Audit 13353

FY End
2023-05-31
Total Expended
$7.76M
Findings
2
Programs
2
Organization: Heights Towers Services Company (TX)
Year: 2023 Accepted: 2024-01-24

Organization Exclusion Status:

Checking exclusion status...

Findings

ID Ref Severity Repeat Requirement
9653 2023-001 - - P
586095 2023-001 - - P

Contacts

Name Title Type
RJ7VQTZ8T2K8 Linda G Holder Auditee
7135269470 Nancy MacK Auditor
No contacts on file

Notes to SEFA

Title: BASIS OF PRESENTATION Accounting Policies: Expenditures reported in 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance The accompanying schedule of expenditures of federal awards includes the federal grant activity of Heights House, HUD No. 114-11440. 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 Heights House, it is not intended to and does not present the financial position, changes in net assets or cash flows of Heights House
Title: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: Expenditures reported in 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance Expenditures reported in 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 reimbursements.
Title: HUD SEC 223(F) MULTI-FAMILY LOAN INSURANCE PROGRAM Accounting Policies: Expenditures reported in 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance The Project refinanced into a HUD insured loan under section 223(f) of the National Housing Act effective February 6, 2018. The balance of the loan at the beginning of the fiscal year reported in the schedule of expenditures of federal awards was $6,602,586. The loan is reported as a liability in the statement of financial position. The balance of the loan as of May 31, 2023 amounts to $6,485,386.
Title: INDIRECT COST RATE Accounting Policies: Expenditures reported in 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance The Project has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance

Finding Details

Findings reference number: 2023-001 Title and AL Number of Federal Program: Section 8 Housing Assistance (AL 14.195) Type of finding: Federal Award. Resolution Status: In progress Population size: N/A Sample size: N/A Repeat finding: No. Criteria: Controls should be in place so that all income, assets, expenses, deductions, family characteristics, and circumstances affecting family eligibility of level of assistance are verified, and tenant rent calculations are reviewed for accuracy. Statement of Condition: During our testing of eligibility, we found that incorrect amounts of tenant income and expenses were used in the computation of tenant rent and HUD assistance in three of the tenants selected for testing. Cause: The move-in certifications are not being thoroughly reviewed for accuracy. Effect: The amounts of tenant rent and HUD assistance may be understated or overstated. Noncompliance code: R Questioned costs: None. Reporting views of officials: Management agrees with the finding. The staff responsible for tenant certification is still being trained. Contract number: 114-11440. Context: The amounts of income and expenses used for calculation of tenant rent and HUD assistance did not match the amounts shown in the source documents provided by the tenant. Recommendation: Management should conduct a complete review of certification of all move-in tenants. Auditors' summary of auditee's comments: They are in agreement, and will conduct a periodic review of certifications. Completion date: 5/31/2024 Response: Management will conduct a review of the tenant rent and HUD assistance for all move-in tenants and prepare recertifications in case of errors. Training and experience will also improve the accuracy of the staff handling tenant certifications.
Findings reference number: 2023-001 Title and AL Number of Federal Program: Section 8 Housing Assistance (AL 14.195) Type of finding: Federal Award. Resolution Status: In progress Population size: N/A Sample size: N/A Repeat finding: No. Criteria: Controls should be in place so that all income, assets, expenses, deductions, family characteristics, and circumstances affecting family eligibility of level of assistance are verified, and tenant rent calculations are reviewed for accuracy. Statement of Condition: During our testing of eligibility, we found that incorrect amounts of tenant income and expenses were used in the computation of tenant rent and HUD assistance in three of the tenants selected for testing. Cause: The move-in certifications are not being thoroughly reviewed for accuracy. Effect: The amounts of tenant rent and HUD assistance may be understated or overstated. Noncompliance code: R Questioned costs: None. Reporting views of officials: Management agrees with the finding. The staff responsible for tenant certification is still being trained. Contract number: 114-11440. Context: The amounts of income and expenses used for calculation of tenant rent and HUD assistance did not match the amounts shown in the source documents provided by the tenant. Recommendation: Management should conduct a complete review of certification of all move-in tenants. Auditors' summary of auditee's comments: They are in agreement, and will conduct a periodic review of certifications. Completion date: 5/31/2024 Response: Management will conduct a review of the tenant rent and HUD assistance for all move-in tenants and prepare recertifications in case of errors. Training and experience will also improve the accuracy of the staff handling tenant certifications.