Finding 976901 (2023-004)

U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.134 Section 207 Insured Loan Balance Special Tests and Provisions Noncompliance and Significant Deficiency in Internal Control over Compliance Criteria: Upon termination of lease, Minnesota statutes require that the Project refund tenant security deposits within 21 days of termination of tenancy. Condition: In our move out testing, we noted the Project did not pay out one deposit within the 21-day requirement. Cause: An adequate review process was not in place to ensure all move out deposits were paid within the required timeline. Effect: The Project was not in compliance with Minnesota statutes. Questioned Costs: None noted. Context: All 15 move outs during the year were subject to testing. A sample of five tenant move outs during the year was selected for testing and noted one security deposit was not paid out within 21 days of termination of tenancy. Repeat Finding from Prior Year: Yes, prior year finding 2022-004. Recommendation: We recommend that the Project create a review process to ensure all required deposits are paid out timely. Views of Responsible Officials: Management agrees with the finding.