Statewide Bay Landing, Inc.Non-Profit

Condition: The replacement reserve account is underfunded totaling $17,073, including $13,585 from the prior year Criteria: HUD regulations specify the amount required to be deposited on a monthly basis to the replacement reserve account. Cause: The funding shortfall was due to the property experiencing a cash flow problem due to not receiving an approved rent increase and therefore unable to make the required deposits. Recommendation: The management agent should arrange to fund the shortfall. Response: Management expects to receive the approved rent increase and will fund the shortfall.

Condition: The replacement reserve account remains underfunded by $13,585 from the prior year. Criteria: HUD regulations specify the amount required to be deposited on a monthly basis to the replacement reserve account. Cause: The funding shortfall was due to the property experiencing a cash flow problem and therefore unable to make the required deposits. Recommendation: The management agent should arrange to fund the shortfall. Response: Management will make every effort to find resources to fund the shortfall.

Condition: Funds held in one bank exceed the FDIC insurance limit by $35,446 and the banks ratings are not monitored. Criteria: HUD regulations require that cash funds be fully insured or the banks ratings monitored on a regular basis. Cause: The management agent neglected to set up a program with the bank providing for automatic transfers to member banks to provide for full FDIC insurance. Recommendation: The management agent should set up the necessary paperwork with the bank to provide for the full FDIC insurance coverage. Response: The management agent will set up the necessary paperwork.

Federal program - Section 202: Criteria: The HUD Occupancy handbook specifies the nature and content of the tenant income annual recertification; Condition: in testing tenant recertification files, I noted the following errors- no EIV obtained (1 of 2 files) and no unit inspection performed (1 of 2 files); Cause: management oversight; Effect: the tenant recertification income may be incorrect and the property may have possible physical property damage uncorrected; Recommendation: Management obtain the required documentation. Response: The management agent will obtain the required documentation.

Federal program - Section 202: Criteria - Federal regulations require the security deposit cash account to be fully funded; Condition - the cash account is deficient by $628; Cause - the deposits are being made to the operating account and not the security deposit account in error; Recommendation - the cash account should be fully funded and all future deposits made to the correct account. Response: The management agent will transfer funds to fully fund the security deposits and will make every effort to deposit security deposits to the correct account.

Federal program - Section 202: Criteria - HUD regulations specify the amount required to be deposited on a monthly basis to the replacement reserve account.; Condition - no deposits were made for 8 months and the total deposits were underfunded by $13,585 (including the prior year duplicate withdrawal totaling $6,309 not yet transferred); Cause - the late deposits and funding shortfall were due to the property experiencing a cash flow problem and therefore unable to make the required deposits; Recommendation - the management agent should make all future deposits on a timely basis and arrange to fund the shortfall. Response: Management will make every effort to fund future deposits on a timely basis and will attempt to find resources to fund the shortfall.

Federal program - Section 202: Criteria: HUD regulations require that cash funds be fully insured or the banks ratings monitored on a regular basis; Condition: funds held in one bank exceed the FDIC insurance limit by $4,597 and the banks ratings are not monitored; Cause: the management agent neglected to set up a program with the bank providing for automatic transfers to member banks to provide for full FDIC insurance; Effect: the property may be at risk of loss of funds; Recommendation: the management agent should set up the necessary paperwork with the bank to provide for the full FDIC insurance coverage. Response: The management agent will set up the necessary paperwork.

Federal program - Section 202: Criteria: The HUD Occupancy handbook specifies the nature and content of the tenant income annual recertification; Condition: in testing tenant recertification files, I noted the following errors- no EIV obtained (2 of 2 files); Cause: the prior management did not retain the required EIV in the tenant file; Effect: tenants recertification may be incorrect; Recommendation: Management should retain the required EIV?s in the tenant files. Response: The current management agent does retain the required EIV in the tenant files.

Federal program - Section 202: Criteria - Federal regulations require the Corporation to file an annual Data Collection Form with the Single Audit Clearing House; Condition - the last year submitted was 12/31/2019; Cause - the prior auditor did not complete the form for owner signature and submission; Recommendation - the owner representative should notify the prior auditor to complete the form for 2020 and 2021 so that the owner can file the annual Data Collection forms for the omitted years. Response: The owner representative has notified the prior auditor to complete the missing years? form and, upon their completion, will file the Data Collection form for the missing years.

Federal program - Section 202: Criteria - HUD regulations specify the amount required to be deposited on a monthly basis to the replacement reserve account.; Condition - one month?s deposit totaling $3,638 was not made by the current management agent; Cause - the missed deposit by the current management agent was due to the timing of the transition of the management from one agent to another; Recommendation - the current management agent should make the necessary deposit and make every effort to deposit the monthly required amounts to the reserve account. Response: Subsequent to year end the current management agent made the necessary deposit and will make the required monthly deposits timely in the future.

Federal program - Section 202: Criteria - HUD regulations specify withdrawals from the replacement reserve should be for allowable project costs paid; Condition - one of the withdrawals during the year was a duplicate withdrawal totaling $6,309 that was approved and withdrawn previously in 2021 and another withdrawal totaling $37,792 did not have sufficient backup to ascertain the amounts requested; Cause - prior management agent oversight for the duplicate request and withdrawal, unavailable documentation for the second request and withdrawal; Recommendation - the current management agent should transfer funds from the operating account for the $6,309 duplicate withdrawal and request backup for the second withdrawal from the prior management agent. Response: The current management agent will request that the prior management agent or HUD provide sufficient documentation for the second withdrawal and will transfer the $6,309 excess funds withdrawn.

Federal program - Section 202: Criteria: HUD regulations state that only eligible costs relating to the property are allowed; Condition: I was unable to test the prior management agent?s payroll charged to the property totaling $18,222; Cause: supporting documentation for the charges were not made available for testing; Effect: the property may have been overcharged for payroll and related benefits; Recommendation: the current management agent should obtain the necessary documentation to support the charges paid or request the prior management agent reimburse the property. Response: The current management agent has attempted to request the supporting documentation but has been unsuccessful.

Federal program - Section 202: Criteria: HUD regulations and the management agreement state that amounts charged to the property by an Identity of Interest firm should be reasonable based on arm?s length contracts generally accomplished by obtaining bids; Condition: the property was charged $19,067 by a company owned by the prior management agent without obtaining bids to support that the charges were reasonable; Cause: the prior management agent did not obtain bids; Effect: the property may have been overcharged for the related expenses totaling $19,067; Recommendation: the current management agent should obtain the necessary documentation to support the charges paid or request the prior management agent reimburse the property. Response: The current management agent has attempted to request the supporting documentation but has been unsuccessful.

Federal program - Section 202: Criteria: HUD regulations specify that management maintain adequate books and records; Condition: I was unable to test the prior management agent?s cash receipts recorded; Cause: supporting documentation for the cash receipts were not made available for testing; Effect: the property records may be incomplete; Recommendation: the current management agent should obtain the necessary documentation to support the cash receipts recorded by the prior management agent. Response: The current management agent has attempted to request the supporting documentation but has been unsuccessful.

Federal program - Section 202: Criteria: The management agreement specifies the calculation of management fees due the agent; Condition: the prior management agent overpaid the management fee totaling $1,385; Cause: unknown; Effect: the management fee was overpaid $1,385; Recommendation: the current management agent should request that the prior management agent reimburse the property for the overpayment. Response: The current management agent will request that the prior management agent reimburse the property for the overpaid management fee.

Federal program - Section 202: Criteria: HUD and state regulations specify that tenant security deposit refunds be issued within 30 days of move out; Condition: in testing tenant security refunds, I noted a late refund (1 of 2 tested) processed by the prior management agent; Cause: oversight by the prior management; Effect: tenant security deposit paid late; Recommendation: Management should make effort to refund tenant security deposits timely. Response: The current management agent will make every effort to refund tenant security deposits timely.

GSA_MIGRATION