FAC Explorer

Audit 301749

FY End
2023-10-31
Total Expended
$3.46M
Findings
2
Programs
3
Organization: Lourexis, Inc. (OH)
Year: 2023 Accepted: 2024-04-01
Auditor: Clark Shaefer Hackett

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
391140 2023-001 Material Weakness - N
967582 2023-001 Material Weakness - N

Programs

ALN Program Spent Major Findings
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $2.78M Yes 1
14.195 Section 8 Housing Assistance Payments Program $641,058 - 0
14.191 Multifamily Housing Service Coordinators $42,880 - 0

Contacts

Name Title Type
V1VQZKGW96U8 Eric Benny Auditee
2165201250 Devesh Kamal Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan gaurantee outstanding balances Accounting Policies: Basis of Presentation: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal grant award activity of Lourexis, Inc, HUD Project 042-EH307-WAH-L8, under programs of the federal government for the year ended October 31, 2023. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) 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 Lourexis, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Lourexis, Inc. Significant Accounting Policies: a) 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: Lourexis, Inc. has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. MORTGAGEINSURANCE FOR THE PURPOSE OF REFINANCING EXISTING MULTIFAMILY HOUSING PROJECTS (14.155) - On June 8, 2016, the HUD Section 202 mortgage note was refinanced with a Section 207 note pursuant to 223(f) HUD insured mortgage. The outstanding balance of loan and loan guarantee programs at October 31, 2023 with continuing compliance requirements which are reported as federal expenditures on the accompanying schedule of expenditures of federal awards was $2,718,733.

Finding Details

Finding 2023-001
Criteria: Project funds must be used for the operation of the project, including required insurance coverage, and to make required deposits to replacement reserve and residual receipts accounts (24 CFR section 891.400(e)). Condition: During fiscal year 2023, the management company used operating funds in the amount of $477,645 for purposes unrelated to the Project. The management company returned $190,000 on January 31, 2023; $180,000 on December 19, 2023 to the operating cash account and $99,000 on December 20,2023 to the service coordinator cash account. Remaining $8,640 is included in prepaid expenses as of October 31, 2023. Questioned Costs: $477,645 Cause: Management company’s oversight of Project funds did not ensure compliance with requirements related to the use of Project funds. Effect: The unauthorized use of Project funds by the management company resulted in the Project not to be in full compliance with its Regulatory Agreement regarding use of project funds. Recommendation: Management should enhance its internal controls to ensure Project funds are only used for Project activities and expenses necessary for the ongoing operation and maintenance of the Project. Management Response: See Management’s Corrective Action Plan on page 35.
Finding 2023-001
Criteria: Project funds must be used for the operation of the project, including required insurance coverage, and to make required deposits to replacement reserve and residual receipts accounts (24 CFR section 891.400(e)). Condition: During fiscal year 2023, the management company used operating funds in the amount of $477,645 for purposes unrelated to the Project. The management company returned $190,000 on January 31, 2023; $180,000 on December 19, 2023 to the operating cash account and $99,000 on December 20,2023 to the service coordinator cash account. Remaining $8,640 is included in prepaid expenses as of October 31, 2023. Questioned Costs: $477,645 Cause: Management company’s oversight of Project funds did not ensure compliance with requirements related to the use of Project funds. Effect: The unauthorized use of Project funds by the management company resulted in the Project not to be in full compliance with its Regulatory Agreement regarding use of project funds. Recommendation: Management should enhance its internal controls to ensure Project funds are only used for Project activities and expenses necessary for the ongoing operation and maintenance of the Project. Management Response: See Management’s Corrective Action Plan on page 35.