As a result of our audit, we proposed thirty-seven (37) audit adjusting entries to correct the books as originally provided to us for audit. Most of these adjustments proposed were material to the financial statements. Adjustments were necessary for basis areas such as prepaid expense, replacement reserve, insurance escrow MIP escrow, fixed assets, accumulated depreciation, operating lease right-of-use asset, accounts payable, accrued expense, due to owner, accrued management fee, accrued mortgage interest, mortgage payable, right -of-use operating lease liability, revenue, and expenses.
The Project’s general ledger is currently maintained on the cash basis of accounting and accrual adjustments are performed at year-end to convert the cash basis of accounting to the accrual basis of accounting. The accrual basis is the method of accounting where revenues are recognized when earned and expenses are recognized when incurred. We understand that maintaining the general ledger on the accrual basis of accounting is more difficult than using the cash basis. However, the accrual basis provides more meaningful financial information to management and complies with generally accepted accounting principles. Failure to maintain the Project’s general ledger on the accrual basis of accounting distorts the interim financial statements and may lead to critical financial decisions being made on erroneous data. This is a repeated finding due to Gross Potential Rent not being recorded on an accrual basis of accounting.
The Project did not provide the Resident Balance By Fiscal Period-December 31, 2022 to reconcile to the 1130 Tenant Receivable, 1130 Accounts Receivable HUD, 2210 Prepaid Revenue, and 2191 Tenant Deposit Held in Trust (Contra). The Resident Balance by Fiscal Period is the subsidiary ledger for the accounts noted. This finding is a repeated finding from prior year
The Management Agent fees are on a paid basis on the Yield CAP -$48,399. The 4.20% of residential income collected fee is noted in the Project Owner’s Certification of Owner-Managed Multifamily Housing Projects dated 3/15/2021. The Yield CAP of $73 per unit is established so the Management Fee basis on collections does not exceed the Yield CAP. The Management Agent does not attach to monthly payment of the Management Fee a Schedule of Resident Income Collected to compute to the Management Fee to support the payment of the Management Fee. This finding is a repeated finding from prior year.
The Project did not obtain fidelity bond coverage for the value of two months of the gross potential income of $202,350 (monthly gross potential income $101,175 X 2 months). This finding is a repeated finding from the prior year.
The Enterprise Income Verification (EIV) was not obtained after 90 days from the date of move-in from the following tenants:
The following tenant’s bank account was not verified:
The following tenant’s Direct Express Card for Social Security was not verified by the Project:
During our testing of cash disbursements and search for unrecorded liabilities, we noted the following: 1. The vendor's invoice is unavailable for examination purposes. 11 (eleven) exceptions were noted. 2. Invoice recording in the incorrect accounting period. 40 (forty) exceptions noted. 3. Cancelled check was unavailable for examination purposes. 2 (two) exceptions were noted.
As a result of our audit, we proposed thirty-seven (37) audit adjusting entries to correct the books as originally provided to us for audit. Most of these adjustments proposed were material to the financial statements. Adjustments were necessary for basis areas such as prepaid expense, replacement reserve, insurance escrow MIP escrow, fixed assets, accumulated depreciation, operating lease right-of-use asset, accounts payable, accrued expense, due to owner, accrued management fee, accrued mortgage interest, mortgage payable, right -of-use operating lease liability, revenue, and expenses.
The Project’s general ledger is currently maintained on the cash basis of accounting and accrual adjustments are performed at year-end to convert the cash basis of accounting to the accrual basis of accounting. The accrual basis is the method of accounting where revenues are recognized when earned and expenses are recognized when incurred. We understand that maintaining the general ledger on the accrual basis of accounting is more difficult than using the cash basis. However, the accrual basis provides more meaningful financial information to management and complies with generally accepted accounting principles. Failure to maintain the Project’s general ledger on the accrual basis of accounting distorts the interim financial statements and may lead to critical financial decisions being made on erroneous data. This is a repeated finding due to Gross Potential Rent not being recorded on an accrual basis of accounting.
The Project did not provide the Resident Balance By Fiscal Period-December 31, 2022 to reconcile to the 1130 Tenant Receivable, 1130 Accounts Receivable HUD, 2210 Prepaid Revenue, and 2191 Tenant Deposit Held in Trust (Contra). The Resident Balance by Fiscal Period is the subsidiary ledger for the accounts noted. This finding is a repeated finding from prior year
The Enterprise Income Verification (EIV) was not obtained after 90 days from the date of move-in from the following tenants:
The following tenant’s bank account was not verified:
The following tenant’s Direct Express Card for Social Security was not verified by the Project:
As a result of our audit, we proposed thirty-seven (37) audit adjusting entries to correct the books as originally provided to us for audit. Most of these adjustments proposed were material to the financial statements. Adjustments were necessary for basis areas such as prepaid expense, replacement reserve, insurance escrow MIP escrow, fixed assets, accumulated depreciation, operating lease right-of-use asset, accounts payable, accrued expense, due to owner, accrued management fee, accrued mortgage interest, mortgage payable, right -of-use operating lease liability, revenue, and expenses.
The Project’s general ledger is currently maintained on the cash basis of accounting and accrual adjustments are performed at year-end to convert the cash basis of accounting to the accrual basis of accounting. The accrual basis is the method of accounting where revenues are recognized when earned and expenses are recognized when incurred. We understand that maintaining the general ledger on the accrual basis of accounting is more difficult than using the cash basis. However, the accrual basis provides more meaningful financial information to management and complies with generally accepted accounting principles. Failure to maintain the Project’s general ledger on the accrual basis of accounting distorts the interim financial statements and may lead to critical financial decisions being made on erroneous data. This is a repeated finding due to Gross Potential Rent not being recorded on an accrual basis of accounting.
The Project did not provide the Resident Balance By Fiscal Period-December 31, 2022 to reconcile to the 1130 Tenant Receivable, 1130 Accounts Receivable HUD, 2210 Prepaid Revenue, and 2191 Tenant Deposit Held in Trust (Contra). The Resident Balance by Fiscal Period is the subsidiary ledger for the accounts noted. This finding is a repeated finding from prior year
The Management Agent fees are on a paid basis on the Yield CAP -$48,399. The 4.20% of residential income collected fee is noted in the Project Owner’s Certification of Owner-Managed Multifamily Housing Projects dated 3/15/2021. The Yield CAP of $73 per unit is established so the Management Fee basis on collections does not exceed the Yield CAP. The Management Agent does not attach to monthly payment of the Management Fee a Schedule of Resident Income Collected to compute to the Management Fee to support the payment of the Management Fee. This finding is a repeated finding from prior year.
The Project did not obtain fidelity bond coverage for the value of two months of the gross potential income of $202,350 (monthly gross potential income $101,175 X 2 months). This finding is a repeated finding from the prior year.
The Enterprise Income Verification (EIV) was not obtained after 90 days from the date of move-in from the following tenants:
The following tenant’s bank account was not verified:
The following tenant’s Direct Express Card for Social Security was not verified by the Project:
During our testing of cash disbursements and search for unrecorded liabilities, we noted the following: 1. The vendor's invoice is unavailable for examination purposes. 11 (eleven) exceptions were noted. 2. Invoice recording in the incorrect accounting period. 40 (forty) exceptions noted. 3. Cancelled check was unavailable for examination purposes. 2 (two) exceptions were noted.
As a result of our audit, we proposed thirty-seven (37) audit adjusting entries to correct the books as originally provided to us for audit. Most of these adjustments proposed were material to the financial statements. Adjustments were necessary for basis areas such as prepaid expense, replacement reserve, insurance escrow MIP escrow, fixed assets, accumulated depreciation, operating lease right-of-use asset, accounts payable, accrued expense, due to owner, accrued management fee, accrued mortgage interest, mortgage payable, right -of-use operating lease liability, revenue, and expenses.
The Project’s general ledger is currently maintained on the cash basis of accounting and accrual adjustments are performed at year-end to convert the cash basis of accounting to the accrual basis of accounting. The accrual basis is the method of accounting where revenues are recognized when earned and expenses are recognized when incurred. We understand that maintaining the general ledger on the accrual basis of accounting is more difficult than using the cash basis. However, the accrual basis provides more meaningful financial information to management and complies with generally accepted accounting principles. Failure to maintain the Project’s general ledger on the accrual basis of accounting distorts the interim financial statements and may lead to critical financial decisions being made on erroneous data. This is a repeated finding due to Gross Potential Rent not being recorded on an accrual basis of accounting.
The Project did not provide the Resident Balance By Fiscal Period-December 31, 2022 to reconcile to the 1130 Tenant Receivable, 1130 Accounts Receivable HUD, 2210 Prepaid Revenue, and 2191 Tenant Deposit Held in Trust (Contra). The Resident Balance by Fiscal Period is the subsidiary ledger for the accounts noted. This finding is a repeated finding from prior year
The Enterprise Income Verification (EIV) was not obtained after 90 days from the date of move-in from the following tenants:
The following tenant’s bank account was not verified:
The following tenant’s Direct Express Card for Social Security was not verified by the Project: