FAC Explorer

Finding 401347 (2023-002)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-06-20
Audit: 309440
Organization: Marygrove Non-Profit Housing Corporation II (MI)
Auditor: Rehmann Robson LLC

AI Summary

  • Core Issue: Duplicate withdrawals of $6,135 from the replacement reserve were made for items already reimbursed, indicating a lack of proper internal controls.
  • Impacted Requirements: Compliance with HUD guidelines under Section 202 of the National Housing Act, which mandates proper documentation and approval for withdrawals.
  • Recommended Follow-Up: Management should implement a review process to ensure that all reimbursement requests are checked against previously approved items to prevent future duplications.

Finding Text

2023-002 – Replacement Reserve Withdrawals Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for obtaining proper documentation and approval by HUD for any withdrawals made from the replacement reserve. Such withdrawals should only be made for qualifying items that have not been previously reimbursed out of the reserve. Condition. Certain capital expenditures, amounting to $6,135, were requested and reimbursed from the reserve for replacements after already having been requested and reimbursed from the reserve. Management corrected this oversight and transferred the duplicate reimbursed funds from the Project's operating account to the reserve for replacements in May 2024. Cause. Management has not properly implemented internal control procedures to ensure previously reimbursed items are not requested for reimbursement from the reserve for replacements again. Effect. As a result of this condition, the reserve for replacements account was underfunded during 2023. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management review all requested items to be approved and ensure they have not been previously approved for reimbursement from the replacement reserve. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

Corrective Action Plan

Corrective Action Plan Marygrove Nonprofit Housing Corp II, dba McGivney Bethune Apartments Project No. 044-EE011 Year Ended December 31, 2023 June 20, 2024 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 2023-002 – Replacement Reserve Withdrawals Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal programs U.S. Department of Housing and Urban Development  Supportive Housing for the Elderly (CFDA# 14.157) Condition. Certain capital expenditures, amounting to $6,135, were requested and reimbursed from the reserve for replacements after already having been requested and reimbursed from the reserve. Management corrected this oversight and transferred the duplicate reimbursed funds from the Project's operating account to the reserve for replacements in May 2024. Effect. As a result of this condition, the reserve for replacements account was underfunded during 2023. Plan. Management agrees with finding 2023-002 and has developed the following plan. All invoices submitted for reserve disbursement requests will be compared to those on prior withdrawals. Contact Person Responsible for This Corrective Action: Laura Maisevich, Senior Housing Manager Anticipated completion date: June 30, 2024

Categories

Internal Control / Segregation of Duties Special Tests & Provisions Allowable Costs / Cost Principles Cash Management HUD Housing Programs Significant Deficiency

Other Findings in this Audit

  • 401346 2023-001
    Significant Deficiency Repeat
  • 401348 2023-003
    Significant Deficiency
  • 401349 2023-001
    Significant Deficiency Repeat
  • 401350 2023-002
    Significant Deficiency
  • 401351 2023-003
    Significant Deficiency
  • 977788 2023-001
    Significant Deficiency Repeat
  • 977789 2023-002
    Significant Deficiency
  • 977790 2023-003
    Significant Deficiency
  • 977791 2023-001
    Significant Deficiency Repeat
  • 977792 2023-002
    Significant Deficiency
  • 977793 2023-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $357,277