Finding 51568 (2022-001)

Material Weakness Repeat Finding
Requirement
L
Questioned Costs
-
Year
2022
Accepted
2023-07-30

AI Summary

  • Core Issue: Annual audits for fiscal years ending April 30, 2022, and 2021 were not submitted to HUD on time.
  • Impacted Requirements: Compliance with HUD's Regulatory Agreement and Uniform Financial Reporting Standards was not met.
  • Recommended Follow-Up: Ensure strict adherence to all HUD financial reporting deadlines moving forward.

Finding Text

FIRST BAPTIST CHURCH CAPITOL HILL HOMES, INCORPORATED HUD Project No. 086-EH003-L7-NP-WAH Schedule of Findings For the Year Ended April 30, 2022 Finding ? Item 2022-1 Reporting under Government Auditing Standards Finding ? Item 2022-1 Major Federal Award Program Audit Department of Housing and Urban Development (HUD): Section 223 (F) Insured Loan ? Federal Assistance Listing # 14.155 Section 8 Housing Assistance Payments ? Federal Assistance Listing # 14.195 Reporting Statement of Condition: The required annual audits of the financial statements for the years ended April 30, 2022 and April 30, 2021 were not completed and submitted to HUD within the time frame required by HUD. Criteria: U. S. Department of Housing and Urban Development (HUD) Regulatory Agreement (Section 18) dated May, 2017, requires that an annual financial report be prepared in accordance with generally accepted accounting principles in such form and substance as specified by HUD under the Uniform Financial Reporting Standards at 24 C.F.R. 5.801 and Program Obligations within ninety (90) days of each fiscal year end. The annual financial report is to be audited by an independent, licensed Certified Public Accountant in accordance with both Generally Accepted Government Auditing Standards and Generally Accepted Auditing Standards and submitted electronically to HUD in accordance with the Program Obligations of the HUD Regulatory Agreement. Effect of Condition: The Property is not in compliance with the Regulatory Agreement under which it is operating. Cause of Condition: During the years in question, the Kelly Miller Smith Towers Board of Directors, property management and independent audit firm experienced disruption in normal business operation due to personnel affected by the COVID 19 pandemic. Regular meetings and communications were limited. The independent audit firm experienced absenteeism of key personnel essential to the audit engagement. In addition, the management agent implemented changes in data management systems which further delayed the audit process. During this time, the Board of Directors did not have an assigned coordinator to insure that the audits were completed and submitted timely. Recommendation: We recommend that all financial reporting and submission requirements and deadlines required by HUD be strictly adhered to for future periods.

Corrective Action Plan

First Baptist Church Capitol Hill Homes, Incorporated d/b/a Kelly Miller Smith Towers HUD Project No. 086-EH003-L7-NP-WAH 2136 Cliff Drive Nashville, TN 37218 CORRECTIVE ACTION PLAN February 23, 2023 To the U. S. Department of Housing and Urban Development First Baptist Church Capitol Hill Homes, Incorporated d/b/a Kelly Miller Smith Towers respectfully submits the following corrective action plan for the year ended April 30, 2021. Name and address of independent public accounting firm: Tabb & Tabb, LLC Certified Public Accountants 260 Peachtree Street, NW, Suite 1201 Atlanta, Georgia 30303 Audit Period: May 1, 2021 to April 30, 2022 The findings from the April 30, 2022 schedule of findings are discussed below. The findings are numbered consistently with the number assigned in the schedule. The Summary of Audit Results does not include findings and is not addressed. Finding ? Item 2022-1 Reporting under Government Auditing Standards Finding ? Item 2022-1 Major Federal Award Program Audit Department of Housing and Urban Development (HUD): Section 223(F) Insured Loan ? Federal Assistance Listing # 14.155 Section 8 Housing Assistance Payments ? Federal Assistance Listing # 14.195 Reporting Statement of Condition: The required annual audits of the financial statements for the years ended April 30, 2022 and April 30, 2021 were not completed and submitted to HUD within the time frame required by HUD. Recommendation: We recommend that all financial reporting and submission requirements and deadlines required by HUD be strictly adhered to for future periods. Auditee Response: The Kelly Miller Smith Towers Board of Directors engaged a new audit firm to conduct the delinquent audits for the years ended April 30, 2022 and 2021. Both audits have been completed and will be submitted to HUD by May 19, 2023. The Board of Directors has established an audit committee who will assure that the audit for the year ending April 30, 2023 and subsequent years' audits will be completed and remitted within HUD's required time frame.

Categories

HUD Housing Programs Reporting Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 51569 2022-002
    Material Weakness Repeat
  • 51570 2022-001
    Material Weakness Repeat
  • 51571 2022-002
    Material Weakness Repeat
  • 628010 2022-001
    Material Weakness Repeat
  • 628011 2022-002
    Material Weakness Repeat
  • 628012 2022-001
    Material Weakness Repeat
  • 628013 2022-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $4.34M
14.195 Section 8 Housing Assistance Payments Program $930,375
14.191 Multifamily Housing Service Coordinators $58,413