FAC Explorer

Audit 3440

FY End
2022-03-31
Total Expended
$2.44M
Findings
6
Programs
2
Organization: Daniels Crossing (UT)
Year: 2022 Accepted: 2023-11-16
Auditor: Fj & Associates PLLC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
1997 2022-001 - Yes C
1998 2022-002 - - P
1999 2022-003 - - P
578439 2022-001 - Yes C
578440 2022-002 - - P
578441 2022-003 - - P

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $2.40M Yes 3
14.195 Section 8 Housing Assistance Payments Program $39,724 - 0

Contacts

Name Title Type
LKN2H8RS9QM3 Ashleigh Lindquist Auditee
4357815481 Scott Farnes Auditor
No contacts on file

Notes to SEFA

Title: Scope of Audit Pursuant to the Uniform Guidance Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Organization. All federal awards received directly from federal agencies as well as federal awards passed through other governmental agencies or other entities are included in the Schedule. The Organization has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The Organization’s Schedule of Expenditures of Federal Awards has been prepared using the same basis of accounting as the March 31, 2022 financial statements of the Organization. The Organization reports to HUD using the accrual basis of accounting. A complete description of the basis of accounting is included in note 1 to those financial statements. 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 Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Organization. All federal awards received directly from federal agencies as well as federal awards passed through other governmental agencies or other entities are included in the Schedule. The Organization has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
Title: Basis of Presentation Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Organization. All federal awards received directly from federal agencies as well as federal awards passed through other governmental agencies or other entities are included in the Schedule. The Organization has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The Organization’s Schedule of Expenditures of Federal Awards has been prepared using the same basis of accounting as the March 31, 2022 financial statements of the Organization. The Organization reports to HUD using the accrual basis of accounting. A complete description of the basis of accounting is included in note 1 to those financial statements. 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 Organization’s Schedule of Expenditures of Federal Awards has been prepared using the same basis of accounting as the March 31, 2022 financial statements of the Organization. The Organization reports to HUD using the accrual basis of accounting. A complete description of the basis of accounting is included in note 1 to those financial statements.
Title: Contingencies Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Organization. All federal awards received directly from federal agencies as well as federal awards passed through other governmental agencies or other entities are included in the Schedule. The Organization has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The Organization’s Schedule of Expenditures of Federal Awards has been prepared using the same basis of accounting as the March 31, 2022 financial statements of the Organization. The Organization reports to HUD using the accrual basis of accounting. A complete description of the basis of accounting is included in note 1 to those financial statements. 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. In connection with various federal grant programs, the Organization is obligated to administer related programs and spend the funds in accordance with regulatory restrictions, and is subject to audit by grantor agencies and other auditors. In cases of noncompliance, the agencies involved may require the Organization to refund program funds.
Title: Federally Funded and Insured Loans Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Organization. All federal awards received directly from federal agencies as well as federal awards passed through other governmental agencies or other entities are included in the Schedule. The Organization has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The Organization’s Schedule of Expenditures of Federal Awards has been prepared using the same basis of accounting as the March 31, 2022 financial statements of the Organization. The Organization reports to HUD using the accrual basis of accounting. A complete description of the basis of accounting is included in note 1 to those financial statements. 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 loan balance at the beginning of the year and loans made during the year are included in the federal expenditures presented in the Schedule. The balance of the outstanding federally insured loan at March 31, 2022 is $2,401,535.

Finding Details

Finding 2022-001
Condition: The Organization failed to bring the reserve account to a fully funded position during the period ended March 31, 2022. Deposits and interest were added during the current period in the amount of $12,218. This leaves the period underfunded and the total deficit at $29,433. Criteria: The Regulatory Agreement with HUD states, “Mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank which is insured by the Federal Deposit Insurance Corporation…. Concurrently with the effective commencement of rental assistance payments under the Project Assistance Contract, the Mortgagor will deposit an amount equal to $840.08 per month unless a different date or amount is approved in writing by HUD.” During the prior year, the replacement reserve was underfunded by $29,433. During the current year, the Project needed to make twelve payments of $840.08 plus an additional $31,570 for the prior year underfunding for total required deposits of $41,651. Current reserve balance is $33,429, and the required reserve balance is $62,862. Effect: The reserve account is underfunded by $29,433 as of March 31, 2022. Thus, necessary repairs and improvements may not be performed until the reserve is fully funded and/or is authorized by HUD. Cause: Management failed to deposit the funds as required since the Organization’s financial position made it difficult to do so. Recommendation: We recommend the Organization bring the reserve account to a fully funded position. Auditee's Response: The Organization will work towards bringing the reserve account into compliance.
Finding 2022-002
Condition: The Organization failed to have its audit completed within nine months after its fiscal year end of March 31, 2022. Criteria: The Regulatory Agreement with HUD states that within nine months following the end of each fiscal year, Borrower shall prepare a financial report for the Borrower's fiscal year end, or the portion thereof that started with the Borrower's assumption of financial responsibility. Effect: The audit was not completed as of December 31, 2022, which is nine months after the fiscal year end of March 31, 2022. Cause: Management failed to have the audit completed within nine months since there was a change in directors and management. Recommendation: We recommend the Organization have its audit completed within nine months of fiscal year end. Auditee’s Response: The Organization will work towards having all materials ready in order for the audit to be completed on time for the next fiscal year end.
Finding 2022-003
Condition: The Organization withdrew $12,756 when only $12,256 was approved. Criteria: The Regulatory Agreement with HUD states Disbursements from such fund, whether for the purpose of effecting replacement of structural elements and mechanical equipment of the project for any other purpose, may be made only after the consent in writing of HUD. In the event of a default in the terms of the mortgage, HUD may demand the full or partial application of the balance in such fund to be amount due on the mortgage debt. Effect: $500 was withdrawn without authorization. Cause: Management requested $12,756 and HUD only approved $12,256. Management withdrew the $500 erroneously. Recommendation: We recommend the Organization repay the $500 that was not approved. Auditee’s Response: The Organization will repay the $500 that was unauthorized.
Finding 2022-001
Condition: The Organization failed to bring the reserve account to a fully funded position during the period ended March 31, 2022. Deposits and interest were added during the current period in the amount of $12,218. This leaves the period underfunded and the total deficit at $29,433. Criteria: The Regulatory Agreement with HUD states, “Mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank which is insured by the Federal Deposit Insurance Corporation…. Concurrently with the effective commencement of rental assistance payments under the Project Assistance Contract, the Mortgagor will deposit an amount equal to $840.08 per month unless a different date or amount is approved in writing by HUD.” During the prior year, the replacement reserve was underfunded by $29,433. During the current year, the Project needed to make twelve payments of $840.08 plus an additional $31,570 for the prior year underfunding for total required deposits of $41,651. Current reserve balance is $33,429, and the required reserve balance is $62,862. Effect: The reserve account is underfunded by $29,433 as of March 31, 2022. Thus, necessary repairs and improvements may not be performed until the reserve is fully funded and/or is authorized by HUD. Cause: Management failed to deposit the funds as required since the Organization’s financial position made it difficult to do so. Recommendation: We recommend the Organization bring the reserve account to a fully funded position. Auditee's Response: The Organization will work towards bringing the reserve account into compliance.
Finding 2022-002
Condition: The Organization failed to have its audit completed within nine months after its fiscal year end of March 31, 2022. Criteria: The Regulatory Agreement with HUD states that within nine months following the end of each fiscal year, Borrower shall prepare a financial report for the Borrower's fiscal year end, or the portion thereof that started with the Borrower's assumption of financial responsibility. Effect: The audit was not completed as of December 31, 2022, which is nine months after the fiscal year end of March 31, 2022. Cause: Management failed to have the audit completed within nine months since there was a change in directors and management. Recommendation: We recommend the Organization have its audit completed within nine months of fiscal year end. Auditee’s Response: The Organization will work towards having all materials ready in order for the audit to be completed on time for the next fiscal year end.
Finding 2022-003
Condition: The Organization withdrew $12,756 when only $12,256 was approved. Criteria: The Regulatory Agreement with HUD states Disbursements from such fund, whether for the purpose of effecting replacement of structural elements and mechanical equipment of the project for any other purpose, may be made only after the consent in writing of HUD. In the event of a default in the terms of the mortgage, HUD may demand the full or partial application of the balance in such fund to be amount due on the mortgage debt. Effect: $500 was withdrawn without authorization. Cause: Management requested $12,756 and HUD only approved $12,256. Management withdrew the $500 erroneously. Recommendation: We recommend the Organization repay the $500 that was not approved. Auditee’s Response: The Organization will repay the $500 that was unauthorized.