Finding 401176 (2023-003)

Significant Deficiency
Requirement
P
Questioned Costs
$1
Year
2023
Accepted
2024-06-18
Audit: 309200
Organization: Trellis Co. (MN)

AI Summary

  • Core Issue: The Corporation received unauthorized COVID-19 Supplemental Payments (CSP) for periods when they were not eligible, totaling $89,393.
  • Impacted Requirements: Section 8 owners cannot claim CSP for expenses incurred during the first three operating periods if they took surplus cash distributions.
  • Recommended Follow-Up: The Corporation should work with HUD to correct the error and clarify how to resolve the situation.

Finding Text

FINDING 2023-003: Unauthorized receipt of COVID-19 Supplemental Payments (CSP) Criteria - Section 8 owners who took distributions of surplus cash following the announcement of CSPs on July 23, 2020, are not eligible to receive a CSP for expenses incurred in the first, second, or third operating periods (March 27, 2020 to March 31, 2021). The Corporation must be able to substantiate the costs submitted for reimbursement and the costs must fall under the eligible cost category for which they were submitted. Condition - The Corporation received CSP’s for all five program operating periods. The Corporation received reimbursement for expenditures in eligible expense categories different from the expense categories applied for. Questioned costs and how they were computed - $89,393. The questioned costs are the CSP funds received that the projects were either not eligible for or that were received for expenditures that were different than those used in the CSP applications. Context - The Corporation is responsible for compliance with Section 8 program requirements, including any special provisions or programs that me be included with the Section 8 cluster. Cause - The management company applied for reimbursement of expenses on behalf of the Corporation for all five program operating periods, when the Corporation was only eligible for program periods 4 and 5. The Corporation received reimbursement for eligible expense categories different from the expense categories applied for. Effect - The Corporation received federal funds it was not eligible to receive. Recommendation - We recommend that the Corporation contact HUD or the Section 8 HAP contract administrators to inform them of the error and to verify how they would like to address the situation. Auditee's comments and response - The applications for reimbursement for program periods 1 through 3 were made in error. The Corporation has contacted HUD and is awaiting a response. Responsible party for corrective action: Megan Netland – Vice President of Asset Management

Corrective Action Plan

FINDING 2023-003: Unauthorized receipt of COVID-19 Supplemental Payments (CSP) Name of contact person – Megan Netland, Vice President of Asset Management Corrective action – The applications for reimbursement for program periods 1 through 3 were made in error. The Corporation has contacted HUD and is awaiting a response. Proposed completion date – Management has contacted HUD and is awaiting a response.

Categories

Questioned Costs HUD Housing Programs Cash Management Special Tests & Provisions

Other Findings in this Audit

  • 401148 2023-001
    Significant Deficiency
  • 401149 2023-001
    Significant Deficiency
  • 401150 2023-001
    Significant Deficiency
  • 401151 2023-001
    Significant Deficiency
  • 401152 2023-001
    Significant Deficiency
  • 401153 2023-001
    Significant Deficiency
  • 401154 2023-001
    Significant Deficiency
  • 401155 2023-001
    Significant Deficiency
  • 401156 2023-001
    Significant Deficiency
  • 401157 2023-001
    Significant Deficiency
  • 401158 2023-001
    Significant Deficiency
  • 401159 2023-001
    Significant Deficiency
  • 401160 2023-001
    Significant Deficiency
  • 401161 2023-001
    Significant Deficiency
  • 401162 2023-002
    Significant Deficiency
  • 401163 2023-002
    Significant Deficiency
  • 401164 2023-002
    Significant Deficiency
  • 401165 2023-002
    Significant Deficiency
  • 401166 2023-002
    Significant Deficiency
  • 401167 2023-002
    Significant Deficiency
  • 401168 2023-002
    Significant Deficiency
  • 401169 2023-002
    Significant Deficiency
  • 401170 2023-002
    Significant Deficiency
  • 401171 2023-002
    Significant Deficiency
  • 401172 2023-002
    Significant Deficiency
  • 401173 2023-002
    Significant Deficiency
  • 401174 2023-002
    Significant Deficiency
  • 401175 2023-002
    Significant Deficiency
  • 401177 2023-003
    Significant Deficiency
  • 401178 2023-003
    Significant Deficiency
  • 401179 2023-003
    Significant Deficiency
  • 401180 2023-003
    Significant Deficiency
  • 401181 2023-003
    Significant Deficiency
  • 977590 2023-001
    Significant Deficiency
  • 977591 2023-001
    Significant Deficiency
  • 977592 2023-001
    Significant Deficiency
  • 977593 2023-001
    Significant Deficiency
  • 977594 2023-001
    Significant Deficiency
  • 977595 2023-001
    Significant Deficiency
  • 977596 2023-001
    Significant Deficiency
  • 977597 2023-001
    Significant Deficiency
  • 977598 2023-001
    Significant Deficiency
  • 977599 2023-001
    Significant Deficiency
  • 977600 2023-001
    Significant Deficiency
  • 977601 2023-001
    Significant Deficiency
  • 977602 2023-001
    Significant Deficiency
  • 977603 2023-001
    Significant Deficiency
  • 977604 2023-002
    Significant Deficiency
  • 977605 2023-002
    Significant Deficiency
  • 977606 2023-002
    Significant Deficiency
  • 977607 2023-002
    Significant Deficiency
  • 977608 2023-002
    Significant Deficiency
  • 977609 2023-002
    Significant Deficiency
  • 977610 2023-002
    Significant Deficiency
  • 977611 2023-002
    Significant Deficiency
  • 977612 2023-002
    Significant Deficiency
  • 977613 2023-002
    Significant Deficiency
  • 977614 2023-002
    Significant Deficiency
  • 977615 2023-002
    Significant Deficiency
  • 977616 2023-002
    Significant Deficiency
  • 977617 2023-002
    Significant Deficiency
  • 977618 2023-003
    Significant Deficiency
  • 977619 2023-003
    Significant Deficiency
  • 977620 2023-003
    Significant Deficiency
  • 977621 2023-003
    Significant Deficiency
  • 977622 2023-003
    Significant Deficiency
  • 977623 2023-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.135 Mortgage Insurance_rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate $3.66M
14.164 Operating Assistance for Troubled Multifamily Housing Projects $2.29M
10.415 Rural Rental Housing Loans $576,502
14.856 Lower Income Housing Assistance Program_section 8 Moderate Rehabilitation $559,521
10.427 Rural Rental Assistance Payments $67,342
14.182 Section 8 New Construction and Substantial Rehabilitation $37,058
14.181 Supportive Housing for Persons with Disabilities $35,646
14.191 Multifamily Housing Service Coordinators $587