Finding 52026 (2022-001)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2022

Accepted

2023-02-27

Audit: 49453

Organization: The Salvation Army Residence Inc., A Florida Corporation (FL)

Auditor: Cohnreznick LLP

AI Summary

Core Issue: The required deposit of $109,025 for residual receipts was made late, violating HUD regulations.
Impacted Requirements: Residual receipts must be deposited within 90 days of year-end to comply with the Regulatory Agreement.
Recommended Follow-Up: Management should implement internal controls to ensure timely deposits and start the FY 23 audit before the fiscal year ends.

Finding Text

Department of Housing and Urban Development Finding 2022-001 Section 223(f) Mortgage Insurance Program, AL 14.155 Statement of Condition For the year ended September 30, 2021, management did not make the required residual receipts reserve deposit in the amount of $109,025 within 90 days of year end, as required by HUD. The residual receipts amount was deposited on February 11, 2022. Criteria Residual receipts reserve deposits should be made within 90 days of year end. Cause Controls are not in place to ensure that required residual receipts reserve deposits are made timely. Effect The Project is not in compliance with the requirements of the Regulatory Agreement. Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. Auditor Noncompliance Code: B - Failure to make required residual receipts deposits (REAC); N - Special tests and provisions (UG) Finding Resolution Status: Resolved. Management is working to get the audit done in a more timely manner so that the calculation for residual receipts can be completed in time to make any necessary deposits within the required deadline. The intent is to begin the FY 23 audit prior to fiscal year end to allow for customary preliminary audit work. Reporting Views of Responsible Officials On February 11, 2022, the Project remitted the funds to HUD.

Corrective Action Plan

1 CORRECTIVE ACTION PLAN Project Legal Name: William Booth Towers Orlando, FL (A Project of The Salvation Army Residences, Inc., a Florida Corporation) HUD Project No.: 067-11269 Audit Firm: CohnReznick LLP Period covered by the audit: 10/1/2021-9/30/2022 Corrective Action Plan prepared by: Name: Sriparna Mitra Position: HUD Specialist, THQ (Legal) Telephone Number: 404-728-6700 A. Current Findings on the Schedule of Findings, Questioned Costs and Recommendations 1. Finding 2022-001 a. Comments on the Finding and Each Recommendation Management is working to get the audit done in a more timely manner so that the calculation for residual receipts can be completed in time to make any necessary deposits within the required deadline. The intent is to begin the FY 23 audit prior to fiscal year end to allow for customary preliminary audit work. b. Action(s) Taken or Planned on the Finding On February 11, 2022 the Project remitted the residual receipts funds to HUD for the fiscal year ended Sep 30, 2021. B. Status of Corrective Actions on Findings Reported in the Schedule of the Status of Prior Year Findings, Questioned Costs and Recommendations 1. Finding 2021-001 Cleared. 2. Finding 2021-002 Cleared.

Other Findings in this Audit

628468 2022-001

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
14.155	Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects	$6.46M
14.182	Section 8 New Construction and Substantial Rehabilitation	$2.43M