Clinton Ecumenical North, Inc.Non-Profit

Finding 2025-002: Internal Control Structure Mortgage Insurance for the Purpose of Refinancing of Existing Multifamily Housing Projects – 14.155 Project-Based Rental Assistance – 14.195 Material Weakness - Eligibility, Reporting and Special Tests and Provisions Criteria: The Project is responsible for establishing an effective internal control process to ensure the Project complies with the federal requirements. Condition: The Project only had one administrative employee that oversees the tenant file process including verification of income and deductions, calculation of rent and reporting tenant data to HUD. As a result, we noted the Project had a lack of segregation of duties related to all applicable compliance requirements. Cause: The Project has not adequately reviewed its internal controls over federal programs. Effect or Potential Effect: The control deficiencies are deficiencies that result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected. Recommendation: The Project should review where it could utilize additional staff to establish controls over these areas. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.

2022-001: The Organization did not make the required deposit of surplus cash into their residual receipt reserve account as calculated on their prior fiscal year-end audit report as required by HUD. Criteria: The Organization is required to deposit their surplus cash into their residual receipt reserve within 90 days after receiving their annual audit report. Condition: The Organization did not deposit their surplus cash into their residual receipt reserve within 90 days after receipt of their annual audit report. Effect: The Organization was not in compliance with the HUD requirement to deposit their surplus cash into their residual receipt reserve on time. Cause: The Organization had a change in staff and the requirement to make this deposit was not clearly conveyed to the employee responsible for making the deposit. Recommendation: We recommend the Executive Director utilize the annual audit reports to make any surplus cash deposits into the Organization's residual receipt reserve in a timely manner as required by the HUD agreement. Depositing the cumulative surplus cash amount as calculated on this year's audit report will remedy the undeposited surplus cash from the prior year. Response: The Executive Director agreed with the recommendation and will implement necessary procedures to ensure that any surplus cash amounts are properly deposited in accordance with the HUD agreement.