Benet Place South

Finding Number 2024-002 In Process Federal Agency U.S. Dept. of Housing and Urban Development Federal Program Name Section 202 Capital Advance Assistance umber 14.157 Federal Award identification number and year MN46S971002-1997 Award period 2024 Compliance Requirement Affected S - Internal Controls Type of Finding Material Weakness - in Internal Control over Financial Reporting Material Weakness in Internal Control over Compliance Criteria Management is responsible for ensuring there are controls in place and they are being followed. Condition The Project should ensure internal control processes are documented and followed. Cause A formal review process had not been adopted during 2024, after the transition in management. The HUD approved budget for the 24-25 grant period, one replacement reserve withdrawal, and the bank reconciliations for August through December did not have documented review or approval. Effect Potential for incorrect reporting. Repeat Finding No Recommendation The Project should establish and follow a consistent review process for budgets, replacement reserve withdrawals, and bank reconciliations. Views of Responsible Officials and Planned Corrective Actions No disagreements with the finding. Management Response Management continues to review and establish monthly processes related to review and approval of budgets, replacement reserve withdrawals, and bank reconciliations.

Material Weakness: Internal Controls Over Compliance: The HUD approved budget for the 24-25 grant period, one replacement reserve withdrawal, and the bank reconciliations for August through December did not have documented review or approval. Recommendation: The Project should establish and follow a consistent review process for budgets, replacement reserve withdrawals, and bank reconciliations. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Management continues to review and establish monthly processes related to review and approval of budgets, replacement reserve withdrawals, and bank reconciliations.

Federal Agency: U.S. Department of Housing and Urban Federal Program Title: Section 202 Capital Advance Federal Assistance Listing Number: 14.157 Federal Award Identification Number and Year: MN46S971002 - 1997 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2023 through December 31, 2023 Type of Finding: Material Weakness in Internal Control over Major Federal Programs N - Replacement Reserve Deposits Criteria or Specific Requirement: Management is responsible for maintaining required monthly deposits into the Replacement Reserve account in accordance with form HUD-9250. Condition: The project did not make the correct monthly deposit that was required in order to be in compliance with HUD for the year under audit. Questioned Costs: $ 61,461 Cause: There was a significant increase to the required monthly deposits to the replacement reserve when the rent increased in July 2023. The monthly deposits were not increased as required. Effect: The Replacement Reserve escrow balance was underfunded by $61,461 at December 31, 2023. Repeat Finding: Yes Recommendation: Management should implement a process to ensure the required monthly deposit into the Replacement Reserve is in accordance with form HUD-9250. Views of Management: There is no disagreement with the audit finding. The Project made a deposit to correct the deficiency in the replacement reserve as follows: $11,321 on 1/1/24; $40,740 on 1/16/24; $10,000 on 2/11/24.

HUD Capital Advance Recommendation: Management should implement a process to ensure the required monthly deposit into the Replacement Reserve is in accordance with form HUD-9250. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Project made a deposit to correct the deficiency in the replacement reserve as follows: $11,321 on 1/1/24; $40,740 on 1/16/24; $10,000 on 2/11/24. Management was aware of the requirements but due to the delays in getting the budget approved and fully executed contract renewals received from HUD not happening until 9/22/2023 and the HAP payment for gross rent changes not being received until 11/6/2023, the Project was not able to make the requirement replacement reserve deposits until, $11,321 on 1/1/24; $40,740 on 1/16/24; $10,000 on 2/11/24. Now that monthly HAP is received and cash is available to make the replacement reserve payments, no further issues are anticipated. Names of the contact persons responsible for corrective action: Chuck Armstrong Planned completion date for corrective action plan: December 31, 2024

2023-001

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 202 Capital Advance Federal Assistance Listing Number: 14.157 Federal Award Identification Number and Year: MN46S971002 - 1997 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Major Federal Programs Criteria or Specific Requirement: Management is responsible for maintaining required monthly deposits into the Replacement Reserve account in accordance with form HUD-9250. Condition: The project did not make the correct monthly deposit that was required in order to be in compliance with HUD for the year under audit. Questioned Costs: $4 Cause: The project miscalculated the monthly amount to deposit as $1,293 when it should have been $1,293.33 causing a $4 deficiency as of year end. Effect: The Replacement Reserve escrow balance was underfunded by $4 at June 30, 2023. Repeat Finding: No. Recommendation: Management should implement a process to ensure the required monthly deposit into the Replacement Reserve is in accordance with form HUD-9250. Views of Management: There is no disagreement with the audit finding. The Project made a deposit to correct the deficiency in the replacement reserve on August 31, 2023.

FINDINGS—FEDERAL AWARD PROGRAMS AUDITS U.S. Department of Housing and Urban Development Benet Place respectfully submits the following corrective action plan for the year ended June 30, 2023. Audit period: July 1, 2022 – June 30, 2023 The findings from the schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. 2023-001 Section 202 Capital Advance – Assistance Listing No. 14.157 Recommendation: Management should implement a process to ensure the required monthly deposits into the replacement reserve is in accordance with form HUD-9250. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Project made a deposit to correct the deficiency in the replacement reserve on August 31, 2023. Name(s) of the contact person(s) responsible for corrective action: Melissa Binnall Planned completion date for corrective action plan: August 31, 2023 If the U.S. Department of Housing and Urban Development has questions regarding this plan, please call Melissa Binnall at 320-251-2700 Ext: 51313

2021 ? 001Federal agency: U.S. Department of Housing and Urban DevelopmentFederal program title: Section 202 Capital AdvanceCFDA Number: 14.157Award Period: July 1, 2020 through June 30, 2021Type of Finding: Other MattersCriteria or specific requirement: Bank statements shall be reconciled promptly to theformal accounting records by persons other thanthose recording or handling cash, or preparing andsigning checks.Condition: Reviewed 3 months of bank reconciliations, August2020, October 2020, and January 2021 to ensurebank reconciliations are properly reviewed andcompleted timely. Noted that the bank reconciliationswere all documented as reviewed on June 17, 2021.Questioned costs: N/ACause: Management got behind in signing off on thereconciliations due to working from home as a resultof the COVID-19 pandemic. Management has nowreturned to the normal and timely review process.Effect: Errors or fraud could be missed or not caughttimely.Repeat Finding: No.Recommendation: We recommend that the reconciliations are reviewedtimely.Views of Management: There is no disagreement with the audit finding.

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