Finding Text
Tenant Security Deposits: The Organization is required to have enough cash in the tenant security deposits account to fully cover the corresponding tenant security deposits liability account. We noted that the balance in the deposits cash account is insufficient to cover the recorded liability Criteria: According to HUD requirements and standard accounting practices, tenant security deposits must be held in a separate, restricted account. The total cash held should at all times equal or exceed the recorded liability for tenant security deposits. Cause: Due to the use of tenant deposit funds for operational purposes and/or failure to reconcile the tenant security deposits cash account with the corresponding liability account on a regular basis. Effect: The project did not comply with requirements to maintain sufficient funds in the tenant security deposits account, which may result in an inability to fully refund tenant deposits upon move-out. Recommendation: Management should implement procedures to regularly reconcile the tenant security deposits cash account to the tenant security deposits liability account and transfer sufficient funds to ensure the account is fully funded at all times. Response and Corrective Action Planned: We will develop and implement procedures to ensure the tenant security deposits cash account is reconciled regularly and adequately funded to cover the corresponding liability. Conclusion: Response accepted.