Finding Text
Criteria: The Uniform Guidance requires HUD Projects to maintain accurate controls to prevent and
detect tenant revenue theft.
Condition: Management lost $504.00 of tenant rental revenue due to suspected theft by property
manager.
Effect: Management of Reach Out II Apartments, Inc. is not in compliance with The Uniform Guidance
provided to HUD Projects, and $504.00 of tenant revenue is unaccounted for.
Cause: Reach Out II Apartments, Inc.’s controls were not sufficient enough to prevent and detect theft
of tenant revenue. The rent collection policy was incompatible with operations.
Questioned Costs: None
Recommendations: Per discussion with management, management has updated internal controls to
mitigate the risk of repetition. The property manager collects the ren revenue from the tenants, but is no
longer allowed to deposit the rent. The rent is brought to Finance, where it is properly checked,
recorded, and deposited by a Finance staff member. We recommend following the updated internal
controls management has already put in place.
Name of Contact Person: Teri Zaner, Finance Director
Management Response: Management is continuously evaluating internal controls to mitigate the risk of
repetition. Internal controls have been updated to reflect this initiative.
Corrective Action Plan: Going forward, management will continue to implement new internal controls
that allow for better segregation of duties and monitoring of tenant revenue. This issue has corrected
itself, thus we anticipate no further action on behalf of management.