Finding 393050 (2023-001)

-
Requirement
P
Questioned Costs
$1
Year
2023
Accepted
2024-04-11

AI Summary

  • Core Issue: Cash for tenant security deposits and rental revenue was not properly deposited, leading to potential theft.
  • Impacted Requirements: Violated HUD regulations requiring all cash receipts to be deposited in project bank accounts.
  • Recommended Follow-Up: Strengthen internal controls to prevent employee theft and ensure compliance with HUD guidelines.

Finding Text

Finding 2023-001 - U.S. Department of Housing and Urban Development: Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Housing Projects (Section 223(f)/207) Insured Loans, Assistance Listing #14.155 Statement of Condition: During the year ended December 31, 2023, the Site Manager accepted cash for tenant security deposits and rental revenue that was not deposited into the security deposit or operating cash accounts, as applicable. Furthermore, the Site Manager collected laundry revenue and inappropriately applied it to tenant balances. Criteria: HUD Handbook 4370.2 REV-1, Chapter 2, Section 2-12, A, specifies that all cash receipts must be deposited in a bank account in the name of the project. Effect: Noncompliance with HUD regulations. Cause: Site employee violated the management company's policies and procedures. Context: Inquiry of management was performed. Management informed auditor that the Site Manager accepted cash for tenant security deposits and rental revenue that was not deposited into the security deposit or operating cash accounts. Questioned Costs: $1,802 Recommendation: We recommend management continue to maintain strong internal controls at the site to effectively catch any employee theft that may occur. Views of Responsible Officials and Corrective Action Plan: Management acknowledges the Site Manager theft and will continue to ensure that strong internal controls are maintained at the site to effectively catch any employee theft that may occur.

Corrective Action Plan

Cleveland County Senior Citizens Housing, Inc. Shelby, North Carolina CORRECTIVE ACTION PLAN March 18, 2024 U.S. Department of Housing and Urban Development Five Points Plaza Building 40 Marietta Street Atlanta, Georgia 30303 Cleveland County Senior Citizens Housing, Inc. respectfully submits the following Corrective Action Plan for the year ended December 31, 2023. Bernard Robinson & Company, L.L.P. 1501 Highwoods Blvd., Suite 300 Greensboro, North Carolina 27410 The finding from the December 31, 2023 Schedule of Findings and Questioned Costs is discussed below. The finding is numbered consistently with the number assigned in the schedule. FINDINGS - Financial Statement and Federal Award Program Audit Finding 2023-001: Recommendation: We recommend management continue to maintain strong internal controls at the site to effectively catch any employee theft that may occur. Action Taken: We agree with Finding 2023-001 and the recommendation described in the accompanying schedule of findings and questioned costs. Management will continue to ensure that strong internal controls are maintained at the site to effectively catch any employee theft that may occur. If HUD has questions regarding this action plan, please call Joe Ward at (336)724-1110. Sincerely yours, Joe Ward NC Asset Manager Residential Properties Management, Inc. Managing Agent

Categories

Questioned Costs HUD Housing Programs Procurement, Suspension & Debarment Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $1.16M
14.195 Section 8 Housing Assistance Payments Program $324,939