Finding 969492 (2023-001)

Finding 2023-001 - U.S. Department of Housing and Urban Development: Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Housing Projects (Section 223(f)/207) Insured Loans, Assistance Listing #14.155 Statement of Condition: During the year ended December 31, 2023, the Site Manager accepted cash for tenant security deposits and rental revenue that was not deposited into the security deposit or operating cash accounts, as applicable. Furthermore, the Site Manager collected laundry revenue and inappropriately applied it to tenant balances. Criteria: HUD Handbook 4370.2 REV-1, Chapter 2, Section 2-12, A, specifies that all cash receipts must be deposited in a bank account in the name of the project. Effect: Noncompliance with HUD regulations. Cause: Site employee violated the management company's policies and procedures. Context: Inquiry of management was performed. Management informed auditor that the Site Manager accepted cash for tenant security deposits and rental revenue that was not deposited into the security deposit or operating cash accounts. Questioned Costs: $1,802 Recommendation: We recommend management continue to maintain strong internal controls at the site to effectively catch any employee theft that may occur. Views of Responsible Officials and Corrective Action Plan: Management acknowledges the Site Manager theft and will continue to ensure that strong internal controls are maintained at the site to effectively catch any employee theft that may occur.