Finding 1229130 (2025-001)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2025
Accepted
2026-09-09

AI Summary

  • Core Issue: The Project made a $130,019 loan repayment without required HUD approval, repeating a previous finding.
  • Impacted Requirements: HUD mandates approval before any sponsor loan repayments are made.
  • Recommended Follow-up: The Sponsor should seek HUD's guidance on whether to retain or repay the unauthorized payment.

Finding Text

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT For the Hill Housing Facility FINDING 2025-001: SECTION 8, ASSISTANCE LISTING NUMBER 14.195 Condition: The Project repaid a portion of the sponsor loan payable (Due to Related Party) without obtaining HUD approval. The total amount of the unauthorized sponsor loan payment was $130,019. This is a repeat of Finding 2024-001. Criteria: HUD approval should be obtained prior to making a sponsor loan repayment. Effect: The Project's cash balance is $130,019 less than it should be. Context: The Sponsor loan payable at December 31, 2025 was tested. The test determined that a portion of the sponsor loan was repaid without obtaining HUD approval. Questioned Costs - $130,019, Cause: The Project repaid a portion of the sponsor loan without obtaining HUD approval. Recommendation: The Sponsor should contact HUD to obtain permission to retain the unauthorized sponsor loan payments. Views of Responsible Officials and Planned Corrective Actions: The Sponsor will work with HUD to detemine if the $130,019 needs to be paid back to the Project. Total - Department of Housing and Urban Development $130,019; Non-compliance code - R

Corrective Action Plan

Over the Rainbow Association and Subsidiaries respectfully submits the following corrective action plans for the year ended December 31, 2025. Name and address of independent public accounting firm: Baker Meinz & Associates, Ltd. 1000 Shelard Parkway, Suite 110 Minneapolis, MN 55426 Audit period: December 31, 2025 The findings from the December 31, 2025 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. Section A of the schedule, Summary of Audit Results, does not include findings and is not addressed. FINDINGS - FINANCIAL STATEMENT AUDIT - NONE; FINDINGS - FEDERAL AWARD PROGRAMS AUDIT DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT For the Hill Housing Facility - FINDING 2025-001: SECTION 8, ASSISTANCE LISTING NUMBER 14.195 SPONSOR LOAN PAYMENT WITHOUT HUD APPROVAL Condition: The Project repaid a portion of the sponsor loan without obtaining HUD approval. Recommendation: The Project should obtain HUD approval for the repayment of the sponsor loan. Action Taken: The Project agrees with the finding. The Sponsor will contact HUD to obtain permission to retain the unauthorized sponsor loan payments.

Categories

HUD Housing Programs Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 1229131 2025-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.181 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES $15.42M
14.195 PROJECT-BASED RENTAL ASSISTANCE (PBRA) $948,986
14.155 MORTGAGE INSURANCE FOR THE PURCHASE OR REFINANCING OF EXISTING MULTIFAMILY HOUSING PROJECTS $835,794