Lake Ridge Elderly Development, Inc.Non-Profit

U.S. Department of Housing and Urban Development CFDA Numbers 14.155 and 14.195 Finding 2021-002 - Required Deposits to the Residual Receipt Account Criteria/Condition: The Corporation was required to make a deposit of surplus cash of $175,357 into the residual receipts account within 90 days of June 30, 2020. Cause: The required deposits were not made timely due to a communication error. Effect: The Corporation made the deposit late on October 7, 2020 rather than within the 90 days as required. Recommendation: Processes should be put into place to properly calculate and deposit the surplus cash into the residual receipts account as required. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and is putting in place a checklist that will be monitored by the finance manager at Fellowship Square Foundation to ensure the timely deposit of any surplus cash requirements.

The Corporation is required to maintain its books and records on an accrual basis in accordance with accounting principles generally accepted in the United States of America(GAAP). The Corporation's internal accounting records did not consider accrued expenses and were completed on a cash basis during the year ended June 30, 2020. The Corporation's management company is keeping the internal books and records on a cash basis and is not properly accounting for accrued expenses in accordance with GAAP. Audit adjustments were required to record accrued expenses to convert the cash basis internal accounting records to the accrual basis in accordance with GAAP for audit purposes. The Corporation's management company is preparing the internal financial statements on a cash basis for the Board of Directors and management to monitor cash flows, and will convert them to the accrual basis of accounting in accordance with GAAP for future years. The Corporation should have procedures in place to ensure that financial statements are prepared on the accrual basis of accounting in accordance with GAAP.

The Corporation is required to maintain and follow documented policies and procedures for procurement and fixed assets. The Corporation did not follow its capitalization policy as set forth in the documented policies and procedures. Audit adjustments were required to adjust noncapitalizable expenditures. The Corporation's management company is preparing additional guidelines for site managers to follow relating to adhering to the established policies and procedures for procurement and fixed assets.The Corporation should have procedures in place to ensure that the proper policies and procedures are being followed.

Condition and Criteria: The Corporation is required to maintain its books and records on an accrual basis in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Corporation's internal accounting records were completed on a cash basis during the year ended June 30, 2019. Cause: The Corporation's management company is keeping the internal books and records on a cash basis and is not properly accounting for accounts receivable, payables, accrued expenses, and depreciation in accordance with GAAP. Effect: Audit adjustments were required to record accounts receivable, accounts payable, accrued expenses, and depreciation to convert the cash basis internal accounting records to the accrual basis in accordance to GAAP for audit purposes.

Unapproved Withdrawal Condition and Criteria: The Corporation made an unapproved withdrawal of $29,415 from the residual receipts account. The Corporation should establish controls to ensure that distributions are paid in accordance with the HUD regulatory agreement. Cause: The funds were withdrawn to fund operations at management?s discretion, but without proper HUD approval. Effect: The Corporation withdrew the $29,415 from the residual receipts account and closed the account without proper HUD approval.

GSA_MIGRATION