Corrective Action Plans

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Management agrees with the recommendation and will further calibrate and clarify the financial reporting relationship between Centro para la Reconstrucción del Hábitat, Inc. (“CRH”) and Desarrollos CRH, Inc. (“Desarrollos”) under applicable accounting standards. Desarrollos was established as a sepa...
Management agrees with the recommendation and will further calibrate and clarify the financial reporting relationship between Centro para la Reconstrucción del Hábitat, Inc. (“CRH”) and Desarrollos CRH, Inc. (“Desarrollos”) under applicable accounting standards. Desarrollos was established as a separate nonprofit entity to further CRH’s affordable housing mission and undertake activities requiring or benefiting from designation as a Community Housing Development Organization (CHDO). Its separate legal and governance structure was intentionally established, in part, to satisfy applicable CHDO requirements, including community representation on its governing board. Desarrollos maintains its own corporate, accounting, and financial records.During its initial years, Desarrollos had limited financial activity while completing organizational, tax-exemption, CHDO certification, and other activities necessary to begin operations. As Desarrollos transitions into active program and development activities, the organizations will approve a more refined collaborative agreement that more clearly documents their organizational relationship, respective responsibilities, and the procedures governing financial support, transfers, and other transactions between the entities. Beginning with the current fiscal year, Desarrollos has also engaged CPAs for the preparation of its own financial statements. CRH will coordinate with its accounting professionals and independent CPAs to better clarify and appropriately reflect the relationship between the entities in CRH’s financial reporting, including consolidation and elimination of intercompany balances and transactions where required under applicable accounting standards. Management notes that the finding concerns the presentation of the financial relationship between two separately organized nonprofit entities. Desarrollos maintains separate accounting records and financial documentation, and the measures described above will provide additional clarity regarding the entities’ relationship and its presentation in future financial statements.
Views of Responsible Officials: During 2025, the Foundation experienced an extraordinary period of uncertainty surrounding the continued availability and accessibility of Federal funding. In response to concerns regarding access to previously awarded Federal funds, the Foundation accelerated certain...
Views of Responsible Officials: During 2025, the Foundation experienced an extraordinary period of uncertainty surrounding the continued availability and accessibility of Federal funding. In response to concerns regarding access to previously awarded Federal funds, the Foundation accelerated certain cash draws associated with approved Federal awards and established work plans. Shortly thereafter, access to certain award accounts within the Federal payment system changed, with access subsequently restored. As circumstances stabilized, the Foundation returned a substantial portion of the advance funding in March 2025. As of December 31, 2025, approximately $7 million remained recorded as refundable Federal advances associated with existing Federal awards. Management anticipated that these funds would be applied to eligible program expenditures and existing award obligations as activities under the approved work plans progressed. The Foundation maintains cash within pooled operating accounts and did not maintain Federal advances in separately segregated bank accounts. While Federal award activity and expenditures were tracked within the Foundation's accounting system, the Foundation's existing cashmanagement and liquidity-monitoring processes did not provide sufficient visibility to demonstrate that cash and investments equal to outstanding refundable Federal advance obligations remained available as of December 31, 2025. The Foundation also maintained access to a $1 million line of credit that was available to provide additional liquidity for short-term organizational working-capital requirements. The line of credit had not been drawn as of December 31, 2025, and therefore was not included in the cash and investments used to measure available liquidity at year-end. Nevertheless, the facility represented an available non-Federal source of liquidity that could have been utilized to address short-term organizational cash-flow requirements. Importantly, as reflected in the auditors' findings, no questioned costs were identified because expenditures unrelated to the applicable Federal awards were not charged to those Federal programs. The Foundation recognizes the need to strengthen its cash-management controls and liquidity-monitoring processes to ensure that Federal cash draws are aligned with immediate program cash requirements and that sufficient liquidity is maintained to satisfy outstanding Federal advance obligations. To address the finding, management has implemented or will implement the following corrective actions: 1. Federal Cash Draw Review and Approval – CFO/Finance Finance will maintain a formal review and approval process for federal cash drawdowns. Draws will be supported by eligible expenditures and actual and immediate cash requirements consistent with applicable federal award requirements. Federal cash draws outside the Foundation's normal reimbursement or cash-management practices will require documented review and approval by the CFO. 2. Extraordinary Federal Cash Draw Protocol – President & CEO/CFO If extraordinary circumstances arise that could affect the Foundation's access to federal awards or federal payment systems, any decision to materially accelerate a federal cash draw will be documented and subject to enhanced executive review.The documentation will include the circumstances supporting the proposed action, affected federal awards, amount of the proposed draw, anticipated eligible expenditures, expected timing of those expenditures, applicable federal cash-management requirements, and identified compliance and liquidity risks. Material extraordinary draw decisions will require approval by the President & CEO and CFO and, when appropriate, consultation with legal counsel, the federal awarding agency, and/or the appropriate Board leadership. 3. Program Certification of Anticipated Eligible Expenditures – Program Leadership When a federal cash-management decision relies on anticipated program activity, the responsible Program Executive will provide Finance with documented projections of the eligible expenditures expected to be incurred under the applicable awards. The documentation will identify the anticipated expenditures, estimated amounts, expected timing, and applicable federal awards. Program Leadership will be responsible for the accuracy and completeness of the programmatic projections provided to Finance. Finance will remain responsible for evaluating the information against applicable federal cash-management requirements. 4. Federal Advance Retention Review – CFO/Finance When a material federal advance remains outstanding, Finance will perform and document an assessment of whether continued retention of the advance is appropriate. The assessment will consider the amount of the outstanding advance, cumulative eligible expenditures, anticipated eligible expenditures, expected timing of those expenditures, applicable award requirements, and the amount, if any, that should be returned. Material advance balances will be periodically reassessed until the funds have been applied to eligible federal program expenditures or returned, as appropriate. 5. Federal Advance Reconciliation – CFO/Finance Finance will maintain an award-level reconciliation of federal cash draws, cumulative eligible expenditures, and outstanding refundable advances. The reconciliation will provide management with visibility into the amount of federal cash advanced in excess of cumulative eligible expenditures and facilitate timely identification of amounts that may require repayment. The remaining refundable advances associated with the December 31, 2025, balance will continue to be monitored through final disposition. 6. Enhanced Cash-Flow and Liquidity Forecasting – CFO/Finance Management will maintain a rolling 90 day cash-flow forecast incorporating anticipated receipts, operating expenditures, federal award activity, refundable advances, unrestricted resources, and other significant obligations. The forecast will be regularly updated and used to identify projected liquidity shortfalls and required management actions. Status: Started September 20267. Federal Advance Liquidity Monitoring – CFO/Finance As part of the Foundation's liquidity reporting, Finance will specifically compare outstanding federal refundable advances with available financial resources. If available resources approach or fall below established thresholds necessary to satisfy federal advances and other restricted or committed obligations, the matter will be immediately escalated to the President & CEO and appropriate Board leadership. This control is intended to prevent a situation in which a significant federal advance remains outstanding without management having timely visibility into the Foundation's ability to satisfy the associated obligation. Status: Started July 2026 8. Executive Accountability Responsibility for remediation will be shared across executive leadership with clearly defined accountability: Finance/CFO will be accountable for federal cash-management compliance, federal draw review, refundable advance reconciliations, cash-flow forecasting, liquidity monitoring, and escalation of identified risks. Program Leadership will be accountable for providing Finance with timely and supportable projections of anticipated eligible program expenditures when those projections are necessary to support federal cash-management decisions. President & CEO will be accountable for ensuring that organizational expenditures and operating decisions are appropriately aligned with available and reasonably forecasted financial resources and for directing organizational corrective action when established liquidity or revenue thresholds are reached. Management believes these measures strengthen the control environment surrounding an extraordinary and unusual event while establishing sustainable controls for federal cash management going forward. Management is committed to ensuring that future federal drawdowns are appropriately aligned with the Foundation's actual and immediate cash requirements and that significant federal advances are subject to documented, ongoing monitoring through their final disposition.
The corrective actions below are listed with the responsible party and target completion date for each. Actions will be completed by November 30, 2026. Policies and Procedures Manual updates will be presented to the CEO and Board of Directors in December 2026. • Complete the implementation of Sage I...
The corrective actions below are listed with the responsible party and target completion date for each. Actions will be completed by November 30, 2026. Policies and Procedures Manual updates will be presented to the CEO and Board of Directors in December 2026. • Complete the implementation of Sage Intacct accounting and financial management platform. Issue system produced financial reports. Target date: November 30, 2026. • Finalize written roles and responsibilities, including review and approval duties, within the accounting function. Target date: November 30, 2026. • Formally adopt the month-end closing workflow and checklists, starting with the September 2026 close. Target Date: October 31, 2026 • Clear the backlog of outstanding bank reconciliations, with documented preparer and reviewer sign-off. This was already achieved as of August 31, 2026. • Engage technical accounting assistance for leases, contributed facilities, and revenue recognition. Target date: November 30, 2026. • Add fixed-asset procedures to evaluate asset classifications, useful lives, lease terms, and depreciation and amortization. Target date: November 15, 2026. • Document the U.S. GAAP evaluation of lease arrangements and contributed or in-kind use of facilities. Target date: November 15, 2026. • Formalize procedures for PRDE funding advances, receivables, deferred revenue, and revenue recognition, including Cartas Constitutivas amendments. Target date: November 15, 2026. • Complete bank reconciliations starting with October’s accounting closing in Sage Intacc as part of the close, with evidence of timely review. Target date: November 2026. • Approve the updated policies and procedures manual. Target date: December 2026. • Deliver technical training to Finance Department staff on the updated procedures. Target date: November 30,2026These initiatives, additional Finance Department resources, the new accounting platform, enhanced month-end closing procedures, updated policies and procedures, and continued technical training represent meaningful steps toward addressing the conditions described in the finding. Management will continue to monitor these measures and evaluate their effectiveness as they operate over time.
Loan Payment Compliance – Criteria: Ecology Education, Inc. (the School) is required to make monthly payments of principal and interest towards its loan balance in accordance with the United States Department of Agriculture Requirements. Condition: During 2025, the School was in monetary default und...
Loan Payment Compliance – Criteria: Ecology Education, Inc. (the School) is required to make monthly payments of principal and interest towards its loan balance in accordance with the United States Department of Agriculture Requirements. Condition: During 2025, the School was in monetary default under the terms of its loan agreement due to missed loan payments. Cause: The School was unable to fulfill loan payment requirements as a result of cash flow challenges encountered during the fiscal year. Effect: Loan payments are not made in accordance with federal guidelines. Recommendation: We recommend that management should develop and implement stronger controls to ensure compliance with future loan payment requirements. Responsible Parties: Drew Dumsch (President/CEO) and Anthony Pyatt (Business Manager). Corrective Action Taken or Planned: Continuing to work with USDA Rural Development on workout plan including implementing stronger controls to ensure compliance with future loan payment requirements. This includes implementing Year 3 of the Fiscal Strategy Plan as part of the workout agreement.
Reserve Account Compliance – Criteria: Ecology Education, Inc. (the School) is required to fund certain loan reserve accounts on a monthly basis in accordance with requirements prescribed by the United States Department of Agriculture. Condition: During 2025, the School did not fulfill its loan rese...
Reserve Account Compliance – Criteria: Ecology Education, Inc. (the School) is required to fund certain loan reserve accounts on a monthly basis in accordance with requirements prescribed by the United States Department of Agriculture. Condition: During 2025, the School did not fulfill its loan reserve requirements, causing the School to be in default of its loan agreement. Cause: The School was unable to fulfill the reserve requirements as a result of cash flow challenges encountered during the fiscal year. Effect: Reserve requirements are not fulfilled in accordance with federal guidelines. Recommendation: We recommend that management should develop and implement a systematic process to restore and maintain the required levels to maintain compliance with reserve requirements going forward. Responsible Parties: Drew Dumsch (President/CEO) and Anthony Pyatt (Business Manager). Corrective Action Taken or Planned: Continuing to work with USDA Rural Development on workout plan including implementing a systematic process to restore and maintain on a monthly basis the required levels to maintain compliance with reserve requirements going forward.
Significant Deficiency in Internal Control over Financial Reporting Recommendation: We recommend the Authority strengthen its monitoring procedures over inspection scheduling and completion to ensure all units receive required HQS inspections within the applicable two-year cycle. Management should i...
Significant Deficiency in Internal Control over Financial Reporting Recommendation: We recommend the Authority strengthen its monitoring procedures over inspection scheduling and completion to ensure all units receive required HQS inspections within the applicable two-year cycle. Management should implement periodic supervisory reviews of inspection tracking reports and discontinue reliance on landlord self-certifications except where explicitly permitted by current HUD guidance. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Authority is reviewing procedures to ensure HQS inspections are completed before the two year mark. Name(s) of the contact person(s) responsible for corrective action: Ron Rawe, CFO Planned completion date for corrective action plan: December 31, 2026
Management acknowledges the finding and will strengthen its subaward and subrecipient monitoring processes. Baltimore Tree Trust (the Organization) will revise its subaward agreement template to require the inclusion of the UEI, FAIN, and Assistance Listing Number for each applicable subaward. The r...
Management acknowledges the finding and will strengthen its subaward and subrecipient monitoring processes. Baltimore Tree Trust (the Organization) will revise its subaward agreement template to require the inclusion of the UEI, FAIN, and Assistance Listing Number for each applicable subaward. The revised template will be reviewed and approved by management before being used for future subawards. The Organization will also develop and implement written policies and procedures for subrecipient monitoring. The procedures will establish responsibilities and requirements for evaluating subrecipients, executing and documenting subaward agreements, identifying applicable Federal award information, performing risk assessments, monitoring subrecipient compliance, and maintaining supporting documentation. For existing subawards, management will review the applicable agreements to determine whether required Federal award information is complete and will obtain or document any missing information as appropriate. Management acknowledges the finding and will strengthen procedures for identifying and reporting first tier subawards subject to Federal reporting requirements. The Organization will establish a written process requiring personnel to review each subaward to determine whether it meets the applicable reporting threshold and other reporting requirements. For subawards that meet the reporting requirements, designated personnel will complete the required reporting within the applicable timeframe. Management will establish a review and approval process to verify that required reports have been submitted accurately and timely. The Organization will maintain documentation supporting each required subaward report, including evidence of the subaward amount, determination that the reporting threshold was met, date of submission, confirmation of submission, and any other applicable supporting documentation. This documentation will be maintained with the Federal award records and made available for audit. Management will provide training for personnel responsible for administering and monitoring Federal awards. A subrecipient monitoring and reporting checklist will be implemented to document completion of required activities and ensure that applicable Federal award information and supporting documentation are maintained.
We concur with the findingrelated to deficiencies in our approval process and thresholds set bycompany policies. We have documented our approval policies accordingly and implemented anew approval system using email starting in the fourth quarter of fiscal year 2026. This systemis designed to accurat...
We concur with the findingrelated to deficiencies in our approval process and thresholds set bycompany policies. We have documented our approval policies accordingly and implemented anew approval system using email starting in the fourth quarter of fiscal year 2026. This systemis designed to accurately capture approvals and expenses by project/grant. Comprehensivetraining sessions will be conducted forall affected employees to ensurethey are proficient in using the new system. We will also research other possible technologies to assist with thedocumentation of approvals.
Finding 1239498 (2025-002)
Material Weakness 2025
FINDINGS – FEDERAL AWARDS SIGNIFICANT DEFICIENCY 2025-002 Untimely filing of certain VA SSVF quarterly and year end annual reports. Recommendation: Management should ensure copies of reports for all funders are retained. Action Taken: Management concurs with the findings and recommendation. Going fo...
FINDINGS – FEDERAL AWARDS SIGNIFICANT DEFICIENCY 2025-002 Untimely filing of certain VA SSVF quarterly and year end annual reports. Recommendation: Management should ensure copies of reports for all funders are retained. Action Taken: Management concurs with the findings and recommendation. Going forward, staff will download and save a pdf of quarterly reports to include date submitted to SharePoint folder. This will be tracked and reported in the grants tracking log. Name of responsible person: Kim Fedrick, Chief Programs Officer Anticipated completion date: Q4 2026 If the there are any questions regarding this plan, please contact Jeff Carr, CEO [ jeff.carr@jvs-socal.org]. Sincerely yours, Name: Ernesto Calzado Title: CFO
Finding 1239496 (2025-001)
Material Weakness 2025
Audit period: For the Year Ended December 31, 2025 The findings for the Year Ended December 31, 2025, from the schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the number assigned in the schedule. FINDINGS – FEDERAL AWARDS SIGNIFICANT DEFICIE...
Audit period: For the Year Ended December 31, 2025 The findings for the Year Ended December 31, 2025, from the schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the number assigned in the schedule. FINDINGS – FEDERAL AWARDS SIGNIFICANT DEFICIENCY 2025-001 No process is in place to compare or revise budgeted amounts to allocate time to Federal programs vs. actual time recorded on manual timesheets. [repeat finding 2023-005] Recommendation: Management should establish procedures to ensure payroll costs charged to federal awards are supported by records that accurately reflect the work performed. This should include reviewing available project-level labor data, reconciling payroll allocations to supporting time and effort records, and updating allocations as necessary for each pay period to ensure costs are charged to the appropriate programs and funding sources based on actual activity here. Action Taken: We agree with the findings. During 2025, JVS implemented enhancements within Paylocity that allow employees to electronically review and update their labor allocations, strengthening internal controls over payroll cost allocation. Management has also enhanced its review and monitoring procedures surrounding labor allocation changes. While these improvements have significantly reduced the risk of misallocations, remediation efforts remain ongoing, including implementing a new payroll software in September 2026. JVS continues to refine its processes to ensure labor costs are accurately recorded and that any necessary allocation corrections are identified and addressed through timely review and adjustment procedures. Name of responsible persons: Yashica Ansberry Director of People & Culture Fahim Hakami Senior Accountant Anticipated completion date: Q4 2026
Corrective Action Planned: Management acknowledges the finding related to the untimely completion and submission of the federal Single Audit reporting package. Management will complete internal compliance and administrative procedures in advance of the applicable federal filing deadline. Management ...
Corrective Action Planned: Management acknowledges the finding related to the untimely completion and submission of the federal Single Audit reporting package. Management will complete internal compliance and administrative procedures in advance of the applicable federal filing deadline. Management will address delays as they arise to facilitate the timely completion of the audit and submission of the reporting package in accordance with applicable federal requirements. Name(s) of Contact Person(s) Responsible for Corrective Action: VP Accounting and Corporate Controller Anticipated Completion Date: June 30, 2027, the submission deadline for the fiscal year 2026 Federal Single Audit report
Corrective Action Planned: Management acknowledges the finding related to the lack of timely review and follow-up of subrecipient Single Audit reports. In FY2026, management has updated their policies and procedures as appropriate related to subrecipient monitoring and will perform such updated proc...
Corrective Action Planned: Management acknowledges the finding related to the lack of timely review and follow-up of subrecipient Single Audit reports. In FY2026, management has updated their policies and procedures as appropriate related to subrecipient monitoring and will perform such updated procedures as required. Name(s) of Contact Person(s) Responsible for Corrective Action: VP Accounting and Corporate Controller Anticipated Completion Date: Completion December 31, 2026
Corrective Action Planned: Management acknowledges the finding related to the lack of formal documentation maintained evidencing a hindsight review of employee working hours to verify alignment between actual hours. The Effort Reporting requirement is now met with a revamped process that includes an...
Corrective Action Planned: Management acknowledges the finding related to the lack of formal documentation maintained evidencing a hindsight review of employee working hours to verify alignment between actual hours. The Effort Reporting requirement is now met with a revamped process that includes an updated institutional effort reporting policy and development of a newly developed effort reporting workflow that aligned with the relatively recent (April 2024) implementation of new ERP system Oracle. This new process applies to those team members who have effort either charged, in-kind or cost-shared, to a grant funded project. The new Effort Reporting workflow formally went live institution wide on October 1, 2025, with a pilot implementation done in September 2025. Effort reporting is conducted monthly and requires a preview of all team members with effort allocated to grants from an automated report. Each report is reviewed for accuracy and then each line item is entered into a Smartsheet format for automated delivery of an individual effort report to each team member. A mid-month report is automated to flag and identify upcoming end dates of grant funding in preparation of the next month effort report. This mid-month review is necessary to adjust for any edits needed in preparation for the next month effort report workflow. In addition, the new process allows for follow up with escalation if individual effort report(s) are not signed by respective team member(s) within the prescribed monthly due date. Name(s) of Contact Person(s) Responsible for Corrective Action: Director Office for Sponsored Programs Anticipated Completion Date: Completion September 30, 2025, active as of October 1, 2025
2025-004 Eligibility Section 8 Project-Based Cluster Material Weakness in Internal Control over Compliance Material Noncompliance Condition: Out of an approximate population of 240 of tenants, 12 tenant files were tested, and the following deficiencies were noted: Twelve files did not have annual re...
2025-004 Eligibility Section 8 Project-Based Cluster Material Weakness in Internal Control over Compliance Material Noncompliance Condition: Out of an approximate population of 240 of tenants, 12 tenant files were tested, and the following deficiencies were noted: Twelve files did not have annual recertifications or a required annual certification performed during the year. Auditor’s Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regard to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample. Action Taken: Management Response / Action Taken The Authority agrees with the finding and acknowledges that timely annual recertifications and certifications are critical to maintaining compliance with program eligibility requirements. As stated in the previous findings pertaining to recertifications, the Authority will continue to strengthen internal controls and monitoring procedures to ensure annual recertifications and certifications are completed timely and appropriately documented. The Authority is actively working to bring all required recertifications and certifications current and expects to be fully current by December 31, 2026. Management believes the corrective actions implemented during 2026 will be more fully reflected in the results of the 2026 and 2027 compliance audits. Responsible Party: Senior Vice President of Voucher Processing Time Frame: Corrective actions were initiated during 2026 and are ongoing. The Authority expects all required recertifications and certifications to be current by December 31, 2026, with continued monitoring and oversight through 2027. Management expects the full impact of these corrective actions to be reflected in the 2026 and 2027 compliance audits. While the Authority recognizes that the 2025 audit reflects a period of significant organizational, operational, and system transition, management is confident that the corrective actions implemented throughout 2026 have addressed the underlying issues identified. The Authority expects the benefits of these improvements to be reflected in the 2026 audit and future audit periods.
2025-003 Eligibility Housing Voucher Cluster Material Weakness in Internal Control over Compliance Material Noncompliance Condition: Out of an approximate population of 1,500 Housing Voucher Cluster tenants we tested 18 tenants and the following deficiencies were noted: Eighteen files did not have a...
2025-003 Eligibility Housing Voucher Cluster Material Weakness in Internal Control over Compliance Material Noncompliance Condition: Out of an approximate population of 1,500 Housing Voucher Cluster tenants we tested 18 tenants and the following deficiencies were noted: Eighteen files did not have annual recertifications or a required annual certification performed during the year. Auditor’s Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regard to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample. Action Taken: Management Response / Action Taken The Authority agrees with the finding and acknowledges that timely annual recertifications and certifications are critical to maintaining compliance with program eligibility requirements. During 2026, the Authority implemented enhanced tracking and monitoring procedures for annual recertifications, including management review of outstanding certifications and recertifications, additional staff training regarding compliance requirements, and increased oversight of file processing activities. The Authority will continue to strengthen internal controls and monitoring procedures to ensure annual recertifications and certifications are completed timely and appropriately documented. The Authority is actively working to bring all required recertifications and certifications current and expects to be fully current by December 31, 2026. Management believes the corrective actions implemented during 2026 will be more fully reflected in the results of the 2026 and 2027 compliance audits. Responsible Party: Senior Vice President of Voucher Processing Time Frame: Corrective actions were initiated during 2026 and are ongoing. The Authority expects all required recertifications and certifications to be current by December 31, 2026, with continued monitoring and oversight through 2027. Management expects the full impact of these corrective actions to be reflected in the 2026 and 2027 compliance audits.
2025-002 Eligibility Moving to Work Demonstration Program AL No. 14.881 Material Weakness in Internal Control over Compliance Material Noncompliance Condition: Out of an approximate population of 17,500 of Section 8 Housing Choice Voucher and 2,200 Low Rent Public Housing tenants the following defic...
2025-002 Eligibility Moving to Work Demonstration Program AL No. 14.881 Material Weakness in Internal Control over Compliance Material Noncompliance Condition: Out of an approximate population of 17,500 of Section 8 Housing Choice Voucher and 2,200 Low Rent Public Housing tenants the following deficiencies were noted: Section 8 Housing Choice Voucher (a total of 19 tenants selected for testing): Nineteen files did not have annual recertifications or a required annual certification performed during the year. Low Rent Public Housing (a total of 40 tenants selected for testing): One file did not have a required annual recertification performed during the year. Auditor’s Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regard to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample. Action Taken: Management Response / Action Taken The Authority agrees with the finding and acknowledges that timely annual recertifications and certifications are critical to maintaining compliance with program eligibility requirements. During 2026, the Authority implemented enhanced tracking and monitoring procedures for annual recertifications, including management review of outstanding certifications and recertifications, additional staff training regarding compliance requirements, and increased oversight of file processing activities. Management also reviewed the affected files and evaluated the potential impact of the identified deficiencies on the broader population of tenant files. The Authority is actively working to bring all required recertifications and certifications current and expects to be fully current by December 31, 2026. Management believes the corrective actions implemented during 2026 will be more fully reflected in the results of the 2026 and 2027 compliance audits. Responsible Party: Senior Vice President of Voucher Processing Time Frame: Corrective actions were initiated during 2026 and are ongoing. The Authority expects all required recertifications and certifications to be current by December 31, 2026, with continued monitoring and oversight through 2027. Management expects the full impact of these corrective actions to be reflected in the 2026 and 2027 compliance audits.
View of Responsible Officials: Management acknowledges the finding and agrees that documentation supporting compliance with procurement requirements was not consistently retained. For the seven disbursements selected for testing, management had established longstanding relationships with the vendors...
View of Responsible Officials: Management acknowledges the finding and agrees that documentation supporting compliance with procurement requirements was not consistently retained. For the seven disbursements selected for testing, management had established longstanding relationships with the vendors utilized and, in several instances, there were a limited number of vendors capable of providing the specialized equipment and services acquired for the project. Management indicated that procurement procedures were performed during the vendor selection process, including obtaining and evaluating quotes, discussing vendor alternatives, and visiting other healthcare organizations to assess the quality and suitability of certain products before making purchasing decisions. However, many of these activities occurred several years earlier, at the outset of the construction project, and supporting documentation was not maintained in accordance with the Organization's procurement policy and federal documentation requirements. Management agrees with the finding and will implement procedures to ensure procurement activities are conducted and documented in accordance with the Organization's procurement policy and Uniform Guidance requirements. Corrective actions will include establishing a centralized procurement file, providing additional training to personnel responsible for purchasing activities, and implementing supervisory review procedures to ensure that competitive procurement and documentation requirements are consistently met and appropriately retained.
2025-003 Condition: Deficiencies Noted in Small Purchases Procurement Steps to resolve: Management agrees with the audit finding and the auditor’s recommendation. We will implement procedures and changes to ensure that this finding will be cleared by the subsequent fiscal year audit. Individual resp...
2025-003 Condition: Deficiencies Noted in Small Purchases Procurement Steps to resolve: Management agrees with the audit finding and the auditor’s recommendation. We will implement procedures and changes to ensure that this finding will be cleared by the subsequent fiscal year audit. Individual responsible for correction: Mr. Damon Dunbar, Executive Director Timeframe: As of December 31, 2026
2025-002 Condition: Deficiencies Noted in Cash Disbursements Steps to resolve: Management agrees with the audit finding and the auditor’s recommendation. We will implement procedures and changes to ensure that this finding will be cleared by the subsequent fiscal year audit. Individual responsible f...
2025-002 Condition: Deficiencies Noted in Cash Disbursements Steps to resolve: Management agrees with the audit finding and the auditor’s recommendation. We will implement procedures and changes to ensure that this finding will be cleared by the subsequent fiscal year audit. Individual responsible for correction: Mr. Damon Dunbar, Executive Director Timeframe: As of December 31, 2026
2025-001 Condition: Deficiencies Noted in Maintenance of Tenant Files Steps to resolve: Management agrees with the audit finding and the auditor’s recommendation. We will implement procedures and changes to ensure that this finding will be cleared by the subsequent fiscal year audit. Individual resp...
2025-001 Condition: Deficiencies Noted in Maintenance of Tenant Files Steps to resolve: Management agrees with the audit finding and the auditor’s recommendation. We will implement procedures and changes to ensure that this finding will be cleared by the subsequent fiscal year audit. Individual responsible for correction: Mr. Damon Dunbar, Executive Director Timeframe: As of December 31, 2026
Finding 2025-002 Finding type: Significant deficiency. Condition: Downstreet purchased a new property for approximately $5 million and did not record the asset in its general ledger. Additionally, receipts of grant funding were recorded as a reduction in construction-in-progress of approximately $1....
Finding 2025-002 Finding type: Significant deficiency. Condition: Downstreet purchased a new property for approximately $5 million and did not record the asset in its general ledger. Additionally, receipts of grant funding were recorded as a reduction in construction-in-progress of approximately $1.38 million rather than an asset and related grant revenue. As a result, property, plant and equipment assets and grant revenue were understated. Management concurrence: Management concurs with this finding. Corrective action plan: Downstreet Housing & Community Development will implement a formal reconciliation and review process for property acquisitions and development activity. For each acquisition or significant development project, Finance will obtain and review the closing documents, development records, funding agreements, grant activity, and construction-in-progress detail to identify all transactions that must be recorded in the general ledger. Property acquisition costs, subsequent improvements, construction-in-progress, related liabilities, and grant revenue will be reconciled to the development project records at key project stages and as part of the year-end closing process. A supervisory finance official will review the reconciliation and supporting documentation to verify that property costs and related funding have been recorded completely, accurately, and in the appropriate accounts and accounting period. Projected completion date: December 31, 2026 Responsible official: Schuyler Anderson, CFO/COO
Finding 2025-001 Finding type: Significant deficiency. Federal award: 21.027 Coronavirus State and Local Fiscal Recovery Funds Passthrough organizations: 21.027 (Agency of Commerce and Community Development, Town of Waterbury, City of Barre, Vermont Department of Environmental Conservation) Conditio...
Finding 2025-001 Finding type: Significant deficiency. Federal award: 21.027 Coronavirus State and Local Fiscal Recovery Funds Passthrough organizations: 21.027 (Agency of Commerce and Community Development, Town of Waterbury, City of Barre, Vermont Department of Environmental Conservation) Condition: Organization’s draft Schedule of Expenditures of Federal Awards was missing certain awards. Management concurrence: Management concurs with this finding. Corrective action plan: Downstreet Housing & Community Development will strengthen its procedures for preparing and reviewing the Schedule of Expenditures of Federal Awards. Management will maintain a centralized listing of federal awards, including awards received directly and through pass-through entities, and will identify awards for which Downstreet provides funding to other organizations. At least annually, and as part of the year-end closing process, the listing will be reconciled to the general ledger, grant records, executed agreements, reimbursement activity, and amounts passed through to other entities. The completed SEFA and supporting reconciliation will be reviewed by a supervisory finance official before being provided to the auditors. The review will include verification of assistance listing numbers, pass-through entities, expenditures, and subrecipient or pass-through activity, as applicable. Projected completion date: December 31, 2026 Responsible official: Schuyler Anderson, CFO/COO
Finding 2025-004 Department of the Treasury, Passed Through the State of Michigan Federal Financial Assistance Listing 21.029, CV0019120, 2025 COVID-19 – Coronavirus Capital Projects Fund Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Noncom...
Finding 2025-004 Department of the Treasury, Passed Through the State of Michigan Federal Financial Assistance Listing 21.029, CV0019120, 2025 COVID-19 – Coronavirus Capital Projects Fund Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Finding Summary: During the course of the engagement, it was identified that the Cooperative’s written policy did not address the requirements of 2 CFR sections 200.318 through 200.327. In addition, the Cooperative did not follow procurement, suspension, and debarment procedures required under the Uniform Guidance prior to entering into contracts with vendors. Responsible Individuals: Kevin Mazure, Brad Essenmacher Corrective Action Plan: The Cooperative will update its written policy to include the requirements of 2 CFR sections 200.318 through 200.326. In addition, the Cooperative will maintain adequate supporting documentation and records to document history and methods of procurement, suspension, and debarment procedures performed to comply with these CFR sections. Anticipated Completion Date: December 31, 2026
Finding 2025-003 Department of the Treasury, Passed Through the State of Michigan Federal Financial Assistance Listing 21.029, CV0019120, 2025 COVID-19 – Coronavirus Capital Projects Fund Reporting Material Weakness in Internal Control over Compliance Finding Summary: The Cooperative has no formal r...
Finding 2025-003 Department of the Treasury, Passed Through the State of Michigan Federal Financial Assistance Listing 21.029, CV0019120, 2025 COVID-19 – Coronavirus Capital Projects Fund Reporting Material Weakness in Internal Control over Compliance Finding Summary: The Cooperative has no formal review process for the quarterly reports, which could result in a material misstatement of the Cooperative’s schedule of expenditures of federal awards. Responsible Individuals: Kevin Mazure, Brad Essenmacher Corrective Action Plan: The Cooperative will implement a formal review process for the quarterly reports, ensuring there is adequate segregation of duties and proper oversight. Anticipated Completion Date: December 31, 2026
Eligibility Public Housing Operating Fund Material Weakness in Internal Control Material Noncompliance Condition: Out of an approximate population of 360 Public Housing tenants, we tested 40 tenants and the following deficiencies were noted: • 30 files did not have an inspection performed during the...
Eligibility Public Housing Operating Fund Material Weakness in Internal Control Material Noncompliance Condition: Out of an approximate population of 360 Public Housing tenants, we tested 40 tenants and the following deficiencies were noted: • 30 files did not have an inspection performed during the required period; • 9 files did not have proper identification or birth certificates for members of the household; • 8 files did not have a flat rent option sheet available; • 8 files had the incorrect utility allowance utilized; • 7 files did not have 214 documentation available; • 5 files did not have internal quality control documentation available; • 4 files did not have a 9886 form signed within the required period; and, • 1 file did not have a prior year annual recertification available. Auditor Recommendations: The Authority should re-evaluate their established procedures and controls in place to ensure full compliance in regard to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample. Action Planned in Response to Finding: In response to the identified deficiency, we are taking the following immediate steps to address the situation: • Implement a new review process, 2nd review of files, and quarterly internal audit of tenant files. • Improvement of the tenant file checklist to ensure all required documents are consistently filed. • Corrections will be made to the tenant ledgers and rent payments will be adjusted retroactively if necessary. • Revise the operations procedures for rent calculations, payment processing, and ledger reconciliations. • Conduct refresher training for the LIPH staff. • Conduct refresher training for inspection staff on timely inspection requirements. • Implement an automated tracking system with alerts for upcoming and overdue inspections. • Increase staff and adjust workload to meet inspection timelines. Name of Responsible Person: Jimmey Garry, Interim Temporary Portfolio Operations Manager (LIPH) Projected Completion Date: Tested file corrections November 30, 2026; Population Review March 31, 2027
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