Finding Text
Compliance Requirement: Special Tests and Provisions Criteria Security deposits on hand at the end of the Project?s annual reporting period must at least equal the amount of the security deposit liability (24 CFR section 891.4). Condition Security deposits were underfunded by $432 in fiscal year 2022. Cause New tenant security deposit was deposited into the operating account and was not transferred until February 28, 2023. The security deposit account was not reviewed in a timely manner to account for the new tenant?s security deposit. Effect or Potential Effect Movin? Out, Inc. and Subsidiaries was not in compliance with the Special Tests and Provisions compliance requirement for the year ended December 31, 2022. Questioned Costs None. Context Most tenants and disabled and use a third-party fiscal payor agent as their fiduciary to pay bills. As such all deposits from the fiscal payor agents are received as ACH payments into Movin? Out, Inc and Subsidiaries? bank account. When a new tenant paid rent and the $432 security deposit, the transaction was consolidated into one ACH payment and deposited to the operating checking account. This resulted in the security deposit account being underfunded by $432. The error was not found until the annual review of the security deposit account was conducted in February 2023. Repeat Finding N/A. Recommendation Security deposits should be closely monitored to ensure compliance. Additionally, management should implement controls over special tests and provisions to ensure compliance. Auditor Noncompliance Code: Section 811 program administration Views of Responsible Officials Movin? Out Inc. and Subsidiaries agrees with the finding and the auditor?s recommendations have been adopted. In June 2023, management updated policies and procedures surrounding the tenant security deposits, including a required monthly review of the account to ensure the account is in compliance.