FAC Explorer

Audit 326753

FY End
2023-06-30
Total Expended
$1.25M
Findings
2
Programs
1
Organization: Deerbrook, Inc. (MO)
Year: 2023 Accepted: 2024-10-31
Auditor: Welch & Associates LLC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
504257 2023-001 Material Weakness Yes ABCEN
1080699 2023-001 Material Weakness Yes ABCEN

Programs

ALN Program Spent Major Findings
14.181 Supportive Housing for Persons with Disabilities $1.25M Yes 1

Contacts

Name Title Type
FAV9DLFKZ2L8 Milva Alvarez Auditee
8162469220 Brian Welch Auditor
No contacts on file

Notes to SEFA

Title: Note 1. Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the GAAP 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. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The Organization did not elect to use the 10% De Minimis Indirect Cost Rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Deerbrook, Inc. under programs of the federal government for the year ended June 30, 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 Requirement, Cost Principles, and Audit Requirements for Federal Awards ( Uniform Guidance). Because the Schedule presents only a selected portion of operations of Deerbrook, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Deerbrook, Inc.
Title: Note 4. Balance of Outstanding Loan Accounting Policies: Expenditures reported on the Schedule are reported on the GAAP 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. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The Organization did not elect to use the 10% De Minimis Indirect Cost Rate. The balance of the Section 811 loan as of June 30, 2023 was $1,248,800.

Finding Details

Finding 2023-001
S3800-010: Finding Reference Number 2023-001 (Material Weakness) S3800-011: Program Information Federal Program: Supportive Housing for Persons with Disabilities (Sec 811) Federal Agency: Department of Housing and Urban Development (HUD) Assistance Listing #: 14.181 Pass-through Entity: None Federal Award Identification Number and Year: N/A Type of Compliance Findings: A/B - Activities Allowed or Unallowed and Allowable Costs/Cost Principles, C – Cash Management, E – Eligibility, and N – Special Tests and Provisions S3800-015: Type of Finding Financial Statement and Federal Awards S3800-016: Finding Resolution Status Unresolved S3800-017: Information on Universe Population Size Unknown S3800-018: Sample Size Information N/A S3800-019: Identification of Repeat Finding and Finding Reference Number 2022-001 S3800-020: Criteria The regulatory agreement requires that the Organization’s books and records are maintained in accordance with generally accepted accounting principles (GAAP). S3800-030: Statement of Condition During our audit of the Organization’s fiscal year ended June 30, 2023 financial statements and federal award program, we noted the below concerns regarding completeness of the financial records and adherence to compliance requirements: • Supporting documentation to evaluate the amounts reported in the financial statements was not available. • Supporting documentation to evaluate Activities Allowed or Unallowed and Allowable Costs/Cost Principles was not available. • Supporting documentation to evaluate Cash Management was not available. • Supporting documentation to evaluate Eligibility was not available. • Supporting documentation to evaluate Special Tests and Provisions for the following criteria were not available: o Replacement reserve o Management fees charged in accordance with HUD-9839B o Move-outs (security deposits), evictions, waitlist applicants and rejected applicants, and work-orders / maintenance requests S3800-032: Cause Complete records were not provided by the predecessor management company. S3800-033: Effect or Potential Effect We have not obtained sufficient audit evidence to express an opinion on the accompanying financial statements and federal award program due to the inability to perform substantive auditing procedures. S3800-035: Auditor Non-Compliance Code Z - Other S3800-040: Questioned Costs Unknown S3800-045: Reporting Views of Responsible Officials Management reported that the failure(s) involved records related to the period managed by the predecessor management company. S3800-050: Context The Organization is required to maintain books and records in accordance with GAAP. The Organization terminated its agreement with the predecessor management agent and the current management agent took over this property on August 25, 2023, after the fiscal year-end. S3800-080: Recommendation We note these non-compliant findings involve records related to the period managed by the predecessor management agent; therefore, we do not have a recommendation regarding the period managed by the predecessor management agent. However, the current management agent should request and keep all required documentation from HUD and establish processes and procedures to ensure compliance with the Regulatory Agreement and / or Capital Advance Use Agreement. S3800-090: Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations Concur S3800-130: Response Indicator Agree S3800-140: Completion Date or Proposed Completion Date June 30, 2024 S3800-150: Response
Finding 2023-001
S3800-010: Finding Reference Number 2023-001 (Material Weakness) S3800-011: Program Information Federal Program: Supportive Housing for Persons with Disabilities (Sec 811) Federal Agency: Department of Housing and Urban Development (HUD) Assistance Listing #: 14.181 Pass-through Entity: None Federal Award Identification Number and Year: N/A Type of Compliance Findings: A/B - Activities Allowed or Unallowed and Allowable Costs/Cost Principles, C – Cash Management, E – Eligibility, and N – Special Tests and Provisions S3800-015: Type of Finding Financial Statement and Federal Awards S3800-016: Finding Resolution Status Unresolved S3800-017: Information on Universe Population Size Unknown S3800-018: Sample Size Information N/A S3800-019: Identification of Repeat Finding and Finding Reference Number 2022-001 S3800-020: Criteria The regulatory agreement requires that the Organization’s books and records are maintained in accordance with generally accepted accounting principles (GAAP). S3800-030: Statement of Condition During our audit of the Organization’s fiscal year ended June 30, 2023 financial statements and federal award program, we noted the below concerns regarding completeness of the financial records and adherence to compliance requirements: • Supporting documentation to evaluate the amounts reported in the financial statements was not available. • Supporting documentation to evaluate Activities Allowed or Unallowed and Allowable Costs/Cost Principles was not available. • Supporting documentation to evaluate Cash Management was not available. • Supporting documentation to evaluate Eligibility was not available. • Supporting documentation to evaluate Special Tests and Provisions for the following criteria were not available: o Replacement reserve o Management fees charged in accordance with HUD-9839B o Move-outs (security deposits), evictions, waitlist applicants and rejected applicants, and work-orders / maintenance requests S3800-032: Cause Complete records were not provided by the predecessor management company. S3800-033: Effect or Potential Effect We have not obtained sufficient audit evidence to express an opinion on the accompanying financial statements and federal award program due to the inability to perform substantive auditing procedures. S3800-035: Auditor Non-Compliance Code Z - Other S3800-040: Questioned Costs Unknown S3800-045: Reporting Views of Responsible Officials Management reported that the failure(s) involved records related to the period managed by the predecessor management company. S3800-050: Context The Organization is required to maintain books and records in accordance with GAAP. The Organization terminated its agreement with the predecessor management agent and the current management agent took over this property on August 25, 2023, after the fiscal year-end. S3800-080: Recommendation We note these non-compliant findings involve records related to the period managed by the predecessor management agent; therefore, we do not have a recommendation regarding the period managed by the predecessor management agent. However, the current management agent should request and keep all required documentation from HUD and establish processes and procedures to ensure compliance with the Regulatory Agreement and / or Capital Advance Use Agreement. S3800-090: Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations Concur S3800-130: Response Indicator Agree S3800-140: Completion Date or Proposed Completion Date June 30, 2024 S3800-150: Response