Audit 350750

FY End

2024-06-30

Total Expended

$1.79M

Findings

2

Programs

2

Organization: Rss Scattered Homes (NC)

Year: 2024 Accepted: 2025-03-31

Auditor: Apple Koceja & Associates PA

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
541843	2024-001	-	-	N
1118285	2024-001	-	-	N

ALN	Program	Spent	Major	Findings
14.155	Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects	$1.53M	Yes	1
14.195	Project-Based Rental Assistance (pbra)	$257,456	-	0

Contacts

Name	Title	Type
KCXYQL8CNFM8	Lori Gougeon	Auditee
7045366661	Brett Koceja	Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation 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. De Minimis Rate Used: N Rate Explanation: RSS Scattered Homes did not elect to use the de minimis cost rate. The accompanying schedule of expenditures of federal awards includes the federal award activity of RSS Scattered Homes and is presented on the accrual basis of accounting. 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 RSS Scattered Homes, it is not intended to and does not present the financial position, changes in net assets, or cash flows of RSS Scattered Homes.

Title: 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 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: N Rate Explanation: RSS Scattered Homes did not elect to use the de minimis cost rate. RSS Scattered Homes has a mortgage loan insured by the U.S. Department of Housing and Urban Development under Section 223(f) of the National Housing Act. The Assistance Listing Number 14.155 (Mortgage insurance for the purchase or refinancing of existing multifamily housing projects) amount of $1,531,623 represents the outstanding loan balance at the beginning of the audit period. The outstanding loan balance at June 30, 2024, the end of the audit period, was $1,469,967.

Finding Details

Finding 2024-001

Section 223(f), Assistance Listing Number14.155 Criteria: Paragraph 5.(a) of the Regulatory Agreement with HUD states that the Project will deposit a HUD-approved monthly amount into the reserve for replacement account. The Project’s HAP Contract renewal letter stated that the monthly amount should be $3,861 effective July 1, 2023 and that the owner was required to submit a HUD 9250 reflecting this monthly deposit change to the HUD Office for execution and mortgagee notification. Statement of Condition: For the year ended June 30, 2024, the owner did not submit a HUD 9250 reflecting the increased monthly deposit amount to the HUD Office, and the Project did not make the full amount of the required annual deposit into the reserve for replacement account, per the Project’s Regulatory Agreement with HUD and the HAP Contract renewal letter. Context: Management did not make the entire monthly reserve for replacement deposit for July 2023 through June 2024. Cause: The failure to submit a HUD 9250 reflecting the new monthly deposit to the HUD office and to make the increased deposit amount into the reserve for replacement account was an oversight by management. Effect: At June 30, 2024, the reserve for replacement account was underfunded by $996, based on the requirements in the Regulatory Agreement and the HAP Contract renewal letter. Recommendation: We recommend that Management fund the reserve for replacement account fully as soon as possible, and we recommend that Management institute procedures to ensure that required HUD 9250 forms are prepared and submitted to HUD and that required deposits are made into the reserve for replacement account on a timely basis. Views of Responsible Officials: Management agrees with the finding and the recommendation. The Project made the required deposits on March 7, 2025. Management will implement procedures to ensure that the effective date of the Form 9250 is adhered to when there are changes in the amount of funding required for the reserve for replacement account.

Finding 2024-001

Section 223(f), Assistance Listing Number14.155 Criteria: Paragraph 5.(a) of the Regulatory Agreement with HUD states that the Project will deposit a HUD-approved monthly amount into the reserve for replacement account. The Project’s HAP Contract renewal letter stated that the monthly amount should be $3,861 effective July 1, 2023 and that the owner was required to submit a HUD 9250 reflecting this monthly deposit change to the HUD Office for execution and mortgagee notification. Statement of Condition: For the year ended June 30, 2024, the owner did not submit a HUD 9250 reflecting the increased monthly deposit amount to the HUD Office, and the Project did not make the full amount of the required annual deposit into the reserve for replacement account, per the Project’s Regulatory Agreement with HUD and the HAP Contract renewal letter. Context: Management did not make the entire monthly reserve for replacement deposit for July 2023 through June 2024. Cause: The failure to submit a HUD 9250 reflecting the new monthly deposit to the HUD office and to make the increased deposit amount into the reserve for replacement account was an oversight by management. Effect: At June 30, 2024, the reserve for replacement account was underfunded by $996, based on the requirements in the Regulatory Agreement and the HAP Contract renewal letter. Recommendation: We recommend that Management fund the reserve for replacement account fully as soon as possible, and we recommend that Management institute procedures to ensure that required HUD 9250 forms are prepared and submitted to HUD and that required deposits are made into the reserve for replacement account on a timely basis. Views of Responsible Officials: Management agrees with the finding and the recommendation. The Project made the required deposits on March 7, 2025. Management will implement procedures to ensure that the effective date of the Form 9250 is adhered to when there are changes in the amount of funding required for the reserve for replacement account.