Audit 43034

Finding 2022-001 Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Programs: HUD Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Assistance Listing # 14.155) Criteria: In accordance with the respective regulatory agreements with HUD for the HUD Section 223(f) Insured Mortgages, Catholic Charities is required to annually recertify its tenants as eligible 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: Catholic Charities affiliates Caritas Plaza and Caritas Villa did not recertify all of its tenants within the timeframe specified by HUD. 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 immaterial non-compliance with the terms of the HUD program listed above. The deficiency in internal controls over compliance could lead to material non-compliance with the eligibility compliance requirement. Questioned Costs: None. Repeat Finding: No. Context: Caritas Plaza - We selected a sample of 8 tenants from a population of 30. The sample size was determined based upon guidelines provided by the AICPA and was not considered a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. From our sample, two tenant recertifications were not performed within the 12 month timeframe specified by HUD. Additionally, during our performance of other audit procedures, there were indications of additional late recertifications that fell outside of our sample. Caritas Villa - We selected a sample of 8 tenants from a population of 30. The sample size was determined based upon guidelines provided by the AICPA and was not considered a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. From our sample, seven tenant recertifications were not performed within the 12 month timeframe specified by HUD. Additionally, during our performance of other audit procedures, there were indications of additional late recertifications 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 2022-001 Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Programs: HUD Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Assistance Listing # 14.155) Criteria: In accordance with the respective regulatory agreements with HUD for the HUD Section 223(f) Insured Mortgages, Catholic Charities is required to annually recertify its tenants as eligible 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: Catholic Charities affiliates Caritas Plaza and Caritas Villa did not recertify all of its tenants within the timeframe specified by HUD. 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 immaterial non-compliance with the terms of the HUD program listed above. The deficiency in internal controls over compliance could lead to material non-compliance with the eligibility compliance requirement. Questioned Costs: None. Repeat Finding: No. Context: Caritas Plaza - We selected a sample of 8 tenants from a population of 30. The sample size was determined based upon guidelines provided by the AICPA and was not considered a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. From our sample, two tenant recertifications were not performed within the 12 month timeframe specified by HUD. Additionally, during our performance of other audit procedures, there were indications of additional late recertifications that fell outside of our sample. Caritas Villa - We selected a sample of 8 tenants from a population of 30. The sample size was determined based upon guidelines provided by the AICPA and was not considered a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. From our sample, seven tenant recertifications were not performed within the 12 month timeframe specified by HUD. Additionally, during our performance of other audit procedures, there were indications of additional late recertifications 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.