Audit 41778

Finding Number: 2022-1 Catalog Number Program Name CFDA#14.195 Section 8 Housing Assistance Payments Program Special Allocations Category Compliance Compliance requirement Cash management Statement of Condition For 4 of 25 disbursement tested we noted that the check was issued 30 days after the date of the vendors? invoices. Context For 25 disbursements selected we verified the time elapsing between the invoice and the check and noted that for 4 of 25 disbursements the time exceed 30 days, average period as per client established procedures. Criteria The 2 CFR Section 215.22 states that payment methods of Non-Profit Organizations shall minimize the time elapsing between the transfer of funds from the United States Treasury and the issuance or redemption of checks, warrants, or payment by other means by the recipients. Known questioned cost None. Underlying cause The Project has not established proper internal control procedures for cash management. In addition, the Project takes more than 30 days in processing its accounts payable invoices. Effect Project may be subject to HUD findings and therefore, may be subject to penalties. Recommendation We recommend the Project?s management to establish specific internal control procedures to minimize the time to pay suppliers invoices and therefore, minimize the cash in bank. We recommend also, establishing monitoring procedures to ensure the compliance of such requirement. Management Response See Corrective Action Plan.

Finding Number: 2022-2 Catalog Number Program Name CFDA#14.195 Section 8 Housing Assistance Payments Program Special Allocations Category Compliance Compliance requirement Special Test and Provisions Statement of Condition The entity has a delinquent deposit to the replacement reserve. Context In order to ascertain whether the Project complied with the proper use of the reserve account, we verified that monthly deposits were transferred from the operating account to the reserve account for the authorized amount. We noted that the entity misses ten payments. Criteria The owner shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. All disbursements from the reserve must be as approved or directed by HUD or the State Agency for 24 CFR part 883 projects, as applicable. An amount as required by HUD or the State Agency for 24 CFR part 883 projects, as applicable, shall be deposited monthly in the reserve fund in accordance with the Regulatory Agreement or HAP contract (24CFR sections 880.601, 880.602, 881.601 and 883.701). Known questioned cost None. Underlying cause Lack of personnel in the accounting department. Only one employee is in-charge of performing the accounting and the closing procedures. Effect Project may be subject to HUD findings and therefore, may be subject to penalties. Recommendation We recommend the Project?s management to evaluate the need of contracting additional personnel to minimize the accounting closing time. We recommend also, establishing monitoring procedures to ensure the compliance of such requirement. Management Response See Corrective Action Plan.

Finding Number: 2022-1 Catalog Number Program Name CFDA#14.195 Section 8 Housing Assistance Payments Program Special Allocations Category Compliance Compliance requirement Cash management Statement of Condition For 4 of 25 disbursement tested we noted that the check was issued 30 days after the date of the vendors? invoices. Context For 25 disbursements selected we verified the time elapsing between the invoice and the check and noted that for 4 of 25 disbursements the time exceed 30 days, average period as per client established procedures. Criteria The 2 CFR Section 215.22 states that payment methods of Non-Profit Organizations shall minimize the time elapsing between the transfer of funds from the United States Treasury and the issuance or redemption of checks, warrants, or payment by other means by the recipients. Known questioned cost None. Underlying cause The Project has not established proper internal control procedures for cash management. In addition, the Project takes more than 30 days in processing its accounts payable invoices. Effect Project may be subject to HUD findings and therefore, may be subject to penalties. Recommendation We recommend the Project?s management to establish specific internal control procedures to minimize the time to pay suppliers invoices and therefore, minimize the cash in bank. We recommend also, establishing monitoring procedures to ensure the compliance of such requirement. Management Response See Corrective Action Plan.

Finding Number: 2022-2 Catalog Number Program Name CFDA#14.195 Section 8 Housing Assistance Payments Program Special Allocations Category Compliance Compliance requirement Special Test and Provisions Statement of Condition The entity has a delinquent deposit to the replacement reserve. Context In order to ascertain whether the Project complied with the proper use of the reserve account, we verified that monthly deposits were transferred from the operating account to the reserve account for the authorized amount. We noted that the entity misses ten payments. Criteria The owner shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. All disbursements from the reserve must be as approved or directed by HUD or the State Agency for 24 CFR part 883 projects, as applicable. An amount as required by HUD or the State Agency for 24 CFR part 883 projects, as applicable, shall be deposited monthly in the reserve fund in accordance with the Regulatory Agreement or HAP contract (24CFR sections 880.601, 880.602, 881.601 and 883.701). Known questioned cost None. Underlying cause Lack of personnel in the accounting department. Only one employee is in-charge of performing the accounting and the closing procedures. Effect Project may be subject to HUD findings and therefore, may be subject to penalties. Recommendation We recommend the Project?s management to evaluate the need of contracting additional personnel to minimize the accounting closing time. We recommend also, establishing monitoring procedures to ensure the compliance of such requirement. Management Response See Corrective Action Plan.