FAC Explorer

Finding 39860 (2022-001)

- Repeat Finding
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-05-16
Audit: 36897
Organization: Pecan Village, Inc. (TX)
Auditor: Pittsford Samuels PLLC

AI Summary

  • Core Issue: The security deposit account lacks sufficient funds to cover tenant liabilities, risking non-refunds for moving tenants.
  • Impacted Requirements: Compliance with federal regulations regarding tenant security deposits is not being met.
  • Recommended Follow-Up: Management should transfer adequate funds to the security deposit account to ensure compliance and protect tenant interests.

Finding Text

Findings reference number: 2022-001 Title and AL Number of Federal Program: Section 8 Housing Assistance, AL 14.195 Type of finding: Federal Award (Compliance) Resolution Status: In process Population size: N/A Sample size: N/A Repeat finding: Yes. Criteria: The tenant security deposits bank account should have enough cash to cover the tenant security deposit liability. Condition: Review of the security deposit account showed that the balance as of December 31, 2022 was insufficient to cover the tenant security deposit liability. Cause: The Project had a shortfall of operational cash and used some funds from the security deposit account. Effect: The Project may not be able to refund the security deposit for tenants moving out. Noncompliance code: M. Security deposits. Questioned costs: N/A. Reporting views of officials: Auditee agrees with the finding. Contract Number: 114-11228 Context: The funds were withdrawn because of a shortfall of operating cash and need for necessary repairs to the property. Recommendation: Management must transfer enough funds to the security deposit account to cover the tenant security deposit liability.

Corrective Action Plan

Auditee's Response: Management has contacted the Property and Liability Broker about the high costs to insure the property. The Broker has agreed not to escalate the prices for the upcoming year. The reserve for replacement has ample funds to request reimbursements of qualified expenditures for the last two years to catch up on outstanding payables and fund the deficiency in the security deposits. Management is going to request a Budget Based Rent increase for the property since the OCAF increases for the last few years do not keep up with the extraordinary escalation of operating costs of the last three years. Management believes that with these steps it will be able to return to its previous cash flow position. Completion date: 12.31.23 For corrective action plan Silver Lake Retirement Community And The Oaks Retirement Community 2022 Corrective Action Plan Audit Finding 2022-001: Cash will be transferred from the operating account into the tenant security deposit account in an amount sufficient to cover the tenant security deposit liability. Name and Title of contact person responsible for corrective action: Linda Holder Vice President ? Houston Housing Management Corporation 2211 Norfolk, Suite 614 Houston, TX 77098 713-526-9470

Categories

HUD Housing Programs Reporting

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 $2.21M
14.195 Section 8 Housing Assistance Payments Program $446,243