Finding Text
Finding No. 2025-006 - Special Tests and Provisions U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant’s rights under state and local laws. Condition: In connection with the procedures applied to a sample of 2 tenants that moved out of the project during the year, we noted 1 instance where management failed to refund the tenant security deposit and/or provide the tenant with an itemized list of charges deducted from the deposit within thirty days after the move-out date. Cause: Management did not have procedures in place regarding timely refunding of tenant security deposits which require refunds or notice to occur within the 30-day requirement established by HUD. Effect or Potential Effect: Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Questioned Costs: $322 Context: Management did not have monitoring procedures in place to ensure timely refunding of tenant security deposits to the tenant or to their estate. Due to errors with the software input an incorrect report was provided to accounting showing no amounts owed to the tenant at move out. Identification as a Repeat Finding: Yes Recommendation: Management should change its policies and procedures related to refunding of tenant security deposits to comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: M - Security Deposits Finding Resolution Status: In Process Views of Responsible Officials: Management is still reviewing and updating the processes and procedures with site personnel to strengthen controls over the refunding of tenant security deposits.