Audit 352377

U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.134 Mortgage Insurance Rental Housing Project Number: 091-11022 HUD Regulatory Agreement Dated July 1, 2016 Special Test and Provisions: Property, Operations and Distributions Significant Deficiency in Internal Control over Compliance Criteria: 2 CRF 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Our testing of property, operations, and distributions detected the following: - Two instances of overpayment of funds based upon review of supporting invoices and calculations. - One instance where the review and approval for the disbursement of funds was not documented. Cause: There was a lapse in oversight of the internal control process designed to ensure disbursement of funds are adequately supported with a documented review and approval. Effect: Inadequate controls over this area of compliance may result in a reasonable possibility that the Project would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: $31 Context/Sampling: A nonstatistical sample of 60 out of more than 250 payroll and nonpayroll disbursements, were selected for testing, which accounted for $99,422 out of approximately $1,902,500 of disbursements. Repeat Finding from Prior Year: Yes, Finding 2023-002 Recommendation: We recommend management review policies and procedures with applicable employees and remind them of the importance of established review and monitoring processes to ensure disbursements of funds are reviewed and approved and documentation supports the amount of the disbursements of funds. Views of Responsible Officials: Management agrees with the finding and recommendation.

U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.134 Mortgage Insurance Rental Housing Project Number: 091-11022 HUD Regulatory Agreement Dated July 1, 2016 Special Test and Provisions: Property, Operations and Distributions Significant Deficiency in Internal Control over Compliance Criteria: 2 CRF 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Our testing of property, operations, and distributions detected the following: - Two instances of overpayment of funds based upon review of supporting invoices and calculations. - One instance where the review and approval for the disbursement of funds was not documented. Cause: There was a lapse in oversight of the internal control process designed to ensure disbursement of funds are adequately supported with a documented review and approval. Effect: Inadequate controls over this area of compliance may result in a reasonable possibility that the Project would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: $31 Context/Sampling: A nonstatistical sample of 60 out of more than 250 payroll and nonpayroll disbursements, were selected for testing, which accounted for $99,422 out of approximately $1,902,500 of disbursements. Repeat Finding from Prior Year: Yes, Finding 2023-002 Recommendation: We recommend management review policies and procedures with applicable employees and remind them of the importance of established review and monitoring processes to ensure disbursements of funds are reviewed and approved and documentation supports the amount of the disbursements of funds. Views of Responsible Officials: Management agrees with the finding and recommendation.