Finding 30549 (2022-001)

- Repeat Finding
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2022-12-08
Audit: 24770
Organization: Kenwood Place I, Inc. (IN)
Auditor: Somerset CPAS PC

AI Summary

  • Core Issue: Monthly deposits of $581 to the replacement reserve account were not made as required by the Regulatory Agreement.
  • Impacted Requirements: Compliance with HUD regulations regarding replacement reserve deposits was not met.
  • Recommended Follow-Up: Ensure the delinquent deposit is made and implement a system to guarantee future compliance with deposit requirements.

Finding Text

Section 223(f) Loan Program, CFDA 14.155 Finding# 2022-001 Criteria: Pursuant to the Regulatory Agreement, monthly deposits to a reserve for replacement account must be made in the amount established by HUD. Statement of Condition: Replacement reserve deposits in the amount of $581 as of June 30, 2022 were not deposited into the account as required by the Regulatory Agreement. Cause: The mortgage servicer did not increase the monthly billings for replacement reserves on December 1, 2021 as required by HUD. The Company failed to notice and correct this oversight. Effect: The Company was not in compliance with the Regulatory Agreement relative to the required replacement reserve deposits. Auditor?s Non-Compliance Code: B - Owners must deposit replacement reserves monthly in the amount prescribed by HUD. Amount of Questioned Costs: $-0- Reporting Views of Responsible Officials: The Company will make the delinquent deposit subsequent to year end. Context: This was not a sampling audit procedure. Recommendation: Make the required delinquent deposit to the replacement reserve account and ensure that all future deposits are made as required by the Regulatory Agreement. Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations: Auditee agreed with auditor?s findings. Response Indicator: Accepted Completion Date: Open Response: Management will fund the delinquent deposit amount as soon as possible. Contact Person: Rod Ludwig

Corrective Action Plan

CORRECTIVE ACTION PLAN October 11, 2022 U.S. Department of Housing and Urban Development Multifamily Midwest Region Chicago Regional Center 77 West Jackson Boulevard Chicago, IL 60604 Kenwood Place I, Inc. respectfully submits the following corrective action plan for the year ended June 30, 2022. Name and address of independent public accounting firm: Somerset CPAs, P.C. 3925 River Crossing Pkwv, Suite 100, Indianapolis, IN 46240 Audit period: Year ended June 30, 2022 The findings from the June 30, 2022 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the number 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: U.S. Department of Housing and Urban Development Finding 2022-001: Section 223(f) Loan Program, CFDA 14.155 Recommendation: Make the required delinquent deposit to the replacement reserve account and ensure that all future deposits are made as required by the Regulatory Agreement. Action Taken: Management will make the required replacement reserve deposits as soon as possible and will ensure compliance in the future. If the U.S. Department of Housing and Urban Development has questions regarding this plan, please call Rod Ludwig at 574-968-9267. Sincerely yours, Rod Ludwig Bradley Company (Management Agent) Senior Managing Director

Categories

HUD Housing Programs Reporting Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
14.155 Section 223(f) of the National Housing Act $1.89M
14.182 Section 8 Housing Assistance Payments $418,959