Finding 22980 (2022-001)

Significant Deficiency Repeat Finding

Requirement

Questioned Costs

Year

2022

Accepted

2023-04-12

Audit: 18813

Organization: Winter Grove, Inc. (CT)

Auditor: Cohnreznick LLP

AI Summary

Core Issue: The tenant security deposit cash account was not fully funded due to a bank error, leading to insufficient cash to cover liabilities.
Impacted Requirements: This situation violates HUD guidelines requiring a fully funded separate account for tenant security deposits.
Recommended Follow-Up: Transfer $6,007 from the operating account to fund the security deposits and consolidate accounts into one interest-bearing account, with monthly reconciliations.

Finding Text

CFDA 14.157 Supportive Housing for the Elderly (Section 202) Finding No. 2022-001 Statement of Condition During the year ended 2022, due to a situation with the bank, the security deposit cash account was not fully funded during various times throughout the year. Cause The bank erroneously transferred dormant account balances as escheated funds to the State of Connecticut in the name of the tenant. Effect or Potential Effect Management did not have sufficient cash balance in the tenant security deposit cash account to cover the security deposit liability as of December 31, 2022. Questioned Costs None 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. Auditor Noncompliance Code: M - Security deposits Recommendations 2022-001-a Management should transfer $6,007 from the operating account in order to fully fund the tenant security deposits account. 2022-001-b Management should consolidate the individual security deposit accounts into one interest-bearing account in the name of the Project. The account should also be reconciled on a monthly basis to ensure proper reporting of the activity and account balances. Views of Responsible Officials and Planned Corrective Actions TBD

Corrective Action Plan

CP-1011 CORRECTIVE ACTION PLAN Project Legal Name: Winter Grove, Inc. HUD Project No.: 017-EE118 Audit Firm: Cohn Reznick Period covered by the audit: 12/31/2022 Corrective Action Plan prepared by: Name: Arlene Lawrence Position: Chief Financial Officer Telephone Number: 203-562-4514 Signature:___________________________________ The following is a recommended format to be followed by the auditee for preparing a corrective action plan: A. Current Findings on the Schedule of Findings, Questioned Costs and Recommendations 1. Finding 2022-001 a. Comments on the Finding and Each Recommendation The bank erroneously refunded dormant account balances Winter Grove was holding as security deposits for tenants. This resulted in the security deposit account to be underfunded as of December 31, 2022. b. Action(s) Taken or Planned on the Finding We are working with the bank and are in the process of closing out all individual sub-accounts to hold all the funds under Winter Grove?s name. We have identified the tenants that received refunds and are working with them to replenish those funds. The account will be funded appropriately in 2023.

Other Findings in this Audit

22981 2022-001

Significant Deficiency Repeat
599422 2022-001

Significant Deficiency Repeat
599423 2022-001

Significant Deficiency Repeat

Programs in Audit

ALN	Program Name	Expenditures
14.157	Supportive Housing for the Elderly	$210,910