Title: Note 3
Accounting Policies: The schedule of expenditures of federal awards is prepared on the accrual basis of accounting.
De Minimis Rate Used: N
Rate Explanation: The Corporation has elected to not use the 10% de minimis cost rate.
The balance of the HUD Section 202 mortgage note payable at May 31, 2024 is $439,727.
Finding reference number: 2024-001
Assistance Listing (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing No. 14.157 (Project identification number 061-EH142 and 1987)
Auditor non-compliance code: M - Security Deposits
Finding resolution status: Resolved
Universe population size: N/A
Sample size information: N/A
Statistically valid sample: No
Name of Federal agency: U.S. Department of Housing and Urban Development
Pass-through entity: N/A
Questioned costs: $223
Statement of condition 2024-001: The resident security deposit account did not have adequate funds to cover the security deposits collected at May 31, 2024.
Criteria: Pursuant to Section 12 of the Regulatory Agreement, resident security deposits are required to be funded in a separate account in an amount which shall at all times equal or exceed the aggregate of all outstanding obligations.
Effect: Failure to fund the security deposit account could result in the inability of the Corporation to return security deposits to residents upon termination of a resident's lease.
Cause: The resident security deposit account did not have adequate funds to cover the security deposits collected at May 31, 2024 due to a security deposit being deposited to the operating account during the year ended May 31, 2024 but not transferred to the security deposit account.
Recommendation: Management should reconcile the security deposit listing on a monthly basis and transfer funds from the operating cash account to ensure the resident security deposit account is adequately funded and collect the security deposit at the time of resident move-in.
Management's response: Agree. On July 22, 2024, Management transferred $223 from the operating cash account to fully fund the security deposit account.
Finding reference number: 2024-002
Assistance Listing (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing No. 14.157 (Project identification number 061-EH142 and 1987)
Auditor non-compliance code: M - Security Deposits
Finding resolution status: Resolved
Universe population size: 12 months
Sample size information: 2 months
Statistically valid sample: No
Name of Federal agency: U.S. Department of Housing and Urban Development
Pass-through entity: N/A
Questioned costs: $0
Statement of condition 2024-002: Two of the move-in residents' security deposits tested were not collected timely.
Criteria: Pursuant to the HUD Handbook 4350.3, Chapter 6, the owner must collect a security deposit at the time of the initial lease execution.
Effect: The Corporation is not in compliance with the HUD Handbook 4350.3, Chapter 6.
Cause: Due to the property manager position being vacant, the residents' security deposits were not collected at the execution of the lease.
Recommendation: Management should collect the security deposit at the time of resident move-in.
Management's response: Agree. Management will collect the security deposit at the time of move-in. During the year ended May 31, 2024, the residents' security deposits were collected. There is no further action required.
Finding reference number: 2024-001
Assistance Listing (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing No. 14.157 (Project identification number 061-EH142 and 1987)
Auditor non-compliance code: M - Security Deposits
Finding resolution status: Resolved
Universe population size: N/A
Sample size information: N/A
Statistically valid sample: No
Name of Federal agency: U.S. Department of Housing and Urban Development
Pass-through entity: N/A
Questioned costs: $223
Statement of condition 2024-001: The resident security deposit account did not have adequate funds to cover the security deposits collected at May 31, 2024.
Criteria: Pursuant to Section 12 of the Regulatory Agreement, resident security deposits are required to be funded in a separate account in an amount which shall at all times equal or exceed the aggregate of all outstanding obligations.
Effect: Failure to fund the security deposit account could result in the inability of the Corporation to return security deposits to residents upon termination of a resident's lease.
Cause: The resident security deposit account did not have adequate funds to cover the security deposits collected at May 31, 2024 due to a security deposit being deposited to the operating account during the year ended May 31, 2024 but not transferred to the security deposit account.
Recommendation: Management should reconcile the security deposit listing on a monthly basis and transfer funds from the operating cash account to ensure the resident security deposit account is adequately funded and collect the security deposit at the time of resident move-in.
Management's response: Agree. On July 22, 2024, Management transferred $223 from the operating cash account to fully fund the security deposit account.
Finding reference number: 2024-002
Assistance Listing (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing No. 14.157 (Project identification number 061-EH142 and 1987)
Auditor non-compliance code: M - Security Deposits
Finding resolution status: Resolved
Universe population size: 12 months
Sample size information: 2 months
Statistically valid sample: No
Name of Federal agency: U.S. Department of Housing and Urban Development
Pass-through entity: N/A
Questioned costs: $0
Statement of condition 2024-002: Two of the move-in residents' security deposits tested were not collected timely.
Criteria: Pursuant to the HUD Handbook 4350.3, Chapter 6, the owner must collect a security deposit at the time of the initial lease execution.
Effect: The Corporation is not in compliance with the HUD Handbook 4350.3, Chapter 6.
Cause: Due to the property manager position being vacant, the residents' security deposits were not collected at the execution of the lease.
Recommendation: Management should collect the security deposit at the time of resident move-in.
Management's response: Agree. Management will collect the security deposit at the time of move-in. During the year ended May 31, 2024, the residents' security deposits were collected. There is no further action required.