Finding Text
Section III - Findings and Questioned Costs-Major Federal Award Program Audit
Finding No. 2022-3
Statement of Condition
A security deposits cash account was not established in accordance with HUD regulations in that funds were not segregated from the operating account.
Criteria
The tenant security deposits cash account must be kept in a separate, interest bearing account in the name of the Company, per HUD Handbook 4370.2 REV-1.
Questioned Costs
$17,312
Effect or potential effect
The Company is noncompliant with specific requirements of its major federal program.
Cause
Controls are not in place to ensure tenant security deposits are maintained in accordance with HUD regulations.
Recommendation
Management should set up a separate bank account in the Company's name for tenant security deposits.
Reporting views of responsible officials
Auditee agrees with the auditor and management will be responsible for creating a separate bank account in the Company's name for tenant security deposits.
Auditor Noncompliance Code: M – Security Deposits