Audit 315712

FY End

2023-09-30

Total Expended

$1.20M

Findings

2

Programs

2

Organization: Pine Hills, Inc. (MS)

Year: 2023 Accepted: 2024-07-23

Auditor: The Gillon Group PLLC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
479166	2023-001	Material Weakness	-	P
1055608	2023-001	Material Weakness	-	P

ALN	Program	Spent	Major	Findings
14.181	Supportive Housing for Persons with Disabilities	$1.14M	Yes	1
14.182	Section 8 New Construction and Substantial Rehabilitation	$57,018	-	0

Contacts

Name	Title	Type
S312LPN57XV9	Watkins G. Wild	Auditee
6016846245	Deanne Tanksley	Auditor
No contacts on file

Notes to SEFA

Title: Presentation Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of Pine Hills, Inc., HUD Project No. 065-HD027-CA, and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the Uniform Guidance. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. The Organization did not use the 10% de minimis rule. De Minimis Rate Used: N Rate Explanation: The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of Pine Hills, Inc., HUD Project No. 065-HD027-CA, and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the Uniform Guidance. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. The Organization did not use the 10% de minimis rule. The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of Pine Hills, Inc., HUD Project No. 065-HD027-CA, and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the Uniform Guidance. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. The Organization did not use the 10% de minimis rule.

Title: Calculation Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of Pine Hills, Inc., HUD Project No. 065-HD027-CA, and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the Uniform Guidance. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. The Organization did not use the 10% de minimis rule. De Minimis Rate Used: N Rate Explanation: The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of Pine Hills, Inc., HUD Project No. 065-HD027-CA, and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the Uniform Guidance. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. The Organization did not use the 10% de minimis rule. To protect its interest in a capital advance, HUD requires a note and a mortgage, generally for a 40 year term. The owner is not required to repay the principal or pay interest and the note is forgiven at maturity, as long as the owner provides housing for the designated class of people in accordance with applicable HUD requirements. However, the full outstanding balance on the note should be considered federal awards expended, included in determining Type A programs and reported as loans on the Schedule of Expenditures of Federal Awards or accompanying notes in accordance with the Uniform Guidance.

Finding Details

Finding 2023-001

Condition: The managing agent engaged for the 2023 fiscal year was unresponsive to our initial and repeated requests for information for the annual audit. No information was received until January 27, 2024, and it was incomplete with key items such as bank reconciliations and support for reserves withdrawals missing. Additionally, significant areas such as revenues and receivables could not be reconciled to the general ledger and the tenant receivable subledger detail had obvious errors. Questions arising from the planning and initial fieldwork went unanswered. Criteria: HUD requires an owner-certified statement to be submitted through the FASSUB within 90 days of year end for all properties, with an audited statement to follow within 6 months for certain properties. Due to the information not being received in a timely manner from the managing agent, neither deadline was met. Effect: The property is out of compliance with the HUD regulations. The amount of missing information and unanswered questions led the auditors to disclaim rendering an opinion on the financial statements as a whole. Context: Managing agents and their companies are charged with stewardship over the properties funds and to maintain the properties to HUD and the owner’s standards. As a condition of that engagement, the books and records are to be made available to the owners and external auditors as required by HUD. The owners received no communication from the managing agent during the year and the year end records were incomplete and the audit not concluded. Cause: The managing agent made decisions that delayed the receipt of year end information and further chose not to respond to the auditor, nor the owners or new managing agent, for any missing information or to clarify what had been received. Recommendation: A change in management company has already been made by the owners as discussed in Note 15. Views of Responsible Officials and Planned Corrective Action: Prior to the September 30, 2023, fiscal year end the ownership had already decided to engage a new management company. We believe that change will eliminate the issues noted in this report going forward.

Finding 2023-001

Condition: The managing agent engaged for the 2023 fiscal year was unresponsive to our initial and repeated requests for information for the annual audit. No information was received until January 27, 2024, and it was incomplete with key items such as bank reconciliations and support for reserves withdrawals missing. Additionally, significant areas such as revenues and receivables could not be reconciled to the general ledger and the tenant receivable subledger detail had obvious errors. Questions arising from the planning and initial fieldwork went unanswered. Criteria: HUD requires an owner-certified statement to be submitted through the FASSUB within 90 days of year end for all properties, with an audited statement to follow within 6 months for certain properties. Due to the information not being received in a timely manner from the managing agent, neither deadline was met. Effect: The property is out of compliance with the HUD regulations. The amount of missing information and unanswered questions led the auditors to disclaim rendering an opinion on the financial statements as a whole. Context: Managing agents and their companies are charged with stewardship over the properties funds and to maintain the properties to HUD and the owner’s standards. As a condition of that engagement, the books and records are to be made available to the owners and external auditors as required by HUD. The owners received no communication from the managing agent during the year and the year end records were incomplete and the audit not concluded. Cause: The managing agent made decisions that delayed the receipt of year end information and further chose not to respond to the auditor, nor the owners or new managing agent, for any missing information or to clarify what had been received. Recommendation: A change in management company has already been made by the owners as discussed in Note 15. Views of Responsible Officials and Planned Corrective Action: Prior to the September 30, 2023, fiscal year end the ownership had already decided to engage a new management company. We believe that change will eliminate the issues noted in this report going forward.