FAC Explorer

Finding 401348 (2023-003)

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: The replacement reserve funds were not kept in an interest-bearing account, violating HUD requirements.
  • Impacted Requirements: Compliance with Section 202 of the National Housing Act, which mandates maintaining these funds in an interest-bearing account.
  • Recommended Follow-Up: Management should transfer the funds to an interest-bearing account and implement proper procedures to ensure compliance.

Finding Text

2023-003 – Replacement Reserve Account 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 required to maintain replacement reserve funds in a interest bearing account. Condition. The replacement reserve balance was not maintained in an interest bearing account during 2023. Cause. Management has not properly implemented procedures to comply with HUD program requirements related to holding the reserve balance in an interest bearing account. Effect. As a result of this condition, the reserve for replacements account was underfunded during 2023 as no interest was earned. 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 move funds to an interest bearing account. " 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 2023-003 – Replacement Reserve Account 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. The replacement reserve balance was not maintained in an interest-bearing account. Effect. As a result of this condition, the reserve for replacements account was underfunded during 2023 as no interest was earned. Plan. Management agrees with finding 2023-003 and has developed the following plan. Management will request a waiver from HUD for the interest-bearing requirement on the project’s reserve account due to the fees charged by Bank of America, which will exceed any interest earned on the account. Contact Person Responsible for This Corrective Action: David DeFrain, Vice President of Finance Anticipated completion date: June 30, 2024

Categories

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

Other Findings in this Audit

  • 401346 2023-001
    Significant Deficiency Repeat
  • 401347 2023-002
    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