EIN: 311627254
UEI: RUPEQ9VJ9Q91
Audited by: Wharton CPA, LLC
Oversight agency: 14 [Department of Housing and Urban Development]
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Data as of September 2, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on September 20, 2024. 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 20, 2025 (533 days ago).
What is a management decision? →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 ▴2023–1 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.
The beginning balances of 2023 were not adjusted to the requested 2022 Audit Adjustment Entries received from the Auditor. We will record the adjusted journal entries of 2022 and 2023 in their respective periods.
The Project did not make the required deposits into the bank account for September 2023 and October 2023. There were only 10 deposits made for the entire year of 2023. 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 Project Rental Assistance Contract, the Mortgagor will deposit an amount…per month unless a different date or amount is approved in writing by HUD”. Cause: The cause was undeterminable. Effect: The cash balance was overstated by $4,000 related to deposits that were never made to this account. The balance was corrected during the audit. Recommendation: I recommend the Property make required monthly deposits according to the Regulatory Agreement each month
Show full finding ▾Hide full finding ▴2023-2 Reserve for Replacement Deposits Not Made or Not Made Timely Condition: The Project did not make the required deposits into the bank account for September 2023 and October 2023. There were only 10 deposits made for the entire year of 2023. 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 Project Rental Assistance Contract, the Mortgagor will deposit an amount…per month unless a different date or amount is approved in writing by HUD”. Cause: The cause was undeterminable. Effect: The cash balance was overstated by $4,000 related to deposits that were never made to this account. The balance was corrected during the audit. Recommendation: I recommend the Property make required monthly deposits according to the Regulatory Agreement each month
Checks for the monthly reserve for replacement deposits for 12 months were processed for the entire year of 2023. We do admit the September and October 2023 deposits were received at the bank in October 2023. However, in October of 2023, management was notified by the banking institution where the Reserve for Replacement account is held that fraudulent activities had taken place with the reserve for replacement accounts. The banking institution closed all accounts and restricted all routine depository activity while they worked through the fraudulent activity. Because of this, the banking institution established new accounts in January 2024 at which time the held payments were deposited into the new account. The checks for the month of September and October cleared on January 02, 2024, management has adjusted the replacement reserve balance to reflect the deposit on January 02, 2024, and have reversed the deposit shown in September and October of 2023.
2022-001, 2021-003
The owner did not meet the HUD financial reporting requirement. Criteria: According to HUD’s Uniform Financial Reporting Standards rule, annually, an owner is required to submit a financial statement, prepared in accordance with generally accepted accounting principles (GAAP), in the electronic format specified by HUD. The unaudited financial statement is due three months after the owner’s fiscal year end and the audited financial statement is due nine months after its fiscal year-end (24 CFR section 5.801). The financial statement must include the financial activities of this program. Cause: The cause is undeterminable. Effect: The Project is not compliant with HUD program requirements. Recommendation: I recommend the owner meet HUD program requirements.
Show full finding ▾Hide full finding ▴2023-3 Late HUD Financial Reporting Condition: The owner did not meet the HUD financial reporting requirement. Criteria: According to HUD’s Uniform Financial Reporting Standards rule, annually, an owner is required to submit a financial statement, prepared in accordance with generally accepted accounting principles (GAAP), in the electronic format specified by HUD. The unaudited financial statement is due three months after the owner’s fiscal year end and the audited financial statement is due nine months after its fiscal year-end (24 CFR section 5.801). The financial statement must include the financial activities of this program. Cause: The cause is undeterminable. Effect: The Project is not compliant with HUD program requirements. Recommendation: I recommend the owner meet HUD program requirements.
We will ensure that going forward, processes are in place to allow for the timely submission of the financial reporting requirements. Further, we request that this finding be removed as the late filing occurred in 2024 and should be given in 2024 pursuant to AU-C 935.
The Project failed to comply with the terms of HUD approved 9250. Criteria: According to HUD-9250 approved on April 11, 2022, a $21,073 loan from the reserve for replacement account was to be repaid upon approval of the budget and the contract. Both the budget and contract were approved for the year however, repayment was not made. Cause: The cause is undeterminable. Effect: The Project did not comply with the repayment terms of HUD 9250. Recommendation: I recommend the Project comply with HUD 9250 Funds Authorizations.
Show full finding ▾Hide full finding ▴2023-4 Unpaid Loan from Reserve for Replacement Condition: The Project failed to comply with the terms of HUD approved 9250. Criteria: According to HUD-9250 approved on April 11, 2022, a $21,073 loan from the reserve for replacement account was to be repaid upon approval of the budget and the contract. Both the budget and contract were approved for the year however, repayment was not made. Cause: The cause is undeterminable. Effect: The Project did not comply with the repayment terms of HUD 9250. Recommendation: I recommend the Project comply with HUD 9250 Funds Authorizations.
Management agrees that HUD approved a 9250 on April 11, 2022, in the amount of $21,073 for a loan from the Reserve for Replacement Account which has not been repaid. Bethel Towers continues to experience increased expenses, specifically with utilities. The property is also experiencing vacancy and receivable issues causing the property to not receive its monthly gross rent potential. The property is aware there is an outstanding loan owed to the Reserve for Replacement Account and intends to repay that loan as soon as the property is financially stable and able to repay it.
2022-002
FAC accepted this audit on September 24, 2023 — management decision was due March 24, 2024.
The Project did not make the required deposit into the bank account for January 2022 until February 2022. 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 Project Rental Assistance 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 Property make required monthly deposits according to the Regulatory Agreement each month.
Show full finding ▾Hide full finding ▴2022-1 Reserve for Replacement Deposits Not Made Timely Condition: The Project did not make the required deposit into the bank account for January 2022 until February 2022. 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 Project Rental Assistance 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 Property make required monthly deposits according to the Regulatory Agreement each month.
2022-1 ? Reserve for Replacement Deposit Not Made Timely Condition: The Project did not make the required deposit into the bank account for January 2022 until February 2022 Response: The January 2022 Reserve for Replacement required deposit was not made until February 2022 due to cash flow issues during the month of January 2022. That deposit was made in February along with all required monthly deposits for the remaining of the year. The project has complied with the replacement Reserve requirement as mentioned in HUD Handbook 4350.1 REV-1, Chapter 4-2. Though, the project was late in depositing the January payment this is not a significant violation of the HUD Handbook 4350.1 REV-1, Chapter 4-2 and the Regulatory Agreement. The requirement to fund and maintain the Replacement Reserve account was accomplished. The project must not be penalized for a 30-day delay in making a monthly payment. The defect was cured in a timely manner. Also, this is not a material weakness to raise it to the level of a reportable condition. We do not agree that this is an instance of material weakness to be elevated to a reportable condition.
2021-003
Reserve for replacement funds were not returned to the account as required by HUD. Criteria: $21,073 was approved to be utilized by HUD from the replacement reserve account for operations. HUD also required that the $21,073 be returned to the replacement reserve account, following approval of the 2022 contract and budget. The funds were not returned to the replacement reserve account as of 12/31/2022, although both the budget and contract had been approved, April 12, 2022. Cause: The cause is undeterminable. Effect: The Project did not comply with HUD 9250 instructions. Recommendation: I recommend management comply with all HUD instructions, rules, and regulations.
Show full finding ▾Hide full finding ▴2022-2 HUD 9250 Instructions not followed Condition: Reserve for replacement funds were not returned to the account as required by HUD. Criteria: $21,073 was approved to be utilized by HUD from the replacement reserve account for operations. HUD also required that the $21,073 be returned to the replacement reserve account, following approval of the 2022 contract and budget. The funds were not returned to the replacement reserve account as of 12/31/2022, although both the budget and contract had been approved, April 12, 2022. Cause: The cause is undeterminable. Effect: The Project did not comply with HUD 9250 instructions. Recommendation: I recommend management comply with all HUD instructions, rules, and regulations.
2022-2 ? HUD 9250 Instructions Not Followed Condition: Reserve for Replacement funds were not returned to the account as required by HUD. Response: Management agree that $21,073 was not returned to the Reserve for Replacement Account. This was an oversight due to paying unforeseen increased expenses, specifically with utilities that increased substantially. (See attached General Ledger)
FAC accepted this audit on April 29, 2022 — management decision was due October 29, 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 Does Not Reconcile to General Ledger 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 5/15/2021. 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.
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 Project Rental Assistance 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 Property make required monthly deposits according to the Regulatory Agreement.
Show full finding ▾Hide full finding ▴2021-3 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 Project Rental Assistance 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 Property 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.
Management failed to provide bids for procured services that exceeded $10,000 or more. Criteria: According to the HUD Management Agent Handbook 4381.5 Section 6.5 Contracting Guidelines when an owner/agent is contracting for goods or services involving project income, an agent is expected to solicit written cost estimates from at least three contractors for any contract, ongoing supply or service which is expected to exceed $10,000 per year. Cause: The cause is undeterminable. Effect: The Project procured services that did not comply with HUD regulations. Recommendation: I recommend management comply with all HUD rules and regulations regarding procurement.
Show full finding ▾Hide full finding ▴2021-4 No Bids Provided Condition: Management failed to provide bids for procured services that exceeded $10,000 or more. Criteria: According to the HUD Management Agent Handbook 4381.5 Section 6.5 Contracting Guidelines when an owner/agent is contracting for goods or services involving project income, an agent is expected to solicit written cost estimates from at least three contractors for any contract, ongoing supply or service which is expected to exceed $10,000 per year. Cause: The cause is undeterminable. Effect: The Project procured services that did not comply with HUD regulations. Recommendation: I recommend management comply with all HUD rules and regulations regarding procurement.
There was one contract service in an active current term during the audit period that exceeded $10,000. We understand and will comply with the requirement to solicit three bids for services that exceed, or are expected to exceed, $10,000 or more.
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 agree that the previous accountant fail 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.
FAC accepted this audit on September 17, 2020 — management decision was due March 17, 2021.
The residual receipts account remained in the name of the previous management company, and is not controlled by the successor management company. Criteria: The Project?s bank accounts should be in the name of the management company that has control of its accounting functions. Cause: The successor management company did not receive funds from the previous management company to gain control of the residual receipts bank account. Effect: The opportunity for potential fraud could occur. Recommendation: I recommend the previous management company relinquish control of the residual receipts bank account to the successor management company.
Show full finding ▾Hide full finding ▴2019-1 Residual Receipts Bank Account Not Controlled by Successor Management Company Condition: The residual receipts account remained in the name of the previous management company, and is not controlled by the successor management company. Criteria: The Project?s bank accounts should be in the name of the management company that has control of its accounting functions. Cause: The successor management company did not receive funds from the previous management company to gain control of the residual receipts bank account. Effect: The opportunity for potential fraud could occur. Recommendation: I recommend the previous management company relinquish control of the residual receipts bank account to the successor management company.
Response: The residual receipts account was under the control of the previous agent and was not a finding on the 2018 Audit Report. We have sent an email and made phone calls to the prior agent to resolve this matter. Today, 4/22/20, the previous agent forwarded information that they are indeed in possession of the residual receipts account,in the name of Bethel Towers, and will be closing the account and will forward a cashier?s check representing these fund to ARMS. Upon receipt, we send you the back-up documentation for your records.
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?2 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?3 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 closed periods of rent and subsidy payments which are reflected in the current fiscal year. We will continue to ensure reconciliation of Gross Rent Potential on a monthly basis.
There was one tenant where supporting documentation was not provided to support the timely refund of tenant security deposits. 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: Unable to determine. Effect: The Project did not maintain support for the timely processing of security deposit refunds. Recommendation: I recommend management maintain sufficient supporting documentation to support the timely processing of tenant security deposit refunds.
Show full finding ▾Hide full finding ▴2019?4 Tenant Security Deposit Incomplete Support Provided Condition: There was one tenant where supporting documentation was not provided to support the timely refund of tenant security deposits. 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: Unable to determine. Effect: The Project did not maintain support for the timely processing of security deposit refunds. Recommendation: I recommend management maintain sufficient supporting documentation to support the timely processing of tenant security deposit refunds.
Response: A review of the disbursements of security deposits during 2019 revealed one instance of a refund being issued within 31 days of the move out date. We will ensure, going forward, that security deposit refunds are disbursed within 30 days of the move out date.
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 September 6, 2018 — management decision was due March 6, 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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