Finding 599108 (2022-005)

Finding # 2022-005 Federal Grantor: Department of Housing and Urban Development AL # / Program : 14.155 - Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects Type of Finding: Federal Award Finding Finding Resolution Status: Unresolved Information on Universe Population Size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Criteria: HUD Handbook 4381.5 REV-2. paragraph 2.6 states that the management agent may assume management responsibility only after: a. The HUD Loan/Asset Management staff has issued a letter approving the agent proposed by the owner; and b. The Owner and agent have executed and submitted the appropriate Management Certification form (Form HUD-9839a). Statement of Condition: The Corporation entered into a Property Management Agreement with YWCA Golden Gate Silicon Valley (YWCA GGSV) on March 1, 2021. The Corporation did not obtain a letter of approval from HUD and did not execute or submit Form HUD-9839a. Cause: The Corporation had insufficient controls in place to identify material noncompliance with HUD regulatory requirements. Effect or Potential Effect: The Corporation is not in compliance with the HUD regulatory agreement dated January 1, 2013 paragraph 21. Auditor Non-Compliance Code: S - Internal Control Deficiencies Questioned Costs: N/A Reporting Views of Responsible Officials: Management disagrees that material noncompliance is indicative of a material weakness in internal controls. Context: During testing of internal controls over compliance with compliance requirements, it was noted that controls were not sufficient to prevent or detect material instances of noncompliance. Recommendations: We recommend management evaluate internal controls over compliance with compliance requirements to ensure the existence of adequate processes and procedures to prevent and/or detect material instances of noncompliance. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Management disagrees that material noncompliance is indicative of a material weakness in internal controls. Response Indicator: Disagree Completion Date: 12/31/2022 Response: See Corrective Action Plan