Audit 5194

FY End

2022-12-31

Total Expended

$2.09M

Findings

4

Programs

1

Organization: Project Support Housing II (CO)

Year: 2022 Accepted: 2023-12-04

Auditor: Fj & Associates PLLC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
3174	2022-001	-	Yes	P
3175	2022-002	-	Yes	P
579616	2022-001	-	Yes	P
579617	2022-002	-	Yes	P

ALN	Program	Spent	Major	Findings
14.157	Supportive Housing for the Elderly	$77,964	Yes	0

Contacts

Name	Title	Type
Q4F6MKH9F3D3	Robin Skelton	Auditee
3035674285	Scott Farnes	Auditor
No contacts on file

Notes to SEFA

Title: Scope of Audit Pursuant to Uniform Guidance Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Organization. All federal awards received directly from federal agencies as well as federal awards passed through other governmental agencies or other entities are included in the Schedule. The Project has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The Organization’s Schedule of Expenditures of Federal Awards has been prepared using the same basis of accounting as the December 31, 2022 financial statements of the Organization. The Organization reports to HUD using the accrual basis of accounting. A complete description of the basis of accounting is included in note 1 to those financial statements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Organization. All federal awards received directly from federal agencies as well as federal awards passed through other governmental agencies or other entities are included in the Schedule. The Project has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.

Title: Basis of Presentation Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Organization. All federal awards received directly from federal agencies as well as federal awards passed through other governmental agencies or other entities are included in the Schedule. The Project has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The Organization’s Schedule of Expenditures of Federal Awards has been prepared using the same basis of accounting as the December 31, 2022 financial statements of the Organization. The Organization reports to HUD using the accrual basis of accounting. A complete description of the basis of accounting is included in note 1 to those financial statements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The Organization’s Schedule of Expenditures of Federal Awards has been prepared using the same basis of accounting as the December 31, 2022 financial statements of the Organization. The Organization reports to HUD using the accrual basis of accounting. A complete description of the basis of accounting is included in note 1 to those financial statements.

Title: Contingencies Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Organization. All federal awards received directly from federal agencies as well as federal awards passed through other governmental agencies or other entities are included in the Schedule. The Project has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The Organization’s Schedule of Expenditures of Federal Awards has been prepared using the same basis of accounting as the December 31, 2022 financial statements of the Organization. The Organization reports to HUD using the accrual basis of accounting. A complete description of the basis of accounting is included in note 1 to those financial statements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. In connection with various federal grant programs, the Organization is obligated to administer related programs and spend the funds in accordance with regulatory restrictions and is subject to audit by grantor agencies and other auditors. In cases of noncompliance, the agencies involved may require the Organization to refund program funds.

Title: Federally Funded and Insured Mortgages Accounting Policies: The Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Organization. All federal awards received directly from federal agencies as well as federal awards passed through other governmental agencies or other entities are included in the Schedule. The Project has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The Organization’s Schedule of Expenditures of Federal Awards has been prepared using the same basis of accounting as the December 31, 2022 financial statements of the Organization. The Organization reports to HUD using the accrual basis of accounting. A complete description of the basis of accounting is included in note 1 to those financial statements. De Minimis Rate Used: N Rate Explanation: The Project has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The mortgage balance at the beginning of the year and loans made during the year are included in the federal expenditures presented in the Schedule. The balance of the outstanding federally insured mortgage at December 31, 2022 is $2,010,132.

Finding Details

Finding 2022-001

Condition: The Organization failed to bring the reserve account to a fully funded position during the period ended December 31, 2022. Deposits and interest were added during the current period in the amount of $9,256. This leaves the period underfunded and the total deficit at $2,254. Criteria: The Regulatory Agreement with HUD states, “Mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank which is insured by the Federal Deposit Insurance Corporation…. Concurrently with the effective commencement of rental assistance payments under the Project Assistance Contract, the Mortgagor will deposit an amount equal to $764.33 per month unless a different date or amount is approved in writing by HUD.” During the prior year, the replacement reserve was underfunded by $2,338. During the current year, the Organization needed to make twelve payments of $764.33 plus an additional $2,338 for the prior year underfunding for total required deposits of $11,510. $9,256 was deposited in the replacement reserve account during 2022. Current reserve balance is $116,203, and the required reserve balance is $118,457. Effect: The reserve account is underfunded by $2,254 as of December 31, 2022. Cause: Management failed to deposit the funds as required since the Organization’s financial position made it difficult to do so. Recommendation: We recommend the Organization bring the reserve account to a fully funded position. Auditee's Response: The Organization will work towards bringing the reserve account into compliance.

Finding 2022-002

Condition: The Organization failed to deposit surplus cash from 2021 of $15,814 into residual receipts within 60 days of the fiscal period end. Criteria: HUD-93486-ORCF states that any surplus cash non-profit projects have at the end of the fiscal year "must be deposited with Mortgagee within 60 days after Fiscal Period ends." During the prior year, the Project had surplus cash in the amount of $15,814. Effect: The residual receipts account is underfunded by $15,814 as of December 31, 2022. Cause: Management failed to deposit the surplus cash in time due to the December 31, 2021, audit being completed later in the year on September 27, 2022. Recommendation: We recommend the Organization deposit the funds into residual receipts as soon as possible. Auditee's Response: The Organization will deposit $15,814 of surplus cash into residual receipts as soon as possible.

Finding 2022-001

Condition: The Organization failed to bring the reserve account to a fully funded position during the period ended December 31, 2022. Deposits and interest were added during the current period in the amount of $9,256. This leaves the period underfunded and the total deficit at $2,254. Criteria: The Regulatory Agreement with HUD states, “Mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank which is insured by the Federal Deposit Insurance Corporation…. Concurrently with the effective commencement of rental assistance payments under the Project Assistance Contract, the Mortgagor will deposit an amount equal to $764.33 per month unless a different date or amount is approved in writing by HUD.” During the prior year, the replacement reserve was underfunded by $2,338. During the current year, the Organization needed to make twelve payments of $764.33 plus an additional $2,338 for the prior year underfunding for total required deposits of $11,510. $9,256 was deposited in the replacement reserve account during 2022. Current reserve balance is $116,203, and the required reserve balance is $118,457. Effect: The reserve account is underfunded by $2,254 as of December 31, 2022. Cause: Management failed to deposit the funds as required since the Organization’s financial position made it difficult to do so. Recommendation: We recommend the Organization bring the reserve account to a fully funded position. Auditee's Response: The Organization will work towards bringing the reserve account into compliance.

Finding 2022-002

Condition: The Organization failed to deposit surplus cash from 2021 of $15,814 into residual receipts within 60 days of the fiscal period end. Criteria: HUD-93486-ORCF states that any surplus cash non-profit projects have at the end of the fiscal year "must be deposited with Mortgagee within 60 days after Fiscal Period ends." During the prior year, the Project had surplus cash in the amount of $15,814. Effect: The residual receipts account is underfunded by $15,814 as of December 31, 2022. Cause: Management failed to deposit the surplus cash in time due to the December 31, 2021, audit being completed later in the year on September 27, 2022. Recommendation: We recommend the Organization deposit the funds into residual receipts as soon as possible. Auditee's Response: The Organization will deposit $15,814 of surplus cash into residual receipts as soon as possible.