FAC Explorer

Audit 354365

FY End
2024-12-31
Total Expended
$12.02M
Findings
10
Programs
2
Organization: Victory Heights, Inc. (MD)
Year: 2024 Accepted: 2025-04-23
Auditor: Cohnreznick LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
555735 2024-001 Significant Deficiency - N
555736 2024-002 Material Weakness Yes E
555737 2024-002 Material Weakness Yes E
555738 2024-003 Significant Deficiency - E
555739 2024-003 Significant Deficiency - E
1132177 2024-001 Significant Deficiency - N
1132178 2024-002 Material Weakness Yes E
1132179 2024-002 Material Weakness Yes E
1132180 2024-003 Significant Deficiency - E
1132181 2024-003 Significant Deficiency - E

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $7.77M Yes 3
14.239 Home Investment Partnerships Program $4.25M Yes 2

Contacts

Name Title Type
PMHJDK326KS7 Sarah O'Rielly Auditee
3014936000 Russell Phillips Auditor
No contacts on file

Notes to SEFA

Title: U.S. Department of Housing and Urban Development Capital Advance program Accounting Policies: The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of Victory Heights, Inc., HUD Project No.: 000-EEE058, under programs of the federal government for the year then ended December 31, 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 Victory Heights, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Victory Heights, Inc. For the year ended December 31, 2024, no awards were passed through to subrecipients. 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 OMB Circular A-122, "Cost Principles for Non-Profit Organizations" and 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: Victory Heights, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The balance shown on the schedule of expenditures of federal awards relating to the capital advance includes $7,158,700 expended in prior periods. Section 202 capital advances need not be repaid as long as the owner continues to make the housing available to the low-income elderly for at least 40 years.
Title: HOME Investment Partnerships Program (HOME) Accounting Policies: The accompanying schedule of expenditures of federal awards ("Schedule") includes the federal award activity of Victory Heights, Inc., HUD Project No.: 000-EEE058, under programs of the federal government for the year then ended December 31, 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 Victory Heights, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Victory Heights, Inc. For the year ended December 31, 2024, no awards were passed through to subrecipients. 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 OMB Circular A-122, "Cost Principles for Non-Profit Organizations" and 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: Victory Heights, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Victory Heights, Inc. has received two loans from the District of Columbia DHCD for $500,000 and $3,750,000. The loan balance outstanding at the beginning of the year is included in the federal expenditures presented in the Schedule. See the Notes to the SEFA for table.

Finding Details

Finding 2024-001
Criteria Any balance in Victory Heights's residual receipts reserve account greater than $250 per unit must be remitted to HUD's Accounting Center upon termination of the PRAC, in accordance with the Consolidated Appropriations Act, 2016 enacted on December 18, 2015 applicable for projects with PRAC expiration dates through September 30, 2025. Termination is defined as expiration of the contract term which for most PRACs is the annual contract anniversary date. Victory Heights's PRAC contract expired on August 31, 2024. Condition During the year ended December 31, 2024, management did not submit Form HUD-9250, "Fund Authorization" to HUD upon termination of the PRAC. As a result, management did not remit excess residual receipts of $10,278 as of August 31, 2024, to HUD. Cause The amount held in the residual receipts reserve was not returned to HUD due to management not submitting Form HUD-9250 on a timely basis. On March 14, 2025, management submitted to HUD a request for approval to transfer $30,625 from the residual receipt reserve to HUD. Effect or Potential Effect The holding of the excess funds in the residual receipts reserve is a violation of HUD's required release of funds above the declared threshold of $250 per unit. Questioned Costs None Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding Not a repeat finding. Recommendation Management should immediately submit the Form HUD-9250, "Fund Authorization" and disburse any excess funds from the residual receipts reserve to HUD upon approval of Form HUD-9250. Auditor Noncompliance Code: Z - Other Finding Resolution Status: In-process Views of Responsible Officials Current management has submitted a 9250 to HUD for approval of release of Residual Receipt funds above $250 per unit to be returned to HUD. As part of the PRAC renewal process, current management will follow HUD guidelines that require a submission of a 9250 residual receipt request with the renewal submission.
Finding 2024-002
Criteria Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: 1 out of 1 new tenants tested did not a have a move in inspection in their lease file. 7 out of 13 new and existing tenants tested did not utilize the Enterprise Income Verification (EIV) system. 5 out of 12 existing tenants tested did not complete the Form 50059 timely. Cause The Project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs None Context A sample of 13 tenant files from a population of 72 were selected. We identified exceptions in 7 out of the 13 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Repeat finding of prior year finding 2023-002. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant security deposits are correctly recorded, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In-ProcessViews of Responsible Officials As there has been a change in the Management Agent, the agent will ensure that the EIV Income Report and annual certifications are completed according to HUD guidelines. The site now has updated its file set-up review to make sure reports have been completed within HUD guidelines and new company policy as well as corporate compliance monitoring.
Finding 2024-002
Criteria Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: 1 out of 1 new tenants tested did not a have a move in inspection in their lease file. 7 out of 13 new and existing tenants tested did not utilize the Enterprise Income Verification (EIV) system. 5 out of 12 existing tenants tested did not complete the Form 50059 timely. Cause The Project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs None Context A sample of 13 tenant files from a population of 72 were selected. We identified exceptions in 7 out of the 13 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Repeat finding of prior year finding 2023-002. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant security deposits are correctly recorded, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In-ProcessViews of Responsible Officials As there has been a change in the Management Agent, the agent will ensure that the EIV Income Report and annual certifications are completed according to HUD guidelines. The site now has updated its file set-up review to make sure reports have been completed within HUD guidelines and new company policy as well as corporate compliance monitoring.
Finding 2024-003
Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant's rights under state and local laws. Condition In connection with the procedures applied to a sample of one tenant that moved out of the project during the year, we noted one instances where management failed to refund the tenant security deposit and/or provide the tenant with an itemized list of charges deducted from the deposit within thirty days after the move-out date. Cause The Project failed to follow the policies and procedures which have been established for timely refunding of tenant security deposits which require refunds or notice to occur within 30 days, established by HUD. Effect or Potential Effect Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Questioned Costs None Context A sample of 1 tenant file from a population of 5 were selected. We identified exceptions in 1 out of the 1 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Not a repeat finding Recommendation Management should change its policies and procedures related to refunding of tenant security deposits to comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: M - Security deposits Finding Resolution Status: In-processViews of Responsible Officials As there has been a change in the Management Agent, the agent will ensure that move-outs are processed within the proper time frame. Management has instituted company policy as well as corporate compliance monitoring that requires timely processing.
Finding 2024-003
Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant's rights under state and local laws. Condition In connection with the procedures applied to a sample of one tenant that moved out of the project during the year, we noted one instances where management failed to refund the tenant security deposit and/or provide the tenant with an itemized list of charges deducted from the deposit within thirty days after the move-out date. Cause The Project failed to follow the policies and procedures which have been established for timely refunding of tenant security deposits which require refunds or notice to occur within 30 days, established by HUD. Effect or Potential Effect Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Questioned Costs None Context A sample of 1 tenant file from a population of 5 were selected. We identified exceptions in 1 out of the 1 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Not a repeat finding Recommendation Management should change its policies and procedures related to refunding of tenant security deposits to comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: M - Security deposits Finding Resolution Status: In-processViews of Responsible Officials As there has been a change in the Management Agent, the agent will ensure that move-outs are processed within the proper time frame. Management has instituted company policy as well as corporate compliance monitoring that requires timely processing.
Finding 2024-001
Criteria Any balance in Victory Heights's residual receipts reserve account greater than $250 per unit must be remitted to HUD's Accounting Center upon termination of the PRAC, in accordance with the Consolidated Appropriations Act, 2016 enacted on December 18, 2015 applicable for projects with PRAC expiration dates through September 30, 2025. Termination is defined as expiration of the contract term which for most PRACs is the annual contract anniversary date. Victory Heights's PRAC contract expired on August 31, 2024. Condition During the year ended December 31, 2024, management did not submit Form HUD-9250, "Fund Authorization" to HUD upon termination of the PRAC. As a result, management did not remit excess residual receipts of $10,278 as of August 31, 2024, to HUD. Cause The amount held in the residual receipts reserve was not returned to HUD due to management not submitting Form HUD-9250 on a timely basis. On March 14, 2025, management submitted to HUD a request for approval to transfer $30,625 from the residual receipt reserve to HUD. Effect or Potential Effect The holding of the excess funds in the residual receipts reserve is a violation of HUD's required release of funds above the declared threshold of $250 per unit. Questioned Costs None Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding Not a repeat finding. Recommendation Management should immediately submit the Form HUD-9250, "Fund Authorization" and disburse any excess funds from the residual receipts reserve to HUD upon approval of Form HUD-9250. Auditor Noncompliance Code: Z - Other Finding Resolution Status: In-process Views of Responsible Officials Current management has submitted a 9250 to HUD for approval of release of Residual Receipt funds above $250 per unit to be returned to HUD. As part of the PRAC renewal process, current management will follow HUD guidelines that require a submission of a 9250 residual receipt request with the renewal submission.
Finding 2024-002
Criteria Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: 1 out of 1 new tenants tested did not a have a move in inspection in their lease file. 7 out of 13 new and existing tenants tested did not utilize the Enterprise Income Verification (EIV) system. 5 out of 12 existing tenants tested did not complete the Form 50059 timely. Cause The Project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs None Context A sample of 13 tenant files from a population of 72 were selected. We identified exceptions in 7 out of the 13 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Repeat finding of prior year finding 2023-002. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant security deposits are correctly recorded, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In-ProcessViews of Responsible Officials As there has been a change in the Management Agent, the agent will ensure that the EIV Income Report and annual certifications are completed according to HUD guidelines. The site now has updated its file set-up review to make sure reports have been completed within HUD guidelines and new company policy as well as corporate compliance monitoring.
Finding 2024-002
Criteria Management is responsible for determining tenant eligibility and maintaining lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: 1 out of 1 new tenants tested did not a have a move in inspection in their lease file. 7 out of 13 new and existing tenants tested did not utilize the Enterprise Income Verification (EIV) system. 5 out of 12 existing tenants tested did not complete the Form 50059 timely. Cause The Project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs None Context A sample of 13 tenant files from a population of 72 were selected. We identified exceptions in 7 out of the 13 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Repeat finding of prior year finding 2023-002. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant security deposits are correctly recorded, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In-ProcessViews of Responsible Officials As there has been a change in the Management Agent, the agent will ensure that the EIV Income Report and annual certifications are completed according to HUD guidelines. The site now has updated its file set-up review to make sure reports have been completed within HUD guidelines and new company policy as well as corporate compliance monitoring.
Finding 2024-003
Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant's rights under state and local laws. Condition In connection with the procedures applied to a sample of one tenant that moved out of the project during the year, we noted one instances where management failed to refund the tenant security deposit and/or provide the tenant with an itemized list of charges deducted from the deposit within thirty days after the move-out date. Cause The Project failed to follow the policies and procedures which have been established for timely refunding of tenant security deposits which require refunds or notice to occur within 30 days, established by HUD. Effect or Potential Effect Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Questioned Costs None Context A sample of 1 tenant file from a population of 5 were selected. We identified exceptions in 1 out of the 1 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Not a repeat finding Recommendation Management should change its policies and procedures related to refunding of tenant security deposits to comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: M - Security deposits Finding Resolution Status: In-processViews of Responsible Officials As there has been a change in the Management Agent, the agent will ensure that move-outs are processed within the proper time frame. Management has instituted company policy as well as corporate compliance monitoring that requires timely processing.
Finding 2024-003
Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant's rights under state and local laws. Condition In connection with the procedures applied to a sample of one tenant that moved out of the project during the year, we noted one instances where management failed to refund the tenant security deposit and/or provide the tenant with an itemized list of charges deducted from the deposit within thirty days after the move-out date. Cause The Project failed to follow the policies and procedures which have been established for timely refunding of tenant security deposits which require refunds or notice to occur within 30 days, established by HUD. Effect or Potential Effect Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Questioned Costs None Context A sample of 1 tenant file from a population of 5 were selected. We identified exceptions in 1 out of the 1 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding Not a repeat finding Recommendation Management should change its policies and procedures related to refunding of tenant security deposits to comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: M - Security deposits Finding Resolution Status: In-processViews of Responsible Officials As there has been a change in the Management Agent, the agent will ensure that move-outs are processed within the proper time frame. Management has instituted company policy as well as corporate compliance monitoring that requires timely processing.