FAC Explorer

Audit 16810

FY End
2022-07-31
Total Expended
$4.53M
Findings
4
Programs
3
Organization: First Housing Corporation D/b/a Cathedral Manor (CT)
Year: 2022 Accepted: 2023-05-14
Auditor: Cohnreznick LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
12422 2022-001 - Yes N
12423 2022-002 - Yes N
588864 2022-001 - Yes N
588865 2022-002 - Yes N

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $3.68M Yes 2
14.195 Section 8 Housing Assistance Payments Program $821,219 Yes 0
14.870 Resident Opportunity and Supportive Services - Service Coordinators $28,297 - 0

Contacts

Name Title Type
VX7NZ6G7XME6 Kimalee Williams Auditee
8605277600 Patricia E. McGowan Auditor
No contacts on file

Notes to SEFA

Title: U.S. Department of Housing and Urban Development loan program Accounting Policies: The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of First Housing Corporation d/b/a Cathedral Manor, HUD Project No. 017-EH136-A, under programs of the federal government for the year ended July 31, 2022. 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 First Housing Corporation d/b/a Cathedral Manor, it is not intended to and does not present the financial position, changes in net assets, or cash flows of First Housing Corporation d/b/a Cathedral Manor. De Minimis Rate Used: N Rate Explanation: 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. First Housing Corporation d/b/a Cathedral Manor has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. First Housing Corporation d/b/a Cathedral Manor has received U.S. Department of Housing and Urban Development capital advances under Section 201 of the National Housing Act. The balances outstanding at the beginning of the year are included in the federal expenditures presented in the Schedule. First Housing Corporation d/b/a Cathedral Manor received no additional advances during the year. The balance of the outstanding advances at July 31, 2022 consists of the following: Federal Assistance Listing Number: 14.157; Program Name: Supportive Housing for the Elderly; Outstanding balance at July 31, 2022: $3,582,059.
Title: Subrecipients Accounting Policies: The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of First Housing Corporation d/b/a Cathedral Manor, HUD Project No. 017-EH136-A, under programs of the federal government for the year ended July 31, 2022. 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 First Housing Corporation d/b/a Cathedral Manor, it is not intended to and does not present the financial position, changes in net assets, or cash flows of First Housing Corporation d/b/a Cathedral Manor. De Minimis Rate Used: N Rate Explanation: 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. First Housing Corporation d/b/a Cathedral Manor has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. There were no payments to subrecipients in any of the federal awards programs during the year ended July 31, 2022.

Finding Details

Finding 2022-001
Finding No. 2022-001; Federal Assistance Listing Number 14.157, Supportive Housing for the Elderly. Statement of Condition During the years ended July 31, 2019, 2020, 2021 and 2022, management did not make the required residual receipts reserve deposit in the amount of $81,489 within 90 days of year ended July 31, 2018, as required by HUD. The residual receipts amount has not been deposited as of the date of this report. Criteria Residual receipts reserve deposits should be made within 90 days of year end. Questioned Costs None Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement. Context Annual calculation was not prepared by the management agent, and accordingly, the required deposit was not made. The auditor notes that the deposit requirement was calculated with the inclusion of a subsidy receivable due from HUD that was not received until after the 90-day period; however, we also note that at the point in time when the subsidy was received the delinquent deposit should have been made and was not made. Cause Controls were not in place in 2019 to ensure that required residual receipts reserve deposits are made timely. Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. Auditor's Noncompliance Code: B - Failure to make required residual receipts deposits Reporting Views of Responsible Officials The property did not generate any positive operating cash in the 2021-2022 fiscal year and was not able to make the installment payments to the residual receipts. Additionally, there was a substantial increase in property operating expenses. Management is looking for forgiveness of the residual receipts deposit.
Finding 2022-002
Finding No. 2022-002; Federal Assistance Listing Number 14.157, Supportive Housing for the Elderly. Statement of Condition During the years ended July 31, 2019, 2020, 2021 and 2022, management did not repay the loan advanced from the reserve for replacements upon receipt of the Section 8 subsidy that was outstanding at July 31, 2018. The loan in the amount of $19,337 is deemed to be an unauthorized distribution at July 31, 2022. The amount due to the reserve for replacement has not been deposited as of the date of this report. Criteria The terms of the loan from the reserve for replacement required repayment from the proceeds of the Section 8 subsidy. Questioned Costs None Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement. Context HUD approved a loan from the reserve for replacement with the stipulation that the loan is repaid when the delinquent Section 8 subsidy was paid by HUD. Cause Management did not maintain adequate controls in 2019 over the reserve for replacement requirements established with the loan advance to ensure the timely repayment of the loan upon receipt of the delayed Section 8 subsidy. Recommendation Management should establish internal controls and procedures to ensure that required payments are made timely. Auditor's Noncompliance Code: N - Reserve for replacements deposits Reporting Views of Responsible Officials During the 2021-2022 fiscal year, there was no operating surplus cash for the property to be able to make any repayments to the reserve. Additionally, there was a substantial increase in property operating expenses. Management will not be able to repay the funds until the property is in a positive operating cash flow position.
Finding 2022-001
Finding No. 2022-001; Federal Assistance Listing Number 14.157, Supportive Housing for the Elderly. Statement of Condition During the years ended July 31, 2019, 2020, 2021 and 2022, management did not make the required residual receipts reserve deposit in the amount of $81,489 within 90 days of year ended July 31, 2018, as required by HUD. The residual receipts amount has not been deposited as of the date of this report. Criteria Residual receipts reserve deposits should be made within 90 days of year end. Questioned Costs None Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement. Context Annual calculation was not prepared by the management agent, and accordingly, the required deposit was not made. The auditor notes that the deposit requirement was calculated with the inclusion of a subsidy receivable due from HUD that was not received until after the 90-day period; however, we also note that at the point in time when the subsidy was received the delinquent deposit should have been made and was not made. Cause Controls were not in place in 2019 to ensure that required residual receipts reserve deposits are made timely. Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. Auditor's Noncompliance Code: B - Failure to make required residual receipts deposits Reporting Views of Responsible Officials The property did not generate any positive operating cash in the 2021-2022 fiscal year and was not able to make the installment payments to the residual receipts. Additionally, there was a substantial increase in property operating expenses. Management is looking for forgiveness of the residual receipts deposit.
Finding 2022-002
Finding No. 2022-002; Federal Assistance Listing Number 14.157, Supportive Housing for the Elderly. Statement of Condition During the years ended July 31, 2019, 2020, 2021 and 2022, management did not repay the loan advanced from the reserve for replacements upon receipt of the Section 8 subsidy that was outstanding at July 31, 2018. The loan in the amount of $19,337 is deemed to be an unauthorized distribution at July 31, 2022. The amount due to the reserve for replacement has not been deposited as of the date of this report. Criteria The terms of the loan from the reserve for replacement required repayment from the proceeds of the Section 8 subsidy. Questioned Costs None Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement. Context HUD approved a loan from the reserve for replacement with the stipulation that the loan is repaid when the delinquent Section 8 subsidy was paid by HUD. Cause Management did not maintain adequate controls in 2019 over the reserve for replacement requirements established with the loan advance to ensure the timely repayment of the loan upon receipt of the delayed Section 8 subsidy. Recommendation Management should establish internal controls and procedures to ensure that required payments are made timely. Auditor's Noncompliance Code: N - Reserve for replacements deposits Reporting Views of Responsible Officials During the 2021-2022 fiscal year, there was no operating surplus cash for the property to be able to make any repayments to the reserve. Additionally, there was a substantial increase in property operating expenses. Management will not be able to repay the funds until the property is in a positive operating cash flow position.