Core Issue: Mold remediation expenses were incorrectly classified as capital expenditures due to a coding error by the Project Administrator.
Impacted Requirements: All transactions must be recorded properly and consistently to maintain accurate financial reporting.
Recommended Follow-Up: Implement procedures to ensure correct classification and recording of all transactions moving forward.
Finding Text
Findings reference number: 2024-001 - Title and AL Number of Federal Program: Mortgage Insurance for purchase or Refinancing of Existing Multifamily Housing Projects (Sec 223(f)), AL 14.155 - Type of finding: Internal control - Resolution Status: In process. - Population size: N/A - Sample size: N/A -Repeat finding: No - Criteria: All transactions should be recorded in a proper and consistent manner. - Condition: The property suffered significant mold damage from a weather events during the year ended December 31, 2024. Mold remediation expenses were capitalized. - Cause: The Project Administrator miscoded mold remediation expenses as capital expenditure in error. - Effect: Audit adjustments of significant amounts had to be made to correct the situation. - Noncompliance code: S - Internal control deficiencies - Questioned costs: None - Reporting views of officials: Management agrees with the finding and will make every effort to record all transactions correctly. - Contract number: 114-11392 -Context: This was noted while performing the audit. - Recommendation: Procedures should be implemented to ensure that all transactions are classified and recorded correctly. - Auditors' summary of auditee's comments: They are in agreement. - Completion date: 12/31/2025 - Response: In the future, management will implement procedures to ensure all transactions are classified and recorded correctly.
Corrective Action Plan
Certain expenses for mold remediation were capitalized and should have been expensed. A significant audit adjustment was made. Response: Management will implement procedures to ensure all transactions are properly recorded in the future.
Categories
Procurement, Suspension & DebarmentHUD Housing ProgramsReportingInternal Control / Segregation of Duties