FAC Explorer

Audit 47283

FY End
2022-06-30
Total Expended
$2.50M
Findings
2
Programs
2
Organization: Franklin-Vance-Warren Housing of Franklin County, Inc. 053-11184 (NC)
Year: 2022 Accepted: 2022-12-13
Auditor: Bernard Robinson & Company LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
44396 2022-001 Significant Deficiency - P
620838 2022-001 Significant Deficiency - P

Programs

ALN Program Spent Major Findings
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $2.10M Yes 1
14.195 Section 8 Housing Assistance Payments Program $400,981 - 0

Contacts

Name Title Type
MCGDDJLCK6N6 Michael Jameyson Auditee
7047711696 Erica Vernon Auditor
No contacts on file

Notes to SEFA

Title: LOAN OUTSTANDING Accounting Policies: SUMMARY OF SIGNIFICANT 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, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Franklin-Vance-Warren Housing of Franklin County, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Franklin-Vance-Warren Housing of Franklin County, Inc. had the following loan balance,related to federal awards, outstanding as of June 30, 2022: Program Title - Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects(Section 207/223(f)) Insured Loan; Assistance Listing Number - 14.155; Amount Outstanding - $2,035,356.
Title: BASIS OF PRESENTATION Accounting Policies: SUMMARY OF SIGNIFICANT 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, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Franklin-Vance-Warren Housing of Franklin County, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. 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 Franklin-Vance-Warren Housing of Franklin County, Inc., under programs of the federal government for the year ended June 30, 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 Franklin-Vance-Warren Housing of Franklin County, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Franklin-Vance-Warren Housing of Franklin County, Inc.

Finding Details

Finding 2022-001
Statement of Condition: On April 20, 2022, HUD's Real Estate Assessment Center ("REAC") inspected the Project, and the Project received a score of 29c. The inspection report identified serious deficiencies that demonstrate the Corporation is in violation of the Regulatory Agreement. On May 16, 2022, the Corporation received a Notice of Violation and Demand for Corrective Action ("NOV") from HUD's Department Enforcement Center as a result of the violation. Furthermore, the NOV required corrective actions within 60 days of receipt of the NOV or a written request for a reasonable extension. Management has not completed all of the corrective actions nor submitted a response to the NOV or request for an extension. Criteria: The Regulatory Agreement requires that the Corporation maintain the mortgaged premises, accommodations and the grounds and equipment appurtenant thereto, in good repair and condition. Furthermore, the Regulatory Agreement requires responses to all inquiries from HUD (including its agents, employees, or attorneys) upon which information is desired relative to income, assets, liabilities, contracts, operations, condition of the property, and the status of the insured mortgage. Effect: Noncompliance with the Regulatory Agreement and possible default on the Regulatory Agreement. Cause: Management override of controls. The Project does not have sufficient cash flow to make the required repairs and is in need of a rehab. Context: A test was performed to review inspection reports/notices from HUD and management's actions/responses to any inspection report/notices from HUD received during the year ended June 30, 2022. Questioned Costs: N/A Recommendation: We recommend that management and ownership continue to pursue a rehab of the Project with HUD and respond to all notices received from HUD. View of Responsible Officials and Corrective Action Plan: Management acknowledges all corrective actions described in the NOV have not been completed and no response was provided to HUD for the NOV. Management and the owners are working with HUD to proceed with a rehab of the Project to correct all physical deficiencies. Furthermore, management has submitted a request to HUD to release Section 8 Contract Savings Escrow funds to pay for the up-front costs due to the lender to process the loan application to HUD for a rehab.
Finding 2022-001
Statement of Condition: On April 20, 2022, HUD's Real Estate Assessment Center ("REAC") inspected the Project, and the Project received a score of 29c. The inspection report identified serious deficiencies that demonstrate the Corporation is in violation of the Regulatory Agreement. On May 16, 2022, the Corporation received a Notice of Violation and Demand for Corrective Action ("NOV") from HUD's Department Enforcement Center as a result of the violation. Furthermore, the NOV required corrective actions within 60 days of receipt of the NOV or a written request for a reasonable extension. Management has not completed all of the corrective actions nor submitted a response to the NOV or request for an extension. Criteria: The Regulatory Agreement requires that the Corporation maintain the mortgaged premises, accommodations and the grounds and equipment appurtenant thereto, in good repair and condition. Furthermore, the Regulatory Agreement requires responses to all inquiries from HUD (including its agents, employees, or attorneys) upon which information is desired relative to income, assets, liabilities, contracts, operations, condition of the property, and the status of the insured mortgage. Effect: Noncompliance with the Regulatory Agreement and possible default on the Regulatory Agreement. Cause: Management override of controls. The Project does not have sufficient cash flow to make the required repairs and is in need of a rehab. Context: A test was performed to review inspection reports/notices from HUD and management's actions/responses to any inspection report/notices from HUD received during the year ended June 30, 2022. Questioned Costs: N/A Recommendation: We recommend that management and ownership continue to pursue a rehab of the Project with HUD and respond to all notices received from HUD. View of Responsible Officials and Corrective Action Plan: Management acknowledges all corrective actions described in the NOV have not been completed and no response was provided to HUD for the NOV. Management and the owners are working with HUD to proceed with a rehab of the Project to correct all physical deficiencies. Furthermore, management has submitted a request to HUD to release Section 8 Contract Savings Escrow funds to pay for the up-front costs due to the lender to process the loan application to HUD for a rehab.