Audit 332280

Reporting – Late submission of the Single Audit Reporting Package and Data Collection Form to the Federal Audit Clearinghouse (FAC) Federal Agency Program Title Assistance Listing Number Award Number Award Period All awards reported on the schedule of expenditures of federal awards Identification as a Repeat Finding: N/A Finding: The Organization did not file its annual 2023 Single Audit and Data Collection form timely. The Organization did not file its HUD REAC Annual Financial Statement timely. Criteria: The Single Audit Reporting Package and Data Collection Form shall be submitted to the Federal Audit Clearinghouse 30 days after receipt of the auditor’s report, or 9 months after the end of the fiscal year, whichever comes first. The HUD REAC AFS is due by September 30. Condition and context: Submission of the Single Audit Reporting Package and Data Collection Form to the FAC was not completed within the timeframe required by the Uniform Guidance. The HUD REAC Annual Financial Statement was not completed or submitted by September 30 as required. We note that the Single Audit Reporting Package, Data Collection Form and HUD REAC AFS are expected to be submitted during December 2024 for the fiscal year ended December 31, 2023. Cause: The Organization changed to a new property management company during 2023. The transition did not go smoothly and the new management agent has had problems transitioning the accounting from the prior management agent which has hindered the completion and filing reports in timely manner. Sample size and population: Sampling was not applicable to this finding. Effect: Noncompliance with the Uniform Guidance and HUD could impact future funding from Federal sources. Recommendation: Changes to the property management company happens infrequently. Therefore, it would be unusual for a similar matter to reoccur; however, it is considered a best practice to maintain a schedule of regulatory and compliance deadlines to ensure related tasks are completed in advance of deadlines. Also, see recommendation in Finding 2023-001. Question Costs: None Views of Management and Corrective Action Plan: Management’s response is reported in the “Corrective Action Plan” Contact Person: Mauro Hernandez

Unauthorized Change in Management Agent and Unauthorized Distribution Federal Agency Program Title Assistance Listing Number Award Number Award Period All awards reported on the schedule of expenditures of federal awards Identification as a Repeat Finding: N/A Finding: The Organization’s management agent is not approved by HUD. Management fees paid to unauthorized management agents are considered unauthorized distributions of project funds. Criteria: HUD requires that a management agent assumes management responsibility only after HUD approval. Condition and context: During 2023, the Organization hired and transitioned the operational management to a management agent which is not approved by HUD. Cause: During 2023, the Organization hired and transitioned the operational management to a management agent which is not approved by HUD. The management agent charged the Organization $55,269 for management fees for the year ended December 31, 2023. Sample size and population: Sampling was not applicable to this finding. Effect: Noncompliance with the HUD requirements could reduce access to future funding from Federal sources. Recommendation: The Organization should immediately require the management agent to complete the HUD approval process, and if necessary, consider the need to change management agents to one that is HUD approved. Question Costs: $55,269 of management fees incurred during 2023 Views of Management and Corrective Action Plan: Management’s response is reported in the “Corrective Action Plan” Contact Person: Mauro Hernandez

Reporting – Late submission of the Single Audit Reporting Package and Data Collection Form to the Federal Audit Clearinghouse (FAC) Federal Agency Program Title Assistance Listing Number Award Number Award Period All awards reported on the schedule of expenditures of federal awards Identification as a Repeat Finding: N/A Finding: The Organization did not file its annual 2023 Single Audit and Data Collection form timely. The Organization did not file its HUD REAC Annual Financial Statement timely. Criteria: The Single Audit Reporting Package and Data Collection Form shall be submitted to the Federal Audit Clearinghouse 30 days after receipt of the auditor’s report, or 9 months after the end of the fiscal year, whichever comes first. The HUD REAC AFS is due by September 30. Condition and context: Submission of the Single Audit Reporting Package and Data Collection Form to the FAC was not completed within the timeframe required by the Uniform Guidance. The HUD REAC Annual Financial Statement was not completed or submitted by September 30 as required. We note that the Single Audit Reporting Package, Data Collection Form and HUD REAC AFS are expected to be submitted during December 2024 for the fiscal year ended December 31, 2023. Cause: The Organization changed to a new property management company during 2023. The transition did not go smoothly and the new management agent has had problems transitioning the accounting from the prior management agent which has hindered the completion and filing reports in timely manner. Sample size and population: Sampling was not applicable to this finding. Effect: Noncompliance with the Uniform Guidance and HUD could impact future funding from Federal sources. Recommendation: Changes to the property management company happens infrequently. Therefore, it would be unusual for a similar matter to reoccur; however, it is considered a best practice to maintain a schedule of regulatory and compliance deadlines to ensure related tasks are completed in advance of deadlines. Also, see recommendation in Finding 2023-001. Question Costs: None Views of Management and Corrective Action Plan: Management’s response is reported in the “Corrective Action Plan” Contact Person: Mauro Hernandez

Unauthorized Change in Management Agent and Unauthorized Distribution Federal Agency Program Title Assistance Listing Number Award Number Award Period All awards reported on the schedule of expenditures of federal awards Identification as a Repeat Finding: N/A Finding: The Organization’s management agent is not approved by HUD. Management fees paid to unauthorized management agents are considered unauthorized distributions of project funds. Criteria: HUD requires that a management agent assumes management responsibility only after HUD approval. Condition and context: During 2023, the Organization hired and transitioned the operational management to a management agent which is not approved by HUD. Cause: During 2023, the Organization hired and transitioned the operational management to a management agent which is not approved by HUD. The management agent charged the Organization $55,269 for management fees for the year ended December 31, 2023. Sample size and population: Sampling was not applicable to this finding. Effect: Noncompliance with the HUD requirements could reduce access to future funding from Federal sources. Recommendation: The Organization should immediately require the management agent to complete the HUD approval process, and if necessary, consider the need to change management agents to one that is HUD approved. Question Costs: $55,269 of management fees incurred during 2023 Views of Management and Corrective Action Plan: Management’s response is reported in the “Corrective Action Plan” Contact Person: Mauro Hernandez