Finding Text
Criteria: The Project is required to maintain tenant security deposits in a separate FDIC insured account. The balance in the bank account is required to cover the tenant security deposit liability. Condition: The balance in the Project’s tenant security deposit bank account at June 30, 2023 was not sufficient to cover the tenant security deposit liability. We consider this finding to be an instance of noncompliance regarding the Special Tests and Provisions compliance requirement. Effect: By not holding tenant security deposits in a separate account, the Project may have insufficient funds when the deposits are required to be refunded. Questioned Costs: $2,409 Cause: The Project experienced turnover on the finance team which resulted in funds not being transferred to the security deposit account when collected. Recommendation: The Project should consider reevaluating their established procedures and controls currently in place to ensure full compliance regarding special tests and provisions. Views of Responsible Officials: Management agrees with the findings. There was significant turnover during and subsequent to the audit period resulting in a lack of controls. Controls have been re-evaluated and implemented under new management. Further response is included in the Corrective Action Plan.