EIN: 261492845
UEI: WWQ3ATKZWHK4
Audited by: N&K CPAs, Inc.
Oversight agency: 14 [Department of Housing and Urban Development]
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Data as of September 7, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on August 28, 2026. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by February 28, 2027 (172 days from today).
What is a management decision? →During our testing, we noted that the Company made only six of the twelve required monthly deposits to the replacement reserve account during the audit period. As a result, the replacement reserve was not funded in accordance with HUD requirements. Cause: The Company changed management agents during the fiscal year, and the new management agent did not make the required monthly replacement reserve deposits. Effect: The Company did not meet the replacement reserve funding requirement under the Capital Advance Program Regulatory Agreement requiring monthly deposits.
Show full finding ▾Hide full finding ▴Criteria: The mortgagor (Company) is required to establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interest-bearing account. An amount as required by HUD ($13,512 annually) will be deposited monthly in the reserve fund. Condition: During our testing, we noted that the Company made only six of the twelve required monthly deposits to the replacement reserve account during the audit period. As a result, the replacement reserve was not funded in accordance with HUD requirements. Cause: The Company changed management agents during the fiscal year, and the new management agent did not make the required monthly replacement reserve deposits. Effect: The Company did not meet the replacement reserve funding requirement under the Capital Advance Program Regulatory Agreement requiring monthly deposits.
The noncompleted replacement reserve contributions were due to the Project not receiving PRAC subsidies during 2025. This left the Project with not enough revenue to fund normal operations, and a replacement reserve withdraw was allowed by HUD to cover operating cash shortfalls. The issue with receiving the PRAC subsidies was resolved by the property managers in April 2026 and the Project is now paying back the replacement reserve withdraw for the shortfall and catch up with replacement reserve contributions. Continuing monitoring of the Project's financial statements and replacement reserve contributions will be performed on a monthly basis.
During our review, management was unable to provide a waiting list or other records demonstrating that applicants were maintained and selected in chronological order as required by 24 CFR Section 891.410(a). Cause: The project changed property management agents during the fiscal year. The previous management company did not maintain adequate documentation of the tenant waiting list, resulting in the absence of records necessary to demonstrate compliance with HUD requirements. Effect: Without a documented tenant waiting list, there is no support to demonstrate that applicants were selected and admitted in accordance with the established order or applicable program requirements.
Show full finding ▾Hide full finding ▴Criteria: Per 24 CFR Section 891.410(a), HUD requires the maintenance of a waiting list and the selection of applicants in chronological order of application date. Condition: During our review, management was unable to provide a waiting list or other records demonstrating that applicants were maintained and selected in chronological order as required by 24 CFR Section 891.410(a). Cause: The project changed property management agents during the fiscal year. The previous management company did not maintain adequate documentation of the tenant waiting list, resulting in the absence of records necessary to demonstrate compliance with HUD requirements. Effect: Without a documented tenant waiting list, there is no support to demonstrate that applicants were selected and admitted in accordance with the established order or applicable program requirements.
This issue occurred during Bob Tanaka, Inc.’s period of managing the project. Bob Tanaka, Inc. was replaced by Hawaii Affordable Properties, Inc. on January 1, 2025, and instructions have been given to the new property management company to maintain the tenant waiting list in accordance with 24 CFR Section 891.410(a). The wait list will be reviewed at quarterly site inspections.
FAC accepted this audit on September 27, 2024 — management decision was due March 27, 2025.
FAC accepted this audit on October 30, 2023 — management decision was due April 30, 2024.
The Company did not make the required deposit of $13,380 in surplus cash based on the June 30, 2022 residual receipts calculation. Cause: The Company deposited surplus cash of $1,338 in the residual receipt account which is the remaining surplus cash after deducting the amount to be paid for the Company’s second mortgage. The Company’s second mortgage requires payments from 90% of annual residual receipts of the Project. Effect: The Company did not deposit the full amount of required residual receipts for fiscal year 2022. HUD may provide written notice of a violation on the agreement. If corrective action is not taken, HUD may declare a default of the Capital Advance Program Regulatory Agreement. $ -- Recommendation The Company should ensure that it makes the full required residual receipt deposit before calculating the payments for other purposes. The company should also transfer the remaining balance of $12,042 to the residual receipts account for fiscal year 2022. Management’s Response The Company agrees with the finding and the recommendation. See Part VI Corrective Action Plan.
Show full finding ▾Hide full finding ▴Criteria: The ‘Consolidated Audit Guide for Audits of HUD Programs’ states that any surplus cash as calculated under HUD guidelines in the project funds accounts (including earned interest) at the end of the fiscal year shall be deposited in a federally insured residual receipts account within 90 days following the end of the fiscal year. Condition: The Company did not make the required deposit of $13,380 in surplus cash based on the June 30, 2022 residual receipts calculation. Cause: The Company deposited surplus cash of $1,338 in the residual receipt account which is the remaining surplus cash after deducting the amount to be paid for the Company’s second mortgage. The Company’s second mortgage requires payments from 90% of annual residual receipts of the Project. Effect: The Company did not deposit the full amount of required residual receipts for fiscal year 2022. HUD may provide written notice of a violation on the agreement. If corrective action is not taken, HUD may declare a default of the Capital Advance Program Regulatory Agreement. $ -- Recommendation The Company should ensure that it makes the full required residual receipt deposit before calculating the payments for other purposes. The company should also transfer the remaining balance of $12,042 to the residual receipts account for fiscal year 2022. Management’s Response The Company agrees with the finding and the recommendation. See Part VI Corrective Action Plan.
1. Ref. No. 2023-001: Payment and Deposit of Residual Receipts Recommendation: The Company should ensure that it makes the full required residual receipt deposit before calculating the payments for other purposes. The Company should also transfer the remaining balance of $12,042 to the residual receipts account for fiscal year 2022. Action Taken: The Company deposited $12,042 into the residual receipts account on August 29, 2023. Contact person: Patrick Delaney (808) 523-5681, ext. 693 Anticipated Completion Date: Complete
FAC accepted this audit on October 30, 2022 — management decision was due April 30, 2023.
FAC accepted this audit on September 7, 2021 — management decision was due March 7, 2022.
FAC accepted this audit on October 12, 2020 — management decision was due April 12, 2021.
FAC accepted this audit on September 22, 2019 — management decision was due March 22, 2020.
FAC accepted this audit on September 19, 2018 — management decision was due March 19, 2019.
FAC accepted this audit on October 15, 2017 — management decision was due April 15, 2018.
FAC accepted this audit on March 13, 2017 — management decision was due September 13, 2017.
Data source: This information comes from the Federal Audit Clearinghouse, the official repository of Single Audit data. All data is public domain. Verify this organization's audit history at fac.gov.
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