Finding 519893 (2024-003)

Material Weakness Repeat Finding
Requirement
AB
Questioned Costs
$1
Year
2024
Accepted
2025-01-22

AI Summary

  • Core Issue: The Organization failed to maintain proper documentation and exceeded the HUD approved budget for certain expenses, leading to non-compliance with federal requirements.
  • Impacted Requirements: Compliance with 24 CFR Part 891 regarding allowable costs and activities, specifically related to documentation and budget adherence.
  • Recommended Follow-Up: Implement procedures to ensure all expenditures are within the approved budget and include necessary documentation before posting to the general ledger; complete this by December 31, 2024.

Finding Text

S3800-010: Finding Reference Number 2024-003 (Material Weakness) S3800-011: Program Information Federal Program: Supportive Housing for the Elderly - Section 202 Federal Agency: U.S. Department of Housing and Urban Development Assistance Listing #: 14.157 Pass-through Entity: None Federal Award Identification Number and Year: N/A Type of Compliance Finding: A/B – Activities Allowed or Unallowed and Allowable Costs/Cost Principles S3800-015: Type of Finding Federal Awards S3800-016: Finding Resolution Status Unresolved S3800-017: Information on Universe Population Size >250 S3800-018: Sample Size Information 25 S3800-019: Identification of Repeat Finding and Finding Reference Number 2023-003 S3800-020: Criteria Per 24 CFR Part 891, PRAC project funds may be used only for expenses that are reasonable and necessary to the operation of the project as provided for in the Regulatory Agreement between HUD and the project owner. S3800-030: Statement of Condition During our audit of the Organization’s fiscal year ended March 31, 2024 federal award program, we noted that the Organization did not: • Maintain proper documentation to support expenditures for three of the twenty-five samples • Adhere to the HUD approved budget o Manager or Superintendent salaries were greater than approved amount o Payroll expenses were greater than approved amount o Garbage and trash removal expenses were greater than approved amount S3800-032: Cause The Organization did not follow HUD required procedures and the approved budget for activities allowed or unallowed and allowable costs and cost principles and Management is not following processes in place that require supporting documentation to be included with all expenditures. S3800-033: Effect or Potential Effect The Organization was not in compliance with the requirements of HUD related to activities allowed or unallowed and allowable costs and cost principles and expenditures may not be allowed. S3800-035: Auditor Non-Compliance Code S – Internal control deficiencies S3800-040: Questioned Costs $40,295 S3800-045: Reporting Views of Responsible Officials Management agrees with auditor’s finding. S3800-050: Context The Organization is required to be in compliance with provisions relating to activities allowed or unallowed and allowable costs and cost principles. S3800-080: Recommendation The Organization should follow procedures to ensure expenditures are not greater than the HUD approved budget and expenditures include supporting documentation before they are posted to the general ledger. The Organization should also review the accuracy / completeness of all documentation prior to making payment. S3800-090: Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations Concur S3800-130: Response Indicator Agree S3800-140: Completion Date or Proposed Completion Date December 31, 2024 S3800-150: Response See Corrective Action Plan

Corrective Action Plan

Finding 2024-003 Responsible Party Name: Fred Gibbs Position: President, Management Agent Telephone Number: (913) 709-1811 Federal Agency U.S. Department of Housing and Urban Development Federal Program Supportive Housing for the Elderly (Section 202) Compliance Requirements A/B – Activities Allowed or Unallowed and Allowable Costs/Cost Principles Finding Type Federal Awards Auditee’s Comments on Finding We agree with the auditors’ finding. Corrective Action We will follow procedures to ensure expenditures are not greater than the HUD approved budget and expenditures include supporting documentation before they are posted to the general ledger. We will also review the accuracy / completeness of all documentation prior to making payment. Anticipated Completion Date December 31, 2024

Categories

Questioned Costs Allowable Costs / Cost Principles Subrecipient Monitoring HUD Housing Programs Material Weakness Reporting

Other Findings in this Audit

  • 519891 2024-001
    Material Weakness Repeat
  • 519892 2024-002
    Material Weakness Repeat
  • 1096333 2024-001
    Material Weakness Repeat
  • 1096334 2024-002
    Material Weakness Repeat
  • 1096335 2024-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $4.10M
14.856 Lower Income Housing Assistance Program_section 8 Moderate Rehabilitation $287,500