MERCY APARTMENTS

Finding No. 2024-001: Current Year Reporting Package and Data Collection Not Filed Timely a. The Mercy Housing Development Fund Company, Inc. September 30, 2024 reporting package and data collection form was not filed with the Federal Audit Clearinghouse on time. b. Criteria: 2 CFR section 200.512(a)(1) requires the reporting package and data collection form to be submitted to the Federal Audit Clearinghouse the earlier of 30 days after the reports are received from the auditors or nine months after the end of the audit period. c. Effect of condition: The effect is that the project would not be considered a "Low Risk Auditee" for at least the fiscal years ending September 30, 2025 and September 30, 2026. This designation will require the auditor to audit at least 40% of the project's programs as Major programs until such time that the project may be considered a “Low Risk Auditee” again. d. Cause of condition: The reporting package and data collection form was submitted to the Federal Audit Clearinghouse late due to management not monitoring CPA firm to enter data in data collection form as agreed upon resulting in a late filing. The form will be submitted as soon as possible. e. Recommendation: We recommend that management implement procedures to ensure that reporting packages and data collection forms are filed timely in the future. f. Views of responsible officials and planned corrective actions: Mercy Apartments agrees with the finding and the auditor’s recommendations have been adopted.

Finding No. 2023-001: Prior Year Reporting Package and Data Collection Not Filed Timely a. The Mercy Housing Development Fund Company, Inc. September 30, 2022 reporting package and data collection form was not filed with the Federal Audit Clearinghouse on time. b. Criteria: 2 CFR section 200.512(a)(1) requires the reporting package and data collection form to be submitted to the Federal Audit Clearinghouse the earlier of 30 days after the reports are received from the auditors or nine months after the end of the audit period. c. Effect of condition: The effect is that the project would not be considered a "Low Risk Auditee" for at least the fiscal years ending September 30, 2023 and September 30, 2024. This designation will require the auditor to audit at least 40% of the project's programs as Major programs until such time that the project may be considered a “Low Risk Auditee” again. d. Cause of condition: The reporting package and data collection form was submitted to the Federal Audit Clearinghouse 161 days late due to management not monitoring CPA firm to enter data in data collection form as agreed upon resulting in a late filing. The form was submitted on December 8, 2023. e. Recommendation: We recommend that management implement procedures to ensure that reporting packages and data collection forms are filed timely in the future. f. Views of responsible officials and planned corrective actions: Mercy Apartments agrees with the finding and the auditor’s recommendations have been adopted.

a. Statement of Condition: The required deposit of surplus cash of $12,233 as of September 30, 2020 to the residual receipts reserve account was not made within the required 60 days following the balance sheet date. b. Criteria: Mercy Apartments is required to determine surplus cash requirements annually. If surplus cash exists, the amount must be transferred from the operating account to the residual receipts account within 60 days of the project?s fiscal year-end. c. Effect of Condition: The project is not in compliance with the HUD Regulatory Agreement as it relates to the management of the residual receipts reserve. d. Cause of Condition: The deposit was made after the 60-day time frame due to an oversight by the managing agent. e. Recommendation: Mercy Apartments should deposit the required funds in the future into the residual receipts reserve account within the 60-day requirement. f. Views of Responsible Officials and Planned Corrective Actions: Mercy Apartments agrees with the finding and the auditor?s recommendations have been adopted.

a. Statement of Condition: The required deposit of surplus cash of $10,593 as of September 30, 2019 to the residual receipts reserve account was not made within the required 60 days following the balance sheet date. b. Criteria: Mercy Apartments is required to determine surplus cash requirements annually. If surplus cash exists, the amount must be transferred from the operating account to the residual receipts account within 60 days of the project?s fiscal year-end. c. Effect of Condition: The project is not in compliance with the HUD Regulatory Agreement as it relates to the management of the residual receipts reserve. d. Cause of Condition: The deposit was made 2 days late due to an oversight by the managing agent. e. Recommendation: Mercy Apartments should deposit the required funds in the future into the residual receipts reserve account within the 60-day requirement. f. Views of Responsible Officials and Planned Corrective Actions: Mercy Apartments agrees with the finding and the auditor?s recommendations have been adopted.

a. Statement of Condition: In one instance of four tenant files tested, the tenant?s rent was miscalculated. Tenant income was understated by $1,617. b. Criteria: The tenant?s adjusted rent is based upon income and allowances. c. Effects of Condition: The tenant?s share of monthly rent was understated in the amount of $41. d. Cause of Condition: Procedures are in place for calculating tenant rent. In this instance, amounts were erroneously excluded from income which should have been included. e. Recommendation: Mercy Apartments should notify the tenant of the error and recalculate the tenant?s rent. f. View of Responsible Officials and Planned Corrective Action: Mercy Apartments agrees with the findings and the auditor?s recommendations will be adopted.