Finding 49810 (2022-002)

Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Funds collected as a security deposit shall be kept in the name of the project, separate and apart from all other funds of the project in a trust account. The amount of this account shall at all times equal or exceed the aggregate of all outstanding obligations under that account. Funds must not be commingled with funds from any other projects. Condition: The Organization's internal controls over compliance related to security deposits were not effective. For two out of four quarter-ends tested, the balance in the Organization?s security deposit liability account exceeded the balance in the Organization?s security deposit cash account. Questioned costs: None Cause: Management oversight. Effect: The Organization did not have sufficient funds in their security deposit account to cover the security deposit liability. The Organization did have sufficient funds in other accounts to cover the liability. The security deposit account was also sufficient at December 31, 2022 to cover the liability. Recommendation: We recommend that management review the account monthly to ensure there is sufficient cash in the account to cover security deposit collections. Views of responsible officials and planned corrective actions: Management will review the security deposit account monthly to ensure proper coverage of the liability.