Audit 338445

Criteria: Generally, a system of internal control includes the ability to understand and prepare the Cooperative's financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America (GAAP). Condition: Due to the limited size of the Cooperative's business staff and related resources available, the Cooperative has utilized the auditor to post adjusting journal entries and prepare the financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America. Questioned Costs: None. Context: The Cooperative has informed us that the small size and qualifications of its business office staff precludes the Cooperative from posting adjusting journal entries and preparing its own financial statements. Effect: The Cooperative utilizes the auditor to prepare GAAP based financial statements. Cause: Limited number of staff and hours available preclude the Cooperative from preparing GAAP based financial statements. Repeat Finding: This finding was reported in the prior year as finding 2023-001. Recommendation: We recommend that the Cooperative continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Current Status: Unresolved, the number of staff and qualifications of staff have not changed. The Cooperative is continuing to review the auditor prepared adjusting journal entries and financial statements. Action Taken: The Cooperative will continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 28 in this audit report.

Criteria: Disbursements totaling not in excess of 20% of the total balance in the general operating reserve as of the close of the preceding annual period may be made by the Cooperative without the approval of HUD. Any disbursements in excess of this amount may be made only following the approval of HUD. Condition: Funds were withdrawn in excess of 20% of the total balance as of the close of the preceding annual period without HUD approval. Questioned Costs: None. Context: The Cooperative has informed us that in the future no withdrawals in excess of 20% of the total balance as of the close of the preceding annual period will be made without first receiving approval from HUD. Effect: The Cooperative is out of compliance with their HUD regulatory agreement. Cause: The Cooperative did not receive approval from HUD before withdrawing funds over 20% of the total balance in the general operating reserve as of the close of the preceding annual period. Repeat Finding: N/A. Recommendation: We recommnd that the Cooperative receive approval from HUD before withdrawing funds from the general operating reserve in excess of 20% of the total balance as of the close of the preceding annual period. Current Status: Resolved. The excess funds have been replaced and the Cooperative will seek HUD approval in the future. Action Taken: The Cooperative will first receive approval from HUD before withdrawing funds over 20% of the total balance in the general operating reserve as of the close of the preceding annual period. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 28 in this audit report.

Criteria: Generally, a system of internal control includes the ability to understand and prepare the Cooperative's financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America (GAAP). Condition: Due to the limited size of the Cooperative's business staff and related resources available, the Cooperative has utilized the auditor to post adjusting journal entries and prepare the financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America. Questioned Costs: None. Context: The Cooperative has informed us that the small size and qualifications of its business office staff precludes the Cooperative from posting adjusting journal entries and preparing its own financial statements. Effect: The Cooperative utilizes the auditor to prepare GAAP based financial statements. Cause: Limited number of staff and hours available preclude the Cooperative from preparing GAAP based financial statements. Repeat Finding: This finding was reported in the prior year as finding 2023-001. Recommendation: We recommend that the Cooperative continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Current Status: Unresolved, the number of staff and qualifications of staff have not changed. The Cooperative is continuing to review the auditor prepared adjusting journal entries and financial statements. Action Taken: The Cooperative will continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 28 in this audit report.

Criteria: Disbursements totaling not in excess of 20% of the total balance in the general operating reserve as of the close of the preceding annual period may be made by the Cooperative without the approval of HUD. Any disbursements in excess of this amount may be made only following the approval of HUD. Condition: Funds were withdrawn in excess of 20% of the total balance as of the close of the preceding annual period without HUD approval. Questioned Costs: None. Context: The Cooperative has informed us that in the future no withdrawals in excess of 20% of the total balance as of the close of the preceding annual period will be made without first receiving approval from HUD. Effect: The Cooperative is out of compliance with their HUD regulatory agreement. Cause: The Cooperative did not receive approval from HUD before withdrawing funds over 20% of the total balance in the general operating reserve as of the close of the preceding annual period. Repeat Finding: N/A. Recommendation: We recommnd that the Cooperative receive approval from HUD before withdrawing funds from the general operating reserve in excess of 20% of the total balance as of the close of the preceding annual period. Current Status: Resolved. The excess funds have been replaced and the Cooperative will seek HUD approval in the future. Action Taken: The Cooperative will first receive approval from HUD before withdrawing funds over 20% of the total balance in the general operating reserve as of the close of the preceding annual period. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 28 in this audit report.