FAC Explorer

Audit 326671

FY End
2024-06-30
Total Expended
$1.41M
Findings
8
Programs
1
Organization: High Street Homes Inc. (MD)
Year: 2024 Accepted: 2024-10-30
Auditor: Gross Mendelsohn & Associates P A

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
504198 2024-002 Material Weakness Yes N
504199 2024-003 Material Weakness - AB
504200 2024-002 Material Weakness Yes N
504201 2024-003 Material Weakness - AB
1080640 2024-002 Material Weakness Yes N
1080641 2024-003 Material Weakness - AB
1080642 2024-002 Material Weakness Yes N
1080643 2024-003 Material Weakness - AB

Programs

ALN Program Spent Major Findings
14.181 Supportive Housing for Persons with Disabilities $43,243 Yes 2

Contacts

Name Title Type
GZNHQDC77EA4 Katherine Dannenfelser Auditee
4109965104 Lisa Johnson 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: High Street Homes, Inc. has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of High Street Homes, Inc. under programs of the federal government for the year ended June 30, 2024. 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 High Street Homes, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of High Street Homes, Inc.
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 reimbursement. De Minimis Rate Used: N Rate Explanation: High Street Homes, Inc. has elected not to use the 10% 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 reimbursement.
Title: Indirect Cost Rate 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: High Street Homes, Inc. has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. High Street Homes, Inc. has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.
Title: Capital Advance - HUD 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: High Street Homes, Inc. has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. The Project entered into a capital advance agreement with HUD to assist in financing the project under Section 811 of the National Affordable Housing Act and received a capital advance of $1,366,100. The capital advance is secured by a mortgage on the property. The capital advance does not bear interest and is not required to be repaid so long as the housing remains available to eligible very low-income households for 40 years beginning in September 2009. Under the terms of the capital advance agreement, any default would result in HUD billing the Project for the entire capital advance outstanding.

Finding Details

Finding 2024-002
Statement of Condition: As a result of our audit procedures, we noted that High Street Homes, Inc. did not make the monthly required deposits for eight months. (Repeat Finding #2023-002) Criteria: Management is responsible for reconciling the replacement reserve account on a monthly basis to ensure the activity is accurately recorded on a monthly basis. Cause: There was significant turnover of key personnel in the Finance department during the year, causing new personnel who were inexperienced with the HUD replacement reserve process to have to assume these duties. Effect: The HUD required monthly deposits were not made. Recommendation: Replacement reserve account should be reconciled monthly and reviewed to ensure all required deposit activity is made. Views of Responsible Officials and Planned Corrective Actions: The projects Replacement Reserve monthly deposit Is now made every month starting in March 2024 and continuing into the present. Staff are now compliant on this topic. (All HUD bank reconciliations are fairly current at this time as an additional PRN employee has been hired to help with project work. This PRN employee works on Saturdays. Again, a formal internal monthly meeting with a checklist will help with the HUD review process. Access to a CPA firm for or other provider of training would also help.)
Finding 2024-003
Statement of Condition: As a result of our audit procedures, we noted that High Street Homes, Inc. used Project funds to pay for unallowable costs. Criteria: All Project costs must be used only for expenses that are reasonable and necessary for the operation of the Project as provided for in the HUD agreement. Cause: There was significant turnover of key personnel in the Finance department during the year, causing new personnel who were inexperienced with the HUD agreement to have to assume recording of Project expenses. Effect: The Project used HUD funding to pay for unallowable costs. Questioned Costs: $7,010. Recommendation: The Project should review the HUD agreement and approved budget to obtain a better understanding of the type of costs that are allowable, and ensure they are only using HUD funds for allowable costs. Views of Responsible Officials and Planned Corrective Actions: A formal scheduled training and study session would benefit staff as there is a need to understand allowable costs. As Senior Management reviews the disbursements, the final review before check signing, a top level review can also be done. At this point, the best approach seems there should be formal purchase orders written for the HUD homes - differentiating High Street Homes from Five Rivers Homes - expenses that should be attached to the invoices before approval. This additional layer of review will benefit the situation as staff can easily see if an item is approved.
Finding 2024-002
Statement of Condition: As a result of our audit procedures, we noted that High Street Homes, Inc. did not make the monthly required deposits for eight months. (Repeat Finding #2023-002) Criteria: Management is responsible for reconciling the replacement reserve account on a monthly basis to ensure the activity is accurately recorded on a monthly basis. Cause: There was significant turnover of key personnel in the Finance department during the year, causing new personnel who were inexperienced with the HUD replacement reserve process to have to assume these duties. Effect: The HUD required monthly deposits were not made. Recommendation: Replacement reserve account should be reconciled monthly and reviewed to ensure all required deposit activity is made. Views of Responsible Officials and Planned Corrective Actions: The projects Replacement Reserve monthly deposit Is now made every month starting in March 2024 and continuing into the present. Staff are now compliant on this topic. (All HUD bank reconciliations are fairly current at this time as an additional PRN employee has been hired to help with project work. This PRN employee works on Saturdays. Again, a formal internal monthly meeting with a checklist will help with the HUD review process. Access to a CPA firm for or other provider of training would also help.)
Finding 2024-003
Statement of Condition: As a result of our audit procedures, we noted that High Street Homes, Inc. used Project funds to pay for unallowable costs. Criteria: All Project costs must be used only for expenses that are reasonable and necessary for the operation of the Project as provided for in the HUD agreement. Cause: There was significant turnover of key personnel in the Finance department during the year, causing new personnel who were inexperienced with the HUD agreement to have to assume recording of Project expenses. Effect: The Project used HUD funding to pay for unallowable costs. Questioned Costs: $7,010. Recommendation: The Project should review the HUD agreement and approved budget to obtain a better understanding of the type of costs that are allowable, and ensure they are only using HUD funds for allowable costs. Views of Responsible Officials and Planned Corrective Actions: A formal scheduled training and study session would benefit staff as there is a need to understand allowable costs. As Senior Management reviews the disbursements, the final review before check signing, a top level review can also be done. At this point, the best approach seems there should be formal purchase orders written for the HUD homes - differentiating High Street Homes from Five Rivers Homes - expenses that should be attached to the invoices before approval. This additional layer of review will benefit the situation as staff can easily see if an item is approved.
Finding 2024-002
Statement of Condition: As a result of our audit procedures, we noted that High Street Homes, Inc. did not make the monthly required deposits for eight months. (Repeat Finding #2023-002) Criteria: Management is responsible for reconciling the replacement reserve account on a monthly basis to ensure the activity is accurately recorded on a monthly basis. Cause: There was significant turnover of key personnel in the Finance department during the year, causing new personnel who were inexperienced with the HUD replacement reserve process to have to assume these duties. Effect: The HUD required monthly deposits were not made. Recommendation: Replacement reserve account should be reconciled monthly and reviewed to ensure all required deposit activity is made. Views of Responsible Officials and Planned Corrective Actions: The projects Replacement Reserve monthly deposit Is now made every month starting in March 2024 and continuing into the present. Staff are now compliant on this topic. (All HUD bank reconciliations are fairly current at this time as an additional PRN employee has been hired to help with project work. This PRN employee works on Saturdays. Again, a formal internal monthly meeting with a checklist will help with the HUD review process. Access to a CPA firm for or other provider of training would also help.)
Finding 2024-003
Statement of Condition: As a result of our audit procedures, we noted that High Street Homes, Inc. used Project funds to pay for unallowable costs. Criteria: All Project costs must be used only for expenses that are reasonable and necessary for the operation of the Project as provided for in the HUD agreement. Cause: There was significant turnover of key personnel in the Finance department during the year, causing new personnel who were inexperienced with the HUD agreement to have to assume recording of Project expenses. Effect: The Project used HUD funding to pay for unallowable costs. Questioned Costs: $7,010. Recommendation: The Project should review the HUD agreement and approved budget to obtain a better understanding of the type of costs that are allowable, and ensure they are only using HUD funds for allowable costs. Views of Responsible Officials and Planned Corrective Actions: A formal scheduled training and study session would benefit staff as there is a need to understand allowable costs. As Senior Management reviews the disbursements, the final review before check signing, a top level review can also be done. At this point, the best approach seems there should be formal purchase orders written for the HUD homes - differentiating High Street Homes from Five Rivers Homes - expenses that should be attached to the invoices before approval. This additional layer of review will benefit the situation as staff can easily see if an item is approved.
Finding 2024-002
Statement of Condition: As a result of our audit procedures, we noted that High Street Homes, Inc. did not make the monthly required deposits for eight months. (Repeat Finding #2023-002) Criteria: Management is responsible for reconciling the replacement reserve account on a monthly basis to ensure the activity is accurately recorded on a monthly basis. Cause: There was significant turnover of key personnel in the Finance department during the year, causing new personnel who were inexperienced with the HUD replacement reserve process to have to assume these duties. Effect: The HUD required monthly deposits were not made. Recommendation: Replacement reserve account should be reconciled monthly and reviewed to ensure all required deposit activity is made. Views of Responsible Officials and Planned Corrective Actions: The projects Replacement Reserve monthly deposit Is now made every month starting in March 2024 and continuing into the present. Staff are now compliant on this topic. (All HUD bank reconciliations are fairly current at this time as an additional PRN employee has been hired to help with project work. This PRN employee works on Saturdays. Again, a formal internal monthly meeting with a checklist will help with the HUD review process. Access to a CPA firm for or other provider of training would also help.)
Finding 2024-003
Statement of Condition: As a result of our audit procedures, we noted that High Street Homes, Inc. used Project funds to pay for unallowable costs. Criteria: All Project costs must be used only for expenses that are reasonable and necessary for the operation of the Project as provided for in the HUD agreement. Cause: There was significant turnover of key personnel in the Finance department during the year, causing new personnel who were inexperienced with the HUD agreement to have to assume recording of Project expenses. Effect: The Project used HUD funding to pay for unallowable costs. Questioned Costs: $7,010. Recommendation: The Project should review the HUD agreement and approved budget to obtain a better understanding of the type of costs that are allowable, and ensure they are only using HUD funds for allowable costs. Views of Responsible Officials and Planned Corrective Actions: A formal scheduled training and study session would benefit staff as there is a need to understand allowable costs. As Senior Management reviews the disbursements, the final review before check signing, a top level review can also be done. At this point, the best approach seems there should be formal purchase orders written for the HUD homes - differentiating High Street Homes from Five Rivers Homes - expenses that should be attached to the invoices before approval. This additional layer of review will benefit the situation as staff can easily see if an item is approved.