Finding 522588 (2024-001)

Finding 2024-001 - Special Tests and Provisions - Significant Deficiency Name of Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 223 HUD-Insured Mortgage Assistance Listing Number: 14.155 Federal Award Identification Number and Year: Not available Name of Pass-through Entity (if applicable): Not applicable Criteria: In accordance with §891.400(e), Responsibilities of owner, the owner must make required deposits to the residual receipts account. Additionally, in accordance with §891.600(e), Responsibilities of borrower, the borrower must make required deposits to the residual receipts account. Condition: During the year ended October 31, 2024, management was required to deposit $6,494 in the residual receipts account within 90 days of fiscal year end, as required by HUD. During the year ended October 31, 2024, management made deposits of $4,791 within 90 days of fiscal year end resulting in an underfunding of the residual receipts account of $1,703. Cause: The Corporation did not have internal controls in place to ensure that required residual receipts reserve deposits are made timely. Effect or Potential Effect: The Corporation is not in compliance with the requirements of the regulatory agreement or Uniform Guidance. Questioned Costs: $1,703 Context: During the year ended October 31, 2024, management made deposits in the amount of $4,791. However, management was required to deposit $6,494 in the residual receipts account. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Corporation establish internal controls over its residual receipts compliance requirements to ensure that the Corporation is in compliance with Uniform Guidance and its regulatory agreement.