Finding Text
2023-001: Delinquent Rent Receivables
Criteria or Specific Requirement: Sound business practices require that all receivables are collected in a prompt and efficient manner to assure adequate operating funds are available to maintain the housing units in proper order.
Condition: The Spirit Lake Housing Corporation does not have adequate policies in place to enforce rent collections. This resulted in excessive tenant accounts receivable at March 31, 2023.
Questioned Costs: N/A
Effect: The Spirit Lake Housing Corporation forfeits operating funds in material amounts that minimizes available monies for routine maintenance and repair and other common operating costs. The allowance for doubtful accounts as of March 31, 2023 was $1,683,655.
Cause: The Spirit Lake Housing Corporation does not enforce its policies on delinquent tenants to ensure payment of rents earned.
Repeat Finding: This is a repeat finding of 2022-001.
Recommendation: The Spirit Lake Housing Corporation needs to prioritize the enforcement of rent collection policies and establish payment plans for delinquent tenants. In many cases, payment plans can be established through payroll deduction with the tenants’ employers.
Management Response and Corrective Action: The Spirit Lake Housing Corporation agrees with this finding and is working to improve upon and enforce the rent collection policies.