Finding 588684 (2022-004)

Significant Deficiency Repeat Finding
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-04-24

AI Summary

  • Core Issue: The Project failed to refund a tenant security deposit within the required 21 days after lease termination, violating Minnesota statutes.
  • Impacted Requirements: Compliance with state laws regarding timely return of security deposits, which was not met due to inadequate review processes.
  • Recommended Follow-Up: Implement a review process to ensure all security deposits are refunded on time to avoid future noncompliance.

Finding Text

2022-004 U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.134 Section 207 Insured Loan Balance Special Tests and Provisions Noncompliance and Significant Deficiency in Internal Control over Compliance Criteria: Upon termination of lease, Minnesota statutes require that the Project refund tenant security deposits within 21 days of termination of tenancy. Condition: In our move out testing, we noted the Project did not pay out one deposit within the 21-day requirement. Cause: An adequate review process was not in place to ensure all move out deposits were paid within the required timeline. Effect: The Project was not in compliance with Minnesota statutes. Questioned Costs: None noted. Context: All 15 move outs during the year were subject to testing. A sample of five tenant move outs during the year was selected for testing and noted one security deposit was not paid out within 21 days of termination of tenancy. Repeat Finding from Prior Year: Yes, prior year finding 2021-004. Recommendation: We recommend that the Project create a review process to ensure all required deposits are paid out timely. Views of Responsible Officials: Management agrees with the finding.

Categories

Special Tests & Provisions Significant Deficiency Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 12241 2022-003
    Material Weakness Repeat
  • 12242 2022-004
    Significant Deficiency Repeat
  • 588683 2022-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.134 Mortgage Insurance_rental Housing $1.52M
14.182 Section 8 New Construction and Substantial Rehabilitation $301,453