Village Cooperative of AlexandriaNon-Profit

2023-001 – Significant deficiency - Segregation of duties Criteria - Good internal control requires a segregation of duties and responsibilities such that no one employee has access to both physical assets and the related accounting records, or to all phases of a transaction. Condition - The Cooperative has one employee that performs day to day management and accounting functions. This results in a lack of segregation of day to day duties and responsibilities. Cause - The size of the Cooperative’s accounting and administrative staff precludes certain internal controls that would be preferred if the office staff were large enough to provide optimum segregation of duties. Effect - The lack of segregation of duties may result in undetected errors in financial statements and increases the possibility of misappropriation of Cooperative assets. Repeat Finding - This finding was reported in the prior year as finding 2022-001. Recommendation - The Board of Directors should remain involved in the financial affairs of the Cooperative on a regular ongoing basis to provide oversight and independent review functions and mitigate the weakness created by the lack of segregation. Auditee’s comment - The Board of Directors is and will remain involved in the financial affairs of the Cooperative. Status - Outstanding Auditor’s non-compliance code - S - Internal Control Deficiencies

2022-001 ? Significant deficiency - Segregation of duties Criteria - Good internal control requires a segregation of duties and responsibilities such that no one employee has access to both physical assets and the related accounting records, or to all phases of a transaction. Condition - The Cooperative has one employee that performs day to day management and accounting functions. This results in a lack of segregation of day to day duties and responsibilities. Cause - The size of the Cooperative?s accounting and administrative staff precludes certain internal controls that would be preferred if the office staff were large enough to provide optimum segregation of duties. Effect - The lack of segregation of duties may result in undetected errors in financial statements and increases the possibility of misappropriation of Cooperative assets. Repeat Finding - This finding was reported in the prior year as finding 2021-001. Recommendation - The Board of Directors should remain involved in the financial affairs of the Cooperative on a regular ongoing basis to provide oversight and independent review functions and mitigate the weakness created by the lack of segregation. Auditee?s comment - The Board of Directors is and will remain involved in the financial affairs of the Cooperative. Status - Outstanding Auditor?s non-compliance code - S - Internal Control Deficiencies

2021-001 ? Significant deficiency - Segregation of duties Criteria - Good internal control requires a segregation of duties and responsibilities such that no one employee has access to both physical assets and the related accounting records, or to all phases of a transaction. Condition - The Cooperative has one employee that performs day to day management and accounting functions. This results in a lack of segregation of day to day duties and responsibilities. Cause - The size of the Cooperative?s accounting and administrative staff precludes certain internal controls that would be preferred if the office staff were large enough to provide optimum segregation of duties. Effect - The lack of segregation of duties may result in undetected errors in financial statements and increases the possibility of misappropriation of Cooperative assets. Repeat Finding - This finding was reported in the prior year as finding 2020-001. Recommendation - The Board of Directors should remain involved in the financial affairs of the Cooperative on a regular ongoing basis to provide oversight and independent review functions and mitigate the weakness created by the lack of segregation. Auditee?s comment - The Board of Directors is and will remain involved in the financial affairs of the Cooperative. Status - Outstanding Auditor?s non-compliance code - S - Internal Control Deficiencies

2020-001 ? Significant deficiency - Segregation of duties Criteria - Good internal control requires a segregation of duties and responsibilities such that no one employee has access to both physical assets and the related accounting records, or to all phases of a transaction. Condition - The Cooperative has one employee that performs day to day management and accounting functions. This results in a lack of segregation of day to day duties and responsibilities. Cause - The size of the Cooperative?s accounting and administrative staff precludes certain internal controls that would be preferred if the office staff were large enough to provide optimum segregation of duties. Effect - The lack of segregation of duties may result in undetected errors in financial statements and increases the possibility of misappropriation of Cooperative assets. Repeat Finding - This finding was reported in the prior year as finding 2019-001. Recommendation - The Board of Directors should remain involved in the financial affairs of the Cooperative on a regular ongoing basis to provide oversight and independent review functions and mitigate the weakness created by the lack of segregation. Auditee?s comment - The Board of Directors is and will remain involved in the financial affairs of the Cooperative. Status - Outstanding Auditor?s non-compliance code - S - Internal Control Deficiencies

2019-001 ? Significant deficiency - Segregation of duties Criteria - Good internal control requires a segregation of duties and responsibilities such that no one employee has access to both physical assets and the related accounting records, or to all phases of a transaction. Condition - The Cooperative has one employee that performs day to day management and accounting functions. This results in a lack of segregation of day to day duties and responsibilities. Cause - The size of the Cooperative?s accounting and administrative staff precludes certain internal controls that would be preferred if the office staff were large enough to provide optimum segregation of duties. Effect - The lack of segregation of duties may result in undetected errors in financial statements and increases the possibility of misappropriation of Cooperative assets. Repeat Finding - This finding was reported in the prior year as finding 2018-001. Recommendation - The Board of Directors should remain involved in the financial affairs of the Cooperative on a regular ongoing basis to provide oversight and independent review functions and mitigate the weakness created by the lack of segregation. Auditee?s comment - The Board of Directors is and will remain involved in the financial affairs of the Cooperative. Status - Outstanding Auditor?s non-compliance code - S - Internal Control Deficiencies

2019-002 ? Significant Deficiency and Noncompliance ? Required Deposits to Replacement Reserve Department of Housing and Urban Development CFDA Number 14.126 ? Mortgage Insurance - Cooperative Projects Significant Deficiency and Noncompliance Category of Finding ? Special Tests and Provisions Criteria ? In September 2016, HUD agreed to release $40,000 from the replacement reserve to fund the roof replacement. In exchange the Cooperative agreed to increase the monthly replacement reserve deposit from $576 to $1,909 effective September 1, 2016 through March 1, 2019. In December 2017 HUD agreed to release an additional $9,229 from the replacement reserve if the Cooperative agreed to extend the additional deposits of $1,909 through October 1, 2019. Condition ? Deposits to the segregated account for the Replacement Reserve during the year ended June 30, 2019 were $5,333 less than the required amount for the year. Cause ? The mortgagor was not made aware of the extension of the additional deposits and decreased the monthly deposit amount beginning with the March 2019 mortgage statement and did not extend the increased deposits through October 1, 2019. Effect ? The Cooperative was out of compliance with their HUD regulatory agreement at June 30, 2019, because the Replacement Reserve was underfunded. Repeat Finding - This is not a repeat finding. Recommendation ? We recommend that the Cooperative implement a control process to ensure adherence to the regulatory agreement and make the required deposits to the replacement reserve. Auditee?s comment ? The Cooperative made the additional catch up deposits on September 20, 2019. The CFO of the management agent will implement a process to ensure deposits are made as required by the regulatory agreement. Status ? Cleared Auditor?s non-compliance code ? N ? Reserve for Replacements Deposits Responsible party for corrective action ? Craig Brinkman, CFO of REE (Management Agent)

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