Finding Text
Finding No. 2025-003 - Special Tests and Provisions - Significant Deficiency Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly (Section 202) Assistance Listing Number: 14.157 Federal Award Identification Number and Year: N/A Name of Pass-through Entity (if applicable): N/A Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, management is required to maintain tenant security deposit records that properly account for the amount of security deposits collected, and to deposit them timely. This will ensure that upon move out, tenants will receive credit for the proper amount of security deposit paid. Condition In connection with the procedures applied to a sample of two tenants that moved in and out of the Project during the year, we noted one instance where the tenant's security deposit amount listed in the lease and collected was not deposited in a timely manner and thus the amount per the lease did not agree to the amount recorded in the accounting records. Cause Management failed to follow the policies and procedures which have been established for maintaining security deposit records. Effect or Potential Effect The Project’s tenant security deposits liability could be misstated, tenant security deposit cash could be underfunded and tenant may receive incorrect refunds upon move out. Questioned Costs N/A Context The Project collected the funds on move in, but due to an administrative error, did not timely deposit them into the Projects security deposit account. Identification as a Repeat Finding No Recommendation Management should follow its procedures to ensure that tenant security deposits collected are properly recorded. HUD Auditor Noncompliance Code: M - Security deposits Uniform Guidance Auditor Noncompliance Code: N - Special Tests and Provisions Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. Due to transfer of banks, the deposits were not timely set up and deposited. Funds were deposited in new accounts in December 2025 with the new bank.