Finding 29954 (2022-001)

Finding 2022-001 - U.S. Department of Housing and Urban Development, Supportive Housing for the Elderly (Section 202), Assistance Listing #14.157 Statement of Condition: The Corporation did not submit its annual financial report, certified by a Certified Public Accountant, to HUD within 90 days following of the end of the fiscal year December 31, 2021. Criteria: HUD requirements, under the Uniform Financial Reporting Standards for HUD Housing Programs; Final Rule, and the Regulatory Agreement require that the Project's annual financial statements report be submitted to HUD within 90 days following the end of each fiscal year. Effect: Noncompliance with HUD regulations and the possibility that the Project could be subject to criminal and civil monetary penalties. Cause: The completion of the audit for the fiscal year ended December 31, 2021 was delayed due to the lack of cash flow to pay prior years' audit expense. Context: A test was performed to review the most recent fiscal year audit submission to HUD. The annual financial statement report for the fiscal year December 31, 2021 was found to have not been submitted to HUD within 90 days following the end of the fiscal year December 31, 2021. Questioned Costs: N/A Recommendation: We recommend management submit the annual financial report, certified by a Certified Public Accountant, each year going forward within 90 days following the fiscal year end. We also recommend that the project request funds from replacement reserve to fund the annual audit expense. Views of Responsible Officials and Corrective Action Plan: Management acknowledges the annual financial report, certified by a Certified Public Accountant, for the year ended December 31, 2021 was not submitted to HUD within the required due date. On May 2, 2022, management received authorization from HUD to take a temporary loan from the replacement reserve to pay the prior years' audit expenses owed. Management will provide additional oversight to ensure the annual financial reports are submitted each fiscal year going forward within required due dates. The annual financial report for the fiscal year ended December 31, 2021 was submitted to HUD on July 27, 2022.