Sunray Communities, Inc.’s capital advance balance outstanding as of December 31, 2024, was $2,352,900 and is included in the federal expenditures presented in the schedule.
Finding #2024-001: Supportive Housing for the Elderly, Assistance Listing 14.157 Type of Finding: Significant deficiency Condition: The Company expensed management fees during 2024 in excess of the maximum amount of management fees approved by HUD. Criteria: The Company’s property management fees must follow the HUD approved management agreement. Effect: The Company expensed management fees in excess of approved HUD Form 9839. Questioned Cost: $11,882 Cause: New property management company Repeat Finding: Yes Recommendation: The Company should monitor property management fees to ensure the management fees follow the terms set forth in the property management agreement. Auditor’s Comment: An adjusting journal entry was made to reduce property management fees to be in compliance with HUD.
Finding #2024-002: Supportive Housing for the Elderly, Assistance Listing 14.157 Type of Finding: Material Weakness Condition: The property management company failed to maintain property insurance coverage on the property during 2024. Criteria: The Company is required to maintain property insurance. Effect: The Company was uninsured from April 2024 through February 2025 Questioned Cost: N/A Cause: New property management company failed to renew property insurance Repeat Finding: No Recommendation: The Property management company should review policies and procedures to ensure compliance with requirements and to ensure property is properly insured. Auditor’s Comment: The property management company has obtained property insurance effective March 2025. Finding 2024-002 cleared.
Finding #2024-003: Supportive Housing for the Elderly, Assistance Listing 14.157 Type of Finding: Significant deficiency Condition: At December 2023, the Company obtained approval from HUD to suspend replacement reserve deposits for twelve months beginning January 2024. However, the Company continued to make the deposits into the replacement reserve during 2024. Criteria: The HUD regulatory agreement requires the Company to make 12 monthly deposits into the replacement reserve account unless HUD approves the suspension. Effect: The Company had obtained approval to suspend the HUD deposits, however, the Company made the monthly reserve deposits. Questioned Cost: $14,400 Cause: New property management company Repeat Finding: Yes Recommendation: The Company should monitor the monthly deposits and should request an approval from HUD to withdrawal the 2024 deposits. Auditor’s Comment: During December 2023, the Company obtained approval from HUD to suspend monthly deposits to the replacement reserve account for 2024 as it was determined that the replacement reserve account was overfunded. The property management company continued to make the monthly deposits. The property management company plans to request a withdrawal from the replacement reserve.
Finding #2024-004: Supportive Housing for the Elderly, Assistance Listing 14.157 Type of Finding: Significant deficiency Condition: The Company closed the residual receipts account during 2024. Criteria: The HUD regulatory agreement requires the Company to maintain a residual receipts account. Effect: The Company closed the residual receipts account and is in violation of the HUD regulatory agreement. Questioned Cost: $595 Cause: New property management company Repeat Finding: No Recommendation: The Company should re-open the residual receipts account and deposit $595 into the residual receipts account. Auditor’s Comment: The Company plans to open the residual receipt account and deposit $595 and deposit the surplus cash of $3,038.