FAC Explorer

Audit 41842

FY End
2022-06-30
Total Expended
$2.08M
Findings
2
Programs
1
Organization: Afiya Apartments INC (OR)
Year: 2022 Accepted: 2023-03-23
Auditor: Jones & Roth PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
50758 2022-002 Material Weakness - E
627200 2022-002 Material Weakness - E

Programs

ALN Program Spent Major Findings
14.181 Supportive Housing for Persons with Disabilities $99,379 Yes 0

Contacts

Name Title Type
RBFBAA4KLXE3 Kathleen Broadhurst Auditee
5416861262 Kari Young Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan guarantee outstanding balances Accounting Policies: Basis of PresentationThe accompanying schedule of expenditures of federal awards (the Schedule) includes the federalaward activity of Afiya Apartments, Inc. under programs of the federal government for the year endedJune 30, 2022. The information in this Schedule is presented in accordance with the requirements ofTitle 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, CostPrinciples, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedulepresents only a selected portion of the operations of Afiya Apartments, Inc., it is not intended to anddoes not present the financial position, changes in net assets, functional expenses, or cash flows ofAfiya Apartments, Inc.2. Summary of Significant Accounting PoliciesExpenditures reported on the Schedule are reported on the accrual basis of accounting. Suchexpenditures are recognized following the cost principles contained in the Uniform Guidance, whereincertain types of expenditures are not allowable or are limited as to reimbursement.Afiya Apartments, Inc. was awarded a capital advance in the amount of $1,977,500 from HUD in 2010under Section 811 of the National Affordable Housing Act. The capital advance qualifies as a majorprogram due to continuing compliance requirements associated with this unamortizable mortgage. Alsoincluded in this major program is the HUD Project Rental Assistance Contract (PRAC) awarded. Theseprograms are both components of HUD Supportive Housing for Persons with Disabilities, which is themajor program. Determination of the amount of federal awards expended for the Section 811 CapitalAdvance Program is based on the June 30, 2022 balance of capital advance granted in current andprior years in accordance with the Uniform Guidance. The balance of the capital advance at June 30,2021 was $1,977,500.Afiya Apartments, Inc. has elected to use the 10 percent de minimis indirect cost rate as allowed underthe Uniform Guidance; however, the award agreements with HUD do not include an indirect costreimbursement, so there were no indirect costs charged to the federal award programs for the yearended June 30, 2022.3. SubrecipientsThere were no federal awards passed through to subrecipients. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate. SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES (14.181) - Balances outstanding at the end of the audit period were 1977500.

Finding Details

Finding 2022-002
Finding 2022-002 Type of Finding: Material weakness in internal control over compliance and noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Eligibility Criteria: In accordance with Afiya Apartments, Inc.?s regulatory agreement with HUD for its HUD Section 811 Capital Advance and HUD Section 811 Project Rental Assistance Contract (PRAC), Afiya Apartments, Inc. is required to annually recertify its tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Condition: Afiya Apartments, Inc. did not perform recertifications for all tenants within the timeframe specified by HUD. We noted significant delays in tenant recertification procedures. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed in the timeframe required by HUD. Effect: The effect is material non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: No. Context: We selected a sample of 4 tenants from a population of 16. The sample size was determined based upon guidelines provided by the AICPA and was not a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. We noted one instance in our sample in which tenant recertifications had not been completed timely and were not completed several months after the required timeframe as specified by HUD. There were also indications of additional late tenant recertifications for tenants that fell outside of our sample. Recommendation: We recommend management review the current internal control procedures and implement additional procedures to ensure annual recertifications are performed as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2022-002
Finding 2022-002 Type of Finding: Material weakness in internal control over compliance and noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Eligibility Criteria: In accordance with Afiya Apartments, Inc.?s regulatory agreement with HUD for its HUD Section 811 Capital Advance and HUD Section 811 Project Rental Assistance Contract (PRAC), Afiya Apartments, Inc. is required to annually recertify its tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Condition: Afiya Apartments, Inc. did not perform recertifications for all tenants within the timeframe specified by HUD. We noted significant delays in tenant recertification procedures. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed in the timeframe required by HUD. Effect: The effect is material non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: No. Context: We selected a sample of 4 tenants from a population of 16. The sample size was determined based upon guidelines provided by the AICPA and was not a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. We noted one instance in our sample in which tenant recertifications had not been completed timely and were not completed several months after the required timeframe as specified by HUD. There were also indications of additional late tenant recertifications for tenants that fell outside of our sample. Recommendation: We recommend management review the current internal control procedures and implement additional procedures to ensure annual recertifications are performed as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.