Audit 402351

Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for Persons with Disabilities Assistance Listing Number: 14.181 Award Period: April 1995 – April 2035 Type of Finding: • Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: HUD regulations and the Project’s Regulatory Agreement require that, for nonprofit HUD‑assisted projects, all surplus cash at year‑end be either used to pay down debts subject to surplus cash or deposited into the residual receipts reserve within the timeframe specified in the Regulatory Agreement. Condition: During the audit year, the Project did not make a specific payments on debts subject to surplus cash limitations, nor were any deposits made to the residual receipts reserve in the amount of prior year’s surplus cash amount of $46,906. Payments were made on amounts due to related party subject to surplus cash throughout the year for expenses related to operations, but there was no specific identifiable payment related to 2024 surplus cash. Questioned costs: N/A Context: The absence of debt payments subject to surplus cash and the lack of residual receipts deposit occurred during the year under audit and relate to the Project’s year‑end cash position and compliance with HUD financial requirements. Cause: Management did not have sufficiently detailed policies and procedures to ensure that surplus cash was either used to pay down debts subject to surplus cash or deposited into residual receipts reserve within the time frame set by the regulatory agreement. Effect: Failure to make the required deposit increases the risk that HUD‑restricted funds could be improperly retained or used, and that loan repayment provisions tied to surplus cash may not be properly enforced. Repeat Finding: No Recommendation: We recommend that management establish and implement formal written policies and procedures to ensure surplus cash is either used to pay down debts subject to surplus cash or deposited in the residual receipts reserve in a timely manner in accordance with HUD requirements and the project’s Regulatory Agreement. Views of responsible officials: There is no disagreement with the audit findings. Management Response: We have strengthened our internal controls by implementing a documented audit trail and a formal monthly reconciliation process for all intercompany activity between Home Share and Accord. Each month, the Contract Accountant prepares and submits to the Vice President of Finance a summary of the year to date activity along with the full outstanding intercompany balance, including prior year amounts. The Vice President of Finance reviews this reconciliation against the Home Share account balances to determine the amount that can be transferred to reduce the intercompany liability in accordance with HUD surplus cash requirements. Once the transfer is approved and completed, the Contract Accountant receives confirmation along with a copy of the ACH transaction to document the transaction. This process is performed and documented as part of each month end close to ensure timely, accurate, and compliant surplus cash transfers.

Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for Persons with Disabilities Assistance Listing Number: 14.181 Award Period: April 1995 – April 2035 Type of Finding: • Material Weakness in Internal Control over Compliance Criteria or specific requirement: The owner submits monthly vouchers to HUD for payment of rental assistance. The total amount of assistance equals total HUD-approved operating expenses for the Project minus the tenant payments received for all units (PRAC paragraph 2.4(f)(1)). Tenants generally are required to pay rent in accordance with a project rental assistance contract. The owner receives assistance from HUD on vacant rental assistance units at a rate of 50 percent of operating expense for a unit under PRAC (PRAC paragraph 2.4(b)) for the first 60 days of vacancy, given certain conditions are met (24 CFR section 891.445). Condition: The Project submits monthly HAP vouchers for rental assistance; however, there was no review performed of the form by someone who had not prepared the voucher prior to submission. Questioned costs: N/A Context: The absence of proper review of the monthly HAP Vouchers before submission. Cause: Management does not have controls in place to ensure the monthly HAP vouchers are properly reviewed before submission. Effect: The absence of proper review of the monthly HAP Vouchers could allow the receipt of improper rental assistance amounts. Repeat Finding: No Recommendation: We recommend that management establish and implement a formal internal control to ensure that someone who did not prepare the HAP Voucher reviews them for accuracy before submission. The preparation and review should be documented with a signature and date to ensure there is a proper audit trail. Views of responsible officials: There is no disagreement with the audit findings. Management Response: We will strengthen our internal controls by implementing a formal, documented review process to ensure that all monthly HAP Vouchers receive an independent review prior to submission to HUD. Beginning with the next reporting cycle, our HUD Consultant will be responsible for preparing the monthly HAP Voucher and assembling all supporting documentation. Once prepared, the voucher package will be forwarded to the Contract Accountant for an independent review. The Contract Accountant will verify the accuracy and completeness of the voucher, including agreement to tenant ledgers, mathematical accuracy, proper application of subsidy rules, and consistency with prior month activity. This review will be documented through a dated signature on the voucher cover sheet, establishing a clear audit trail and ensuring appropriate segregation of duties between preparation and review. This control will be incorporated into the monthly close process and performed consistently going forward to ensure accurate, compliant, and fully supported HAP Voucher submissions.