Audit 323445

FY End
2023-12-31
Total Expended
$10.47M
Findings
4
Programs
1

Organization Exclusion Status:

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Findings

ID Ref Severity Repeat Requirement
501189 2023-001 - Yes N
501190 2023-001 - Yes N
1077631 2023-001 - Yes N
1077632 2023-001 - Yes N

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $748,275 Yes 1

Contacts

Name Title Type
DS6MD4RCG217 Carl Leung Auditee
7182404166 Leonora Galleros Auditor
No contacts on file

Notes to SEFA

Title: GENERAL 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has not elected to use the ten percent de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (“the Schedule”) presents the activity of all federal awards Melrose Villa Hermosa Housing Development Fund Company, Inc. (the “Project”). The Project is described in the notes to the Project’s financial statements. All federal awards received directly consolidated from federal or state agencies, as well as federal awards passed through other government agencies, is included on the Schedule.
Title: 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has not elected to use the ten percent de minimis indirect cost rate allowed under the Uniform Guidance. 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 reimbursements.
Title: HUD CAPITAL ADVANCE 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has not elected to use the ten percent de minimis indirect cost rate allowed under the Uniform Guidance. The Project’s total HUD Capital Advance of $9,719,624 is recognized as net assets with donor restrictions as of December 31, 2023 in the Project’s statement of financial position. The capital advance was used to finance the construction and development of the Project’s buildings. There was no loan activity for 2023. The total advance is included as federal expenditures in the Schedule.
Title: DE MINIMIS INDIRECT COST 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has not elected to use the ten percent de minimis indirect cost rate allowed under the Uniform Guidance. The Project has not elected to use the ten percent de minimis indirect cost rate allowed under the Uniform Guidance.

Finding Details

Criteria - Owners shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. All disbursements from the reserve must be approved by HUD (24 CFR sections 891.405 and 891.605). Condition - During the year, withdrawals amounting to $66,801 were made from the replacement reserve account for an emergency roof project without prior HUD approval. Cause - The managing agent was not provided a copy of the regulatory agreement. The project owner was not aware of the HUD requirement that all withdrawals from the replacement reserve account should be approved and determined as qualified withdrawals by HUD. Effect - Required approval by HUD for replacement reserve withdrawals was not obtained before withdrawal. Questioned cost - None. Context - Withdrawals made from the replacement reserve account during the year without proper HUD approval. Recommendation - We recommend that the Project monitor the disbursements being made in relation to the withdrawal from the replacement reserve account to ensure that the said disbursements are within the HUD guidelines. Also, to ensure compliance with the requirements of 24 CFR sections 891.405 and 891.605, all withdrawals from the replacement reserve account should be reviewed and approved by HUD. View of Responsible Official and Planned Corrective Action - Managing agent subsequently obtained approval from HUD for the questioned replacement reserve withdrawal. All replacement reserve withdrawals will obtain prior approval from HUD.
Criteria - Owners shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. All disbursements from the reserve must be approved by HUD (24 CFR sections 891.405 and 891.605). Condition - During the year, withdrawals amounting to $66,801 were made from the replacement reserve account for an emergency roof project without prior HUD approval. Cause - The managing agent was not provided a copy of the regulatory agreement. The project owner was not aware of the HUD requirement that all withdrawals from the replacement reserve account should be approved and determined as qualified withdrawals by HUD. Effect - Required approval by HUD for replacement reserve withdrawals was not obtained before withdrawal. Questioned cost - None. Context - Withdrawals made from the replacement reserve account during the year without proper HUD approval. Recommendation - We recommend that the Project monitor the disbursements being made in relation to the withdrawal from the replacement reserve account to ensure that the said disbursements are within the HUD guidelines. Also, to ensure compliance with the requirements of 24 CFR sections 891.405 and 891.605, all withdrawals from the replacement reserve account should be reviewed and approved by HUD. View of Responsible Official and Planned Corrective Action - Managing agent subsequently obtained approval from HUD for the questioned replacement reserve withdrawal. All replacement reserve withdrawals will obtain prior approval from HUD.
Criteria - Owners shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. All disbursements from the reserve must be approved by HUD (24 CFR sections 891.405 and 891.605). Condition - During the year, withdrawals amounting to $66,801 were made from the replacement reserve account for an emergency roof project without prior HUD approval. Cause - The managing agent was not provided a copy of the regulatory agreement. The project owner was not aware of the HUD requirement that all withdrawals from the replacement reserve account should be approved and determined as qualified withdrawals by HUD. Effect - Required approval by HUD for replacement reserve withdrawals was not obtained before withdrawal. Questioned cost - None. Context - Withdrawals made from the replacement reserve account during the year without proper HUD approval. Recommendation - We recommend that the Project monitor the disbursements being made in relation to the withdrawal from the replacement reserve account to ensure that the said disbursements are within the HUD guidelines. Also, to ensure compliance with the requirements of 24 CFR sections 891.405 and 891.605, all withdrawals from the replacement reserve account should be reviewed and approved by HUD. View of Responsible Official and Planned Corrective Action - Managing agent subsequently obtained approval from HUD for the questioned replacement reserve withdrawal. All replacement reserve withdrawals will obtain prior approval from HUD.
Criteria - Owners shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. All disbursements from the reserve must be approved by HUD (24 CFR sections 891.405 and 891.605). Condition - During the year, withdrawals amounting to $66,801 were made from the replacement reserve account for an emergency roof project without prior HUD approval. Cause - The managing agent was not provided a copy of the regulatory agreement. The project owner was not aware of the HUD requirement that all withdrawals from the replacement reserve account should be approved and determined as qualified withdrawals by HUD. Effect - Required approval by HUD for replacement reserve withdrawals was not obtained before withdrawal. Questioned cost - None. Context - Withdrawals made from the replacement reserve account during the year without proper HUD approval. Recommendation - We recommend that the Project monitor the disbursements being made in relation to the withdrawal from the replacement reserve account to ensure that the said disbursements are within the HUD guidelines. Also, to ensure compliance with the requirements of 24 CFR sections 891.405 and 891.605, all withdrawals from the replacement reserve account should be reviewed and approved by HUD. View of Responsible Official and Planned Corrective Action - Managing agent subsequently obtained approval from HUD for the questioned replacement reserve withdrawal. All replacement reserve withdrawals will obtain prior approval from HUD.