Audit 305487

FY End
2023-12-31
Total Expended
$3.23M
Findings
2
Programs
2
Year: 2023 Accepted: 2024-05-03
Auditor: Cohnreznick LLP

Organization Exclusion Status:

Checking exclusion status...

Findings

ID Ref Severity Repeat Requirement
395867 2023-001 Significant Deficiency Yes E
972309 2023-001 Significant Deficiency Yes E

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $3.19M Yes 1
14.239 Home Investment Partnerships Program $42,238 - 0

Contacts

Name Title Type
NVP8F3CP3NK1 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 A-122, "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 III, Inc. has elected not 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 minimis cost rate. The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of Community Housing III, 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 Community Housing III, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Community Housing III, Inc.
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 A-122, "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 III, Inc. has elected not 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 minimis 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 A-122, "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 III, Inc. has elected not 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 A-122, "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 III, Inc. has elected not 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 minimis cost rate. Community Housing III, Inc. has received U.S. Department of Housing and Urban Development loans under Section 202. The loan balances outstanding at the beginning of the year are included in the federal expenditures presented in the Schedule. Community Housing III, 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 $3,065,900 and Federal Assistance Listing Number 14.239 HOME Investment Partnership Program $42,238 for a total of $3,108,138.

Finding Details

Finding No. 2023-001; Federal Assistance Listing Number 14.157 Criteria Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review we noted: - two out of three tenants did not have a recertification performed timely. - one out of four tenants did not have income verification with the use of the HUD Enterprise Income Verification ("EIV") performed timely. Cause Management failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant EIV 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. Context Two out of three tenants tested did not have an EIV performed timely and one out of four tenants did not have income verification with the use of the HUD Enterprise Income Verification ("EIV") performed timely. Repeat Finding Yes, 2022-001 Questioned Costs N/A Recommendation Management should monitor compliance with procedures to insure that recertifications and EIVs are performed timely, 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 administration. 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 No. 2023-001; Federal Assistance Listing Number 14.157 Criteria Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review we noted: - two out of three tenants did not have a recertification performed timely. - one out of four tenants did not have income verification with the use of the HUD Enterprise Income Verification ("EIV") performed timely. Cause Management failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant EIV 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. Context Two out of three tenants tested did not have an EIV performed timely and one out of four tenants did not have income verification with the use of the HUD Enterprise Income Verification ("EIV") performed timely. Repeat Finding Yes, 2022-001 Questioned Costs N/A Recommendation Management should monitor compliance with procedures to insure that recertifications and EIVs are performed timely, 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 administration. 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.