Audit 365069

FY End
2025-05-31
Total Expended
$10.42M
Findings
4
Programs
3
Organization: Houston Heights Towers (TX)
Year: 2025 Accepted: 2025-08-27

Organization Exclusion Status:

Checking exclusion status...

Findings

ID Ref Severity Repeat Requirement
574781 2025-001 - Yes A
574782 2025-002 - - A
1151223 2025-001 - Yes A
1151224 2025-002 - - A

Programs

ALN Program Spent Major Findings
14.239 Home Investment Partnerships Program $6.50M Yes 0
14.218 Community Development Block Grants/entitlement Grants $3.50M Yes 0
14.195 Project-Based Rental Assistance (pbra) $421,065 Yes 2

Contacts

Name Title Type
D1YXYTMXD9G5 Linda Holder Auditee
7135629470 Nancy MacK Auditor
No contacts on file

Notes to SEFA

Title: BASIS OF PRESENTATION Accounting Policies: Expenditures reported in 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards includes the federal grant activity of Houston Heights Tower, HUD No. 114-44098. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CRT) 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 Houston Heights Tower, it is not intended to and does not present the financial position, changes in net assets or cash flows of Houston Heights Tower.
Title: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: Expenditures reported in 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. Expenditures reported in 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 reimbursements.
Title: GRANTS Accounting Policies: Expenditures reported in 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. The Project has received grants under the Community Development Block Grant and HOME Improvement Partnership Grant programs. The grant balances at the beginning of the year are included in the federal expenditures presented in the schedule. The Project received no additional grant funds during the year. The grants are reported as net assets with donor restrictions in the statement of financial position.
Title: INDIRECT COST RATE Accounting Policies: Expenditures reported in 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 reimbursements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. The Project has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.

Finding Details

Schedule reference number 2025-001 - Title and AL Number of Federal Program: Section 8 Housing Assistance (AL 14.195) - Type of finding: Federal Award - Resolution Status: Resolved. - Population size: N/A - Sample size: N/A - Repeat finding: Yes. - Criteria: The regulatory agreement stipulates that all withdrawals exceeding $2,500 from the Reserve for Replacement Account need prior written consent of the lender. - Statement of Condition: Several withdrawals totaling $108,111 for emergency repairs and improvements, to cover payroll, pay audit fees and for other operating expenses were made from the Reserve for Replacement account without prior approval from the lender. - Cause: The Project had several major equipment failures and was short of cash to cover its monthly operating expenses. - Effect or Potential Effect: The Project is not in conformity with the terms of the regulatory agreement. - Auditor Non-Compliance Code: A. - Questioned costs: N/A. - Reporting views of responsible officials: Management was forced to draw funds from the Reserve for Replacement Account to cover the urgent repairs and other operating expenses. - Contract Number: 114-44098. - Context: The lack of prior approval for withdrawals was noticed at the time of performing the audit. - Recommendation: Management should obtain prior consent from lender for all withdrawals from the Reserve for Replacement Account exceeding $2,500. - Auditors' summary of auditee's comment: They are in agreement. Management has tried to rectify the deficiency by obtaining retroactive approval from the lender for the total amount withdrawn from the Reserve for Replacement Account, on April 30, 2025. - Proposed completion date: Completed. - Response: Management agrees with the finding, was aware of the requirement for prior approval and on April 30, 2025, and has obtained retroactive approval from the lender for the withdrawal of 108,111.
Schedule reference number 2025-002 - Title and AL Number of Federal Program: Section 8 Housing Assistance (AL 14.195) - Type of finding: Federal Award - Resolution Status: Resolved. - Population size: N/A - Sample size: N/A - Repeat finding: No. - Criteria: The regulatory agreement stipulates that all withdrawals from the Reserve for Replacement Account be supported by invoices and payments as proof of amounts expended. - Statement of Condition: An invoice of $1,707 was duplicated while calculating the funds to be withdrawn from the Reserve for Replacement account . - Cause: Management oversight. - Effect or Potential Effect: There is an excess withdrawal of $1,707. - Auditor Non-Compliance Code: A. - Questioned costs: N/A. - Reporting views of responsible officials: Management inadvertently duplicated a previously included invoice for expenditure of $1,707 while drawing funds from the Reserve for Replacement Account. - Contract Number: 114-44098. - Context: The duplication of the expenditure in the withdrawal request was noticed at the time of performing the audit. - Recommendation: Management should have controls in place to make sure no expenditure is duplicated for withdrawals from the Reserve for Replacement Account. - Auditors' summary of auditee's comment: They are in agreement. Management asserts that it was a one-time error and they will put controls in place to ensure it does not happen again in the future. - Proposed completion date: Completed. - Response: Management agrees with the finding and has refunded $1,707 to the Reserve for Replacement Account on August 12, 2025.
Schedule reference number 2025-001 - Title and AL Number of Federal Program: Section 8 Housing Assistance (AL 14.195) - Type of finding: Federal Award - Resolution Status: Resolved. - Population size: N/A - Sample size: N/A - Repeat finding: Yes. - Criteria: The regulatory agreement stipulates that all withdrawals exceeding $2,500 from the Reserve for Replacement Account need prior written consent of the lender. - Statement of Condition: Several withdrawals totaling $108,111 for emergency repairs and improvements, to cover payroll, pay audit fees and for other operating expenses were made from the Reserve for Replacement account without prior approval from the lender. - Cause: The Project had several major equipment failures and was short of cash to cover its monthly operating expenses. - Effect or Potential Effect: The Project is not in conformity with the terms of the regulatory agreement. - Auditor Non-Compliance Code: A. - Questioned costs: N/A. - Reporting views of responsible officials: Management was forced to draw funds from the Reserve for Replacement Account to cover the urgent repairs and other operating expenses. - Contract Number: 114-44098. - Context: The lack of prior approval for withdrawals was noticed at the time of performing the audit. - Recommendation: Management should obtain prior consent from lender for all withdrawals from the Reserve for Replacement Account exceeding $2,500. - Auditors' summary of auditee's comment: They are in agreement. Management has tried to rectify the deficiency by obtaining retroactive approval from the lender for the total amount withdrawn from the Reserve for Replacement Account, on April 30, 2025. - Proposed completion date: Completed. - Response: Management agrees with the finding, was aware of the requirement for prior approval and on April 30, 2025, and has obtained retroactive approval from the lender for the withdrawal of 108,111.
Schedule reference number 2025-002 - Title and AL Number of Federal Program: Section 8 Housing Assistance (AL 14.195) - Type of finding: Federal Award - Resolution Status: Resolved. - Population size: N/A - Sample size: N/A - Repeat finding: No. - Criteria: The regulatory agreement stipulates that all withdrawals from the Reserve for Replacement Account be supported by invoices and payments as proof of amounts expended. - Statement of Condition: An invoice of $1,707 was duplicated while calculating the funds to be withdrawn from the Reserve for Replacement account . - Cause: Management oversight. - Effect or Potential Effect: There is an excess withdrawal of $1,707. - Auditor Non-Compliance Code: A. - Questioned costs: N/A. - Reporting views of responsible officials: Management inadvertently duplicated a previously included invoice for expenditure of $1,707 while drawing funds from the Reserve for Replacement Account. - Contract Number: 114-44098. - Context: The duplication of the expenditure in the withdrawal request was noticed at the time of performing the audit. - Recommendation: Management should have controls in place to make sure no expenditure is duplicated for withdrawals from the Reserve for Replacement Account. - Auditors' summary of auditee's comment: They are in agreement. Management asserts that it was a one-time error and they will put controls in place to ensure it does not happen again in the future. - Proposed completion date: Completed. - Response: Management agrees with the finding and has refunded $1,707 to the Reserve for Replacement Account on August 12, 2025.