FAC Explorer

Audit 318591

FY End
2023-12-31
Total Expended
$3.20M
Findings
4
Programs
5
Organization: Pilgrim Towers, Inc. (CT)
Year: 2023 Accepted: 2024-09-05
Auditor: Whittlesey PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
485752 2023-001 Significant Deficiency Yes P
485753 2023-002 Significant Deficiency - E
1062194 2023-001 Significant Deficiency Yes P
1062195 2023-002 Significant Deficiency - E

Programs

ALN Program Spent Major Findings
14.218 Community Development Block Grants/entitlement Grants $1.63M Yes 0
14.239 Home Investment Partnerships Program $800,000 Yes 1
14.164 Flexible Subsidy Loan (section 201) $373,400 Yes 1
14.856 Lower Income Housing Assistance Program_section 8 Moderate Rehabilitation $339,711 - 0
14.191 Multifamily Housing Service Coordinators $56,847 - 0

Contacts

Name Title Type
HS2NGCSLY253 Pat Thatcher Auditee
2036536538 Niko Yanouzas Auditor
No contacts on file

Notes to SEFA

Title: NOTE 1 – BASIS OF PRESENTATION Accounting Policies: Expenditures reported 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: The ten percent de minimis indirect cost rate is not applicable to the HUD funded loan and housing assistance program. The accompanying Schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of Pilgrim Towers, Inc. (the “Corporation”) 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 Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Agency, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Agency.
Title: NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: Expenditures reported 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: The ten percent de minimis indirect cost rate is not applicable to the HUD funded loan and housing assistance program. Expenditures reported 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.
Title: NOTE 3 – FEDERALLY FUNDED LOANS Accounting Policies: Expenditures reported 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: The ten percent de minimis indirect cost rate is not applicable to the HUD funded loan and housing assistance program. Federally funded loans reported on the Schedule include the amount of new loans funded during the year ended December 31, 2023, the beginning balances of loans from the previous year that have continuing compliance imposed by HUD and subsidized interest that has been accrued in accordance with the promissory notes, as applicable. The ending principal balances of federally funded loans as of December 31, 2023 are as follows: Department of Housing and Urban Development - Flexible Subsidy Loan (Section 201) January 1, 2023 - $485,829, Accrued interest for 2023 - $3,734, Flexible Subsidy Loan (Section 201) December 31, 2023 - $489,563. Community Development Block Grants/Entitlement Grants - $1,630,446. Home Investment Partnerships Program - $800,000.
Title: NOTE 4 – INDIRECT COST RATE Accounting Policies: Expenditures reported 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: The ten percent de minimis indirect cost rate is not applicable to the HUD funded loan and housing assistance program. The ten percent de minimis indirect cost rate is not applicable to the HUD funded loan and housing assistance program.

Finding Details

Finding 2023-001
S3800-010 Finding reference number: 2023-001 S3800-011 Title and CFDA Flexible Subsidy Loan: 14.164 S3800-015 Type of Finding: FA S3800-016 Finding resolution status: In process S3800-019 Identification of repeat finding: 2022-002 S3800-020 Criteria: The Flexible Subsidy Loan "Residual Receipts Note" clause 3(a) cites that the entire principal together with interest is immediately due and payable when the HUD Section 202 mortgage is paid off. S3800-030 Statement of Condition: During our audit for the year ended December 31, 2021, we inquired and requested documentation regarding the repayment status of the Flexible Subsidy Loan from the Agency's officers and from its management company. The Agency did not have documentation regarding the mortgage status of the Flexible Subsidy Loan available since the HUD Section 202 mortgage was paid off in November 2016. S3800-032 Cause: The Agency is waiting for a response from HUD as to their inquiry regarding the repayment of the Flexible Subsidy Loan. S3800-033 Effect of Potential Effect: Based on the literal terms of the Flexible Subsidy Loan, the Agency appears to be in default as it has not established repayment with HUD. S3800-035 Auditor non-compliance code: S S3800-040 Amount of questioned costs: $0 S3800-045 Reporting Views of Responsible Officials: We continue to follow up, as we diligently have over many recent months, starting in 2008. Most recently, via an attorney, who, like Pilgrim Towers, has not been able to elicit any response from HUD to resolve this matter. S3800-037 FHA/Contract number: CT26M000251 S3800-038 Questioned Costs: $0 S3800-050 Context: It has been brought to the Agency's attention that the repayment of the HUD Section 202 mortgage that they would need to contact their HUD field representative regarding repayment of the Flexible Subsidy Loan. S3800-080 Recommendation: We recommend that the Agency follow up with its HUD field representative to determine the next steps regarding the repayment terms of the Flexible Subsidy Loan. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: We recommend that the Agency follow up with its HUD field representative to determine the next steps regarding the repayment terms of the Flexible Subsidy Loan. S3800-130 Response Indicator: A S3800-140 Completion date of proposed recommendation: December 31, 2024 S3800-150 Response: We continue to follow up, as we diligently have over many recent months, starting in 2008. Most recently, via an attorney, who, like Pilgrim Towers, has not been able to elicit any response from HUD to resolve this matter.
Finding 2023-002
S3800-010 Finding reference number: 2023-002 S3800-011 Title and CFDA: Home Investment Partnerships Program CFDA# 14.239 S3800-015 Type of Finding: FA S3800-016 Finding resolution status: In process S3800-019 Identification of repeat finding: N/A S3800-020 Criteria: The HOME program has income targeting requirements. Only low-income or very lowincome persons, as defined in 24 CFR section 92.2, can receive housing assistance (24 CFR section 92.1). Therefore, the Agency must determine if each family is income eligible by determining the family’s annual income, including all persons in the household. The Agency must maintain records for each family assisted. S3800-030 Statement of Condition: During our audit for the year ended December 31, 2023, we noted that sufficient supporting documentation was not available for the annual income amounts. S3800-032 Cause: Annual income determinations were not properly documented by the property management company. S3800-033 Effect of Potential Effect: There is not sufficient supporting documentation for the annual income used to assess housing eligibility and the auditor can not determine if appropriate rental limits were followed in line with the HOME program compliance requirements. S3800-035 Auditor non-compliance code: S S3800-040 Amount of questioned costs: $0 S3800-045 Reporting Views of Responsible Officials: As of April 1, 2024, a new management company has taken over responsibility of management of the Pilgrim Towers project. This new management company will be diligently working to update and obtain the documentation that is unavailable, and will ensure to properly maintain any future documentation regarding annual income certifications for housing elilgiblity. S3800-037 FHA/Contract number: CT26M000251 S3800-038 Questioned Costs: $0 S3800-050 Context: The Agency is not in compliance with the HOME Program requirements of maintain records for each family assisted. HOME-assisted units in a rental housing project must be occupied only by households that are eligible as low-income families and must meet certain limits on the rents that can be charged. Due to the lack of supporting documentation of annual income the auditor is unable to determine if the tenants are eligible under the HOME program. S3800-080 Recommendation: We recommend that the Agency documents all annual income assessments, and that it retain copies of the income assessment and supporting documentation to comply with the requirements of the HOME Program. In addition, we recommend that the annual income certifications be signed by the tenant and a property manager. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Annual income determinations must be documented and maintained by the Agency. S3800-130 Response Indicator: A S3800-140 Completion date of proposed recommendation: December 31, 2024 S3800-150 Response: We agree with the finding, and expect this to be resolved in the coming year with the new management company, Kingsway Senior Housing, in place as of April 1, 2024.
Finding 2023-001
S3800-010 Finding reference number: 2023-001 S3800-011 Title and CFDA Flexible Subsidy Loan: 14.164 S3800-015 Type of Finding: FA S3800-016 Finding resolution status: In process S3800-019 Identification of repeat finding: 2022-002 S3800-020 Criteria: The Flexible Subsidy Loan "Residual Receipts Note" clause 3(a) cites that the entire principal together with interest is immediately due and payable when the HUD Section 202 mortgage is paid off. S3800-030 Statement of Condition: During our audit for the year ended December 31, 2021, we inquired and requested documentation regarding the repayment status of the Flexible Subsidy Loan from the Agency's officers and from its management company. The Agency did not have documentation regarding the mortgage status of the Flexible Subsidy Loan available since the HUD Section 202 mortgage was paid off in November 2016. S3800-032 Cause: The Agency is waiting for a response from HUD as to their inquiry regarding the repayment of the Flexible Subsidy Loan. S3800-033 Effect of Potential Effect: Based on the literal terms of the Flexible Subsidy Loan, the Agency appears to be in default as it has not established repayment with HUD. S3800-035 Auditor non-compliance code: S S3800-040 Amount of questioned costs: $0 S3800-045 Reporting Views of Responsible Officials: We continue to follow up, as we diligently have over many recent months, starting in 2008. Most recently, via an attorney, who, like Pilgrim Towers, has not been able to elicit any response from HUD to resolve this matter. S3800-037 FHA/Contract number: CT26M000251 S3800-038 Questioned Costs: $0 S3800-050 Context: It has been brought to the Agency's attention that the repayment of the HUD Section 202 mortgage that they would need to contact their HUD field representative regarding repayment of the Flexible Subsidy Loan. S3800-080 Recommendation: We recommend that the Agency follow up with its HUD field representative to determine the next steps regarding the repayment terms of the Flexible Subsidy Loan. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: We recommend that the Agency follow up with its HUD field representative to determine the next steps regarding the repayment terms of the Flexible Subsidy Loan. S3800-130 Response Indicator: A S3800-140 Completion date of proposed recommendation: December 31, 2024 S3800-150 Response: We continue to follow up, as we diligently have over many recent months, starting in 2008. Most recently, via an attorney, who, like Pilgrim Towers, has not been able to elicit any response from HUD to resolve this matter.
Finding 2023-002
S3800-010 Finding reference number: 2023-002 S3800-011 Title and CFDA: Home Investment Partnerships Program CFDA# 14.239 S3800-015 Type of Finding: FA S3800-016 Finding resolution status: In process S3800-019 Identification of repeat finding: N/A S3800-020 Criteria: The HOME program has income targeting requirements. Only low-income or very lowincome persons, as defined in 24 CFR section 92.2, can receive housing assistance (24 CFR section 92.1). Therefore, the Agency must determine if each family is income eligible by determining the family’s annual income, including all persons in the household. The Agency must maintain records for each family assisted. S3800-030 Statement of Condition: During our audit for the year ended December 31, 2023, we noted that sufficient supporting documentation was not available for the annual income amounts. S3800-032 Cause: Annual income determinations were not properly documented by the property management company. S3800-033 Effect of Potential Effect: There is not sufficient supporting documentation for the annual income used to assess housing eligibility and the auditor can not determine if appropriate rental limits were followed in line with the HOME program compliance requirements. S3800-035 Auditor non-compliance code: S S3800-040 Amount of questioned costs: $0 S3800-045 Reporting Views of Responsible Officials: As of April 1, 2024, a new management company has taken over responsibility of management of the Pilgrim Towers project. This new management company will be diligently working to update and obtain the documentation that is unavailable, and will ensure to properly maintain any future documentation regarding annual income certifications for housing elilgiblity. S3800-037 FHA/Contract number: CT26M000251 S3800-038 Questioned Costs: $0 S3800-050 Context: The Agency is not in compliance with the HOME Program requirements of maintain records for each family assisted. HOME-assisted units in a rental housing project must be occupied only by households that are eligible as low-income families and must meet certain limits on the rents that can be charged. Due to the lack of supporting documentation of annual income the auditor is unable to determine if the tenants are eligible under the HOME program. S3800-080 Recommendation: We recommend that the Agency documents all annual income assessments, and that it retain copies of the income assessment and supporting documentation to comply with the requirements of the HOME Program. In addition, we recommend that the annual income certifications be signed by the tenant and a property manager. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Annual income determinations must be documented and maintained by the Agency. S3800-130 Response Indicator: A S3800-140 Completion date of proposed recommendation: December 31, 2024 S3800-150 Response: We agree with the finding, and expect this to be resolved in the coming year with the new management company, Kingsway Senior Housing, in place as of April 1, 2024.