FAC Explorer

Audit 316973

FY End
2022-11-30
Total Expended
$7.27M
Findings
4
Programs
1
Organization: Mt Pleasant Housing Develpment Fund Company (NY)
Year: 2022 Accepted: 2024-08-09
Auditor: Cohnreznick LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
480843 2022-002 Material Weakness Yes N
480844 2022-003 Material Weakness Yes B
1057285 2022-002 Material Weakness Yes N
1057286 2022-003 Material Weakness Yes B

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $7.27M Yes 2

Contacts

Name Title Type
SDE2KVBJSC56 Christopher Cirillo Auditee
2124013153 Jason Rocker Auditor
No contacts on file

Notes to SEFA

Title: 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. De Minimis Rate Used: N Rate Explanation: Mt. Pleasant Housing Development Fund Company has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards includes the federal award activity of Mt. Pleasant Housing Development Fund Company, HUD Project No. 012-EE094, under programs of the federal government for the year ended November 30, 2022. 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 Mt. Pleasant Housing Development Fund Company, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Mt. Pleasant Housing Development Fund Company.
Title: Summary of signifcant 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. De Minimis Rate Used: N Rate Explanation: Mt. Pleasant Housing Development Fund Company has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. 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. Mt. Pleasant Housing Development Fund Company has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.
Title: 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. De Minimis Rate Used: N Rate Explanation: Mt. Pleasant Housing Development Fund Company has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Note 3 - U.S. Department of Housing and Urban Development loan program Mt. Pleasant Housing Development Fund Company has received a U.S. Department of Housing and Urban Development direct loan under Section 202 of the National Housing Act. The loan balance outstanding at the beginning of the year is included in the federal expenditures presented in the Schedule. Mt. Pleasant Housing Development Fund Company received no additional loans during the year. The balance of the loan outstanding at November 30, 2022 consists of: CFDA Number Program Name Outstanding Balance at November 30, 2022 14.157 Section 202 direct loan $ 6,236,300

Finding Details

Finding 2022-002
Finding No. 2022-002; Supportive Housing for the Elderly (Section 202), CFDA 14.157 Criteria The regulatory agreement required that the project make monthly deposits to its replacement reserve. Condition During the year ended November 30, 2022, the project did not make the required monthly deposits to the replacement reserve as disclosed. The project was required to make monthly deposits to the reserve in the amount of $5,000 and $9,160 related to Finding 2021-1. Total cumulative deposits due to the replacement reserve during the year ended November 30, 2022 were $69,160 of which the project made deposits of $54,569 leaving an amount remaining due to the reserve of $14,431. Cause Due to COVID-19, the Property experienced delays in receiving its annual PRAC renewal and monthly PRAC subsidy funding. Effect or Potential Effect Underfunding of the replacement reserve and a noncompliance of the regulatory agreement. Questioned Costs: $14,431 Recommendation Management should make timely deposits to ensure that the replacement reserve is funded in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code: N - Special Tests and Provisions Finding Resolution Status: Open Views of Responsible Officials and Planned Corrective Actions: Due to COVID-19, delays were encountered by HUD while reviewing and renewing the annual PRAC which did not afford management enough time to settle outstanding vendor payments and make the increased reserve for replacement deposit.
Finding 2022-003
Finding No. 2022-003; Supportive Housing for the Elderly (Section 202), CFDA 14.157 Criteria Loans are not permitted to be made from project cash without prior authorization from HUD. Condition During the year ended November 30, 2022, the project paid expenses in the amount of $326,282 on behalf of other affiliates from project cash without HUD approval. The amount due to the project as of November 30, 2022 is $326,282. Cause Procedures were not in place to ensure that cash disbursements of project funds were limited to approved project operating costs. Effect or Potential Effect The payments of $326,282 were unauthorized loans and therefore considered to be questioned costs. Questioned Costs $326,282. Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: B - Allowable Costs/Cost Principles Views of Responsible Officials and Planned Corrective Actions Because the PRAC renewals were so delayed, therefore there was no money available to pay back the project. Furthermore, the insurance costs are tremendous and had to be financed. In order to ensure the payments are applied and paid timely it is best to have the entire amount pulled from one bank account. If each entity were to pay its share it would cause confusion and may result in possible cancellation. Upon finalizing the audits and submitting to HUD, management intends to request funds from the replacement reserve to enable them to pay down the due from affiliates.
Finding 2022-002
Finding No. 2022-002; Supportive Housing for the Elderly (Section 202), CFDA 14.157 Criteria The regulatory agreement required that the project make monthly deposits to its replacement reserve. Condition During the year ended November 30, 2022, the project did not make the required monthly deposits to the replacement reserve as disclosed. The project was required to make monthly deposits to the reserve in the amount of $5,000 and $9,160 related to Finding 2021-1. Total cumulative deposits due to the replacement reserve during the year ended November 30, 2022 were $69,160 of which the project made deposits of $54,569 leaving an amount remaining due to the reserve of $14,431. Cause Due to COVID-19, the Property experienced delays in receiving its annual PRAC renewal and monthly PRAC subsidy funding. Effect or Potential Effect Underfunding of the replacement reserve and a noncompliance of the regulatory agreement. Questioned Costs: $14,431 Recommendation Management should make timely deposits to ensure that the replacement reserve is funded in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code: N - Special Tests and Provisions Finding Resolution Status: Open Views of Responsible Officials and Planned Corrective Actions: Due to COVID-19, delays were encountered by HUD while reviewing and renewing the annual PRAC which did not afford management enough time to settle outstanding vendor payments and make the increased reserve for replacement deposit.
Finding 2022-003
Finding No. 2022-003; Supportive Housing for the Elderly (Section 202), CFDA 14.157 Criteria Loans are not permitted to be made from project cash without prior authorization from HUD. Condition During the year ended November 30, 2022, the project paid expenses in the amount of $326,282 on behalf of other affiliates from project cash without HUD approval. The amount due to the project as of November 30, 2022 is $326,282. Cause Procedures were not in place to ensure that cash disbursements of project funds were limited to approved project operating costs. Effect or Potential Effect The payments of $326,282 were unauthorized loans and therefore considered to be questioned costs. Questioned Costs $326,282. Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: B - Allowable Costs/Cost Principles Views of Responsible Officials and Planned Corrective Actions Because the PRAC renewals were so delayed, therefore there was no money available to pay back the project. Furthermore, the insurance costs are tremendous and had to be financed. In order to ensure the payments are applied and paid timely it is best to have the entire amount pulled from one bank account. If each entity were to pay its share it would cause confusion and may result in possible cancellation. Upon finalizing the audits and submitting to HUD, management intends to request funds from the replacement reserve to enable them to pay down the due from affiliates.