FAC Explorer

Audit 309439

FY End
2023-12-31
Total Expended
$3.41M
Findings
6
Programs
2
Organization: Marygrove Non-Profit Housing Corporation (MI)
Year: 2023 Accepted: 2024-06-20
Auditor: Rehmann Robson LLC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
401343 2023-002 Significant Deficiency - N
401344 2023-003 Significant Deficiency - N
401345 2023-003 Significant Deficiency - N
977785 2023-002 Significant Deficiency - N
977786 2023-003 Significant Deficiency - N
977787 2023-003 Significant Deficiency - N

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $2.82M Yes 2
14.195 Section 8 Housing Assistance Payments Program $593,812 Yes 1

Contacts

Name Title Type
CDH8ZET8NEQ6 David Defrain Auditee
7434366632 Justin Masters Auditor
No contacts on file

Notes to SEFA

Title: Note 3. Pass-Through Agency Accounting Policies: The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal grant activity of Marygrove Non-Profit Housing Corporation (the "Project") 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 Project, it is not intended to and does not present the net assets, changes in net assets or cash flows of the Project. 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 or other applicable guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: For purposes of charging indirect costs to federal awards, the Project has not elected to use the 10 percent de minimis cost rate as permitted by §200.414 of the Uniform Guidance. The Project receives Section 8 Housing Assistance Payments as a subaward from the Michigan State Housing Development Authority ("MSHDA").
Title: Note 4. Loan Program - Supportive Housing for the Elderly (ALN 14.157) Accounting Policies: The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal grant activity of Marygrove Non-Profit Housing Corporation (the "Project") 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 Project, it is not intended to and does not present the net assets, changes in net assets or cash flows of the Project. 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 or other applicable guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: For purposes of charging indirect costs to federal awards, the Project has not elected to use the 10 percent de minimis cost rate as permitted by §200.414 of the Uniform Guidance. The Project has an outstanding loan that is guaranteed by the U.S. Department of Housing and Urban Development. As of December 31, 2023, the outstanding balance on the loan was $2,712,803 and is presented on the statement of financial position net of the related deferred financing costs.

Finding Details

Finding 2023-002
2023-002 – Timely Payment of Mortgage Balance Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for making timely payments to its mortgage payable, which is insured by HUD. Condition. Out of 12 monthly payments on the Project's HUD insured mortgage payable, that are due each fiscal year, 1 payment was late, resulting in a late fee. Cause. Management does not appear to have sufficient internal control procedures in place to properly implement all of HUD's program requirements. Effect. As a result of this condition, the mortgage was not paid on time. While there was ultimately payment of the delinquent monthly balance, the lack of effective internal controls could lead to future significant noncompliance. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management should strengthen their current policies and follow a documented process for ensuring that monthly mortgage payments are made timely. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.
Finding 2023-003
2023-003 – Required Replacement Reserve Deposits Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) ·   Section 8 Housing Assistance Payments (ALN# 14.195) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for making monthly deposits to the reserve for replacements account, as approved by HUD. Condition. Out of 12 required monthly deposits, 3 deposits were not made in the correct amount as approved by HUD. Cause. Management has not properly implemented internal control procedures to ensure deposits are made in the correct amount on monthly basis as approved by HUD. Effect. As a result of this condition, the reserve for replacements account was underfunded during 2023. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management make the required deposit each month as required by HUD. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.
Finding 2023-003
2023-003 – Required Replacement Reserve Deposits Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) ·   Section 8 Housing Assistance Payments (ALN# 14.195) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for making monthly deposits to the reserve for replacements account, as approved by HUD. Condition. Out of 12 required monthly deposits, 3 deposits were not made in the correct amount as approved by HUD. Cause. Management has not properly implemented internal control procedures to ensure deposits are made in the correct amount on monthly basis as approved by HUD. Effect. As a result of this condition, the reserve for replacements account was underfunded during 2023. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management make the required deposit each month as required by HUD. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.
Finding 2023-002
2023-002 – Timely Payment of Mortgage Balance Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for making timely payments to its mortgage payable, which is insured by HUD. Condition. Out of 12 monthly payments on the Project's HUD insured mortgage payable, that are due each fiscal year, 1 payment was late, resulting in a late fee. Cause. Management does not appear to have sufficient internal control procedures in place to properly implement all of HUD's program requirements. Effect. As a result of this condition, the mortgage was not paid on time. While there was ultimately payment of the delinquent monthly balance, the lack of effective internal controls could lead to future significant noncompliance. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management should strengthen their current policies and follow a documented process for ensuring that monthly mortgage payments are made timely. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.
Finding 2023-003
2023-003 – Required Replacement Reserve Deposits Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) ·   Section 8 Housing Assistance Payments (ALN# 14.195) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for making monthly deposits to the reserve for replacements account, as approved by HUD. Condition. Out of 12 required monthly deposits, 3 deposits were not made in the correct amount as approved by HUD. Cause. Management has not properly implemented internal control procedures to ensure deposits are made in the correct amount on monthly basis as approved by HUD. Effect. As a result of this condition, the reserve for replacements account was underfunded during 2023. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management make the required deposit each month as required by HUD. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.
Finding 2023-003
2023-003 – Required Replacement Reserve Deposits Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) ·   Section 8 Housing Assistance Payments (ALN# 14.195) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for making monthly deposits to the reserve for replacements account, as approved by HUD. Condition. Out of 12 required monthly deposits, 3 deposits were not made in the correct amount as approved by HUD. Cause. Management has not properly implemented internal control procedures to ensure deposits are made in the correct amount on monthly basis as approved by HUD. Effect. As a result of this condition, the reserve for replacements account was underfunded during 2023. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management make the required deposit each month as required by HUD. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.