Finding Text
Finding No. 2022-001: Residual Receipts Deposit (Material Weakness) Statement of condition Special Tests and Provisions The surplus cash calculated balance of $10,300 at June 30, 2021 was not deposited into the residual receipts reserve during the year ended June 30, 2022. Criteria The Regulatory Agreement requires that any surplus cash amount be deposited into a residual receipts reserve and retained until released as approved by the U.S. Department of Housing and Urban Development ("HUD"). Cause Review procedures were insufficient to ensure that the computation of surplus cash was performed accurately and timely, resulting in the calculated surplus cash amount not being deposited into the residual receipts reserve. Effect Funds required to be deposited into the residual receipts reserve could be used to fund operations or for alternative purposes without HUD's authorization. Recommendation Management should revisit its internal controls and procedures for the computation of surplus cash to ensure it is performed accurately and timely and that any calculated surplus cash amount be deposited into the residual receipts reserve timely. Identification of repeat finding The finding is not a repeat finding. Auditor non-compliance code B - Failure to make required residual receipts deposits Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management has opened a new residual account for this HUD entity and has put in place controls to ensure that the calculated surplus cash balance is deposited into the account, if applicable, annually.