Federal expenditures for the mortgage insurance program represent the fully funded amount of the loan. Loan proceeds of $3,730,966 were received during the period ended March 31, 2025. The federal government imposes continuing compliance requirements on this loan. The loan balance at March 31, 2025 was $17,381,916.
Material Weakness – Lack of Internal Controls Criteria - Management is responsible for establishing and maintaining internal controls in order to safeguard the assets of the Cooperative and achieve accurate financial reporting. Condition - The Cooperative lacked sufficient controls and procedures related to financial reporting, resulting in no formal documentation and review of financial activity, and a lack of understanding the segregation of duties. Cause - Appropriate internal controls and procedures related to financial reporting were not established when the property management agent was hired. Effect - The Cooperative was exposed to an increased risk that misstatements (whether caused by error or fraud) may occur and not be prevented or detected by management on a timely basis. A significant number of journal entries were required to adjust the 2025 financial statements. Recommendation - We recommend that management design and document their internal control process to ensure that they have an adequately designed system of internal controls. Auditee’s comment - In June 2025, the Cooperative entered into a management agreement with Paramark Real Estate Services to manage the Cooperative. The management company maintains sufficient controls and procedures related to financial reporting and have proper segregation of duties in place to safeguard the assets of the Cooperative. Status - Resolved