Audit 26498

FY End

2022-06-30

Total Expended

$1.43M

Findings

4

Programs

1

Organization: Morning Calm Apt (WA)

Year: 2022 Accepted: 2023-03-27

Auditor: Squires Maddux & Company PLLC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
20472	2022-002	-	-	N
20473	2022-003	-	-	N
596914	2022-002	-	-	N
596915	2022-003	-	-	N

ALN	Program	Spent	Major	Findings
14.157	Supportive Housing for the Elderly	$104,749	Yes	0

Contacts

Name	Title	Type
VA5DLTMDADG4	Marc	Auditee
4253393638	John Maddux	Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan guarantee outstanding balances Accounting Policies: NOTE A BASIS OF PRESENTATIONThe preceding schedule of expenditures of federal awards includes the federal grant activity of Morning Calm Apt (formerly Morning Calm, Inc.), HUD Project No. 127-EE017 and 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); the financial statements have been prepared and presented based upon accounting principles generally accepted in the United States of America (US GAAP); therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. Because the Schedule presents only a selected portion of the operations of Morning Calm Apt (formerly Morning Calm, Inc.), it is not intended to and does not present the financial position, change in net assets, or cash flows of Morning Calm Apt.NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESExpenditures reported on the Schedule 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. Morning Calm Apt has elected not to use the ten percent (10%) de Minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Morning Calm Apt has received a U.S. Department of Housing and Urban Development capital advance pursuant to Section 202, of the National Housing Act. The capital advance outstanding at the beginning of the year is included in the federal expenditures presented in the Schedule. Morning Calm Apt received no additional capital advance proceeds during the year. The balance of the capital advance outstanding at June 30, 2022 consisted of: SUPPORTIVE HOUSING FOR THE ELDERLY (14.157) - Balances outstanding at the end of the audit period were 1325200.

Finding Details

Finding 2022-002

S3800-010 Finding Reference Number: 2022-002 S3800-011 Title and Assistance Listing Number of Federal Program: 14.157 Supportive Housing for the Elderly S3800-015 Type of Finding: Federal Program Finding (FP) S3800-016 Finding Resolution Status: IN PROCESS S3800-017 Information on Universe Population Size: N/A - Sampling not performed S3800-018 Sample Size Information: N/A - Sampling not performed S3800-019 Identification of Repeat Finding and Finding Reference Number: N/A S3800-020 Criteria: The HUD regulatory agreement requires monthly deposits to the replacement reserve account of $1,351. S3800-030 Statement of Condition: Management only made nine (9) of the twelve (12) monthly required reserve deposits, leaving the account underfunded by $4,053. S3800-032 Cause: Management has properly designed controls to ensure all monthly deposits are made; however, the control is not functioning as intended. S3800-033 Effect or Potential Effect: The replacement reserve account is underfunded by $4,053. S3800-035 Auditor Non-Compliance Code: N ? Reserve for Replacements S3800-040 Questioned Costs: $4,053 Details ? Questioned Costs by Property S3800-037 FHA/Contract Number: 127-EE017 S3800-038 Questioned Costs: $4,053 S3800-045 Reporting Views of Responsible Officials: Senior management has discussed the deficiency with the Project Accountant and Regional Manager. All future deposits to the replacement reserve will be made as required in the regulatory agreement. S3800-050 Context: See statement of condition. S3800-080 Recommendation: Management should institute a monitoring process to ensure all required monthly deposits to the replacement reserve are made. Such process could include initiating automatic recurring monthly transfers with the financial institution that maintains the replacement reserve account. S3800-090 Auditor?s Summary of the Auditee?s Comments on the Findings and Recommendations: Management agrees with the finding, and has taken corrective actions which include communication with the Project Accountant and Regional Manager. All future deposits the replacement reserve will be made as required in the regulatory agreement. S3800-0130 Response Indicator: Agree (A) S3800-0140 Completion Date: March 24, 2023 S3800-0150 Response: Management agrees with the finding, and has taken corrective actions which include communication with the Project Accountant and Regional Manager. All future deposits the replacement reserve will be made as required in the regulatory agreement.

Finding 2022-003

S3800-010 Finding Reference Number: 2022-003 S3800-011 Title and Assistance Listing Number of Federal Program: 14.157 Supportive Housing for the Elderly S3800-015 Type of Finding: Federal Program Finding (FP) S3800-016 Finding Resolution Status: IN PROCESS S3800-017 Information on Universe Population Size: N/A - Sampling not performed S3800-018 Sample Size Information: N/A - Sampling not performed S3800-019 Identification of Repeat Finding and Finding Reference Number: N/A S3800-020 Criteria: The HUD regulatory agreement requires pre-approval for all withdrawals from the residual receipts account. S3800-030 Statement of Condition: Management made an unauthorized withdrawal of $4,400 from the residual receipts account. S3800-032 Cause: Management received HUD approval to withdraw $5,817 from the replacement reserve account, but mistakenly withdrew funds from the residual receipts account by mistake. S3800-033 Effect or Potential Effect: The residual receipts account is underfunded by $4,400. S3800-035 Auditor Non-Compliance Code: C ? Unauthorized withdrawals from residual receipts account S3800-040 Questioned Costs: $4,400 Details ? Questioned Costs by Property S3800-037 FHA/Contract Number: 127-EE017 S3800-038 Questioned Costs: $4,400 S3800-045 Reporting Views of Responsible Officials: Senior management has discussed the unauthorized transfer with the Project Accountant and will transfer $4,400 from the replacement reserve to the residual receipts reserve. All future withdrawals will be made as directed and approved by HUD. S3800-050 Context: Management received HUD approval to withdraw $5,817 from the replacement reserve account, but mistakenly withdrew funds from the residual receipts account. S3800-080 Recommendation: Management should institute a monitoring process to review approved HUD 9250?s ensuring that all withdrawals are made from the proper account. S3800-090 Auditor?s Summary of the Auditee?s Comments on the Findings and Recommendations: Management agrees with the finding, and has taken corrective actions which include communication with the Project Accountant and Regional Manager about ensuring withdrawals are made from the proper account and will transfer $4,400 from the replacement reserve account to the residual receipts account. S3800-0130 Response Indicator: Agree (A) S3800-0140 Completion Date: March 24, 2023 S3800-0150 Response: Management agrees with the finding and plans to take corrective actions which include communication with the Project Accountant and Regional Manager about withdrawals, and will transfer $4,400 from the replacement reserve account to the residual receipts account.

Finding 2022-002

S3800-010 Finding Reference Number: 2022-002 S3800-011 Title and Assistance Listing Number of Federal Program: 14.157 Supportive Housing for the Elderly S3800-015 Type of Finding: Federal Program Finding (FP) S3800-016 Finding Resolution Status: IN PROCESS S3800-017 Information on Universe Population Size: N/A - Sampling not performed S3800-018 Sample Size Information: N/A - Sampling not performed S3800-019 Identification of Repeat Finding and Finding Reference Number: N/A S3800-020 Criteria: The HUD regulatory agreement requires monthly deposits to the replacement reserve account of $1,351. S3800-030 Statement of Condition: Management only made nine (9) of the twelve (12) monthly required reserve deposits, leaving the account underfunded by $4,053. S3800-032 Cause: Management has properly designed controls to ensure all monthly deposits are made; however, the control is not functioning as intended. S3800-033 Effect or Potential Effect: The replacement reserve account is underfunded by $4,053. S3800-035 Auditor Non-Compliance Code: N ? Reserve for Replacements S3800-040 Questioned Costs: $4,053 Details ? Questioned Costs by Property S3800-037 FHA/Contract Number: 127-EE017 S3800-038 Questioned Costs: $4,053 S3800-045 Reporting Views of Responsible Officials: Senior management has discussed the deficiency with the Project Accountant and Regional Manager. All future deposits to the replacement reserve will be made as required in the regulatory agreement. S3800-050 Context: See statement of condition. S3800-080 Recommendation: Management should institute a monitoring process to ensure all required monthly deposits to the replacement reserve are made. Such process could include initiating automatic recurring monthly transfers with the financial institution that maintains the replacement reserve account. S3800-090 Auditor?s Summary of the Auditee?s Comments on the Findings and Recommendations: Management agrees with the finding, and has taken corrective actions which include communication with the Project Accountant and Regional Manager. All future deposits the replacement reserve will be made as required in the regulatory agreement. S3800-0130 Response Indicator: Agree (A) S3800-0140 Completion Date: March 24, 2023 S3800-0150 Response: Management agrees with the finding, and has taken corrective actions which include communication with the Project Accountant and Regional Manager. All future deposits the replacement reserve will be made as required in the regulatory agreement.

Finding 2022-003

S3800-010 Finding Reference Number: 2022-003 S3800-011 Title and Assistance Listing Number of Federal Program: 14.157 Supportive Housing for the Elderly S3800-015 Type of Finding: Federal Program Finding (FP) S3800-016 Finding Resolution Status: IN PROCESS S3800-017 Information on Universe Population Size: N/A - Sampling not performed S3800-018 Sample Size Information: N/A - Sampling not performed S3800-019 Identification of Repeat Finding and Finding Reference Number: N/A S3800-020 Criteria: The HUD regulatory agreement requires pre-approval for all withdrawals from the residual receipts account. S3800-030 Statement of Condition: Management made an unauthorized withdrawal of $4,400 from the residual receipts account. S3800-032 Cause: Management received HUD approval to withdraw $5,817 from the replacement reserve account, but mistakenly withdrew funds from the residual receipts account by mistake. S3800-033 Effect or Potential Effect: The residual receipts account is underfunded by $4,400. S3800-035 Auditor Non-Compliance Code: C ? Unauthorized withdrawals from residual receipts account S3800-040 Questioned Costs: $4,400 Details ? Questioned Costs by Property S3800-037 FHA/Contract Number: 127-EE017 S3800-038 Questioned Costs: $4,400 S3800-045 Reporting Views of Responsible Officials: Senior management has discussed the unauthorized transfer with the Project Accountant and will transfer $4,400 from the replacement reserve to the residual receipts reserve. All future withdrawals will be made as directed and approved by HUD. S3800-050 Context: Management received HUD approval to withdraw $5,817 from the replacement reserve account, but mistakenly withdrew funds from the residual receipts account. S3800-080 Recommendation: Management should institute a monitoring process to review approved HUD 9250?s ensuring that all withdrawals are made from the proper account. S3800-090 Auditor?s Summary of the Auditee?s Comments on the Findings and Recommendations: Management agrees with the finding, and has taken corrective actions which include communication with the Project Accountant and Regional Manager about ensuring withdrawals are made from the proper account and will transfer $4,400 from the replacement reserve account to the residual receipts account. S3800-0130 Response Indicator: Agree (A) S3800-0140 Completion Date: March 24, 2023 S3800-0150 Response: Management agrees with the finding and plans to take corrective actions which include communication with the Project Accountant and Regional Manager about withdrawals, and will transfer $4,400 from the replacement reserve account to the residual receipts account.