Finding 561007 (2023-004)

Finding 2023-004 Reporting – Late REAC Submission and Late OMB Data Collection Form Submission 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects 14.195 Section 8 Housing Assistance Payments Program Material Weakness in Internal Control – Material Noncompliance Repeat of Finding from June 30, 2023 (Finding 2023-002) Condition: The Organization’s annual financial statement data was not submitted within the timeframes specified by HUD. The financial statement data was due by March 31, 2024, but the financials were not issued until May 20, 2025. The Organization was also required to submit the OMB Data Collection Form to the Federal Audit Clearinghouse (“FAC”) by September 30, 2024, but was not filed timely as the audit was completed on May 20, 2025. Criteria: The Real Estate Assessment Center (“REAC”) requires an accurate and timely submission of annual financial data no later than three months after fiscal year end. The OMB Data Collection Form is due to be electronically filed with the FAC at the completion of a single audit but no later than 9 months after fiscal year end, unless extended. Questioned Cost: None Effect: The Organization did not submit annual financial statement data within the timeframe required by HUD, and therefore was noncompliant with this reporting requirement as well as the requirement to submit the OMB Data Collection Form within the required time frame, and in violation of the Regulatory Agreement. Failure to properly submit timely data could lead to significant issues including penalties and delays in funding. Cause: The Organization changed its fiscal year end to December in order to have the same as the Project sponsor, however they did not contact HUD within the required timeframe and as result were not able to timely submit financial statement data for the six months ended December 31, 2023. Auditor’s Recommendation: We recommend that the Organization make every effort to submit its annual financial statement data within the timeframe specified by HUD. Views of Responsible Officials of the Auditee: We concur with the recommendation and have implemented various controls. See corrective action plan.