Finding Number: 2024-001
Questioned Costs: N/A
Information on Universe and Population Size: N/A
Sample Size Information: N/A
Noncompliance Information: No instances of noncompliance identified.
Statement of Condition: Material audit adjustments related to receivables, revenues, prepaid assets, accounts payable, accrued liabilities, and expenses were required to present the financial statements in accordance with generally accepted accounting principles.
Criteria: Management is responsible for maintaining its accounting records in accordance with generally accepted accounting principles.
Cause: Inadequate controls over financial close and reporting procedures.
Effect or Potential Effect: As a result of the condition, the Corporation’s accounting records were initially misstated by amounts material to the financial statements.
Recommendation: We recommend that control systems are put in place to ensure there is proper training and review over monthly and annual financial close and reporting procedures to eliminate errors in the future.
Reporting Views of Responsible Officials and Planned Corrective Action: While policies and procedures were fundamentally sound, deficiencies existed in the oversight and review of material transactions over receivables, revenues, prepaid assets, accounts payable, accrued liabilities, and expenses during financial close and reporting procedures. Therefore, the following action will be implemented by December 31, 2024:
• Management will implement staff training on monthly and annual procedures over financial close and reporting by December 31, 2024.
Finding Number: 2024-002
Questioned Costs: $11,250
Information on Universe and Population Size: Full population is twelve months of required deposits to the replacement reserve account totaling $45,000. Three months of required deposits totaling $11,250 were not made.
Sample Size information: N/A – full population examined.
Noncompliance Information: The Corporation failed to make three required monthly deposits into the Replacement Reserve account during the period under review.
Statement of Condition: During April 2024 when there was a change in management agents, required monthly deposits to the replacement reserve account were not made for the final three months of the period under review resulting in an underfunded replacement reserve account by $11,250.
Criteria: Owners shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund. All disbursements from the reserve must be approved by HUD.
Cause: Lack of adequate controls, oversight, and review of the replacement reserve funding process.
Effect or Potential Effect: Required monthly deposits to the replacement reserve were not made for three months as required by HUD resulting in and underfunded balance.
Recommendation: We recommend that management make the delinquent deposits to the replacement reserve account, that accounting staff be trained on the requirement to make monthly deposits into the replacement reserve account, and that management monitor account funding to ensure all required deposits have been made on time.
Reporting Views of Responsible Officials and Planned Corrective Action: We concur that lack of adequate oversight and review of the replacement reserve funding process led to an underfunding of the replacement reserve account, and are in agreement with the recommendations that the delinquent deposits be made, that accounting staff be trained on the requirement to make monthly deposits into the replacement reserve account, and that management monitor account funding to ensure all required deposits have been made timely. Therefore, the following actions will be implemented:
• Make delinquent deposits to the Replacement Reserve account by October 31, 2024.
• Management will implement staff training on the requirement to make monthly deposits into the replacement reserve account and implement processes to monitor account funding to ensure timely monthly deposits by December 31, 2024.
Finding Number: 2024-001
Questioned Costs: N/A
Information on Universe and Population Size: N/A
Sample Size Information: N/A
Noncompliance Information: No instances of noncompliance identified.
Statement of Condition: Material audit adjustments related to receivables, revenues, prepaid assets, accounts payable, accrued liabilities, and expenses were required to present the financial statements in accordance with generally accepted accounting principles.
Criteria: Management is responsible for maintaining its accounting records in accordance with generally accepted accounting principles.
Cause: Inadequate controls over financial close and reporting procedures.
Effect or Potential Effect: As a result of the condition, the Corporation’s accounting records were initially misstated by amounts material to the financial statements.
Recommendation: We recommend that control systems are put in place to ensure there is proper training and review over monthly and annual financial close and reporting procedures to eliminate errors in the future.
Reporting Views of Responsible Officials and Planned Corrective Action: While policies and procedures were fundamentally sound, deficiencies existed in the oversight and review of material transactions over receivables, revenues, prepaid assets, accounts payable, accrued liabilities, and expenses during financial close and reporting procedures. Therefore, the following action will be implemented by December 31, 2024:
• Management will implement staff training on monthly and annual procedures over financial close and reporting by December 31, 2024.
Finding Number: 2024-002
Questioned Costs: $11,250
Information on Universe and Population Size: Full population is twelve months of required deposits to the replacement reserve account totaling $45,000. Three months of required deposits totaling $11,250 were not made.
Sample Size information: N/A – full population examined.
Noncompliance Information: The Corporation failed to make three required monthly deposits into the Replacement Reserve account during the period under review.
Statement of Condition: During April 2024 when there was a change in management agents, required monthly deposits to the replacement reserve account were not made for the final three months of the period under review resulting in an underfunded replacement reserve account by $11,250.
Criteria: Owners shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund. All disbursements from the reserve must be approved by HUD.
Cause: Lack of adequate controls, oversight, and review of the replacement reserve funding process.
Effect or Potential Effect: Required monthly deposits to the replacement reserve were not made for three months as required by HUD resulting in and underfunded balance.
Recommendation: We recommend that management make the delinquent deposits to the replacement reserve account, that accounting staff be trained on the requirement to make monthly deposits into the replacement reserve account, and that management monitor account funding to ensure all required deposits have been made on time.
Reporting Views of Responsible Officials and Planned Corrective Action: We concur that lack of adequate oversight and review of the replacement reserve funding process led to an underfunding of the replacement reserve account, and are in agreement with the recommendations that the delinquent deposits be made, that accounting staff be trained on the requirement to make monthly deposits into the replacement reserve account, and that management monitor account funding to ensure all required deposits have been made timely. Therefore, the following actions will be implemented:
• Make delinquent deposits to the Replacement Reserve account by October 31, 2024.
• Management will implement staff training on the requirement to make monthly deposits into the replacement reserve account and implement processes to monitor account funding to ensure timely monthly deposits by December 31, 2024.