Finding 586888 (2023-001)

Significant Deficiency – Reconciliation of Escrow Accounts Mortgage Insurance Rental Housing, ALN #14.134 Criteria The U.S. Department of Housing and Urban Development (HUD) Chapter 3 HUD Multifamily Housing Program states owners shall establish a reserve for replacement account and make deposits in accordance with HUD requirements, usually a regulatory agreement and disbursements from the reserve for replacement fund may be made only after a written consent is received from HUD. Condition During the course of the audit, it was noted that the escrow accounts were not being accurately reconciled during the year. Cause The cause is due to monthly escrow amounts that were missing. Effect The effect was the escrow accounts were overstated. Questioned Costs None Perspective Information None Identification as a repeat finding There was no similar finding in the prior year. Recommendation We recommend that McSherrystown Interfaith Housing Corporation make an entry to record escrow activity during the year and implement similar monthly adjustments going forward. View of responsible officials and planned corrective action We agree that this compliance requirement is listed in the compliance supplement. We will implement additional procedures to capture escrow activity during the year. Additional training has been provided to the Accounting staff.