FAC Explorer

Audit 318546

FY End
2023-12-31
Total Expended
$12.01M
Findings
6
Programs
2
Organization: Victory Heights, Inc. (MD)
Year: 2023 Accepted: 2024-09-04
Auditor: Cohnreznick LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
485725 2023-001 Material Weakness - N
485726 2023-002 Material Weakness Yes E
485727 2023-002 Material Weakness Yes E
1062167 2023-001 Material Weakness - N
1062168 2023-002 Material Weakness Yes E
1062169 2023-002 Material Weakness Yes E

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $7.76M Yes 2
14.239 Home Investment Partnerships Program $4.25M Yes 1

Contacts

Name Title Type
PMHJDK326KS7 Sarah O'Rielly Auditee
3014936000 Russell Phillips Auditor
No contacts on file

Notes to SEFA

Title: U.S. Department of Housing and Urban Development Capital Advance program Accounting Policies: The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of Victory Heights, Inc., HUD Project No.: 000-EEE058, under programs of the federal government for the year then 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 Victory Heights, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Victory Heights, Inc. For the year ended December 31, 2023, no awards were passed through to subrecipients. 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, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: Victory Heights, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The balance shown on the schedule of expenditures of federal awards relating to the capital advance includes $7,158,700 expended in prior periods. Section 202 capital advances need not be repaid as long as the owner continues to make the housing available to the low-income elderly for at least 40 years.
Title: HOME Investment Partnerships Program (HOME) Accounting Policies: The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of Victory Heights, Inc., HUD Project No.: 000-EEE058, under programs of the federal government for the year then 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 Victory Heights, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Victory Heights, Inc. For the year ended December 31, 2023, no awards were passed through to subrecipients. 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, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: Victory Heights, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Victory Heights, Inc. has received two loans from the District of Columbia DHCD for $500,000 and $3,750,000. The loan balance outstanding at the beginning of the year is included in the federal expenditures presented in the Schedule. See Nores to the SEFA for table.

Finding Details

Finding 2023-001
Criteria - Special Tests and Provisions Effective January 1, 2023, Victory Heights changed from a fiscal year end of June 30 to December 31. The prior period audit report, dated October 31, 2023, represents a six-month fiscal transition period from July 1, 2022 through December 31, 2022. Any required residual receipts reserve deposits should be made on or before October 31, 2023. Condition During the year ended December 31, 2023, management did not make the required residual receipts reserve deposit in the amount of $19,656, as required by HUD. Cause Controls are not in place to ensure that required residual receipts reserve deposits are made timely. In addition, operating cash was insufficient to fund the reserve as of October 31, 2023. Effect or Potential Effect Victory Heights is not in compliance with the requirements of the regulatory agreement. Questioned Costs None Context Isolated instance Identification as a Repeat Finding Not a repeat finding. Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. In addition, management should withdrawal $19,656 from operating cash and immediately deposit this amount into the residual receipts account. Auditor Noncompliance Code: B - Failure to make required residual receipts deposits Finding Resolution Status: In-Process Views of Responsible Officials Going forward, management will ensure that any shortage is funded on time even if operating funds are short and we have to request funds from ownership.
Finding 2023-002
Criteria - Eligibility Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: 1 out of 9 tenants tested did not have the accurate amount of adjusted annual income reported on HUD Form 50059 and did not utilized the Enterprise Income Verification system timely. 7 out of 9 tenants tested did not utilize the Enterprise Income Verification system timely. Cause The Project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Context A sample of 9 tenant files from a population of 82 were selected. We identified exceptions in 8 out of the 9 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Repeat finding of Finding No. 2022-001 Questioned Costs None Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that the determination of tenant eligibility and the maintenance of lease files are in accordance with guidelines specified by HUD. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In-Process Views of Responsible Officials Going forward, management will ensure that the EIV system is utilized correctly and timely. Tenant files have been noted on the late EIV reports. Management is now running EIV reports from corporate to eliminate the pate processing or missing EIV reports.
Finding 2023-002
Criteria - Eligibility Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: 1 out of 9 tenants tested did not have the accurate amount of adjusted annual income reported on HUD Form 50059 and did not utilized the Enterprise Income Verification system timely. 7 out of 9 tenants tested did not utilize the Enterprise Income Verification system timely. Cause The Project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Context A sample of 9 tenant files from a population of 82 were selected. We identified exceptions in 8 out of the 9 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Repeat finding of Finding No. 2022-001 Questioned Costs None Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that the determination of tenant eligibility and the maintenance of lease files are in accordance with guidelines specified by HUD. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In-Process Views of Responsible Officials Going forward, management will ensure that the EIV system is utilized correctly and timely. Tenant files have been noted on the late EIV reports. Management is now running EIV reports from corporate to eliminate the pate processing or missing EIV reports.
Finding 2023-001
Criteria - Special Tests and Provisions Effective January 1, 2023, Victory Heights changed from a fiscal year end of June 30 to December 31. The prior period audit report, dated October 31, 2023, represents a six-month fiscal transition period from July 1, 2022 through December 31, 2022. Any required residual receipts reserve deposits should be made on or before October 31, 2023. Condition During the year ended December 31, 2023, management did not make the required residual receipts reserve deposit in the amount of $19,656, as required by HUD. Cause Controls are not in place to ensure that required residual receipts reserve deposits are made timely. In addition, operating cash was insufficient to fund the reserve as of October 31, 2023. Effect or Potential Effect Victory Heights is not in compliance with the requirements of the regulatory agreement. Questioned Costs None Context Isolated instance Identification as a Repeat Finding Not a repeat finding. Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. In addition, management should withdrawal $19,656 from operating cash and immediately deposit this amount into the residual receipts account. Auditor Noncompliance Code: B - Failure to make required residual receipts deposits Finding Resolution Status: In-Process Views of Responsible Officials Going forward, management will ensure that any shortage is funded on time even if operating funds are short and we have to request funds from ownership.
Finding 2023-002
Criteria - Eligibility Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: 1 out of 9 tenants tested did not have the accurate amount of adjusted annual income reported on HUD Form 50059 and did not utilized the Enterprise Income Verification system timely. 7 out of 9 tenants tested did not utilize the Enterprise Income Verification system timely. Cause The Project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Context A sample of 9 tenant files from a population of 82 were selected. We identified exceptions in 8 out of the 9 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Repeat finding of Finding No. 2022-001 Questioned Costs None Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that the determination of tenant eligibility and the maintenance of lease files are in accordance with guidelines specified by HUD. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In-Process Views of Responsible Officials Going forward, management will ensure that the EIV system is utilized correctly and timely. Tenant files have been noted on the late EIV reports. Management is now running EIV reports from corporate to eliminate the pate processing or missing EIV reports.
Finding 2023-002
Criteria - Eligibility Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: 1 out of 9 tenants tested did not have the accurate amount of adjusted annual income reported on HUD Form 50059 and did not utilized the Enterprise Income Verification system timely. 7 out of 9 tenants tested did not utilize the Enterprise Income Verification system timely. Cause The Project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Context A sample of 9 tenant files from a population of 82 were selected. We identified exceptions in 8 out of the 9 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Repeat finding of Finding No. 2022-001 Questioned Costs None Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that the determination of tenant eligibility and the maintenance of lease files are in accordance with guidelines specified by HUD. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In-Process Views of Responsible Officials Going forward, management will ensure that the EIV system is utilized correctly and timely. Tenant files have been noted on the late EIV reports. Management is now running EIV reports from corporate to eliminate the pate processing or missing EIV reports.