Finding Text
Finding No. 2021-003 (Significant Deficiency)
Condition
Project failed to maintain security deposits for each occupied unit as required by the Regulatory Agreement.
Criteria
The Regulatory Agreement stipulates that each unit shall have at least one month of security, and any funds
collected as a security deposit shall be kept separate and apart from all other funds of the Project in a trust
account.
Cause
Management did not have proper control to ensure each unit’s tenant security deposit was maintain in a
segregated bank account.
Effect
The Company was not in compliance with its Regulatory Agreement.
Context
During our audit procedures for compliance testing of security deposits, the auditor noted that the Company
was not in custody of 16 of the 93 occupied units’ security deposit in the Development.
Recommendation
The Company should implement monitoring controls to ensure compliance with tenants’ security deposits
and Management should transfer all security deposit amounts currently being held in the Company's
operating project account to a separate security deposit bank account as soon as possible.
Reporting Views of Responsible Officials
Management has acknowledged a breach in protocol and is in the process of transferring the tenants’
security deposits collected and held in the operating bank account to a segregated bank account.
Prior Year Finding
Yes.