Finding Text
Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times a fully funded separate bank account for tenant security deposits collected. Condition As of December 31, 2025, management has not fully funded the tenant security deposits cash account. The tenant security deposits cash account was underfunded by $1,617. Cause Management’s policies with respect to the determination of tenant security deposits in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect The procedures for determining tenant security deposits were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in tenant security deposits being inappropriately spent. Questioned Costs $1,617 Identification as a Repeat Finding N/A - Not a repeat finding Recommendation Management should transfer $1,617 from the operating account in order to fully fund the tenant security deposits account. Auditor Noncompliance Code D - Commingling of funds Finding Resolution Status Resolved. Views of Responsible Officials Management agrees with the finding and the auditor's recommendations have been adopted. The tenant security deposit was fully funded subsequent to year end on September 9, 2026. To ensure compliance going forward the tenant security deposit account will be reconciled monthly against the liability and any shortfalls will be remedied immediately.