Finding 1166115 (2025-001)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2025
Accepted
2025-12-22
Audit: 376905
Organization: Ken-Crest Housing PA 2002, Inc. (PA)

AI Summary

  • Core Issue: Ken-Crest Housing did not maintain an interest-bearing project fund account as required by HUD regulations.
  • Impacted Requirements: 24 CFR 891.400(e) mandates that all project funds must be deposited in an interest-bearing account.
  • Recommended Follow-Up: Ensure the project fund account is interest-bearing moving forward and monitor compliance with HUD requirements.

Finding Text

Finding 2025-001: Special Tests and Provisions – Project Funds Information on the Federal Program: U.S. Housing of Urban Development (HUD) -14.181 Supportive Housing for Persons with Disabilities; FAIN #034HD0072; July 1, 2024 – June 30, 2025. Finding Type: Significant Deficiency Criteria: In accordance with 24 CFR 891.400(e), a separate interest-bearing project fund account shall be maintained in a depository or depositories which are members of the Federal Deposit Insurance Corporation or National Credit Union Share Insurance Fund and all tenant payments, charges, income and revenues arising from project operation or ownership shall be deposited to this account. Condition and Context: During our testing, we noted that the project fund account used by Ken-Crest Housing PA 2002, Inc., HUD Project No. 034-HD072-WDD was not an interest-bearing account. Cause: Subsequent to the initial rental assistance contract, changes to HUD regulations resulted in the requirement that the project fund account be an interest-bearing account. This change was an oversight by Ken-Crest Housing PA 2002, Inc., HUD Project No. 034-HD072-WDD’s management. Effect or Potential Effect: Project funds would not earn interest in accordance with HUD requirements. Questioned Costs: None Recommendation: We recommend that Ken-Crest Housing PA 2002, Inc., HUD Project No. 034-HD072-WDD utilize an interest-bearing account for project funds in accordance with HUD requirements. Management’s Response: Although the Ken-Crest Housing PA 2002, Inc., HUD Project No. 034-HD072-WDD did not use an interest-bearing account for project funds during the year ended June 30, 2025. In July 2025, management opened an interest-bearing account and all Project funds were transferred into that account. Planned Implementation Date of Corrective Action: July 2025 \Person Responsible for Corrective Action: Chief Financial Officer

Corrective Action Plan

Person Responsible for Corrective Action: Chief Financial Officer CORRECTIVE ACTION PLAN U.S. Department of Housing and Urban Development Ken-Crest Housing PA 2002, Inc. ("the Organization") respectfully submits the following corrective action plan for the report dated December 3, 2025. Name and address of independent public accounting firm: WithumSmith+Brown, P.C. 1835 Market Street, 3rd Floor Philadelphia, PA, 19103 Audit period: July 1, 2024 – June 30, 2025 The findings from the June 30, 2025 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the number assigned in the schedule. Significant Deficiency-Special Tests and Provisions – Project Funds Finding 2025-001 – Project funds are not held in an interest-bearing account. This is a repeat finding from June 30, 2024 (Finding 2004-001). 2025-001 Recommendation: We recommend that the Corporation utilize an interest-bearing account for project funds in accordance with HUD requirements. Action Taken: Although Ken-Crest Housing Del II, Inc. did not use an interest-bearing account for project funds during the year ended June 30, 2025, in July 2025, management opened an interest-bearing account and all Project funds were transferred into that account. Date of Completion: July 2025 Follow up on Prior Year’s Findings and Questioned Costs: Finding 2024-001 was not resolved during 2025, therefore, it has been reported as finding 2025-001 for the year ended June 30, 2025. In July 2025, management resolved this finding as all Project funds were transferred into an interest-bearing account. If the U.S. Department of Housing and Urban Development has questions regarding this plan, please contact Arthur Anderson, CFO at Arthur.anderson@kencrest.org.

Categories

Special Tests & Provisions HUD Housing Programs Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1166114 2025-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.181 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES $163,220