Finding Text
Finding 2024-003 - Material Weakness - Special Tests and Provisions - Tenant rent payments not deposited timely Name of Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 8 Housing Choice Vouchers Assistance Listing Number: 14.871 Criteria In accordance with the HUD regulatory agreements, Project funds should be immediately deposited in the Projects' bank accounts. Condition During the year ended June 30, 2024, Bay Cove Human Services, Inc., an affiliate and sponsor agency for Juliette Corporation, collected rent and other client fees related to its clients who are also tenants in the Projects. Bay Cove Human Services, Inc. did not timely remit the tenant rent portion of these payments to the Projects which resulted in a total balance owed to the Projects of $161,053 as of June 30, 2024. Cause Management's internal controls over monitoring of the tenant rent deposits did not function consistently throughout the year ended June 30, 2024. Effect or Potential Effect Failure to deposit the tenant rents into the Project accounts timely resulted in a violation of the regulatory agreements. Questioned Costs Not applicable. Context N/A Identification as a Repeat Finding This is not a repeat finding from 2023. Recommendation Management should establish or undertake a review of internal controls over monitoring of the tenant rent deposits to ensure deposits are timely made into the Project accounts. Views of Responsible Officials Management acknowledges that certain internal controls did not operate effectively during the year ended June 30, 2024. This is attributed to an unusually high level of staff turnover within the finance team during the year. We have since supplemented our team with new senior leadership and experienced resources to ensure the tenant receipts are timely remitted to the Project accounts. The due from affiliate balance of $161,053 was fully refunded into the Project accounts subsequent to year end.