Finding 12422 (2022-001)

- Repeat Finding
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-05-14

AI Summary

  • Core Issue: The organization failed to deposit $81,489 into the residual receipts reserve within the required 90-day period after the fiscal year ended July 31, 2018.
  • Impacted Requirements: This non-compliance with HUD regulations indicates a lack of proper controls and procedures for timely deposits.
  • Recommended Follow-Up: Management should implement internal controls to ensure timely deposits and address the financial challenges affecting compliance.

Finding Text

Finding No. 2022-001; Federal Assistance Listing Number 14.157, Supportive Housing for the Elderly. Statement of Condition During the years ended July 31, 2019, 2020, 2021 and 2022, management did not make the required residual receipts reserve deposit in the amount of $81,489 within 90 days of year ended July 31, 2018, as required by HUD. The residual receipts amount has not been deposited as of the date of this report. Criteria Residual receipts reserve deposits should be made within 90 days of year end. Questioned Costs None Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement. Context Annual calculation was not prepared by the management agent, and accordingly, the required deposit was not made. The auditor notes that the deposit requirement was calculated with the inclusion of a subsidy receivable due from HUD that was not received until after the 90-day period; however, we also note that at the point in time when the subsidy was received the delinquent deposit should have been made and was not made. Cause Controls were not in place in 2019 to ensure that required residual receipts reserve deposits are made timely. Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. Auditor's Noncompliance Code: B - Failure to make required residual receipts deposits Reporting Views of Responsible Officials The property did not generate any positive operating cash in the 2021-2022 fiscal year and was not able to make the installment payments to the residual receipts. Additionally, there was a substantial increase in property operating expenses. Management is looking for forgiveness of the residual receipts deposit.

Corrective Action Plan

Finding 2022-001 ? Major Federal Award Programs Audit a. Comments on the Finding and Recommendation We concur with the auditors finding as follows: During the years ended July 31, 2019, 2020, 2021 and 2022, management did not make the required residual receipts reserve deposit in the amount of $81,489 within 90 days of year ended July 31, 2018, as required by HUD. The residual receipts amount has not been deposited as of the date of this report. b. Action(s) Taken or Planned on the Finding: The residual receipt account will be funded when funds are available.

Categories

HUD Housing Programs Cash Management Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $3.68M
14.195 Section 8 Housing Assistance Payments Program $821,219
14.870 Resident Opportunity and Supportive Services - Service Coordinators $28,297