Finding 6117 (2023-002)

Finding 2023-002 Reporting – Late REAC 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 Condition: The Organization’s annual financial statement data was not submitted within the timeframes specified by HUD. The financial statement data was due by September 30, 2023, but was not filed until December 21, 2023. 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. 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 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 attempted to change 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 did not submit financial statement data for year ended June 30, 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.