FAC Explorer

Audit 12871

FY End
2023-06-30
Total Expended
$755,164
Findings
4
Programs
2
Organization: D H, Incorporated (OR)
Year: 2023 Accepted: 2024-01-22
Auditor: Jones & Roth PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
9400 2023-001 Material Weakness Yes E
9401 2023-002 Significant Deficiency - L
585842 2023-001 Material Weakness Yes E
585843 2023-002 Significant Deficiency - L

Programs

ALN Program Spent Major Findings
14.134 Mortgage Insurance_rental Housing $630,268 Yes 2
14.195 Section 8 Housing Assistance Payments Program $124,896 - 0

Contacts

Name Title Type
HLA9ZNET3KF3 Kathleen Broadhurst Auditee
5416861262 Kari Young Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Basis of Presentation The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of DH, Incorporated (DHI) under programs of the federal government for the year ended June 30, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of DHI, it is not intended to and does not present the financial position, changes in net assets, or cash flows of DHI. 2. Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. DHI has a mortgage insured by the United States Department of Housing and Urban Development (HUD) under the HUD Section 223(f) insured mortgage program under Section 207 of the National Affordable Housing Act, as amended. There are continuing compliance requirements associated with the insured mortgage. Determination of the amount of federal awards expended for the HUD Section 223(f) insured mortgage is based on the balance of the mortgage at the beginning of the fiscal year ended June 30, 2023 in accordance with the Uniform Guidance. There were no additions to the mortgage during the fiscal year ended June 30, 2023. The outstanding balance of the HUD insured mortgage at June 30, 2023 was $619,016. De Minimis Rate Used: Y Rate Explanation: DHI has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the agreements with HUD do not include indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of DH, Incorporated (DHI) under programs of the federal government for the year ended June 30, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of DHI, it is not intended to and does not present the financial position, changes in net assets, or cash flows of DHI.
Title: Summary of Significant Accounting Policies Accounting Policies: Basis of Presentation The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of DH, Incorporated (DHI) under programs of the federal government for the year ended June 30, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of DHI, it is not intended to and does not present the financial position, changes in net assets, or cash flows of DHI. 2. Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. DHI has a mortgage insured by the United States Department of Housing and Urban Development (HUD) under the HUD Section 223(f) insured mortgage program under Section 207 of the National Affordable Housing Act, as amended. There are continuing compliance requirements associated with the insured mortgage. Determination of the amount of federal awards expended for the HUD Section 223(f) insured mortgage is based on the balance of the mortgage at the beginning of the fiscal year ended June 30, 2023 in accordance with the Uniform Guidance. There were no additions to the mortgage during the fiscal year ended June 30, 2023. The outstanding balance of the HUD insured mortgage at June 30, 2023 was $619,016. De Minimis Rate Used: Y Rate Explanation: DHI has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the agreements with HUD do not include indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. DHI has a mortgage insured by the United States Department of Housing and Urban Development (HUD) under the HUD Section 223(f) insured mortgage program under Section 207 of the National Affordable Housing Act, as amended. There are continuing compliance requirements associated with the insured mortgage. Determination of the amount of federal awards expended for the HUD Section 223(f) insured mortgage is based on the balance of the mortgage at the beginning of the fiscal year ended June 30, 2023 in accordance with the Uniform Guidance. There were no additions to the mortgage during the fiscal year ended June 30, 2023. The outstanding balance of the HUD insured mortgage at June 30, 2023 was $619,016. DHI has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the agreements with HUD do not include indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023.
Title: Subrecipients Accounting Policies: Basis of Presentation The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of DH, Incorporated (DHI) under programs of the federal government for the year ended June 30, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of DHI, it is not intended to and does not present the financial position, changes in net assets, or cash flows of DHI. 2. Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. DHI has a mortgage insured by the United States Department of Housing and Urban Development (HUD) under the HUD Section 223(f) insured mortgage program under Section 207 of the National Affordable Housing Act, as amended. There are continuing compliance requirements associated with the insured mortgage. Determination of the amount of federal awards expended for the HUD Section 223(f) insured mortgage is based on the balance of the mortgage at the beginning of the fiscal year ended June 30, 2023 in accordance with the Uniform Guidance. There were no additions to the mortgage during the fiscal year ended June 30, 2023. The outstanding balance of the HUD insured mortgage at June 30, 2023 was $619,016. De Minimis Rate Used: Y Rate Explanation: DHI has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the agreements with HUD do not include indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023. There were no federal awards passed through to subrecipients.

Finding Details

Finding 2023-001
Finding 2023-001 Type of Finding: Material weakness in internal control over compliance and noncompliance. Federal program: HUD Section 223(f) Insured Mortgage (Assistance Listing #14.134) Compliance Requirement: Eligibility Criteria: In accordance with DH, Incorporated’s regulatory agreement with HUD for its HUD Section 223(f) Insured Mortgage and HUD Section 8 Housing Assistance Payments contract, DH, Incorporated is required to annually recertify its tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Additionally, HUD requires minimum security deposits of $50 to be collected for all tenants. Condition: DH, Incorporated did not perform recertifications for all tenants within the timeframe specified by HUD. Additionally, we noted security deposits were not collected from several tenants. We also noted a calculation error for one of the tenants’ adjusted income and tenant portion of rent and rent assistance. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed accurately and in the timeframe required by HUD and to ensure security deposits were collected as required. Effect: The effect is material non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2022-002. Context: We noted from review of the Forms HUD-52670 Schedule of Tenant Assistance Payments Due and other client prepared schedules, several tenants had not been recertified during the fiscal year as required. From the total 19 tenants at June 30, 2023, the annual recertifications for twelve tenants were past due. We selected a sample of 6 tenants from a population of 19 for eligibility testing. The sample was not a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. We noted 1 instance in our sample in which the tenant recertification had not been completed timely. As noted above, there were also indications of additional late tenant recertifications for tenants that fell outside of our sample. From our sample of 6 tenants, we noted one instance in which there was an error in the calculation of tenant adjusted income and therefore the tenant portion of rent. There was a transposition in the income amount used in the calculation from the actual income resulting in a minor error in the amount of tenant adjusted income, tenant portion of rent and rent assistance. We also noted from the total 19 tenants, there were 5 tenants that did not have security deposits collected as required. Recommendation: We recommend management review the current internal control procedures and implement additional procedures to ensure annual recertifications are performed as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2023-002
Finding 2023-002 Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Program: HUD Section 223(f) Insured Mortgage (Assistance Listing # 14.134) Compliance Requirement: Reporting Criteria: DHI’s regulatory agreement with HUD and the HUD Uniform Financial Reporting Standards (24 CFR §5.801) require audited financial statements to be submitted to HUD within 90 days of the fiscal year end. HUD may authorize an extension to the 90 day due date. Condition: The annual audit for the fiscal year ended June 30, 2022 was not submitted by the due date as required by HUD. Cause: The audit was not completed within the applicable time frame, so it was not available to be submitted to HUD by the due date. Effect: The effect is immaterial non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: No. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure the audit is completed timely and submitted to HUD as required. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2023-001
Finding 2023-001 Type of Finding: Material weakness in internal control over compliance and noncompliance. Federal program: HUD Section 223(f) Insured Mortgage (Assistance Listing #14.134) Compliance Requirement: Eligibility Criteria: In accordance with DH, Incorporated’s regulatory agreement with HUD for its HUD Section 223(f) Insured Mortgage and HUD Section 8 Housing Assistance Payments contract, DH, Incorporated is required to annually recertify its tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Additionally, HUD requires minimum security deposits of $50 to be collected for all tenants. Condition: DH, Incorporated did not perform recertifications for all tenants within the timeframe specified by HUD. Additionally, we noted security deposits were not collected from several tenants. We also noted a calculation error for one of the tenants’ adjusted income and tenant portion of rent and rent assistance. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed accurately and in the timeframe required by HUD and to ensure security deposits were collected as required. Effect: The effect is material non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2022-002. Context: We noted from review of the Forms HUD-52670 Schedule of Tenant Assistance Payments Due and other client prepared schedules, several tenants had not been recertified during the fiscal year as required. From the total 19 tenants at June 30, 2023, the annual recertifications for twelve tenants were past due. We selected a sample of 6 tenants from a population of 19 for eligibility testing. The sample was not a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. We noted 1 instance in our sample in which the tenant recertification had not been completed timely. As noted above, there were also indications of additional late tenant recertifications for tenants that fell outside of our sample. From our sample of 6 tenants, we noted one instance in which there was an error in the calculation of tenant adjusted income and therefore the tenant portion of rent. There was a transposition in the income amount used in the calculation from the actual income resulting in a minor error in the amount of tenant adjusted income, tenant portion of rent and rent assistance. We also noted from the total 19 tenants, there were 5 tenants that did not have security deposits collected as required. Recommendation: We recommend management review the current internal control procedures and implement additional procedures to ensure annual recertifications are performed as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2023-002
Finding 2023-002 Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Program: HUD Section 223(f) Insured Mortgage (Assistance Listing # 14.134) Compliance Requirement: Reporting Criteria: DHI’s regulatory agreement with HUD and the HUD Uniform Financial Reporting Standards (24 CFR §5.801) require audited financial statements to be submitted to HUD within 90 days of the fiscal year end. HUD may authorize an extension to the 90 day due date. Condition: The annual audit for the fiscal year ended June 30, 2022 was not submitted by the due date as required by HUD. Cause: The audit was not completed within the applicable time frame, so it was not available to be submitted to HUD by the due date. Effect: The effect is immaterial non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: No. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure the audit is completed timely and submitted to HUD as required. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.