Finding 1156138 (2024-003)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
$1
Year
2024
Accepted
2025-09-29
Audit: 368559
Organization: Sunray Communities, Inc. (TX)
Auditor: M Group LLP

AI Summary

  • Issue: The Company continued to make monthly deposits into the replacement reserve despite having HUD approval to suspend them for 2024.
  • Requirements Impacted: HUD regulations require deposits only if not suspended; the Company did not follow this guideline.
  • Follow-Up: The Company should monitor deposits closely and formally request HUD approval to withdraw the excess deposits made in 2024.

Finding Text

Finding #2024-003: Supportive Housing for the Elderly, Assistance Listing 14.157 Type of Finding: Significant deficiency Condition: At December 2023, the Company obtained approval from HUD to suspend replacement reserve deposits for twelve months beginning January 2024. However, the Company continued to make the deposits into the replacement reserve during 2024. Criteria: The HUD regulatory agreement requires the Company to make 12 monthly deposits into the replacement reserve account unless HUD approves the suspension. Effect: The Company had obtained approval to suspend the HUD deposits, however, the Company made the monthly reserve deposits. Questioned Cost: $14,400 Cause: New property management company Repeat Finding: Yes Recommendation: The Company should monitor the monthly deposits and should request an approval from HUD to withdrawal the 2024 deposits. Auditor’s Comment: During December 2023, the Company obtained approval from HUD to suspend monthly deposits to the replacement reserve account for 2024 as it was determined that the replacement reserve account was overfunded. The property management company continued to make the monthly deposits. The property management company plans to request a withdrawal from the replacement reserve.

Corrective Action Plan

CORRECTIVE ACTION PLAN Name and Number of the Project: Sunray Communities, Inc. No. 112-EE003 Audit Firm: M Group, LLP Audit Period: The year ended December 31, 2024 Compliance Review A. Comments on Findings and Recommendations We concur with the findings and recommendations of our auditors regarding our noncompliance as cited in the accompanying Schedule of Findings and Questioned Costs. Actions Taken FINDING 2024-003: Supportive Housing for the Elderly, Assistance Listing 14.157 CORRECTIVE ACTION COMPLETED: HUD approved the suspension of monthly deposits to the replacement reserve account for 2024 due to the account being overfunded in prior years. The Company has requested from HUD to approve a withdrawal of $14,400 to reimburse the property for deposits made during the approved suspension of payments. We have prepared the corrective action plan as required by the standards applicable to financial statements contained in Government Auditing Standards and by the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards. Any questions regarding the above corrective action plan should be directed to Ms. Natalie Bastien, Vice President, RPM Living.

Categories

Questioned Costs Procurement, Suspension & Debarment HUD Housing Programs Significant Deficiency

Other Findings in this Audit

  • 1156136 2024-001
    Material Weakness Repeat
  • 1156137 2024-002
    Material Weakness Repeat
  • 1156139 2024-004
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $186,766