Finding 501480 (2023-003)

Significant Deficiency Repeat Finding
Requirement
C
Questioned Costs
$1
Year
2023
Accepted
2024-10-01
Audit: 323539
Auditor: M Group LLP

AI Summary

  • Core Issue: Management failed to record expenses and subsidies correctly for HUD projects, leading to significant deficiencies in internal controls.
  • Impacted Requirements: Violations of HUD regulatory agreements regarding expense payments and cash receipt deposits.
  • Recommended Follow-Up: Management should review the Regulatory Agreement to ensure compliance and correct fund allocations.

Finding Text

Finding #2023-003: Section 223(a)(7) HUD Insured Loan, Assistance Listing 14.135 - AAMHA Western Hills, LLC HUD Project No. 115-115888, AAMHA KPTP, LLC HUD Project No 115-35652 and Section 223(f) HUD Insured Loan, Assistance Listing 14.155 - AAMHA Calcasieu, LLC HUD Project No 115-11280 Type of Finding: Significant Deficiency Type of Finding: Significant Deficiency over Internal Control over Federal Awards Condition: The management company did not ensure expenses or subsidies received were recorded on the correct operating property’s books. Criteria: The HUD regulatory agreement requires all expenses paid from the project’s bank account relate to the entity and requires all project cash receipts are deposited into the entity’s bank account. Questioned Costs: a. $3,199 for AAMHA Western Hills, LLC b. $24,348 for AAMHA KPTP, LLC c. $5,869 for AAMHA Calcasieu, LLC Effect: The Company is in violation of the terms of the HUD Regulatory Agreement governing payment of operating expenses and costs and recording cash receipts. Cause: Oversight Repeat Finding: Yes Recommendation: Management should review the Regulatory Agreement to ensure they are familiar with all the terms of the agreement. Management’s Comment: Management is in agreement with finding and will review Regulatory agreement. Management will transfer funds to the appropriate affiliate. Auditor’s Comment: a. AAMHA Western Hills, LLC - On April 24, 2024, $3,199 was received from an affiliate. b. AAMHA KPTP, LLC - During 2023, $16,321 was received from affiliates. On May 10, 2023, the Project received $8,027. c. AAMHA Calcasieu, LLC – On April 16, 2024, the Project received $5,869 from an affiliate.

Corrective Action Plan

CORRECTIVE ACTION PLAN Name and Number of the Project: Alamo Area Mutual Housing Association Audit Firm: M Group, LLP Audit Period: The year ended December 31, 2023 Compliance Review A. COMMENTS ON FINDINGS AND RECOMMENDATIONS We concur with the findings and recommendations of our auditors regarding our noncompliance as cited in the accompanying Schedule of Findings and Questioned Costs. ACTIONS TAKEN FINDING 2023-003: Section 223(a)(7) HUD Insured Loan, Assistance Listing 14.135 - AAMHA Western Hills, LLC HUD Project No. 115-115888, AAMHA KPTP, LLC HUD Project No 115-35652 and Section 223(f) HUD Insured Loan, Assistance Listing 14.155 - AAMHA Calcasieu, LLC HUD Project No 115-11280Section 223(a)(7) HUD Insured Loan, Assistance Listing 14.135. Entity expenses and receipts were recorded on the incorrect project’s books. CORRECTIVE ACTION COMPLETED: a. AAMHA Western Hills, LLC - On April 24, 2024, $3,199 was received from an affiliate. b. AAMHA KPTP, LLC - During 2023, $16,321 was received from affiliates. On May 10, 2023, the Project received $8,027. c. AAMHA Calcasieu, LLC – On April 16, 2024, the Project received $5,869 from an affiliate. We have prepared the corrective action plan as required by the standards applicable to financial statements contained in Government Auditing Standards and by the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Any questions regarding the above corrective action plan should be directed to Christine Drennon, Executive Director.

Categories

Questioned Costs Internal Control / Segregation of Duties HUD Housing Programs Significant Deficiency Matching / Level of Effort / Earmarking

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
14.135 Mortgage Insurance_rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate $6.81M
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $4.32M
14.218 Community Development Block Grants/entitlement Grants $800,650
14.239 Home Investment Partnerships Program $770,331
21.011 Capital Magnet Fund $312,000
14.267 Continuum of Care Program $190,680