Finding 1206442 (2025-001)

2025 – 001 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 207 Insured Loan Balance Assistance Listing Number: 14.134 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Security deposits shall be kept separate and apart from all other funds of the project in a trust account the amount of which shall at all times equal or exceed the aggregate of all outstanding obligations of said account. Condition: The security deposit account was underfunded at December 31, 2025 by $1,800 in comparison to the aggregate of all outstanding security deposit obligations. Questioned costs: $1,800 Context: There was one instance of a security deposit that was incorrectly applied as accounts receivable when received instead of being recorded as a security deposit. Cause: This resulted in the security deposit asset being underfunded. Effect: The security deposit account was underfunded by $1,800 at year end. Repeat Finding: No Recommendation: We recommend management ensure security deposits are accurately recorded upon receipt and review the security deposit asset against the related liability monthly to ensure the account is adequately funded. Views of responsible officials: There is no disagreement with the finding.