Audit 415774

FY End

2026-03-31

Total Expended

$1.20M

Findings

3

Programs

1

Organization: Dima Iv, Inc. (DE)

Year: 2026 Accepted: 2026-11-06

Auditor: LANK JOHNSON & TULL CPAS

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
1241776	2026-001	Material Weakness	Yes	EN
1241777	2026-002	Material Weakness	Yes	EN
1241778	2026-003	Material Weakness	Yes	N

ALN	Program	Spent	Major	Findings
14.181	SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES	$52,244	Yes	0

Contacts

Name	Title	Type
CEPKFA9EMVP1	Marie Wenzel	Auditee
3024270787	Rick Tull	Auditor
No contacts on file

Notes to SEFA

HUD awarded DIMA IV, Inc. a capital advance of $1,416,300 under Section 811 of the National Affordable Housing Act for acquisition and rehabilitation of the Project. A modification agreement entered into on May 6, 1996, reduced the maximum capital advance commitment to $1,145,100. No interest or principal payments are payable or due on the capital advance. The capital advance note does not become due unless HUD operating and filing requirements, as defined under Section 811 of the National Affordable Housing Act, are not met, in which case the entire capital advance balance becomes due, including interest accrued at 6.625% per annum. DIMA IV, Inc. must continue to operate the Project under HUD guidelines until May 6, 2036, before the note will be forgiven. Although the capital advance is fully forgivable if certain compliance requirements are met, the Project accounts for this obligation as debt in the accompanying financial statements. Because repayment is not expected to occur if the requirements are satisfied, no interest is imputed on the noninterest-bearing advance. The HUD capital advance is a forgivable government grant contingent on continued program compliance, not a conventional borrowing arrangement. ASC 835-30 exempts transactions where interest rates are prescribed by governmental agencies, and the substance of this advance is a conditional grant. The liability will remain until the conditions for forgiveness have been substantially met.

Rental assistance is provided to eligible tenants under a Project Rental Assistance Contract (PRAC) with HUD under the Section 811 program. The contract requires tenants to contribute a portion of the rent based on their income, and HUD pays the difference between the tenant payment and the approved contract rent. For the year ended March 31, 2026, the Project earned a total of $52,244 under the PRAC. Beginning with the October 2025 voucher, HUD held rental assistance payments, and the unpaid amounts are included in subsidy receivable at March 31, 2026. See Note 10 for additional information.

Finding Details

Finding 2026-001

Finding 2026-001: Lack of Formalized Compliance Monitoring and Documented Management Oversight Federal Program: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181, U.S. Department of Housing and Urban Development; Capital Advance No. 032-HD004 and PRAC No. DE26Q931001; year ended March 31, 2026 Compliance Requirements: Eligibility; Special Tests and Provisions Type of Finding: Material weakness in internal control over financial reporting and material weakness in internal control over compliance Repeat Finding: Yes, repeat of Finding 2025-001 Criteria: Government Auditing Standards, the Uniform Guidance, and the terms of the Project’s major federal program require the Project to maintain effective internal control over financial reporting and over compliance with its applicable program requirements. Effective internal control includes maintaining documented policies and procedures for monitoring compliance, routine supervisory review of accounting and compliance-related activities, and documentation sufficient to demonstrate that this oversight is occurring. Condition: The Project has not established a formalized compliance monitoring process. We were unable to identify documented evidence of routine supervisory review of accounting and compliance-related activities. Compliance processes and monitoring remain informal and are frequently undocumented. Tenant and subsidy receivable records were not reconciled to the general ledger, and compliance activities related to tenant certifications and replacement reserve deposits were not effectively monitored, as described in more detail in Findings 2026-002 and 2026-003. Context: The condition affects the Project’s accounting and compliance functions as a whole and was identified through our tests of controls, substantive procedures, and compliance testing. Cause: The Project’s compliance functions historically relied on the institutional knowledge and experience of long-tenured staff rather than on functioning internal controls. In recent years, the Project’s management agent has experienced significant personnel turnover, exacerbating this deficiency. Effect: Without documented compliance monitoring, errors or instances of noncompliance could occur and remain undetected. During the current year, these conditions contributed to material audit adjustments to the Project’s tenant receivables and to the noncompliance reported in Findings 2026-002 and 2026-003. These circumstances also limit the Project’s ability to demonstrate compliance to external parties. Questioned Costs: None Recommendations: Management should establish a documented compliance monitoring process, including defined roles and responsibilities, routine supervisory review with documentary evidence, periodic reconciliation of subsidiary records to the general ledger, and a periodic compliance checklist addressing the key requirements of the Project’s major program. Views of Responsible Officials: We concur with this finding. We are working to formalize our compliance procedures and to document supervisory review activities going forward. Note: Findings 2026-002 and 2026-003, which are also required to be reported as noncompliance under Government Auditing Standards, are presented in Section III.

Finding 2026-002

Finding 2026-002: Tenant Certifications and PRAC Renewal Not Completed Timely Federal Program: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181, U.S. Department of Housing and Urban Development; Capital Advance No. 032-HD004 and PRAC No. DE26Q931001; year ended March 31, 2026 Compliance Requirements: Special Tests and Provisions; Eligibility Type of Finding: Noncompliance Repeat Finding: No Criteria: HUD guidance and the Project’s PRAC require the owner to maintain current certifications for each assisted household, to transmit those certifications to HUD’s Tenant Rental Assistance Certification System (TRACS) in a timely manner, and to renew the PRAC timely. HUD holds rental assistance payments when fewer than 90% of assisted units have current certifications in TRACS. Condition: The Project’s compliance percentage in TRACS fell below 90% beginning with the October 2025 voucher, and HUD held rental assistance payments until August 2026, after the Project’s certifications were brought current. Unpaid rental assistance of $31,671 was recorded as subsidy receivable at March 31, 2026, of which $13,895 was received in August 2026. The remaining balance relates primarily to the March 2026 voucher of $18,286, which HUD canceled and the Project must resubmit. In addition, the Project’s PRAC expired on September 30, 2026 before a renewal was executed. The PRAC was renewed on October 19, 2026. Context: We reviewed PRAC vouchers and receipts for each month of the year, the TRACS voucher list, HUD correspondence, and the PRAC renewal, and discussed the conditions with management. Cause: Management did not have an effective process to track certification due dates and PRAC renewal deadlines, or to confirm that certifications were successfully transmitted to TRACS. The lack of compliance monitoring described in Finding 2026-001 contributed to the condition. Effect: The Project did not comply with its certification and PRAC renewal requirements, and HUD withheld rental assistance. This strained the Project’s cash flow and its ability to meet operating obligations. Questioned Costs: None Recommendations: Management should track certification and PRAC renewal due dates, confirm that certifications are successfully transmitted to TRACS, reconcile TRACS submissions monthly, and require documented supervisory review of the Project’s compliance percentage before each voucher is submitted. Views of Responsible Officials: We concur with this finding. HUD approved a rent increase on January 29, 2026, effective October 1, 2025, subject to the availability of funding. We have brought tenant certifications current in TRACS, and HUD resumed rental assistance payments in August 2026. We will resubmit the March 2026 voucher, and we will track future certification and PRAC renewal due dates to ensure they are completed timely.

Finding 2026-003

Finding 2026-003: Noncompliance with Replacement Reserve Deposit Requirements Federal Program: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181, U.S. Department of Housing and Urban Development; Capital Advance No. 032-HD004 and PRAC No. DE26Q931001; year ended March 31, 2026 Compliance Requirement: Special Tests and Provisions Type of Finding: Noncompliance Repeat Finding: No Criteria: The Project’s regulatory and other agreements with HUD require the Project to make monthly deposits of $300 to the reserve for replacements account. Withdrawals from the reserve require prior HUD approval. Condition: During our compliance testing, we found that management did not make 10 of the 12 required monthly deposits of $300 to the replacement reserve during the year ended March 31, 2026. Required deposits for the year totaled $3,600, of which $600 was deposited, leaving a shortfall of $3,000 as of year-end. Context: We tested all 12 required monthly deposits for the year. Cause: The Project lacks a formal process for tracking and monitoring required monthly deposits to the replacement reserve. This condition is related to the material weakness described in Finding 2026-001. Effect: The Project is not in compliance with its regulatory and other agreements with HUD, and the replacement reserve is underfunded by $3,000. This reduces the funds available for future major repairs and replacements. Questioned Costs: None Recommendations: Management should deposit the $3,000 shortfall into the replacement reserve as soon as practicable. Management should also put in place a formal process to track required reserve deposits, such as a monthly deposit schedule reconciled to its bank statements and reviewed by someone other than the preparer. Views of Responsible Officials: We concur with this finding. Due to current cash flow constraints resulting from the suspension of rental assistance payments, we will deposit the $3,000 shortfall into the replacement reserve as cash flow allows and will implement procedures to ensure that required monthly deposits are tracked and made timely going forward. Note: Finding 2026-001 is also a material weakness in internal control over compliance required to be reported under the Uniform Guidance and is presented in Section II.