Finding Text
Questioned cost: None Title: Section 8 - Housing Assistance CFDA Number: 14.195 Award Year: 6/1/2025-5/31/2026 Condition: As of May 31, 2026, the balance maintained in the tenant security deposit account was $11,327, while the related tenant security deposit liability was $18,468, resulting in a deficiency of $7,141. Management transferred funds from the tenant security deposit account to cover operating expenditures, including utility payments, and initiated a transfer to replenish the account before year-end.Tenant security deposit funds were not fully available to satisfy tenant obligations as of May 31, 2026. In addition, the deficiency had not been corrected as of the date the financial statements were available to be issued. Criteria: HUD requires tenant security deposit funds to be maintained in a separate account and the balance of the account to equal or exceed the related tenant security deposit liability at all times. Cause: The Project did not maintain adequate controls and oversight over restricted cash accounts to ensure tenant security deposit funds were used solely for their intended purpose and that account balances remained sufficient to cover related liabilities. Effect: Tenant security deposit funds were not fully available to satisfy tenant obligations at May 31, 2026. Recommendation: Management should ensure that tenant security deposit funds remain segregated and that the balance of the security deposit account equals or exceeds the related liability at all times. View of Responsible Officials: Management concurs with the finding. The tenant security deposit account deficiency was corrected on August 5, 2026, and the account was restored to the required balance. Management will ensure that tenant security deposit funds remain segregated and that the account balance is maintained at or above the related tenant security deposit liability going forward.