FAC Explorer

Audit 50186

FY End
2022-06-30
Total Expended
$754,067
Findings
2
Programs
2
Organization: D H, Incorporated (OR)
Year: 2022 Accepted: 2023-03-23
Auditor: Jones & Roth PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
42647 2022-002 Material Weakness Yes E
619089 2022-002 Material Weakness Yes E

Programs

ALN Program Spent Major Findings
14.134 Mortgage Insurance_rental Housing $640,956 Yes 1
14.195 Section 8 Housing Assistance Payments Program $113,111 - 0

Contacts

Name Title Type
HLA9ZNET3KF3 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 DH, Incorporated (DHI) under programs of the federal government for the yearended June 30, 2022. The information in this Schedule is presented in accordance with therequirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).Because the Schedule presents only a selected portion of the operations of DHI, it is not intendedto and does not present the financial position, changes in net assets, or cash flows of DHI.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,wherein certain types of expenditures are not allowable or are limited as to reimbursement.DHI has a mortgage insured by the United States Department of Housing and Urban Development(HUD) under the HUD Section 223(f) insured mortgage program under Section 207 of the NationalAffordable Housing Act, as amended. There are continuing compliance requirements associatedwith the insured mortgage. Determination of the amount of federal awards expended for the HUDSection 223(f) insured mortgage is based on the balance of the mortgage at the beginning of thefiscal year ended June 30, 2022 in accordance with the Uniform Guidance. There were no additionsto the mortgage during the fiscal year ended June 30, 2022. The outstanding balance of the HUDinsured mortgage at June 30, 2022 was $630,268.DHI has elected to use the 10 percent de minimis indirect cost rate as allowed under the UniformGuidance; however, the agreements with HUD do not include indirect cost reimbursement, so therewere no indirect costs charged to the federal award programs for the year ended 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. MORTGAGE INSURANCE_RENTAL HOUSING (14.134) - Balances outstanding at the end of the audit period were 630268.

Finding Details

Finding 2022-002
Finding 2022-002 Type of Finding: Material weakness in internal control over compliance and noncompliance. Federal program: HUD Section 223(f) Insured Mortgage (Assistance Listing #14.134) Compliance Requirement: Eligibility Criteria: In accordance with DH, Incorporated?s regulatory agreement with HUD for its HUD Section 223(f) Insured Mortgage and HUD Section 8 Housing Assistance Payments contract, DH, Incorporated 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: DH, Incorporated did not perform recertifications for all 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 material non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2021-003. Context: We selected a sample of 7 tenants from a population of 18. 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 two 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: Material weakness in internal control over compliance and noncompliance. Federal program: HUD Section 223(f) Insured Mortgage (Assistance Listing #14.134) Compliance Requirement: Eligibility Criteria: In accordance with DH, Incorporated?s regulatory agreement with HUD for its HUD Section 223(f) Insured Mortgage and HUD Section 8 Housing Assistance Payments contract, DH, Incorporated 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: DH, Incorporated did not perform recertifications for all 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 material non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2021-003. Context: We selected a sample of 7 tenants from a population of 18. 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 two 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.