Finding 38696 (2022-005)

Significant Deficiency
Requirement
N
Questioned Costs
$1
Year
2022
Accepted
2023-09-26
Audit: 46646
Auditor: M Group LLP

AI Summary

  • Core Issue: Security deposits for several Projects exceeded available cash, violating HUD regulations.
  • Impacted Requirements: HUD requires security deposits to be maintained in a separate trust account equal to or greater than the liability.
  • Recommended Follow-Up: Ensure all security deposits are deposited directly into the trust account to prevent future shortfalls; management has already corrected the issue.

Finding Text

Finding #2022-005: Section 221(d)(4) HUD Insured Loan, CFDA 14.135 and Section 8 Housing Assistance Payments Program CDFA 14.195 Condition: The liability for several Projects security deposits exceeded the security deposit cash account at December 31, 2022. Criteria: The HUD regulatory agreement requires the Company to maintain the security deposit in a trust account separate from other funds in an amount which at all times equals or exceeds the outstanding security deposit obligation. Effect: The Projects are in violation of their HUD/HAP contracts. Questioned Cost: $9,897 Cause: Oversight Recommendation: We recommend the Company deposit all security deposits directly into the trust account for security deposits in an amount sufficient to cover the security deposit liability. Management Views: Management is in agreement with the finding and will deposit the deficient funds into the respective Projects security deposit accounts. Status: Cleared. The Projects have deposited a total of $9,897 into their respective security deposit accounts. The security deposit shortfall has been corrected.

Corrective Action Plan

CORRECTIVE ACTION PLAN Name and Number of the Project: See below Audit Firm: M Group, LLP Audit Period: The year ended December 31, 2022 Projects: Waters at Berryhill, LP (HUD Project No. 054-35841) $2,995 Afton Gardens, LLC (FHA/Contract No. VA36L00002) $1,587 Spring Grove, LLC (FHA/Contract No. SC16L00003 and SC160056002) $4,214 Temple Court, LLC (FHA/Contract No. FL29A002001) $1,101 Compliance Review COMMENTS ON FINDINGS AND RECOMMENDATIONS We concur with the findings and recommendations of our auditors regarding our noncompliance as cited in the accompanying Schedule of Findings and Questioned Costs. ACTIONS TAKEN OR TO BE TAKEN FINDING 2022-005: Section 8 Housing Assistance Payments Program, CFDA: 14.195 Section 221(d)(4) HUD Insured Loan, CFDA 14.135 CORRECTIVE ACTION TO BE COMPLETED: The Projects listed above have deposited the amounts noted into their respective security deposit accounts. Finding CLEARED. We have prepared the corrective action plan as required by the standards applicable to financial statements contained in Government Auditing Standards and by the audit requirements of Title 2 US. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards. Any questions regarding the above corrective action plan should be directed to Mr. Michael N. Nguyen, President & CEO of Atlantic Housing Management, Inc.

Categories

Questioned Costs HUD Housing Programs Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 38694 2022-004
    Significant Deficiency Repeat
  • 38695 2022-004
    Significant Deficiency Repeat
  • 38697 2022-004
    Significant Deficiency Repeat
  • 38698 2022-004
    Significant Deficiency Repeat
  • 38699 2022-004
    Significant Deficiency Repeat
  • 38700 2022-004
    Significant Deficiency Repeat
  • 38701 2022-004
    Significant Deficiency Repeat
  • 38702 2022-004
    Significant Deficiency Repeat
  • 38703 2022-005
    Significant Deficiency
  • 38704 2022-004
    Significant Deficiency Repeat
  • 38705 2022-005
    Significant Deficiency
  • 38706 2022-004
    Significant Deficiency Repeat
  • 38707 2022-004
    Significant Deficiency Repeat
  • 38708 2022-001
    Material Weakness
  • 38709 2022-003
    Material Weakness
  • 38710 2022-005
    Significant Deficiency Repeat
  • 38711 2022-006
    Significant Deficiency Repeat
  • 38712 2022-003
    Material Weakness
  • 38713 2022-002
    Material Weakness Repeat
  • 38714 2022-003
    Material Weakness
  • 615136 2022-004
    Significant Deficiency Repeat
  • 615137 2022-004
    Significant Deficiency Repeat
  • 615138 2022-005
    Significant Deficiency
  • 615139 2022-004
    Significant Deficiency Repeat
  • 615140 2022-004
    Significant Deficiency Repeat
  • 615141 2022-004
    Significant Deficiency Repeat
  • 615142 2022-004
    Significant Deficiency Repeat
  • 615143 2022-004
    Significant Deficiency Repeat
  • 615144 2022-004
    Significant Deficiency Repeat
  • 615145 2022-005
    Significant Deficiency
  • 615146 2022-004
    Significant Deficiency Repeat
  • 615147 2022-005
    Significant Deficiency
  • 615148 2022-004
    Significant Deficiency Repeat
  • 615149 2022-004
    Significant Deficiency Repeat
  • 615150 2022-001
    Material Weakness
  • 615151 2022-003
    Material Weakness
  • 615152 2022-005
    Significant Deficiency Repeat
  • 615153 2022-006
    Significant Deficiency Repeat
  • 615154 2022-003
    Material Weakness
  • 615155 2022-002
    Material Weakness Repeat
  • 615156 2022-003
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $21.17M
14.239 Home Investment Partnerships Program $3.54M
14.195 Section 8 Housing Assistance Payments Program $1.38M