Finding Text
Information on the Federal Program: U.S. Department of Housing and Urban Development (“HUD”) – 14.157 Supportive Housing for the Elderly (Section 202); FAIN #012-EH692; July 1, 2024 – June 30, 2025 Finding Type: Significant deficiency Criteria: In accordance with 24 CFR 891.400(e) and 891.600(e), a separate interest-bearing project fund account shall be maintained in a depository or depositories which are members of the Federal Deposit Insurance Corporation and all tenant payments, charges, income and revenues arising from project operation or ownership shall be deposited to this account. Condition and Context: During our testing, we noted that the project fund account used by the Organization was not an interest-bearing account. Cause: Subsequent to the initial rent assistance contract, changes to HUD regulations resulted in the requirement that the project fund account be an interest-bearing account. Due to oversight by the Organization’s management, the new requirement was not adopted. Effect or Potential Effect: Project funds would not earn interest in accordance with HUD requirements. Repeat Finding: 2024-001 Questioned Costs: None Recommendation: We recommend that the Organization utilize an interest-bearing account for project funds in accordance with HUD requirements. Management’s Response: Although the Organization does not currently use an interest-bearing account for project funds, due to the ongoing operation of the program and continuous activity within the project funds account, any interest earned in such an account would be negligible. Management is in the process of evaluating this recommendation to determine the appropriate course of action.