The Rio Housing Association, Inc.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly Assistance Listing Number: 14.157 Federal Award Identification Number and Year: WI39S961001 Award Period: 2024-2025 Type of Finding: • Material Weakness in Internal Control Over Financial Reporting • Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Generally, a system of internal control contemplates separation of duties such that no individual has responsibility to execute a transaction, have physical access to the related assets, and have responsibility or authority to record the transaction. Condition: Responsibilities related to cash receipts, cash disbursements, certifications of tenant eligibility, replacement reserve deposits, residual receipts deposits, and financial reporting have not been segregated; a single individual collects receipts, prepares and signs checks, prepares and approves certifications of tenant eligibility, and maintains the accounting records if the Project. Neither cash receipts, cash disbursements, financial records, nor bank reconciliations are reviewed on a regular basis by an individual other than the preparer. Monitoring controls are not in place to ensure the certifications of tenant eligibility have been completed accurately and timely, replacement reserve deposits are made monthly, or the residual receipts calculation is accurate and any required deposits are made within 90 days of the end of the fiscal year. Questioned Costs: None Context: Small staff prevents adequate segregation of duties. Cause: The Project is management by management agent with limited staff. Small Staff prevents adequate segregation of duties. Effect: Lack of segregation of duties could result in financial statement misstatement, caused by error or fraud, that would not be detected or prevented by the Project. Repeat Finding: Repeat Finding 2024-003. Recommendation: The Project should continue to evaluate its staffing in order to segregate incompatible duties whenever possible. Views of Responsible officials and planned corrective actions: There is no disagreement with the finding. The board of directors will continue to closely monitor the financial operations of the Project.

Segregation of Duties Supportive Housing for the Elderly – Assistance Listing No. 14.157 Recommendation: The Project should continue to evaluate its staffing in order to segregate incompatible duties whenever possible. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The board of directors will continue to closely monitor the financial operations of the Project. Name(s) of the contact person(s) responsible for corrective action: Mary Gilberts, Management Agent Planned completion date for corrective action plan: June 2026

2024-003

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly Assistance Listing Number: 14.157 Federal Award Identification Number and Year: WI39S961001 Award Period: 2024-2025 Type of Finding: • Significant Deficiency in Special Tests Over Compliance Criteria or specific requirement: Monthly deposits are required to be made to the replacement reserve account. Condition: Monthly deposits were not made. Deposits were made every few months and total amount deposited ties to the required total deposit for the year. Questioned Costs: None Context: Required deposits were made but they were not made monthly due to cash flow restraint. Cause: Required deposits were made but they were not made monthly due to cash flow restraint. Effect: Not in compliance with monthly requirement. Repeat Finding: N/A Recommendation: The Project should make the required deposits monthly. Views of Responsible officials and planned corrective actions: There is no disagreement with the finding. Management will make the required deposits monthly if cash flow allows.

Replacement Reserve Monthly Deposits Not Made Supportive Housing for the Elderly – Assistance Listing No. 14.157 Recommendation: The Project should made the required deposits monthly. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Management will make the required deposits monthly as cash flow allows. Name(s) of the contact person(s) responsible for corrective action: Mary Gilberts, Management Agent Planned completion date for corrective action plan: June 2026

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly Assistance Listing Number: 14.157 Federal Award Identification Number and Year: WI39S961001 Award Period: 2023-2024 Type of Finding:  Material Weakness in Internal Control over Financial Reporting  Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Generally, a system of internal control contemplates separation of duties such that no individual has responsibility to execute a transaction, have physical access to the related assets, and have responsibility or authority to record the transaction. Condition: Responsibilities related to cash receipts, cash disbursements, certifications of tenant eligibility, replacement reserve deposits, residual receipts deposits, and financial reporting have not been segregated; a single individual collects receipts, prepares and signs checks, prepares and approves certifications of tenant eligibility, and maintains the accounting records if the Project. Neither cash receipts, cash disbursements, financial records, not bank reconciliations are reviewed on a regular basis by an individual other than the preparer. Monitoring controls are not in place to ensure the certifications of tenant eligibility have been completed accurately and timely, replacement reserve deposits are made monthly, or the residual receipts calculation is accurate and any required deposits are made within 90 days of the end of the fiscal year. Questioned Costs: None Context: Small staff prevents adequate segregation of duties. Cause: The Project is management by management agent with limited staff. Small Staff prevents adequate segregation of duties. Effect: Lack of segregation of duties could result in financial statement misstatement, caused by error or fraud, that would not be detected or prevented by the Project. Repeat Finding: Repeat Finding 2023-003. Recommendation: The Project should continue to evaluate its staffing in order to segregate incompatible duties whenever possible. Views of Responsible officials and planned corrective actions: There is no disagreement with the finding. The board of directors will continue to closely monitor the financial operations of the Project.

Segregation of Duties Supportive Housing for the Elderly – Assistance Listing No. 14.157 Recommendation: The Project should continue to evaluate its staffing in order to segregate incompatible duties whenever possible. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The board of directors will continue to closely monitor the financial operations of the Project. Name(s) of the contact person(s) responsible for corrective action: Mary Gilberts, Management Agent Planned completion date for corrective action plan: June 2025

2023-003

Segregation of Duties Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly Assistance Listing Number: 14.157 Federal Award Identification Number and Year: WI39S961001 Award Period: 2022-2023 Type of Finding: • Material Weakness in Internal Control over Financial Reporting • Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Generally, a system of internal control contemplates separation of duties such that no individual has responsibility to execute a transaction, have physical access to the related assets, and have responsibility or authority to record the transaction. Condition: Responsibilities related to cash receipts, cash disbursements, certifications of tenant eligibility, replacement reserve deposits, residual receipts deposits, and financial reporting have not been segregated; a single individual collects receipts, prepares and signs checks, prepares and approves certifications of tenant eligibility, and maintains the accounting records if the Project. Neither cash receipts, cash disbursements, financial records, not bank reconciliations are reviewed on a regular basis by an individual other than the preparer. Monitoring controls are not in place to ensure the certifications of tenant eligibility have been completed accurately and timely, replacement reserve deposits are made monthly, or the residual receipts calculation is accurate and any required deposits are made within 90 days of the end of the fiscal year. Questioned Costs: None Context: Small staff prevents adequate segregation of duties. Cause: The Project is management by management agent with limited staff. Small Staff prevents adequate segregation of duties. Effect: Lack of segregation of duties could result in financial statement misstatement, caused by error or fraud, that would not be detected or prevented by the Project. Repeat Finding: Repeat Finding 2022-003. Recommendation: The Project should continue to evaluate its staffing in order to segregate incompatible duties whenever possible. Views of Responsible officials and planned corrective actions: There is no disagreement with the finding. The board of directors will continue to closely monitor the financial operations of the Project.

Segregation of Duties Supportive Housing for the Elderly – Assistance Listing No. 14.157 Recommendation: The Project should continue to evaluate its staffing in order to segregate incompatible duties whenever possible. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The board of directors will continue to closely monitor the financial operations of the Project. Name(s) of the contact person(s) responsible for corrective action: Mary Gilberts, Management Agent Planned completion date for corrective action plan: June 2024

2022-003

2022 ? 003 ? Segregation of Duties Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly Assistance Listing Number: 14.157 Federal Award Identification Number and Year: WI39S961001 Award Period: 2021-2022 Type of Finding: ? Material Weakness in Internal Control over Financial Reporting ? Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Generally, a system of internal control contemplates separation of duties such that no individual has responsibility to execute a transaction, have physical access to the related assets, and have responsibility or authority to record the transaction. Condition: Responsibilities related to cash receipts, cash disbursements, certifications of tenant eligibility, replacement reserve deposits, residual receipts deposits, and financial reporting have not been segregated; a single individual collects receipts, prepares and signs checks, prepares and approves certifications of tenant eligibility, and maintains the accounting records if the Project. Neither cash receipts, cash disbursements, financial records, not bank reconciliations are reviewed on a regular basis by an individual other than the preparer. Monitoring controls are not in place to ensure the certifications of tenant eligibility have been completed accurately and timely, replacement reserve deposits are made monthly, or the residual receipts calculation is accurate and any required deposits are made within 90 days of the end of the fiscal year. Questioned Costs: None Context: Small staff prevents adequate segregation of duties. Cause: The Project is management by management agent with limited staff. Small Staff prevents adequate segregation of duties. Effect: Lack of segregation of duties could result in financial statement misstatement, caused by error or fraud, that would not be detected or prevented by the Project. Repeat Finding: Repeat Finding 2021-003. Recommendation: The Project should continue to evaluate its staffing in order to segregate incompatible duties whenever possible. Views of Responsible officials and planned corrective actions: There is no disagreement with the finding. The board of directors will continue to closely monitor the financial operations of the Project.

2022-003 Segregation of Duties Supportive Housing for the Elderly ? Assistance Listing No. 14.157 Recommendation: The Project should continue to evaluate its staffing in order to segregate incompatible duties whenever possible. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The board of directors will continue to closely monitor the financial operations of the Project. Name(s) of the contact person(s) responsible for corrective action: Mary Gilberts, Management Agent Planned completion date for corrective action plan: June 2023 If the Housing and Urban Development has questions regarding this plan, please call Mary Gilberts at 608-838-4000

2021-003

2021? 003 ? Segregation of Duties Federal agency: U.S. Department of Housing and Urban Development Federal program title: Supportive Housing for the Elderly Assistance Listing Number: 14.157 Award Period: 2020-2021 Type of Finding: ? Material Weakness in Internal Control over Financial Reporting ? Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Generally, a system of internal control contemplates separation of duties such that no individual has responsibility to execute a transaction, have physical access to the related assets, and have responsibility or authority to record the transaction. Condition: Responsibilities related to cash receipts, cash disbursements, certifications of tenant eligibility, replacement reserve deposits, residual receipts deposits, and financial reporting have not been segregated; a single individual collects receipts, prepares and signs checks, prepares and approves certifications of tenant eligibility, and maintains the accounting records if the Project. Neither cash receipts, cash disbursements, financial records, not bank reconciliations are reviewed on a regular basis by an individual other than the preparer. Monitoring controls are not in place to ensure the certifications of tenant eligibility have been completed accurately and timely, replacement reserve deposits are made monthly, or the residual receipts calculation is accurate and any required deposits are made within 90 days of the end of the fiscal year. Questioned costs : None Context : Small staff prevents adequate segregation of duties. Cause: The Project is management by management agent with limited staff. Small Staff prevents adequate segregation of duties. Effect: Lack of segregation of duties could result in financial statement misstatement, caused by error or fraud, that would not be detected or prevented by the Project. Repeat Finding: Repeat Finding 2020-02. Recommendation: The Project should continue to evaluate its staffing in order to segregate incompatible duties whenever possible. Views of responsible officials and planned corrective actions : The board of directors will continue to closely monitor the financial operations of the Project.

2021-003 Segregation of Duties Supportive Housing for the Elderly ? Assistance Listing No. 14.157 Recommendation: The Project should continue to evaluate its staffing in order to segregate incompatible duties whenever possible. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The board of directors will continue to closely monitor the financial operations of the Project. Name(s) of the contact person(s) responsible for corrective action: Mary Gilberts, Management Agent Planned completion date for corrective action plan: June 2022

2020-002

2021 ? 00 4 ? Residual Receipts Deposit Federal agency: U.S. Department of Housing and Urban Development Federal program title: Supportive Housing for the Elderly Assistance Listing Number: 14.157 Award Period: 2020-2021 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Other Matters Criteria or specific requirement: The Project?s regulatory agreement requires the Project to calculate residual receipts at year-end and deposit the amount into a segregated fund within 90 days. Internal controls are necessary to endure the Project remains in compliance with the HUD requirement. Condition: Monitoring Controls are not in place to ensure residual receipts deposit is done within 90 days of the fiscal year-end. Questioned costs : None Context : Deposit was made in November 2020, which is after 90 days after fiscal year-end. Cause: The Project relied on the auditor to calculate the deposit due and did not monitor procedures to ensure deposit was made within 90 days. Effect: The residual receipts account may be underfunded. Repeat Finding : Repeat Finding 2020-003. Recommendation: We recommend management work with the board of directors and auditors to ensure timely deposit is made. Views of responsible officials: Management agrees with the finding and is in process of designing and implementing internal controls to ensure timely deposit is made to residual receipts account.

Residual Receipts Deposit Supportive Housing for the Elderly ? Assistance Listing No. 14.157 Recommendation: We recommend management work with the board of directors and auditors to ensure timely deposit is made. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Management agrees with the finding and is in process of designing and implementing internal controls to ensure timely deposit is made to residual receipts account. Name(s) of the contact person(s) responsible for corrective action: Mary Gilberts, Management Agent Planned completion date for corrective action plan: June 2022

2020-003

Information on the Federal Program: Department of Housing and Urban Development, CFDA 14.157, Supportive Housing for the Elderly Criteria: The Association?s regulatory agreement with HUD requires that Project receipts are promptly deposited in a bank account in the name of the Association, that Project funds are expended only for purposes allowed under the agreement, that Project units are rented only to eligible persons, replacement reserve and residual receipts deposits are made timely, and that Association financial statements are submitted on an annual basis and presented in accordance with accounting principles generally accepted in the United States of America. Internal controls are necessary to ensure the Association remains in compliance with the requirements of the regulatory agreement. HUD handbook 4370.2 Financial Operations and Accounting Procedures for Insured describes specific required internal controls. Condition: Responsibilities related to cash receipts, cash disbursements, certifications of tenant eligibility, replacement reserve deposits, residual receipts deposits, and financial reporting have not been segregated; a single individual collects receipts, prepares and signs checks, prepares and approves certifications of tenant eligibility, and maintains the accounting records of the Project. Neither cash receipts, cash disbursements, financial reports, nor bank reconciliations are reviewed on a regular basis by an individual other than the preparer. Monitoring controls are not in place to ensure that certifications of tenant eligibility have been completed accurately and timely, replacement reserve deposits are made monthly, or the residual receipts calculation is accurate and any required deposit is made within 60 days following the end of the fiscal year. Cause: Monitoring controls over compliance with the Association?s regulatory agreement have not been designed and implemented. Potential Effect: Material noncompliance with the Association?s regulatory agreement may occur and may not be detected and corrected in a timely manner. Repeat Finding: This finding is a repeat of Finding 2019-002. Recommendation: We recommend that financial reports be reviewed on a monthly basis by a person other than the individual responsible for maintaining the accounting records of the Association. We recommend that the monthly review include review of bank statements and reconciliations, review of budget versus actual performance, and review of vacancy loss and bad debt. We recommend that certifications of tenant eligibility be reviewed on a monthly basis by a person other than the preparer for accuracy and to ensure all necessary certifications have been completed timely. We also recommend residual receipt calculation be reviewed for accuracy and ensuring any required deposit is made within 60 days of fiscal year end and replacement reserve deposits are made timely. We recommend that management document performance of these monitoring procedures.

Views of Responsible Officials: Management agrees with the finding and is in the process of designing and implementing controls to include monitoring of compliance with the Association?s regulatory agreement.

2019-002

Information on the Federal Program: Department of Housing and Urban Development, CFDA 14.157, Supportive Housing for the Elderly Criteria: The Association?s regulatory agreement with HUD requires the Project to calculate residual receipts at year-end and deposit the amount into a segregated fund within 60 days. Internal controls are necessary to ensure the Association remains in compliance with the residual receipts requirement. HUD handbook 4370.2 Financial Operations and Accounting Procedures for Insured describes specific required internal controls. Condition: Monitoring controls are not in place to ensure the residual receipts calculation is accurate and any required deposit is made within 60 days following the end of the fiscal year. The required residual receipts deposit was not made within 60 days following the end of the fiscal year, the deposit was made in December 2019. Cause: Internal controls and monitoring procedures have not been implemented to ensure an accurate calculation of residual receipts is completed and a timely deposit is made. Potential Effect: The residual receipts account may become underfunded. Recommendation: We recommend management work with the Board of Directors to establish a monitoring procedure to ensure annually in August the calculation of residual receipts from the adjusted year-end financial statements is completed. Documentation of how residual receipts is calculated should be maintained and approved by the Board of Directors. In addition, for any residual receipts calculated proof of the deposit be provided and acknowledged by the Board President prior to August 31.

Views of Responsible Officials: Management agrees with the finding and is in the process of designing and implementing internal controls to ensure a timely deposit is made to the residual receipts account.

Finding 2019-002 Information on the Federal Program: Department of Housing and Urban Development, CFDA 14.157, Supportive Housing for the Elderly Criteria: The Association?s regulatory agreement with HUD requires that Project receipts are promptly deposited in a bank account in the name of the Association, that Project funds are expended only for purposes allowed under the agreement, that Project units are rented only to eligible persons, residual receipts deposits are made timely, and that Association financial statements are submitted on an annual basis and presented in accordance with accounting principles generally accepted in the United States of America. Internal controls are necessary to ensure the Association remains in compliance with the requirements of the regulatory agreement. HUD handbook 4370.2 Financial Operations and Accounting Procedures for Insured describes specific required internal controls. Condition: Responsibilities related to cash receipts, cash disbursements, certifications of tenant eligibility, residual receipts deposits, and financial reporting have not been segregated; a single individual collects receipts, prepares and signs checks, prepares and approves certifications of tenant eligibility, and maintains the accounting records of the Project. Neither cash receipts, cash disbursements, financial reports, nor bank reconciliations are reviewed on a regular basis by an individual other than the preparer. Monitoring controls are not in place to ensure that certifications of tenant eligibility have been completed accurately and timely or residual receipts calculation is accurate and any required deposits are made within 60 days following the end of the fiscal year. Cause: Monitoring controls over compliance with the Association?s regulatory agreement have not been designed and implemented. Potential Effect: Material noncompliance with the Association?s regulatory agreement may occur and may not be detected and corrected in a timely manner. Repeat Finding: This finding is a repeat of Finding 2018-002. Recommendation: We recommend that financial reports be reviewed on a monthly basis by a person other than the individual responsible for maintaining the accounting records of the Association. We recommend that the monthly review include review of bank statements and reconciliations, review of budget versus actual performance, and review of vacancy loss and bad debt. We recommend that certifications of tenant eligibility be reviewed on a monthly basis by a person other than the preparer for accuracy and to ensure all necessary certifications have been completed timely. We also recommend residual receipt calculation be reviewed for accuracy and ensuring any required deposit is made within 60 days of fiscal year end. We recommend that management document performance of these monitoring procedures. Views of Responsible Officials: Management agrees with the finding and is in the process of designing and implementing controls to include monitoring of compliance with the Association?s regulatory agreement.

Financial Statement Finding Significant Deficiency ? 2019-001 Planned Action: Management has adopted a financial statement review policy whereby a quorum of the Board of Directors of the Rio Housing Association will review the quarterly financial statements. The review will be documented in the secretary?s notes at the time of review. Anticipated Completion Date: February 20, 2020 Federal Award Findings Significant Deficiency ? 2019-002 Planned Action: Same as 2019-001. Anticipated Completion Date: February 20, 2020 Jerry Traut, President of The Rio Housing Association, Inc., is responsible for the corrective action plan and may be contacted at jerrtraut@gmail.com with any questions regarding the plan.

2018-002

Finding 2019-003 Information on the Federal Program: Department of Housing and Urban Development, CFDA 14.157, Supportive Housing for the Elderly Criteria: The Association?s regulatory agreement with HUD requires monthly deposits to the replacement reserve. Condition: The total required deposits were made but not on a monthly basis. No deposits were made to the replacement reserve during the first 5 months of the year ended June 30, 2019 and additional deposits were made later in the year so the annual requirement was satisfied as of June 30, 2019. Cause: Internal controls have not been implemented to ensure timely deposits to the replacement reserve. Potential Effect: The replacement reserve may become underfunded. Repeat Finding: This finding is a repeat of Finding 2018-003. Recommendation: We recommend that management work with the Association?s bankers to establish automatic monthly deposits to the replacement reserve. We recommend annual review and update of the amounts to be automatically deposited during the preparation of the annual budget. Views of Responsible Officials: Management agrees with the finding and is in the process of designing and implementing internal controls to ensure timely deposits to the replacement reserve.

Noncompliance ? 2019-003 Planned Action: The Board of Directors and management will design and implement controls to ensure deposits to the replacement reserve are made in a timely manner. Anticipated Completion Date: June 30, 2020 Jerry Traut, President of The Rio Housing Association, Inc., is responsible for the corrective action plan and may be contacted at jerrtraut@gmail.com with any questions regarding the plan.

2018-003

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2017-001

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