Finding 398422 (2023-004)

S3800-010: Finding Reference Number 2023-004 (Material Weakness) S3800-011: Program Information Federal Program: Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Rental Housing (Section 207/223(F)) Federal Agency: Department of Housing and Urban Development (HUD) Assistance Listing #: 14.155 Pass-through Entity: None Federal Award Identification Number and Year: N/A Type of Compliance Finding: N – Special Tests and Provisions S3800-015: Type of Finding Federal Awards S3800-016: Finding Resolution Status Unresolved S3800-017: Information on Universe Population Size N/A S3800-018: Sample Size Information N/A S3800-019: Identification of Repeat Finding and Finding Reference Number N/A S3800-020: Criteria Per the Consolidated Audit Guide for Audits of HUD Programs (Handbook 2000.4 REV-2; the HUD audit guide), the amount of tenant security deposits shall at all times equal or exceed the aggregate of all outstanding obligations under the security deposit account. S3800-030: Statement of Condition During our audit of the Organization’s fiscal year ended December 31, 2023 federal award program, we noted the Organization failed to maintain an amount equal to or greater of the tenant security deposit account compared to all obligations under that account. S3800-032: Cause The Organization failed to review and ensure the amount on deposit was at least equal to the outstanding obligations under the security deposit account throughout the reporting period. S3800-033: Effect or Potential Effect The Organization was not in compliance with requirements in the HUD audit guide related to tenant security deposits. S3800-035: Auditor Non-Compliance Code: M – Security deposits S3800-040: Questioned Costs None S3800-045: Reporting Views of Responsible Officials Management agrees with the finding. S3800-050: Context The Organization did not reconcile the security deposit account throughout the reporting period to ensure the amount on deposit was at least equal to the outstanding obligations under the security deposit account. At all times, the liability account was greater than the asset account. S3800-080: Recommendation The Organization should implement policies and procedures to ensure that accounting records are kept accurate and complete as per the requirement of the HUD audit guide related to tenant security deposits and a responsible official should ensure the process is being followed on a monthly basis. S3800-090: Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations Auditee agreed with our recommendation. S3800-130: Response Indicator Agree S3800-140: Completion Date or Proposed Completion Date June 30, 2024 S3800-150: Response See Corrective Action Plan