FAC Explorer

Audit 55703

FY End
2022-06-30
Total Expended
$2.87M
Findings
6
Programs
1
Organization: Dogwood Manor Apartments, Inc. (TN)
Year: 2022 Accepted: 2022-10-23
Auditor: Johnson Hickey & Murchison PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
60085 2022-001 Significant Deficiency - P
60086 2022-003 - Yes P
60087 2022-002 - - P
636527 2022-001 Significant Deficiency - P
636528 2022-003 - Yes P
636529 2022-002 - - P

Programs

ALN Program Spent Major Findings
14.157 Supportive Housing for the Elderly $2.87M Yes 3

Contacts

Name Title Type
K8H8P7SNKFL9 Myra Walker Auditee
9314324111 Andrew Grimes Auditor
No contacts on file

Notes to SEFA

Title: U.S. Department of Housing and Urban Development Loan Program Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures arerecognized following the cost principles contained in the Uniform Guidance, wherein certain types ofexpenditures are not allowable or are limited as to reimbursement. Dogwood Manor Apartments, Inc. haselected 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. Dogwood Manor Apartments, Inc. has received a U.S. Department of Housing and Urban Development capital advance under Section 202 of the National Housing Act. The balance is included in the federal expenditures presented in the Schedule. Dogwood Manor Apartments, Inc. received no additional funds during the year.
Title: Basis of presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures arerecognized following the cost principles contained in the Uniform Guidance, wherein certain types ofexpenditures are not allowable or are limited as to reimbursement. Dogwood Manor Apartments, Inc. haselected 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 includes the federal award activity of Dogwood Manor Apartments, Inc., HUD Project No. 087-EE073, and is presented on the accrual basis of accounting. 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 Dogwood Manor Apartments, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Dogwood Manor Apartments, Inc.

Finding Details

Finding 2022-001
Finding 2022-001 Condition The Organization paid for services rendered to another Organization. Criteria The Organization?s internal control over cash disbursements of project funds requires proper cost identification and segregation before payment. Cause Utility bills were not properly segregated before processing. Effect Organizational funds were erroneously disbursed for services it did not receive. Recommendation Management should re-evaluate controls around cost identification. Views of management Management concurs. Auditors? summary of the auditee?s comments on the findings and recommendations Management will re-evaluate controls around cost identification in efforts to minimize potential error going forward.
Finding 2022-003
Finding 2022-003 Information on federal program Section 202 Supportive Housing for the Elderly Federal Assistance Listing Number 14.157. Questioned costs $0 Criteria The Organization is required to make deposits into an escrow account to fund tax and insurance payments for the fiscal year. Condition The Organization?s escrow cash account did not have adequate deposits as of June 30, 2022. Cause The Organization had inadequate cash on hand to fund the escrow account. Effect The Organization may not be able to pay for their taxes and insurance for the upcoming year. Recommendation Management should budget for monthly tax and insurance escrow deposits and request a rent increase to prevent future shortfalls in escrow cash. Views of Management Management concurs. Auditors? summary of the auditee?s comments on the findings and recommendations Management will request a rent increase and make deposits to the escrow account sufficient to cover future tax and insurance costs.
Finding 2022-002
Finding 2022-002 Information of federal program Section 202 Supportive Housing for the Elderly Federal Assistance Listing Number 14.157. Questioned costs $0 Criteria Operating costs paid on behalf of another Organization is considered an unallowable cost. Condition Our consideration of internal control disclosed that the management company incorrectly segregated utility invoices between two Organizations. Cause Utility bills were not correctly identified and segregated before payment was authorized. Effect Disallowed costs were identified, although the amount identified did not meet the threshold for reporting as a questioned cost under the Uniform Guidance. Recommendation Management should review its controls over proper identification of costs associated with each Organization.Views of management Management concurs. Auditors? summary of the auditee?s comments on the findings and recommendations Management will reimburse the Organization for amounts that were not owed by the Organization.
Finding 2022-001
Finding 2022-001 Condition The Organization paid for services rendered to another Organization. Criteria The Organization?s internal control over cash disbursements of project funds requires proper cost identification and segregation before payment. Cause Utility bills were not properly segregated before processing. Effect Organizational funds were erroneously disbursed for services it did not receive. Recommendation Management should re-evaluate controls around cost identification. Views of management Management concurs. Auditors? summary of the auditee?s comments on the findings and recommendations Management will re-evaluate controls around cost identification in efforts to minimize potential error going forward.
Finding 2022-003
Finding 2022-003 Information on federal program Section 202 Supportive Housing for the Elderly Federal Assistance Listing Number 14.157. Questioned costs $0 Criteria The Organization is required to make deposits into an escrow account to fund tax and insurance payments for the fiscal year. Condition The Organization?s escrow cash account did not have adequate deposits as of June 30, 2022. Cause The Organization had inadequate cash on hand to fund the escrow account. Effect The Organization may not be able to pay for their taxes and insurance for the upcoming year. Recommendation Management should budget for monthly tax and insurance escrow deposits and request a rent increase to prevent future shortfalls in escrow cash. Views of Management Management concurs. Auditors? summary of the auditee?s comments on the findings and recommendations Management will request a rent increase and make deposits to the escrow account sufficient to cover future tax and insurance costs.
Finding 2022-002
Finding 2022-002 Information of federal program Section 202 Supportive Housing for the Elderly Federal Assistance Listing Number 14.157. Questioned costs $0 Criteria Operating costs paid on behalf of another Organization is considered an unallowable cost. Condition Our consideration of internal control disclosed that the management company incorrectly segregated utility invoices between two Organizations. Cause Utility bills were not correctly identified and segregated before payment was authorized. Effect Disallowed costs were identified, although the amount identified did not meet the threshold for reporting as a questioned cost under the Uniform Guidance. Recommendation Management should review its controls over proper identification of costs associated with each Organization.Views of management Management concurs. Auditors? summary of the auditee?s comments on the findings and recommendations Management will reimburse the Organization for amounts that were not owed by the Organization.