Finding Text
Criteria - On September 2003, the HUD provided funds to the Project for the construction and initial operation of an apartment building catering to very low-income elderly persons or very low-income persons with disabilities (whichever is applicable). Under the terms of the HUD agreement and as required by the National Housing Act, the Project must submit a Cost Certification to HUD. The cost certification is used by HUD to determine the building?s actual development cost and/or the maximum insurable mortgage. Condition - The Project has not finalized and submitted a final Cost Certification as required by HUD and the National Housing Act and regulations. Cause - The Project submitted an initial Cost Certification to HUD; however, HUD did not accept the Certification because it did not have the required financial statements and was not signed by the certified public accountant who prepared it. The accountant of the accounting firm with whom the Project contracted to complete the Cost Certificate has since left the accounting firm and no known replacement has been identified. Effect - The final Cost Certification enables the mortgagor to establish the actual costs, including contractor?s cost, and the maximum insurable mortgage for final endorsement of the insured mortgage. Recommendation - We recommend that the Project seek the assistance of HUD to identify audit firms that can provide cost certification services so that the Project can finalize and submit the Cost Certification to comply with HUD requirements and the National Housing Act. View of Responsible Official and Planned Corrective Action - HUD has completed the Cost Certification for the property.