NAF Senior Housing, Inc.Non-Profit

Finding 2024-002: Replacement Reserves Material Weakness Special Tests and Provisions Criteria: The Project should have procedures to account for its replacement reserve monthly and to review for any errors. Condition: The Project’s management, the Housing Authority of the City of Lexington, Nebraska, incorrectly handled a replacement reserve transaction and did not identify the error for it to be corrected by the fiscal year end. In April, 2024, the Project was approved to transfer $22,606.44 from its replacement reserve to its checking account to pay for capital improvements. In error, the management agent transferred funds of $22,606.44 from another program into the Project’s replacement reserve. The error was not caught and corrected as of our audit fieldwork date. Cause: The Project did not have procedures to reconcile approved replacement reserve withdrawals to the bank account and further was not adequately reviewing the account activity to identify errors. Effect or Potential Effect: The Project deposited funds into its replacement reserve from another program and did not identify the mistake or realize funds were not deposited into the checking account. Recommendation: The Project should have procedures in place to monitor approved withdrawals and transferred to the correct account and have reconciliation procedures to identify these errors. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.

Finding 2023-001: Excess Residual Receipts Material Weakness/Noncompliance Special Tests and Provisions Criteria: Annually upon expiration and/or renewal of the PRAC, residual receipts account balances in excess of $250 per unit must be remitted to HUD. Condition: The Project is allowed to maintain up to $4,500 in its residual receipts. The Project failed to determine excess receipts due to HUD when its PRAC renewed November 1, 2022. The excess due to HUD at June 30, 2023 was $5,292.34. Cause: The Project did not have procedures to annually review the residual receipts account balance at the PRAC renewal date. Effect or Potential Effect: The Project did not comply with the regulation to remit excess residual receipts to HUD. Recommendation: The Project has had significant vacancies this past year which has reduced its ability to pay its vendors or capital improvements. Prior to remitting funds back to HUD, the Project should contact its HUD representative to see if it would be possible to use the excess residual receipts instead of remitting them to HUD. If not, the Project should begin the process to remit the funds back to HUD. The Project should establish an annual procedure to review residual receipt balances on the PRAC renewal and remit funds as required. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.

GSA_MIGRATION