ARCHULETA HOUSING FOR THE ELDERLYNon-Profit

A. Current Findings on the Schedule of Findings, Ouestioned Costs, and Recommendations. 1. Finding 2020J)01 Statement of condition: The Organization received a $827,240 capital advance from HUD. They did not file audited financial statements with HUD under the Real Estate Assessment Center (REAC). We found that the Organization filed owner certified statements through REAC. Criteria: The REAC requires Organizations that expend $750,000 of federal funds to file to flle audited financial statements through the Financial Assessment Sub System q=ASS) system. Questioned costs: The amount of questioned costs cannot be determined. Effect: The Organization was not in compliance with HUD reporting requirements Cause: Management has indicated they were not aware of the reporting requirement. Recommendation: We recommend that management obtain the necessary training and knowledge to ensure compliance with all applicable HUD reporting requirements. a. Comments on the Finding and Each Recommendation Management concurs with Finding 2020-001 and agrees with the recommendation in the flnding. Management was unaware of the requirement and filed the owner certified statements through REAC, as was done by the previous two other administrations. Management believed that since the budget was well under $750,000, it was not required to flle audited financial statements through the Financial Assessment SubSystem, and was unaware of the requirement due to the Capital Advance of $827,240. In addition, the CPA firm previously used to prepare financial statements did not advise Archuleta Housing for the Elderly of this requirement, nor did HUD who only recently found the error in reporting. HUD attested to not catching the reporting error for 12 years, thus there was little to no way for management to know they were submitting the financial statements incorrectly. b. Action(s) Taken or Planned on the Finding Once notified of the error in reporting, Management immediately contacted the CPA firm previously used to prepare financial statements and then responded to Mr. Scott Loveday of REAC to notify him of our misunderstanding. At that time, Mr. Loveday explained that the requirement was due to the Capital Advance and provided documentation of the amount and the loan. Management agreed to conduct the audit and resubmit the audited financial statements, but asked that it be deferred until FY 2020. Mr. Loveday agreed to the deferring of the audit until FY 2020. Management then contacted HUD for a list of HUD approved auditors and interviewed five agencies, eventually choosing the current auditor for the FY 2020 audit who will be submitting audited financial statements to REAC by 9/30/2020 as required. Management will seek additional training as well, to ensure compliance with all HUD reporting requirements.

2. Finding 2020-002 Statement of condition: The Organization did not have audited financial statements prepared and the results of the audit were not filed with Federal Audit Clearinghouse (FAC). Criteria: The Uniform Grant Guidance (UG) requires that Organizations that expend $750,000 of federal funds to have audited financial statements and the results of the audit be filed with FAC. Questioned costs: The amount of questioned costs cannot be determined. Effect: The Organization was not in compliance with the UG reporting requirements Cause: Management has indicated they were not aware of the reporting requirement. Recommendation: We recommend management receive training on the reporting requirements under the UG. a. Comments on the Finding and Each Recommendation 2 Management concurs with Finding 2020-002 and agrees with the recommendation in the finding. Due to not conducting a single audit in FY 2019, audited statements were not prepared and the results were not filed with the Federal Audit Clearinghouse. b. Action(s) Taken or Planned on the Finding Management is currently having a single audit done for FY 2020 and will file the results with the Federal Audit Clearinghouse by 9/30/2020. In addition, Management will seek training on the reporting requirements under the UG.