FAC Explorer

Audit 7706

FY End
2023-06-30
Total Expended
$2.07M
Findings
10
Programs
1
Organization: Afiya Apartments INC (OR)
Year: 2023 Accepted: 2023-12-20
Auditor: Jones & Roth PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
5703 2023-001 Material Weakness Yes E
5704 2023-002 Significant Deficiency - L
5705 2023-003 Significant Deficiency - N
5706 2023-004 Significant Deficiency - N
5707 2023-005 Significant Deficiency - ABN
582145 2023-001 Material Weakness Yes E
582146 2023-002 Significant Deficiency - L
582147 2023-003 Significant Deficiency - N
582148 2023-004 Significant Deficiency - N
582149 2023-005 Significant Deficiency - ABN

Programs

ALN Program Spent Major Findings
14.181 Supportive Housing for Persons with Disabilities $2.07M Yes 5

Contacts

Name Title Type
RBFBAA4KLXE3 Kathleen Broadhurst Auditee
5416861262 Kari Young Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: 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. Afiya Apartments, Inc. was awarded a capital advance in the amount of $1,977,500 from HUD in 2010 under Section 811 of the National Affordable Housing Act. The capital advance qualifies as a major program due to continuing compliance requirements associated with this unamortizable mortgage. Also included in this major program is the HUD Project Rental Assistance Contract (PRAC) awarded. These programs are both components of HUD Supportive Housing for Persons with Disabilities, which is the major program. Determination of the amount of federal awards expended for the Section 811 Capital Advance Program is based on the June 30, 2023 balance of capital advance granted in current and prior years in accordance with the Uniform Guidance. The balance of the capital advance at June 30, 2023 was $1,977,500. Afiya Apartments, Inc. has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the award agreements with HUD do not include an indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023. De Minimis Rate Used: Y Rate Explanation: Afiya Apartments, Inc. has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the award agreements with HUD do not include an indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Afiya Apartments, Inc. under programs of the federal government for the year ended June 30, 2023. 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 Afiya Apartments, Inc., it is not intended to and does not present the financial position, changes in net assets, functional expenses, or cash flows of Afiya Apartments, Inc.
Title: Summary of Significant Accounting Policies Accounting Policies: 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. Afiya Apartments, Inc. was awarded a capital advance in the amount of $1,977,500 from HUD in 2010 under Section 811 of the National Affordable Housing Act. The capital advance qualifies as a major program due to continuing compliance requirements associated with this unamortizable mortgage. Also included in this major program is the HUD Project Rental Assistance Contract (PRAC) awarded. These programs are both components of HUD Supportive Housing for Persons with Disabilities, which is the major program. Determination of the amount of federal awards expended for the Section 811 Capital Advance Program is based on the June 30, 2023 balance of capital advance granted in current and prior years in accordance with the Uniform Guidance. The balance of the capital advance at June 30, 2023 was $1,977,500. Afiya Apartments, Inc. has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the award agreements with HUD do not include an indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023. De Minimis Rate Used: Y Rate Explanation: Afiya Apartments, Inc. has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the award agreements with HUD do not include an indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023. 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. Afiya Apartments, Inc. was awarded a capital advance in the amount of $1,977,500 from HUD in 2010 under Section 811 of the National Affordable Housing Act. The capital advance qualifies as a major program due to continuing compliance requirements associated with this unamortizable mortgage. Also included in this major program is the HUD Project Rental Assistance Contract (PRAC) awarded. These programs are both components of HUD Supportive Housing for Persons with Disabilities, which is the major program. Determination of the amount of federal awards expended for the Section 811 Capital Advance Program is based on the June 30, 2023 balance of capital advance granted in current and prior years in accordance with the Uniform Guidance. The balance of the capital advance at June 30, 2023 was $1,977,500. Afiya Apartments, Inc. has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the award agreements with HUD do not include an indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023.

Finding Details

Finding 2023-001
Finding 2023-001 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Eligibility Criteria: In accordance with Afiya Apartments, Inc.’s regulatory agreement with HUD for its HUD Section 811 Capital Advance and HUD Section 811 Project Rental Assistance Contract (PRAC), Afiya Apartments, Inc. 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: Afiya Apartments, Inc. 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: Yes, see Finding 2022-002. Context: We noted from review of the Forms HUD-52670 Schedule of Tenant Assistance Payments Due and other client prepared schedules, several tenants had not been recertified during the fiscal year as required. From the total 16 tenants at June 30, 2023, the annual recertifications for 11 tenants were past due. We selected a sample of 4 tenants from a population of 16 for eligibility testing. The sample was not a statistically valid sample. Our sample of 4 tenants did not reveal any exceptions. 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 2023-002
Finding 2023-002 Type of Finding: Significant deficiency in internal control over compliance and immaterial noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Reporting Criteria: Afiya Apartments, Inc.’s regulatory agreement with HUD and the HUD Uniform Financial Reporting Standards (24 CFR §5.801) require audited financial statements to be submitted to HUD within 90 days of the fiscal year end. HUD may authorize an extension to the 90 day due date. Condition: The annual audit for the fiscal year ended June 30, 2022 was not submitted by the due date as required by HUD. Cause: The audit was not completed within the applicable time frame, so it was not available to be submitted to HUD by the due date. Effect: The effect is immaterial non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: No. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure the audit is completed timely and submitted to HUD as required. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2023-003
Finding 2023-003 Type of Finding: Significant deficiency in internal control over compliance immaterial noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Special Tests and Provisions – Residual Receipts Account Criteria: Afiya Apartments, Inc.’s regulatory agreement with HUD requires surplus cash to be deposited into the residual receipts account within 60 days following year-end. Condition: The required deposit of surplus cash was not made to the residual receipts account within 60 days following year-end as required. It was deposited late. Cause: There were not proper internal controls in place to ensure the deposit was made timely. Effect: The deposit was made after the required 60 days following year-end. This is considered immaterial noncompliance. Questioned Costs: None. Repeat Finding: No. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure that surplus cash is deposited to the residual receipts account within 60 days following year-end as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2023-004
Finding 2023-004 Type of Finding: Significant deficiency in internal control over compliance and immaterial noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirements: Special Tests and Provisions – Replacement Reserve Criteria: Afiya Apartments, Inc.’s regulatory agreement with HUD requires certain monthly deposits to the replacement reserve. Condition: Afiya Apartments, Inc.’s did not make required replacement reserve deposits. The annual deposits were short by $780 and the replacement reserve account was underfunded by a cumulative total of $4,199 at year-end. Cause: There were not proper internal controls in place to ensure the monthly deposits were made as required. Effect: The replacement reserve was not funded as required by HUD. It was underfunded by $4,199. This is considered immaterial noncompliance. Questioned Costs: None. Repeat Finding: No. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure monthly deposits are made to the replacement reserve as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2023-005
Finding 2023-005 Type of Finding: Significant deficiency in internal control over compliance and immaterial noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirements: Allowable Activities, Allowable Costs and Special Tests and Provisions – Use of Project Funds Criteria: PRAC project funds must be used only for expenses that are reasonable and necessary to the operation of the project as provided for in the Regulatory Agreement. Condition: There was an invoice that was processed and paid twice by Afiya Apartments with project funds. The invoice was for $99. The organization’s internal controls did not prevent or detect and correct the error. Cause: There were not proper internal controls in place to prevent or detect and correct the duplicate transaction from being processed and paid with project funds. Effect: An invoice was paid twice resulting in immaterial noncompliance with the major program compliance requirements listed above. Questioned Costs: None. Repeat Finding: No. Context: We noted one instance in our sample of 40 transactions. Our sample was not a statistically valid sample. Recommendation: We recommend management evaluate the design and implementation of its internal controls over compliance with respect to project disbursements to ensure there is a process to identify invoices that have been paid so as to avoid duplicate payments. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2023-001
Finding 2023-001 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Eligibility Criteria: In accordance with Afiya Apartments, Inc.’s regulatory agreement with HUD for its HUD Section 811 Capital Advance and HUD Section 811 Project Rental Assistance Contract (PRAC), Afiya Apartments, Inc. 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: Afiya Apartments, Inc. 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: Yes, see Finding 2022-002. Context: We noted from review of the Forms HUD-52670 Schedule of Tenant Assistance Payments Due and other client prepared schedules, several tenants had not been recertified during the fiscal year as required. From the total 16 tenants at June 30, 2023, the annual recertifications for 11 tenants were past due. We selected a sample of 4 tenants from a population of 16 for eligibility testing. The sample was not a statistically valid sample. Our sample of 4 tenants did not reveal any exceptions. 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 2023-002
Finding 2023-002 Type of Finding: Significant deficiency in internal control over compliance and immaterial noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Reporting Criteria: Afiya Apartments, Inc.’s regulatory agreement with HUD and the HUD Uniform Financial Reporting Standards (24 CFR §5.801) require audited financial statements to be submitted to HUD within 90 days of the fiscal year end. HUD may authorize an extension to the 90 day due date. Condition: The annual audit for the fiscal year ended June 30, 2022 was not submitted by the due date as required by HUD. Cause: The audit was not completed within the applicable time frame, so it was not available to be submitted to HUD by the due date. Effect: The effect is immaterial non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: No. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure the audit is completed timely and submitted to HUD as required. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2023-003
Finding 2023-003 Type of Finding: Significant deficiency in internal control over compliance immaterial noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Special Tests and Provisions – Residual Receipts Account Criteria: Afiya Apartments, Inc.’s regulatory agreement with HUD requires surplus cash to be deposited into the residual receipts account within 60 days following year-end. Condition: The required deposit of surplus cash was not made to the residual receipts account within 60 days following year-end as required. It was deposited late. Cause: There were not proper internal controls in place to ensure the deposit was made timely. Effect: The deposit was made after the required 60 days following year-end. This is considered immaterial noncompliance. Questioned Costs: None. Repeat Finding: No. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure that surplus cash is deposited to the residual receipts account within 60 days following year-end as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2023-004
Finding 2023-004 Type of Finding: Significant deficiency in internal control over compliance and immaterial noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirements: Special Tests and Provisions – Replacement Reserve Criteria: Afiya Apartments, Inc.’s regulatory agreement with HUD requires certain monthly deposits to the replacement reserve. Condition: Afiya Apartments, Inc.’s did not make required replacement reserve deposits. The annual deposits were short by $780 and the replacement reserve account was underfunded by a cumulative total of $4,199 at year-end. Cause: There were not proper internal controls in place to ensure the monthly deposits were made as required. Effect: The replacement reserve was not funded as required by HUD. It was underfunded by $4,199. This is considered immaterial noncompliance. Questioned Costs: None. Repeat Finding: No. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure monthly deposits are made to the replacement reserve as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2023-005
Finding 2023-005 Type of Finding: Significant deficiency in internal control over compliance and immaterial noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirements: Allowable Activities, Allowable Costs and Special Tests and Provisions – Use of Project Funds Criteria: PRAC project funds must be used only for expenses that are reasonable and necessary to the operation of the project as provided for in the Regulatory Agreement. Condition: There was an invoice that was processed and paid twice by Afiya Apartments with project funds. The invoice was for $99. The organization’s internal controls did not prevent or detect and correct the error. Cause: There were not proper internal controls in place to prevent or detect and correct the duplicate transaction from being processed and paid with project funds. Effect: An invoice was paid twice resulting in immaterial noncompliance with the major program compliance requirements listed above. Questioned Costs: None. Repeat Finding: No. Context: We noted one instance in our sample of 40 transactions. Our sample was not a statistically valid sample. Recommendation: We recommend management evaluate the design and implementation of its internal controls over compliance with respect to project disbursements to ensure there is a process to identify invoices that have been paid so as to avoid duplicate payments. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.