Finding 519699 (2024-001)

Significant Deficiency Repeat Finding

Requirement

Questioned Costs

Year

2024

Accepted

2025-01-17

Audit: 338779

Organization: The Pavilion Housing Development Fund Corporation (NY)

Auditor: Withumsmith+brown PC

AI Summary

Core Issue: The non-profit Organization failed to make the required monthly deposits of $24,952 into the replacement reserve account, contributing only $6,237.
Impacted Requirements: This non-compliance violates the regulatory agreement, which mandates maintaining a reserve for replacements.
Recommended Follow-Up: Management should prioritize making the required deposits and conduct monthly reviews of reserve account activity to ensure compliance.

Finding Text

Criteria The non-profit Organization as mortgagor, in accordance with the regulatory agreement, is required to maintain a reserve for replacements. The required minimum monthly deposit into this account is $2,079. Additionally, the non-profit Organization is required to deposit all prior year required delinquent deposits. For the year ended September 30, 2024, required monthly deposits of $24,952 were to be funded into the replacement reserve account, and $6,237 was funded. Condition The non-profit Organization did not make all required deposits into the replacement reserve account per the regulatory agreement. Cause Due to limited cash flow, management was unable to fulfill all required deposits. Questioned Costs None noted. Context When performing our audit, we noted the non-profit Organization did not make all required deposits in the current year. Effect The non-profit Organization did not make the deposits into the replacement reserve account as required by the HUD agreement. Repeat Finding Repeat Finding of 2023-001. Recommendation We recommend management make the required deposit as soon as possible and review the activity in the reserve accounts monthly to determine that deposits are being made as required. Views of Responsible Official and Planned Corrective Action Management concurs with the audit finding. Management will transfer the funds as soon as cash flow permits.

Corrective Action Plan

Name of auditee: The Pavilion Housing Development Fund Corporation HUD auditee identification number: 012-EE247 Name of audit firm: WithumSmith+Brown, PC Period covered by the audit: Year Ended September 30, 2024 CAP prepared by: Name: Father Ronald Giannone Position: Executive Director Telephone: 646-996-4234 1. Current Findings on the Schedule of Findings, and Questioned Costs a. Finding 2024-001. Delinquent deposits into the replacement reserve account. i. Comments on the Finding and Each Recommendation: Management concurs with the finding and the auditor’s recommendation to transfer the funds to the replacement reserve account. ii. Actions Taken on the Finding: Management will transfer the funds as soon as cash flow permits. b. Finding 2024-002. Special Tests and Provisions – Project Funds. i. Comments on the Finding and Each Recommendation: Management concurs with the finding and the auditor’s recommendation to utilize an interest-bearing account for project funds. ii. Actions Taken on the Finding: Management is in the process of evaluating the recommendation to determine that appropriate course of action. 2. Status of Corrective Actions on Findings Reported in the Prior Audit Schedule of Findings, and Questioned Costs. Finding 2023-001 for delinquent deposits in the aggregated amount of $54,061 were funded in 2024.

Other Findings in this Audit

519700 2024-002

Significant Deficiency
1096141 2024-001

Significant Deficiency Repeat
1096142 2024-002

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
14.157	Supportive Housing for the Elderly	$555,187