FAC Explorer

Audit 354366

FY End
2024-12-31
Total Expended
$7.70M
Findings
4
Programs
2
Organization: Victory Oaks, Inc. (MD)
Year: 2024 Accepted: 2025-04-23
Auditor: Cohnreznick LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
555740 2024-001 Material Weakness Yes E
555741 2024-002 Significant Deficiency - A
1132182 2024-001 Material Weakness Yes E
1132183 2024-002 Significant Deficiency - A

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $6.83M Yes 2
14.239 Home Investment Partnerships Program $863,402 - 0

Contacts

Name Title Type
ZWVBCEE4NFG7 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 Oaks, Inc., HUD Project No. 000-EE0067, under programs of the federal government for the year 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 Oaks, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Victory Oaks, 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 Oaks, 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 consists of $6,484,700 expended in prior years. 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 Oaks, Inc., HUD Project No. 000-EE0067, under programs of the federal government for the year 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 Oaks, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Victory Oaks, 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 Oaks, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Victory Oaks, Inc. has received a Montgomery County, Maryland loan under the HOME Investment Partnerships Program for $932,000. 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 Tenant lease files are required to be maintained and tenant eligibility determined in accordancewith HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily HousingPrograms. Condition In connection with our lease file review we noted the following deficiencies: 2 of 6 new and existing tenants tested did not utilize the Enterprise Income Verification (EIV) system timely. 2 of 6 existing tenants tested did not complete the HUD 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 security deposits and eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Context A sample of 6 tenant files from a population of 47 were selected. We identified exceptions in 4 of the 6 files tested. The sample was not a statistically valid sample. Identification as a Repeat Finding Finding is a repeat finding, see prior year finding 2023-001. Questioned Costs None 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-process Views 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 Loans are not permitted to be made from project cash without prior authorization from HUD in accordance with the HUD regulatory agreement and PRAC contract. Condition During the year ended December 31, 2024, Victory Oaks paid expenses in the amount of $3,941 on behalf of an affiliate from project cash without HUD approval. The amount due from the project as of December 31, 2024 is $3,941. Cause Procedures were not in place to ensure that cash disbursements of project funds were limited to project operating costs. Effect or Potential Effect The payment of $3,941 is an unauthorized loan and therefore considered to be a questioned cost. Questioned Costs Expenses paid on behalf of an affiliate of $3,941. Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: G - Unauthorized loans from project assets Finding Resolution Status: In-process Views of Responsible Officials The Management Agent will ensure that invoices will be recorded accurately and according to HUD guidelines. A list of service accounts by property is cross-referenced prior to invoice approval and utility accounts will be transferred to a third party for processing and payment.
Finding 2024-001
Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordancewith HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily HousingPrograms. Condition In connection with our lease file review we noted the following deficiencies: 2 of 6 new and existing tenants tested did not utilize the Enterprise Income Verification (EIV) system timely. 2 of 6 existing tenants tested did not complete the HUD 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 security deposits and eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Context A sample of 6 tenant files from a population of 47 were selected. We identified exceptions in 4 of the 6 files tested. The sample was not a statistically valid sample. Identification as a Repeat Finding Finding is a repeat finding, see prior year finding 2023-001. Questioned Costs None 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-process Views 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 Loans are not permitted to be made from project cash without prior authorization from HUD in accordance with the HUD regulatory agreement and PRAC contract. Condition During the year ended December 31, 2024, Victory Oaks paid expenses in the amount of $3,941 on behalf of an affiliate from project cash without HUD approval. The amount due from the project as of December 31, 2024 is $3,941. Cause Procedures were not in place to ensure that cash disbursements of project funds were limited to project operating costs. Effect or Potential Effect The payment of $3,941 is an unauthorized loan and therefore considered to be a questioned cost. Questioned Costs Expenses paid on behalf of an affiliate of $3,941. Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: G - Unauthorized loans from project assets Finding Resolution Status: In-process Views of Responsible Officials The Management Agent will ensure that invoices will be recorded accurately and according to HUD guidelines. A list of service accounts by property is cross-referenced prior to invoice approval and utility accounts will be transferred to a third party for processing and payment.