Audit 395543

Finding Type: - Immaterial noncompliance with major program requirements - Significant deficiency in internal control over compliance Title and Assistance Listing Number of Federal Program - 14.155 Supportive Housing for the Elderly Section 207 pursuant to Section 223(f) Finding Resolution Status - None Information on Universe and Population Size - N/A Sample Size Information - N/A Identification of Repeat Finding and Finding Reference Number - N/A Criteria - The Management Agent’s Certification agreement requires that management fees be calculated as a percentage of residential income collected, subject to a maximum cap of $52 per unit per month (PUPM). Statement of Condition - The Organization paid management fees in excess of the allowable amount by calculating fees based solely on a percentage of revenue without limiting the fees to the $52 PUPM cap required by the Management Agent’s Certification agreement. Cause - The Organization calculated management fees based on a percentage of revenue but did not have controls in place to ensure that fees were limited to the $52 PUPM cap required under the Management Agent’s Certification agreement. Effect or Potential Effect - Management fees of $5,820 were paid out in excess of those allowed by the Management Agent’s Certification agreement. Auditor Noncompliance Code - J - Unauthorized management fees Reporting Views of Responsible Officials - Responsible officials will update controls to ensure allowable amount per the Management Agent's Certification agreement is followed. Context - N/A Recommendation - We recommend that management revise its calculation of management fees to ensure amounts charged are limited to the allowable cap in accordance with the terms of the applicable federal award and the Management Agent’s Certification. In addition, we recommend that management enhance its internal controls over compliance by implementing documented review procedures to ensure management fees are calculated accurately and reviewed for allowability prior to payment. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - The auditee concurs with the finding. Management stated that it will refund management fees paid in excess of the allowable amount and will implement enhanced review controls to ensure future management fees comply with the Management Agent’s Certification agreement. Response Indicator - Agree Anticipated Completion Date - 12/31/2026 Response - The excess management fees will be adjusted for the year ended December 31, 2026, ensuring alignment with allowable limits. Management acknowledges the noncompliance identified in the current year, will implement corrective actions for this period, and is actively reviewing internal controls related to management fees for future periods.