Finding Text
S3800-010: Finding Reference Number
2023-004 (Material Weakness)
S3800-011: Program Information
Federal Program: Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Rental
Housing (Section 207/223(F))
Federal Agency: Department of Housing and Urban Development (HUD)
Assistance Listing #: 14.155
Pass-through Entity: None
Federal Award Identification Number and Year: N/A
Type of Compliance Finding: N – Special Tests and Provisions
S3800-015: Type of Finding
Federal Awards
S3800-016: Finding Resolution Status
Unresolved
S3800-017: Information on Universe Population Size
N/A
S3800-018: Sample Size Information
N/A
S3800-019: Identification of Repeat Finding and Finding Reference Number
N/A
S3800-020: Criteria
Per the Consolidated Audit Guide for Audits of HUD Programs (Handbook 2000.4 REV-2; the
HUD audit guide), the amount of tenant security deposits shall at all times equal or exceed the
aggregate of all outstanding obligations under the security deposit account.
S3800-030: Statement of Condition
During our audit of the Organization’s fiscal year ended December 31, 2023 federal award
program, we noted the Organization failed to maintain an amount equal to or greater of the tenant
security deposit account compared to all obligations under that account.
S3800-032: Cause
The Organization failed to review and ensure the amount on deposit was at least equal to the
outstanding obligations under the security deposit account throughout the reporting period.
S3800-033: Effect or Potential Effect
The Organization was not in compliance with requirements in the HUD audit guide related to
tenant security deposits.
S3800-035: Auditor Non-Compliance Code:
M – Security deposits
S3800-040: Questioned Costs
None
S3800-045: Reporting Views of Responsible Officials
Management agrees with the finding.
S3800-050: Context
The Organization did not reconcile the security deposit account throughout the reporting period
to ensure the amount on deposit was at least equal to the outstanding obligations under the
security deposit account. At all times, the liability account was greater than the asset account.
S3800-080: Recommendation
The Organization should implement policies and procedures to ensure that accounting records
are kept accurate and complete as per the requirement of the HUD audit guide related to tenant
security deposits and a responsible official should ensure the process is being followed on a
monthly basis.
S3800-090: Auditor’s Summary of the Auditee’s Comments on the Findings and
Recommendations
Auditee agreed with our recommendation.
S3800-130: Response Indicator
Agree
S3800-140: Completion Date or Proposed Completion Date
June 30, 2024
S3800-150: Response
See Corrective Action Plan