Finding 564308 (2024-001)

In accordance with 24 CFR 891.400(e), a separate interest-bearing project fund account shall be maintained in a depository or depositories which are members of the Federal Deposit Insurance Corporation or National Credit Union Share Insurance Fund and all tenant payments, charges, income and revenues arising from project operation or ownership shall be deposited to this account. During our testing, we noted that the project fund account used by the Organization was not an interest-bearing account. Subsequent to the initial rental assistance contract, changes to HUD regulations resulted in the requirement that the project fund account be an interest-bearing account. This change was an oversight by the Organization’s management. Project funds would not earn interest in accordance with HUD requirements. We recommend that the Organization utilize an interest-bearing account for project funds in accordance with HUD requirements. Management has started utilizing an interest-bearing account for the project effective May 2025, as soon as they became aware of the new HUD compliance requirement. Planned Implementation Date of Corrective Action is May 2025. Person responsible for the corrective action plan is Elizabeth Mbakaya, CFO.