FAC Explorer

Audit 322940

FY End
2023-12-31
Total Expended
$3.55M
Findings
8
Programs
1
Organization: Shiloh Manor, Inc. (CT)
Year: 2023 Accepted: 2024-09-30
Auditor: Cohnreznick LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
500104 2023-001 - Yes N
500105 2023-002 Material Weakness Yes A
500106 2023-003 Significant Deficiency Yes N
500107 2023-004 Material Weakness - A
1076546 2023-001 - Yes N
1076547 2023-002 Material Weakness Yes A
1076548 2023-003 Significant Deficiency Yes N
1076549 2023-004 Material Weakness - A

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $3.29M Yes 4

Contacts

Name Title Type
FRL7B3YLRVJ6 Kimalee Williams Auditee
8605285000 Robert Balchunas Auditor
No contacts on file

Notes to SEFA

Title: 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: Shiloh Manor, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of Shiloh Manor, Inc., HUD Project No. 017-EE012, 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 Shiloh Manor, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Shiloh Manor, Inc.
Title: U.S. Department of Housing and Urban Development loan program 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: Shiloh Manor, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Shiloh Manor, Inc. has received a U.S. Department of Housing and Urban Development capital advance under Section 202 of the National Housing Act. The balance outstanding at the beginning of the year is included in the federal expenditures presented in the Schedule. Shiloh Manor, Inc. received no additional advances during the year. The balance of the outstanding advance at December 31, 2023 consists of the following: Federal Assistance Listing Number 14.157 Program Name Section 202 Capital Advance Outstanding Balance at December 31, 2023 $ 3,286,743
Title: Subrecipients 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: Shiloh Manor, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. There are no payments to subrecipients in any of the federal award programs during the year ended December 31, 2023.

Finding Details

Finding 2023-001
Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, funds may only be used with the approval of HUD. Condition As of December 31, 2023, management had not repaid $40,239 due to reserve for replacement. Additionally, during 2022, the property transferred $9,000 of reserve for replacement funds to operations to fund payroll and operating payables which was not reimbursed as of December 31, 2023. Cause Inadequate cash flow to fund operations and return of funds to reserve for replacement. Effect or Potential Effect Shiloh Manor, Inc. is not in compliance with the funding requirement of the reserve for replacement. Questioned Costs None. Context On December 31, 2017, HUD had approved a loan to operations from the reserve for replacement of $40,239 to be repaid upon receipt of the past due subsidy. When the past due subsidy was received the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. During 2022, the property transferred $9,000 of reserve for replacement funds to operations to fund payroll and operating payables; the funds have not been reimbursed as of December 31, 2023. Identification as a Repeat Finding This is a repeat finding (see prior year finding number 2022-001). Recommendation Management should start making monthly repayments on the $9,000 loan as established by HUD. Management should work with HUD to execute the loan waiver for the delinquent amount of $40,239. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: In process. Views of Responsible Officials The transfer from reserve of $9,000 was not returned as of 2023. A conversation with HUD on May 29, 2024, lead to a decision being made with a payment plan of $1,500 per month to start on June 1, 2024. As of December 31, 2023, there was a meeting with HUD representatives on March 23, 2023, which resulted in the decision for the waiver of the balance owed to the reserve of the $40,239. We are awaiting documentation from HUD on this decision.
Finding 2023-002
Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, loans are not permitted to be made from project cash without prior authorization from HUD. Condition During the year ended December 31, 2023, the project paid payroll expenses in the amount of $76 on behalf of an affiliate from project cash without HUD approval. The amount due to the project as of December 31, 2023 is $76. Cause Procedures were not in place to ensure that cash disbursements of projects funds were limited to project operating costs. Effect or Potential Effect The payment of $76 is an unauthorized loan and therefore considered to be questioned costs. Questioned Costs $76 Context During 2023, the project paid payroll expenses for an affiliated entity from project cash account resulting in a receivable in the amount of $76. Identification as a Repeat Finding This is a repeat finding (see prior year finding number 2022-002). Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: G - Unauthorized loans from project assets. Finding Resolution Status: In process. Views of Responsible Officials The finding for the $76 includes items deducted from Shiloh Manor due to an error with the setup of payroll processing with Paychex, which resulted in a few items deducted from the bank account that should have been for First Housing Corp. It was eventually corrected with Paychex in 2024 and the amount was accounted for as accounts receivable - other as a due from First Housing Corp. A transfer will be made in 2024 for the total balance due of $76 from First Housing Corp. to Shiloh Manor to correct the error. Department of Housing and Urban Development
Finding 2023-003
Criteria HUD regulatory agreement for Section 202 Supportive Housing for the Elderly requires that the project make timely monthly deposits to its replacement reserve. Condition During the year ended December 31, 2023, the project did not make the required monthly deposits to the replacement reserve in the amount of $66,000 as $5,500 was not made timely. The project is required to make timely monthly deposits to the reserve in the amount of $5,500 per month. Cause The project does not generate sufficient cash flow to make the required monthly deposits. Effect or Potential Effect Failure to make monthly payments resulted in underfunding the replacement reserve and a violation of the regulatory agreement. Questioned Costs None. Context During 2023, management resumed making deposits into the reserve for replacement; the deposits were not made timely and only eleven deposits were made as of December 31, 2023. The twelfth deposit was made in February 2024. Identification as a Repeat Finding This is a repeat finding (see prior year finding number 2022-001). Recommendation Management should review the project budget to ensure that the replacement reserve is funded timely and in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: Completed. Views of Responsible Officials The last amount of $5,500 of the reserve funding for 2023 was missed and then accounted for in February 2024 to fully fund for the 2023 year.
Finding 2023-004
Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly and regulatory agreement, undocumented disbursements are not permitted to be made from project cash and shall be an ineligible project expense. Condition During the year ended December 31, 2023, the project paid real estate tax expenses in the amount of $9,400 from project cash while a tax abatement agreement was in effect. Cause City of Middletown Tax Assessor submitted real estate tax bill that was paid by management during the current year while property has an active real property tax abatement in place. Effect or Potential Effect The payment of $9,400 is an unauthorized distribution and therefore considered to be questioned costs. Questioned Costs $9,400 Context During 2023, the project paid $9,400 of real estate tax expense while a tax abatement agreement was in effect resulting in unauthorized distribution. Identification as a Repeat Finding None. Recommendation Management should implement procedures to ensure payments of this nature are not made in the future. Management should contact City of Middletown officials to investigate the nature of the bill and request refund of funds back to project cash. Auditor Noncompliance Code: H - Unauthorized distribution from project assets. Finding Resolution Status: In process. Views of Responsible Officials Management contacted City of Middletown Tax Assessor who has agreed to reverse the bill. Management is working with the assessor to get the funds reimbursed.
Finding 2023-001
Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, funds may only be used with the approval of HUD. Condition As of December 31, 2023, management had not repaid $40,239 due to reserve for replacement. Additionally, during 2022, the property transferred $9,000 of reserve for replacement funds to operations to fund payroll and operating payables which was not reimbursed as of December 31, 2023. Cause Inadequate cash flow to fund operations and return of funds to reserve for replacement. Effect or Potential Effect Shiloh Manor, Inc. is not in compliance with the funding requirement of the reserve for replacement. Questioned Costs None. Context On December 31, 2017, HUD had approved a loan to operations from the reserve for replacement of $40,239 to be repaid upon receipt of the past due subsidy. When the past due subsidy was received the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. During 2022, the property transferred $9,000 of reserve for replacement funds to operations to fund payroll and operating payables; the funds have not been reimbursed as of December 31, 2023. Identification as a Repeat Finding This is a repeat finding (see prior year finding number 2022-001). Recommendation Management should start making monthly repayments on the $9,000 loan as established by HUD. Management should work with HUD to execute the loan waiver for the delinquent amount of $40,239. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: In process. Views of Responsible Officials The transfer from reserve of $9,000 was not returned as of 2023. A conversation with HUD on May 29, 2024, lead to a decision being made with a payment plan of $1,500 per month to start on June 1, 2024. As of December 31, 2023, there was a meeting with HUD representatives on March 23, 2023, which resulted in the decision for the waiver of the balance owed to the reserve of the $40,239. We are awaiting documentation from HUD on this decision.
Finding 2023-002
Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, loans are not permitted to be made from project cash without prior authorization from HUD. Condition During the year ended December 31, 2023, the project paid payroll expenses in the amount of $76 on behalf of an affiliate from project cash without HUD approval. The amount due to the project as of December 31, 2023 is $76. Cause Procedures were not in place to ensure that cash disbursements of projects funds were limited to project operating costs. Effect or Potential Effect The payment of $76 is an unauthorized loan and therefore considered to be questioned costs. Questioned Costs $76 Context During 2023, the project paid payroll expenses for an affiliated entity from project cash account resulting in a receivable in the amount of $76. Identification as a Repeat Finding This is a repeat finding (see prior year finding number 2022-002). Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: G - Unauthorized loans from project assets. Finding Resolution Status: In process. Views of Responsible Officials The finding for the $76 includes items deducted from Shiloh Manor due to an error with the setup of payroll processing with Paychex, which resulted in a few items deducted from the bank account that should have been for First Housing Corp. It was eventually corrected with Paychex in 2024 and the amount was accounted for as accounts receivable - other as a due from First Housing Corp. A transfer will be made in 2024 for the total balance due of $76 from First Housing Corp. to Shiloh Manor to correct the error. Department of Housing and Urban Development
Finding 2023-003
Criteria HUD regulatory agreement for Section 202 Supportive Housing for the Elderly requires that the project make timely monthly deposits to its replacement reserve. Condition During the year ended December 31, 2023, the project did not make the required monthly deposits to the replacement reserve in the amount of $66,000 as $5,500 was not made timely. The project is required to make timely monthly deposits to the reserve in the amount of $5,500 per month. Cause The project does not generate sufficient cash flow to make the required monthly deposits. Effect or Potential Effect Failure to make monthly payments resulted in underfunding the replacement reserve and a violation of the regulatory agreement. Questioned Costs None. Context During 2023, management resumed making deposits into the reserve for replacement; the deposits were not made timely and only eleven deposits were made as of December 31, 2023. The twelfth deposit was made in February 2024. Identification as a Repeat Finding This is a repeat finding (see prior year finding number 2022-001). Recommendation Management should review the project budget to ensure that the replacement reserve is funded timely and in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: Completed. Views of Responsible Officials The last amount of $5,500 of the reserve funding for 2023 was missed and then accounted for in February 2024 to fully fund for the 2023 year.
Finding 2023-004
Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly and regulatory agreement, undocumented disbursements are not permitted to be made from project cash and shall be an ineligible project expense. Condition During the year ended December 31, 2023, the project paid real estate tax expenses in the amount of $9,400 from project cash while a tax abatement agreement was in effect. Cause City of Middletown Tax Assessor submitted real estate tax bill that was paid by management during the current year while property has an active real property tax abatement in place. Effect or Potential Effect The payment of $9,400 is an unauthorized distribution and therefore considered to be questioned costs. Questioned Costs $9,400 Context During 2023, the project paid $9,400 of real estate tax expense while a tax abatement agreement was in effect resulting in unauthorized distribution. Identification as a Repeat Finding None. Recommendation Management should implement procedures to ensure payments of this nature are not made in the future. Management should contact City of Middletown officials to investigate the nature of the bill and request refund of funds back to project cash. Auditor Noncompliance Code: H - Unauthorized distribution from project assets. Finding Resolution Status: In process. Views of Responsible Officials Management contacted City of Middletown Tax Assessor who has agreed to reverse the bill. Management is working with the assessor to get the funds reimbursed.