Audit 51243

FY End
2022-06-30
Total Expended
$816,527
Findings
8
Programs
1
Organization: Pono Homes, Inc. (MD)
Year: 2022 Accepted: 2022-10-16

Organization Exclusion Status:

Checking exclusion status...

Findings

ID Ref Severity Repeat Requirement
43728 2022-001 Material Weakness - N
43729 2022-002 - - N
43730 2022-003 - - E
43731 2022-004 - - E
620170 2022-001 Material Weakness - N
620171 2022-002 - - N
620172 2022-003 - - E
620173 2022-004 - - E

Programs

ALN Program Spent Major Findings
14.181 Supportive Housing for Persons with Disabilities $816,527 Yes 4

Contacts

Name Title Type
TVHBLXMXBKL8 Patti Appel Auditee
4106536190 Kimberly Mustard Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan guarantee outstanding balances Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal award activity of Pono Homes, Inc., HUD Project No. 052-HD078, under a program 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 the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES (14.181) - Balances outstanding at the end of the audit period were 774500. The Organization received a capital advance from the U.S. Department of Housing and Urban Development. The loan balance outstanding at the beginning of the year is included in the federal expenditures in the Schedule. TheOrganization received no additional loans and made no payments during the year.
Title: Pass Through Funds Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal award activity of Pono Homes, Inc., HUD Project No. 052-HD078, under a program 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 the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. 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. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The Organization has no funds that pass through any other agency or organization.

Finding Details

S3800-010 Finding Reference Number: 2022-001 S3800-011 Title and CFDA Number of Federal Program:Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-020 Criteria: Project funds must be used for the operation of the Project. S3800-030 Statement of Condition: Project funds were used to pay a related party. The related party, in turn, paid the operating expenses of the Project. S3800-032 Cause: For ease of administration, common vendors were paid by the related party. S3800-033 Effect: The payments made to the related party could be disallowed. S3800-035 Auditor Non-Compliance Code: H - Unauthorized distribution of project assets S3800-040 Questioned Costs: $28,775 S3800-045 Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations, as well as the local HUD field office's recommendations, are in the process of being implemented. S3800-050 Context: Review of the detail in the account provided evidence that project funds were paid to the related party. Personnel were forthcoming with this practice and are in the process of correcting this finding. S3800-080 Recommendation: In conjunction with the Organization's local HUD field office, it was determined that the related party should invoice the Organization for project expenses on a monthly basis. In turn, the Organization should pay the invoice amount on a monthly basis. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: The auditors have worked with the auditee in conjunction with their local HUD field office to determine a course of action. All parties were in agreement with the recommendation. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022 S3800-150 Response: The auditee is committed to correcting the finding.
S3800-010 Finding Reference Number: 2022-002 S3800-011 Title and CFDA Number of Federal Program: Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-020 Criteria: Residual receipts balance at year end should be equal to the number of units multiplied by $250. After the overage is calculated, the Organization should request approval for the withdrawal from HUD. After approval, this overage is to be withdrawn and used to pay the excess in residual receipts. S3800-030 Statement of Condition: Residual receipts balance is over the calculated compliance amount. S3800-032 Cause: The prior year surplus cash amount was deposited into the residual receipts account. However, approval was not requested to pay back excess residual receipts. S3800-033 Effect: Residual receipts balance is over the compliance amount. S3800-035 Auditor Non-Compliance Code: Z S3800-040 Questioned Costs: $7,625 S3800-045 Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations are in the process of being implemented. S3800-050 Context: Review of the residual receipts activity showed that the client had deposited surplus cash money into the account; however, approval was never sought to pay back excess residual receipts. S3800-080 Recommendation: Training of staff should be performed to bring the staff up to date with of all residual receipts compliance requirements. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: The Organization did not obtain approval to pay back the excess residual receipts amount. This led to the residual receipts account being greater than its compliance amount. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022 S3800-150 Response: The Organization will request approval to pay back excess residual receipts.
S3800-010 Finding Reference Number: 2022-003 S3800-011 Title and CFDA Number of Federal Program: Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-020 Criteria: Reports viewed from EIV system must be printed and included in the tenant files in order to demonstrate EIV system compliance. S3800-030 Statement of Condition: Reports demonstrating the proper use of EIV system were not printed and retained in one of the sampled tenant file. S3800-032 Cause: The Organization was not storing EIV reports into the tenant files. S3800-033 Effect: Potential miscalculation of tenant rent responsibility. S3800-035 Auditor Non-Compliance Code: Z S3800-040 Questioned Costs: $0 S3800-045 Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations are in the process of being implemented. S3800-050 Context: Review of the tenant files provided evidence that the EIV reports were not being printed and stored in the tenant file. S3800-080 Recommendation Training of staff should be performed to bring the staff up to date with the implementation of all the EIV system compliance requirements. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: The Organization did not retain EIV information because in their opinion they had more current and detailed information on clients' financial status than EIV provided; however, the Organization will retain the EIV information in the tenant file as required. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022 S3800-150 Response: The Organization will retain the EIV information in the tenant file as required.
S3800-010 Finding Reference Number: 2022-004 S3800-011 Title and CFDA Number of Federal Program: Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-020 Criteria: The Organization should retain all required tenant documentation on site and should retain all required information. S3800-030 Statement of Condition: A tenant file requested only retained EIV information on the tenant. No other required documentation was observed in the file. S3800-032 Cause: Organization did not retain the information, except the EIV support, in a specific tenant file selected. S3800-033 Effect: Non-compliance of HUD requirements in regards to information that must be retained in tenant files. S3800-035 Auditor Non-Compliance Code: Z S3800-040 Questioned Costs: $0 S3800-045 Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor'srecommendations are in the process of being implemented. S3800-050 Context: Review of a specific tenant file showed that no information,except an EIV support, was stored in the tenant file. S3800-080 Recommendation: Training of staff should be performed to bring the staff up to date with the implementation of proper storage and documentation of tenant files and all tenant files should be reviewed to ensure all proper documentation is stored within the files. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations:The Organization did not retain all the required information in the tenant file. Going forward, the Organization will retain all tenant file information and will review its current tenant files. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022 S3800-150 Response: The Organization will review all tenant files to insure all documentation is retained.
S3800-010 Finding Reference Number: 2022-001 S3800-011 Title and CFDA Number of Federal Program:Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-020 Criteria: Project funds must be used for the operation of the Project. S3800-030 Statement of Condition: Project funds were used to pay a related party. The related party, in turn, paid the operating expenses of the Project. S3800-032 Cause: For ease of administration, common vendors were paid by the related party. S3800-033 Effect: The payments made to the related party could be disallowed. S3800-035 Auditor Non-Compliance Code: H - Unauthorized distribution of project assets S3800-040 Questioned Costs: $28,775 S3800-045 Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations, as well as the local HUD field office's recommendations, are in the process of being implemented. S3800-050 Context: Review of the detail in the account provided evidence that project funds were paid to the related party. Personnel were forthcoming with this practice and are in the process of correcting this finding. S3800-080 Recommendation: In conjunction with the Organization's local HUD field office, it was determined that the related party should invoice the Organization for project expenses on a monthly basis. In turn, the Organization should pay the invoice amount on a monthly basis. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: The auditors have worked with the auditee in conjunction with their local HUD field office to determine a course of action. All parties were in agreement with the recommendation. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022 S3800-150 Response: The auditee is committed to correcting the finding.
S3800-010 Finding Reference Number: 2022-002 S3800-011 Title and CFDA Number of Federal Program: Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-020 Criteria: Residual receipts balance at year end should be equal to the number of units multiplied by $250. After the overage is calculated, the Organization should request approval for the withdrawal from HUD. After approval, this overage is to be withdrawn and used to pay the excess in residual receipts. S3800-030 Statement of Condition: Residual receipts balance is over the calculated compliance amount. S3800-032 Cause: The prior year surplus cash amount was deposited into the residual receipts account. However, approval was not requested to pay back excess residual receipts. S3800-033 Effect: Residual receipts balance is over the compliance amount. S3800-035 Auditor Non-Compliance Code: Z S3800-040 Questioned Costs: $7,625 S3800-045 Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations are in the process of being implemented. S3800-050 Context: Review of the residual receipts activity showed that the client had deposited surplus cash money into the account; however, approval was never sought to pay back excess residual receipts. S3800-080 Recommendation: Training of staff should be performed to bring the staff up to date with of all residual receipts compliance requirements. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: The Organization did not obtain approval to pay back the excess residual receipts amount. This led to the residual receipts account being greater than its compliance amount. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022 S3800-150 Response: The Organization will request approval to pay back excess residual receipts.
S3800-010 Finding Reference Number: 2022-003 S3800-011 Title and CFDA Number of Federal Program: Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-020 Criteria: Reports viewed from EIV system must be printed and included in the tenant files in order to demonstrate EIV system compliance. S3800-030 Statement of Condition: Reports demonstrating the proper use of EIV system were not printed and retained in one of the sampled tenant file. S3800-032 Cause: The Organization was not storing EIV reports into the tenant files. S3800-033 Effect: Potential miscalculation of tenant rent responsibility. S3800-035 Auditor Non-Compliance Code: Z S3800-040 Questioned Costs: $0 S3800-045 Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations are in the process of being implemented. S3800-050 Context: Review of the tenant files provided evidence that the EIV reports were not being printed and stored in the tenant file. S3800-080 Recommendation Training of staff should be performed to bring the staff up to date with the implementation of all the EIV system compliance requirements. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: The Organization did not retain EIV information because in their opinion they had more current and detailed information on clients' financial status than EIV provided; however, the Organization will retain the EIV information in the tenant file as required. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022 S3800-150 Response: The Organization will retain the EIV information in the tenant file as required.
S3800-010 Finding Reference Number: 2022-004 S3800-011 Title and CFDA Number of Federal Program: Supportive Housing for Persons with Disabilities - 14.181 S3800-015 Type of Finding: Federal Award Finding S3800-016 Finding Resolution Status: In Process S3800-020 Criteria: The Organization should retain all required tenant documentation on site and should retain all required information. S3800-030 Statement of Condition: A tenant file requested only retained EIV information on the tenant. No other required documentation was observed in the file. S3800-032 Cause: Organization did not retain the information, except the EIV support, in a specific tenant file selected. S3800-033 Effect: Non-compliance of HUD requirements in regards to information that must be retained in tenant files. S3800-035 Auditor Non-Compliance Code: Z S3800-040 Questioned Costs: $0 S3800-045 Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor'srecommendations are in the process of being implemented. S3800-050 Context: Review of a specific tenant file showed that no information,except an EIV support, was stored in the tenant file. S3800-080 Recommendation: Training of staff should be performed to bring the staff up to date with the implementation of proper storage and documentation of tenant files and all tenant files should be reviewed to ensure all proper documentation is stored within the files. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations:The Organization did not retain all the required information in the tenant file. Going forward, the Organization will retain all tenant file information and will review its current tenant files. S3800-130 Response Indicator: Agree S3800-140 Completion Date: September 30, 2022 S3800-150 Response: The Organization will review all tenant files to insure all documentation is retained.