FAC Explorer

Audit 414610

FY End
2025-09-30
Total Expended
$1.70M
Findings
2
Programs
2
Organization: Cottonwood Ridge Apartments (MN)
Year: 2025 Accepted: 2026-10-05
Auditor: CLIFTONLARSONALLEN LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
1239916 2025-002 Material Weakness Yes N
1239917 2025-003 Material Weakness Yes N

Programs

ALN Program Spent Major Findings
14.155 MORTGAGE INSURANCE FOR THE PURCHASE OR REFINANCING OF EXISTING MULTIFAMILY HOUSING PROJECTS $1.66M Yes 2
14.195 PROJECT-BASED RENTAL ASSISTANCE (PBRA) $44,612 Yes 0

Contacts

Name Title Type
NCN3Q13MXF97 Lindsey Beyer Auditee
5077233211 Josh Sherburne Auditor
No contacts on file

Notes to SEFA

The Project received $1,660,000 from the U.S. Department of Housing and Urban Development (HUD) Capital Advance Program for construction of Cottonwood Ridge. The capital advance is repayable, plus accrued interest accumulated from the date of the advance, only if the Project does not remain available for very low income individuals as approved by HUD for a period of 40 years ending September 2037. Accrued interest is not recorded in the financial statements as it is only payable in the event of default. Restrictions on the capital advance were satisfied by building the facility. The outstanding balance of the capital advance at September 30, 2025, is $1,660,000

Finding Details

Finding 2025-002
Federal Agency: United States Department of Housing and Urban Development Federal Program Title: Section 223(f) Capital Advance Assistance Listing Number(s): 14.155 Award Periods: October 1, 2024, through September 30, 2025 Type of Finding: - Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or Specific Requirement: All disbursements from the replacement reserve must be approved by HUD (24 CFR sections 891.405 and 891.605). Condition: The Project withdrew $51,448.72 from the replacement reserve account in May 2025 to reimburse the Project's parent company for operating expenses without HUD approval. Questioned Costs: $51,448.72 Context: The Project withdrew replacement reserve funds without HUD approval to reimburse St. John Lutheran Home and Subsidiaries, of which the Project is a subsidiary, for payables for operating expenses that had gone unpaid for multiple years. Cause: While the Project has internal controls to mitigate the risk of noncompliance, an unapproved withdrawal was identified. Effect: An unapproved withdrawal was made from the replacement reserve account. Recommendation: We recommend that processes and procedures be evaluated to strengthen internal control over compliance relating to HUD accounts. Views of Responsible Officials and Planned Corrective Actions: Management will review compliance requirements for HUD programs related to replacement reserve withdrawals to ensure they are followed in the future.
Finding 2025-003
Federal Agency: United States Department of Housing and Urban Development Federal Program Title: Section 223(f) Capital Advance Assistance Listing Number(s): 14.155 Award Periods: October 1, 2024, through September 30, 2025 Type of Finding: - Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or Specific Requirement: An amount as required by HUD will be deposited monthly in the reserve fund (Regulatory Agreement, item 5 A). Condition: The Project reduced the required monthly deposit in the replacement reserve account from $994 to $50 without HUD approval. Questioned Costs: $4,720.00 Context: The Project reduced required monthly deposits in the replacement reserve account without HUD approval. Cause: While the Project has internal controls to mitigate the risk of noncompliance, an unapproved change in required monthly deposits was identified. Effect: An unapproved change in required monthly deposit was made for the replacement reserve account. Recommendation: We recommend that processes and procedures be evaluated to strengthen internal control over compliance relating to HUD accounts. Views of Responsible Officials and Planned Corrective Actions: Management will review compliance requirements for HUD programs related to replacement reserve withdrawals to ensure they are followed in the future.