Audit 415030

Statement of Condition: During the audit, we noted that the projects withdrew reserve funds in excess of $2,000 without obtaining prior lender approval, as required by the City of Greensboro HOME loan agreement. Criteria: The City of Greensboro HOME loan agreement requires lender approval for reserve withdrawals in excess of $2,000. Effect: Noncompliance with lender regulations. Cause: The projects did not maintain effective controls over reserve disbursements to ensure withdrawals requiring lender approval were identified, submitted for review, and approved before funds were disbursed. Specifically, oversight of the management agent was insufficient to ensure compliance with the reserve withdrawal provisions of the loan agreement. Context: A test was performed over reserve activity and related controls. We noted that one or more reserve withdrawals in excess of $2,000 were made during the period without documented lender approval as required by the loan agreement. Questioned Costs: N/A Recommendation: We recommend that the owner and management agent strengthen controls over reserve account activity by implementing procedures to review all reserve withdrawal requests before disbursement, verify whether lender approval is required under the loan agreement, obtain and retain evidence of approval before funds are released, and perform periodic supervisory review of reserve activity for compliance with loan agreement restrictions. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. Management indicated that the withdrawal occurred under the prior management agent and that corrective actions are being implemented. Management has replaced the management agent and will require all future reserve withdrawals in excess of $2,000 to be reviewed for lender approval requirements and supported by written approval before disbursement.

Statement of Condition: The Corporation did not submit the data collection form and required reporting package to the Federal Audit Clearinghouse (FAC) within the required due dates for the single audit for the year ending December 31, 2024. Criteria: The Uniform Guidance, 2 CFR Part 200 Section 200.512(d), Report Submission, requires any non-federal entity that expends Federal awards which must be audited under Subpart F of 2 CFR to electronically submit to the FAC the data collection form and the reporting package described in 2 CFR Part 200 Section 200.512. Additionally, 2 CFR Section 200.512(a) requires the reporting package and data collection form to be submitted to the FAC the earlier of 30 calendar days after the reports are received from the auditors or nine months after the end of the audit period. Effect: Noncompliance with Uniform Guidance regulations. Cause: Timing delays in receipt of information required to complete the audit performed under Uniform Guidance for the year ending December 31, 2024. Context: A test was performed to review the two most recent fiscal year audits performed under the Uniform Guidance and the required data collection forms were submitted to the FAC to determine if the Corporation qualified as a low-risk auditee. A single audit was performed under the Uniform Guidance for the year ending December 31, 2024 and 2023, however, the data collection form was not submitted to the FAC within the required due dates for the years ending December 31, 2024 and 2023. Questioned Costs: N/A Recommendation: We recommend management ensure that the data collection forms are submitted electronically to the FAC within the required due dates each fiscal year going forward. Views of Responsible Officials and Corrective Action Plan: Management acknowledges the data collection form for the year ended December 31, 2024 was not submitted to the FAC within the required due dates. Management will provide additional oversight to ensure the data collection forms are submitted electronically to the FAC each fiscal year going forward within required due dates.

Statement of Condition: During testing of three HOME-assisted tenant files, we noted that two households did not have a completed annual income recertification on file for the period under audit. As a result, the owner lacked timely documentation to demonstrate continued compliance with HOME income-eligibility requirements for those HOME-assisted units. Criteria: HOME-assisted rental units must be occupied by households that are eligible as low-income families and must continue to satisfy the affordability and occupancy requirements throughout the affordability period. HOME regulations applicable to the projects and period under audit require participating jurisdictions to perform income determinations in accordance with 24 CFR 92.203, and HOME rental housing must meet the occupancy and affordability requirements in 24 CFR 92.252. Effect: Noncompliance with HOME program requirements related to ongoing income eligibility support and documentation Cause: The property did not maintain effective controls to ensure annual recertifications were completed timely for HOME-assisted households. Specifically, the oversight of the management agent was insufficient to ensure timely recertifications. Context: A test was performed to review eligibility of tenants under the HOME program. Two of the three tenant files selected for testing did not include annual recertifications for the period under audit. Questioned Costs: N/A Recommendation: We recommend that the owner and management agent strengthen controls over HOME annual recertifications to ensure that recertifications are completed timely. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. The delays resulted from issues with the prior management agent. Management has replaced the management agent in question and they have begun completing the overdue recertifications.