FAC Explorer

Audit 41859

FY End
2022-12-31
Total Expended
$3.32M
Findings
4
Programs
4
Organization: Preserve Spencer House Inc. (OR)
Year: 2022 Accepted: 2023-05-17
Auditor: Mark Schwing CPA PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
45904 2022-001 Significant Deficiency Yes N
45905 2022-002 Significant Deficiency - N
622346 2022-001 Significant Deficiency Yes N
622347 2022-002 Significant Deficiency - N

Programs

ALN Program Spent Major Findings
14.135 Mortgage Insurance_rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate $1.80M Yes 2
14.187 Section 220 Capital Grant (lihprha) $1.25M - 0
14.195 Section 8 Housing Assistance Payments Program $198,215 - 0
14.239 Home Investment Partnerships Program $66,734 - 0

Contacts

Name Title Type
DJTGSJKH6T35 Rachael Duke Auditee
5032934038 Mark Schwing Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan guarantee outstanding balances Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance and/or OMB Circular A0122, Cost Principles for Non-profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. MORTGAGE INSURANCE_RENTAL AND COOPERATIVE HOUSING FOR MODERATE INCOME FAMILIES AND ELDERLY, MARKET INTEREST RATE (14.135) - Balances outstanding at the end of the audit period were $1,802,416. HOME INVESTMENT PARTNERSHIPS PROGRAM (14.239) - Balances outstanding at the end of the audit period were $66,734.
Title: Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance and/or OMB Circular A0122, Cost Principles for Non-profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Preserve Spencer House, Inc. under programs of the federal government for the year ended December 31, 2022. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations 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 Preserve Spencer House, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Preserve Spencer House, Inc.
Title: Expenditures to Subrecipients Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance and/or OMB Circular A0122, Cost Principles for Non-profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. There were no expenditures to subrecipients during the year ended December 31, 2022.

Finding Details

Finding 2022-001
S3800-010 - Finding Reference Number: 2022-001 S3800-011 - Title and FAN Number: Section 220 HUD 221 (d)(4) Multi Family Housing Loan FAN #14.135 S3800-015 - Type of Finding: Federal Awards Finding S3800-016 - Resolution: In process S3800-017 - Population: 100% of surplus cash required to be deposited into residual receipts reserved. S3800-018 - Sample Size: 100% of surplus cash required to be deposited into residual receipts reserved. S3800-019 - Repeat Finding: This is a repeat finding refer to prior year finding 2021-001. S3800-020 - Criteria: In accordance with the HUD regulatory agreement, Surplus Cash at the end of the year is required to be deposited into the Residual Receipts Reserve within 60 days after the end of the year. S3800-030 - Statement of Condition: Surplus cash as of December 31, 2021 was $88,846 of which only $40,000 was deposited into Residual Receipts Reserve account on July 11, 2022. S3800-032 - Cause: The property has experienced significant vacancies that have negatively affected its cash flow. S3800-033 - Effect: Management plans to resolve the matter with its HUD representative. The amount of lost interest income is very insignificant. S3800-035 - Auditor Non-Response Compliance Code: B-Failure to make required Residual Receipts Deposit. S3800-040 - Questioned Costs: None S3800-045 - Reporting Views of Responsible Officials: We agree with the finding and will take immediate action to resolve the matter with our HUD representative. We will closely monitor surplus cash calculations to assure deposits to the residual receipts reserve account are made in a timely manner and have assigned an individual to take responsibility. S3800-050 - Context: Management had made residual receipts deposits in all years prior to 2021 in a timely manner. S3800-080 - Recommendation: We recommend Management resolve this matter with its HUD representative and closely monitor surplus cash calculations to assure deposits to the residual receipts reserve account are made in a timely manner and that an individual be assigned that responsibility. S3800-090 ? Auditor?s Summary of the Auditee?s Comments on findings and Recommendations: We agree with the Auditee?s comments. S3800-130 - Response Indicator: Agree S3800-140 - Completion Date: June 30, 2023 S3800-150 - Response: We agree with Management?s response.
Finding 2022-002
S3800-010 - Finding Reference Number: 2022-002 S3800-011 - Title and FAN Number: Section 220 HUD 221 (d)(4) Multi Family Housing Loan FAN #14.135 S3800-015 - Type of Finding: Federal Awards Finding S3800-016 - Resolution: In process S3800-017 - Population: 100% of tenants S3800-018 - Sample Size: 100% of tenants S3800-020 - Criteria: Under HUD regulations properties are required to provide tenants at least 30 days notification of rental rate increases. S3800-030 - Statement of Condition: The property manager did not notify tenants of HUD approved increases and as a result did not bill them for it. S3800-032 - The property manager did not provide an on-site manager for the property for a significant amount of time during the year. The on-site manager notifies tenants of rental increases. S3800-033 - Effect: The property incurred a loss of rental income that it could have billed to tenants but did not because of the lack of notification. S3800-0035 - Auditor Non Compliance Code: Z-Other S3800-040 - Questioned Costs: None S3800-045 - Reporting Views of Responsible Officials: We agree with the findings and will take responsibility to make sure that Property Management Company personnel notify all tenants of rental rate increases. S3800-050 - Context: This is the first year this issue has occurred and is a direct result of not being able to provide an on-site manager for the property. S3800-080 - Recommendation: We recommend Management work directly with the Property Management Company to provide an on-site manager and notify all tenants of rental rate increases. S3800-090 - Auditors Summary of the Auditee?s Comments on Findings and Recommendations: We agree with the Auditee?s comments. S3800-130 - Response Indicator: Agree S3800-140 - Completion Date: June 30, 2023 S3800-150 - Response: We agree with Management?s response.
Finding 2022-001
S3800-010 - Finding Reference Number: 2022-001 S3800-011 - Title and FAN Number: Section 220 HUD 221 (d)(4) Multi Family Housing Loan FAN #14.135 S3800-015 - Type of Finding: Federal Awards Finding S3800-016 - Resolution: In process S3800-017 - Population: 100% of surplus cash required to be deposited into residual receipts reserved. S3800-018 - Sample Size: 100% of surplus cash required to be deposited into residual receipts reserved. S3800-019 - Repeat Finding: This is a repeat finding refer to prior year finding 2021-001. S3800-020 - Criteria: In accordance with the HUD regulatory agreement, Surplus Cash at the end of the year is required to be deposited into the Residual Receipts Reserve within 60 days after the end of the year. S3800-030 - Statement of Condition: Surplus cash as of December 31, 2021 was $88,846 of which only $40,000 was deposited into Residual Receipts Reserve account on July 11, 2022. S3800-032 - Cause: The property has experienced significant vacancies that have negatively affected its cash flow. S3800-033 - Effect: Management plans to resolve the matter with its HUD representative. The amount of lost interest income is very insignificant. S3800-035 - Auditor Non-Response Compliance Code: B-Failure to make required Residual Receipts Deposit. S3800-040 - Questioned Costs: None S3800-045 - Reporting Views of Responsible Officials: We agree with the finding and will take immediate action to resolve the matter with our HUD representative. We will closely monitor surplus cash calculations to assure deposits to the residual receipts reserve account are made in a timely manner and have assigned an individual to take responsibility. S3800-050 - Context: Management had made residual receipts deposits in all years prior to 2021 in a timely manner. S3800-080 - Recommendation: We recommend Management resolve this matter with its HUD representative and closely monitor surplus cash calculations to assure deposits to the residual receipts reserve account are made in a timely manner and that an individual be assigned that responsibility. S3800-090 ? Auditor?s Summary of the Auditee?s Comments on findings and Recommendations: We agree with the Auditee?s comments. S3800-130 - Response Indicator: Agree S3800-140 - Completion Date: June 30, 2023 S3800-150 - Response: We agree with Management?s response.
Finding 2022-002
S3800-010 - Finding Reference Number: 2022-002 S3800-011 - Title and FAN Number: Section 220 HUD 221 (d)(4) Multi Family Housing Loan FAN #14.135 S3800-015 - Type of Finding: Federal Awards Finding S3800-016 - Resolution: In process S3800-017 - Population: 100% of tenants S3800-018 - Sample Size: 100% of tenants S3800-020 - Criteria: Under HUD regulations properties are required to provide tenants at least 30 days notification of rental rate increases. S3800-030 - Statement of Condition: The property manager did not notify tenants of HUD approved increases and as a result did not bill them for it. S3800-032 - The property manager did not provide an on-site manager for the property for a significant amount of time during the year. The on-site manager notifies tenants of rental increases. S3800-033 - Effect: The property incurred a loss of rental income that it could have billed to tenants but did not because of the lack of notification. S3800-0035 - Auditor Non Compliance Code: Z-Other S3800-040 - Questioned Costs: None S3800-045 - Reporting Views of Responsible Officials: We agree with the findings and will take responsibility to make sure that Property Management Company personnel notify all tenants of rental rate increases. S3800-050 - Context: This is the first year this issue has occurred and is a direct result of not being able to provide an on-site manager for the property. S3800-080 - Recommendation: We recommend Management work directly with the Property Management Company to provide an on-site manager and notify all tenants of rental rate increases. S3800-090 - Auditors Summary of the Auditee?s Comments on Findings and Recommendations: We agree with the Auditee?s comments. S3800-130 - Response Indicator: Agree S3800-140 - Completion Date: June 30, 2023 S3800-150 - Response: We agree with Management?s response.