FAC Explorer

Audit 47500

FY End
2022-06-30
Total Expended
$1.16M
Findings
6
Programs
1
Organization: River Kourt Apartments (OR)
Year: 2022 Accepted: 2023-03-23
Auditor: Jones & Roth PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
43633 2022-002 Significant Deficiency Yes N
43634 2022-003 Significant Deficiency Yes I
43635 2022-004 Material Weakness - E
620075 2022-002 Significant Deficiency Yes N
620076 2022-003 Significant Deficiency Yes I
620077 2022-004 Material Weakness - E

Programs

ALN Program Spent Major Findings
14.181 Supportive Housing for Persons with Disabilities $68,250 Yes 0

Contacts

Name Title Type
JL12MKGHP7G7 Kathleen Broadhurst Auditee
5416861262 Kari Young Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan guarantee outstanding balances Accounting Policies: 1. Basis of PresentationThe accompanying schedule of expenditures of federal awards (the Schedule) includes the federalaward activity of River Kourt Apartments under programs of the federal government for the periodJanuary 1, 2021 through June 30, 2022. The information in this Schedule is presented in accordancewith the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, UniformAdministrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UniformGuidance). Because the Schedule presents only a selected portion of the operations of River KourtApartments, it is not intended to and does not present the financial position, changes in net assets,functional expenses, or cash flows of River Kourt Apartments.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.River Kourt Apartments was awarded a capital advance in the amount of $1,096,400 from HUD in 1996under 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 the capital advance in accordance with theUniform Guidance.River Kourt Apartments has elected to use the 10 percent de minimis indirect cost rate as allowedunder the 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 1096400.

Finding Details

Finding 2022-002
Finding 2022-002 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Special tests and provisions Criteria: In accordance with River Kourt Apartments? regulatory agreement with HUD, surplus cash should be deposited to the residual receipts account within 60 days of year end. Also, in accordance with River Kourt Apartments? regulatory agreement with HUD, monthly deposits of $400 are required to be made to the replacement reserve. It is the responsibility of management to design and implement internal controls to ensure timely deposit of surplus funds to residual receipts and monthly replacement reserves in accordance with the regulatory agreement. Condition and Context: Surplus cash for the year ended December 31, 2020 in the amount of $5,830 was not deposited to the residual receipts within 60 days of year end; nor was it deposited by June 30, 2022. The replacement reserve deposits for the year ended June 30, 2022 totaled $4,400 so the reserve deposits were underfunded by $400. Cause: Surplus cash was used to pay down advances from affiliate so it was not available to be deposited to the residual receipts account in accordance with regulatory agreement. There were deposits to the replacement reserve missed during the transition to a new property management agent. Effect: The effect is underfunding of the residual receipts reserve by $5,830 at June 30, 2022 and underfunding of the replacement reserve by $400 at June 30, 2022. The effect is non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2021-002. Recommendation: We recommend management design and implement internal controls over compliance to ensure surplus cash is deposited to residual receipts within 60 days of year end as required by HUD. We recommend management either make the required deposit of $5,830 which was due from 2020 surplus cash or obtain a waiver from HUD. We recommend management made additional deposit of $400 to the replacement reserve to remedy the deficit. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2022-003
Finding 2022-003 Type of Finding: Significant deficiency in internal controls over compliance and non-compliance. Federal Award Program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Procurement Criteria: Pursuant to the Uniform Guidance, for procurements of goods and services made with federal awards, River Kourt Apartments is required to have policies in place that conform with the Procurement Standards as prescribed in 2 CFR ?200.318 through ?200.320. River Kourt Apartments is required to follow the methods of procurement as prescribed in 2 CFR ?200.320. Condition: River Kourt Apartments has written policies and procedures regarding the procurement of goods and services; however, the written procedures did not include all required elements regarding procurement procedures pursuant to 2 CFR ?200.318 through ?200.320. Cause of Condition: River Kourt Apartments has written policies and procedures regarding the procurement of goods and services; however, the written procedures did not include all required elements regarding procurement procedures pursuant to 2 CFR ?200.318 through ?200.320. Effect of Condition: This increases risk that River Kourt Apartments would not materially comply with the procurement requirement for the major program. Questioned Costs: None. Context: There were no procurements over the de minimis threshold made during the year period ended June 30, 2022; however, the written procedures did not include all required elements regarding procurement procedures pursuant to 2 CFR ?200.318 through ?200.320. Repeat Finding: Yes, see Finding 2021-003. Recommendation: We recommend management revise the current policies and procedures to include all required elements for procurement procedures pursuant to 2 CFR ?200.318 through ?200.320. Procurement methods shall follow the methods as prescribed in 2 CFR ?200.320. View of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2022-004
Finding 2022-004 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 River Kourt Apartments? regulatory agreement with HUD for its HUD Section 811 Capital Advance and HUD Section 811 Project Rental Assistance Contract (PRAC), River Kourt Apartments? 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: River Kourt Apartments 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 7 tenants from a population of 20. 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 3 instances 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: Significant deficiency in internal control over compliance and noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Special tests and provisions Criteria: In accordance with River Kourt Apartments? regulatory agreement with HUD, surplus cash should be deposited to the residual receipts account within 60 days of year end. Also, in accordance with River Kourt Apartments? regulatory agreement with HUD, monthly deposits of $400 are required to be made to the replacement reserve. It is the responsibility of management to design and implement internal controls to ensure timely deposit of surplus funds to residual receipts and monthly replacement reserves in accordance with the regulatory agreement. Condition and Context: Surplus cash for the year ended December 31, 2020 in the amount of $5,830 was not deposited to the residual receipts within 60 days of year end; nor was it deposited by June 30, 2022. The replacement reserve deposits for the year ended June 30, 2022 totaled $4,400 so the reserve deposits were underfunded by $400. Cause: Surplus cash was used to pay down advances from affiliate so it was not available to be deposited to the residual receipts account in accordance with regulatory agreement. There were deposits to the replacement reserve missed during the transition to a new property management agent. Effect: The effect is underfunding of the residual receipts reserve by $5,830 at June 30, 2022 and underfunding of the replacement reserve by $400 at June 30, 2022. The effect is non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2021-002. Recommendation: We recommend management design and implement internal controls over compliance to ensure surplus cash is deposited to residual receipts within 60 days of year end as required by HUD. We recommend management either make the required deposit of $5,830 which was due from 2020 surplus cash or obtain a waiver from HUD. We recommend management made additional deposit of $400 to the replacement reserve to remedy the deficit. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2022-003
Finding 2022-003 Type of Finding: Significant deficiency in internal controls over compliance and non-compliance. Federal Award Program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Procurement Criteria: Pursuant to the Uniform Guidance, for procurements of goods and services made with federal awards, River Kourt Apartments is required to have policies in place that conform with the Procurement Standards as prescribed in 2 CFR ?200.318 through ?200.320. River Kourt Apartments is required to follow the methods of procurement as prescribed in 2 CFR ?200.320. Condition: River Kourt Apartments has written policies and procedures regarding the procurement of goods and services; however, the written procedures did not include all required elements regarding procurement procedures pursuant to 2 CFR ?200.318 through ?200.320. Cause of Condition: River Kourt Apartments has written policies and procedures regarding the procurement of goods and services; however, the written procedures did not include all required elements regarding procurement procedures pursuant to 2 CFR ?200.318 through ?200.320. Effect of Condition: This increases risk that River Kourt Apartments would not materially comply with the procurement requirement for the major program. Questioned Costs: None. Context: There were no procurements over the de minimis threshold made during the year period ended June 30, 2022; however, the written procedures did not include all required elements regarding procurement procedures pursuant to 2 CFR ?200.318 through ?200.320. Repeat Finding: Yes, see Finding 2021-003. Recommendation: We recommend management revise the current policies and procedures to include all required elements for procurement procedures pursuant to 2 CFR ?200.318 through ?200.320. Procurement methods shall follow the methods as prescribed in 2 CFR ?200.320. View of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2022-004
Finding 2022-004 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 River Kourt Apartments? regulatory agreement with HUD for its HUD Section 811 Capital Advance and HUD Section 811 Project Rental Assistance Contract (PRAC), River Kourt Apartments? 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: River Kourt Apartments 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 7 tenants from a population of 20. 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 3 instances 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.