Finding Text
Federal Agency: U.S. Department of Agriculture Federal Program Title: Rural Rental Housing Loans Federal Assistance Listing Number: 10.415 Federal Award Identification Number(s) and Year(s): AMAS000000191197-2018, AMAS000000191198-2018, AMAS000000315075-2018, AMAS000000017172-2017 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 01/01/22 to 12/31/22 Type of Finding: ? Significant Deficiency in Internal Control over Major Federal Programs Criteria or Specific Requirement: Funds collected as a security deposit shall be kept separate from other funds and shall remain equal to or exceed outstanding security deposit obligations. Condition: During our testing of the six Rural Development projects, we noted four had underfunded security deposit assets in relation to the security deposit liability. Questioned Costs: $1,011 Context: Each of the six Rural Development projects were reviewed to ensure proper funding over security deposits, and four were noted to be underfunded. Cause: During the tracking of security deposits, long-term tenants accrued interest at higher rates over time, resulting in a larger than expected interest accrual, which management did not prepare for, resulting in those projects to be underfunded (the security deposit cash is less than the liability). Effect: Potential for insufficient funds to remit all security deposits to tenants. Repeat Finding: No. Recommendation: The Organization should ensure the security deposit asset is equal to or greater than the security deposit liability in the event that any or all security deposits are required to be returned to tenants to ensure the Organization would have sufficient funding to do so. Views of Responsible Officials and Planned Corrective Actions: No disagreement with the finding. The Organization will implement a review step during the tracking of security deposits to verify the security deposit asset is equal to or greater than the security deposit liability and will correct any that are underfunded.