HERITAGE MANOR, INC.Non-Profit

Condition: During the audit process, a material audit adjustment was identified. The adjustment pertained to recording the current year depreciation expense. Effect: A control deficiency exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions to prevent or detect misstatements on a timely basis. This could affect the Organization’s ability to initiate, record, process, and report financial data consistent with the assertion of management in the financial statements. Cause: The management agent did not make all necessary adjustments to the financial statements prior to the audit process. Criteria: The Organization should have procedures in place and these procedures must be followed to ensure all necessary adjustments are made to the financial statements. Recommendation: We recommend that the Organization verifies all necessary adjustments are made to the financial statements prior to the audit process. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and the auditor’s recommendations will be adopted.

Condition: The Organization has established internal controls over compliance for the major federal programs; however, these controls failed for the reserve for replacements account deposit. Effect: The Organization did not follow it’s established controls for compliance with the requirement to make monthly deposits into the reserve for replacements account, and as a result, the Organization is not in compliance with this requirement of the federal programs. Cause: The Organization bypassed the established controls over this compliance requirement. Criteria: The Organization should have control procedures in place to ensure all compliance requirements applicable to the federal programs are met. Questioned Costs: There are no questioned costs associated with this finding. Context: During our examination of compliance with all program requirements we noted one instance of internal controls not preventing noncompliance with the requirements of the federal program. Recommendation: We recommend that the Organization ensure that the appropriate controls established over the federal program compliance requirements are being followed. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and the auditor’s recommendations will be adopted.

Condition: We noted that the required deposit to the reserve for replacements account was not made before the end of the current fiscal year. Effect: The Organization was not in compliance with the requirement to make the required deposit into the reserve for replacements account in a timely manner. Cause: The minimum required deposit was not made until after the current fiscal year end. Management was aware of the amount required to be deposited; however, the processing of the transfer was missed. Criteria: The Organization should make the required deposit to the reserve for replacements account on a timely basis. Questioned Costs: There are no questioned costs associated with this finding. Context: $2,177 of the required deposit should have been made by September 30, 2023. Recommendation: We recommend that the Organization ensure that the required deposit to the reserve for replacements account be made on a timely basis. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and the auditor’s recommendations will be adopted.

2019-001 Lack of controls over compliance of federal program Condition: The Organization has established internal controls over compliance for the major federal program; however, these controls failed for procurement policy and residual receipts account deposit. This finding was reported in the prior year as finding number 2018-002. Effect: The Organization did not follow it?s established controls for compliance with the requirement to have a written procurement policy and the requirements to make the residual receipts account deposit within 60 days of the previous year end, and as a result, the Organization is not in compliance with these requirements of the federal program. Cause: The Organization bypassed the established controls over these compliance requirements. Criteria: The Organization should have control procedures in place to ensure all compliance requirements applicable to the federal program are met. Questioned Costs: There are no questioned costs associated with this finding. Context: During our examination of compliance with all program requirements we noted two instances of internal controls not preventing noncompliance with the requirements of the federal program. Recommendation: We recommend that the Organization ensure that the appropriate controls established over the federal program compliance requirements are being followed. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and the auditor?s recommendations will be adopted.

2019-002 Improper procurement policy Condition: The Organization has not updated its procurement policy to comply with the requirements of the Uniform Guidance. Effect: The Organization has not implemented a policy to ensure compliance with the requirements of the Uniform Guidance in respect to Procurement/Suspension and Debarment and is not in compliance with these requirements of the federal program. Cause: The Organization?s board of directors and it?s management agent did not update the written procurement policies to be compliant with the Uniform Guidance. Criteria: The Organization must establish a written procurement policy as required by the Uniform Guidance to ensure all compliance requirements applicable to the federal program are met. Questioned Costs: There are no questioned costs associated with this finding. Context: During the course of our audit we noted no improper procurements made by the Organization; however, there is no updated written policy governing these procurements as required by the Uniform Guidance. Recommendation: We recommend that the Organization adopt a written procurement policy to ensure that the federal program compliance requirements are being followed. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and the auditor?s recommendations will be adopted.

2019-003 Required residual receipts deposits was not made before the 60-day after year-end deadline Condition: We noted that the required deposit to the residual receipts reserve was made after the 60-day deadline following the 2018 fiscal year end. Effect: The Organization was not in compliance with the requirement to make the required deposits into the residual receipt reserve in a timely manner. Cause: The deposit was made when the annual audit was submitted to HUD, which was beyond the 60-day deadline. Criteria: The Organization should have procedures in place to ensure the required deposit to the residual receipts account is made on a timely basis. Questioned Costs: There are no questioned costs associated with this finding. Context: The residual receipts account deposit was made 157 days after the September 30, 2018 fiscal year end. Recommendation: We recommend that the Organization ensure that all the required deposits to the residual receipts account be made on a timely basis. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and the auditor?s recommendations will be adopted.

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