Finding 398420 (2023-002)

Material Weakness
Requirement
N
Questioned Costs
$1
Year
2023
Accepted
2024-05-23

AI Summary

  • Core Issue: The Organization failed to make required monthly deposits of $1,842 into the reserve for replacement account, instead depositing only $1,796.
  • Impacted Requirements: This non-compliance with HUD Form-9250 has resulted in a material weakness, with questioned costs totaling $544 for the current fiscal year.
  • Recommended Follow-Up: The Organization should deposit the $544 shortfall immediately and ensure compliance by reconciling and depositing the correct amounts monthly, including any past shortfalls by June 30, 2024.

Finding Text

S3800-010: Finding Reference Number 2023-002 (Material Weakness) S3800-011: Program Information Federal Program: Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Rental Housing (Section 207/223(F)) Federal Agency: Department of Housing and Urban Development (HUD) Assistance Listing #: 14.155 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 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 2022-002 S3800-020: Criteria HUD Form-9250, Funds Authorizations, requires the Organization to deposit $1,842 into the replacement reserve account on a monthly basis. S3800-030: Statement of Condition During our audit of the Organization’s fiscal year ended December 31, 2023 federal award program, we noted the Organization failed to make the required monthly deposits into the reserve for replacement account for all twelve months. The Organization deposited monthly $1,796 as opposed to the approved $1,842. S3800-032: Cause The Organization deposited the prior required monthly amount into the reserve for replacement account. S3800-033: Effect or Potential Effect The Organization was not in compliance with the regulatory agreement to make required monthly deposits into the reserve for replacement account. S3800-035: Auditor Non-Compliance Code: N – Reserve for replacements deposits S3800-040: Questioned Costs $544 S3800-045: Reporting Views of Responsible Officials Management agrees with the finding. S3800-050: Context The Organization deposited $21,560 onto the reserve for replacement account during the year ended December 31, 2023. The Organization was required to deposit $22,104 for the year. Per Missouri Housing Development Commission (HUD’s designee), the Organization was required to increase the monthly deposit to the reserve for replacement account from $1,796 to $1,842 effective June 1, 2019. The $544 questioned costs only accounts for the current fiscal year underfunding. S3800-080: Recommendation The Organization should deposit the shortfall of $544 into the reserve for replacement account, as well as the shortfall for 2019, 2020, 2021 and 2022, as soon as possible and ensure the process is being followed to deposit and reconcile the reserve for replacement account on a monthly basis. S3800-090: Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations Auditee agreed with our recommendation. S3800-130: Response Indicator Agree S3800-140: Completion Date or Proposed Completion Date June 30, 2024 S3800-150: Response See Corrective Action Plan

Corrective Action Plan

CORRECTIVE ACTION PLAN FOR THE YEAR ENDED DECEMBER 31, 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 December 31, 2023. Finding 2023-002 Responsible Party Name: Fred Gibbs Position: President – Management Agent Telephone Number: 913-709-1811 Federal Agency U.S. Department of Housing and Urban Development Federal Program Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Rental Housing (Section 207/223(F)) Compliance Requirements N – Special Tests and Provisions Finding Type Federal Awards Auditee’s Comment on Finding We agree with the auditor’s finding. Corrective Action We will deposit the shortfall of $544 into the reserve for replacement account, as well as the shortfalls for 2019, 2020, 2021 and 2022, as soon as possible and ensure the process is being followed to deposit and reconcile the reserve for replacement account on a monthly basis. Anticipated Completion Date June 30, 2024

Categories

Questioned Costs HUD Housing Programs Special Tests & Provisions Procurement, Suspension & Debarment Subrecipient Monitoring Material Weakness Reporting

Other Findings in this Audit

  • 398419 2023-001
    Material Weakness
  • 398421 2023-003
    Significant Deficiency
  • 398422 2023-004
    Material Weakness
  • 974861 2023-001
    Material Weakness
  • 974862 2023-002
    Material Weakness
  • 974863 2023-003
    Significant Deficiency
  • 974864 2023-004
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $2.74M
14.195 Section 8 Housing Assistance Payments Program $334,591