Finding 970803 (2023-002)

Finding Type: - Immaterial noncompliance with major program requirements - Significant deficiency in internal control over compliance Title and Assistance Listing Number of Federal Program - 14.155 - U.S. Department of Housing and Urban Development - Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Projects (Section 207/223(f)) Finding Resolution Status - In progress Information on Universe and Population Size - All security deposit refunds made during 2023 Sample Size Information - A sample size of two security deposit refunds was determined based on the HUD audit guide. Identification of Repeat Finding and Finding Reference Number - N/A Criteria - HUD requires the Corporation to refund the security deposit to tenants within 30 days of the move-out. Statement of Condition - The Corporation failed to refund the security deposit to one tenant within 30 days of the tenant's move-out date. The security deposit was refunded to the tenant on the 34th day subsequent to move-out. Cause - The Corporation’s internal controls over compliance failed to detect the security deposit that was not refunded within 30 days. Effect or Potential Effect - Additional security deposit refunds may not meet HUD's requirements. Auditor Noncompliance Code - M - Security deposits Reporting Views of Responsible Officials - Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance. Context - During testing of move-outs, one instance of security deposit noncompliance was noted. Recommendation - Management should make the necessary changes to internal controls over compliance so that security deposit refunds are made within 30 days of a tenant's move-out date.Department of Housing and Urban Development - Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Projects (Section 207/223(f))