FAC Explorer

Audit 13303

FY End
2023-06-30
Total Expended
$1.24M
Findings
6
Programs
1
Organization: Kuleana Gardens, Inc. (MD)
Year: 2023 Accepted: 2024-01-24
Auditor: Handwerger Cardegna Funkhouser and Lurman P A

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
9616 2023-001 Material Weakness - N
9617 2023-002 Material Weakness - N
9618 2023-003 - - E
586058 2023-001 Material Weakness - N
586059 2023-002 Material Weakness - N
586060 2023-003 - - E

Programs

ALN Program Spent Major Findings
14.181 Supportive Housing for Persons with Disabilities $44,457 Yes 3

Contacts

Name Title Type
Y876X39NN8C5 Patti Appel Auditee
4104155492 Kimberly Mustard Auditor
No contacts on file

Notes to SEFA

Title: NOTE A - BASIS OF PRESENTATION Accounting Policies: The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations 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 the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. De Minimis Rate Used: N Rate Explanation: The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the “Schedule”), includes the federal award activity of Kuleana Gardens, Inc., HUD Project No. 052-HD086, under a program 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 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 the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization.
Title: NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations 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 the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. De Minimis Rate Used: N Rate Explanation: The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. 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. The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance.
Title: NOTE C - CAPITAL ADVANCE Accounting Policies: The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations 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 the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. De Minimis Rate Used: N Rate Explanation: The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The Organization received a capital advance from the U.S. Department of Housing and Urban Development. The loan balance outstanding at the beginning of the year is included in the federal expenditures in the Schedule. The Organization received no additional loans and made no payments during the year.
Title: NOTE D - PASS-THROUGH FUNDS Accounting Policies: The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations 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 the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. De Minimis Rate Used: N Rate Explanation: The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The Organization has no funds that pass through any other agency or organization.

Finding Details

Finding 2023-001
Statement of Condition: Project funds were used to pay a related party. The related party, in turn, paid the operating expenses of the Project. Cause: For ease of administration, common vendors were paid by the related party. Effect: The payments made to the related party could be disallowed. Auditor Non-Compliance Code: H - Unauthorized distribution of project assets. Questioned Costs: $35,211. Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations, as well as the local HUD field office's recommendations, are in the process of being implemented. Context: Review of the detail in the account provided evidence that project funds were paid to the related party. Personnel were forthcoming with this practice and are in the process of correcting this finding. Recommendation: In conjunction with the Organization's local HUD field office, it was determined that the related party should invoice the Organization for project expenses on a monthly basis. In turn, the Organization should pay the invoice amount on a monthly basis.
Finding 2023-002
Statement of Condition: Residual receipts balance is over the calculated compliance amount. Cause: The prior year surplus cash amount was deposited into the residual receipts account. However, approval was not requested to pay back excess residual receipt note. Effect: Residual receipts balance is over the compliance amount. Auditor Non-Compliance Code: Z. Questioned Costs: $5,753. Reporting View of Responsible Oficials: The Organization agrees with the finding. The auditor's recommendations are in the process of being implemented. Context: Review of the residual receipt activity showed that the client had deposited surplus cash money into the account; however, approval was not sought to pay back excess residual receipts. Recommendation: Training of staff should be performed to bring the staff up to date with the implementation of all residual receipts compliance requirements. Additionally, the Organization should request approval for current overage.
Finding 2023-003
Statement of Condition: Tenant files after October 2022 were missing Form 50059. Cause: The Organization lost access to the federal form writing software and there was a delay getting it corrected due to a change in staffing. Effect: Potential miscalculation of tenant eligibility. Auditor Non-Compliance Code: Z. Questioned Costs: $0. Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations are in the process of being implemented. Context: Review of the tenant files provided evidence that the Form 50059 reports were not being printed and stored in tenant files. Recommendation: Training of staff should be performed to bring the staff up to date with the implementation of all the tenant file compliance requirements.
Finding 2023-001
Statement of Condition: Project funds were used to pay a related party. The related party, in turn, paid the operating expenses of the Project. Cause: For ease of administration, common vendors were paid by the related party. Effect: The payments made to the related party could be disallowed. Auditor Non-Compliance Code: H - Unauthorized distribution of project assets. Questioned Costs: $35,211. Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations, as well as the local HUD field office's recommendations, are in the process of being implemented. Context: Review of the detail in the account provided evidence that project funds were paid to the related party. Personnel were forthcoming with this practice and are in the process of correcting this finding. Recommendation: In conjunction with the Organization's local HUD field office, it was determined that the related party should invoice the Organization for project expenses on a monthly basis. In turn, the Organization should pay the invoice amount on a monthly basis.
Finding 2023-002
Statement of Condition: Residual receipts balance is over the calculated compliance amount. Cause: The prior year surplus cash amount was deposited into the residual receipts account. However, approval was not requested to pay back excess residual receipt note. Effect: Residual receipts balance is over the compliance amount. Auditor Non-Compliance Code: Z. Questioned Costs: $5,753. Reporting View of Responsible Oficials: The Organization agrees with the finding. The auditor's recommendations are in the process of being implemented. Context: Review of the residual receipt activity showed that the client had deposited surplus cash money into the account; however, approval was not sought to pay back excess residual receipts. Recommendation: Training of staff should be performed to bring the staff up to date with the implementation of all residual receipts compliance requirements. Additionally, the Organization should request approval for current overage.
Finding 2023-003
Statement of Condition: Tenant files after October 2022 were missing Form 50059. Cause: The Organization lost access to the federal form writing software and there was a delay getting it corrected due to a change in staffing. Effect: Potential miscalculation of tenant eligibility. Auditor Non-Compliance Code: Z. Questioned Costs: $0. Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations are in the process of being implemented. Context: Review of the tenant files provided evidence that the Form 50059 reports were not being printed and stored in tenant files. Recommendation: Training of staff should be performed to bring the staff up to date with the implementation of all the tenant file compliance requirements.