)runp & Tervalon LLP - LLA Default Homepage · 2018-06-10 · Contributions 5,546 Other revenues 56,668 Developer fees 62,499 Total revenues and support 961.557 EXPENSES Program services

UJAMAA COMMUNITY DEVELOPMENT CORPORATION

FINANCIAL AND COMPLIANCE AUDITTOGETHER WITH

INDEPENDENT AUDITORS' REPORT

FOR THE YEAR ENDED DECEMBER 31,2005

Under provisions of state law, this report is a publicdocument Acopy of the report has been submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office of the parish clerk of court.

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)runp & Tervalon LLP7Certified Public Accountants

TABLE OF CONTENTS

PAGE

INDEPENDENT AUDITORS' REPORT 1

CONSOLIDATED STATEMENT OF FINANCIALPOSITION-DECEMBER 31,2005 3

CONSOLIDATED STATEMENT OF ACTIVITIESFOR THE YEAR ENDED DECEMBER 31,2005 4

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31,2005 5

CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSESFOR THE YEAR ENDED DECEMBER 31,2005 6

NOTES TO THE FINANCIAL STATEMENTS 7

TABLE OF CONTENTS(CONTINUED)

PAGE

SUPPLEMENTARY INFORMATION:Consolidating Statement of Financial Position

As of December 31,2005 18Consolidating Statement of Revenues and Support

For the Year Ended December 31,2005 19Consolidating Schedule of Functional Expenses

For the Year Ended December 31,2005 20Schedule of Expenditures of Federal Awards

For the Year Ended December 31,2005 21

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ONINTERNAL CONTROL OVER FINANCIAL REPORTING BASEDON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMEDIN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS .... 23

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITHREQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAMAND INTERNAL CONTROL OVER COMPLIANCE INACCORDANCE WITH OMB CIRCULAR A-133 25

SUMMARY SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS FOR THE YEAR ENDED DECEMBER 31, 2005:

Section I - Summary of the Independent Auditors'Results 30Section II - Financial Statement Findings 31Section III - Federal Award Findings and Questioned Costs 33Schedule of Prior Year Audit Findings 38

~Bruno& Tervalon LLP. ,,Certified ~ublic Accountants

Member American Institute of Michael B. Bruno, CPA

Alcide J. Tervalon, Jr., CPA

Waldo J. Moret, Jr., CPA

PauiK.Andoh,S~,CPA

Certified Public Accountants Society of Louisiana

Certified Public Accountants

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of UJAMAA Community Development Corporation New Orleans, Louisiana

We were engaged to audit the accompanying consolidated statement of financial position ofUJAMAA Community Development Corporation (UJAMAA) as ofDecember 31, 2005 and the related consolidated statements of activities, functional expenses and cash flows for the year then ended. These consolidated fmancial statements are the responsibility ofUJAMAA's management.

As a result of accounting controls pertaining to the management of the St. Bakhita Gardens apartment complex being ineffective regarding certain operating accounting functions, which resulted in deposits and disbursements not being posted to the general ledger, bank statements not being reconciled, certain receivables and payables not being recorded, and with management being unable to locate supporting documentation for transactions, we were unable to audit the financial statements ofUJAMAA. We also noted that management ofUJAMAA is currently performing certain investigations, the result of which could have a material effect on the financial statements.

Because of the significance of the matters described in the preceding paragraph, we were unable to express, and we do not express, an opinion on the financial statements referred to in the first paragraph.

In accordance with Government Auditing Standards, we have also issued our report dated March 16 , 2007 on our consideration of UJAMAA's internal control over financial reporting and our test of its compliance with certain provisions of laws, regulations, contracts and grants as of and for the year ended December 31, 2005. That report is an integral part of an audit performed in accordance with Govermnent Auditing Standards and should be read in conjunction with this report in considering the results of our audit.

4298 ELYSIAN FIELDS AVENUE, NEW ORLEANS, LA 70122 (504) 284-8733 FAX (504) 284-8296

E-MAIL: [email protected]

INDEPENDENT AUDITORS' REPORT(CONTINUED)

To the Board of Directors ofUJAMAA Community Development CorporationNew Orleans, LouisianaPage 2

Our audits were made for the purpose of forming an opinion on the basic financial, the resultof which resulted in a disclaimer of opinion. The accompanying Schedule of Expendituresof Federal Awards is presented for the purpose of additional analysis as required by U.S.Office of Management and Budget Circular A-133, Audits of States, Local Governments,and Non-Profits, and is not a required part of the basic financial statements. Suchinformation has been subjected to the auditing procedures applied in the audit of the basicfinancial statements, the results of which resulted in a disclaimer of opinion.

The other supplementary information which is prepared in accordance with accountingprinciples generally accepted in the United States of America and is not a required part ofthe financial statements.has also been subjected to auditing procedures applied in the auditof the financial statements, the results of which resulted in a disclaimer of opinion.

BRUNO & TERVALON LLPCERTIFIED PUBLIC ACCOUNTANTS

March 16, 2007

irunp & Tervalon LLP7Certified Public Accountants

UJAMAA COMMUNITY DEVELOPMENT CORPORATIONCONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS OF DECEMBER 31,2005

ASSETS

Cash and cash equivalents (NOTE 2) $ 60,442Restricted deposits 307,396Tenants receivable 4,164Due from Affiliates (NOTE 17) 99,370Accounts Receivable 52,900Deposits on Lots 2,900Prepaid expense 1,260Investment in partnership (NOTE 6) ' 1,020,945Fixed assets, net of accumulated depreciation of

$259,797 (NOTES 2 AND 3) 7366.847

Total assets $8.916.225

LIABILITIES AND NET ASSETS

Liabilities: .Bank overdraft $ 92,448Retainage payable 9,814Accounts payable 157,087Accrued management expenses and

loans payable (NOTE 15) 261,324Accrued Expenses 374,965Flexible Subsidy Loan Payable (NOTE 14) 262,470Notes payable (NOTE 9) . 650,000Series 2003 mortgage payable (NOTE 12) 2,058,840Deferred revenues 15,001Line of credit (NOTE 16) 40,000Rental security deposits . 19,486Accrued interest payable 79.113

Total liabilities 4.020.548Net Assets:

Unrestricted (NOTE 2) 4.895.677

Total liabilities and net assets $8.916.225

The accompanying notes are an integral part of these financial statements.

3

UJAMAA COMMUNITY DEVELOPMENT CORPORATIONCONSOLIDATED STATEMENT OF ACTIVITIESFOR THE YEAR ENDED DECEMBER 31,2005

REVENUES AND SUPPORT

Grant revenue (NOTE 4) $ 116,517Rental income, net of vacancy and

other losses of $352,068 720,327Contributions 5,546Other revenues 56,668Developer fees 62,499

Total revenues and support 961.557

EXPENSES

Program services 755,860'Support services 318387

Total expenses 1.074.247

Change in net assets (112,689)

Net assets at beginning of year 5.008.366

Net assets at end of year $4.895.677


UJAMAA COMMUNITY DEVELOPMENT CORPORATIONCONSOLIDATED STATEMENT OF CASH FLOWS


CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assetsAdjustments to reconcile change in net assets

to net cash used in operating activities:DepreciationIncrease in deposit on lotsIncrease in due from affiliateIncrease in restricted depositsIncrease in tenant receivableIncrease in accounts receivableDecrease in prepaid expenseIncrease in accounts payableDecrease in deferred revenuesDecrease in rental depositsIncrease in retainage payableIncrease in accrued expensesIncrease in accrued interest payableIncrease in bank overdraft

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVmES

Net purchase of fixed assets

Net cash used in investing activities

$ (112,689)

115,692(2,900)

(80,616)(307,396)

(2,020)(52,900)

92,3013,651

(83,173)(243)2,443

90,38662,98092.448

(182.036)

n.175.039)

fl.17S.039)

CASH FLOWS FROM FINANCING ACTIVITIES

Line of credit principal paymentsProceeds from Series 2003 Mortgage loanFlex subsidy loan principal payments

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

(54,600)1,033,200

(4.690)

973.910

383,165

443.607

$ 60.442


UJAMAA COMMUNITY DEVELOPMENT CORPORATIONCONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES


EXPENSES

Program SupportingServices Services Total

Insurance $123,580 $ -0- $ _ 123,580Utilities 183,864 -0- 183,864Professional fees 201S832 -0- 201,832Miscellaneous -0- 17S583 17,583Repairs and maintenance 42,177 11,682 53,859Supplies -0- 4,841 4,841Telephone -0- 9,316 9,316Taxes 24 -0- 24Advertising 1,126 -0- 1,126Decorations 5,216 -0- 5,216Payroll and related taxes -0- 54,971 • 54,971Management fees 198,041 -0- 198,041Computer expense -0- 8,136 8,136Depreciation -0- 115,692 115,692Conference -0- 1,472 1,472Otherrent -0- 11,640 11,640Interest expense -0- 65,690 65,690Office expense -0- 5,362 5,362Travel -0- 6,343 65343Fundraising -0- 745 745Donations -0- 1,450 1,450Entertainment -_Qz 3.464 3.464

Total expenses S755.860 S318387 $1,074,247


UJAMAA COMMUNITY DEVELOPMENT CORPORATIONNOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - Organization:

UJAMAA Community Development Corporation (UJAMAA) wasorganized for the following purposes:

• To raise the economic, educational and social levels of the residentsof Orleans Parish, who are substantially unemployed, underemployed, or whose income is below federal poverty guidelines, tofoster and promote community-wide interest and concern for theproblems of said residents to the end that (a) educational andeconomic opportunities may be. expanded; (b) sickness, poverty,crime and environmental degradation may be lessened;

• To expand opportunities for residents of the Special Impact area toobtain and/or acquire adequate low cost housing;

• Provide assistance and educational material with respect to thedevelopment, operation and maintenance of affordable, safe, sanitaryand decent housing in the State of Louisiana;

• Provide decent housing that is affordable to low and moderate incomeresidents of the State;

• Ensure the accessibility of every resident of the State to affordable,safe, sanitary and decent housing dwelling units;

» Educate residents of public and subsidized housing as to their rights,responsibilities and privileges under the existing laws;

'• Expand economic development and home ownership opportunities forresidents of the State, especially for the disadvantaged, homeless,impaired or impoverished, on a nondiscriminatory basis;

UJAMAA COMMUNITY DEVELOPMENT CORPORATIONNOTES TO THE FINANCIAL STATEMENTS, CONTINUED

NOTE 1 - Organization. Continued:

• Encourage all levels of government to provide services,improvements and incentives to stimulate the housing revitalizationprocess;

• Disseminate information concerning housing and communityimprovement programs;

• Provide technical assistance in housing acquisition; and

• Ensure communication between residents, City and Parishgovernment and financial institutions to promote cooperative effortsto prevent neighborhood deterioration.

The consolidated financial statements of UJAMAA include:

.UJAMAA Community Development Corporation as described above; andUJAMAA Development Company, a for profit corporation organizedunder the laws of the State of Louisiana and sponsored by UJAMAACommunity Development Corporation. No capital stock is authorized,issued, or outstanding. UJAMAA Development Company was formed toenter into a partnership with Bane One Community DevelopmentCorporation (a not-for-profit organization) to develop approximately forty-three (43) low income rental units in the abandoned.St. Ann Church andSchool. The rental units will be earmarked for low income elderlyresidents. UJAMAA Development Company serves as the general partnerof the St. Ann Square Limited Partnership.


NOTE 1 - Organization, Continued:

Throughout the notes to the consolidated financial statements UJAMAACommunity Development Corporation and UJAMAA DevelopmentCompany will be collectively referred to as UJAMAA. The financialstatements of UJAMAA Community Development Corporation andUJAMAA Development Company have been consolidated as they areunder common management.

NOTE 2- Summary of Significant Accounting Policies:

Basis of Reporting

UJAMAA's financial statements are prepared on the accrual basis. Thepreparation of financial statements in conformity with generally acceptedaccountingprinciples requires managementto make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and thereported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates.

Financial Statement Presentation

UJAMAA has adopted the provision of Statement of Financial AccountingStandards No. 117, "Financial Statements of Not-for-Profit Organizations",which establishes standards for external financial reporting by not-for-profitorganizations and requires that resources be classified for accounting andreporting purposes into three net assets categories according to external(donor) imposed restrictions.


NOTE 2 - Summary of Significant Accounting Policies. Continued:

A description of the three net asset categories is as follows:

Unrestricted net assets include funds not subjectto donor-imposed stipulations.The revenues received and expenses incurred in conducting the missions ofUJAMAA are included in this category.

Temporarily restricted net assets include realized gains and losses, investmentincome and gifts and contributions for which donor imposed restrictions(capital improvements, etc.) have not been met.

Permanently restricted net assets are contributions which are required by thedonor-imposed restriction to be invested in perpetuity and only the income be

. made available for program operations in accordance with the donorrestrictions. Such income is reflected in temporarily restricted net assets untilutilized for donor imposed restrictions.

At December 31, 2005, UJAMAA did not have any temporarily orpermanently restricted net assets.

Support and Revenues

Revenues received under government grant programs are recognized wtien- earned.

Contributions (public support) are considered to be available for unrestricteduse unless specifically restricted by the donor or the Board of Directors.

Cash Equivalents

For purposes of the statement of cash flows, UJAMAA considers all short-term, highly liquid investments with a maturity of three months or less at thetime of purchase to be cash equivalents.

10


NOTE 2 - Summary of Significant Accounting Policies. Continued:

Fixed Assets

Fixed assets ofUJAMAA are recorded as assets and are stated at fair marketvalue at the date of the gift, if donated. Additions, improvements andexpenditures that significantly extend the useful life of an asset are capitalized.

Depreciation is provided using the straight-line method over the estimateduseful lives of the assets, which is nine years.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts ofUJAMAA Community Development Corporation and UJAMAADevelopment Company. All material intercompany transactions have beeneliminated.

Functional Allocation of Expenses

The costs of providing the various programs and activities have beensummarized on a functional basis in the statement of activities. Accordingly,certain costs have been allocated among the programs and supporting servicesbenefitted.

NOTE 3 - Fixed Assets:

Land, building and construction in progress for the year ended December 31,2005 is summarized as follows:

Land and buildingEquipmentConstruction in progress

Less: accumulated depreciation

Total fixed assets

$6,142,42511,893

1.472326

(259.797)

$7.366.847

Depreciation expense totaled $ 115,692 for the year ended December 31,2005.

11

TJJAMAA COMMUNITY DEVELOPMENT CORPORATIONNOTES TO THE FINANCIAL STATEMENTS, CONTINUED

NOTE 4 - Grant Revenue:

UJAMAA is the recipient of grant funds from various sources in the amountof $116,517. The-grants were primarily utilized for neighborhoodrevitalization and for the development of low income rental housing for theelderly.

UJAMAA was primarily funded through the following grants for the yearended December 31,2005:

Funding Source

Private Community GrantsWeed & Technical GrantLouisiana Stadium and Exposition DistrictPaceState of Louisiana

Total

Revenue

40,0003,782

12,58819,82440.323

S116.517

NOTE 5 - Economic Dependency:

The primary source of revenue for UJAMAA is state and local grants, rentalincome and contributions provided through various funding agencies. Thecontinued success of UJAMAA is dependent upon the renewal of contractsfrom current funding sources as well as obtaining new funding.

12


NOTE 6 - Investment in Partnership:

UJAMAA Development Company (a wholly owned subsidiary of UJAMAACommunity Development Corporation) entered into apartnership with BaneOne Community Development Corporation to develop approximately forty-three (43) units in the abandoned St. Ann Church and School. The church andschool is being leased to the UJAMAA Community DevelopmentCorporation by the Archdiocese of New Orleans. The lease provided for rentof $1.00 per year for a period of thirty-five (35) years. The apartments areearmarked for low income elderly residents. UJAMAA DevelopmentCompany serves as the general partner and owns. 1 % of the partnership. Thetotal amount invested into the partnership by UJAMAA DevelopmentCompany totaled $1,020,945 at December 31,2005.

NOTE 7 - Income Taxes:

UJAMAA Community Development Corporation is exempt from federalincome taxes under code section 501(c)(3) of the Internal Revenue Code.Therefore, no provision for income taxes is made in the accompanyingfinancial statements.. UJAMAA Development Company did not have anyoperating income during the year, and as such is not liable for any incometaxes.

NOTE 8 - Contingency:

UJAMAA is a recipient of grant funds from various sources. The grants aregoverned by various guidelines, regulations, and contractual agreements.

The administration of the program and activities funded by the grant is underthe control and administration of UJAMAA and are subject to audit and/orreview by the applicable funding source. Any grant funds found not to beproperly spent in accordance with the terms, conditions, and regulations of thefunding source may be subject to recapture.

13


NOTE 9 - Note Payable:

UJAMAA obtained a 6% loan of Home funds from the City of New Orleansin the amount of $650,000. The loan is to be repaid from the project's excesscash flow over a yet to be determined period of time. At December 31,2005,the note payable balance totaled $650,000.

NOTE 10- In-Kind Revenues/Expenses:

St. Peter Claver Church provides office space, utilities, and the use of all officefurniture and equipment. The value of these services has not been recorded inthe financial statements since the related amount has not been determined.

NOTE 11 - Housing Operations:

On September 24, 2003, UJAMAA and Villa D'Ames, Inc. entered into anagreement whereby Villa D'Ames, Inc. donated the Villa D'Ames apartmentcomplex located in Marrero, Louisiana "as is, where is". The donation wassubject to the existing mortgage which was in favor of HUD in the amount of$1,450,000. On September 25, 2003, UJAMAA entered into the followingagreement:

• A mortgage restructuring agreement with the U.S. Department ofHousing and Urban Development (HUD) in the principal amount of$1,179,692; and

• A contingent repayment agreement with HUD in the principal amountof$131,151.

On February 17,2004, HUD authorized the write-off of 100% of the existingmortgage totaling $1,450,000 and cancelled the mortgage restructuringagreement, and the contingent repayment note and mortgage.

14


NOTE 12 - Series 2003 Mortgage:

On September 25,2003, UJAMAA entered into a mortgage agreement withthe Louisiana Housing Finance Agency for a home loan obligation in theprincipal amount of $2,412,205. The mortgage is payable in level annualinstallments in the amount of $138,194.88 for thirty (30) years and is due onthe first day of each April commencing on April 1,2004. The mortgage bearsinterest at the rate of 4.00% per annum with all payments due only payable outof and to the extent of the net cash flow of UJAMAA after payment of alloperating expenses. At December 31,2005, $2,05 8,840 had been disbursedto UJAMAA by the Louisiana Housing Finance Agency.

NOTE 13 - Section 8 Contract:

On October 1, 2003, UJAMAA entered into a Section 8 Mark to MarketRenewal Contract with the U.S. Department of Housing and UrbanDevelopment (HUD) for the Villa D'Ames Apartments located in Marrero,Louisiana. The Renewal Contract is for a twenty (20) year period and providesfor Housing Assistance payments to be made by HUD to UJAMAA foreligible tenants at the Villa D'Ames Apartment Complex.

NOTE 14 - Flexible Subsidy Loan Payable:

On September 24, 2003, UJAMAA acquired the Villa D'Ames Apartmentcomplex which was subject to an existing note payable with the U.S.Department of Housing and Urban Development (HUD) in the amount of$420,786. The note bears interest at 1% per annum and payable in monthlylevel installments of $1,393 over thirty (30) years ending May 1, 2002. AtDecember 31, 2005, $262,470 is due to HUD for the Flexible SubsidyProgram.

15

TJJAMAA COMMUNITY DEVELOPMENT CORPORATIONNOTES TO THE FINANCIAL STATEMENTS, CONTINUED

NOTE 14 - Flexible Subsidy Loan Payable. Continued:

Maturities of the note in each of the next five years are as follows:

YEAR

20062007200820092010 and future years

NOTE 15 - Accrued Management Expenses and Loans Payable:

AMOUNT

14,25714S40014,54514,691

195,152

$253,045

UJAMAA has entered into a management agreement with a third party tomanage the apartment complex. In the normal course of operations, themanager made available to UJAMAA assistance in the form of operatingsubsidies and loans. The amount due to the manager as of December 31,2005consisted of unpaid management fees of $34,176 and loans non-interestbearing of $227,148 totaling $261,324.

NOTE 16 - Line of Credit:

At December 31,2005, UJAMAA has available a $40,000 revolving line ofcredit, secured by first mortgage on all properties of UJAMAA, expiringDecember 16,2004 bearing interest at 7.0%. The amdunt'bbrfowed bifthe line"of credit totaled $40,000 at December 31,2005.

At December 31, 2005, the line of credit liability totaled $40,000.

16

NOTE 17- Due From Affiliates

Due from affiliates consist of the following receivables from affiliatedorganizations:

St. Ann Partnership $ 58,754St. Bakhita Gardens 40.616

$ 99370

17

SUPPLEMENTARY INFORMATION

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UJAMAA UJAMAADevelopment St. Bakhita

UJAMAA Company Gardens TOTAL

REVENUES AND SUPPORT

Grantrevenues $116,517 $-0- $ -0- $116,517Rental income, net of

vacancy and other lossesof $555,731 10,058 -0- 710,269 720,327

Contributions 5,546 -0- -0- 5,546Other revenues 46,536 -0- 10,132 56,668Developer Fees 62,499 & ^ 62.499

Total revenuesand support $241,156 $-0- ' $720,401 $961.557

See the Independent Auditors' Report on Supplementary Information.

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UJAMAA COMMUNITY DEVELOPMENT CORPORATIONNOTES TO THE SCHEDULE OF EXPENDITURES AND FEDERAL AWARDS


NOTE 1 - Basis of Accounting:

The accompanying schedule of expenditures of federal awards includes thefederal grant activity of UJAMAA and is presented on the accrual basis ofaccounting. The information in this schedule is presented in accordance withthe requirements of OMB Circular A-133, Audits of States, LocalGovernments) and Non-Profit Organizations. Therefore, some amountspresented in this schedule may differ from amounts presented, or used in thepreparation of, the basic financial statements.

22

Irunp & Tervalon^Certified Public Accountants

MemberAmerican Institute of Michael B. Bruno, CPACertified Public Accountants _ . . „„

Society of Louisiana Alcide J'Tervalon*Jr" CPA

Certified Public Accountants Waldo J. Moret, Jr., CPAPaul K. Andoh, Sr., CPA

INDEPENDENT AUDITORS5 REPORT ON COMPLIANCEAND ON INTERNAL CONTROL OVER FINANCIAL REPORTING

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMEDIN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Directors ofUJAMAA Community Development Corporation

We were engaged to audit the financial statements of UJAMAA Community DevelopmentCorporation (UJAMAA) as of and for the year ended December 31, 2005 in accordancewith auditing standards generally accepted in the United States of America and the standardsapplicable to financial audits contained in Government Auditing Standards issued by theComptroller General of the United States of America. In our report dated March 16,2007,we did not express on opinion on the financial statements because we were unable to auditthe financial statements due to transactions not being recorded and accounts not beingreconciled.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered UJAMAA's internal control overfinancial reporting in order to determine our auditing procedures for the purpose ofexpressing our opinion on the financial statements and not to provide assurance on theinternal control over financial reporting. However, we noted certain matters involving theinternal control over financial reporting and its operation that we consider to be reportableconditions. Reportable conditions involve matters coming to our attention relating tosignificant deficiencies in the design or operations of the internal control over financial

23

4298 ELYSiAN FIELDS AVENUE, NEW ORLEANS, LA 70122(504) 284-8733 FAX (504) 284-8296

E-MAIL [email protected]

INDEPENDENT AUDITORS' REPORT ON COMPLIANCEAND ON INTERNAL CONTROL OVER FINANCIAL REPORTING


(CONTINUED)

Internal Control Over Financial Reporting. Continued

reporting that, and our judgement, could adversely affect UJAMAA's ability to initiaterecord, process, and report financial data consistent with the assertions of management in thefinancial statements. Reportable conditions are described in the accompanying schedule offindings questioned cost as items 2005-01 and 2005-02.

A material weakness is a condition in which the design or operation of one or more of theinternal control components does not reduce to a relatively low level the risk thatmisstatements in amounts that would be material in relation to the financial statements beingaudited may occur and not be detected within a timely period by employees in the normalcourse of performing their assigned functions. Our consideration of the internal control overfinancial reporting would not necessarily disclose all matters in the internal control that mightbe reportable conditions and, accordingly, would not necessarily disclose all reportableconditions that are also considered to be material weaknesses. However, of the reportableconditions described above, we considered items, 2005-01 and 2005-02 to be materialweaknesses.

Compliance

As part of obtaining reasonable assurance about whether UJAMAA's consolidated financialstatements are free of material misstatement, we performed tests of its compliance withcertain provisions of laws, regulations, contracts and grants, noncompliance with whichcould have a direct and material effect on the determination of financial statement amounts.However, providing an opinion on compliance with those provisions was not an objectiveof our audit and, accordingly, we do not express such an opinion. The results of our testsdisclosed no instances of noncompliance that are required to be reported under GovernmentA uditing Standards. However, we noted certain immaterial instances of noncompliance thatwe have reported to the management of UJAMAA in a separate letter dated March 16,2007.

24

INDEPENDENT AUDITORS' REPORT ON COMPLIANCEAND ON INTERNAL CONTROL OVER FINANCIAL REPORTING


(CONTINUED)

This report is intended solely for the information of the Board of Directors, management, theLegislative Auditor of the State of Louisiana, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than thesespecified parties. Under Louisiana Revised Statue 24:513, this report is distributed by theLegislative Auditor as a public document.


March 16, 2007

25

lrunp& Tervalon LLPCertified Public Accountants

wrun & Tervalon^jg^Certified Public Accountants

Member

,* Michael B. Bruno, CPACertified Public Accountants . . . . . _ . . ««„

Society of Louisiana ***** J"Tervalon'Jr- CPA

Certified Public Accountants Waldo J. Moret, Jr., CPA

Paul K. Andoh, Sr., CPA

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITHREQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM

AND INTERNAL CONTROL OVER COMPLIANCEIN ACCORDANCE WITH OMB CIRCULAR A-133

Board of DirectorsUJAMAA Community Development CorporationNew Orleans, Louisiana

Compliance

We have audited the compliance of UJAMAA Community Development Corporation(UJAMAA) with the types of compliance requirements described in the U.S. Office ofManagement and Budget fOMB) Circular A-133 Compliance Supplement fasti, are applicableto its major federal programs for the year ended December 31, 2005. UJAMAA's majorfederal programs are identified in the summary of independent auditors' results section ofthe accompanying schedule of findings and questioned costs. Compliance with therequirements of laws, regulations, contracts and grants applicable to its major federalprograms is the responsibility of UJAMAA's management. Our responsibility is to expressan opinion on UJAMAA's compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generallyaccepted in the United States of America, the standards applicable to financial auditscontained in Government Auditing Standards, issued by the Comptroller General of theUnited States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan andperform the audit to obtain reasonable assurance about whether noncompliance with the types

26

4298 ELYSIAN FIELDS AVENUE, NEW ORLEANS, LA 70122(504) 284-8733 FAX (504) 284-8296

E-MAIL: [email protected]



(CONTINUED)

of compliance requirements referred to above that could have a direct and material effect ona major federal program occurred. An audit includes examining, on a test basis, evidenceabout UJAMAA's compliance with those requirements and performing such otherprocedures as we considered necessary in the circumstances. We believe that our auditprovides a reasonable basis for our opinion. Our audit does not provide a legal determinationon UJAMAA's compliance with those requirements.

As described in Schedule III, audit finding 2005-03 and 2005-04 in the accompanyingschedule of findings and questioned costs, UJAMAA did not comply with the special testsand provisions and the suspension and debarment compliance requirement that areapplicable to its Home Investment Partnerships program. Compliance with suchrequirements is necessary in our opinion, for UJAMAA to comply with requirementsapplicable to that program.

In our opinion, except for the compliance described in the preceding paragraph, UJAMAAcomplied in all material respects, with the requirements referred to above that are applicableto its major program for the year ended December 31,2005.

27



(CONTINUED)

Internal Control Over Compliance

The management of UJAMAA is responsible for establishing and maintaining effectiveinternal control over compliance with the requirements of laws, regulations, contracts andgrants applicable to federal programs. In planning and performing our audit, we consideredU JAMAA's internal control over compliance with requirements that could have a direct andmaterial effect on a major federal program in order to determine our auditing procedures forthe purpose of expressing our opinion on compliance and to test and report on internalcontrol over compliance in accordance with OMB Circular A-133. We noted certain mattersinvolving the internal control over compliance and its operation that we consider to bereportable conditions. Reportable conditions involve matters coming to our attention relatingto significant deficiencies in the design or operation of the internal control over compliancethat, in our judgment, could adversely affect UJAMAA's ability to administer a majorfederal program in accordance with the applicable requirements of laws, regulations,contracts, and grants. The reportable conditions are described in the accompanying scheduleof findings and questioned costs as items 2005-03 and 2005-04.

A material weakness is a condition in which the design or operation of one or more of theinternal control components does not reduce to a relatively low level the risk thatnoncompliance with applicable requirements of laws, regulations, contracts and grants thatwould be material in relation to a major federal program being audited may occur and not bedetected within a timely period by employees in the normal course of performing theirassigned functions. Our consideration of the internal control over compliance would notnecessarily disclose all matters in the internal control that might be reportable conditions thatare also considered to be material weaknesses. We noted no matters involving the internalcontrol over compliance and its operation to be material weaknesses.

28


AND INTERNAL CONTROL OVER COMPLIANCEIN ACCORDANCE WITH OMB CIRCULAR A-l 33

(CONTINUED)

This report is intended solely for the information and use of the Board of Directors,management and federal awarding agencies and pass-through entities, and is not intended tobe and should not be used by anyone other than these specified parties.


March 16, 2007

29

1Brun& Tervalon7Certified Public Accountants

Section I - Summary of the Independent Auditors9 Results

1. Type of report issued on the financial statements. Disclaimer of opinion

2. Did the audit disclose any reportable conditions in internal control. Yes

3. Were any of the reportable conditions material weaknesses. Yes

4. Did the audit disclose any noncompliance which is material to the financialstatements of the organization. Yes

5. Did the audit disclose any reportable conditions in internal control over majorprograms. Yes

6. Were any of the reportable conditions in internal control over major programsmaterial weaknesses. No

7. Type of report issued on compliance for major programs. Unqualified

8. Did the audit disclose any audit findings which the independent auditors are requiredto report under OMB Circular A-133, Section 510(a). Yes

9. The following is an identification of major programs:

CFDA or Name ofContract Number Federal Program14.195 Housing Assistance Payments Program - Special

Allocations14.239 HOME Investment Partnerships Program

10. The dollar threshold used to distinguish between Type A and Type B Programs, asdescribed in OMB Circular A-133, Section 520(b) was $300,000.

11. Did the auditee qualify as a low risk auditee under OMB Circular A-133, Section530. No.

30

UJAMAA COMMUNITY DEVELOPMENT CORPORATIONSCHEDULE OF FINDINGS AND QUESTIONED COSTS, CONTINUED

FINANCIAL STATEMENT FINDINGSFOR THE YEAR ENDED DECEMBER 31, 2005

COMPLIANCE

Audit Finding Reference Number

2005-01 - Unavailability of Records

Condition and Perspective

As a result of Hurricane Katrina which occurred August 29, 2005, UJAMAA sufferedextensive wind and water damage to its St. Bakhita apartment complex. Also, as a result ofthe resulting limited resources of the third party property manager, the property managerdiscontinued the management of the complex. As a result of the aforementioned conditions,management of UJAMAA began managing the complex. During the course of our audit,we noted that supporting documentation could not be located for certain transactionsselected for testing that related to the apartment complex. As a result, we were unable torender an opinion on the financial statements that we were engaged to audit.

Recommendation

We recommend that management of UJAMAA discuss these matters with the LegislativeAuditor and the related federal funding sources in an effort to determine what correctiveaction should be undertaken.

We also recommend that management of UJAMAA take immediate steps to strengthen theorganization's disaster recovery plan to ensure that records and supporting documentationare properly safeguarded.

31

SCHEDULE II

UJAMAA COMMUNITY DEVELOPMENT CORPORATIONSCHEDULE OF FINDINGS AND QUESTIONED COSTS

FINANCIAL STATEMENT FINDINGS, CONTINUEDFOR THE YEAR ENDED DECEMBER 31,2005

INTERNAL CONTROL OVER FINANCIAL REPORTING

Audit Finding Reference Number (Continued)

2005-02 - Financial Management System

Criteria

OMB Circular A-l 10 specifies that financial management systems must be maintained inaccordance with certain standards.

Conditions and Perspective

As noted during our previous audit, management of UJAMAA did not consistently adhereto established accounting procedures and ensure that accounting records and general ledgeraccounts (i.e. cash, receivables, accounts payable, revenues, and expenses) were reconciledand reviewed on a monthly basis. We also noted that supporting documentation could notbe located for transactions selected for testing. The aforementioned condition resulted ininaccurate financial statements being generated during the year, which limits theeffectiveness of management to make financial decisions regarding UJAMAA and have theaudit report issued on a more timely basis.

Recommendation

We recommend that management of UJAMAA adhere to established procedures and ensurethat accounting records are properly maintained, reconciled, and reviewed by managementon a timely basis.

32


FOR THE YEAR ENDED DECEMBER 31, 2005

Section III - Federal Award Findings and Questioned Costs

INTERNAL CONTROL OVER COMPLIANCE AND FEDERAL COMPLIANCE

Audit Finding Reference Number Questioned Costs2005-03 - Special Tests and Provisions - Replacement

Reserves and Escrow Deposits andAffirmative Fair Housing Marketing Plan S-0-

Federal Program and Specific Federal Award Identification

CFDA Title and Number

14.239 - HOME Investment Partnerships Program

Federal Award year

December 31,2004

Federal Agencies

U.S. Department of Housing and Urban Development

Pass-Through Entity

None

Criteria

The Regulatory Agreement stipulates that the management of UJAMAA is required to makespecific monthly deposits of $24,117 into the replacement reserves and insurance accounts.Also, the Regulatory Agreement stipulates that the management of UJAMAA is required todevelop and carry-out an Affirmative Fair Housing Marketing Plan to ensure compliancewith 24 CFR 200.620 - Affirmative Fair Housing Marketing regulations.

33



Section III - Federal Award Findings and Questioned Costs, Continued

INTERNAL CONTROL OVER COMPLIANCE AND FEDERAL COMPLIANCE(CONTINUED)

Audit Finding Reference Number. Continued2005-03 - Special Test and Provisions - Replacement

Reserves and Escrow Deposits andAffirmative Fair Housing Marketing Plan

Conditions and Perspectives

We noted that the manager of UJAMAA did not deposit the required amount into thereplacement reserve and insurance escrow account and did not develop and carry-out anAffirmative Fair Housing Marketing Plan.

Cause

As a result of cashflows, the manager of UJAtyEAA was unable to make the requireddeposits into the replacement reserve and insurance escrow account and did not adhere tothe Affirmative Fair Housing Marketing regulations to develop a Marketing Plan.

Questioned Costs

For purpose of this condition, we have not questioned any costs.

Effect

Non-compliance with the regulatory agreement which require certain funds be depositedinto the replacement reserve and insurance escrow accounts and to develop and carry-outan Affirmative Fair Housing Marketing Plan.

Recommendation

We recommend that the manager of UJAMAA take the necessary steps to deposit therequired amount of cash into the replacement reserve and insurance escrow accounts anddevelop a Marketing Plan in accordance with the agreement.

34



Section III - Federal Award Findings and Questioned Costs

»

INTERNAL CONTROL OVER COMPLIANCE AND FEDERAL COMPLIANCE

Audit Finding Reference Number Questioned Costs2005-04 - Suspension and Debarment

Certifications $-0-

Federal Program and Specific Federal Award Identification

CFDA Title and Number

14.239 - HOME Investment Partnerships Program

Federal Award year

December 31,2005

Federal Agencies

U.S. Department of Housing and Urban Development

Pass-Through Entity

None

Criteria

OMB Circular A-133 Compliance Supplement Part 3, Section I stipulates that contractorsreceiving individual awards for $ 100,000 or more and all sub-recipients must certify that theorganization and its principals are not suspended or debarred.

35

UJAMAA COMMUNITY DEVELOPMENT CORPORATIONHUD PROJECT NO. 064-92002 .

SCHEDULE OF FINDINGS AND QUESTIONED COSTS, CONTINUEDFOR THE YEAR ENDED DECEMBER 31,2005


Audit Finding Reference Number, Continued2005-04 - Suspension and Debarment

Certifications


We noted during our audit that management of UJAMAA failed to provide us with asuspension and debarment certification from a contractor for the following federal grantprogram.

Contractors/Sub-recipients

14.239 Home Investment Partnership Program 1

Cause

The manager of UJAMAA inadvertently failed to obtain the certification.

Questioned Costs

For purposes of these conditions, we have not questioned any costs.

36


FOR THE YEAR ENDED DECEMBER 31, 2005


INTERNAL CONTROL OVER COMPLIANCE AND FEDERAL COMPLIANCE(CONTINUED)

Audit Finding Reference Number. Continued2005-04 - Suspension and Debarment

Certifications

Effect • .

UJAMAA has not complied with federal regulations.

Recommendation

We recommend that the manager of UJAMAA implement procedures and to ensure thatapplicable contractors provide the related certifications.

37

UJAMAA COMMUNITY DEVELOPMENT CORPORATIONSCHEDULE OF PRIOR YEAR AUDIT FINDINGSFOR THE YEAR ENDED DECEMBER 31, 2005

Section I - Internal Control and Compliance MaterialTo the Financial Statements

No matters reported.

Section n - Findings and Questioned Costs RelatedTo Federal Awards

2004-01 -Special Tests and Provisions - ReplacementReserves and Escrow Deposits andAffirmative Fair Housing Marketing Plan


We noted that the manager of UJAMAA did not deposit the required amountinto the replacement reserve and insurance escrow account and did not developand carry-out an Affirmative Fair Housing Marketing Plan.

Recommendation

We recommend that the manager of UJAMAA take the necessary steps todeposit the required amount of cash into the replacement reserve and insuranceescrow accounts and develop a Marketing Plan in accordance with theagreement.

Current Status

Unresolved. See current year Finding 2005-03

38



2004-02 - Suspension and DebarmentCertifications


We noted during our audit that management of UJAMAA failed to provide uswith a suspension and debarment certification from a contractor for thefollowing federal grant program.

Recommendation

We recommend that the manager of UJAMAA implement procedures and toensure that applicable contractors provide the related certifications.

Current Year Status

Unresolved. See current year Findings 2005-04.

Section III - Management Letter

See the status of prior year management letter comments reported tomanagement in a separate letter dated March 16,2007.

39

UJAMAA CDC1910 Ursulines Avenue * New Orleans, LA 70116 • tel: 504.822.8059 • fax: 504.822.9251

www.ujamaacdc.org

March 23,2007

Bruno and Tervalon CPA Firm4298 Elysian Field AvenueNew Orleans, LA 70122

UJAMAA Community Development Corporation has reviewed the audit findingsreported in the 2005 Financial Audit and have prepared the following responses:

2005-01 Unavailability of Records

UJAMAA's management will provide the 3rd party property management organizationwith the supporting documents to properly support all financial transactions that haveoccurred. The 3rd party management organization will properly record all transactions,from documents provided hy UJAMAA, reconcile all bank statements and provide therevised financial records to the external auditors for proper testing in order that anopinion may be rendered. This work will be completed within 10 days of receipt of theneeded supporting documents.

2005-02 Financial Management System

UJAMAA Corporation has entered into an agreement to transfer St. Bakhita and allrelated assets to another nonprofit organization by June, 2007. Until the transfer of StBakhita has been completed, UJAMAA Corporation and its Board of Directors haverequired that the monthly financial statements including bank reconciliations besubmitted for review by the 20th of the following month of operations.

2005-03Special Test and Provisions - ReplacementReserves and Escrow Deposits andAffirmative Fair Housing Marketing Plan

Due to Financial constraints imposed on St. Bakhita as a result of Hurricane Katrina, St.Bakhita was unable to meet its financial obligations as it related the monthly deposits intothe reserves and insurance accounts.

mission is to create safe, decent and diverse communities for trodrtfondl underserved populations throughout Greater New Orleans.

UJAMAACDC1910 Ursulines Avenue * New Orleans, LA 70116 • tel: 504.822.8059 - fax: 504.822.9251

www.ujamaacdc.org

The property is current being vacated of all tenants, no HUD subsidies have beencollected since October 2005 and the property is intended to be transferred to anothernonprofit organization by June 2007.

2005-04 Suspension and Debarment Certification

The property is currently being vacated and no federal funds are currently beingdisbursed, nor are any new contracts schedule to be awarded in excess of $100,000.

Sincerely,

Rev/Michael P. Jacques, SSEUJ&MAA Board President

UJAMAA's mission is to create safe, decent and diverse communities for tradrtionallq underserved populations throuqhout Greater New Orleans.

fra/10 & TervalonFied Public Accountants

VMember

*~ ^ Michael B. Bruno, CPACertified Public AccountantsSociety of Louisiana Mc*de J- Tervalon, Jr., CPACertified Public Accountants Waldo J. Moret, Jr., CPA

Paul K. Andoh, Sr., CPA

INDEPENDENT AUDITORS' COMMENTS TO MANAGEMENT

To the Board of DirectorsUJAMAA Community Development CorporationNew Orleans, Louisiana

We have audited the consolidated financial statements of the UJAMAA CommunityDevelopment Corporation (UJAMAA) for the year ended December 31, 2005, andhave issued our report thereon dated March 16,2007.

In planning and performing our audit of the consolidated financial statements, weconsidered the organization's internal control in order to determine our auditingprocedures for the purpose of expressing our opinion on the financial statements and notto provide assurance on the internal control.

During our audit, we became aware of several matters that are opportunities forstrengthening internal control and operating efficiency. The memorandum thataccompanies this letter summarizes our findings and recommendations regarding thosematters. Also, we have reviewed Management's Corrective Action Plan with regard toour December 31, 2004 comments to management. The current status of the December31,2004 comments have been summarized in the accompanying memorandum.

This letter does not affect our report dated March 16, 2007 on the consolidated financialstatements of UJAMAA.

4298 ELYSIAN FIELDS AVENUE. NEW ORLEANS, LA 70122(504) 284-8733 FAX (504) 284-8296

E-MAIL [email protected] -

UJAMAA COMMUNITY DEVELOPMENT CORPORATIONCURRENT YEAR MANAGEMENT LETTER COMMENTS

05-01 - Vacancy Loss Subsidiary Ledger

' As noted in the prior year, we noted during our audit that the vacancy losssubsidiary ledger for year ended December 31, 2005 did not agree to thegeneral ledger.

We recommend that UJAMAA take immediate steps to ensure that thevacancy loss subsidiary ledger is reconciled to the general ledger on a monthlybasis.

Management's Response

Management will continue to strengthen its internal control procedures over itsoperations and require the manager of the complex to reconcile the vacancyloss subsidiary ledger to the general ledger on a monthly basis.

05-02 - Budgets. Records and Reports

As noted in the prior year, we noted during our audit that the manager of theapartment complex did not submit the recommended operating budget toUJAMAA as required by the mîagejnent agreement. We also noted that themanager did not furnish to UJAMAA a statement of receipts anddisbursements and reconciled bank statements on a monthly basis.

We recommend that management implement procedures that require themanager of UJAMAA to adhere to the rules and regulations of themanagement agreement.

Management's Response

Management has implemented procedures that require the manager of theapartment complex to submit bank reconciliations and financial statements toUJAMAA on a monthly basis.

UJAMAA COMMUNITY DEVELOPMENT CORPORATIONSTATUS OF PRIOR YEAR MANAGEMENT LETTER COMMENTS

04-01 - Vacancy Loss Subsidiary Ledger

We recommend that the manager of UJAMAA take immediate steps to ensure thatthe manager of the complex reconciles the vacancy loss subsidiary ledger to thegeneral ledger on a monthly basis.

Current Status

Unresolved. See current year auditor management letter comment 05-01.

04-02 -Budgets, Records and Reports

We recommend that management implement procedures that require the manager ofUJAMAA to adhere to the rules and regulations of the management agreement.

Current Status

Unresolved. See current year auditor management letter comment 05-02.

04-03 - Annual Unit Inspections

We recommend that management implement procedures to ensure that the managerof the apartment complex adhere to established procedures and perform the annualinspections as required by HUD regulations.

Current Status

Resolved.

04-04 - Financial Management System

Recommendation

We recommend that the manager of the complex adhere to established proceduresand ensure all activity is recorded in the general ledger and that all bank accounts arereconciled on a timely basis.

Current StatusUnresolved. See current year audit finding 2005-02.

UJAMAA COMMUNITY DEVELOPMENT CORPORATIONSTATUS OF PRIOR YEAR MANAGEMENT LETTER COMMENTS

04-05- Late Submission of Audit Report

Recommendation

We recommend that management take the necessary steps to ensure that all futureaudit reports be issued within the statutory required deadline.

Current Status

Unresolved. See current year audit finding 2005-02.

We will review the status- of these comments during our next audit engagement. We havealready discussed many of these comments and suggestions with appropriate personnel ofUJAMAA, and we will be pleased to discuss them in further detail at your convenience,to perform any additional study of these matters, or to assist you in implementing therecommendation.

This report is intended solely for the information and use of the'Board of Directors, andmanagement and is not intended to be and should not be used by anyone other than thesespecified parties.

LL?


March 16,2007

frunp & Tervalon7Certified Public Accountants

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