FAC Explorer

Audit 339371

FY End
2020-09-30
Total Expended
$942,820
Findings
20
Programs
1
Organization: Health & Education Housing Service, INC (MA)
Year: 2020 Accepted: 2025-01-22
Auditor: Cohnreznick LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
519932 2020-002 Material Weakness Yes B
519933 2020-003 Material Weakness Yes N
519934 2020-004 Material Weakness Yes L
519935 2020-005 Material Weakness Yes L
519936 2020-006 Material Weakness Yes N
519937 2020-002 Material Weakness Yes B
519938 2020-003 Material Weakness Yes N
519939 2020-004 Material Weakness Yes L
519940 2020-005 Material Weakness Yes L
519941 2020-006 Material Weakness Yes N
1096374 2020-002 Material Weakness Yes B
1096375 2020-003 Material Weakness Yes N
1096376 2020-004 Material Weakness Yes L
1096377 2020-005 Material Weakness Yes L
1096378 2020-006 Material Weakness Yes N
1096379 2020-002 Material Weakness Yes B
1096380 2020-003 Material Weakness Yes N
1096381 2020-004 Material Weakness Yes L
1096382 2020-005 Material Weakness Yes L
1096383 2020-006 Material Weakness Yes N

Programs

ALN Program Spent Major Findings
14.181 Supportive Housing for Persons with Disabilities $48,920 Yes 5

Contacts

Name Title Type
WMSWDFR9QSN5 Roger Cardoza Auditee
6175646894 Karen Kent 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 accrual basis of accounting. Such expenditures are recognized following, as applicable, 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: Y Rate Explanation: Health and Education Housing Services, Inc. has elected the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of Health and Education Housing Services, Inc., HUD Project No. 023-HD-016, under programs of the federal government for the year ended September 30, 2020. 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 Health and Education Housing Services, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Health and Education Housing Services, Inc. For the year ended September 30, 2020, no awards were passed through to subrecipients.
Title: Note 2 - 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, as applicable, 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: Y Rate Explanation: Health and Education Housing Services, Inc. has elected 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, as applicable, the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
Title: Note 3 - Indirect cost rate Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, 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: Y Rate Explanation: Health and Education Housing Services, Inc. has elected the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Health and Education Housing Services, Inc. has elected the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.
Title: Note 4 - U.S. Department of Housing and Urban Development loan program Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, 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: Y Rate Explanation: Health and Education Housing Services, Inc. has elected the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Health and Education Housing Services, Inc. has received a U.S. Department of Housing and Urban Development capital advance under Section 811 of the National Affordable Housing Act. The capital advance balance outstanding at the beginning of the year is included in the federal expenditures presented in the Schedule. Health and Education Housing Services, Inc. received no additional loans during the year. The balance of the loan outstanding at September 30, 2020 consists of: Assistance Listing Number Program Name Outstanding Balance at September 30, 2020 14.181 Section 811 Capital Advance $893,900

Finding Details

Finding 2020-002
Finding 2020-002 – Allowable Costs/Cost Principles – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria Management fee payments are limited to amounts determined in accordance with the terms of the management agreement. Condition During the year ended September 30, 2020, HES paid the management agent for costs in excess of amounts incurred by the management agent totaling $30,803 of which $29,480 is related to prior year. Cause Internal controls were not in place to ensure that payments to the management agent were allowable costs. Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Questioned Costs $30,803 Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-002). Auditor Noncompliance Code: J – Unauthorized management fees Finding Resolution Status: Unresolved Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-003
Finding 2020-003 – Special Tests and Provisions – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria HUD regulations at HUD Handbook 4381.5, the Management Agent, require HES's management agent to have fidelity bond coverage equal to the greater of $50,000 or the value of two months’ gross potential rent. If the policy covers more than one project, this minimum must be computed using HES with the highest gross potential rent. Condition Management did not maintain fidelity bond coverage as required by HUD regulations. Cause Internal controls were not in place to fidelity bond coverage was in place. Effect or Potential Effect Management did not maintain fidelity bond coverage in violation of HUD regulations. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding ( see prior year finding number 2019-003). Recommendation Management should obtain fidelity bond coverage as required by HUD regulations immediately. Auditor Noncompliance Code: Z- Other Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-004
Finding 2020-004 – Reporting – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria HUD under the Uniform Financial Reporting Standards Rule implementing requirements of 24 CFR, Part 5, Subpart H, requires not-for-profit multifamily program participants to submit financial statement data electronically to Real Estate Assessment Center ("REAC") within 90 days after their fiscal year-end. If the owner is not prepared to submit the audited financial information, then an owner-certified report must be submitted within 90 days of fiscal year-end. Condition The audited annual financial statement data for the year ended September 30, 2019 was not timely submitted to HUD via the Real Estate Assessment Center REAC system. Cause Management did not have internal controls in place to allow for a timely audit which resulted in delays in timely submitting the report to REAC. Effect or Potential Effect The audited annual financial statement data was not filed timely to REAC. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-004). Recommendation Financial statements should be timely filed. Auditor Noncompliance Code: S - Internal control deficiency Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-005
Finding 2020-005 – Reporting – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria The OMB has issued Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly called "Uniform Guidance"), which requires institutions of higher education and nonprofit institutions that expend $750,000 or more in federal funds to annually conduct a detailed, organization-wide audit that complies with the established criteria. Additionally, the Uniform Guidance reporting package and the data collection form are required to be submitted to the Federal Audit Clearinghouse (“FAC”) the earlier of 30 days after the receipt of the auditors reports or nine months after the end of the audit period, unless a longer period of time was agreed to in advance by the cognizant or oversight agency for the audit. Condition A detailed, organization-wide audit that complies with Uniform Guidance established criteria was not timely completed and submitted to the FAC. Cause Management did not have internal controls in place to allow for a timely audit which resulted in delays in timely submitting the report to FAC. Effect or Potential Effect A detailed, organization-wide audit that complies with the established criteria was not timely completed resulting in HES not being in compliance with Uniform Guidance requirements. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-005). Recommendation Management should ensure timely completion of a Uniform Guidance audit, as required. Auditor Noncompliance Code: S - Internal control deficiency Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-006
Finding 2020-006 – Special Tests and Provisions – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria In accordance with 24 CFR Part 200 Subpart M section 200.625 requires program participants to provide an Affirmative Fair Housing Marketing Plan (“AFHMP”) approved by HUD. In addition, HUD’s equal housing opportunity logo is required to be displayed on marketing materials. Condition HES was unable to produce an approved AFHMP and did not display the HUD-approved equal housing opportunity logo on marketing materials. Cause Management did not have internal controls in place to ensure an AFHMP was in place and the equal opportunity logo was displayed in accordance with HUD requirements. Effect or Potential Effect HES is not in compliance with HUD regulations. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-006). Recommendation Management should obtain a HUD approved AFHMP and add the equal opportunity logo to marketing materials. Auditor Noncompliance Code: Z- Other Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-002
Finding 2020-002 – Allowable Costs/Cost Principles – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria Management fee payments are limited to amounts determined in accordance with the terms of the management agreement. Condition During the year ended September 30, 2020, HES paid the management agent for costs in excess of amounts incurred by the management agent totaling $30,803 of which $29,480 is related to prior year. Cause Internal controls were not in place to ensure that payments to the management agent were allowable costs. Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Questioned Costs $30,803 Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-002). Auditor Noncompliance Code: J – Unauthorized management fees Finding Resolution Status: Unresolved Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-003
Finding 2020-003 – Special Tests and Provisions – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria HUD regulations at HUD Handbook 4381.5, the Management Agent, require HES's management agent to have fidelity bond coverage equal to the greater of $50,000 or the value of two months’ gross potential rent. If the policy covers more than one project, this minimum must be computed using HES with the highest gross potential rent. Condition Management did not maintain fidelity bond coverage as required by HUD regulations. Cause Internal controls were not in place to fidelity bond coverage was in place. Effect or Potential Effect Management did not maintain fidelity bond coverage in violation of HUD regulations. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding ( see prior year finding number 2019-003). Recommendation Management should obtain fidelity bond coverage as required by HUD regulations immediately. Auditor Noncompliance Code: Z- Other Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-004
Finding 2020-004 – Reporting – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria HUD under the Uniform Financial Reporting Standards Rule implementing requirements of 24 CFR, Part 5, Subpart H, requires not-for-profit multifamily program participants to submit financial statement data electronically to Real Estate Assessment Center ("REAC") within 90 days after their fiscal year-end. If the owner is not prepared to submit the audited financial information, then an owner-certified report must be submitted within 90 days of fiscal year-end. Condition The audited annual financial statement data for the year ended September 30, 2019 was not timely submitted to HUD via the Real Estate Assessment Center REAC system. Cause Management did not have internal controls in place to allow for a timely audit which resulted in delays in timely submitting the report to REAC. Effect or Potential Effect The audited annual financial statement data was not filed timely to REAC. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-004). Recommendation Financial statements should be timely filed. Auditor Noncompliance Code: S - Internal control deficiency Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-005
Finding 2020-005 – Reporting – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria The OMB has issued Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly called "Uniform Guidance"), which requires institutions of higher education and nonprofit institutions that expend $750,000 or more in federal funds to annually conduct a detailed, organization-wide audit that complies with the established criteria. Additionally, the Uniform Guidance reporting package and the data collection form are required to be submitted to the Federal Audit Clearinghouse (“FAC”) the earlier of 30 days after the receipt of the auditors reports or nine months after the end of the audit period, unless a longer period of time was agreed to in advance by the cognizant or oversight agency for the audit. Condition A detailed, organization-wide audit that complies with Uniform Guidance established criteria was not timely completed and submitted to the FAC. Cause Management did not have internal controls in place to allow for a timely audit which resulted in delays in timely submitting the report to FAC. Effect or Potential Effect A detailed, organization-wide audit that complies with the established criteria was not timely completed resulting in HES not being in compliance with Uniform Guidance requirements. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-005). Recommendation Management should ensure timely completion of a Uniform Guidance audit, as required. Auditor Noncompliance Code: S - Internal control deficiency Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-006
Finding 2020-006 – Special Tests and Provisions – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria In accordance with 24 CFR Part 200 Subpart M section 200.625 requires program participants to provide an Affirmative Fair Housing Marketing Plan (“AFHMP”) approved by HUD. In addition, HUD’s equal housing opportunity logo is required to be displayed on marketing materials. Condition HES was unable to produce an approved AFHMP and did not display the HUD-approved equal housing opportunity logo on marketing materials. Cause Management did not have internal controls in place to ensure an AFHMP was in place and the equal opportunity logo was displayed in accordance with HUD requirements. Effect or Potential Effect HES is not in compliance with HUD regulations. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-006). Recommendation Management should obtain a HUD approved AFHMP and add the equal opportunity logo to marketing materials. Auditor Noncompliance Code: Z- Other Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-002
Finding 2020-002 – Allowable Costs/Cost Principles – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria Management fee payments are limited to amounts determined in accordance with the terms of the management agreement. Condition During the year ended September 30, 2020, HES paid the management agent for costs in excess of amounts incurred by the management agent totaling $30,803 of which $29,480 is related to prior year. Cause Internal controls were not in place to ensure that payments to the management agent were allowable costs. Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Questioned Costs $30,803 Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-002). Auditor Noncompliance Code: J – Unauthorized management fees Finding Resolution Status: Unresolved Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-003
Finding 2020-003 – Special Tests and Provisions – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria HUD regulations at HUD Handbook 4381.5, the Management Agent, require HES's management agent to have fidelity bond coverage equal to the greater of $50,000 or the value of two months’ gross potential rent. If the policy covers more than one project, this minimum must be computed using HES with the highest gross potential rent. Condition Management did not maintain fidelity bond coverage as required by HUD regulations. Cause Internal controls were not in place to fidelity bond coverage was in place. Effect or Potential Effect Management did not maintain fidelity bond coverage in violation of HUD regulations. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding ( see prior year finding number 2019-003). Recommendation Management should obtain fidelity bond coverage as required by HUD regulations immediately. Auditor Noncompliance Code: Z- Other Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-004
Finding 2020-004 – Reporting – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria HUD under the Uniform Financial Reporting Standards Rule implementing requirements of 24 CFR, Part 5, Subpart H, requires not-for-profit multifamily program participants to submit financial statement data electronically to Real Estate Assessment Center ("REAC") within 90 days after their fiscal year-end. If the owner is not prepared to submit the audited financial information, then an owner-certified report must be submitted within 90 days of fiscal year-end. Condition The audited annual financial statement data for the year ended September 30, 2019 was not timely submitted to HUD via the Real Estate Assessment Center REAC system. Cause Management did not have internal controls in place to allow for a timely audit which resulted in delays in timely submitting the report to REAC. Effect or Potential Effect The audited annual financial statement data was not filed timely to REAC. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-004). Recommendation Financial statements should be timely filed. Auditor Noncompliance Code: S - Internal control deficiency Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-005
Finding 2020-005 – Reporting – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria The OMB has issued Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly called "Uniform Guidance"), which requires institutions of higher education and nonprofit institutions that expend $750,000 or more in federal funds to annually conduct a detailed, organization-wide audit that complies with the established criteria. Additionally, the Uniform Guidance reporting package and the data collection form are required to be submitted to the Federal Audit Clearinghouse (“FAC”) the earlier of 30 days after the receipt of the auditors reports or nine months after the end of the audit period, unless a longer period of time was agreed to in advance by the cognizant or oversight agency for the audit. Condition A detailed, organization-wide audit that complies with Uniform Guidance established criteria was not timely completed and submitted to the FAC. Cause Management did not have internal controls in place to allow for a timely audit which resulted in delays in timely submitting the report to FAC. Effect or Potential Effect A detailed, organization-wide audit that complies with the established criteria was not timely completed resulting in HES not being in compliance with Uniform Guidance requirements. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-005). Recommendation Management should ensure timely completion of a Uniform Guidance audit, as required. Auditor Noncompliance Code: S - Internal control deficiency Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-006
Finding 2020-006 – Special Tests and Provisions – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria In accordance with 24 CFR Part 200 Subpart M section 200.625 requires program participants to provide an Affirmative Fair Housing Marketing Plan (“AFHMP”) approved by HUD. In addition, HUD’s equal housing opportunity logo is required to be displayed on marketing materials. Condition HES was unable to produce an approved AFHMP and did not display the HUD-approved equal housing opportunity logo on marketing materials. Cause Management did not have internal controls in place to ensure an AFHMP was in place and the equal opportunity logo was displayed in accordance with HUD requirements. Effect or Potential Effect HES is not in compliance with HUD regulations. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-006). Recommendation Management should obtain a HUD approved AFHMP and add the equal opportunity logo to marketing materials. Auditor Noncompliance Code: Z- Other Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-002
Finding 2020-002 – Allowable Costs/Cost Principles – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria Management fee payments are limited to amounts determined in accordance with the terms of the management agreement. Condition During the year ended September 30, 2020, HES paid the management agent for costs in excess of amounts incurred by the management agent totaling $30,803 of which $29,480 is related to prior year. Cause Internal controls were not in place to ensure that payments to the management agent were allowable costs. Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Questioned Costs $30,803 Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-002). Auditor Noncompliance Code: J – Unauthorized management fees Finding Resolution Status: Unresolved Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-003
Finding 2020-003 – Special Tests and Provisions – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria HUD regulations at HUD Handbook 4381.5, the Management Agent, require HES's management agent to have fidelity bond coverage equal to the greater of $50,000 or the value of two months’ gross potential rent. If the policy covers more than one project, this minimum must be computed using HES with the highest gross potential rent. Condition Management did not maintain fidelity bond coverage as required by HUD regulations. Cause Internal controls were not in place to fidelity bond coverage was in place. Effect or Potential Effect Management did not maintain fidelity bond coverage in violation of HUD regulations. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding ( see prior year finding number 2019-003). Recommendation Management should obtain fidelity bond coverage as required by HUD regulations immediately. Auditor Noncompliance Code: Z- Other Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-004
Finding 2020-004 – Reporting – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria HUD under the Uniform Financial Reporting Standards Rule implementing requirements of 24 CFR, Part 5, Subpart H, requires not-for-profit multifamily program participants to submit financial statement data electronically to Real Estate Assessment Center ("REAC") within 90 days after their fiscal year-end. If the owner is not prepared to submit the audited financial information, then an owner-certified report must be submitted within 90 days of fiscal year-end. Condition The audited annual financial statement data for the year ended September 30, 2019 was not timely submitted to HUD via the Real Estate Assessment Center REAC system. Cause Management did not have internal controls in place to allow for a timely audit which resulted in delays in timely submitting the report to REAC. Effect or Potential Effect The audited annual financial statement data was not filed timely to REAC. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-004). Recommendation Financial statements should be timely filed. Auditor Noncompliance Code: S - Internal control deficiency Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-005
Finding 2020-005 – Reporting – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria The OMB has issued Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly called "Uniform Guidance"), which requires institutions of higher education and nonprofit institutions that expend $750,000 or more in federal funds to annually conduct a detailed, organization-wide audit that complies with the established criteria. Additionally, the Uniform Guidance reporting package and the data collection form are required to be submitted to the Federal Audit Clearinghouse (“FAC”) the earlier of 30 days after the receipt of the auditors reports or nine months after the end of the audit period, unless a longer period of time was agreed to in advance by the cognizant or oversight agency for the audit. Condition A detailed, organization-wide audit that complies with Uniform Guidance established criteria was not timely completed and submitted to the FAC. Cause Management did not have internal controls in place to allow for a timely audit which resulted in delays in timely submitting the report to FAC. Effect or Potential Effect A detailed, organization-wide audit that complies with the established criteria was not timely completed resulting in HES not being in compliance with Uniform Guidance requirements. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-005). Recommendation Management should ensure timely completion of a Uniform Guidance audit, as required. Auditor Noncompliance Code: S - Internal control deficiency Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.
Finding 2020-006
Finding 2020-006 – Special Tests and Provisions – Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181 Federal Award Identification Number and Year: N/A and 1997 Name of Pass-through Entity: N/A Criteria In accordance with 24 CFR Part 200 Subpart M section 200.625 requires program participants to provide an Affirmative Fair Housing Marketing Plan (“AFHMP”) approved by HUD. In addition, HUD’s equal housing opportunity logo is required to be displayed on marketing materials. Condition HES was unable to produce an approved AFHMP and did not display the HUD-approved equal housing opportunity logo on marketing materials. Cause Management did not have internal controls in place to ensure an AFHMP was in place and the equal opportunity logo was displayed in accordance with HUD requirements. Effect or Potential Effect HES is not in compliance with HUD regulations. Questioned Costs None. Context See the context of the finding detailed in the condition section above. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2019-006). Recommendation Management should obtain a HUD approved AFHMP and add the equal opportunity logo to marketing materials. Auditor Noncompliance Code: Z- Other Finding Resolution Status: Unresolved. Views of Responsible Officials HES agrees with the finding and the auditor's recommendations have been adopted.