Realife Cooperative of Duluth

Finding 2020-001 Criteria: Disbursements totaling not in excess of 20% of the total balance in the general operating reserves as of the close of the preceding annual period may be made by the Cooperative without the approval of HUD. Any disbursements in excess of this amount may be made only following the approval of HUD. Condition: Funds were withdrawn in excess of 20% of the total balance as of the close of the preceding annual period without HUD approval. Cause: The Cooperative did not first receive approval from HUD before withdrawing funds over 20% of the total balance in the general operating reserve as of the close of the preceding annual period. Effect: The Cooperative is out of compliance with the HUD regulatory agreement. Context: The Cooperative did not adequately fund the general operating reserve. Questioned Costs: None. Repeat Finding: No. Recommendation: We recommend that the Cooperative receive approval from HUD before withdrawing funds from the general operating reserve in excess of 20% of the total balance as of the close of the preceding annual period. Current Status: Resolved, the excess funds have been replaced and the Cooperative will seek HUD approval in the future. Action Taken: The Cooperative will first receive approval from HUD before withdrawing funds over 20% of the total balance in the general operating reserve as of the close of the preceding annual period. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the correction action plan.

Housing and Urban Development Realife Cooperative of Duluth respectfully submits the following corrective action plan for the year ended October 31, 2020. Westberg Eischens, PLLP 2630 1st Street South P.O. Box 362 Willmar, MN 56201 Audit Period: October 31, 2020 The findings from the October 31, 2020 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedules. Summary of audit results does not include findings and is not addressed. FINDINGS ? FEDERAL AWARDS PROGRAM UNIT Finding 2020-001 Recommendation: We recommend that the Cooperative receive approval from HUD before withdrawing funds from the general operating reserve in excess of 20% of the total balance as of the close of the preceding annual period. Action Taken: The Cooperative will first receive approval from HUD before withdrawing funds over 20% of the total balance in the general operating reserve as of the close of the preceding annual period. Planned Completion Date: Completed.

Finding 2020-002 Criteria: The establishment and maintenance of a separate bank account for member deposits held in trust is a program requirement applicable to cooperative housing insured by HUD. The deposits in this account must equal or exceed the liability for member deposits. Condition: The Cooperative did not adequately fund the member deposits held in trust. Cause: The Cooperative withdrew funds from the member deposits held in trust to pay for expenses. Effect: The Cooperative is out of compliance with the HUD regulatory agreement. Context: The Cooperative did not adequately fund the member deposits held in trust. Questioned Costs: None. Repeat Finding: No. Recommendation: We recommend that the Cooperative replace the funds withdrawn from the member deposits held in trust in order to adequately cover the liability member security deposits. Current Status: Resolved, the member deposits held in trust are sufficient to cover the Cooperative?s liability. Action Taken: Subsequent to year-end the Cooperative replaced the funds withdrawn in order to adequately cover the liability. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the correction action plan.

Housing and Urban Development Realife Cooperative of Duluth respectfully submits the following corrective action plan for the year ended October 31, 2020. Westberg Eischens, PLLP 2630 1st Street South P.O. Box 362 Willmar, MN 56201 Audit Period: October 31, 2020 The findings from the October 31, 2020 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedules. Summary of audit results does not include findings and is not addressed. FINDINGS ? FEDERAL AWARDS PROGRAM UNIT Finding 2020-002 Recommendation: We recommend that the Cooperative replace the funds withdrawn from the member deposits held in trust in order to adequately cover the liability member security deposits. Action Taken: The Cooperative will replace the funds withdrawn in order to adequately cover the liability. Planned Completion Date: January 31, 2021.

Finding 2019-001 Criteria: Generally, a system of internal control contemplates separation of duties such that no individual has the responsibility to execute a transaction, have physical access to the related assets, and have responsibility or authority to record the transactions. Condition: Due to the limited size of the Cooperative?s business staff, the Cooperative has limited segregation of duties. Cause: Limited number of staff in the business office. Effect: The Cooperative is unable to maintain separation of incompatible duties. Context: The Cooperative has informed us that the small size of its business office staff precludes proper separation of duties at this time. Questioned Costs: None. Repeat Finding: This finding was reported in the prior year as finding 2011-001. Recommendation: We recommend that the Cooperative continue to separate incompatible duties as best it can within the limits of what the Cooperative considers to be cost beneficial. Current Status: Unresolved, The Cooperative still has a limited number of staff in the business office. Action Taken: The Cooperative reviews and makes improvements to its internal controls on an ongoing basis, and attempts to maximize the segregation of duties in all areas within the limits of the staff available. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 28 in this audit report.

Housing and Urban Development Realife Cooperative of Duluth respectfully submits the following corrective action plan for the year ended October 31, 2019. Westberg Eischens, PLLP 2630 1st Street South Audit Period: October 31, 2019 P.O. Box 362 Willmar, MN 56201 The findings from the October 31, 2019 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedules. Summary of audit results does not include findings and is not addressed. FINDINGS ? FINANCIAL STATEMENT AUDIT Finding 2019-001 Recommendation: We recommend that the Cooperative continue to separate incompatible duties as best it can within the limits of what the Cooperative considers to be cost beneficial. Action Taken: The Cooperative reviews and makes improvements to its internal controls on an ongoing basis, and attempts to maximize the segregation of duties in all areas within the limits of the staff available. Planned Completion Date: Not Applicable. Finding 2019-002 Recommendation: We recommend that the Cooperative continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Action Taken: The Cooperative will continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Planned Completion Date: Not Applicable. FINDINGS ? FEDERAL AWARDS PROGRAM AUDIT Finding 2019-003 Recommendation: We recommend that the Cooperative immediately transfer into the General Operating reserve the amount needed to come back into compliance. Action Taken: The Cooperative will make the transfer. Planned Completion Date: December 6, 2019 If Housing and Urban Development has questions regarding this plan, please call Dick Wallin at 218-464-4495.

2018-001

Finding 2019-002 Criteria: Generally, a system of internal control includes the ability to understand and prepare the Cooperative?s financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America (GAAP). Condition: Due to the limited size of the Cooperative?s business staff and related resources available, the Cooperative has utilized the auditor to post auditing journal entries and prepare the financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America. Cause: Limited number of staff and hours available preclude the Cooperative from preparing GAAP based financial statements. The Cooperative will continue to review auditor prepared financial statements. Effect: The Cooperative utilizes the auditor to prepare GAAP based financial statements. Context: The Cooperative has informed us that the small size and qualifications of its business office staff precludes the Cooperative from posting adjusting journal entries and preparing its own financial statements. Questioned Costs: None. Repeat Finding: This finding was reported in the prior year as finding 2011-002. Recommendation: We recommend that the Cooperative continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Current Status: Unresolved, the number of staff and qualifications of staff have not changed. The Cooperative is continuing to review the auditor prepared adjusting journal entries and financial statements. Action Taken: The Cooperative will continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 28 in this audit report.

Housing and Urban Development Realife Cooperative of Duluth respectfully submits the following corrective action plan for the year ended October 31, 2019. Westberg Eischens, PLLP 2630 1st Street South Audit Period: October 31, 2019 P.O. Box 362 Willmar, MN 56201 The findings from the October 31, 2019 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedules. Summary of audit results does not include findings and is not addressed. FINDINGS ? FINANCIAL STATEMENT AUDIT Finding 2019-001 Recommendation: We recommend that the Cooperative continue to separate incompatible duties as best it can within the limits of what the Cooperative considers to be cost beneficial. Action Taken: The Cooperative reviews and makes improvements to its internal controls on an ongoing basis, and attempts to maximize the segregation of duties in all areas within the limits of the staff available. Planned Completion Date: Not Applicable. Finding 2019-002 Recommendation: We recommend that the Cooperative continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Action Taken: The Cooperative will continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Planned Completion Date: Not Applicable. FINDINGS ? FEDERAL AWARDS PROGRAM AUDIT Finding 2019-003 Recommendation: We recommend that the Cooperative immediately transfer into the General Operating reserve the amount needed to come back into compliance. Action Taken: The Cooperative will make the transfer. Planned Completion Date: December 6, 2019 If Housing and Urban Development has questions regarding this plan, please call Dick Wallin at 218-464-4495.

2018-002

Finding 2019-003 Criteria: The establishment and maintenance of a general operating reserve fund is a program requirement applicable to cooperative housing insured by HUD. Monthly payments of not less than 3% of the monthly charges to members are required. Upon accrual of an amount equal to 15% of the current annual charges to members, the rate may be reduced from 3% to 2% provided the total of the operating reserve does not fall below 15% of annual charges. Upon the operating reserve reaching 25% of the annual charges, payments into the reserve may be discontinued so long as the 25% level is maintained. If the level falls below 25%, monthly deposits of 3% of monthly charges shall commence until the 25% level is restored. Condition: The Cooperative did not adequately fund the general operating reserve at 2% of the member carrying charges. Cause: The Cooperative?s deposits into the general operating reserve did not meet the 2% of the member carrying charges. Effect: The Cooperative is out of compliance with the HUD regulatory agreement. Context: The Cooperative did not adequately fund the general operating reserve. Questioned Costs: None. Recommendation: We recommend that the Cooperative immediately transfer into the General Operating reserve the amount needed to come back into compliance. Current Status: Resolved, the Cooperative made a transfer into the General Operating Reserve after year end. Action Taken: The Cooperative will make the transfer. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 28 in this audit report.

Housing and Urban Development Realife Cooperative of Duluth respectfully submits the following corrective action plan for the year ended October 31, 2019. Westberg Eischens, PLLP 2630 1st Street South Audit Period: October 31, 2019 P.O. Box 362 Willmar, MN 56201 The findings from the October 31, 2019 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedules. Summary of audit results does not include findings and is not addressed. FINDINGS ? FINANCIAL STATEMENT AUDIT Finding 2019-001 Recommendation: We recommend that the Cooperative continue to separate incompatible duties as best it can within the limits of what the Cooperative considers to be cost beneficial. Action Taken: The Cooperative reviews and makes improvements to its internal controls on an ongoing basis, and attempts to maximize the segregation of duties in all areas within the limits of the staff available. Planned Completion Date: Not Applicable. Finding 2019-002 Recommendation: We recommend that the Cooperative continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Action Taken: The Cooperative will continue to review the auditor prepared adjusting journal entries and financial statements with the intention of understanding and acceptance of responsibility for reporting under generally accepted accounting principles. Planned Completion Date: Not Applicable. FINDINGS ? FEDERAL AWARDS PROGRAM AUDIT Finding 2019-003 Recommendation: We recommend that the Cooperative immediately transfer into the General Operating reserve the amount needed to come back into compliance. Action Taken: The Cooperative will make the transfer. Planned Completion Date: December 6, 2019 If Housing and Urban Development has questions regarding this plan, please call Dick Wallin at 218-464-4495.

GSA_MIGRATION

GSA_MIGRATION

2011-001

GSA_MIGRATION

GSA_MIGRATION

2011-002

GSA_MIGRATION

GSA_MIGRATION

2011-001

GSA_MIGRATION

GSA_MIGRATION

2011-002

GSA_MIGRATION

GSA_MIGRATION

2011-001

GSA_MIGRATION

GSA_MIGRATION

2011-002