Finding 1130203 (2024-002)

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 207/223(f) HUD Insured Mortgage Assistance Listing Number: 14.155 Federal Award Identification Number and Year: 075-EH008-WAH-L8 - 2024 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and immaterial noncompliance Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires compliance with the provisions of regulatory agreement. Simeanna III, Inc. should have internal controls designed to ensure compliance with those provisions. Condition: During our testing, we noted that Simeanna III, Inc. did not have adequate internal controls designed to ensure replacement reserve deposits were updated based on the provisions of the regulatory agreement. Questioned Costs: $606 Context: During our testing, it was noted that Simeanna III, Inc. did not update the October through December 2024 replacement reserve deposits as prescribed in the regulatory agreement. Cause: Simeanna III, Inc. was unaware the bank did not update the October through December 2024 replacement reserve deposits. Effect: Noncompliance with the HUD regulatory agreement. Recommendation: We recommend that management develop procedures to ensure replacement reserve deposits are updated timely to ensure compliance with the HUD regulatory agreement. Views of responsible officials: There is no disagreement with the audit finding.