Audit 357748

FY End
2024-08-31
Total Expended
$2.11M
Findings
2
Programs
3
Year: 2024 Accepted: 2025-06-02

Organization Exclusion Status:

Checking exclusion status...

Findings

ID Ref Severity Repeat Requirement
562122 2024-003 Material Weakness Yes C
1138564 2024-003 Material Weakness Yes C

Programs

ALN Program Spent Major Findings
10.447 Rural Multi-Family Housing Revitalization Demonstration Program (mpr) $1.24M Yes 1
10.415 Rural Rental Housing Loans $781,383 Yes 0
10.427 Rural Rental Assistance Payments $88,659 - 0

Contacts

Name Title Type
M3B6TBAHXY78 Arlene Odeja Auditee
2627635566 Taylor Debs 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. De Minimis Rate Used: N Rate Explanation: The Housing Authority has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the Housing Authority of the City of Burlington under programs of the federal government for the year ended August 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 the Housing Authority of the City of Burlington, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Housing Authority of the City of Burlington.
Title: Summary of Significant Accounting Policies 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. De Minimis Rate Used: N Rate Explanation: The Housing Authority has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. 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.
Title: Indirect Cost Rate 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. De Minimis Rate Used: N Rate Explanation: The Housing Authority has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. The Housing Authority has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance.
Title: Oversight Agency 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. De Minimis Rate Used: N Rate Explanation: The Housing Authority has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. The oversight agency is the U. S. Department of Agriculture.
Title: Outstanding Loans 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. De Minimis Rate Used: N Rate Explanation: The Housing Authority has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. The Housing Authority of the City of Burlington has three outstanding notes payable to Rural Development. The interest rates on the two Rural Rental Housing Loans are 3.625%, which are subsidized to reduced rates of 1.0%. There is no stated interest rate on the Multi-Family Housing Revitalization Demonstration Program loan. The balance of loans outstanding as of August 31, 2024 consists of: Program Title Federal Assistance Listings Outstanding Loans Rural Rental Housing Loans 10.415 $ 756,190 Multi-Family Housing Revitalization Demonstration Program 10.447 1,212,323 Total $ 1,968,513
Title: Subrecipient Awards 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. De Minimis Rate Used: N Rate Explanation: The Housing Authority has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. There were no awards passed through to subrecipients.

Finding Details

2024-003 Program: 10.447 – Multi-Family Housing Revitalization and Demonstration Program Description: Inadequate Reserve Funds Condition: During our testing of reserve balances to comply with requirements of the debt service agreement, it was noted that the reserve balance did not comply with the minimum amount required. Criteria: Requirement 7 CFR 3560 states that the Housing Authority shall establish and maintain on its books a reserve account as long as the loan obligations remain unsatisfied. This reserve account requires deposits of stated amounts until the reserve account reaches the sum of $350,000. Use of funds deposited to the account will be in accordance with 7 CFR 3560 or any successor regulation. As of August 31, 2024, the required balance in the reserve account was $167,521. The actual reserve account balance was $108,417. Cause: Expenditures from the reserve account. Effect: Insufficient reserve account balances could effect future borrowings and the Housing Authority’s ability to perform required maintenance or facility improvements. Recommendation: It is important that management remain aware of the required balance in the reserve account and transfer appropriate funds to remain in compliance with debt agreements. Identification of a Repeat Finding: This is a repeat finding from previous audit. See 2023-003. Views of Responsible Officials: See attached corrective action plan.
2024-003 Program: 10.447 – Multi-Family Housing Revitalization and Demonstration Program Description: Inadequate Reserve Funds Condition: During our testing of reserve balances to comply with requirements of the debt service agreement, it was noted that the reserve balance did not comply with the minimum amount required. Criteria: Requirement 7 CFR 3560 states that the Housing Authority shall establish and maintain on its books a reserve account as long as the loan obligations remain unsatisfied. This reserve account requires deposits of stated amounts until the reserve account reaches the sum of $350,000. Use of funds deposited to the account will be in accordance with 7 CFR 3560 or any successor regulation. As of August 31, 2024, the required balance in the reserve account was $167,521. The actual reserve account balance was $108,417. Cause: Expenditures from the reserve account. Effect: Insufficient reserve account balances could effect future borrowings and the Housing Authority’s ability to perform required maintenance or facility improvements. Recommendation: It is important that management remain aware of the required balance in the reserve account and transfer appropriate funds to remain in compliance with debt agreements. Identification of a Repeat Finding: This is a repeat finding from previous audit. See 2023-003. Views of Responsible Officials: See attached corrective action plan.