FAC Explorer

Audit 409419

FY End
2026-05-31
Total Expended
$7.53M
Findings
1
Programs
2
Organization: Heights Towers Services Company (TX)
Year: 2026 Accepted: 2026-08-19
Auditor: PITTSFORD SAMUELS PLLC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
1227306 2026-001 Material Weakness Yes M

Programs

ALN Program Spent Major Findings
14.155 MORTGAGE INSURANCE FOR THE PURCHASE OR REFINANCING OF EXISTING MULTIFAMILY HOUSING PROJECTS $6.24M Yes 1
14.195 PROJECT-BASED RENTAL ASSISTANCE (PBRA) $1.29M Yes 0

Contacts

Name Title Type
RJ7VQTZ8T2K8 Linda Holder Auditee
7135629470 Nancy Mack Auditor
No contacts on file

Notes to SEFA

The accompanying schedule of expenditures of federal awards includes the federal grant activity of Heights House, HUD No. 114-11440. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) 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 Heights House, it is not intended to and does not present the financial position, changes in net assets or cash flows of Heights House.
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.
The Project refinanced into a HUD insured loan under section 223(f) of the National Housing Act effective February 6, 2018. The balance of the loan at the beginning of the fiscal year reported in the schedule of expenditures of federal awards was $6,237,622. The loan is reported as a liability in the statement of financial position. The balance of the loan as of May 31, 2026 amounts to $6,106,723.
The Project has elected not to use the 15% de minimis indirect cost rate allowed under the Uniform Guidance.

Finding Details

Finding 2026-001
Findings reference number: 2026-001 - Title and AL Number of Federal Program: Section 223(f) Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Housing Projects (AL 14.155) - Type of finding: Federal Award. - Resolution Status: In process - Population size: N/A - Sample size: N/A - Repeat finding: No. - Criteria: Controls should be in place so that the balance in the bank account maintained for tenant security deposits is sufficient to cover the liability for tenant security deposits payable. - Statement of Condition: During our testing of tenant security deposits, it was discovered that the balance in the bank account maintained for tenant security deposits was insufficient to cover the liability for tenant security deposits payable. - Cause: This happened because of a temporary transfer of funds from the tenant security deposit account to the operating account to cover payroll. - Effect: The Project is not in compliance with the requirements of the Regulatory Agreement. - Noncompliance code: M - Questioned costs: None. - Reporting views of officials: Management agrees with the finding and has transferred funds from the operating account to the tenant security deposit account to ensure the balance is enough to cover the liability for tenant security deposits payable. - Contract number: 114-11440. - Context: The balance in the tenant security deposit account as of May 31, 2026, was lower than the liability for tenant security deposits payable. - Recommendation: Management should regularly monitor the balance in the tenant security deposit account and make sure it is sufficient to cover the liability for tenant security deposits payable. - Auditors' summary of auditee's comments: They are in agreement, but have pointed out that the funds in the operating account were depleted due to payments to a vendor for urgent water damage remediation after the apartment fire at the property. Management will make sure to keep sufficient funds in the tenant security deposit account to cover the liability for tenant security deposits payable in the future. - Completion date: 5/31/2027. - Response: Per Management, there was a temporary depletion of funds in the operating account, since they paid the amount of their insurance deductible to a vendor for urgent water damage remediation after an apartment fire on the property. This resulted in the operating account not having sufficient funds to cover the next payroll. Hence a temporary transfer of funds was made from the tenant security deposits account. Management is aware that the Regulatory Agreement stipulates maintaining sufficient funds in a separate tenant security deposit account to cover the liability for tenant security deposits payable and have since replenished the balance in the tenant security deposit account.