FAC Explorer

Audit 334688

FY End
2024-03-31
Total Expended
$10.45M
Findings
6
Programs
1
Organization: Verdugo Tower, Inc. (CA)
Year: 2024 Accepted: 2024-12-23
Auditor: Kkaj LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
516698 2024-001 Material Weakness - N
516699 2024-002 Material Weakness - N
516700 2024-003 Material Weakness - N
1093140 2024-001 Material Weakness - N
1093141 2024-002 Material Weakness - N
1093142 2024-003 Material Weakness - N

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $550,143 Yes 0

Contacts

Name Title Type
PYTBB1EWRTU4 James Sweeney Auditee
3232583512 Thomas Engman Auditor
No contacts on file

Notes to SEFA

Title: NOTE A – BASIS OF PRESENTATION: Accounting Policies: NOTE B - SUMMARY OF SIGNIFICANT 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. 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. Passthrough entity identifying numbers are presented where applicable. The organization has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The organization has elected not to use the 10 percent 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 the organization under programs of the federal government as of and for the year ended March 31, 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 the organization, it is not intended to and does not present the financial position, changes in net assets or cash flows of the organization.
Title: NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: NOTE B - SUMMARY OF SIGNIFICANT 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. 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. Passthrough entity identifying numbers are presented where applicable. The organization has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The organization has elected not to use the 10 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 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. Passthrough entity identifying numbers are presented where applicable. The organization has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
Title: NOTE C – FEDERALLY FUNDED AND INSURED MORTGAGES Accounting Policies: NOTE B - SUMMARY OF SIGNIFICANT 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. 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. Passthrough entity identifying numbers are presented where applicable. The organization has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The organization has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The capital advance balance at the beginning of the year and advances made during the year are included in the federal expenditures presented in the Schedule. The balance of the outstanding capital advance at March 31, 2024 is $9,904,700.

Finding Details

Finding 2024-001
Statement of Condition: Management is responsible submitting the audit package to the Federal Audit Clearinghouse within 9 months of the fiscal year end. Criteria: The audit package was submitted after the 9 month deadline. Effect: The Federal Audit Clearinghouse received the information late. It should be noted that the audit information was timely submitted to HUD in the REAC system. Cause: During the period the process for submitting the audit package to the Federal Audit Clearinghouse changed, which caused some confusion. Also, there was some miscommunication between the auditor and the auditee. Recommendation: In the future the audit package should be timely filed with the Federal Audit Clearinghouse. Non-compliance code: Z – Other.
Finding 2024-002
Statement of Condition: HUD requires that the Company maintain cash balances in financial institutions that are covered by insurance issued by the Federal Deposit Insurance Corporation (FDIC). The Company may maintain cash balances in financial institution in excess of the FDIC insurance limit if the Company verifies the bank’s debt rating meets certain requirements. Criteria: As of March 31, 2024 the cash balances in excess of the amount allowed by HUD is $70,001. Effect: The Company has cash balances in excess of the amounts allowed by HUD. Cause: The Company accumulated excess cash in the operating account. Recommendation: The Company should monitor the investments held by these financial institutions to ensure that HUD’s requirements are met. Non-compliance code: Z – Other.
Finding 2024-003
Statement of Condition: HUD requires that the Company receive HUD’s approval on Form HUD-9250 prior to withdrawing money from the Replacement Reserve. During the year the Company withdrew $196,334 from the Replacement Reserve and transferred the cash to the Company’s operating bank account. Criteria: The Company did not obtain Form HUD-9250 prior to withdrawing the funds from the Replacement Reserve. Effect: The Company has more cash in its operating account and less cash in the Replacement Reserve than it should. Cause: The Company erroneously transferred the money from a Replacement Reserve account to the operating account. Recommendation: The Company should transfer $196,334 from the operating account back to the Replacement Reserve account. Non-compliance code: A – Unauthorized withdrawal form replacement reserve account.
Finding 2024-001
Statement of Condition: Management is responsible submitting the audit package to the Federal Audit Clearinghouse within 9 months of the fiscal year end. Criteria: The audit package was submitted after the 9 month deadline. Effect: The Federal Audit Clearinghouse received the information late. It should be noted that the audit information was timely submitted to HUD in the REAC system. Cause: During the period the process for submitting the audit package to the Federal Audit Clearinghouse changed, which caused some confusion. Also, there was some miscommunication between the auditor and the auditee. Recommendation: In the future the audit package should be timely filed with the Federal Audit Clearinghouse. Non-compliance code: Z – Other.
Finding 2024-002
Statement of Condition: HUD requires that the Company maintain cash balances in financial institutions that are covered by insurance issued by the Federal Deposit Insurance Corporation (FDIC). The Company may maintain cash balances in financial institution in excess of the FDIC insurance limit if the Company verifies the bank’s debt rating meets certain requirements. Criteria: As of March 31, 2024 the cash balances in excess of the amount allowed by HUD is $70,001. Effect: The Company has cash balances in excess of the amounts allowed by HUD. Cause: The Company accumulated excess cash in the operating account. Recommendation: The Company should monitor the investments held by these financial institutions to ensure that HUD’s requirements are met. Non-compliance code: Z – Other.
Finding 2024-003
Statement of Condition: HUD requires that the Company receive HUD’s approval on Form HUD-9250 prior to withdrawing money from the Replacement Reserve. During the year the Company withdrew $196,334 from the Replacement Reserve and transferred the cash to the Company’s operating bank account. Criteria: The Company did not obtain Form HUD-9250 prior to withdrawing the funds from the Replacement Reserve. Effect: The Company has more cash in its operating account and less cash in the Replacement Reserve than it should. Cause: The Company erroneously transferred the money from a Replacement Reserve account to the operating account. Recommendation: The Company should transfer $196,334 from the operating account back to the Replacement Reserve account. Non-compliance code: A – Unauthorized withdrawal form replacement reserve account.