Finding 478704 (2022-006)

Material Weakness
Requirement
N
Questioned Costs
$1
Year
2022
Accepted
2024-07-17

AI Summary

  • Core Issue: Funds from the reserve for replacements were used improperly, with $8,261 spent on non-HUD approved purposes.
  • Impacted Requirements: This violates the Regulatory Agreement, which mandates that disbursements must be for HUD approved purposes.
  • Recommended Follow-Up: Management should refund any improperly used reserve funds and ensure future withdrawals are monitored for compliance.

Finding Text

Finding 2022-006 - U.S. Department of Housing and Urban Development, Mortgage Insurance Rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate, CFDA #14.135 Statement of Condition: During the year ending December 31, 2022 a reserve for replacements request included an estimate of repairs for $18,925.89 which was approved by HUD. No expense for the related amount was recorded or paid by the Project for the amount approved by HUD, therefore, the funds received from the reserve for replacements were expended for purposes other than approved by HUD. Criteria: The Regulatory Agreement requires disbursements from the reserve for replacements to be expended for HUD approved purposes. Effect: Noncompliance with the Regulatory Agreement. Cause: Management override of controls. Context: A test was performed to verify withdrawals from the reserve for replacements were expended for the HUD approved expenditure. A HUD approved reserve for replacements withdrawal included an amount for $18,925.89 for estimated repairs and no expense was recorded or paid in the amount of $18,925.89. The operating cash account had a balance of $10,665 as of December 31, 2022, therefore, $8,260.89 of the reserve for replacement funds were expended for purposes other than approved by HUD. Questioned Costs: $8,261 Recommendation: We recommend that management refund any reserve for replacements withdrawals that are not expended for the HUD approved purpose. Views of Responsible Officials and Corrective Action Plan: Management acknowledges that no expense was recorded for the $18,925.89. Management will monitor HUD approved reserve for replacements withdrawals and that they are expended for approved items.

Corrective Action Plan

Mount Sinai Foundation, Incorporated 703 Blue Street Fayetteville, North Carolina 28301 CORRECTIVE ACTION PLAN March 11, 2024 U.S. Department of Housing and Urban Development Five Points Plaza Building 40 Marietta Street Atlanta, Georgia 30303 Mount Sinai Foundation, Incorporated respectfully submits the following Corrective Action Plan for the year ended December 31, 2022. Bernard Robinson & Company, L.L.P. 1501 Highwoods Blvd., Suite 300 Post Office Box 19608 Greensboro, North Carolina 27419-9608 The findings for the year ended December 31, 2022 Schedule of Findings and Questioned Costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. FINDINGS - Financial Statement Audit and Federal Award Program Audits Finding 2022-006 - U.S. Department of Housing and Urban Development, Mortgage Insurance Rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate (Sections 221d(3) and (4) Multifamily - Market Rate Housing), CFDA #14.135 Recommendation: We recommend that management refund any reserve for replacements withdrawals that are not expended for the HUD approved purpose. Action Taken: We agree with Finding 2022-006 and the recommendation described in the accompanying schedule of findings and questioned costs. Management will monitor HUD approved reserve for replacements withdrawals and that they are expended for approved items. If HUD has questions regarding this corrective action plan, please call (803) 873-2377. Sincerely yours, Dwayne Legrant President Omni Property Management and Development Managing Agent

Categories

Questioned Costs HUD Housing Programs

Other Findings in this Audit

  • 478699 2022-001
    Material Weakness Repeat
  • 478700 2022-002
    Material Weakness Repeat
  • 478701 2022-003
    Material Weakness Repeat
  • 478702 2022-004
    - Repeat
  • 478703 2022-005
    - Repeat
  • 1055141 2022-001
    Material Weakness Repeat
  • 1055142 2022-002
    Material Weakness Repeat
  • 1055143 2022-003
    Material Weakness Repeat
  • 1055144 2022-004
    - Repeat
  • 1055145 2022-005
    - Repeat
  • 1055146 2022-006
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.135 Mortgage Insurance_rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate $7.10M
14.182 Section 8 New Construction and Substantial Rehabilitation $709,576