Finding Text
S3800-010: Finding Reference Number 2022-002 (Significant Deficiency) S3800-011: Program Information Federal Program: Supportive Housing for the Elderly ? Section 202 Federal Agency: Department of Housing and Urban Development (HUD) Assistance Listing #: 14.157 Pass-through Entity: None Federal Award Identification Number and Year: N/A Type of Compliance Finding: N ? Special Tests and Provisions S3800-015: Type of Finding Federal Awards S3800-016: Finding Resolution Status Unresolved S3800-017: Information on Universe Population Size N/A S3800-018: Sample Size Information N/A S3800-019: Identification of Repeat Finding and Finding Reference Number N/A S3800-020: Criteria The regulatory agreement requires that tenant security deposits held should equal or exceed the tenant security deposit liability at all times. S3800-030: Statement of Condition During our audit of the Organization?s fiscal year ended December 31, 2022 federal award program, we tested two months for compliance with this requirement. The tenant security deposit asset account was reconciled for all months tested. However, the tenant security deposit liability account was more than the security deposit asset account on August 31, 2022 and December 31, 2022. S3800-032: Cause The Organization does not have adequate controls in place to determine that it is in compliance with the requirement that the security deposit asset is greater than the liability at all times. S3800-033: Effect or Potential Effect The Organization was not in compliance with the requirement to maintain its tenant security deposit account equal to or in excess of its security deposit liabilities at all times. S3800-035: Auditor Non-Compliance Code M ? Security deposits S3800-040: Questioned Costs $4,793 S3800-045: Reporting Views of Responsible Officials Management agreed with the finding. S3800-050: Context The Organization reconciles the tenant security deposit asset account monthly, but only reconciles the liability account at year-end; therefore, the Organization did not contemporaneously determine its compliance with the regulatory requirement that the tenant security deposit asset must equal or exceed the tenant security deposit liability at all times. We did not increase our sample size as reconciliation of the liability was not performed monthly and therefore, the internal control procedure necessary for this compliance requirement was not in place. S3800-080: Recommendation The tenant security deposit liability exceeded the tenant security deposit asset by $1,707 as of August 31, 2022, when the Organization was managed by the predecessor management company. We do not have a recommendation regarding the period managed by the predecessor management company. The current management company should compare the security deposit liability to the security deposit asset each month as part of the monthly closing process. S3800-090: Auditor?s Summary of the Auditee?s Comments on the Findings and Recommendations Auditee agreed with our recommendation. S3800-130: Response Indicator Agree S3800-140: Completion Date or Proposed Completion Date June 30, 2023 S3800-150: Response See Corrective Action Plan