FAC Explorer

Audit 20879

FY End
2022-06-30
Total Expended
$1.32M
Findings
4
Programs
1
Organization: Mahalo Homes, Inc. (MD)
Year: 2022 Accepted: 2022-10-16
Auditor: Handwerger Cardegna Funkhouser and Lurman P A

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
20610 2022-001 Material Weakness Yes N
20611 2022-002 Material Weakness - N
597052 2022-001 Material Weakness Yes N
597053 2022-002 Material Weakness - N

Programs

ALN Program Spent Major Findings
14.181 Supportive Housing for Persons with Disabilities $1.32M Yes 2

Contacts

Name Title Type
G4MNAMFTLKK4 Patti Appel Auditee
4106536190 Kimberly Mustard 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 Mahalo Homes, Inc., HUD Project No. 052-HD082, under a program of the federal government for the year ended June 30, 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 the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES (14.181) - Balances outstanding at the end of the audit period were 1278500. 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. TheOrganization received no additional loans and made no payments during the year.
Title: PASS THROUGH FUNDS Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal award activity of Mahalo Homes, Inc., HUD Project No. 052-HD082, under a program of the federal government for the year ended June 30, 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 the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. 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 2022-001
S3800-010 Finding Reference Number: 2022-001 S3800-011 Title and CFDA Number of Federal Program: Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-019 Identification of Repeat Finding and Finding Reference Number: 2021-001. S3800-020 Criteria: Project funds must be used for the operation of the Project. S3800-030 Statement of Condition: Project funds were used to pay a related party. The related party, in turn, paid the operating expenses of the Project. S3800-032 Cause: For ease of administration, common vendors were paid by the related party. S3800-033 Effect:The payments made to the related party could be disallowed. S3800-035 Auditor Non-Compliance Code: H - Unauthorized distribution of project assets. S3800-040 Questioned Costs: $40,083 S3800-045 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. S3800-050 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. S3800-080 Recommendation: In conjunction with the Organization's local HUD field office, it was determined that the related party should invoice the entity for project expenses on a monthly basis. In turn, the Organization should pay the invoice amount on a monthly basis. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: The auditors have worked with the auditee in conjunction with their local HUD field office to determine a course of action. All parties were in agreement with the recommendation. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022 S3800-150 Response: The auditee is committed to correcting the finding.
Finding 2022-002
S3800-010 Finding Reference Number: 2022-002 S3800-011 Title and CFDA Number of Federal Program: Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-020 Criteria: Residual receipts balance at year end should be equal to the number of units multiplied by $250. After the overage is calculated, the Organization is to request approval for the withdrawal from HUD. After approval, this overage is to be withdrawn and used to pay the surplus cash note. S3800-030 Statement of Condition: Residual receipts balance is over the calculated compliance amount. S3800-032 Cause: The prior year surplus cash amount was deposited into the residual receipts account and was then given withdrawal approval by HUD. However, the approved amount was never withdrawn from the account to pay the residual receipts note. S3800-033 Effect: Residual receipts balance is over the compliance amount. S3800-035 Auditor Non-Compliance Code: Z S3800-040 Questioned Costs: $14,449 S3800-045 Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations are in the process of being implemented. S3800-050 Context: Review of the residual receipts activity showed that the client had deposited surplus cash money into the account and obtained approval to use said money to pay the residual receipts note. However, at year end the money was never withdrawn from the account. S3800-080 Recommendation: Training of staff should be performed to bring the staff up to date with the implementation of all residual receipts compliance requirements. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: The Organization did not move money from the residual receipts account in order to pay down surplus cash note despite receiving HUD approval. This led to the residual receipts account being greater than its compliance amount. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022
Finding 2022-001
S3800-010 Finding Reference Number: 2022-001 S3800-011 Title and CFDA Number of Federal Program: Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-019 Identification of Repeat Finding and Finding Reference Number: 2021-001. S3800-020 Criteria: Project funds must be used for the operation of the Project. S3800-030 Statement of Condition: Project funds were used to pay a related party. The related party, in turn, paid the operating expenses of the Project. S3800-032 Cause: For ease of administration, common vendors were paid by the related party. S3800-033 Effect:The payments made to the related party could be disallowed. S3800-035 Auditor Non-Compliance Code: H - Unauthorized distribution of project assets. S3800-040 Questioned Costs: $40,083 S3800-045 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. S3800-050 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. S3800-080 Recommendation: In conjunction with the Organization's local HUD field office, it was determined that the related party should invoice the entity for project expenses on a monthly basis. In turn, the Organization should pay the invoice amount on a monthly basis. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: The auditors have worked with the auditee in conjunction with their local HUD field office to determine a course of action. All parties were in agreement with the recommendation. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022 S3800-150 Response: The auditee is committed to correcting the finding.
Finding 2022-002
S3800-010 Finding Reference Number: 2022-002 S3800-011 Title and CFDA Number of Federal Program: Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-020 Criteria: Residual receipts balance at year end should be equal to the number of units multiplied by $250. After the overage is calculated, the Organization is to request approval for the withdrawal from HUD. After approval, this overage is to be withdrawn and used to pay the surplus cash note. S3800-030 Statement of Condition: Residual receipts balance is over the calculated compliance amount. S3800-032 Cause: The prior year surplus cash amount was deposited into the residual receipts account and was then given withdrawal approval by HUD. However, the approved amount was never withdrawn from the account to pay the residual receipts note. S3800-033 Effect: Residual receipts balance is over the compliance amount. S3800-035 Auditor Non-Compliance Code: Z S3800-040 Questioned Costs: $14,449 S3800-045 Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations are in the process of being implemented. S3800-050 Context: Review of the residual receipts activity showed that the client had deposited surplus cash money into the account and obtained approval to use said money to pay the residual receipts note. However, at year end the money was never withdrawn from the account. S3800-080 Recommendation: Training of staff should be performed to bring the staff up to date with the implementation of all residual receipts compliance requirements. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: The Organization did not move money from the residual receipts account in order to pay down surplus cash note despite receiving HUD approval. This led to the residual receipts account being greater than its compliance amount. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022