FAC Explorer

Audit 28946

FY End
2022-12-31
Total Expended
$4.87M
Findings
4
Programs
1
Organization: Farrell-Bell Senior Housing Apartments, Inc. 073-Ee119 (IN)
Year: 2022 Accepted: 2023-05-30
Auditor: Agresta Storms & O'Leary PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
29169 2022-001 - - N
29170 2022-002 - Yes N
605611 2022-001 - - N
605612 2022-002 - Yes N

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $237,671 - 0

Contacts

Name Title Type
FCBBXFGR5A37 Lodeana Lumpkins Auditee
3172818794 Dominic Agresta Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan guarantee outstanding balances Accounting Policies: 1. BASIS OF PRESENTATIONThe accompanying schedule of expenditures of federal awards includes the federal grant activity ofFarrell-Bell Senior Housing Apartments, Inc., HUD Project No. 073-EE119, and is presented on theaccrual basis of accounting. The information in this schedule is presented in accordance with therequirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).Therefore, some amounts presented in this schedule may differ from amounts presented in, or used inthe preparation of, the basic financial statements.RECOGNITION OF RENTAL REVENUEResidents in this facility are billed a monthly rental charge. These charges are recognized as incomewhen earned. Revenue is recorded for each month a housing unit is available for occupancy. Amountsattributable to employee housing units and vacancies are charged to the appropriate accounts inaccordance with HUD provisions.The Corporation also receives housing assistance payments from HUD which are also recognized asincome when earned. Rental income from the PRAC agreement (including special claims) totaled$237,671, or 65% of net rental revenue, for the year ended December 31, 2022. De Minimis Rate Used: N Rate Explanation: DE MINIMIS COST RATEThe Corporation does not utilize the 10% de minimis cost rate because the guidance under Part 200.414Indirect Costs does not apply. 2. CAPITAL ADVANCEThe Corporation has entered into a Capital Advance Program Mortgage Note (the Note) for a capitaladvance not to exceed $5,182,600. The note bears no interest, and repayment is not required as long asthe housing project remains available for very low-income elderly persons, in accordance with Section202 of the National Affordable Housing Act of 1990 and the Project Rental Assistance Contract and isoperated in accordance with the regulatory agreement and HUD regulations. The Note is secured by themortgage upon the land, building and equipment and other amounts held by the Corporation. AtDecember 31, 2022, the balance of the Note was $4,635,400.

Finding Details

Finding 2022-001
Finding No. 2022-001 Statement of Condition: The Corporation failed to make all 12 monthly deposits into the replacement reserve account. The account is underfunded by $2,728 at December 31, 2022. Criteria: The Corporation is required to make monthly deposits to the replacement reserve account in accordance with the regulatory agreement. Questioned Costs: Not applicable Effect: The Corporation is not in compliance with the regulatory agreement. Cause: The Corporation failed to make two months of required monthly deposits to the replacement reserve account due to cash flow issues. Recommendation: The Corporation should deposit the required funds into the replacement reserve account when funds are available. Management Response: Management agrees with the finding. Subsequent to year end, funds were transferred to the reserve account to cover the delinquent deposits.
Finding 2022-002
Finding No. 2022-002 Statement of Condition: The Corporation made an unauthorized withdrawal from the reserve fund. Criteria: The Corporation is required to receive authorization from HUD prior to withdrawing funds from the replacement reserve fund. Questioned Costs: $35,000 Effect: The Corporation was not in compliance with the regulatory agreement. Cause: The Corporation withdrew cash from the reserve fund to pay for operating expenses due to delays in the PRAC being renewed. Recommendation: The Corporation should reimburse the reserve account when funds are available. Management Response: Management agrees with the finding and will reimburse the reserve account when funds are available.
Finding 2022-001
Finding No. 2022-001 Statement of Condition: The Corporation failed to make all 12 monthly deposits into the replacement reserve account. The account is underfunded by $2,728 at December 31, 2022. Criteria: The Corporation is required to make monthly deposits to the replacement reserve account in accordance with the regulatory agreement. Questioned Costs: Not applicable Effect: The Corporation is not in compliance with the regulatory agreement. Cause: The Corporation failed to make two months of required monthly deposits to the replacement reserve account due to cash flow issues. Recommendation: The Corporation should deposit the required funds into the replacement reserve account when funds are available. Management Response: Management agrees with the finding. Subsequent to year end, funds were transferred to the reserve account to cover the delinquent deposits.
Finding 2022-002
Finding No. 2022-002 Statement of Condition: The Corporation made an unauthorized withdrawal from the reserve fund. Criteria: The Corporation is required to receive authorization from HUD prior to withdrawing funds from the replacement reserve fund. Questioned Costs: $35,000 Effect: The Corporation was not in compliance with the regulatory agreement. Cause: The Corporation withdrew cash from the reserve fund to pay for operating expenses due to delays in the PRAC being renewed. Recommendation: The Corporation should reimburse the reserve account when funds are available. Management Response: Management agrees with the finding and will reimburse the reserve account when funds are available.