Audit 293195

FY End

2023-06-30

Total Expended

$1.44M

Findings

2

Programs

3

Organization: Highland Area Non-Profit Housing Corporation (MI)

Year: 2023 Accepted: 2024-03-01

Auditor: Rehmann Robson LLC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
371927	2023-001	Significant Deficiency	-	N
948369	2023-001	Significant Deficiency	-	N

ALN	Program	Spent	Major	Findings
14.157	Supportive Housing for the Elderly	$1.15M	Yes	1
14.195	Section 8 Housing Assistance Payments Program	$265,098	Yes	0
14.191	Multifamily Housing Service Coordinators	$20,902	-	0

Contacts

Name	Title	Type
CNLJN6KAFZ91	David Defrain	Auditee
7343431312	Justin Masters	Auditor
No contacts on file

Notes to SEFA

Title: Note 3. Pass-Through Agency Accounting Policies: The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal grant activity of Highland Area Non-Profit Housing Corporation (the "Project") under programs of the federal government for the year ended June 30, 2023. 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 the Project, it is not intended to and does not present the net assets, changes in net assets or cash flows of the Project. 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 or other applicable guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: For purposes of charging indirect costs to federal awards, the Project has not elected to use the 10 percent de minimis cost rate as permitted by §200.414 of the Uniform Guidance. The Project receives Section 8 Housing Assistance Payments as a subaward from the Michigan State Housing Development Authority ("MSHDA").

Title: Note 4. Loan Program - Supportive Housing for the Elderly (ALN 14.157) Accounting Policies: The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal grant activity of Highland Area Non-Profit Housing Corporation (the "Project") under programs of the federal government for the year ended June 30, 2023. 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 the Project, it is not intended to and does not present the net assets, changes in net assets or cash flows of the Project. 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 or other applicable guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: For purposes of charging indirect costs to federal awards, the Project has not elected to use the 10 percent de minimis cost rate as permitted by §200.414 of the Uniform Guidance. The Project has an outstanding loan that is guaranteed by the U.S. Department of Housing and Urban Development. As of June 30, 2023, the outstanding balance on the loan was $1,108,837, and is presented on the statement of financial position net of the related deferred financing costs.

Finding Details

Finding 2023-001

2023-001 – Timely Payment of Mortgage Balance Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development · Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for making timely payments to its mortgage payable, which is insured by HUD. Condition. Out of 12 monthly payments on the Project's HUD insured mortgage payable, that are due each fiscal year, 1 payment was late, resulting in a late fee. Cause. Management does not appear to have sufficient internal control procedures in place to properly implement all of HUD's program requirements. Effect. As a result of this condition, the mortgage was not paid on time. While there was ultimately payment of the delinquent monthly balance, the lack of effective internal controls could lead to future significant noncompliance. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management should strengthen their current policies and follow a documented process for ensuring that monthly mortgage payments are made timely. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

Finding 2023-001

2023-001 – Timely Payment of Mortgage Balance Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development · Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for making timely payments to its mortgage payable, which is insured by HUD. Condition. Out of 12 monthly payments on the Project's HUD insured mortgage payable, that are due each fiscal year, 1 payment was late, resulting in a late fee. Cause. Management does not appear to have sufficient internal control procedures in place to properly implement all of HUD's program requirements. Effect. As a result of this condition, the mortgage was not paid on time. While there was ultimately payment of the delinquent monthly balance, the lack of effective internal controls could lead to future significant noncompliance. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management should strengthen their current policies and follow a documented process for ensuring that monthly mortgage payments are made timely. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.