LAKEVIEW PROPERTIES, INC.Non-Profit

2019-002 ? Section 811 Project, CFDA #14.181; Project No. 052-HD071; Grant Period- Year Ended June 30, 2019 Condition: The Organization?s accounting records were not adequately maintained. Specifically, bank reconciliations were performed tardily for November 2018 through June 30, 2019, related party operating cost reimbursements did not agree to billed amounts and time sheets, the year- end general ledger did not balance, several general journal entries were not supported by detailed backup, and year end payable accounts were inaccurate. Criteria: The organization?s policies were not adhered by staff. Cause: The organization experienced significant staff turnover in the accounting department with the Accounting Manager and the Staff Accountant leaving during the fiscal year which resulted in vacant positions and existing staff having greater responsibilities. Effect: Because accounting records were not adequately maintained, the organization was more susceptible to errors or frauds not being identified in a timely manner. Material Weakness. As discussed in Finding 2019-001, the organization did not maintain its accounting records in accordance with HUD regulations which could result in errors or frauds not being identified in a timely manner. The organization?s policies and procedures should be adhered, and new staff should receive training and greater supervision. Recommendation: We recommend that the organization increase management oversight of new staff and provide all accounting staff with the established accounting policies and procedures to be followed as part of their required duties. Views of Responsible Officials and Planned Corrective Actions: We agree with the auditor?s recommendation and are still in the process of filling the vacant positions.

2019-003 ? Section 811 Project, CFDA #14.181; Project No. 052-HD071; Grant Period- Year Ended June 30, 2019 Statement of Condition: The project did not maintain tenant files in accordance with HUD regulations regarding tenant rents, tenant files, and security deposits. Criteria: 1 of 4 tenant files reviewed revealed that tenants were not billed correctly; 2 of 4 tenant files reviewed revealed that the security deposit listed in the tenant lease did not agree to the organization?s schedule of tenant security deposits; 2 of 4 tenant files reviewed did not contain a signed housing application signed by the tenant and the organization; and 1 of 4 tenant files reviewed did not contain a signed housing rules and regulations document. Cause: The organization did not update tenant rent rolls after the tenant was recertified for the one tenant. In addition, the organization did not reconcile security deposits per tenant leases to the security deposit schedule by tenant maintained by the organization. Effect: The Project is in violation of its regulatory agreement with HUD. It appears that the organization overbilled the one tenant by $1,494. Context: A sample of four tenant files was selected for audit out of a total population of 13 tenant files during the audit period. 16 attributes were tested in which the exceptions were identified. Our sample was a statistically valid sample. Recommendation: We recommend that the tenant ledger be corrected immediately for the one tenant overbilled, that tenant security deposits per the security deposit schedule be reconciled to security deposits recorded in tenant lease agreements annually. In addition, tenant billings per the rent rolls should be reconciled to tenant billings per the housing assistance payment request on a monthly basis. Views of Responsible Officials and Planned Corrective Actions: Per the auditor?s recommendation, this issue has been corrected by the agency. The tenant signed her certification which accurately reflected the owed amount however this was not updated with the tenants rent roll.

2019-004 ? Section 811 Project, CFDA #14.181; Project No. 052-HD071; Grant Period- Year Ended June 30, 2019 Statement of Condition: The Project was late depositing the required monthly reserve for replacement deposit in five of twelve months and the June 2019 deposit was not remitted during the fiscal year. Criteria: HUD requires Section 811 Projects to remit deposits to the reserve for replacement account on a monthly basis. Cause: The organization had staff turnover which led to the required deposits being tardy. Effect: The Project was not in compliance with Section 811 project requirements and had under-funded its? reserve for replacement account at June 30, 2019. Context: HUD regulations have specific guidelines for the funding of the reserve for replacement account. The Project did not adhere to the HUD guidelines. Recommendation: The Project should adhere to HUD guidelines concerning funding of the reserve for replacement account and remit the missed deposit immediately. Views of Responsible Officials and Planned Corrective Actions: The Project funded the reserve for replacements account in the amount of $458 in September 2019 to fully satisfy the required deposit from June 30, 2019.

2019-005 ? Section 811 Project, CFDA #14.181; Project No. 052-HD071; Grant Period- Year Ended June 30, 2019 Statement of Condition: The management agent billed the Project for allocated payroll costs based on budgeted amounts and not actual costs. Criteria: HUD requires Section 811 Projects to substantiate related party costs allocated to the Project. Cause: The organization had staff turnover which led to management agent personnel not adhering to procedures regarding substantiating and reconciling related party allocated costs. Effect: The Project was not in compliance with Section 811 project requirements and potentially overbilled the Project for its allocated payroll costs as of June 30, 2019. Context: The management agent was allocating personnel costs monthly based on budgeted costs and not actual costs as reflected in time sheets and payroll journals. Recommendation: The management agent should allocate payroll costs monthly based on actual costs incurred as reflected in time sheets and payroll journals. Views of Responsible Officials and Planned Corrective Actions: The Project did not actually pay the management agent the billed costs as of June 30, 2019 so we reduced the payable recorded as of June 30, 2019 to the management agent to reflect actual payroll costs documented as of June 30, 2019. As a result, the management agent did not actually receive the overbilled amount. Per the auditor?s recommendation we will have the management agent allocate payroll costs to the project based on actual time sheets and payroll journals.

2019-006 ? Section 811 Project, CFDA #14.181; Project No. 052-HD071; Grant Period- Year Ended June 30, 2019 Statement of Condition: The Project was tardy submitting its financial statement audit to the HUD Real Estate Assessment Center within ninety days of year end. Criteria: HUD requires Section 811 Projects to submit their financial statement audit to the Real Estate Assessment Center within ninety days of year end. Cause: The organization had staff turnover which led to the audit being submitted tardily. Effect: The Project was not in compliance with its Section 811 project regulatory requirements. Context: HUD regulations have specific guidelines for the timely submission of financial information. Recommendation: The Project should adhere to HUD guidelines concerning the time frame for submitting its financial statement audit. Views of Responsible Officials and Planned Corrective Actions: The Project submitted its financial statement audit to HUD in October 2019.

2019-007 ? Section 811 Project, CFDA #14.181; Project No. 052-HD071; Grant Period- Year Ended June 30, 2019 Statement of Condition: The Project was late depositing the required residual receipts deposit for the year ended June 30, 2019. Criteria: HUD requires Section 811 Projects to remit deposits to the residual receipts account if the organization has surplus cash as defined in the regulatory agreement. Cause: The organization had staff turnover which led to the delay in the calculation of surplus cash. Effect: The Project was not in compliance with Section 811 project requirements and did not remit the residual receipts deposit within ninety days of year end as required in the regulatory agreement. Context: HUD regulations have specific guidelines for the funding of the residual receipts account. The Project did not adhere to the HUD guidelines. Recommendation: The Project should adhere to HUD guidelines concerning funding of the residual receipts account and remit the missed deposit immediately. Views of Responsible Officials and Planned Corrective Actions: The Project funded the residual receipts account in the amount of $382 in October 2019 to fully satisfy the required deposit from June 30, 2019.

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