Audit 303856

Financial Management System- (Material Weakness) Cluster: Not applicable Sponsoring Agency U.S. Department of Housing and Urban Development Award Name Home Investment Partnerships Program Award Number Not applicable Assisting Listing Number 14.239 Award Year FY 2002 Pass-through entity Not applicable Criteria: According to 2 CFR 200.302, the financial management system of each non-Federal entity must provide records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Condition: Statement of financial position transactions were not allocated properly to programs/properties funded with federal funds. Cause: Due to a human error of individuals who were handling the accounting entries, some of transactions were not accurately allocated to the correct programs/properties. Effect: Improper allocation of transactions among various programs/properties could lead to comingling of funds from different projects. This could result in unallowable cost or in allowable cost charged simultaneously to two different programs/properties. Questioned Cost: None noted Recommendation: Establish an internal control procedures in place that provide for separate accountability for projects by allocating transactions properly and producing accurate financial reports for each federally funded programs/properties. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.

Completeness and accuracy of Schedule of Expenditures of Federal Awards (SEFA)- (Significant Deficiency) Cluster: Not applicable Sponsoring Agency U.S. Department of Housing and Urban Development Award Name Home Investment Partnerships Program Award Number Not applicable Assisting Listing Number 14.239 Award Year FY 2002 Pass-through entity Not applicable Criteria: 2 CFR 200.510 Financial statements requires auditees to prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. The information presented should be consistent with the accounting records and other federal guidance. Condition: Not all federal expenditures were included on SEFA. Through our discussions with management, we identified federal expenditures that were excluded from SEFA. Cause The COVID-19 pandemic resulted in the receipt and expenditure of additional federal funds. There was a limited information regarding new awards and reliance on the prior year information. Effect A SEFA that is not complete and accurate could impact the scoping of an entity’s major programs and result in incomplete information being provided to the federal government.. Questioned Cost: None noted Recommendation: Review all grant agreements. Develop checklist of anticipated awards in advance of the year and also complete an interim SEFA to identify inconsistencies earlier in the fiscal year. We recommend a formal review of final year-end SEFA for completeness and accuracy evidenced by a formal sign-off/approval. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.

Data Collection Form (Form SF-SAC) Cluster: Not applicable Sponsoring Agency U.S. Department of Housing and Urban Development Award Name Home Investment Partnerships Program Award Number Not applicable Assisting Listing Number 14.239 Award Year FY 2002 Pass-through entity Not applicable Criteria: According to 45 CFR 75.512, the audit must be completed and the data collection form (Form SF-SAC) must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. Condition: The CDP failed to submit to FAC the data collection form. Cause: The CDP failed to acquire the annual audit in a timely fashion resulting in a failure to file the data collection form. Effect: Failure to file data collection form could result in withholding of federal funds and jeopardize CDP's eligibility for federal awards. Recommendation: Management needs to ensure the CDP can produce accurate and complete annual financial statements to ensure efficient audit process. Incomplete financial records will lead to increased testing which may result in delay of filing the data collection form. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.

Separate accounting records for housing project operations - (Material Weakness) Criteria: According to 7 CFR 3560.302, borrowers must establish accounting and financial management procedures necessary to conduct housing project operations in a financially safe and sound manner. Borrowers must maintain records in a manner suitable for an audit, and must be able to report accurate operational results to the Rural Development (RD) from these accounts and records. Condition: The CDP accounting software is not set up to separate transactions for its RD project (Fred Bell Way) and to produce a separate statement of financial position and a general ledger. Cause: The CDP changed its accounting software and merge various accounts during the transition which made it difficult to separate projects' activities and financial records. Effect: Lack of accounting system that segregates and tracks funds for projects allows for comingling of funds from different projects Questioned Cost: None noted Recommendation: Establish an accounting system that provides for separate accountability for projects by segregating and tracking projects funds separately and producing separate financial records for each project. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost

Annual Financial Reports Criteria: According to 7 CFR 3560.308, to ensure that the project is in sound financial condition and is complying with the program financial management requirements, the RD requires annual financial reports to be submitted by each borrower. Condition: The required financial reports and forms for Fred Bell Way were not submitted to the RD. Cause: The CDP staff was not aware of and did not follow the guidelines for annual reporting. Effect: Failure to file annual reports to RD could result in the loss or withholding of rental assistance funds thereby putting a financial strain on the project. Questioned Cost: None noted Recommendation: Establish an understanding and initiate the requirements of the management and reporting of RD funds. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.

Financial Management System- (Material Weakness) Cluster: Not applicable Sponsoring Agency U.S. Department of Housing and Urban Development Award Name Home Investment Partnerships Program Award Number Not applicable Assisting Listing Number 14.239 Award Year FY 2002 Pass-through entity Not applicable Criteria: According to 2 CFR 200.302, the financial management system of each non-Federal entity must provide records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Condition: Statement of financial position transactions were not allocated properly to programs/properties funded with federal funds. Cause: Due to a human error of individuals who were handling the accounting entries, some of transactions were not accurately allocated to the correct programs/properties. Effect: Improper allocation of transactions among various programs/properties could lead to comingling of funds from different projects. This could result in unallowable cost or in allowable cost charged simultaneously to two different programs/properties. Questioned Cost: None noted Recommendation: Establish an internal control procedures in place that provide for separate accountability for projects by allocating transactions properly and producing accurate financial reports for each federally funded programs/properties. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.

Completeness and accuracy of Schedule of Expenditures of Federal Awards (SEFA)- (Significant Deficiency) Cluster: Not applicable Sponsoring Agency U.S. Department of Housing and Urban Development Award Name Home Investment Partnerships Program Award Number Not applicable Assisting Listing Number 14.239 Award Year FY 2002 Pass-through entity Not applicable Criteria: 2 CFR 200.510 Financial statements requires auditees to prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. The information presented should be consistent with the accounting records and other federal guidance. Condition: Not all federal expenditures were included on SEFA. Through our discussions with management, we identified federal expenditures that were excluded from SEFA. Cause The COVID-19 pandemic resulted in the receipt and expenditure of additional federal funds. There was a limited information regarding new awards and reliance on the prior year information. Effect A SEFA that is not complete and accurate could impact the scoping of an entity’s major programs and result in incomplete information being provided to the federal government.. Questioned Cost: None noted Recommendation: Review all grant agreements. Develop checklist of anticipated awards in advance of the year and also complete an interim SEFA to identify inconsistencies earlier in the fiscal year. We recommend a formal review of final year-end SEFA for completeness and accuracy evidenced by a formal sign-off/approval. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.

Data Collection Form (Form SF-SAC) Cluster: Not applicable Sponsoring Agency U.S. Department of Housing and Urban Development Award Name Home Investment Partnerships Program Award Number Not applicable Assisting Listing Number 14.239 Award Year FY 2002 Pass-through entity Not applicable Criteria: According to 45 CFR 75.512, the audit must be completed and the data collection form (Form SF-SAC) must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. Condition: The CDP failed to submit to FAC the data collection form. Cause: The CDP failed to acquire the annual audit in a timely fashion resulting in a failure to file the data collection form. Effect: Failure to file data collection form could result in withholding of federal funds and jeopardize CDP's eligibility for federal awards. Recommendation: Management needs to ensure the CDP can produce accurate and complete annual financial statements to ensure efficient audit process. Incomplete financial records will lead to increased testing which may result in delay of filing the data collection form. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.

Separate accounting records for housing project operations - (Material Weakness) Criteria: According to 7 CFR 3560.302, borrowers must establish accounting and financial management procedures necessary to conduct housing project operations in a financially safe and sound manner. Borrowers must maintain records in a manner suitable for an audit, and must be able to report accurate operational results to the Rural Development (RD) from these accounts and records. Condition: The CDP accounting software is not set up to separate transactions for its RD project (Fred Bell Way) and to produce a separate statement of financial position and a general ledger. Cause: The CDP changed its accounting software and merge various accounts during the transition which made it difficult to separate projects' activities and financial records. Effect: Lack of accounting system that segregates and tracks funds for projects allows for comingling of funds from different projects Questioned Cost: None noted Recommendation: Establish an accounting system that provides for separate accountability for projects by segregating and tracking projects funds separately and producing separate financial records for each project. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost

Annual Financial Reports Criteria: According to 7 CFR 3560.308, to ensure that the project is in sound financial condition and is complying with the program financial management requirements, the RD requires annual financial reports to be submitted by each borrower. Condition: The required financial reports and forms for Fred Bell Way were not submitted to the RD. Cause: The CDP staff was not aware of and did not follow the guidelines for annual reporting. Effect: Failure to file annual reports to RD could result in the loss or withholding of rental assistance funds thereby putting a financial strain on the project. Questioned Cost: None noted Recommendation: Establish an understanding and initiate the requirements of the management and reporting of RD funds. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.