EIN: 311208149
UEI: UX26S5YKYLJ9
Audited by: WHARTON CPA, LLC
Oversight agency: 14 [Department of Housing and Urban Development]
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Data as of August 28, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on September 24, 2023. 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 March 24, 2024 (889 days ago).
What is a management decision? →FAC accepted this audit on April 30, 2022 — management decision was due October 30, 2022.
Management did not record utility accruals in the accounting records. Criteria: The accrual accounting method ensures transactions are recognized in the accounting period incurred, rather than paid; which follows the matching principle. Cause: The cause is undeterminable. Effect: Not recording accruals could have a material impact on both the balance sheet and the income statements. Recommendation: I recommend management post all accruals to properly reflect the financial position of the Project.
Show full finding ▾Hide full finding ▴2021-1 Accruals Not Properly Posted Condition: Management did not record utility accruals in the accounting records. Criteria: The accrual accounting method ensures transactions are recognized in the accounting period incurred, rather than paid; which follows the matching principle. Cause: The cause is undeterminable. Effect: Not recording accruals could have a material impact on both the balance sheet and the income statements. Recommendation: I recommend management post all accruals to properly reflect the financial position of the Project.
We will ensure that going forward, all required utility accrual entries will be done timely
Management failed to properly reconcile prepaid insurance expenses to the general ledger. Criteria: Management is required to prepare financial statements in accordance with generally accepted accounting principles. Cause: The cause is undeterminable. Effect: Misrepresentation of prepaid expenses could have an impact on both the balance sheet and the income statements. Recommendation: I recommend management properly record prepaid insurance expenses.
Show full finding ▾Hide full finding ▴2021-2 Prepaid Insurance Not Properly Recorded Condition: Management failed to properly reconcile prepaid insurance expenses to the general ledger. Criteria: Management is required to prepare financial statements in accordance with generally accepted accounting principles. Cause: The cause is undeterminable. Effect: Misrepresentation of prepaid expenses could have an impact on both the balance sheet and the income statements. Recommendation: I recommend management properly record prepaid insurance expenses.
In 2021 we were recording prepaid expenses monthly as required and reconciling based on the policy renewal date of 5/22/2021. Going forward, we will adjust the general ledger to match that of the prepaid expense schedule at fiscal year-end in reconciliation of the same.
2020-002
Accounts payable aging report was not provided to support the general ledger account balance. Criteria: Support must be maintained for general ledger account balances. Cause: The cause is undeterminable. Effect: Appropriate audit trail for accounts payable was not provided. Recommendation: I recommend management provide supporting documentation to support general ledger account balances.
Show full finding ▾Hide full finding ▴2021-3 Accounts Payable Aging Report Not Provided Condition: Accounts payable aging report was not provided to support the general ledger account balance. Criteria: Support must be maintained for general ledger account balances. Cause: The cause is undeterminable. Effect: Appropriate audit trail for accounts payable was not provided. Recommendation: I recommend management provide supporting documentation to support general ledger account balances.
Accounts Payable aging report was provided, but the report total did not equal that of the general ledger balance on 12/31/2021 as it should. Going forward, we will ensure that the Accounts Payable aging report will reconcile and tie out to the general ledger account balance.
The Project did not make the required deposit into the bank account on a monthly basis. Criteria: According to the Regulatory Agreement, ?mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank?Concurrently with the effective commencement of rental assistance payments under the Housing Assistance Payment contract, the Mortgagor will deposit an amount?per month unless a different date or amount is approved in writing by HUD?. Cause: The cause is undeterminable. Effect: The Project is not in compliance with the Regulatory Agreement. Recommendation: I recommend the Project make required monthly deposits according to the Regulatory Agreement.
Show full finding ▾Hide full finding ▴2021-4 Reserve for Replacement Deposits Not Made Timely Condition: The Project did not make the required deposit into the bank account on a monthly basis. Criteria: According to the Regulatory Agreement, ?mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank?Concurrently with the effective commencement of rental assistance payments under the Housing Assistance Payment contract, the Mortgagor will deposit an amount?per month unless a different date or amount is approved in writing by HUD?. Cause: The cause is undeterminable. Effect: The Project is not in compliance with the Regulatory Agreement. Recommendation: I recommend the Project make required monthly deposits according to the Regulatory Agreement.
The required remittances were made on a monthly basis, however delivery delays into the bank account were outside of our control. To correct this going forward, we will explore utilizing a financial institution that will allow for external wire transfers into the reserve for replacement bank account to avoid postal or other delivery methods delays.
The current HUD 9250 in place for monthly deposits to the reserve for replacement account had an effective date from 3/1/2019 ? 2/28/2021. Criteria: An updated HUD 9250 should be obtained from HUD upon expiration of the one in place. Cause: The cause is undeterminable. Effect: The Project is not in compliance with HUD regulations. Recommendation: I recommend management obtain an updated HUD 9250.
Show full finding ▾Hide full finding ▴2021-5 Updated HUD 9250 Not Provided Condition: The current HUD 9250 in place for monthly deposits to the reserve for replacement account had an effective date from 3/1/2019 ? 2/28/2021. Criteria: An updated HUD 9250 should be obtained from HUD upon expiration of the one in place. Cause: The cause is undeterminable. Effect: The Project is not in compliance with HUD regulations. Recommendation: I recommend management obtain an updated HUD 9250.
Response: There has been no increase to the reserve for replacement since 2019. Therefore, this is the current 9250 and what we are required to abide by. HUD does not issue 9250?s for the monthly reserves on an annual basis, only when there has been a change. Therefore, this is not a valid finding, and we request removal from the audit DRAFT report.
FAC accepted this audit on April 29, 2021 — management decision was due October 29, 2021.
Management failed to post prior year audit entries. Criteria: Agreed upon audit adjustments must be posted to the financial statements each year. Cause: The cause is undeterminable. Effect: The financial statement records did not contain all financial transactions of the property. Recommendation: I recommend management post audit entries to agree financial records to audit report.
Show full finding ▾Hide full finding ▴2020?1 Prior Year Audit Entries Not Posted Condition: Management failed to post prior year audit entries. Criteria: Agreed upon audit adjustments must be posted to the financial statements each year. Cause: The cause is undeterminable. Effect: The financial statement records did not contain all financial transactions of the property. Recommendation: I recommend management post audit entries to agree financial records to audit report.
Management agrees that our previous accountant failed to post the prior year audit entries. Management?s recently hired accountant has been made aware of this issue and has proceeded to post the prior year entries and will post audit entries timely going forward.
Management failed to properly record prepaid insurance expenses. Criteria: Management is required to prepare financial statements in accordance with generally accepted accounting principles. Cause: The cause is undeterminable. Effect: Misrepresentation of prepaid expenses could have an impact on both the balance sheet and the income statements. Recommendation: I recommend management properly record prepaid insurance expenses.
Show full finding ▾Hide full finding ▴2020-2 Prepaid Insurance Not Properly Recorded Condition: Management failed to properly record prepaid insurance expenses. Criteria: Management is required to prepare financial statements in accordance with generally accepted accounting principles. Cause: The cause is undeterminable. Effect: Misrepresentation of prepaid expenses could have an impact on both the balance sheet and the income statements. Recommendation: I recommend management properly record prepaid insurance expenses.
Management has reviewed this matter with our accounting team and will ensure that prepaid insurance is recorded properly going forward.
FAC accepted this audit on September 20, 2020 — management decision was due March 20, 2021.
Vacancies are not reconciled throughout the calendar year. Criteria: Vacancies should be reconciled at the end of each month. Cause: The cause is undeterminable. Effect: Vacancies had to be reconciled during the audit process. Recommendation: I recommend management reconcile vacancies on a monthly basis.
Show full finding ▾Hide full finding ▴2019?1 Vacancies Not Reconciled Timely Condition: Vacancies are not reconciled throughout the calendar year. Criteria: Vacancies should be reconciled at the end of each month. Cause: The cause is undeterminable. Effect: Vacancies had to be reconciled during the audit process. Recommendation: I recommend management reconcile vacancies on a monthly basis.
Response: All vacancies in the General Ledger of ARMS agree to the reports of the tenant ledgers in our Leasing and Rents software. This reconciliation of vacancies is performed on a regular basis.
Gross potential rent is not reconciled throughout the calendar year. Criteria: Gross potential rent should be reconciled at the end of each month. Cause: The cause is undeterminable. Effect: Gross potential rent had to be calculated and reconciled during the audit process. Recommendation: I recommend management calculate and reconcile on gross potential rent on a monthly basis.
Show full finding ▾Hide full finding ▴2019?2 Gross Potential Rent Not Reconciled Timely Condition: Gross potential rent is not reconciled throughout the calendar year. Criteria: Gross potential rent should be reconciled at the end of each month. Cause: The cause is undeterminable. Effect: Gross potential rent had to be calculated and reconciled during the audit process. Recommendation: I recommend management calculate and reconcile on gross potential rent on a monthly basis.
Response: The gross rent potential is reconciled throughout the year. However, interim and annual certifications of resident income, assets, and household composition may create adjustments to prior periods of rent and subsidy payments. We will continue to ensure reconciliation of Gross Rent Potential on a monthly basis.
Management failed to collect monthly lease payments resulting in tenants accruing large amounts of past due rent. Criteria: Monthly tenant lease payments should be collected and payable according to the terms of the HUD model lease. Cause: Site managers did not carry out the terms of the HUD-model lease and collect rent due. Effect: Tenant accounts receivables included significant amounts of unpaid rent for former residents. Recommendation: I recommend management develop and implement a collection policy.
Show full finding ▾Hide full finding ▴2019?3 Collection of Tenant Accounts Receivable Condition: Management failed to collect monthly lease payments resulting in tenants accruing large amounts of past due rent. Criteria: Monthly tenant lease payments should be collected and payable according to the terms of the HUD model lease. Cause: Site managers did not carry out the terms of the HUD-model lease and collect rent due. Effect: Tenant accounts receivables included significant amounts of unpaid rent for former residents. Recommendation: I recommend management develop and implement a collection policy.
Response: Management has a collection policy, and will ensure that it is adhered to.
Management Agent Certifications provided during the audit and approved by the Department of Housing and Urban Development (HUD) had a term of 9/1/2017 ? 8/31/2018. Criteria: According to HUD Handbook 4381.5, The Management Handbook, Paragraph 2.6, the owner and agent must complete HUD Form 9839-B Management Agent Certification. Cause: Management failed to obtain a current management agent certification approved by HUD. Effect: The accuracy of the management fee expense is undeterminable. Recommendation: I recommend the management company obtain current management agent certifications approved by HUD, upon expiration.
Show full finding ▾Hide full finding ▴2019?4 Management Agent Certifications Not Current Condition: Management Agent Certifications provided during the audit and approved by the Department of Housing and Urban Development (HUD) had a term of 9/1/2017 ? 8/31/2018. Criteria: According to HUD Handbook 4381.5, The Management Handbook, Paragraph 2.6, the owner and agent must complete HUD Form 9839-B Management Agent Certification. Cause: Management failed to obtain a current management agent certification approved by HUD. Effect: The accuracy of the management fee expense is undeterminable. Recommendation: I recommend the management company obtain current management agent certifications approved by HUD, upon expiration.
Response: The Management Agent Certification (HUD Form 9839-b) does not have an expiration date. An updated Management Agent Certification (HUD Form 9839-b) is required under the following conditions: a) Authorizing the agent to collect a fee different from the percentages fees and any special fees specified in Paragraph 1 of the existing Certification: b) Changing the expiration date of the Management Agreement. c) Renewing the Management Agreement. d) Permitting a new Agent to operate the project e) Permitting a new Agent to collect a fee. f) Undertaking self-management of the project. Therefore, we disagree with this finding as the Management Agent Certification provided that is signed and approved by the Owner, HUD, and the Agent, is valid.
There was no information provided for one tenant; therefore eligibility is undererminable. Criteria: According to HUD Handbook 4350.3 Chapter 3, Section 1, 3-4, owners are required to determine whether applicants are eligible to occupy the subsidized property and receive housing assistance. Cause: The cause is underterminable. Effect: I was unable to determine compliance with HUD guidelines as no information was provided. Recommendation: I recommend management follow HUD guidelines to determine eligibility for each tenant, and maintain all required documents prescribed by HUD.
Show full finding ▾Hide full finding ▴2019-5 Eligibility of Tenant Undeterminable Condition: There was no information provided for one tenant; therefore eligibility is undererminable. Criteria: According to HUD Handbook 4350.3 Chapter 3, Section 1, 3-4, owners are required to determine whether applicants are eligible to occupy the subsidized property and receive housing assistance. Cause: The cause is underterminable. Effect: I was unable to determine compliance with HUD guidelines as no information was provided. Recommendation: I recommend management follow HUD guidelines to determine eligibility for each tenant, and maintain all required documents prescribed by HUD.
Response: The documents of one resident did not properly upload initially. It has since been uploaded on the Auditors Share File, which is accessible to your office.
2018-003
There was one tenant whose security deposit was not refunded within the 30 day timeframe required by the U.S. Department of Housing and Urban Development. Criteria: According to the Consolidated Audit Guide for Audits of HUD Program Handbook 2000.04 REV-2 Change 1, Chapter 3, tenant security deposits must be refunded within 30 days of move-out. Cause: Management did not process move-out documents in a timely manner to facilitate proper and timely processing of refund. Effect: The Project is not in compliance with the Consolidated Audit Guide for Audits of HUD Program as it relates to tenant security deposits. Recommendation: I recommend management implement stronger internal controls related to the refund process to ensure compliance with Consolidated Audit Guide for Audits of HUD Program.
Show full finding ▾Hide full finding ▴2019-6 Tenant Security Deposit Not Refunded Timely Condition: There was one tenant whose security deposit was not refunded within the 30 day timeframe required by the U.S. Department of Housing and Urban Development. Criteria: According to the Consolidated Audit Guide for Audits of HUD Program Handbook 2000.04 REV-2 Change 1, Chapter 3, tenant security deposits must be refunded within 30 days of move-out. Cause: Management did not process move-out documents in a timely manner to facilitate proper and timely processing of refund. Effect: The Project is not in compliance with the Consolidated Audit Guide for Audits of HUD Program as it relates to tenant security deposits. Recommendation: I recommend management implement stronger internal controls related to the refund process to ensure compliance with Consolidated Audit Guide for Audits of HUD Program.
Response: Management will ensure that security deposits are refunded in a timely manor.
FAC accepted this audit on March 25, 2019 — management decision was due September 25, 2019.
GSA_MIGRATION
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Show full finding ▾Hide full finding ▴FAC accepted this audit on August 16, 2018 — management decision was due February 16, 2019.
GSA_MIGRATION
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Show full finding ▾Hide full finding ▴FAC accepted this audit on April 30, 2017 — management decision was due October 30, 2017.
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