Audit 317585

FY End
2023-12-31
Total Expended
$2.53M
Findings
4
Programs
1
Organization: Sunray Communities, Inc. (TX)
Year: 2023 Accepted: 2024-08-20
Auditor: M Group LLP

Organization Exclusion Status:

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Findings

ID Ref Severity Repeat Requirement
484702 2023-001 Significant Deficiency - P
484703 2023-002 - Yes N
1061144 2023-001 Significant Deficiency - P
1061145 2023-002 - Yes N

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $178,853 Yes 0

Contacts

Name Title Type
RA99MZKJ74Z8 Connie Quillen Auditee
9726433200 Michael Martin Auditor
No contacts on file

Notes to SEFA

Title: Note 4: Capital Advance Balance Accounting Policies: Note 1: Basis of Presentation: This schedule of expenditures of federal awards includes the federal award activity of Sunray Communities, Inc. 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 Audits for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Sunray Communities, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Sunray Communities, Inc. Note 2: Summary of Significant Accounting Policies: Expenditures reporting 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. De Minimis Rate Used: N Rate Explanation: Note 3: Indirect Cost Rate: Sunray Communities, Inc. has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. Sunray Communities, Inc.’s capital advance balance outstanding as of December 31, 2023, was $2,352,900 and is included in the federal expenditures presented in the schedule.

Finding Details

Finding #2023-001: Section 202 Capital Advance, Assistance Listing 14.157 Condition: The Company paid management fees during 2021 and 2022 in excess of the maximum amount of management fees approved by HUD. Criteria: The Company’s property management fees must follow the HUD approved management agreement. Effect: The Company overpaid property management fees in 2021 and 2022. Questioned Cost: $6,719 Cause: Oversight Repeat Finding: No Recommendation: The Company should monitor property management fees to ensure the management fees follow the terms set forth in the property management agreement. Auditor’s Comment: We recommend the Company reduce current management fees by $6,719 during 2023 to account for excess management
Finding #2023-002: Section 202 Capital Advance, Assistance Listing 14.157 Type of Finding: Other Matter Condition: The Company made 7 monthly deposits into the replacement reserve account. Criteria: The HUD regulatory agreement requires the Company to make 12 monthly deposits into the replacement reserve account. Effect: The Company is not in compliance with the HUD regulatory agreement. Questioned Cost: $6,000 Cause: Lack of available funds Repeat Finding: Yes Recommendation: The Company should monitor the monthly deposits and should request a suspension in replacement reserve deposits from HUD. Auditor’s Comment: During December 2023, the Company obtained an approval from HUD to suspend monthly deposits to the replacement reserve account for 2024 as it was determined that the replacement reserve account was overfunded. Finding 2023-002 cleared.
Finding #2023-001: Section 202 Capital Advance, Assistance Listing 14.157 Condition: The Company paid management fees during 2021 and 2022 in excess of the maximum amount of management fees approved by HUD. Criteria: The Company’s property management fees must follow the HUD approved management agreement. Effect: The Company overpaid property management fees in 2021 and 2022. Questioned Cost: $6,719 Cause: Oversight Repeat Finding: No Recommendation: The Company should monitor property management fees to ensure the management fees follow the terms set forth in the property management agreement. Auditor’s Comment: We recommend the Company reduce current management fees by $6,719 during 2023 to account for excess management
Finding #2023-002: Section 202 Capital Advance, Assistance Listing 14.157 Type of Finding: Other Matter Condition: The Company made 7 monthly deposits into the replacement reserve account. Criteria: The HUD regulatory agreement requires the Company to make 12 monthly deposits into the replacement reserve account. Effect: The Company is not in compliance with the HUD regulatory agreement. Questioned Cost: $6,000 Cause: Lack of available funds Repeat Finding: Yes Recommendation: The Company should monitor the monthly deposits and should request a suspension in replacement reserve deposits from HUD. Auditor’s Comment: During December 2023, the Company obtained an approval from HUD to suspend monthly deposits to the replacement reserve account for 2024 as it was determined that the replacement reserve account was overfunded. Finding 2023-002 cleared.