Vista Prairie at Garnette GardensNon-Profit

Preparation of Financial Statements Significant Deficiency in Internal Control over Financial Reporting Criteria: Proper controls over financial reporting include a system designed to provide for the preparation of the accompanying financial statements and notes to the financial statements that are materially correct and include all required disclosures in accordance with accounting principles generally accepted in the United States. Condition: The Project does not have an internal control system designed to provide for the preparation of the full financial statements being audited. We were requested to draft the financial statements and accompanying notes to the financial statements. Cause: The Project has limited staff to prepare full disclosure financial statements. Effect: There is a reasonable possibility that the Project would not be able to draft the financial statements and the accompanying notes to the financial statements without the assistance of the auditors. Recommendation: We recommend that management continue reviewing operating procedures in order to obtain the maximum internal control over financial reporting possible under the circumstances to enable staff to draft the financial statements internally. Management and those charged with governance should make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.155 Section 223(f) Mortgage Insurance for the Purchase or Refinance of Existing Multifamily Housing Projects Special Tests and Provisions – Distribution of Project Funds Significant Deficiency in Internal Control over Compliance Criteria: The Project shall not allow any affiliate to receive or retain any distribution of assets except from surplus cash. Condition: Cash distributions were made to affiliated organizations in the amount of $95,000, which is approximately $23,000 in excess of the calculated surplus cash of $72,109. Cause: The Project did not have an internal control process in place to ensure that the surplus cash distribution was made in accordance with the regulatory agreement. Effect: Cash distributions were made in excess of the amount of allowable distributions. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Testing consisted of reviewing cash distributions for the year and compared to available surplus cash. Repeat Finding from Prior Year: No Recommendation: We recommend that controls be implemented to prevent excess cash distributions from being made after the semi-annual and annual surplus cash calculations are prepared. Views of Responsible Officials: Management agrees with the finding.