Audit 16461

FY End

2022-12-31

Total Expended

$1.82M

Findings

4

Programs

2

Organization: Pioneer Housing Development Inc. Dba John Paul Apartments 092-11212 (MN)

Year: 2022 Accepted: 2023-04-24

Auditor: Eide Bailly LLP

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
12241	2022-003	Material Weakness	Yes	I
12242	2022-004	Significant Deficiency	Yes	N
588683	2022-003	Material Weakness	Yes	I
588684	2022-004	Significant Deficiency	Yes	N

ALN	Program	Spent	Major	Findings
14.134	Mortgage Insurance_rental Housing	$1.52M	Yes	2
14.182	Section 8 New Construction and Substantial Rehabilitation	$301,453	-	0

Contacts

Name	Title	Type
J3W5SCFTJ7L3	Brenda Weller	Auditee
3203482337	Mark Dale	Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan guarantee outstanding balances Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal award activity of Pioneer Housing Development, Inc. (the Project), under programs of the Federal Government for the year ended December 31, 2022. The information 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 Project, it is not intended to, and does not present the financial position, changes in net assets, or cash flows of the Project. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in Subpart E Cost Principles of the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Projects summary of significant accounting policies is presented in Note 1 in the Projects basic financial statements. The Project received federal awards directly from federal agencies. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The Project does not draw for administrative costs and has not elected to use the 10% de minimis cost rate. MORTGAGE INSURANCE_RENTAL HOUSING (14.134) - Balances outstanding at the end of the audit period were 1470836.

Finding Details

Finding 2022-003

2022-003 U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.134 Section 207 Insured Loan Balance Procurement, Suspension, and Debarment Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria: The Project must have a written procurement, suspension, and debarment policy. Condition: In our procurement, suspension, and debarment testing, we noted the Project did not have the required policy guidelines in place and did not have proper documentation for the procurement, suspension, and debarment process. Cause: Accounting personnel did not update the policies in place to conform to procurement, suspension, and debarment requirements under the Uniform Guidance. Effect: Lack of a compliance policy could adversely affect the Project?s compliance with Uniform Guidance requirements. Questioned Costs: None noted. Context: All contracts over $10,000 were subject to testing. A total of three purchases were tested for procurement. In addition, one of the three purchases were also subject to suspension and debarment, but there was no documentation that suspension and debarment procedures were performed for this vendor. Repeat Finding from Prior Year: Yes, prior year finding 2021-003. Recommendation: We recommend that the existing policy be updated to include the requirements under Uniform Guidance. Views of Responsible Officials: Management agrees with the finding.

Finding 2022-004

2022-004 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 2021-004. 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.

Finding 2022-003

2022-003 U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.134 Section 207 Insured Loan Balance Procurement, Suspension, and Debarment Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria: The Project must have a written procurement, suspension, and debarment policy. Condition: In our procurement, suspension, and debarment testing, we noted the Project did not have the required policy guidelines in place and did not have proper documentation for the procurement, suspension, and debarment process. Cause: Accounting personnel did not update the policies in place to conform to procurement, suspension, and debarment requirements under the Uniform Guidance. Effect: Lack of a compliance policy could adversely affect the Project?s compliance with Uniform Guidance requirements. Questioned Costs: None noted. Context: All contracts over $10,000 were subject to testing. A total of three purchases were tested for procurement. In addition, one of the three purchases were also subject to suspension and debarment, but there was no documentation that suspension and debarment procedures were performed for this vendor. Repeat Finding from Prior Year: Yes, prior year finding 2021-003. Recommendation: We recommend that the existing policy be updated to include the requirements under Uniform Guidance. Views of Responsible Officials: Management agrees with the finding.

Finding 2022-004

2022-004 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 2021-004. 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.