Finding Text
HUD Finding No. 2022-001 S-2700-005 Property Improvement Loan Insurance for Improving All Existing Structures and Building of New Nonresidential Structures - Assistance Listing No. 14.142 Late filing of the HUD audit for 2022 Criteria S-2700-020 HUD requires annual financial statements audits with HUD schedules to be filed within 90 days after the end of the entity's fiscal year. Condition S-2700-010 The 2022 audit for The Ridge was not filed with HUD on or before March 31, 2023. Context S-2700-009 The Ridge's parent nonprofit organization, Northwest Coastal Housing (NWCH) purchased properties, added staff, and set up new entities producing a volume of documentation and transactions for the audit beyond what is typical for this organization. In addition, management researched, obtained HUD approval, and contracted a new property management company for The Ridge to replace the prior property management company that perpetrated financial abuses discovered in the 2021 audit, that have not yet been reimbursed to The Ridge by this company. Cause S-2700-040 Rapid growth of NWCH in providing low-income housing on the Oregon coast coupled with difficulty in hiring qualified staff to maintain expanded operations. The 2022 accounting was submitted to the auditor in several trial balances from the contracted bookkeeper and property management companies resulting in more work for the auditor than expected. In addition, closing entries for properties purchased and sold were not recorded correctly, causing the auditor to calculate corrections to the financial statements for these and other accounting issues. The Schedule of Expenditures of Federal Awards and the status of prior year audit findings and questioned costs were provided to the auditor on April 12, 2023, after the HUD audit submission deadline. NWCH's operations and activities have expanded beyond the entity's current internal infrastructure but are greatly needed in this rural area of Oregon with many homeless and low-income individuals. Effect S-2700-030 Late submission of the 2022 audit and REAC filing to HUD for The Ridge for 2022. Questioned Costs S-2700-065 None. Recommendation S-2700-050 Hire a degreed accountant or engage an accounting firm to oversee the accounting function for NWCH and to properly prepare for the audit with corrections made, and consolidated financial statements prepared prior to the start of the annual audit. Summarize commitments, contingencies, subsequent events, and related party transactions and include these items in the financial statements as part of audit preparation. Expand your search for qualified accounting personnel to remote employees and professional staffing companies since there is definitely a known shortage of qualified accountants in the traditional job markets. Views of Responsible Officials and Planned Corrective Actions S-2700-100 We agree with this finding. NWCH was successful in adding needed staff in 2023, but was unable to hire a degreed accountant or controller, or to contract with an accounting firm for oversight of the accounting function. Bookkeeper training was provided from Shelter Resources Financial Manager in February 2023. NWCH is researching CPA firms in order to contract a qualified controller with expertise in real estate holdings relevant to NWCH. Efforts to hire experienced personnel continues, especially for a qualified, college degreed accountant.