Finding Text
Assistance Listing (Federal award identification number and year): LIHPRHA Capital Grant, Assistance Listing No. 14.122, 122-44641 and 1996; Mortgage Insurance Rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate, Assistance Listing No. 14.135, 122-35766 and 2024 Auditor non-compliance code: Z - Other Finding resolution status: In process Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Statistically valid sample: N/A Name of Federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: N/A Statement of condition 2025-005: The Corporation's accounting books and records as submitted for audit included certain accounts which were not presented in accordance with accounting standards generally accepted in the United States of America ("GAAP"). As a result, audit adjustments provided by management were required to present the June 30, 2025 financial statements in accordance with GAAP. Criteria: Pursuant to the HUD Regulatory Agreement and LIHPRHA Capital Grant, the books and records of the Company are required to be kept in accordance with the requirements of HUD, which includes adequate design and monitoring of controls to safeguard the Corporation's assets. Chapter 2 of the Financial Operations and Accounting Procedures of Insured Multi-Family Projects Handbook (Handbook 4370.2 Rev.1) provides the accounting and financial operations requirements of a HUD insured multi-family property including: maintenance of books and records, completeness and accuracy of books and records, and an auditable paper trail. Effect: The Corporation is not in compliance with the terms of the HUD Regulatory Agreement and LIHPRHA Capital Grant. Audit adjustments provided by management were required to present the June 30, 2025 financial statements in accordance with GAAP. Cause: Certain reconciliations were not completed or reviewed timely which resulted in unrecorded journal entries. Recommendation: Management should review the internal controls to ensure that the accounting software allows for timely recording of information and that a timely review of the reconciliations is completed by another accountant not responsible for the month end close. Management's response: Management concurs with the finding and the auditor's recommendation. The accounting software provider is being changed and a new system to indicate review and approval of the month end closing process will be implemented.