Audit 258341

FY End

2022-12-31

Total Expended

$17.11M

Findings

4

Programs

3

Organization: Mi Residential Community, Inc. 023-11147 (MA)

Year: 2022 Accepted: 2023-04-10

Auditor: Anstiss & CO PC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
247638	2022-001	Significant Deficiency	-	E
247639	2022-002	Significant Deficiency	-	N
824080	2022-001	Significant Deficiency	-	E
824081	2022-002	Significant Deficiency	-	N

ALN	Program	Spent	Major	Findings
14.129	Mortgage Insurance_nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities	$7.28M	Yes	0
14.314	Assisted Living Conversion for Eligible Multifamily Housing Projects	$6.05M	-	0
14.195	Section 8 Housing Assistance Payments Program	$3.79M	Yes	2

Contacts

Name	Title	Type
SYULGJLL2NT1	Fredericka Baker	Auditee
9786201446	Brendan E. Toolin Iii, CPA	Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan guarantee outstanding balances Accounting Policies: Note 1 - General - The schedule of expenditures of federal awards presents the activity of all federal financial assistance programs of MI Residential Community, Inc., (Community) HUD Project Nos. 023-11477. Financial assistance received directly from federal agencies is included on the schedule. Note 2 - Basis of Presentation - The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of MI Residential Community, Inc. under programs of the federal government for the year ended December 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 MI Residential Community, it is not intended to and does not present the financial position, changes in net assets, or cash flows of MI Residential Community. Note 3 - 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: The Community has not elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance as the Community does not receive reimbursement for indirect costs incurred. MORTGAGE INSURANCE_NURSING HOMES, INTERMEDIATE CARE FACILITIES, BOARD AND CARE HOMES AND ASSISTED LIVING FACILITIES (14.129) - Balances outstanding at the end of the audit period were $7,159,514.

Finding Details

Finding 2022-001

Criteria: Organizations operating the Section 8 Housing Assistance Payment Program are required to maintain sufficient internal controls to ensure compliance with eligibility requirement. Condition: 1) 1 of the 40 tenants selected for testing had an incorrect amount reported for social security income on Form HUD-50059. 2) 1 of the 40 tenants selected for testing had an amount reporting for medical expenses on Form HUD-50059 that was not supported by documentation in the tenant?s file. Cause: Procedures to ensure that the required information and documentation were obtained and maintained did not exist. Effect: The housing assistance payments and tenant payments may potentially be incorrect. Auditor's Recommendation: We recommend that an internal control procedure be implemented to ensure that all HUD-50059 forms are completed accurately and all required information is obtained and maintained within the tenant files. Views of Responsible Officials and Planned Corrective Action: 1) Management will meet with the tenant to properly investigate causation for the finding noted above. Pending the outcome of the investigation, Management will correct the July 2022 Annual Certification with the expectation of correcting the income used to tabulate the tenant?s level of rental assistance, the tenant will not be charged for the error, and HUD will be reimbursed for subsidy accordingly. 2) Management removed the active medical expense from the expense tab on the management software. The medical expenses do not impact the level of rental assistance since the amount did not exceed 3 percent of the tenant?s household income. Nevertheless, Management reclassified the medical expense as inactive to ensure the medical expense is not part of the future certifications.

Finding 2022-002

Criteria: Housing quality inspections must be performed at the time of initial occupancy and at least annually thereafter to assure that the units are decent, safe, and sanitary. Condition: 2 of the 40 units selected for testing did not have annual housing quality inspections completed within one year of the previous inspection. Cause: Procedures to ensure that the required annual housing inspections were performed within one year of the previous inspection did not exist. Effect: Housing could potentially not meet the requirement that it be decent, safe, and sanitary. Auditor's Recommendation: We recommend that an internal control procedure be implemented to ensure that the required annual housing inspections are performed within one year of the previous inspection and that the inspection reports are being maintained within the tenant files. View of Responsible Officials and Planned Corrective Action: Management will continue to work tenaciously to comply with "performing unit inspections on at lease an annual basis to determine whether the applicants and equipment in the unit are functioning properly and to assess whether a component needs to be repaired or replaced.? [HUD Occupancy Handbook, 4350.3 rev-1, Chapter 6 Lease Requirement and Leasing Activities, Section 6-29, Unit Inspection, Paragraph 3].

Finding 2022-001

Criteria: Organizations operating the Section 8 Housing Assistance Payment Program are required to maintain sufficient internal controls to ensure compliance with eligibility requirement. Condition: 1) 1 of the 40 tenants selected for testing had an incorrect amount reported for social security income on Form HUD-50059. 2) 1 of the 40 tenants selected for testing had an amount reporting for medical expenses on Form HUD-50059 that was not supported by documentation in the tenant?s file. Cause: Procedures to ensure that the required information and documentation were obtained and maintained did not exist. Effect: The housing assistance payments and tenant payments may potentially be incorrect. Auditor's Recommendation: We recommend that an internal control procedure be implemented to ensure that all HUD-50059 forms are completed accurately and all required information is obtained and maintained within the tenant files. Views of Responsible Officials and Planned Corrective Action: 1) Management will meet with the tenant to properly investigate causation for the finding noted above. Pending the outcome of the investigation, Management will correct the July 2022 Annual Certification with the expectation of correcting the income used to tabulate the tenant?s level of rental assistance, the tenant will not be charged for the error, and HUD will be reimbursed for subsidy accordingly. 2) Management removed the active medical expense from the expense tab on the management software. The medical expenses do not impact the level of rental assistance since the amount did not exceed 3 percent of the tenant?s household income. Nevertheless, Management reclassified the medical expense as inactive to ensure the medical expense is not part of the future certifications.

Finding 2022-002

Criteria: Housing quality inspections must be performed at the time of initial occupancy and at least annually thereafter to assure that the units are decent, safe, and sanitary. Condition: 2 of the 40 units selected for testing did not have annual housing quality inspections completed within one year of the previous inspection. Cause: Procedures to ensure that the required annual housing inspections were performed within one year of the previous inspection did not exist. Effect: Housing could potentially not meet the requirement that it be decent, safe, and sanitary. Auditor's Recommendation: We recommend that an internal control procedure be implemented to ensure that the required annual housing inspections are performed within one year of the previous inspection and that the inspection reports are being maintained within the tenant files. View of Responsible Officials and Planned Corrective Action: Management will continue to work tenaciously to comply with "performing unit inspections on at lease an annual basis to determine whether the applicants and equipment in the unit are functioning properly and to assess whether a component needs to be repaired or replaced.? [HUD Occupancy Handbook, 4350.3 rev-1, Chapter 6 Lease Requirement and Leasing Activities, Section 6-29, Unit Inspection, Paragraph 3].