FAC Explorer

Audit 23412

FY End
2022-12-31
Total Expended
$11.55M
Findings
4
Programs
3
Organization: Palermo Lakes, Inc. (FL)
Year: 2022 Accepted: 2023-06-22
Auditor: Bellows Associates P A

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
22162 2022-001 - - N
22163 2022-002 - Yes N
598604 2022-001 - - N
598605 2022-002 - Yes N

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly - Capital Advance $9.37M Yes 0
14.239 Home Investment Partnerships Program - Home $1.65M - 0
14.157 Supportive Housing for the Elderly - Prac $528,670 Yes 2

Contacts

Name Title Type
LNLDLQ77NNA4 Irene Phillips Auditee
9548359200 Jennifer R. Koffman Auditor
No contacts on file

Notes to SEFA

Title: NOTE C - U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Accounting Policies: NOTE A - BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal award activity of Palermo Lakes, Inc., HUD Project No. 066-EE100, and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title2 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 Palermo Lakes, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Palermo Lakes, Inc. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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: Palermo Lakes, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the UniformGuidance. Palermo Lakes, Inc. has received a HUD capital advance under Section 202 of the National Housing Act and a HOME loan passed through the City of Miami. The outstanding balances of the capital advance and HOME loan at the beginning of the year are included in the federal expenditures presented in the Schedule. The outstanding balances of the capital advance and HOME loan as of December 31, 2022 was $9,372,800 and $1,645,973, respectively.

Finding Details

Finding 2022-001
FINDING No. 2022-001: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Resolved. Information on Universe Population Size: All activity in the replacement reserve account for the year ended December 31, 2022. Sample Size Information: All replacement reserve withdrawals for the year ended December 31, 2022. Identification of Repeat Finding and Finding Reference Number: No. Criteria: In accordance with HUD, the Project should provide a copy of the paid invoices with the HUD-9250 form when requesting reimbursement for completed work. Statement of Condition: The Project withdrew replacement reserve funds twice for the same work that was performed. Cause: Management requested funds for the same work performed using the proposal and then again when the invoice was received. Effect or Potential Effect: The Project misused $1,285 in funds from the replacement reserve account. Auditor Non-Compliance Code: A ? Unauthorized withdrawals from replacement reserve account Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor?s recommendations will be adopted. Recommendation: The Project should return the excess withdrawal to the replacement reserve account. Response Indicator: Agree. Completion Date: 03/16/2023 Response: Management has implemented a 3-step review process for all 9250?s prior to submitting them to HUD. In addition, the duplicated funds have been returned to the replacement reserve account.
Finding 2022-002
FINDING No. 2022-002: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Resolved. Information on Universe Population Size: Total assistance revenue. Sample Size Information: All monthly PRAC requests. Identification of Repeat Finding and Finding Reference Number: Yes, 2021-002. Criteria: As required by HUD regulations, applications for renewal of PRAC contracts must be completed 120 days prior to the PRAC expiration date. Statement of Condition: The Project did not complete the renewal process 120 days prior to the PRAC expiration date. Cause: The Project did not follow HUD regulations for a timely contract renewal resulting in the delay of HUD funding and short-term loans taken from the replacement reserve via HUD approved 9250s. Effect or Potential Effect: The Project is not in compliance with HUD regulations for timely renewal of PRAC contract resulting in delayed receipt of HAP funds. Auditor Non-Compliance Code: R ? Section 8 Program Administration Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor?s recommendations have been adopted. Recommendation: The Project should comply with HUD regulations for timely renewal of the PRAC contract to ensure no interruption in funding. Response Indicator: Agree. Completion Date: 6/8/2022 Response: Compliance Department is now monitoring and tracking PRAC contract renewals for properties. Going forward, reminders and follow-up to deadlines will be conducted to ensure the contract renewal is completed.
Finding 2022-001
FINDING No. 2022-001: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Resolved. Information on Universe Population Size: All activity in the replacement reserve account for the year ended December 31, 2022. Sample Size Information: All replacement reserve withdrawals for the year ended December 31, 2022. Identification of Repeat Finding and Finding Reference Number: No. Criteria: In accordance with HUD, the Project should provide a copy of the paid invoices with the HUD-9250 form when requesting reimbursement for completed work. Statement of Condition: The Project withdrew replacement reserve funds twice for the same work that was performed. Cause: Management requested funds for the same work performed using the proposal and then again when the invoice was received. Effect or Potential Effect: The Project misused $1,285 in funds from the replacement reserve account. Auditor Non-Compliance Code: A ? Unauthorized withdrawals from replacement reserve account Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor?s recommendations will be adopted. Recommendation: The Project should return the excess withdrawal to the replacement reserve account. Response Indicator: Agree. Completion Date: 03/16/2023 Response: Management has implemented a 3-step review process for all 9250?s prior to submitting them to HUD. In addition, the duplicated funds have been returned to the replacement reserve account.
Finding 2022-002
FINDING No. 2022-002: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Resolved. Information on Universe Population Size: Total assistance revenue. Sample Size Information: All monthly PRAC requests. Identification of Repeat Finding and Finding Reference Number: Yes, 2021-002. Criteria: As required by HUD regulations, applications for renewal of PRAC contracts must be completed 120 days prior to the PRAC expiration date. Statement of Condition: The Project did not complete the renewal process 120 days prior to the PRAC expiration date. Cause: The Project did not follow HUD regulations for a timely contract renewal resulting in the delay of HUD funding and short-term loans taken from the replacement reserve via HUD approved 9250s. Effect or Potential Effect: The Project is not in compliance with HUD regulations for timely renewal of PRAC contract resulting in delayed receipt of HAP funds. Auditor Non-Compliance Code: R ? Section 8 Program Administration Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor?s recommendations have been adopted. Recommendation: The Project should comply with HUD regulations for timely renewal of the PRAC contract to ensure no interruption in funding. Response Indicator: Agree. Completion Date: 6/8/2022 Response: Compliance Department is now monitoring and tracking PRAC contract renewals for properties. Going forward, reminders and follow-up to deadlines will be conducted to ensure the contract renewal is completed.