Finding 2455 (2023-001)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2023

Accepted

2023-11-27

Audit: 4230

Organization: Wpc Housing Corp. Danford Hall Apartments (MO)

Auditor: Welch and Associates LLC

AI Summary

Core Issue: Management failed to reconcile escrow balances with the general ledger, leading to non-compliance with GAAP.
Impacted Requirements: The Organization is not maintaining accurate books and records as required by the regulatory agreement.
Recommended Follow-Up: Management should improve the month-end closing process to ensure all accounts reconcile with source documents by September 30, 2023.

Finding Text

S3800-011: Program Information Federal Program: Mortgage Insurance for Rental and Cooperative Housing Section 221(d)(4) Federal Agency: Department of Housing and Urban Development (HUD) Assistance Listing #: 14.135 Pass-through Entity: None Federal Award Identification Number and Year: N/A Type of Compliance Finding: N - Special Tests and Provisions S3800-015: Type of Finding Financial Statement and Federal Awards S3800-016: Finding Resolution Status Unresolved S3800-017: Information on Universe Population Size N/A S3800-018: Sample Size Information N/A S3800-019: Identification of Repeat Finding and Finding Reference Number 2022-001 and 2021-001 S3800-020: Criteria The regulatory agreement requires that the Organization’s books and records are maintained in accordance with GAAP. S3800-030: Statement of Condition During our audit of the Organization’s fiscal year ended February 28, 2023 federal award program, we noted that management was not reconciling the escrow balances to the general ledger. Escrow accounts including reserve for replacement did not agree to the lender statement. The expenses were not capitalized as per the capitalization policy. S3800-032: Cause Management was not reconciling general ledger balances to supporting documentation. Management’s monthly closing process is inadequate. S3800-033: Effect or Potential Effect The Organization is not in compliance with requirements to maintain books and records according to GAAP. S3800-035: Auditor Non-Compliance Code S – Internal Control Deficiencies S3800-040: Questioned Costs None S3800-045: Reporting Views of Responsible Officials Management agrees with auditor’s finding. S3800-050: Context Management was not reconciling the financial statements to source documents. S3800-080: Recommendation As part of the month-end closing process, management should ensure that the accounts reconcile to source documents. S3800-090: Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations Concur S3800-130: Response Indicator Agree S3800-140: Completion Date or Proposed Completion Date September 30, 2023 S3800-150: Response See Corrective Action Plan

Corrective Action Plan

CORRECTIVE ACTION PLAN FOR THE YEAR ENDED FEBRUARY 28, 2023 Title 2, U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Subpart F, Section 511 – Audit Findings Follow-up requires the auditee to prepare a corrective action plan to address each audit finding included in the current year auditor’s reports. The Corrective Action Plan for Current Year Findings present our corrective action plan for the Financial Statement and/or Federal Award Findings described in the accompanying Schedule of Findings and Questioned Costs for the period ended February 28, 2023. Finding 2023-001 Responsible Party Name: Tamara Wallace Position: Executive Director – Management Agent Telephone Number: 816-233-4250 Federal Agency U.S. Department of Housing and Urban Development Federal Program Mortgage Insurance for Rental and Cooperative Housing (Section 221(d)(4)) Compliance Requirements N – Special Tests and Provisions Finding Type Financial Statement and Federal Awards Auditee’s Comment on Finding We agree with the auditors’ finding. Corrective Action We will ensure that the accounts reconcile to source documents as part of our month-end closing process. Anticipated Completion Date September 30, 2023

Other Findings in this Audit

578897 2023-001

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
14.135	Mortgage Insurance_rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate	$944,966