Ridgecrest at Richfield

Criteria: The Regulatory Agreement for Multifamily Housing Projects dated May 20, 2008, states in section 2.(c), that the owners shall establish and maintain, in addition to the reserve fund for replacements, a residual receipts fund by depositing thereto, with the mortgagee, the residual receipts, as defined herein, within 60 days after the end of the semiannual or annual fiscal period within which such receipts are realized. Condition: During our testing of the surplus cash calculation and residual receipts account, we noticed the surplus cash computed as of the September 30, 2024 fiscal year was not deposited in the residual receipts fund account held by the mortgagee. Cause: During the fiscal year 2024, the majority of the Project’s sole member’s assets were sold to two other organizations. As such, several staff transferred to the new organization. The Project was left with only the current CFO and no accounting staff. Management did not have the appropriate controls or staff in place to ensure the surplus cash was deposited timely with the mortgagee. Effect: The Project did not deposit the surplus cash amount of $140,440 calculated as of September 30, 2024, with the mortgagee within 60 days of the fiscal year end.

Action plan to improve the filing process for Ridgecrest Surplus cash deposit. Per the corrective action plan for FY24, "Mary Clements, CFO, the only accounting professional left at Richfield, was set an annual reminder for 45 days after the end of the fiscal year. HUD form 93486 will be completed and funds will be sent to the reserve within 60 days after the end of the fiscal year. The FY22 deposit is combined with the FY23 deposit on form 93486. The deposit for FY23 is also late. I have notified Evangeline Hilboldt at Lument. When she receives the payment, she will mark both years as complying. The deposit is being sent today, 8/2/2024." However, several days after the transfer, the transfer was rejected. I booked the rejection and did not resend the funds. I set a reminder for FY24, so I was reminded on November 15th to send the funds and the form 93486 by 11/29/2024. However, by this date, we knew that the closing of the property was happening on 12/1/2024. No funds were sent in. The loan was paid off on 12/5/2024, and no future payments will be needed. The reserve was accounted for in the closing. proposed completion date: Immediately.

Criteria: The Regulatory Agreement for Multifamily Housing Projects dated May 20, 2008, states in section 2. (c), that the owners shall establish and maintain, in addition to the reserve fund for replacements, a residual receipts fund by depositing thereto, with the mortgagee, the residual receipts, as defined herein, within 60 days after the end of the semiannual or annual fiscal period within which such receipts are realized. Condition: During our testing of the surplus cash calculation and residual receipts account, we noticed the surplus cash computed as of the September 30, 2023 fiscal year was not deposited in the residual receipts fund account held by the mortgagee. It was not completed as Ridgecrest at Richfield did not deposit the funds from prior year in 2024. This finding was not resolved in the schedule of status of prior year findings and questioned costs. Cause: During the fiscal year 2023, the majority of the Project’s sole member’s assets were sold to two other organizations. As such, several staff transferred to the new organization. The Project was left with only the current CFO and no accounting staff. Management did not have the appropriate controls or staff in place to ensure the surplus cash was deposited timely with the mortgagee. Effect: The Project did not deposit the surplus cash amount of $22,818 calculated as of September 30, 2023, with the mortgagee within 60 days of the fiscal year end. Questioned Costs: None noted. Recommendation: We recommend that management implement controls to review the calculation of surplus cash as soon as possible after the fiscal year end and forward any surplus cash computed to the mortgagee within 60 days of the fiscal year end.

Action plan to improve the filing process for Ridgecrest Surplus cash deposit. Per the corrective action plan for FY24, "Mary Clements, CFO, the only accounting professional left at Richfield, was set an annual reminder for 45 days after the end of the fiscal year. HUD form 93486 will be completed and funds will be sent to the reserve within 60 days after the end of the fiscal year. The FY22 deposit is combined with the FY23 deposit on form 93486. The deposit for FY23 is also late. I have notified Evangeline Hilboldt at Lument. When she receives the payment, she will mark both years as complying. The deposit is being sent today, 8/2/2024." However, several days after the transfer, the transfer was rejected. I booked the rejection and did not resend the funds. I set a reminder for FY24, so I was reminded on November 15th to send the funds and the form 93486 by 11/29/2024. However, by this date, we knew that the closing of the property was happening on 12/1/2024. No funds were sent in. The loan was paid off on 12/5/2024, and no future payments will be needed. The reserve was accounted for in the closing. proposed completion date: Immediately.

2023-001

Criteria: Per 24 CFR 5.801 and HUD Handbook 4350.3, all tenant certifications must be supported by a completed HUD Form 50059, this documentation is required to verify tenant eligibility, rent calculations, and subsidy amounts and must retained in tenant files for review and audit purposes. Condition: During our testing of lease eligibility, we noted that HUD form 50059 was not available for two of the tenant files selected for testing. The client was unable to provide the executed forms during our audit. Considered a finding. Cause: During the fiscal year 2024, the majority of the property was sold during the fiscal year 2024, and certain tenant records may not have been retained or transferred appropriately during the transition period. As a result, the required documentation could not be located. Effect: The absence of HUD Form 50059 limits our ability to verify tenant eligibility and the accuracy of housing assistance payments. This may result in unallowable costs being charged to the program and noncompliance with HUD record retention requirements. Questioned Costs: None noted. Recommendation: We recommend that management implement controls and procedure to ensure that all required tenant documentation, including HUD Form 50059, is retained in accordance with HUD and program record retention requirements, especially during and after property transitions. In addition, management should evaluate current recordkeeping practices and establish controls to prevent similar occurrences in the future.

Action plan for two missing leases For FY25, only 2 months exist. During this time, leases were signed and placed in physical files in the business office on the property. The property closed on 12/1/2024 so the new owners do have the signed leases. proposed completion date: Immediately.

Criteria: The Regulatory Agreement for Multifamily Housing Projects dated May 20, 2008, states in section 2. (c), that the owners shall establish and maintain, in addition to the reserve fund for replacements, a residual receipts fund by depositing thereto, with the mortgagee, the residual receipts, as defined herein, within 60 days after the end of the semiannual or annual fiscal period within which such receipts are realized. Condition: During our testing of the surplus cash calculation and residual receipts account, we noticed the surplus cash computed as of the September 30, 2022 fiscal year was not deposited in the residual receipts fund account held by the mortgagee. Cause: During the fiscal year 2023, the majority of the Project’s sole member’s assets were sold to two other organizations. As such, several staff transferred to the new organization. The Project was left with only the current CFO and no accounting staff. Management did not have the appropriate controls or staff in place to ensure the surplus cash was deposited timely with the mortgagee. Effect: The Project did not deposit the surplus cash amount of $22,818 calculated as of September 30, 2022, with the mortgagee within 60 days of the fiscal year end. Questioned Costs: None noted. Recommendation: We recommend that management implement controls to review the calculation of surplus cash as soon as possible after the fiscal year end and forward any surplus cash computed to the mortgagee within 60 days of the fiscal year end. Management views and Corrective Action Plan: Management agrees with this finding. Please refer to the Corrective Action Plan.

Action plan to improve the filing process for Ridgecrest Surplus cash deposit. For FY24, Mary Clements, CFO, and only accounting professional left at Richfield, has set an annual reminder for 45 days after the end of the fiscal year. HUD form 93486 will be completed and funds will be sent to the reserve within 60 days if the end of the fiscal year. The FY22 deposit is combined with the FY23 deposit on form 93486. The deposit for FY23 is also late. I have notified Evangeline Hilboldt at Lument. When she receives the payment, she will mark both years as complying. The deposit is being sent today, 8/2/2024.

Section II?Financial Statement Findings Finding 2021-001 SIGNIFICANT DEFICIENCY Criteria: The Organization?s internal control over financial reporting is a process designed to provide reasonable assurance that the financial statements are free of material errors. Condition: During our audit, we noted that management had not properly accrued or recorded several financial statement areas including payroll, accounts payable and accrued liabilities, and escrow funds. As a result, several post-close audit adjustments were necessary. Due to the significance of these adjustments, we identified a significant deficiency in internal control over financial reporting Effect: Several adjustments were made to general ledger accounts to reconcile supporting detail and documentation. Cause: The Organization?s lack of design and implementation of a proper management review control caused post close adjustments. Recommendation: We recommend that the Organization design and implement controls to prevent or detect necessary adjustments in a timely manner. View of Responsible Officials: Refer to corrective action plan. Section III?Federal Award Findings and Questioned Costs No matters are reportable

Single Audit Findings and Corrective Action Plan Year Ended September 30, 2021 Finding 2021-001- Post- Close Adjustments Name of contact person: Mary Clements/ Cherie Grisso Corrective Actions and Completion Date: 1. Hired CFO-Completed October 2021. Hired Mary P. Clements. 2. Primary Balance Sheet Accounts reconciled and adjusting entries done monthly-1/31/2022. 3. Balance Sheet fully reconciled and adjusting entries done quarterly- 3/31/2022. 4. Balance Sheet fully reconciled and adjusting entries done monthly- 9/30/2022. 5. Ridgecrest audit papers prepared and all adjusting entries done by the requested dates - 10/31/2022