FAC Explorer

Audit 307266

FY End
2023-07-31
Total Expended
$4.45M
Findings
6
Programs
3
Organization: First Housing Corporation D/b/a Cathedral Manor (CT)
Year: 2023 Accepted: 2024-05-28
Auditor: Cohnreznick LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
398554 2023-003 Significant Deficiency - N
398555 2023-001 - Yes N
398556 2023-002 - Yes N
974996 2023-003 Significant Deficiency - N
974997 2023-001 - Yes N
974998 2023-002 - Yes N

Programs

ALN Program Spent Major Findings
14.134 Mortgage Insurance_rental Housing $3.58M Yes 2
14.195 Section 8 Housing Assistance Payments Program $826,728 Yes 1
14.870 Resident Opportunity and Supportive Services - Service Coordinators $37,280 - 0

Contacts

Name Title Type
VX7NZ6G7XME6 Kimalee Williams Auditee
8605277600 Patricia McGowan Auditor
No contacts on file

Notes to SEFA

Title: U.S. Department of Housing and Urban Development loan program Accounting Policies: The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of First Housing Corporation d/b/a Cathedral Manor, HUD Project No. 017-EH136-A, under programs of the federal government for the year ended July 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 First Housing Corporation d/b/a Cathedral Manor, it is not intended to and does not present the financial position, changes in net assets, or cash flows of First Housing Corporation d/b/a Cathedral Manor. De Minimis Rate Used: N Rate Explanation: 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. First Housing Corporation d/b/a Cathedral Manor has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. First Housing Corporation d/b/a Cathedral Manor has received U.S. Department of Housing and Urban Development capital advances under Section 201 of the National Housing Act. The balances outstanding at the beginning of the year are included in the federal expenditures presented in the Schedule. First Housing Corporation d/b/a Cathedral Manor received no additional advances during the year. The balance of the outstanding advances at July 31, 2023 consists of the following: Outstanding Federal Assistance balance at Listing Number Program name July 31, 2023 14.134 Mortgage Insurance - Rental Housing $ 3,482,616
Title: Subrecipients Accounting Policies: The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of First Housing Corporation d/b/a Cathedral Manor, HUD Project No. 017-EH136-A, under programs of the federal government for the year ended July 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 First Housing Corporation d/b/a Cathedral Manor, it is not intended to and does not present the financial position, changes in net assets, or cash flows of First Housing Corporation d/b/a Cathedral Manor. De Minimis Rate Used: N Rate Explanation: 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. First Housing Corporation d/b/a Cathedral Manor has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. There were no payments to subrecipients in any of the federal awards programs during the year ended July 31, 2023.

Finding Details

Finding 2023-003
Finding No. 2023-003; Federal Assistance Listing Number 14.195, Section 8 Housing Assistance Payments Program Statement of Condition In connection with our lease files review we noted the following deficiencies: 1 out of 1 move-outs tested did not have the inspection signed by the tenant or an employee at the property. 1 out of 1 move-outs tested did not have the inspection dated by an employee at the property. 1 out of 1 move-ins tested did not have the tenant’s Enterprise Income Verification (“EIV”) performed timely within the 90 days HUD requires. 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. Questioned Costs None Effect or Potential Effect The procedures for determining tenant security deposits and 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. Cause Management’s policies with respect to the determination of tenant security deposits 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. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant security deposits are correctly recorded, 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 R - Section 8 program administration Reporting Views of Responsible Officials Management has hired a new Compliance Manager and engaged a third party compliance monitoring company to review all files and EIV processes effective May 1, 2024.
Finding 2023-001
Department of Housing and Urban Development Finding No. 2023-001; Federal Assistance Listing Number 14.134, Mortgage Insurance - Rental Housing. Statement of Condition During the years ended July 31, 2019, 2020, 2021, 2022 and 2023, management did not make the required residual receipts reserve deposit in the amount of $81,489 that was required within 90 days of year ended July 31, 2018, as required by HUD. The residual receipts amount has not been deposited as of the date of this report. Criteria According to 24 CFR 891.400(e), residual receipts reserve deposits should be made within 90 days of year end. Questioned Costs None Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement. Context The annual calculation was not prepared by the management agent, and accordingly, the required deposit was not made. The auditor notes that the deposit requirement was calculated with the inclusion of a subsidy receivable due from HUD that was not received until after the 90-day period. However, we also note that at the time the subsidy was received, the delinquent deposit should have been made and was not made. Cause Controls were not in place in 2019 to ensure that required residual receipts reserve deposits are made timely. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2022-001). Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. Reporting Views of Responsible Officials The amount due to the residual receipts has not been deposited. Until the property is in a positive cash flow position, management is not able to commit to any type of repayment plan and management is looking for forgiveness of the required deposit from HUD. Auditor's Noncompliance Code: B - Failure to make required residual receipts deposits Reporting Views of Responsible Officials The amount due to the residual receipts has not been deposited. Until the property is in a positive cash flow position, management is not able to commit to any type of repayment plan and management is looking for forgiveness of the required deposit from HUD.
Finding 2023-002
Statement of Condition During the years ended July 31, 2019, 2020, 2021, 2022 and 2023, management did not repay the loan advanced from the reserve for replacements upon receipt of the Section 8 subsidy that was outstanding at July 31, 2018. The loan in the amount of $19,337 is deemed to be an unauthorized distribution at July 31, 2023. The amount due to the reserve for replacement has not been deposited as of the date of this report. Criteria According to the HUD Handbook 4350.1, Appendix 2, the terms of the loan from the reserve for replacement required repayment from the proceeds of the Section 8 subsidy. Questioned Costs None Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement. Context HUD approved a loan from the reserve for replacement with the stipulation that the loan be repaid when the delinquent Section 8 subsidy was paid by HUD. Cause Management did not maintain adequate controls in 2019 over the reserve for replacement requirements established with the loan advance to ensure the timely repayment of the loan upon receipt of the delayed Section 8 subsidy. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2022-002). Recommendation Management should establish internal controls and procedures to ensure that required payments are made timely. Auditor's Noncompliance Code: N - Reserve for replacements deposits Reporting Views of Responsible Officials A repayment plan has been put in place. Commencing in March 2024, four monthly installment payments will be made in the amount of $4,834 until the balance is paid in full.
Finding 2023-003
Finding No. 2023-003; Federal Assistance Listing Number 14.195, Section 8 Housing Assistance Payments Program Statement of Condition In connection with our lease files review we noted the following deficiencies: 1 out of 1 move-outs tested did not have the inspection signed by the tenant or an employee at the property. 1 out of 1 move-outs tested did not have the inspection dated by an employee at the property. 1 out of 1 move-ins tested did not have the tenant’s Enterprise Income Verification (“EIV”) performed timely within the 90 days HUD requires. 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. Questioned Costs None Effect or Potential Effect The procedures for determining tenant security deposits and 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. Cause Management’s policies with respect to the determination of tenant security deposits 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. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant security deposits are correctly recorded, 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 R - Section 8 program administration Reporting Views of Responsible Officials Management has hired a new Compliance Manager and engaged a third party compliance monitoring company to review all files and EIV processes effective May 1, 2024.
Finding 2023-001
Department of Housing and Urban Development Finding No. 2023-001; Federal Assistance Listing Number 14.134, Mortgage Insurance - Rental Housing. Statement of Condition During the years ended July 31, 2019, 2020, 2021, 2022 and 2023, management did not make the required residual receipts reserve deposit in the amount of $81,489 that was required within 90 days of year ended July 31, 2018, as required by HUD. The residual receipts amount has not been deposited as of the date of this report. Criteria According to 24 CFR 891.400(e), residual receipts reserve deposits should be made within 90 days of year end. Questioned Costs None Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement. Context The annual calculation was not prepared by the management agent, and accordingly, the required deposit was not made. The auditor notes that the deposit requirement was calculated with the inclusion of a subsidy receivable due from HUD that was not received until after the 90-day period. However, we also note that at the time the subsidy was received, the delinquent deposit should have been made and was not made. Cause Controls were not in place in 2019 to ensure that required residual receipts reserve deposits are made timely. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2022-001). Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. Reporting Views of Responsible Officials The amount due to the residual receipts has not been deposited. Until the property is in a positive cash flow position, management is not able to commit to any type of repayment plan and management is looking for forgiveness of the required deposit from HUD. Auditor's Noncompliance Code: B - Failure to make required residual receipts deposits Reporting Views of Responsible Officials The amount due to the residual receipts has not been deposited. Until the property is in a positive cash flow position, management is not able to commit to any type of repayment plan and management is looking for forgiveness of the required deposit from HUD.
Finding 2023-002
Statement of Condition During the years ended July 31, 2019, 2020, 2021, 2022 and 2023, management did not repay the loan advanced from the reserve for replacements upon receipt of the Section 8 subsidy that was outstanding at July 31, 2018. The loan in the amount of $19,337 is deemed to be an unauthorized distribution at July 31, 2023. The amount due to the reserve for replacement has not been deposited as of the date of this report. Criteria According to the HUD Handbook 4350.1, Appendix 2, the terms of the loan from the reserve for replacement required repayment from the proceeds of the Section 8 subsidy. Questioned Costs None Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement. Context HUD approved a loan from the reserve for replacement with the stipulation that the loan be repaid when the delinquent Section 8 subsidy was paid by HUD. Cause Management did not maintain adequate controls in 2019 over the reserve for replacement requirements established with the loan advance to ensure the timely repayment of the loan upon receipt of the delayed Section 8 subsidy. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2022-002). Recommendation Management should establish internal controls and procedures to ensure that required payments are made timely. Auditor's Noncompliance Code: N - Reserve for replacements deposits Reporting Views of Responsible Officials A repayment plan has been put in place. Commencing in March 2024, four monthly installment payments will be made in the amount of $4,834 until the balance is paid in full.