Finding 498203 (2023-001)

Significant Deficiency

Requirement

Questioned Costs

Year

2023

Accepted

2024-09-25

Audit: 320969

Organization: Mt. Sinai Manor (LA)

Auditor: Wharton CPA LLC

AI Summary

Issue: The Project failed to make required monthly bank deposits.
Impact: This non-compliance with the Regulatory Agreement led to an understatement of cash by $1,936, which was corrected during the audit.
Next Steps: Ensure the Property makes the necessary monthly deposits as outlined in the Regulatory Agreement.

Finding Text

Condition: The Project did not make the required deposits into the bank account on a monthly basis. Criteria: According to the Regulatory Agreement, “mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank…Concurrently with the effective commencement of rental assistance payments under the Project Rental Assistance Contract, the Mortgagor will deposit an amount…per month unless a different date or amount is approved in writing by HUD”. Cause: The cause is undeterminable. Effect: The Project is not in compliance with the Regulatory Agreement. The cash balance was understated by $1,936. The balance was corrected during the audit. Recommendation: I recommend the Property make required monthly deposits according to the Regulatory Agreement.

Corrective Action Plan

Checks for the monthly reserve for replacement deposits for 12 months were generated in the entire year of 2023. However, in October of 2023, management was notified by the banking institution where the Reserve for Replacement account is held that fraudulent activities had taken place with the reserve for replacement accounts. The banking institution closed all accounts and restricted all routine depository activity while they worked through the fraudulent activity. Because of this, the banking institution established new accounts in January 2024 at which time the held payments were deposited into the new account.

Other Findings in this Audit

498204 2023-002

Significant Deficiency
1074645 2023-001

Significant Deficiency
1074646 2023-002

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
14.157	Supportive Housing for the Elderly	$4.16M
14.195	Section 8 Housing Assistance Payments Program	$275,429