Audit 29207

FY End

2022-12-31

Total Expended

$1.33M

Findings

4

Programs

2

Organization: Fourth Street Housing Development Company 014hh010cany06q901006 (NY)

Year: 2022 Accepted: 2023-03-20

Auditor: Buffamante Whipple Buttafaro PC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
32908	2022-002	Material Weakness	-	P
32909	2022-002	Material Weakness	-	P
609350	2022-002	Material Weakness	-	P
609351	2022-002	Material Weakness	-	P

ALN	Program	Spent	Major	Findings
14.181	U.s. Department of Housing and Urban Development - Section 811 Capital Advance	$1.21M	Yes	1
14.181	U.s. Department of Housing and Urban Development - Section 811 Housing Assistance Payments	$118,546	Yes	1

Contacts

Name	Title	Type
PJZYMA1GTL25	John Barber	Auditee
7166642802	James C. Alexander Iv, CPA	Auditor
No contacts on file

Notes to SEFA

Title: OTHER ASSISTANCE Accounting Policies: Basis of Presentation - The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of Fourth Street Housing Development Company, Inc. Project No. 014-HH010-CA/NY06-Q901-006 and is presented on the accrual basis of accounting. The information in the 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 Fourth Street Housing Development Company, Inc., Project No. 014-HH010-CA/NY06-Q901-006, it is not intended to and does not present the financial position, changes in operations, or cash flows of Fourth Street Housing Development Company, Inc., Project No. 014-HH010-CA/NY06-Q901-006. Summary of Significant Accounting Policies - Expenditures reported on the Schedule of Expenditures of Federal Awards 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 Project has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Fourth Street Housing Development Company, Inc., Project No. 014-HH010-CA/NY06-Q901-006 had a capital advance of $1,211,100 under the Section 811 Capital Advance Program at December 31, 2022. This capital advance is included in the schedule of expenditures of federal awards.

Finding Details

Finding 2022-002

Control Environment and Lack of Segregation of Duties Year ended December 31, 2022 Condition and criteria: The Board of Directors did not meet during the year or provide adequate oversight and review of the Project?s operations and financial activity. An active Board of Directors that meets regularly and reviews operations and financial information is an important component of an Organization?s overall control environment. Also, we noted that during the year the Project underwent a leadership change and as a result one individual is now responsible for carrying out the duties of the Property Manager and the Managing Agent. A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the Project. Cause: The Project is a small entity with limited number of personnel. In addition, the Board of Directors were unable to meet during the year. Effect: A lack of oversight from the governing board and lack of proper segregation of duties increases the exposure to potential risk of error or fraud. Auditor?s Recommendations: We recommend that the Board of Directors become more active in the oversight of the Project. The Board of Directors, should at a minimum, meet at least semi-annually and review monthly or quarterly financial statements of the Project. Also, the Project should consider splitting duties of the Property Manager and the Managing Agent between two individuals. This will mitigate the risk of error or fraud. Agency?s Response: During 2023, the Board of Directors will meet at least annually and designate an individual to perform the duties of the Property Manager separate from the Managing Agent.

Finding 2022-002

Control Environment and Lack of Segregation of Duties Year ended December 31, 2022 Condition and criteria: The Board of Directors did not meet during the year or provide adequate oversight and review of the Project?s operations and financial activity. An active Board of Directors that meets regularly and reviews operations and financial information is an important component of an Organization?s overall control environment. Also, we noted that during the year the Project underwent a leadership change and as a result one individual is now responsible for carrying out the duties of the Property Manager and the Managing Agent. A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the Project. Cause: The Project is a small entity with limited number of personnel. In addition, the Board of Directors were unable to meet during the year. Effect: A lack of oversight from the governing board and lack of proper segregation of duties increases the exposure to potential risk of error or fraud. Auditor?s Recommendations: We recommend that the Board of Directors become more active in the oversight of the Project. The Board of Directors, should at a minimum, meet at least semi-annually and review monthly or quarterly financial statements of the Project. Also, the Project should consider splitting duties of the Property Manager and the Managing Agent between two individuals. This will mitigate the risk of error or fraud. Agency?s Response: During 2023, the Board of Directors will meet at least annually and designate an individual to perform the duties of the Property Manager separate from the Managing Agent.

Finding 2022-002

Control Environment and Lack of Segregation of Duties Year ended December 31, 2022 Condition and criteria: The Board of Directors did not meet during the year or provide adequate oversight and review of the Project?s operations and financial activity. An active Board of Directors that meets regularly and reviews operations and financial information is an important component of an Organization?s overall control environment. Also, we noted that during the year the Project underwent a leadership change and as a result one individual is now responsible for carrying out the duties of the Property Manager and the Managing Agent. A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the Project. Cause: The Project is a small entity with limited number of personnel. In addition, the Board of Directors were unable to meet during the year. Effect: A lack of oversight from the governing board and lack of proper segregation of duties increases the exposure to potential risk of error or fraud. Auditor?s Recommendations: We recommend that the Board of Directors become more active in the oversight of the Project. The Board of Directors, should at a minimum, meet at least semi-annually and review monthly or quarterly financial statements of the Project. Also, the Project should consider splitting duties of the Property Manager and the Managing Agent between two individuals. This will mitigate the risk of error or fraud. Agency?s Response: During 2023, the Board of Directors will meet at least annually and designate an individual to perform the duties of the Property Manager separate from the Managing Agent.

Finding 2022-002

Control Environment and Lack of Segregation of Duties Year ended December 31, 2022 Condition and criteria: The Board of Directors did not meet during the year or provide adequate oversight and review of the Project?s operations and financial activity. An active Board of Directors that meets regularly and reviews operations and financial information is an important component of an Organization?s overall control environment. Also, we noted that during the year the Project underwent a leadership change and as a result one individual is now responsible for carrying out the duties of the Property Manager and the Managing Agent. A fundamental element of an effective internal control system is the proper segregation of duties. Proper segregation of duties provides for a system of checks and balances and entails assigning responsibilities of authorizing and recording transactions among different people in the Project. Cause: The Project is a small entity with limited number of personnel. In addition, the Board of Directors were unable to meet during the year. Effect: A lack of oversight from the governing board and lack of proper segregation of duties increases the exposure to potential risk of error or fraud. Auditor?s Recommendations: We recommend that the Board of Directors become more active in the oversight of the Project. The Board of Directors, should at a minimum, meet at least semi-annually and review monthly or quarterly financial statements of the Project. Also, the Project should consider splitting duties of the Property Manager and the Managing Agent between two individuals. This will mitigate the risk of error or fraud. Agency?s Response: During 2023, the Board of Directors will meet at least annually and designate an individual to perform the duties of the Property Manager separate from the Managing Agent.