Audit 354548

FY End

2024-12-31

Total Expended

$2.38M

Findings

4

Programs

2

Organization: Martin Luther King Gardens Urban Renewal, Inc. (NJ)

Year: 2024 Accepted: 2025-04-24

Auditor: Burns Draeger & Humphries LLC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
555897	2024-001	-	Yes	L
555898	2024-002	-	-	N
1132339	2024-001	-	Yes	L
1132340	2024-002	-	-	N

ALN	Program	Spent	Major	Findings
14.182	Lower Income Housing Assistance Program - Section 8 Moderate Rehabilitation	$2.09M	Yes	2
14.103	Section 236 Interest Reduction Payment	$289,624	-	0

Contacts

Name	Title	Type
CCCMM2Z6GTN5	Melchoir Roberts	Auditee
9737432300	Neil E. Burns	Auditor
No contacts on file

Notes to SEFA

Title: Note 4. – Subrecipients Accounting Policies: Note 1. – Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal award activity of Martin Luther King Gardens Urban Renewal, Inc. HUD Project No. 031-061-NI under programs of the federal government for the year ended December 31, 2024. The information on this Schedule is prepared 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 Martin Luther King Gardens Urban Renewal, Inc. HUD Project No. 031-061-NI, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Martin Luther King Gardens Urban Renewal, Inc. HUD Project No. 031-061-NI. Note 2. – Summary of Significant 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 Uniform Guidance, wherein certain types of expenditures may or may not be allowable or may be limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: Note 3. – Indirect Cost Rate The Entity has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The Entity is reimbursed for programmatic and administrative costs in accordance with the rules set forth by the U.S. Department of Housing and Urban Development.ment. There were no subrecipients present for the year ended December 31, 2024.

Finding Details

Finding 2024-001

Other Compliance Matters 2024-001 U.S. Department of Housing and Urban Development (“HUD”) – Assistance Listing No. 14.182 – Section 8 Housing Assistance Payments Program -- Reporting Condition The HUD REAC filing was not completed within the prescribed time frame. Criteria Per the Compliance Supplement for the Section 8 Housing Assistance Payments Program above, the Center was to submit the annual financial statement to HUD Real Estate Assessment Center (REAC) within ninety days of its fiscal year end. Questioned Costs None Context The REAC filing was late. Cause There was a fire in the Project's office resulting in the temporary relocation of the office and records. These unforeseen circumstances resulted in a delay in accessing the information required to complete the audit. Effect Filing required forms untimely makes it more challenging for HUD to monitor and administer its programs and the recipients of grant funding and could jeopardize program funding. Recommendation Senior management should develop a contingency plan to ensure necessary accounting systems continue to function during the occurrence of unexpected events.

Finding 2024-002

Other Compliance Matters 2024-002 Replacement Reserve Account was not correctly titled. Condition The Project is required by the regulatory agreement to establish and maintain a replacement reserves account. The reserve account was transferred from New Jersey Housing and Mortgage Finance Agency (NJHMFA) to the Project during the year. The funds were not deposited into an account tilted as Replacement Reserve. Criteria Management of the Project is responsible for complying with laws and regulations. This responsibility includes compliance with HUD regulations requiring the Project to establish and maintain a replacement reserve account. Questioned Costs None Context The Replacement Reserve account was not correctly established. Cause The Replacement Reserve Account was previously held by New Jersey Housing and Mortgage Finance Agency (NJHMFA). NJHMFA's oversight ended in 2023 and the Replacement Reserve funds were dispersed to the Project in 2024. The Project deposited the funds into certificates of deposit accounts which were not titled Replacement Reserve. Effect The Project's Replacement Reserve funds were not deposited into an account which correctly listed it as restricted for the Replacement Reserve, which was not in accordance with the regulatory agreement with HUD. Recommendation We recommend that management establish a bank account titled Reserve Replacement and immediately fund the account with the amount received from HMFA along with the corresponding interest income. Management should take the necessary steps to ensure that future deposits are made in accordance with the HUD agreement.

Finding 2024-001

Other Compliance Matters 2024-001 U.S. Department of Housing and Urban Development (“HUD”) – Assistance Listing No. 14.182 – Section 8 Housing Assistance Payments Program -- Reporting Condition The HUD REAC filing was not completed within the prescribed time frame. Criteria Per the Compliance Supplement for the Section 8 Housing Assistance Payments Program above, the Center was to submit the annual financial statement to HUD Real Estate Assessment Center (REAC) within ninety days of its fiscal year end. Questioned Costs None Context The REAC filing was late. Cause There was a fire in the Project's office resulting in the temporary relocation of the office and records. These unforeseen circumstances resulted in a delay in accessing the information required to complete the audit. Effect Filing required forms untimely makes it more challenging for HUD to monitor and administer its programs and the recipients of grant funding and could jeopardize program funding. Recommendation Senior management should develop a contingency plan to ensure necessary accounting systems continue to function during the occurrence of unexpected events.

Finding 2024-002

Other Compliance Matters 2024-002 Replacement Reserve Account was not correctly titled. Condition The Project is required by the regulatory agreement to establish and maintain a replacement reserves account. The reserve account was transferred from New Jersey Housing and Mortgage Finance Agency (NJHMFA) to the Project during the year. The funds were not deposited into an account tilted as Replacement Reserve. Criteria Management of the Project is responsible for complying with laws and regulations. This responsibility includes compliance with HUD regulations requiring the Project to establish and maintain a replacement reserve account. Questioned Costs None Context The Replacement Reserve account was not correctly established. Cause The Replacement Reserve Account was previously held by New Jersey Housing and Mortgage Finance Agency (NJHMFA). NJHMFA's oversight ended in 2023 and the Replacement Reserve funds were dispersed to the Project in 2024. The Project deposited the funds into certificates of deposit accounts which were not titled Replacement Reserve. Effect The Project's Replacement Reserve funds were not deposited into an account which correctly listed it as restricted for the Replacement Reserve, which was not in accordance with the regulatory agreement with HUD. Recommendation We recommend that management establish a bank account titled Reserve Replacement and immediately fund the account with the amount received from HMFA along with the corresponding interest income. Management should take the necessary steps to ensure that future deposits are made in accordance with the HUD agreement.