Finding Text
Statement of Condition: The auditors noted that the entity did not submit its financial statements to HUD within the required 90-day timeframe. For the fiscal year ended 12/31/2025, the entity’s financial statements and related reporting package were submitted after the required deadline. Criteria: HUD reporting requirements generally require auditees to submit their financial statements and related reports within 90 days after fiscal year-end (or within the applicable required submission timeframe) to ensure timely reporting and oversight. Context: During the audit of the fiscal year ended 12/31/2025, the auditors noted the entity’s financial statement submission occurred after the required 90-day deadline. Cause: According to management, the entity experienced a lack of sufficient accounting personnel to ensure the books and records were maintained timely in accordance with generally accepted accounting principles (GAAP) and to complete the year-end closing and reporting package within required timeframes. Effect: Failure to submit required financial statements timely results in noncompliance with HUD reporting requirements and reduces the timeliness of financial information available to HUD and other users for oversight and decision-making. This delay may also indicate a deficiency in internal control over financial reporting and financial close processes, which could rise to the level of a significant deficiency depending on the auditor’s evaluation. Recommendation: Management should evaluate staffing levels and competencies within the accounting function and implement a formal closing and reporting timeline to support timely preparation and submission of financial statements and related HUD reporting. Management should also establish monitoring controls (e.g., supervisory review, milestone tracking, and escalation procedures for delays) to ensure required submissions are completed within applicable deadlines. Management Response: Management noted the finding was caused partially by the change in management company and the delayed access to REAC caused by the change. Management now has the required access and will work to ensure the books are reconciled and closed timely to ensure compliance with HUD financial statement requirements in future periods