Audit 338629

FY End

2024-09-30

Total Expended

$3.79M

Findings

2

Programs

2

Organization: McSherrystown Interfaith Housing Corporation (PA)

Year: 2024 Accepted: 2025-01-17

Auditor: Hamilton & Musser PC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
519556	2024-002	Significant Deficiency	-	N
1095998	2024-002	Significant Deficiency	-	N

ALN	Program	Spent	Major	Findings
14.134	Mortgage Insurance_rental Housing	$3.06M	Yes	1
14.182	Section 8 New Construction and Substantial Rehabilitation	$726,884	-	0

Contacts

Name	Title	Type
R71YW1EJFFL3	Stephanie McIlwee	Auditee
7173341518	Michael Mark	Auditor
No contacts on file

Notes to SEFA

Title: MORTGAGE PAYABLE Accounting Policies: BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of McSherrystown Interfaith Housing Corporation (the Corporation) under programs of the federal government for the year ended September 30, 2024. The information in this Schedule is presented 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. Because the Schedule presents only a selected portion of the operations of the Corporation, it is not intended to and does not present the financial position or changes in net assets of the Corporation. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following 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: The Corporation did not elect to use the 10 percent indirect cost rate allowed under the Uniform Guidance. McSherrystown Interfaith Housing Corporation has received a U.S. Department of Housing and Urban Development direct loan. The loan balance outstanding at the beginning of the year is included in the federal expenditures presented in the Schedule. McSherrystown Interfaith Housing Corporation received no additional loans during the year. The balance of the loan outstanding at September 30, 2024, consists of Mortgage Insurance Rental Housing ALN # 14.134 is $2,985,021. CALCULATION OF 40% RULE: TOTAL FEDERAL EXPENDITURES PER SCHEDULE WERE $3,785,923. MAJOR PROGRAM: MORTGAGE INSURANCE_RENTAL HOUSING (14.134) TOTAL EXPENDED $3,059,039. (81% OF TOTAL FEDERAL EXPENDITURES).

Finding Details

Finding 2024-002

#2024-002 – Significant Deficiency – Management Fee Mortgage Insurance Rental Housing, ALN# 14.134 Criteria The U.S. Department of Housing and Urban Development (HUD) Chapter 3 HUD Multifamily Housing Program states the management agent fees paid should not exceed the amount listed on the management agent certification and should agree to the management agreement. Condition During the course of the audit, it was noted that while the management fee expensed during the year was below the management fee agreement of 6.04%, in total, the management fee expensed was above the PUPM rate of $49.00. PUPM stands for per unit per month, and is the unit of measurement for residential management fees. Cause The cause is due to overcharging monthly management fees from McSherrystown Interfaith Housing Corporation. Effect The effect was the total management fee charged per unit per month exceeded the approved PUPM rate. Questioned Costs None Perspective Information Management increased management fees due to not reaching the agreed upon percentage of 6.04% outlined in the management agreement, however, management did not factor in the capped PUPM rate of $49.00. Identification as a repeat finding There was no similar finding in the prior year. Recommendation We recommend that McSherrystown Interfaith Housing Corporation request a revised PUPM rate from HUD as the management fee expensed has not reached the maximum of 6.04% outlined in the management agreement with the management agent, but is capped below this level due to the original PUPM rate agreed upon. View of responsible officials and planned corrective action We agree that this compliance requirement is listed in the compliance supplement. We will work with HUD to increase the PUPM rate going forward and implement controls to ensure the management fees stay within the agreed upon limits.

Finding 2024-002

#2024-002 – Significant Deficiency – Management Fee Mortgage Insurance Rental Housing, ALN# 14.134 Criteria The U.S. Department of Housing and Urban Development (HUD) Chapter 3 HUD Multifamily Housing Program states the management agent fees paid should not exceed the amount listed on the management agent certification and should agree to the management agreement. Condition During the course of the audit, it was noted that while the management fee expensed during the year was below the management fee agreement of 6.04%, in total, the management fee expensed was above the PUPM rate of $49.00. PUPM stands for per unit per month, and is the unit of measurement for residential management fees. Cause The cause is due to overcharging monthly management fees from McSherrystown Interfaith Housing Corporation. Effect The effect was the total management fee charged per unit per month exceeded the approved PUPM rate. Questioned Costs None Perspective Information Management increased management fees due to not reaching the agreed upon percentage of 6.04% outlined in the management agreement, however, management did not factor in the capped PUPM rate of $49.00. Identification as a repeat finding There was no similar finding in the prior year. Recommendation We recommend that McSherrystown Interfaith Housing Corporation request a revised PUPM rate from HUD as the management fee expensed has not reached the maximum of 6.04% outlined in the management agreement with the management agent, but is capped below this level due to the original PUPM rate agreed upon. View of responsible officials and planned corrective action We agree that this compliance requirement is listed in the compliance supplement. We will work with HUD to increase the PUPM rate going forward and implement controls to ensure the management fees stay within the agreed upon limits.