FAC Explorer

Audit 320806

FY End
2023-12-31
Total Expended
$5.90M
Findings
6
Programs
4
Organization: Little Earth of United Tribes Housing Corporation (MN)
Year: 2023 Accepted: 2024-09-25
Auditor: Mahoney Ulbrich Christiansen & Russ PA

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
498125 2023-001 Significant Deficiency Yes N
498126 2023-002 Significant Deficiency - L
498127 2023-003 Significant Deficiency - E
1074567 2023-001 Significant Deficiency Yes N
1074568 2023-002 Significant Deficiency - L
1074569 2023-003 Significant Deficiency - E

Programs

ALN Program Spent Major Findings
14.195 Lower Income Housing Assistance Program - Section 8 Moderate Rehabilitation $3.30M Yes 3
14.239 Home Investment Partnerships Program $500,000 Yes 0
14.244 Renewal Community and Empowerment Zone Programs $500,000 - 0
14.218 Community Development Block Grants/entitlement Grants $350,000 - 0

Contacts

Name Title Type
NQX7WG88CJL5 Brian Murdock Auditee
6129787821 Darren Fetzer Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: (1) Expenditures reported on this Schedule are reported on the accrual basis of accounting, except for the loan balances as discussed below. 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. (2) Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: Auditee did not use the de minimis cost rate. This schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of Little Earth of United Tribes Housing 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 (the Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Little Earth of United Tribes Housing Corporation, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Little Earth of United Tribes Housing Corporation.
Title: Loans Accounting Policies: (1) Expenditures reported on this Schedule are reported on the accrual basis of accounting, except for the loan balances as discussed below. 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. (2) Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: Auditee did not use the de minimis cost rate. Expenditures reported for the loans with continuing compliance requirements represent the December 31, 2022 balance of an insured mortgage loan outstanding from a previous year for which the grantor imposes continuing compliance requirements. The balance of the loans outstanding as of December 31, 2023 is $2,600,000.

Finding Details

Finding 2023-001
Finding 2023-001 - Replacement Reserve Deposits Federal Program – Section 8 Housing Assistance Payments Program Assistance Listing Number – 14.195 Significant Deficiency Category of Finding – N – Special tests and provisions Criteria - Pursuant to LEUTHC’s Regulatory Agreement with the Department of Housing and Urban Development (HUD), 12 monthly deposits of $17,617 are required into the replacement reserve (annually $211,404). Condition - LEUTHC made 10 monthly deposits ($176,170) to the replacement reserve in 2022. In 2023, only 1 catch-up deposit of $17,617 was made to the replacement reserve. Effect - The replacement reserve is underfunded by $17,617. Cause - LEUTHC did not make 2 catch-up deposits ($17,617 each) to the replacement reserve in 2023 to resolve the 2022 finding and underfunding of the replacement reserve. Recommendation - LEUTHC should make an additional deposit to the replacement reserve of $17,617 in 2024. Auditee’s comments and response - Management made an additional deposit to the replacement reserve of $17,617 in June 2024. Status - Resolved
Finding 2023-002
Finding 2023-002 – Filing of Single Audit Reporting Package Federal Program – Section 8 Housing Assistance Payments Program Assistance Listing Number – 14.195 Significant Deficiency Category of Finding – L – Reporting Criteria - Pursuant to 2 CFR section 200.512(a), the reporting package shall be submitted within the earlier of 30 days after receipt of the auditor’s report(s), or nine months after the end of the audit period. Condition - LEUTHC did not submit the Single Audit Reporting Package for the year ended December 31, 2022 within nine months after the end of the audit period (September 30, 2023). Effect - Failure to submit the required Single Audit Reporting Package timely automatically results in LEUTHC not qualifying for low-risk auditee status for the subsequent year’s single audit. Cause - The Single Audit Reporting website was updated in 2022 and 2023 and a new unique entity identification number was required to be created. LEUTHC did not file for a unique entity identification number in an appropriate time to submit the report. Recommendation - We recommend LEUTHC develop, document, and implement policies and procedures for timely submission of the Single Audit Reporting Package. Auditee’s comments and response - LEUTHC will designate an individual in management to document financial statement preparation processes to ensure timely submission of the Single Audit Reporting Package. The 2022 Single Audit Reporting Package was filed in July 2024. Status - Resolved
Finding 2023-003
Finding 2023-003 – Tenant File Certification Federal Program – Section 8 Housing Assistance Payments Program Assistance Listing Number – 14.195 Significant Deficiency Category of Finding – E – Eligibility Criteria - For eligibility of Section 8 rental assistance, HUD regulations require that Owners conduct a recertification of family income and composition at least annually. Owners must then recompute the tenants’ rent and assistance payments, if applicable, based on the information gathered. Condition - Family income and composition gross rent adjustments were not documented by management. There were 22 tenants selected for testing at the Project and 1 tenant gross rent adjustment was not documented. Effect - The Project is out of compliance with HUD Regulations. In addition, rental assistance may be delayed and changes in rental assistance will be effective from tenants’ annual recertification dates and any gross rent adjustments made. Any changes in the tenant portion of rent may not take effect until the annual recertifications are complete and may result in a loss of rent. Cause - Multiple tenant gross rent adjustments during the year resulted in the oversight of management to document a tenant gross rent change. Recommendation - Management is working diligently to review and document annual recertifications and gross rent adjustments accordingly. Management should ensure procedures are in place to properly review and document annual recertifications and gross rent adjustments. Auditee’s comments and response - LEUTHC and management agree with the finding, and will implement strategies to address the finding, including developing a monitoring program to set expectations and hold employees accountable to those expectations. The tenant out of compliance in 2023 performed the annual recertification and the rental assistance and contract rent agreed to the HUD form 50059 and housing assistance payments schedule. Status - Resolved
Finding 2023-001
Finding 2023-001 - Replacement Reserve Deposits Federal Program – Section 8 Housing Assistance Payments Program Assistance Listing Number – 14.195 Significant Deficiency Category of Finding – N – Special tests and provisions Criteria - Pursuant to LEUTHC’s Regulatory Agreement with the Department of Housing and Urban Development (HUD), 12 monthly deposits of $17,617 are required into the replacement reserve (annually $211,404). Condition - LEUTHC made 10 monthly deposits ($176,170) to the replacement reserve in 2022. In 2023, only 1 catch-up deposit of $17,617 was made to the replacement reserve. Effect - The replacement reserve is underfunded by $17,617. Cause - LEUTHC did not make 2 catch-up deposits ($17,617 each) to the replacement reserve in 2023 to resolve the 2022 finding and underfunding of the replacement reserve. Recommendation - LEUTHC should make an additional deposit to the replacement reserve of $17,617 in 2024. Auditee’s comments and response - Management made an additional deposit to the replacement reserve of $17,617 in June 2024. Status - Resolved
Finding 2023-002
Finding 2023-002 – Filing of Single Audit Reporting Package Federal Program – Section 8 Housing Assistance Payments Program Assistance Listing Number – 14.195 Significant Deficiency Category of Finding – L – Reporting Criteria - Pursuant to 2 CFR section 200.512(a), the reporting package shall be submitted within the earlier of 30 days after receipt of the auditor’s report(s), or nine months after the end of the audit period. Condition - LEUTHC did not submit the Single Audit Reporting Package for the year ended December 31, 2022 within nine months after the end of the audit period (September 30, 2023). Effect - Failure to submit the required Single Audit Reporting Package timely automatically results in LEUTHC not qualifying for low-risk auditee status for the subsequent year’s single audit. Cause - The Single Audit Reporting website was updated in 2022 and 2023 and a new unique entity identification number was required to be created. LEUTHC did not file for a unique entity identification number in an appropriate time to submit the report. Recommendation - We recommend LEUTHC develop, document, and implement policies and procedures for timely submission of the Single Audit Reporting Package. Auditee’s comments and response - LEUTHC will designate an individual in management to document financial statement preparation processes to ensure timely submission of the Single Audit Reporting Package. The 2022 Single Audit Reporting Package was filed in July 2024. Status - Resolved
Finding 2023-003
Finding 2023-003 – Tenant File Certification Federal Program – Section 8 Housing Assistance Payments Program Assistance Listing Number – 14.195 Significant Deficiency Category of Finding – E – Eligibility Criteria - For eligibility of Section 8 rental assistance, HUD regulations require that Owners conduct a recertification of family income and composition at least annually. Owners must then recompute the tenants’ rent and assistance payments, if applicable, based on the information gathered. Condition - Family income and composition gross rent adjustments were not documented by management. There were 22 tenants selected for testing at the Project and 1 tenant gross rent adjustment was not documented. Effect - The Project is out of compliance with HUD Regulations. In addition, rental assistance may be delayed and changes in rental assistance will be effective from tenants’ annual recertification dates and any gross rent adjustments made. Any changes in the tenant portion of rent may not take effect until the annual recertifications are complete and may result in a loss of rent. Cause - Multiple tenant gross rent adjustments during the year resulted in the oversight of management to document a tenant gross rent change. Recommendation - Management is working diligently to review and document annual recertifications and gross rent adjustments accordingly. Management should ensure procedures are in place to properly review and document annual recertifications and gross rent adjustments. Auditee’s comments and response - LEUTHC and management agree with the finding, and will implement strategies to address the finding, including developing a monitoring program to set expectations and hold employees accountable to those expectations. The tenant out of compliance in 2023 performed the annual recertification and the rental assistance and contract rent agreed to the HUD form 50059 and housing assistance payments schedule. Status - Resolved