Condition: Management failed to post prior year audit entries.
Criteria: Agreed upon audit adjustments must be posted to the financial statements each year.
Cause: The cause is undeterminable.
Effect: The financial statement records did not contain all financial transactions of the property.
Recommendation: I recommend management post audit entries to agree financial records to audit report.
Condition: Management did not record utility accruals in the accounting records in the amount of $12K.
Criteria: The accrual accounting method ensures transactions are recognized in the accounting period
incurred, rather than paid, which follows the matching principle.
Cause: The cause is undeterminable.
Effect: Not recording accruals could have a material impact on both the balance sheet and the income
statements.
Recommendation: I recommend management post all accruals to properly reflect the financial position of
the Project.
Condition: Management failed to make two required monthly deposits in the amount of $15,000 into the reserve for replacement bank account.
Criteria: According to the Regulatory Agreement, “mortgagor will establish and maintain a reserve fund
for replacements in a separate account in a bank…Concurrently with the effective commencement of rental assistance payments under the Project Rental Assistance Contract, the Mortgagor will deposit an amount…per month unless a different date or amount is approved in writing by HUD”.
Cause: The cause is undeterminable.
Effect: The Project did not comply fully with the HUD regulatory agreement.
Recommendation: I recommend management adhere to the Regulatory Agreement as it relates to required monthly deposits into the reserve for replacement account.
Condition: HUD 9250 funds were requested for use in operations in the amount of $229,388.
Criteria: According to HUD 9250 requests, advanced funds were to be repaid within 60 days of receipt of HAP subsidy funds.
Cause: The cause is undeterminable.
Effect: The Project utilized funds from the reserve for replacement account and currently does not have funds to repay the loan.
Recommendation: I recommend the Project remain in compliance with the HUD 9250 requests.
Condition: The owner did not meet the HUD financial reporting requirement.
Criteria: According to HUD’s Uniform Financial Reporting Standards rule, annually, an owner is required to submit a financial statement, prepared in accordance with generally accepted accounting principles (GAAP), in the electronic format specified by HUD. The unaudited financial statement is due three months after the owner’s fiscal year end and the audited financial statement is due nine months after its fiscal year-end (24 CFR section 5.801). The financial statement must include the financial activities of this program.
Cause: The cause is undeterminable.
Effect: The Project is not compliant with HUD program requirements.
Recommendation: I recommend the owner meet HUD program requirements.
Condition: Management failed to post prior year audit entries.
Criteria: Agreed upon audit adjustments must be posted to the financial statements each year.
Cause: The cause is undeterminable.
Effect: The financial statement records did not contain all financial transactions of the property.
Recommendation: I recommend management post audit entries to agree financial records to audit report.
Condition: Management did not record utility accruals in the accounting records in the amount of $12K.
Criteria: The accrual accounting method ensures transactions are recognized in the accounting period
incurred, rather than paid, which follows the matching principle.
Cause: The cause is undeterminable.
Effect: Not recording accruals could have a material impact on both the balance sheet and the income
statements.
Recommendation: I recommend management post all accruals to properly reflect the financial position of
the Project.
Condition: Management failed to make two required monthly deposits in the amount of $15,000 into the reserve for replacement bank account.
Criteria: According to the Regulatory Agreement, “mortgagor will establish and maintain a reserve fund
for replacements in a separate account in a bank…Concurrently with the effective commencement of rental assistance payments under the Project Rental Assistance Contract, the Mortgagor will deposit an amount…per month unless a different date or amount is approved in writing by HUD”.
Cause: The cause is undeterminable.
Effect: The Project did not comply fully with the HUD regulatory agreement.
Recommendation: I recommend management adhere to the Regulatory Agreement as it relates to required monthly deposits into the reserve for replacement account.
Condition: HUD 9250 funds were requested for use in operations in the amount of $229,388.
Criteria: According to HUD 9250 requests, advanced funds were to be repaid within 60 days of receipt of HAP subsidy funds.
Cause: The cause is undeterminable.
Effect: The Project utilized funds from the reserve for replacement account and currently does not have funds to repay the loan.
Recommendation: I recommend the Project remain in compliance with the HUD 9250 requests.
Condition: The owner did not meet the HUD financial reporting requirement.
Criteria: According to HUD’s Uniform Financial Reporting Standards rule, annually, an owner is required to submit a financial statement, prepared in accordance with generally accepted accounting principles (GAAP), in the electronic format specified by HUD. The unaudited financial statement is due three months after the owner’s fiscal year end and the audited financial statement is due nine months after its fiscal year-end (24 CFR section 5.801). The financial statement must include the financial activities of this program.
Cause: The cause is undeterminable.
Effect: The Project is not compliant with HUD program requirements.
Recommendation: I recommend the owner meet HUD program requirements.