FAC Explorer

Audit 323597

FY End
2023-12-31
Total Expended
$1.74M
Findings
6
Programs
1
Organization: Stand Down Housing Westerly, Inc. (RI)
Year: 2023 Accepted: 2024-10-02
Auditor: Damiano Burk & Nuttall PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
501544 2023-001 Significant Deficiency Yes C
501545 2023-002 Significant Deficiency - E
501546 2023-003 Significant Deficiency - C
1077986 2023-001 Significant Deficiency Yes C
1077987 2023-002 Significant Deficiency - E
1077988 2023-003 Significant Deficiency - C

Programs

ALN Program Spent Major Findings
14.181 Supportive Housing for Persons with Disabilities $79,747 Yes 3

Contacts

Name Title Type
F8HUNAEASCP7 Erik Wallin, Esq. Auditee
4013834730 Victoria Sylvia Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Stand Down Housing Westerly, Inc. 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 Stand Down Housing Westerly, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Stand Down Housing Westerly, Inc. 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: Y Rate Explanation: Stand Down Housing Westerly, Inc. has elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Stand Down Housing Westerly, Inc. 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 Stand Down Housing Westerly, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Stand Down Housing Westerly, Inc.
Title: Summary of Significant Accounting Policies Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Stand Down Housing Westerly, Inc. 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 Stand Down Housing Westerly, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Stand Down Housing Westerly, Inc. 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: Y Rate Explanation: Stand Down Housing Westerly, Inc. has elected to use the 10% de minimis indirect cost rate as 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 reimbursement.
Title: Indirect cost rate Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Stand Down Housing Westerly, Inc. 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 Stand Down Housing Westerly, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Stand Down Housing Westerly, Inc. 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: Y Rate Explanation: Stand Down Housing Westerly, Inc. has elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. Stand Down Housing Westerly, Inc. has elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance.

Finding Details

Finding 2023-001
Condition: During 2023, there was a shortfall of $12,432 in required deposits into the reserve for replacements. Criteria: As of December 31, 2023, in accordance with the Section 811 Capital Advance Program ("Program") Regulatory Agreement ("Agreement") with the United States Department of Housing and Urban Development ("HUD"), the Corporation is obligated to establish and maintain a reserve for replacements in a separate bank account under the Corporation's name. The Corporation is required to make monthly payments of $1,036 from April 1, 2022, through February 28, 2024, or until a different amount or schedule is approved in writing by HUD. During 2023, the Corporation did not make any of the required monthly deposits into the reserve, resulting in a cumulative shortfall of $24,442. Cause: Failure to make all required payments into the replacement reserve during the period under audit as result of the Corporation not having the cash to make the deposits. Effect or Potential Effect: Noncompliance with the terms and requirements of the Agreement as well as the compliance requirements of the Program in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Recommendation: We recommend that the Corporation make up the shortfall of deposits in the subsequent period and on a going forward basis, make the monthly required reserve for replacement deposits. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the auditor’s finding and recommendation. The Corporation will subsequently make the necessary deposits to align the reserve for replacement balance with the requirements of the Section 811 Capital Advance Program Regulatory Agreement.
Finding 2023-002
Condition: Three tenant files from a sample of five tenant files tested were missing one or more documents required by HUD regulations including: • Tenant was unwilling to sign executed HUD Form 50059 for annual recertification in one instance • Insufficient documentation provided for income verification purposes in one instance • Discrepancy noted between tenant security deposit amount on lease agreement and listing in one instance • Absence of required birth certificate documentation in one instance • Lack of pre-rental inspection record in one instance • Missing pre-rental application documentation in one instance Criteria: Properly maintained tenant files are supposed to include all required items. Cause: Prior management had an oversight in internal controls to ensure that all required documents are maintained in tenant files. Housing Opportunities Corporation (“HOC”) took over management in April 2023. Effect or Potential Effect: The Corporation is not in compliance with its Project Rental Assistance Contract and Tenant Selection Plan. Recommendation: Management should design and implement internal controls to ensure all required documentation is collected and maintained for all tenants and will conduct an inspection of all tenant files to ensure completeness. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the auditor’s finding and recommendation. A new management agent was hired in April 2023 to oversee the implementation of a comprehensive internal control system, ensuring all tenant files include required documentation.
Finding 2023-003
1.Condition: Prior to the transition in management agents, the Corporation failed to deposit surplus cash of $121 into the residual receipts reserve account as required for the previous fiscal year ending December 31, 2022. 2. Cause: Under the previous management, internal controls over the timely remission of surplus cash were ineffective, resulting in the failure to identify and make the required deposit. 3. Criteria: According to the Corporation's Regulatory Agreement, it is mandatory to deposit surplus cash into the residual receipts reserve. This requirement ensures that surplus funds are appropriately allocated and managed in compliance with HUD regulations. 4. Effect: The Corporation's failure to deposit the surplus cash constitutes non-compliance with its Regulatory Agreement. This non-compliance can lead to potential penalties and increased scrutiny from HUD. 5. Recommendation: The Corporation should immediately transfer the delinquent surplus cash to the residual receipts reserve account. Furthermore, it is recommended that the Corporation implement robust internal controls to ensure that all future deposits are made promptly and in compliance with the Regulatory Agreement. 6. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the audit finding and is currently in the process of transferring the overdue amount to the residual receipts reserve account. Additionally, management is implementing enhanced internal controls to prevent such occurrences in the future.
Finding 2023-001
Condition: During 2023, there was a shortfall of $12,432 in required deposits into the reserve for replacements. Criteria: As of December 31, 2023, in accordance with the Section 811 Capital Advance Program ("Program") Regulatory Agreement ("Agreement") with the United States Department of Housing and Urban Development ("HUD"), the Corporation is obligated to establish and maintain a reserve for replacements in a separate bank account under the Corporation's name. The Corporation is required to make monthly payments of $1,036 from April 1, 2022, through February 28, 2024, or until a different amount or schedule is approved in writing by HUD. During 2023, the Corporation did not make any of the required monthly deposits into the reserve, resulting in a cumulative shortfall of $24,442. Cause: Failure to make all required payments into the replacement reserve during the period under audit as result of the Corporation not having the cash to make the deposits. Effect or Potential Effect: Noncompliance with the terms and requirements of the Agreement as well as the compliance requirements of the Program in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Recommendation: We recommend that the Corporation make up the shortfall of deposits in the subsequent period and on a going forward basis, make the monthly required reserve for replacement deposits. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the auditor’s finding and recommendation. The Corporation will subsequently make the necessary deposits to align the reserve for replacement balance with the requirements of the Section 811 Capital Advance Program Regulatory Agreement.
Finding 2023-002
Condition: Three tenant files from a sample of five tenant files tested were missing one or more documents required by HUD regulations including: • Tenant was unwilling to sign executed HUD Form 50059 for annual recertification in one instance • Insufficient documentation provided for income verification purposes in one instance • Discrepancy noted between tenant security deposit amount on lease agreement and listing in one instance • Absence of required birth certificate documentation in one instance • Lack of pre-rental inspection record in one instance • Missing pre-rental application documentation in one instance Criteria: Properly maintained tenant files are supposed to include all required items. Cause: Prior management had an oversight in internal controls to ensure that all required documents are maintained in tenant files. Housing Opportunities Corporation (“HOC”) took over management in April 2023. Effect or Potential Effect: The Corporation is not in compliance with its Project Rental Assistance Contract and Tenant Selection Plan. Recommendation: Management should design and implement internal controls to ensure all required documentation is collected and maintained for all tenants and will conduct an inspection of all tenant files to ensure completeness. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the auditor’s finding and recommendation. A new management agent was hired in April 2023 to oversee the implementation of a comprehensive internal control system, ensuring all tenant files include required documentation.
Finding 2023-003
1.Condition: Prior to the transition in management agents, the Corporation failed to deposit surplus cash of $121 into the residual receipts reserve account as required for the previous fiscal year ending December 31, 2022. 2. Cause: Under the previous management, internal controls over the timely remission of surplus cash were ineffective, resulting in the failure to identify and make the required deposit. 3. Criteria: According to the Corporation's Regulatory Agreement, it is mandatory to deposit surplus cash into the residual receipts reserve. This requirement ensures that surplus funds are appropriately allocated and managed in compliance with HUD regulations. 4. Effect: The Corporation's failure to deposit the surplus cash constitutes non-compliance with its Regulatory Agreement. This non-compliance can lead to potential penalties and increased scrutiny from HUD. 5. Recommendation: The Corporation should immediately transfer the delinquent surplus cash to the residual receipts reserve account. Furthermore, it is recommended that the Corporation implement robust internal controls to ensure that all future deposits are made promptly and in compliance with the Regulatory Agreement. 6. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the audit finding and is currently in the process of transferring the overdue amount to the residual receipts reserve account. Additionally, management is implementing enhanced internal controls to prevent such occurrences in the future.