FAC Explorer

Audit 351103

FY End
2024-06-30
Total Expended
$1.81M
Findings
4
Programs
2
Organization: Stoneboro Development Corporation 033-11048 (PA)
Year: 2024 Accepted: 2025-03-31
Auditor: Bernard Robinson & Company LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
544416 2024-001 - Yes C
544417 2024-002 - Yes P
1120858 2024-001 - Yes C
1120859 2024-002 - Yes P

Programs

ALN Program Spent Major Findings
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $1.57M Yes 2
14.195 Project-Based Rental Assistance (pbra) $240,035 - 0

Contacts

Name Title Type
DW98QNQJQ395 Trisha Jester Auditee
8009631280 Jamie Parsons 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. Stoneboro Development Corporation 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: Stoneboro Development Corporation 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 award activity of Stoneboro Development Corporation, under programs of the federal government for the year ended June 30, 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 Stoneboro Development Corporation, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Stoneboro Development Corporation.
Title: LOAN OUTSTANDING- 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. Stoneboro Development Corporation 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: Stoneboro Development Corporation has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Stoneboro Development Corporation had the following loan balance, related to federal awards, outstanding as of June 30, 2024: Program Title: Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 207/223(f)); Assistance Listing Number: 14.155; Amount Outstanding: $1,506,214.

Finding Details

Finding 2024-001
Finding 2024-001 - U.S. Department of Housing and Urban Development, Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, Market Interest Rate, Assistance Listing #14.155 Statement of Condition: During the year ended June 30, 2024, the Corporation made twelve payments on the mortgage payable, however, as of June 30, 2024 the Corporation was delinquent by four months of principal and interest from a prior year. Additionally, the Corporation incurred late fees of $2,127 during the year ended June 30, 2024. Criteria: The Loan Agreement and the Regulatory Agreement with HUD requires the Corporation to make all required monthly mortgage and escrow payments by its due date. Effect: Noncompliance with HUD regulations and mortgage default. Cause: Vacancy and cash flow shortages. Context: A test to compare the required mortgage payments and escrow deposits to the actual mortgage payments and escrow deposits was performed. During the year ended June 30, 2024, the Corporation made twelve mortgage payments and escrow deposits, however, as of June 30, 2024 the Corporation was delinquent by four months of principal and interest. Questioned Costs: $2,127 Recommendation: We recommend that management and the board of directors continue to work to improve occupancy and submit special claims requests to HUD for vacant units to improve cash flow to ensure timely payment of the mortgage payments and escrow deposits. Views of Responsible Officials and Corrective Action Plan: The board of directors acknowledges the required mortgage payments and escrow deposits were not made. Effective June 1, 2023, the board of directors contracted with a new management company. The new management company is increasing advertising to fill vacancies and submitting special claims requests to improve the cash flow. Additionally, the new management company is working with the lender to make additional mortgage payments and escrow deposits as cash flow permits.
Finding 2024-002
Finding 2024-002 - U.S. Department of Housing and Urban Development, Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, Market Interest Rate, Assistance Listing #14.155 Statement of Condition: The Corporation did not submit the annual financial report to HUD for the year ended June 30, 2023 by the required deadline. Criteria: The Regulatory Agreement requires the Corporation to submit to HUD the annual financial report within 90 days following the end of each fiscal year. Effect: Noncompliance with HUD regulations. Cause: Prior management oversight and non-responsiveness. Context: The annual audit was not completed by the required HUD annual financial report due date. Questioned Costs: N/A Recommendation: We recommend the board of directors and management ensure that the annual financial reports to HUD are submitted by the required due dates. Views of Responsible Officials and Corrective Action Plan: The board of directors acknowledges the annual financial report to HUD for the year ended June 30, 2024 is past the required due date. Effective June 1, 2023, the board of directors contracted with a new management company. The new management company will ensure the annual financial reports to HUD are submitted once the audits are back on track with the scheduled due dates.
Finding 2024-001
Finding 2024-001 - U.S. Department of Housing and Urban Development, Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, Market Interest Rate, Assistance Listing #14.155 Statement of Condition: During the year ended June 30, 2024, the Corporation made twelve payments on the mortgage payable, however, as of June 30, 2024 the Corporation was delinquent by four months of principal and interest from a prior year. Additionally, the Corporation incurred late fees of $2,127 during the year ended June 30, 2024. Criteria: The Loan Agreement and the Regulatory Agreement with HUD requires the Corporation to make all required monthly mortgage and escrow payments by its due date. Effect: Noncompliance with HUD regulations and mortgage default. Cause: Vacancy and cash flow shortages. Context: A test to compare the required mortgage payments and escrow deposits to the actual mortgage payments and escrow deposits was performed. During the year ended June 30, 2024, the Corporation made twelve mortgage payments and escrow deposits, however, as of June 30, 2024 the Corporation was delinquent by four months of principal and interest. Questioned Costs: $2,127 Recommendation: We recommend that management and the board of directors continue to work to improve occupancy and submit special claims requests to HUD for vacant units to improve cash flow to ensure timely payment of the mortgage payments and escrow deposits. Views of Responsible Officials and Corrective Action Plan: The board of directors acknowledges the required mortgage payments and escrow deposits were not made. Effective June 1, 2023, the board of directors contracted with a new management company. The new management company is increasing advertising to fill vacancies and submitting special claims requests to improve the cash flow. Additionally, the new management company is working with the lender to make additional mortgage payments and escrow deposits as cash flow permits.
Finding 2024-002
Finding 2024-002 - U.S. Department of Housing and Urban Development, Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, Market Interest Rate, Assistance Listing #14.155 Statement of Condition: The Corporation did not submit the annual financial report to HUD for the year ended June 30, 2023 by the required deadline. Criteria: The Regulatory Agreement requires the Corporation to submit to HUD the annual financial report within 90 days following the end of each fiscal year. Effect: Noncompliance with HUD regulations. Cause: Prior management oversight and non-responsiveness. Context: The annual audit was not completed by the required HUD annual financial report due date. Questioned Costs: N/A Recommendation: We recommend the board of directors and management ensure that the annual financial reports to HUD are submitted by the required due dates. Views of Responsible Officials and Corrective Action Plan: The board of directors acknowledges the annual financial report to HUD for the year ended June 30, 2024 is past the required due date. Effective June 1, 2023, the board of directors contracted with a new management company. The new management company will ensure the annual financial reports to HUD are submitted once the audits are back on track with the scheduled due dates.