Audit 31174

FY End

2022-12-31

Total Expended

$15.95M

Findings

2

Programs

4

Organization: Arizona Housing, Inc. (AZ)

Year: 2022 Accepted: 2023-09-28

Auditor: Snyder & Brown CPAS PLLC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
32961	2022-101	Material Weakness	-	B
609403	2022-101	Material Weakness	-	B

ALN	Program	Spent	Major	Findings
21.027	Coronavirus State and Local Fiscal Recovery Funds	$5.71M	Yes	1
14.228	Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii	$1.57M	-	0
14.275	Housing Trust Fund	$1.20M	Yes	0
81.128	Energy Efficiency and Conservation Block Grant Program (eecbg)	$1.13M	-	0

Contacts

Name	Title	Type
QEK2LBHWKXW8	Christine Wetherington	Auditee
6022965200	Robert N Snyder	Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan guarantee outstanding balances Accounting Policies: Note 1 - Basis of AccountingThe accompanying Schedule of Expenditures of Federal Awards includes the federal grantactivity of Arizona Housing, Inc. (the Organization). The information in this schedule is presentedin accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200,Uniform Administrative Requirements, Cost Principles, and Audit Requirements for FederalAwards (Uniform Guidance).Note 2 - Summary of significant accounting policiesExpenditures reported on the schedule are reported on the accrual basis of accounting. Suchexpenditures 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.Therefore, some amounts presented in this schedule may differ from amounts presented in, orused in the preparation of, the financial statements.Note 3 - Federal Assistance Listings numberThe program titles and Federal Assistance Listings numbers were obtained from the federal orpass-through grantor or the 2021 Federal Assistance Listings. When no Federal AssistanceListings number had been assigned to a program, the 2-digit federal agency identifier and thefederal contract number were used. When there was no federal contract number, the 2-digitfederal agency identifier and the word unknown were used.Note 4 - Capital Advances (Forgivable Loans)This schedule includes federal expenditures incurred in a prior year for which there is anoutstanding loan balance (Capital Advances). The Community Development BlockGrants/States Program, 14.228, and the Energy Efficiency and Conservation Block GrantProgram, 81.128, each have continuing compliance requirements. The full outstanding balancefor each capital advance is considered federal awards expended and requires disclosure on thisschedule; each outstanding balance is included in determining Type A programs.During 2022 the Organization received forgivable loan proceeds relating to Assistance ListingNo. 14.275, Housing Trust Fund, of $1,200,511 and $5,709,869 relating to Coronavirus Stateand Local Fiscal Recovery Funds, assistance listing No. 21.027. These amounts are includedon the schedule of expenditures of federal awards and are forgivable loan balances expendedduring 2022. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. COMMUNITY DEVELOPMENT BLOCK GRANTS/STATE'S PROGRAM AND NON-ENTITLEMENT GRANTS IN HAWAII (14.228) - Balances outstanding at the end of the audit period were 6345062. COMMUNITY DEVELOPMENT BLOCK GRANTS/STATE'S PROGRAM AND NON-ENTITLEMENT GRANTS IN HAWAII (14.228) - Balances outstanding at the end of the audit period were 1569801. HOUSING TRUST FUND (14.275) - Balances outstanding at the end of the audit period were 1200511. CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (21.027) - Balances outstanding at the end of the audit period were 5709869. ENERGY EFFICIENCY AND CONSERVATION BLOCK GRANT PROGRAM (EECBG) (81.128) - Balances outstanding at the end of the audit period were 1128428.

Finding Details

Finding 2022-101

2022-101 ? Allowable Cost/Cost Principles (Material Weakness, Material Noncompliance) Federal program information: Funding agencies: U.S. Department of Treasury Titles: Coronavirus State and Local Fiscal Recovery Funds CFDA numbers: 21.027 Award years: January 1, 2022 through December 31, 2022 Pass-through entities: Maricopa County, Arizona Questioned Costs: $247,841 Criteria: United States Treasury guidelines and the Uniform Guidance require that costs charged to the program are for actual costs incurred and are supported by underlying records. Condition: During 2022 the Organization entered into a contract with Maricopa County for $7,730,022 to purchase and renovate a building to be used for low-income housing. Within this contract an amount of $850,000 was indicated as ?Developer?s Fee.? However, this developer?s fee was not defined in the contract. The Organization billed and collected $247,841 of developer?s fees under the contract through December 31, 2022. However, this amount was not supported by underlying actual expenses incurred by the Organization as required by the Uniform Guidance. Cause and Effect: Under housing related contracts developer fees typically indicate a revenue source to the developer that is unrestricted. During 2022 the Organization believed that these funds were to be received by the County in addition to the direct costs incurred by the Organization and reimbursed. However, the contract did not define developer fees separately from other reimbursable expenses. As a result, it appears that the drawdown of $247,841 relating to developer fees may be unallowable under the Uniform Guidance. Auditor?s Recommendations: Procedures should be implemented to ensure that all costs charged to federal programs are supported by actual costs incurred, unless other types of costs, such as indirect costs using a specified or de minimis rate, are specified in the contract as allowable.

Finding 2022-101

2022-101 ? Allowable Cost/Cost Principles (Material Weakness, Material Noncompliance) Federal program information: Funding agencies: U.S. Department of Treasury Titles: Coronavirus State and Local Fiscal Recovery Funds CFDA numbers: 21.027 Award years: January 1, 2022 through December 31, 2022 Pass-through entities: Maricopa County, Arizona Questioned Costs: $247,841 Criteria: United States Treasury guidelines and the Uniform Guidance require that costs charged to the program are for actual costs incurred and are supported by underlying records. Condition: During 2022 the Organization entered into a contract with Maricopa County for $7,730,022 to purchase and renovate a building to be used for low-income housing. Within this contract an amount of $850,000 was indicated as ?Developer?s Fee.? However, this developer?s fee was not defined in the contract. The Organization billed and collected $247,841 of developer?s fees under the contract through December 31, 2022. However, this amount was not supported by underlying actual expenses incurred by the Organization as required by the Uniform Guidance. Cause and Effect: Under housing related contracts developer fees typically indicate a revenue source to the developer that is unrestricted. During 2022 the Organization believed that these funds were to be received by the County in addition to the direct costs incurred by the Organization and reimbursed. However, the contract did not define developer fees separately from other reimbursable expenses. As a result, it appears that the drawdown of $247,841 relating to developer fees may be unallowable under the Uniform Guidance. Auditor?s Recommendations: Procedures should be implemented to ensure that all costs charged to federal programs are supported by actual costs incurred, unless other types of costs, such as indirect costs using a specified or de minimis rate, are specified in the contract as allowable.