Finding Text
Finding reference number: #2025-003 Assistance Listing (federal award identification number and year): Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, CFDA No. 14.155 (Project identification number 047-11056, 2007) Auditor non-compliance code: M – Security Deposits Finding resolution status: Cleared Universe population size: 12 months Statistically valid sample: 3 months Name of federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $542 Was the sampling statistically valid: Yes Statement of condition of #2025-003: The Corporation did not maintain resident security deposits in an amount equal or greater than resident security deposits liabilities at all times during the year ended December 31, 2025. At December 31, 2025, the resident security deposit account was underfunded by $542. Criteria: Pursuant to the Regulatory Agreement, residents' security deposits should be funded in an amount which shall at all times equal or exceed the aggregate of all outstanding obligations. Effect or potential effect: Failure to fund resident security deposits could result in the inability of the Corporation to return security deposits to resident upon the termination of the resident's lease. Cause: Management did not transfer deposits from 2025 move-ins that were received into the operating account into the security deposits account as of December 31, 2025. Recommendation: Management should ensure the security deposit account is adequately funded and transfer funds, if necessary, from the operating account to adequately fund the security deposit account. Reporting response: Management concurs. Security deposits collected from new residents during 2025 were received into the operating account, and the corresponding transfer to the resident security deposit account was not completed before year-end. The Corporation transferred $542 from the operating account to the security deposit account on September 17, 2026, fully funding the account. Effective September 2026, security deposit receipts are transferred to the deposit account monthly and the account is reconciled to the tenant deposit ledger as part of the monthly close.