Finding 1174614 (2024-002)

Finding reference number: 2024-002 Assistance Listing (Federal award identification number and year): Section 8 Project-Based Cluster, Assistance Listing No. 14.195, CA16L000004, and 1996 Auditor non-compliance code: M - Security Deposits Finding resolution status: Resolved Universe population size: 12 months Sample size information: 3 months Statistically valid sample: Yes Name of Federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $11,052 Statement of condition 2024-002: The Corporation did not maintain a cash account for residents' security deposits in an amount greater than or equal to the outstanding balance of the residents' security deposit liability at all times during the year ended December 31, 2024. At December 31, 2024, the residents' security deposit cash account was underfunded by $11,052. Criteria: Pursuant to the HAP Contract, the amount on deposit must be at least equal to the outstanding security deposit obligations. Effect: The Corporation is not in compliance with the HAP Contract. Cause: The management agent did not establish a security deposit cash account when management of the Property was transferred. Recommendation: Management should establish a security deposit cash account and ensure the residents' security deposits cash account is adequately funded. Management should transfer funds from the Property's operating cash account to adequately fund the residents' security deposits cash accounts. Management's response: Management concurs with the finding and recommendation. Management transferred operating funds to adequately fund the security deposit cash account on November 13, 2025.