Findley Place Apartments

Finding 2025-001 􀂱 Return of Excess Residual Receipts Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Supportive Housing for the Elderly (CFDA No. 14.157) Criteria: Per HUD regulations, any excess balance greater than $250 per unit in the Residual Receipts account must be remitted to HUD's accounting center upon termination of the PRAC. Condition: During the course of our audit, we noted that the Project did not return excess residual receipts funds in excess of $250 per unit to HUD upon expiration of the Section 202 PRAC contract which ended on October 31, 2024. The Project is allowed to keep $3,750 based on its fifteen units. The balance of the account on October 31, 2024, was $3,784. Cause: Management is maintaining a calculation to show excess balances in its Residual Receipts bank account along with its calculation of surplus cash. However, the return was not made due to an oversight. There is no second review in place to detect and correct such oversights. Effect: Noncompliance with HUD requirements can lead to adverse consequences with future funding. Recommendation: We recommend that management review the excess of the Residual Receipts account regularly and return the proper amount of the excess to HUD by the required due date. The Project should enhance its operational and fiscal policies regarding HUD requirements to require a second review of all compliance requirements to ensure adherence with each item. Checklists can be maintained to show these requirements were met and reviewed by management.

Management agent will be responsible for signing off and completion of PRAC renewal. As part of the PRAC renewal process checklist, verification of returned residual receipts will be added. Consistent review of Findley Place Financials balance sheet will further ensure compliance with HUD requirements.

The Project is required to determine the tenant?s income before the tenant is deemed eligible for housing within the Project. This income calculation also determines the amount of assistance the tenant is eligible to receive as well as the tenant?s responsibility. The HUD program regulations specify the allowable income and deductions to be included in the calculation. Condition: During the course of our audit, we noted the Project performed a review process of the tenant assistance calculation, however, this process was not documented. Additionally, the review put in place is to occur one time per year, however a more frequently occurring review would alert management to calculation errors and allow for more timely corrective responses, as needed. Cause: The Project does not have a procedure in place to timely review the calculation of income, and therefore, eligible assistance from HUD. Effect: If tenant income, and ultimately, tenant eligibility and potential assistance is not calculated correctly, the Project may provide services to ineligible tenants and/or the rental amount from the tenant could be incorrect. A timely review of this calculation could help ensure compliance and correct revenue reporting. Recommendation: The Project should employ a review process for initial certifications as well as for annual recertifications for each tenant to ensure the calculations are performed and reported correctly. Reviews should be conducted more frequently to allow for timely corrective responses. Additionally, reviews should be documented showing the date, reviewer, and results of the review. Response: Management will conduct initial certification reviews prior to an incoming tenants move in finalization. Additionally, reviews will take place for all tenants during the annual recertification process to ensure accurate calculations. Documentation will then be kept with each year?s information within the tenant file. See Corrective Action Plan.

Finding 2022-002 - Oversight of Computation of Tenant Eligibility of Assistance Responsible Person, Title: Vanessa Keppner, Board Secretary/Treasurer Anticipated Completion Date: Ongoing Response: Management will conduct initial certification reviews prior to an incoming tenants move in finalization. Additionally, reviews will take place for all tenants during the annual recertification process to ensure accurate calculations. Documentation will then be kept with each years information within the tenant file.

2021-002

The Single Audit Reporting Package including the Data Collection Form is required to be submitted to the Federal Audit Clearinghouse nine months after the end of the audit period. Condition: During the course of our audit, we noted the audit for year ended June 30, 2019, has still not been submitted to the Federal Audit Clearinghouse. The required extended due date was September 30, 2020. Cause: It appears the required information was not available to be submitted to the Clearinghouse in a timely manner. Effect: Late submissions indicate an elevated risk for the entity for single audit testing purposes. It also indicates noncompliance with federal law (2 CFR 200.512). Recommendation: The Project should ensure that all filings are done timely and accurately. We recommend the Project continue to try to resolve the required filings for the fiscal year ended June 30, 2019. Response: We concur with this finding. The board has approved use of a new auditing firm which has improved the timeliness of the audit. The FY22 audit will be planned to be completed and submitted in the correct time frame. See Corrective Action Plan.

Finding 2022-003 - Single Audit Reporting Package Submission (Repeat Finding) Responsible Person, Title: Vanessa Keppner, Board Secretary/Treasurer Anticipated Completion Date: Completed Response: We concur with this finding. The board has approved use of a new auditing firm which has improved the timeliness of the audit. The FY21 audit will be planned to be completed and submitted in the correct time frame.

2021-003

The Project is required to submit Form HUD-9250 to HUD in order to receive approval to remit excess Residual Receipt funds to HUD. Condition: Form HUD-9250 was not completed, and approval was not received before excess Residual Receipt funds were remitted to HUD. Cause: Form HUD-9250 was not completed due to an oversight by management. There was extensive communication between management and HUD to remit fiscal year 2018 surplus funds to HUD. After these funds were remitted to HUD, an excess balance of Residual Receipt funds remained in the account. A check for the excess balance was remitted to HUD without submission and approval of an additional Form HUD-9250.Noncompliance with HUD regulations per the memorandum instructions for Owners of Sec. 202 and Sec. 811 PRAC with Contracts Terminating or Renewing in FY2016 regarding Residual Receipts Authority ? Section 202/811 Project Rental Assistance Contracts (PRACS). Recommendation: We recommend that Form HUD-9250 Funds Authorizations procedures be followed to be in compliance with HUD regulations. Response: Management will ensure that all authorized funds requests will utilize the required 9250 forms in following compliance procedures per HUD regulations.

Finding 2022-004 - Form HUD-9250 Responsible Person, Title: Vanessa Keppner, Board SecretarylTreasurer Anticipated Completion Date: 6/30/23 Response: Management will ensure that all authorized funds requests will utilize the required 9250 forms in following compliance procedures per HUD regulations.

Finding 2021-002 ? Oversight of Computation of Tenant Eligibility of Assistance Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Supportive Housing for the Elderly (CFDA No. 14.157) Criteria: The Project is required to determine the tenant?s income before the tenant is deemed eligible for housing within the Project. This income calculation also determines the amount of assistance the tenant is eligible to receive as well as the tenant?s responsibility. The HUD program regulations specify the allowable income and deductions to be included in the calculation. Condition: During the course of our audit, we noted that the Project did not have a review process in place to oversee the tenant assistance calculation. Cause: The Project does not have a procedure in place to review the calculation of income, and therefore, eligible assistance from HUD. Effect: If the tenant income, expenses and ultimately eligibility and potential assistance is not calculated correctly, the Project may provide services to ineligible tenants and/or the rental amount from the tenant could be incorrect. A secondary review of this calculation could help ensure compliance and correct revenue reporting. Recommendation: The Project should employ a review process for both the initial certification as well as the annual recertifications to ensure the calculations are performed correctly. Response: The management agent will complete an annual audit for all tenant files to ensure eligibility and correct tenant assistance calculation. See Corrective Action Plan.

Finding 2021 -002 - Oversight of Computation of Tenant Eligibility of Assistance Responsible Person, Title: Vanessa Keppner, Board Secretary/Treasurer Anticipated Completion Date: June 30, 2022 Response: We concur with this finding. The management agent will complete an annual audit for all tenant files to ensure eligibility and correct tenant assistance calculation.

Finding 2021-003 ? Single Audit Reporting Package Submission (Repeated Finding) Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Supportive Housing for the Elderly (CFDA No. 14.157) Criteria: The Single Audit Reporting Package including the Data Collection Form is required to be submitted to the Federal Audit Clearinghouse nine months after the end of the audit period. Condition: During the course of our audit, we noted that the audit for the year ended June 30, 2019, was not submitted by the required extended due date of September 30, 2020. Cause: It appears the required information was not available to be submitted to the Clearinghouse in a timely manner. Effect: Late submissions indicate an elevated risk for the entity for single audit testing purposes. It also indicates noncompliance with federal law (2 CFR 200.512). Recommendation: The Project should ensure that all filings are done timely and accurately. We recommend the Project continue to try to resolve the required filings for the fiscal year ended June 30, 2019. Response: The board has approved use of a new auditing firm which has improved the timeliness of the audit. The FY21 audit will be planned to be completed and submitted in the correct time frame. See Corrective Action Plan.

Finding 2021-003 - Single Audit Reporting Package Submission (Repeat Finding) Responsible Person, Title: Vanessa Keppner, Board Secretary/Treasurer Anticipated Completion Date: September 30, 2021 Response: We concur with this finding. The board has approved use of a new auditing firm which has improved the timeliness of the audit. The FY21 audit will be planned to be completed and submitted in the correct time frame.

2020-003

Finding 2020-002 ? Oversight of Agent Services Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Supportive Housing for the Elderly (CFDA No. 14.157) Criteria: Although the accounting function is being performed by a third party, the Project is still responsible for monitoring and ensuring the accuracy of the financial statements and adherence to compliance requirements. Condition: During the course of our audit, we noted that the Project uses West Central Illinois Aging and Disabilities Resource Center (Agent) to perform its bookkeeping services. We obtained an understanding of the controls employed by the Agent and subsequently reviewed by the Project. We found areas where the Project?s oversight could be improved. Cause: Although meetings are being held and financial statements are provided, additional financial information is not provided to the Board for their review. Effect: Without proper oversight, the Project may not be in compliance with policies and procedures regarding approvals and compliance with various HUD requirements. Also, financial statement misstatements and noncompliance, both intentional and unintentional, may not be detected in a timely manner. Recommendation: The Agent should provide bank statements and bank reconciliations for all bank accounts along with any journal entries posted each month for the Board to review and approve. This review and approval should be indicated with initials and dates. Board minutes should also include all reviews and approvals. All requests submitted to HUD for approval to use funds from the Replacement Reserve or Residual Receipts accounts should also be reviewed and approved by the Board and this approval should be noted in the minutes. Transfers in and out of these two accounts should be monitored by the Board to ensure timeliness. In addition, the end of the year surplus cash calculation and transfer should also be reviewed and approved by the Board. Response: The President and/or Secretary/Treasurer will review all bank statements, bank reconciliations and journal entries for the company on a monthly basis as provided by the Agent. All requests submitted to HUD will also be reviewed and initialed. All of these reviews will be reported to the board at regularly scheduled meetings. See Corrective Action Plan.

FINDING 2020-002 - OVERSIGHT OF AGENT SERVICES THE PRESIDENT AND/OR SECRETARY WILL REVIEW ALL BANK STATEMENTS, BANK RECONCILIATIONS AND JOURNAL ENTRIES FOR THE COMPANY ON A MONTHLY BASIS AS PROVIDED BY THE AGENT. ALL REQUESTS SUBMITTED TO HUD WILL ALSO BE REVIEWED AND INITIALED. ALL OF THESE REVIEWS WILL BE REPORTED TO THE BOARD AT REGULARLY SCHEDULED MEETINGS.

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