FAC Explorer

Audit 305485

FY End
2023-12-31
Total Expended
$2.16M
Findings
8
Programs
2
Organization: Community Housing, Inc. (OR)
Year: 2023 Accepted: 2024-05-03
Auditor: Cohnreznick LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
395862 2023-001 Significant Deficiency Yes E
395863 2023-002 Significant Deficiency - N
395864 2023-003 Significant Deficiency - N
395865 2023-004 Significant Deficiency - N
972304 2023-001 Significant Deficiency Yes E
972305 2023-002 Significant Deficiency - N
972306 2023-003 Significant Deficiency - N
972307 2023-004 Significant Deficiency - N

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $1.41M Yes 3
14.239 Home Investment Partnerships Program $750,000 Yes 1

Contacts

Name Title Type
L9NEKD325FX5 Tekle Bushen Auditee
5035196012 Karen Smith Auditor
No contacts on file

Notes to SEFA

Title: Note 1 - Basis of presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, the cost principles contained in OMB Circular A122, "Cost Principles for Non-Profit Organizations" and the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Community Housing Inc. has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Auditee did not use the de minimus cost rate. The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of Community Housing, Inc. (the "Company") under programs of the federal government for the year ended December 31, 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 Company, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Company.
Title: Note 2 - Summary of significant accounting policies Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, the cost principles contained in OMB Circular A122, "Cost Principles for Non-Profit Organizations" and the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Community Housing Inc. has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Auditee did not use the de minimus cost rate. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, the cost principles contained in OMB Circular A122, "Cost Principles for Non-Profit Organizations" and the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Community Housing Inc. has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.
Title: Note 3 - U.S. Department of Housing and Urban Development loan program Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, the cost principles contained in OMB Circular A122, "Cost Principles for Non-Profit Organizations" and the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Community Housing Inc. has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Auditee did not use the de minimus cost rate. Community Housing Inc. has received U.S. Department of Housing and Urban Development direct loans under Section 202 of the National Housing Act and the Home Investment Partnership Program. The loan balances outstanding at the beginning of the year are included in the federal expenditures presented in the Schedule. Community Housing Inc. received no additional loans during the year ended December 31, 2023. The balance of the loans outstanding at December 31, 2023 consists of: Federal Assistance Listing Number 14.157 Section 202 Capital Advance Mortgage Program $1,296,900 and Federal Assistance Listing Number 14.239 HOME Investment Partnership Program $750,000 for a total of $2,046,900.

Finding Details

Finding 2023-001
Finding No. 2023-001; Federal Assistance Listing Number 14.157 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted that the use of the HUD Enterprise Income Verification ("EIV") to verify three out of four tenants' income tested, was not performed timely. Cause Management's policies with respect to recertifications and eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect The procedures for determining tenant recertification eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs N/A Context Three out of four tenants' tenants tested did not have the EIV run timely. Identification as a Repeat Finding Yes 2022-001 Recommendation Management should establish procedures and monitor compliance with those procedures to insure that recertifications are performed timely and signed, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: E - Eligibility for Uniform Guidance R - Section 8 Program Compliance Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to complete certifications in a timely manner but due to staffing shortages and tenant noncompliance issues the property continued to have issues with timely completion of income certifications in 2023. As new staff are brought onboard training is provided and annual HUD training is completed by all staff. Additional procedures have been implemented in 2023 to coordinate and provide assistance to on-site staff to ensure that the properties are in compliance.
Finding 2023-002
Finding No. 2023-002; Federal Assistance Listing Number 14.157 Criteria In accordance with Chapter 6 of HUD Handbook 4350.1, Management and Occupancy Reports ("MOR") must be replied to within HUD specified timelines. Condition During our review of management's response to the April 27, 2023 Management and Occupancy Report response we noted the response was not provided timely. Cause Management did not follow procedures to ensure a timely response. Effect or Potential Effect The property may not be in compliance with HUD guidelines relating to the property's physical condition, the quality of management and tenant services and annual financial reporting requirements. Questioned Costs N/A Context HUD had required a complete response to previously unaddressed findings by June 9, 2023, however, the response was not sent until July 14, 2023. Identification as a Repeat Finding No Recommendation Management should respond timely to all future MOR inspections. Auditor Noncompliance Code: N - Special tests and provisions for Uniform Guidance Z - Other Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to respond to MORs but due to staffing shortages in 2023 had issues filing in a timely manner. Staff have been reminded to respond to MOR findings in a timely manner going forward.
Finding 2023-003
Finding No. 2023-003; Federal Assistance Listing Number 14.157 Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant's rights under state and local laws. Condition In connection with our lease file testing one out of one move-out tenant files tested did not have a security deposit refunded timely or a move out inspection on file. Cause Management does not consistently follow procedures to refund tenant security deposits within the time requirement established by HUD and maintain move out inspections on file. Effect or Potential Effect Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Questioned Costs N/A Context In connection with our lease file testing one out of one move-out tenant files tested did not refund a security deposit timely or maintain a move out inspection on file. Identification as a Repeat Finding No Recommendation Management should follow its policies and procedures related to refunding of tenant security deposits to comply with the timeline required by HUD regulations. Auditor Noncompliance Code: N - Special tests and provisions for Uniform Guidance M - Security Deposits Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to ensure that move out inspections and the return of tenant security deposits are done in a timely manner. Staffing shortages at the property had an impact on the timeliness of the move out inspection and the return of security deposits. As new staff are brought onboard training is provided and additional training will be provided to on-site staff to ensure that the inspections and the return of security deposits are being completed and properties are in compliance.
Finding 2023-004
Finding No. 2023-004; Federal Assistance Listing Number 14.239 Criteria The owner did not ensure passing HQS unit inspections were performed during 2023. Condition During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners no less than every year for projects containing 26 or more units. The participating jurisdiction must perform on-site inspections of rental housing occupied by tenants receiving HOME/HOME-ARP-assisted tenant-based rental assistance to determine compliance with housing quality standards (24 CFR sections 92.209(i), 92.251(f), and 92.504(d)). Cause Management did not perform HQS unit inspections during 2023. Effect or Potential Effect Housing units may be out of compliance with HUD Housing Quality Standards.. Questioned Costs N/A Context In connection with the procedures applied to tenant file testing there were 3 instances of the 3 files tested where the passing HQS inspections were not performed during the year ended December 31, 2023. Identification as a Repeat Finding No Recommendation Management should make sure all units meet the HUD Housing Quality Standards. Auditor Noncompliance Code: N- Special tests and provisions for Uniform Guidance Z - Other Finding Resolution Status: Unresolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to ensure that HQS inspections are done in a timely manner. Staffing shortages at the property had an impact on the completion of HQS inspections in 2023. As new staff are brought onboard training is provided and additional training will be provided to on-site staff to ensure that the inspections are being completed and properties are in compliance.
Finding 2023-001
Finding No. 2023-001; Federal Assistance Listing Number 14.157 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted that the use of the HUD Enterprise Income Verification ("EIV") to verify three out of four tenants' income tested, was not performed timely. Cause Management's policies with respect to recertifications and eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect The procedures for determining tenant recertification eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs N/A Context Three out of four tenants' tenants tested did not have the EIV run timely. Identification as a Repeat Finding Yes 2022-001 Recommendation Management should establish procedures and monitor compliance with those procedures to insure that recertifications are performed timely and signed, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: E - Eligibility for Uniform Guidance R - Section 8 Program Compliance Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to complete certifications in a timely manner but due to staffing shortages and tenant noncompliance issues the property continued to have issues with timely completion of income certifications in 2023. As new staff are brought onboard training is provided and annual HUD training is completed by all staff. Additional procedures have been implemented in 2023 to coordinate and provide assistance to on-site staff to ensure that the properties are in compliance.
Finding 2023-002
Finding No. 2023-002; Federal Assistance Listing Number 14.157 Criteria In accordance with Chapter 6 of HUD Handbook 4350.1, Management and Occupancy Reports ("MOR") must be replied to within HUD specified timelines. Condition During our review of management's response to the April 27, 2023 Management and Occupancy Report response we noted the response was not provided timely. Cause Management did not follow procedures to ensure a timely response. Effect or Potential Effect The property may not be in compliance with HUD guidelines relating to the property's physical condition, the quality of management and tenant services and annual financial reporting requirements. Questioned Costs N/A Context HUD had required a complete response to previously unaddressed findings by June 9, 2023, however, the response was not sent until July 14, 2023. Identification as a Repeat Finding No Recommendation Management should respond timely to all future MOR inspections. Auditor Noncompliance Code: N - Special tests and provisions for Uniform Guidance Z - Other Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to respond to MORs but due to staffing shortages in 2023 had issues filing in a timely manner. Staff have been reminded to respond to MOR findings in a timely manner going forward.
Finding 2023-003
Finding No. 2023-003; Federal Assistance Listing Number 14.157 Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant's rights under state and local laws. Condition In connection with our lease file testing one out of one move-out tenant files tested did not have a security deposit refunded timely or a move out inspection on file. Cause Management does not consistently follow procedures to refund tenant security deposits within the time requirement established by HUD and maintain move out inspections on file. Effect or Potential Effect Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Questioned Costs N/A Context In connection with our lease file testing one out of one move-out tenant files tested did not refund a security deposit timely or maintain a move out inspection on file. Identification as a Repeat Finding No Recommendation Management should follow its policies and procedures related to refunding of tenant security deposits to comply with the timeline required by HUD regulations. Auditor Noncompliance Code: N - Special tests and provisions for Uniform Guidance M - Security Deposits Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to ensure that move out inspections and the return of tenant security deposits are done in a timely manner. Staffing shortages at the property had an impact on the timeliness of the move out inspection and the return of security deposits. As new staff are brought onboard training is provided and additional training will be provided to on-site staff to ensure that the inspections and the return of security deposits are being completed and properties are in compliance.
Finding 2023-004
Finding No. 2023-004; Federal Assistance Listing Number 14.239 Criteria The owner did not ensure passing HQS unit inspections were performed during 2023. Condition During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners no less than every year for projects containing 26 or more units. The participating jurisdiction must perform on-site inspections of rental housing occupied by tenants receiving HOME/HOME-ARP-assisted tenant-based rental assistance to determine compliance with housing quality standards (24 CFR sections 92.209(i), 92.251(f), and 92.504(d)). Cause Management did not perform HQS unit inspections during 2023. Effect or Potential Effect Housing units may be out of compliance with HUD Housing Quality Standards.. Questioned Costs N/A Context In connection with the procedures applied to tenant file testing there were 3 instances of the 3 files tested where the passing HQS inspections were not performed during the year ended December 31, 2023. Identification as a Repeat Finding No Recommendation Management should make sure all units meet the HUD Housing Quality Standards. Auditor Noncompliance Code: N- Special tests and provisions for Uniform Guidance Z - Other Finding Resolution Status: Unresolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to ensure that HQS inspections are done in a timely manner. Staffing shortages at the property had an impact on the completion of HQS inspections in 2023. As new staff are brought onboard training is provided and additional training will be provided to on-site staff to ensure that the inspections are being completed and properties are in compliance.