Audit Report

OIG-16-007

DOMESTIC ASSISTANCE

Recovery Act: Audit of Mississippi Home Corporation’s

Payment Under 1602 Program

November 10, 2015

Office of

Inspector General

Department of the Treasury
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Contents

Audit of Mississippi Home Corporation’s Payment

Under 1602 Program (OIG-16-007) 

Page i 

Audit Report................................................................................................. 1 

Results in Brief............................................................................................ 1 

Background ................................................................................................ 2 

Audit Results .............................................................................................. 5 

 

Appendices

Appendix 1: Objectives, Scope, and Methodology ...................................... 10

Appendix 2: Grantee Terms and Conditions ............................................... 12 

Appendix 3: Mississippi Home Corporation Response .................................. 17 

Appendix 4: Treasury Management Response ............................................ 18 

Appendix 5: Major Contributors to This Report........................................... 19 

Appendix 6: Report Distribution................................................................ 20

Acronyms

IRC Internal Revenue Code

OFAS Office of the Fiscal Assistant Secretary

OIG Office of Inspector General

MHC Mississippi Home Corporation

QAP Qualified Allocation Plan
OIG Audit

Report

The Department of the Treasury

Office of Inspector General

Audit of Mississippi Home Corporation’s Payment

Under 1602 Program (OIG-16-007)

Page 1

 November 10, 2015

David A. Lebryk

Fiscal Assistant Secretary

As part of our ongoing oversight of the Department of the 

Treasury’s (Treasury) Payments to States for Low-Income Housing 

Projects in Lieu of Low-Income Housing Credits for 2009 (1602 

Program),

1 authorized by Section 1602 of the American Recovery 

and Reinvestment Act of 2009 (Recovery Act),2 we conducted

audits of awards made to selected State housing credit agencies. 

The objective of these audits was to assess whether the agencies 

awarded funds under Treasury’s 1602 Program complied with the 

program’s requirements contained in the “Grantee Terms and 

Conditions” (hereinafter terms and conditions). In this report, we 

provided our assessment of Mississippi Home Corporation’s (MHC) 

compliance with the 1602 Program requirements. Appendix 1 

provides a more detailed description of our audit objectives, scope, 

and methodology.

Results in Brief

We found that MHC complied with Treasury’s 1602 Program terms 

and conditions which capture the eligibility and compliance 

requirements set forth in both Section 42 of the Internal Revenue 

Code (IRC)3 and Section 1602 of the Recovery Act. That is, MHC

met the applicable requirements for receiving its $29,664,458

1602 Program award as well as requirements for subawarding 

those funds to 17 eligible low-income housing projects. 

 

1 Treasury’s Office of the Fiscal Assistant Secretary (OFAS) administers this program. 

2

 Public Law 111-5, 123 Stat. 362-364 (Feb. 17, 2009). Under section 1602 of the Recovery Act, 

Treasury shall make a grant to the housing credit agency of each State in an amount equal to such 

State’s low-income housing grant election amount. 3 26 U.S.C.§42 “Low-Income Housing Credit” 

(http://www.treasury.gov/initiatives/Documents/LIH_application-package.pdf) 
Audit of Mississippi Home Corporation’s Payment Page 2

Under 1602 Program (OIG-16-007)

We also found that MHC established a process for monitoring the 

long-term viability of projects and their compliance with 1602 

Program requirements and met Treasury’s reporting requirements 

required by the terms and conditions. With that, we emphasize the 

need for continued diligence on the part of MHC to ensure 

compliance with the terms and conditions of the 1602 Program 

award over the remaining 15-year compliance period.

As part of our reporting process over the 1602 Program awardees, 

we provided MHC an opportunity to comment on a draft of this 

report. In a written response, MHC management expressed its 

commitment to comply with its obligations as Grantee throughout 

the remaining 15-year compliance period for all projects as well as 

continue its compliance and asset management processes and 

post-award reporting. MHC’s response is provided in appendix 3.

After incorporating MHC’s response into this report, we provided it 

to Treasury management for comment. Treasury management 

concurred with our audit results. Management’s response is 

provided in appendix 4.

Background

The low-income housing tax credit program codified in Section 42 

of the IRC was authorized by the Tax Reform Act of 1986.4 The 

tax credit is an incentive for individuals and corporations to invest 

in the construction or rehabilitation of low-income housing. For 

projects meeting the program requirements, the tax credit provides 

the investor a dollar-for-dollar reduction in personal or corporate 

federal income tax liability for a 10-year period. 

The Recovery Act intended to provide relief to the conditions 

caused by the economic crisis, at the time. Part of that relief, 

provided in Section 1602 of the Recovery Act, consisted of grants 

awarded to States5 for low-income housing projects in lieu of low-

 4 Public Law 99-514, Stat. 2189 (Oct. 22, 1986)

5 According to Treasury’s Grantee Terms and Conditions, “...2. Grantee Eligibility a. The grantee is the 

housing credit agency for one of the 50 States, the District of Columbia, the Commonwealth of Puerto 

Rico, the Virgin Islands, American Samoa, Guam, or the Northern Mariana Islands which files Form 

8610, Annual Low-Income Housing Credit Agencies Report with the Internal Revenue Service.”
Audit of Mississippi Home Corporation’s Payment Page 3

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income housing credit allocations. The purpose of Section 1602 

was to fill the gap left by the reduced demand for low-income 

housing tax credits that would enable low-income housing projects 

to continue or begin in cases where developers could not obtain 

private investment, as well as, increase the availability of 

affordable housing. The Secretary of the Treasury is responsible for 

carrying out the requirements of Section 1602. 

Eligibility under the 1602 Program 

Under the Recovery Act, State housing credit agencies were 

allowed to exchange a portion of their low-income housing credits 

for Section1602 funds. The maximum funds available to a State 

could not exceed its “Low-income Housing Grant Election 

Amount”6 as determined under Section 1602. In turn, State 

housing credit agencies would disburse funds to eligible 

subawardees to help finance either the construction or the 

acquisition and rehabilitation of qualified low-income housing 

projects. Section 1602 also provided that subawarded projects be

subject to the same eligibility and compliance requirements as the 

low-income housing credits found in Section 42 of the IRC. In 

addition to following the IRC Section 42 eligibility and compliance 

requirements, Section 1602 required that State housing credit 

agencies:

(1) establish a process to ensure that applicants who were 

allocated low-income housing credits demonstrate “good 

faith efforts” to obtain investment commitments for credits 

elsewhere; 

(2) perform asset management functions to ensure subawardee

compliance with Section 42 of the IRC and the long-term 

viability of projects;7 and

 6 “Low-income Housing Grant Election Amount” may not exceed 85 percent of the sum of (1) 10 times 

(a) the unused State housing credit ceiling (if any) for calendar year 2008 and (b) the amount of State 

housing credit ceiling returned in 2009, plus (2) 10 times 40 percent of (a) the greater of $2.30 

multiplied by the State population or $2,655,000 and (b) unused housing credit carryover allocated to 

the State in the 2009 National Pool.

7 Low-income housing projects must be financially feasible and remain viable throughout the 15-year 

compliance period required by Section 42 of the IRC. 
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Under 1602 Program (OIG-16-007)

(3) recapture funds in the event of subawardees’ noncompliance 

payable to Treasury.

As part of its overall administration of Treasury’s 1602 Program, 

OFAS developed the terms and conditions of award to identify the 

eligibility and compliance requirements set forth in both Section 42 

of the IRC and Section 1602 of the Recovery Act. State housing 

credit agencies and subawards funded by them are subject to these 

terms and conditions for the 15-year compliance period. Among 

the terms and conditions, State housing credit agencies are 

required to provide quarterly financial status and project 

performance reports and other applicable reports to ensure their

compliance with the terms and conditions of their 1602 Program 

awards. In its post subaward reporting guidance, OFAS required 

that State housing credit agencies certify annually that (1) the 

amount of Section 1602 funds subawarded to a project was equal 

to or less than 85 percent of the project’s eligible basis; and (2) 

funded projects remain “qualified” throughout the 15-year 

compliance period. Appendix 2 provides the detail contained in 

OFAS’ terms and conditions for award.

Since awards under the 1602 Program are not grants but an 

exchange of low-income housing credits falling under the 

requirements of Section 42 of the IRC, they are not required to be 

within the scope of the Single Audit Act8 or audit requirements 

prescribed by the Office of Management and Budget. Therefore, 

unless the State auditor specifically audits these awards, the 

awards to the respective States and their subawardees will not 

receive audit coverage.

 8 Public Law 98-502, amended by Public Law 104-145, Single Audit Act Amendment of 1996
Audit of Mississippi Home Corporation’s Payment Page 5

Under 1602 Program (OIG-16-007)

Mississippi Home Corporation

The MHC is charged with 

raising funds from private 

investors to finance the 

acquisition, construction 

and rehabilitation of 

residential housing for 

persons of low to 

moderate income within 

Mississippi. MHC is selfsupported and operates 

independent from the State

of Mississippi.

MHC is also responsible for administering Mississippi’s low-income 

housing tax credit program and allocates credits based on the 

selection criteria set forth in its Qualified Allocation Plan (QAP). In 

2009, MHC exchanged a portion of its low-income housing credits 

for $29,664,458 under the 1602 Program which helped restart 17

projects that were stalled due to fallout from the low-income 

housing tax credit equity market. As a result, a total of 671

housing units were created, all of which were set aside as lowincome for qualifying residents throughout the State. Projects were 

placed in-service between December 2009 and February 2012.

Audit Results

We found that MHC complied with the terms and conditions of its 

1602 Program award. Specifically, MHC met the requirements for 

receiving its 1602 Program award as well as requirements for 

subawarding those funds to low-income housing projects. MHC

established a process for monitoring the long-term viability of 

projects and their compliance with 1602 Program requirements

and, met Treasury’s reporting requirements. 

Based on our review of MHC’s administration and oversight 

activities, we concluded that the projects funded with 1602 

Lincoln Gardens

(MHC Photograph, November 2012)
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Under 1602 Program (OIG-16-007)

Program funds met the subaward requirements also contained in 

the 1602 Program terms and conditions.

Awarding

MHC requested and was awarded $29,664,458 of 1602 Program 

funds, which was equal to MHC’s low-income housing election 

amount. In turn, MHC subawarded $29,436,582 to low-income 

housing projects. Since the remaining $227,876 was not 

subawarded by the December 31, 2010, deadline, it was returned

to the General Fund as required by the 1602 Program terms and 

conditions.

MHC subawarded its 1602 Program funds to 17 eligible lowincome housing projects in exchange for tax credits. As required by 

the 1602 Program terms and conditions, MHC subawarded funds 

to low-income housing projects which (1) qualified under Section 

42 of the IRC; (2) demonstrated “good faith efforts” to obtain 

investments elsewhere, and (3) did not exceed the amounts 

necessary to make the projects financially feasible and viable 

throughout the 15-year compliance period. 

Subawarding

Through its tax credit allocation and 1602 Program tax credit 

exchange processes, MHC identified 17 qualified projects which 

were allocated tax credits in 2007, 2008, and 2009 but were 

stalled due to conditions in the low-income housing tax credit 

equity market. In selecting these projects, MHC applied the tax 

credits consistent with the criteria laid out in its QAP for each 

respective year. The QAP established the selection criteria for lowincome housing projects, and provided guidance for tax credit 

allocations and 1602 Program subawards. Based on our review, we 

noted that MHC’s QAP complied with the 1602 Program terms and 

conditions which reference Section 42 of the IRC where the 

statutory provision for QAP is required. We also determined that 

MHC properly allocated low-income credits to projects qualified 

under Section 42 of the IRC and was compliant with the 1602 

Program terms and conditions for subawarding funds to those 

projects.
Audit of Mississippi Home Corporation’s Payment Page 7

Under 1602 Program (OIG-16-007)

Furthermore, as part of its application process, MHC ensured that 

subawardees made “good faith efforts” in their attempts to obtain

other investment commitments for tax credits in lieu of the 1602 

Program subawards, and that subawarded amounts did not exceed 

the amounts necessary to ensure the projects’ financial feasibility 

and future viability.

Compliance and Asset Management 

As required by Section 1602 of the Recovery Act, MHC

established compliance and asset management oversight functions

to ensure that low-income housing projects comply with Section

42 of the IRC and remain viable during the 15-year compliance

period.

MHC also imposed recapture requirements in its subaward

agreements in the event of subawardee noncompliance. 

Section1602 of the Recovery Act required that State housing 

credit agencies impose conditions and/or restrictions, including 

recapture requirements, on subawardees to ensure low-income 

housing projects remain qualified during the 15-year compliance 

period. OFAS stipulated in its terms and conditions that recapture

requirements be included in State credit housing agencies’ written

subaward agreements. Furthermore, State housing credit agencies

were required by OFAS to have procedures in place for monitoring

1602 Program subawardees to identify and correct issues of

noncompliance during the compliance period. In the event of

noncompliance, State housing credit agencies must take reasonable 

action to recapture 1602 Program funds, payable to Treasury.

9

MHC structured its 1602 Program subawards as tax credit 

exchange funds, subject to recapture in the event a low-income 

building does not remain qualified during the 15-year compliance 

period. Eight of the nine projects we reviewed had commenced the 

first year of the 15-year compliance period. MHC’s compliance 

monitoring procedures include performing on-site inspections of 

project buildings and units and reviews of management practices, 

and reviews of project tenant files for compliance with Section 42 

of the IRC. 

 9 Treasury, “Section 1602—Payments to States for Low-Income Housing Projects in Lieu of Low-Income 

Housing Credits for 2009 Recapture Guidance”
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MHC’s policy is to perform its asset management function on each 

1602 Program project annually throughout the 15-year compliance

period to ensure its long-term viability. Specifically, MHC requires

all properties to submit occupancy reports quarterly, budget 

information and audited financial statements annually, through 

MHC’s online reporting systems.

10 MHC’s continuous compliance 

monitoring and asset management, for the remaining years within 

the projects’ 15-year compliance period, will ensure 1602 projects 

maintain qualified low-income buildings.

Reporting

OFAS requires that State housing credit agencies submit quarterly

financial status and project performance reports for each 

low-income housing project during the development stage as well 

as other reports deemed necessary to ensure compliance with

provisions of Section 1602. In its post sub-award reporting

guidance, OFAS also requires that State housing credit agencies

provide two additional certification reports. The first report is to

certify each project’s placed in-service date and whether 1602

Program funds used were equal to or less than 85 percent of the

project’s eligible basis. The second report is required each year

thereafter for the project’s annual compliance throughout the 15-

year compliance period once the project is placed in service.

We found that MHC complied with OFAS’ reporting requirements. 

That is, MHC submitted quarterly project performance reports 

during each project’s developmental stage and annual certification 

reports after the project was placed in service.

 10 MHC requires subawardees to submit quarterly and annual reports using the online system applicable

to the project. Applied Oriented Design/Certification On-Line is used for multifamily compliance tracking 

and the Development Financial Analysis Report system for reporting financial activity of housing tax 

credit developments.
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* * * * * *

We appreciate the courtesies and cooperation extended by your 

staff during this audit. Major contributors to this report are listed in 

appendix 5. A distribution list for this report is provided as 

appendix 6. If you have any questions, you may contact me at 

(202) 927-0009 or Shiela Michel, Audit Manager, at 

(202) 927-5407

/s/

James Hodge

Acting Audit Director
Appendix 1

Objectives, Scope, and Methodology

Audit of Mississippi Home Corporation’s Payment Page 10 

Under 1602 Program (OIG-16-007)

In July 2012, we initiated our audit of the Mississippi Home 

Corporation (MHC) as part of our audits of State housing credit 

agencies funded under Department of the Treasury’s (Treasury) 

Payments to States for Low-Income Housing Projects in Lieu of 

Low-Income Housing Credits for 2009 (1602 Program) authorized 

by Section 1602 of the American Recovery and Reinvestment Act 

of 2009 (Recovery Act). The objective of these audits was to 

assess whether State housing credit agencies awarded funds under 

Treasury’s 1602 Program complied with the program’s 

requirements contained in the “Grantee Terms and Conditions” 

(hereinafter terms and conditions). The term and conditions outline 

the program requirements for award eligibility, compliance 

monitoring and reporting. In this report, we assessed whether MHC

properly received and subawarded 1602 Program funds, 

implemented compliance and asset management processes, and 

met Treasury’s reporting requirements. 

We statistically selected MHC from the universe of 55 States and 

territories eligible to receive 1602 Program funds. We caution, 

however, that our sample was randomly selected to avoid bias and 

not for the purpose of projecting results to the universe or 

concluding on the effectiveness of the 1602 Program. In the case 

of MHC, we statistically selected and reviewed 9 of the 17 funded 

projects, representing $12.3 million of the $29.4 million awarded 

to Mississippi. 

In performing our work, we reviewed applicable laws and 

regulations governing the 1602 Program to include the Recovery 

Act and Section 42 of the Internal Revenue Code, as well as 

Treasury’s policies and procedures. We also visited MHC in 

Jackson, Mississippi, where we interviewed key personnel; 

reviewed documents used to support Mississippi’s low-income 

housing credit allocation, low-income housing projects’ existence, 

and cash disbursements in our sample; and assessed MHC’s overall 

compliance with Treasury’s terms and conditions. We also 

conducted site visits to three projects located in Durant and 

Jackson, Mississippi. We performed our fieldwork between July 

2012 and July 2015. 

We conducted this performance audit in accordance with generally 

accepted government auditing standards. Those standards require 

that we plan and perform the audit to obtain sufficient, appropriate 
Appendix 1

Objectives, Scope, and Methodology

Audit of Mississippi Home Corporation’s Payment Page 11

Under 1602 Program (OIG-16-007)

evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix 2

Grantee Terms and Conditions

Audit of Mississippi Home Corporation’s Payment Page 12 

Under 1602 Program (OIG-16-007)

Grants to States for Low-Income Housing Projects in Lieu of Low-Income Housing 

Credits for 2009 

GRANTEE TERMS AND CONDITIONS 

1. Authority 

a. Section 1602 of the American Recovery and Reinvestment Tax Act of 2009 (Act) authorizes 

the United States Department of the Treasury (Treasury) to issue grants to State housing credit 

agencies in lieu of low-income housing credits. 

b. The grantee has authority to receive Section 1602 grants. 

2. Grantee Eligibility 

a. The grantee is the housing credit agency for one of the 50 States, the District of Columbia, the 

Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, Guam, or the Northern 

Mariana Islands which files Form 8610, Annual Low-Income Housing Credit Agencies Report 

with the Internal Revenue Service. 

b. The grantee shall be the sole recipient of the Section 1602 funds in the State and must 

coordinate with other housing credit agencies within the State (including any constitutional home 

rule cities) to determine how much of their 2009 credit ceiling the other agencies would elect to 

take in the form of a grant election amount and will provide to those agencies their proportionate 

share. 

c. The grantee shall enter into written agreement with any other participating housing credit 

agencies within the State, binding the participating agency to comply with the terms and 

conditions applicable to the grantee or designated State agency in the sections 3 through 10 of 

these terms and conditions. 

d. The grantee is the party responsible to Treasury for all grant matters. 

3. Eligible Projects 

a. The grantee shall only select projects for subawards which are qualified low-income buildings 

under Section 42 of the Internal Revenue Code (the Code). 

b. The grantee must ensure that the subaward is consistent with the requirement of section 

42(m)(2) of the Code that the subaward made for a project [building(s)] does not exceed the 

amount necessary to ensure the financial feasibility of the project and its viability as a project 

throughout the credit period. 

4. Use of Grant Funds 

a. The grantee is receiving an initial grant election amount. The grantee may apply for additional 

grant funds through 2010. If the Treasury Department approves the request, the Treasury 

Department will amend the award to increase the grant amount. 
Appendix 2

Grantee Terms and Conditions

Audit of Mississippi Home Corporation’s Payment Page 13

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b. The grantee shall use all grant amounts to make subawards, or for transfer to other agencies to 

make subawards. The subawards shall be in the form of cash assistance and are not required to 

be repaid unless there is a recapture event with respect to the qualified low-income building. The 

grantee shall not use grant election amounts for any other purpose, including administrative 

costs. The grantee may collect reasonable fees from a subawardee to cover expenses associated 

with performance of its duties under Section 1602(c)(3) of the Act, Compliance and Asset 

Management. Reasonable fees are amounts customarily charged for the same or similar services 

and in no event may exceed costs. 

c. The grantee may disburse grant funds to subawardees in 2009 and 2010. The grantee may 

disburse grant funds to subawardees in 2011 provided the subaward has been made to the 

subawardee on or before December 31, 2010 and the subawardee has, by the close of 2010, paid 

or incurred at least 30 percent of the subawardee’s total adjusted basis in land and depreciable 

property that is reasonably expected to be part of the low-income housing project for which the 

disbursements are made. 

d. The subawards shall finance the construction or acquisition and rehabilitation of qualified lowincome buildings in accordance with Section 1602(c) of the Act. 

e. The grantee shall make subawards in the same manner and shall be subject to the same 

limitations as an allocation of housing credit dollar amount allocated under Section 42(m) of the 

Code, except for the additional determinations required in subsection g of this section. 

f. Prior to making any subaward, the grantee shall establish a written process for making a 

determination that applicants for subawards have demonstrated a good faith effort to obtain 

investment commitments for tax credits in lieu of a subaward. 

g. Prior to making any subaward, the grantee shall make a determination that the applicant for 

the subaward has demonstrated a good faith effort to obtain investment commitments for tax 

credits in lieu of the subaward. 

5. Written Agreements and Disbursements to Subawardees 

a. The grantee shall execute a legally binding written agreement with the entity receiving a 

subaward. The grantee and the subawardee must execute the written agreement before any 

Section 1602 funds are disbursed to the subawardee. 

b. The written agreement must set forth (explicitly, or incorporated by reference) all Section 

1602 program requirements, including the requirements of Section 42 of the Code, applicable to 

the subaward. 

c. The written agreement shall impose conditions or restrictions, including a requirement 

providing for recapture, so as to assure that the qualified low-income building remains a 

qualified low-income building during the 15-year compliance period. The written agreement may 

include the extended low-income housing commitment under Section 42(h)(6)(B) of the Code. 
Appendix 2

Grantee Terms and Conditions

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d. The written agreement shall require the subawardee to provide sufficient information to the 

grantee to report on the use of grant funds as required by section 8 of these terms and conditions. 

6. Asset Management 

a. The grantee shall perform asset management functions so as to ensure compliance with 

Section 42 of the Code and the regulations thereunder (including Title 26 Code of Federal 

Regulations section 1.42.9), and the long-term viability of the buildings funded by a subaward 

under the Act in accordance with Section 1602(c)(3) of the Act. 

7. Compliance with the 2009 State Housing Credit Ceiling 

a. The grantee shall track (1) the credit equivalent of all grant election amounts to ensure that the 

2009 State Housing Credit Ceiling is appropriately reduced as required by section 42(i)(9)(A) of 

the Code and (2) total grant election amounts to ensure that these amounts do not exceed the 

amount authorized by section 1602(b). 

b. The grantee shall track the total of credits allocated under Section 42(h)(1) of the Code. 

c. The grantee shall ensure that the credit equivalent of all elected grant amounts through 2010, 

plus the credits allocated under Section 42(h)(1) of the Code during 2009, do not exceed the 

State housing credit ceiling for 2009. 

8. Reporting 

a. The grantee shall provide periodic reports as required by Treasury. A financial status report 

and a project performance report is required on a quarterly basis, due 10 working days after the 

end of the quarter. Quarters end on March 31, June 30, September 30, and December 31. 

b. The performance report has the following elements on each project receiving a subaward 

during the quarter: 

• Name of recipient entity 

• Name of project 

• Brief description of project 

• Location of project: city/county, State, zip code 

• Number of construction jobs created 

• Number of construction jobs retained 

• Number of non-construction jobs created 

• Number of non-construction jobs retained 

• Number of total housing units newly constructed 

• Number of total housing units rehabilitated 

• Number of low-income housing units newly constructed 

• Number of low-income housing units rehabilitated 

c. The grantee shall submit any other reports that Treasury deems necessary to comply with 

Section 1602 of the Act and American Recovery and Reinvestment Act guidance. 
Appendix 2

Grantee Terms and Conditions

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9. Recapture 

a. The grantee shall include in any subaward a requirement providing for recapture to assure that 

the building remains a qualified low-income building during the 15-year compliance period. 

b. The grantee shall notify subawardees that any amount subject to recapture becomes a debt 

owed to the United States payable to the General Fund of the Treasury and enforceable by all 

available means against any assets of the recipient entity. 

10. Financial Management 

a. The grantee must expend and account for grant funds in accordance with State laws and 

procedures for expending and accounting for its own funds. Fiscal control and accounting 

procedures of the designated State housing credit agency must be sufficient to permit preparation 

of required reports and permit the tracing of funds to a level of expenditures adequate to establish 

that such funds have not been used in violation of the restrictions and prohibitions of applicable 

statutes. Effective control and accountability must be maintained for all grant funds. 

b. The grantee shall open a new account (Grant Account) with a financial institution for the 

purpose of receiving grant election amounts, for making distributions of grant election amounts 

to other agencies within the State, and for making subawards. 

c. The grantee must maintain program, financial, and accounting records sufficient to 

demonstrate that grant funds were used in accordance with the Section 1602 program and these 

terms and conditions. The Treasury as the awarding office, the cognizant Treasury inspector 

general, and the Comptroller General of the United States, or any of their authorized 

representatives, shall have the right of access to facilities and to any pertinent books, documents, 

papers, or other records (electronic and otherwise) of grantees, which are pertinent to the grant, 

in order to make audits, examinations, excerpts, and transcripts. 

d. The grantee shall minimize the time between the receipt of grant funds and the disbursement 

of those funds to subawardees. Federal funds cannot be drawn by the grantee from the U.S. 

Treasury in advance of need. The grantee shall not place in escrow or advance lump sums to 

project owners. Once funds are drawn from the grantee’s U.S. Treasury account, they must be 

expended as a subaward by the grantee within three days, or if grant funds are transferred by the 

grantee to another agency, as a subaward by that agency within three days following the date of 

transfer by the grantee.

e. The grantee shall promptly return to its Grant Account any subawards returned to the 

designated State housing credit agency from subawardees and shall expend returned amounts as 

subawards before additional grant amounts are drawn from the Treasury. 

11. Disallowance, Suspension, and Termination 

a. If the grantee materially fails to comply with any term of the award, whether stated in a 

Federal statute or regulation, the terms and conditions herein, in a State plan or application, a 
Appendix 2

Grantee Terms and Conditions

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notice of award, or elsewhere, Treasury may take one or more of the following actions, as 

appropriate in the circumstances: 

• Temporarily halt cash payments pending correction of the deficiency by the grantee

• Disallow all or part of the cost of the activity or action not in compliance 

• Wholly or partly suspend or terminate the current award 

• Withhold further awards for the program 

• Take other remedies that may be legally available 

In taking an enforcement action, Treasury will provide the grantee the opportunity for a hearing, 

appeal, or other administrative proceeding to which the grantee is entitled under any statute or 

regulation applicable to the action involved. 

b. The grantee must immediately report any indication of fraud, waste, abuse, or potentially 

criminal activity pertaining to grant funds to Treasury and the cognizant Treasury inspector 

general. 

12. Return of Unused Grant Funds 

a. The grantee shall return to the Treasury by January 1, 2011 any grant election amounts not 

used to make subawards by December 31, 2010. This requirement does not prevent the State 

housing credit agency from continuing to disburse funds to subawardees after December 31, 

2010 provided: 

(1) A subaward has been made to the subawardee on or before December 31, 2010; 

(2) The subawardee has, by the close of 2010, paid or incurred at least 30 percent of the 

subawardee’s total adjusted basis in land and depreciable property that is reasonably 

expected to be part of the low-income housing project; and 

(3) Any funds not disbursed to the subawardee by December 31, 2011 must be returned 

to the Treasury by January 1, 2012. 

Signature 

Under penalties of perjury, I declare that I have examined the terms and conditions in this 

application and that the designated State housing credit agency agrees to and will ensure that 

these terms and conditions will be followed. I declare that I am an authorized official of the 

designated State housing credit agency and am authorized to bind the State housing credit agency 

to these Terms and Conditions.

Name Title

Phone Email

Signature Date signed
Appendix 3

Mississippi Home Corporation Response 

Audit of Mississippi Home Corporation’s Payment Page 17 

Under 1602 Program (OIG-16-007)
Appendix 4

Treasury Management Response

Audit of Mississippi Home Corporation’s Payment Page 18 

Under 1602 Program (OIG-16-007)
Appendix 5

Major Contributors To This Report

Audit of Mississippi Home Corporation’s Payment Page 19 

Under 1602 Program (OIG-16-007)

Shiela Michel, Audit Manager

Gerald Kelly, Auditor-In-Charge 

Nicholas Slonka, Auditor

Paul Harris, Program Analyst

Fawntrella Thompson, Referencer
Appendix 6

Report Distribution

Audit of Mississippi Home Corporation’s Payment Page 20 

Under 1602 Program (OIG-16-007)

Department of the Treasury

Deputy Secretary

Assistant Secretary for Management of the Treasury

Fiscal Assistant Secretary

Deputy Assistant Secretary, Fiscal Operations and Policy

Office of Strategic Planning and Performance Management

Office of the Deputy Chief Financial Officer, Risk and Control

Group

Program Manager, Office of Fiscal Assistant Secretary

Office of Management and Budget

 OIG Budget Examiner

Mississippi Home Corporation

Executive Director
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