George Galen Wheeler House INCNon-Profit

Finding 2023-001: Section 811 (Repeat of Finding 2022-001) Criteria: No activity was recorded in the designated tenant security deposit cash account during the fiscal year despite tenant turnover at the property, suggesting commingling of funds. Statement of Condition: No documented evidence shows that funds were properly deposited or disbursed from the tenant security deposit cash account as required by the regulatory agreement. Cause: Lack of segregation and proper oversight of tenant security deposit funds. Effect or Potential Effect: Increased risk of financial inaccuracies and regulatory non-compliance. Recommendation: Implement strict segregation of tenant security deposit funds, conduct regular reconciliations, and establish regular record-keeping practices. Management’s Response: We will reconcile our security deposit cash and security deposit liability contra accounts as part of our month-end close process to ensure transactions are recorded properly.

Finding 2022-001: Section 811 Criteria: Tenant security deposit liability exceeds tenant security deposit cash, with evidence of fund commingling and absence of activity during the fiscal year. Statement of Condition: Tenant security deposit liability exceeds available tenant security deposit cash. Cause: Lack of segregation and proper oversight of tenant security deposit funds. Effect or Potential Effect: Increased risk of financial inaccuracies and regulatory non-compliance. Recommendation: Implement strict segregation of tenant security deposit funds, conduct regular reconciliations, and establish regular record-keeping practices. Management’s Response: We will reconcile our security deposit cash and security liability contra accounts to ensure that cash exceeds the liability.

Finding 2022-002: Section 811 Criteria: Requirement to maintain evidence of monthly rent rolls and a current tenant security deposit liability summary. Statement of Condition: Lack of documented evidence demonstrating the maintenance of monthly rent rolls and a current tenant security deposit liability summary. Cause: Oversight in record-keeping procedures regarding the current status of tenant security deposits. Effect or Potential Effect: Potential delay in the return of security deposits for move-out tenants due to insufficient documentation and lack of segregation of funds. Recommendation: Establish and maintain documented monthly rent rolls and a current tenant security deposit liability summary into the month-end close process. Management’s Response: We recognize the need to promptly enact measures to uphold monthly rent roll maintenance and the ongoing review of tenant security deposit liabilities.

Finding 2021-001 Condition: The Corporation did not deposit surplus cash at June 30, 2020 to the residual receipts reserve. Recommendation: The Corporation should make the delinquent deposit. Additionally, the Corporation should implement internal control sufficient to ensure that such deposits are made timely, if required. Management Response: Management is in agreement with the finding and is in the process of transferring the delinquent amount and implementing internal controls to prevent recurrence. Cause: Internal controls over time remission of surplus cash were not effective to identify that the deposit was not made. Criteria: The Corporation is required to deposit surplus cash to the residual receipts reserve in accordance with its regulatory agreement. Effect: The Corporation is not in compliance with its regulatory agreement. Recommendation: The Corporation should make the delinquent deposit. Additionally, the Corporation should implement internal control sufficient to ensure that such deposits are made timely, if required. Management Response: Management is in agreement with the finding and is in the process of transferring the delinquent amount and implementing internal controls to prevent recurrence.

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