Caritas Plaza

Finding 2022-001 Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Program: HUD Mortgage Insurance for the Purchase or Refinancing of Existing Multi-family housing projects (Assistance Listing #14.155) Compliance Requirement: Eligibility Criteria: In accordance with Caritas Plaza?s regulatory agreement with HUD for its HUD Section 223(f) Insured Mortgage, Caritas Plaza is required to annually recertify its tenants as eligible tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Condition: Caritas Plaza did not recertify all of its tenants within the timeframe specified by HUD. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed in the timeframe required by HUD. Effect: The effect is immaterial non-compliance with the terms of the HUD program listed above. The deficiency in internal controls over compliance could lead to material non-compliance with the eligibility compliance requirement. Questioned Costs: None. Repeat Finding: Yes. See Finding 2021-002. Context: We selected a sample of 8 tenants from a population of 30. The sample size was determined based upon guidelines provided by the AICPA and was not considered a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. From our sample, two tenant recertifications were not performed within the 12 month timeframe specified by HUD. Additionally, during our performance of other audit procedures, there were indications of additional late recertifications that fell outside of our sample. Recommendation: We recommend management review the current internal control procedures and implement additional procedures to ensure annual recertifications are performed as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Finding 2021-001 Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Program: HUD Mortgage Insurance for the Purchase or Refinancing of Existing Multi-family Housing Projects (Assistance Listing #14.155) Compliance Requirement: Reporting Criteria: Caritas Plaza?s regulatory agreement with HUD and the HUD Uniform Financial Reporting Standards (24 CFR ?5.801) require audited financial statements to be submitted to HUD within 90 days of the fiscal year end. HUD may authorize an extension to the 90 day due date. Condition: The annual audit for the fiscal year ended June 30, 2020 was not submitted within the 90 day timeframe as required by HUD and was not submitted within the extension period authorized by HUD. Cause: The audit was not completed within the applicable time frames so it was not available to be submitted to HUD by the due date. Effect: The effect is immaterial non-compliance with the terms of the HUD programs listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2020-001. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure the audit is completed timely and submitted to HUD as required. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Finding 2021-002 Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Program: HUD Mortgage Insurance for the Purchase or Refinancing of Existing Multi-family Housing Projects (Assistance Listing #14.155) Compliance Requirement: Eligibility Criteria: In accordance with Caritas Plaza?s regulatory agreement with HUD for its HUD Section 223(f) Insured Mortgage, Caritas Plaza is required to annually recertify its tenants as eligible tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Condition: Caritas Plaza did not recertify all of its tenants within the timeframe specified by HUD. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed in the timeframe required by HUD. Effect: The effect is immaterial non-compliance with the terms of the HUD program listed above. The deficiency in internal controls over compliance could lead to material non-compliance with the eligibility compliance requirement. Questioned Costs: None. Repeat Finding: No. Context: We selected a sample of 8 tenants from a population of 31. The sample size was determined based upon guidelines provided by the AICPA and was not a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. From our sample, two tenant recertifications were not performed within the 12 month timeframe specified by HUD. Recommendation: We recommend management review the current internal control procedures and implement additional procedures to ensure annual recertifications are performed as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Findings and Questioned Costs ? Major Federal Award Programs Audit Finding 2020-001 Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Programs: HUD Mortgage Insurance for the Purchase or Refinancing of Existing Multi-family housing projects (CFDA 14.155) and HUD Section 8 Housing Assistance Payments Program (CFDA 14.195) Criteria: The HUD Uniform Financial Reporting Standards (24 CFR ?5.801) require audited financial statements to be submitted to HUD within 90 days of the fiscal year end. Additionally, the Uniform Guidance (2 CFR ?200.512) requires auditees to complete the data collection form and annual audited financial statements to the Federal Audit Clearinghouse the earlier of 30 calendar days after the receipt of the auditor?s report or nine months after the end of the audit period. Condition: The annual audit for the fiscal year ended June 30, 2019 was not submitted within the 90 day timeframe as required by HUD or within nine months after year end as required by the Uniform Guidance. Cause: The audit was not completed within the applicable time frames so it was not available to be submitted to HUD or to the Federal Audit Clearinghouse. Effect: The effect is immaterial non-compliance with the terms of the HUD programs listed above as well as non-compliance with the ?200.512 of the Uniform Guidance. Questioned Costs: None. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure the audit is completed timely and submitted to HUD and the Federal Audit Clearinghouse as required. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.