Finding 1131260 (2024-002)

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 223(f) Mortgage Insurance for the Purchase or Refinance of Existing Multi-Family Housing Units Assistance Listing Number: 14.155 Federal Award Identification Number and Year: 092-EH098-WAC-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. Chaska Manor dba: Talheim should have internal controls designed to ensure compliance with those provisions. Condition: During our testing, we noted that Chaska Manor dba: Talheim did not have adequate internal controls designed to ensure deposits held over FDIC limits were monitored quarterly to ensure consistency with the minimally acceptable ratings as established by the Government National Association. Questioned costs: None. Context: During our testing, it was noted that Chaska Manor dba: Talheim operating account was over the FDIC limits and did not have documentation showing that the Project monitored the institution’s rating on a quarterly basis. Cause: Chaska Manor dba: Talheim was unaware of this requirement. Effect: Noncompliance with the HUD regulatory agreement. Recommendation: We recommend that management develop procedures to ensure requirements are monitored, documented, and reviewed to ensure compliance with the HUD regulatory agreement. Views of responsible officials: There is no disagreement with the audit finding.