Largo Landing Elderly Developments, Inc.Non-Profit

U.S. Department of Housing and Urban Development CFDA Numbers 14.155 and 14.195 Finding 2021-002 - Eligibility Condition: Certification of low income status could not be verified. Criteria: Eligibility of tenants for federal housing assistance must be documented and verified. Effect: The cost of assistance may be disallowed. Context: A sample of 11 tenant files was selected for eligibility testing including potential move-ins, existing residents and move-outs. There was one resident who had moved out that their file could not be located. Cause: Procedures are in place for eligibility determinations and verifications, but the missing file was for a tenant whom had been occupying their apartment for a long period of time, and the file could not be located in storage. Recommendation: Personnel should make sure that all tenants have an active file and that they are readily accessible and updated. View of Responsible Officials and Planned Corrective Actions: The Corporation agrees with the finding and the missing file dates back to a previous management company and management plans on reviewing all active residents to ensure an active file is in place with proper eligibility determinations and verification.

U.S. Department of Housing and Urban Development CFDA Numbers 14.155 and 14.195 Finding 2021-003 - Required Deposits to the Residual Receipt Account Criteria/Condition: The Corporation was required to make a deposit of surplus cash of $228,134 into the residual receipts account within 90 days of June 30, 2020. This was also a prior year finding Cause: The required deposits were not made timely due to a communication error. Effect. The Corporation made the deposit late on October 26, 2020 rather than within the 90 days as required. Recommendation: Processes should be put into place to properly calculate and deposit the surplus cash into the residual receipts account as required. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and is putting in place a checklist that will be monitored by the finance manager at Fellowship Square Foundation to ensure the timely deposit of any surplus cash requirements.

The Corporation is required to maintain its books and records on an accrual basis in accordance with GAAP. The Corporation's internal accounting records did not consider accrued expenses and were completed on a cash basis during the year ended June 30, 2020. The Corporation's management company is keeping the internal books and records on a cash basis and is not properly accounting for accrued expenses in accordance with GAAP. Audit adjustments were required to record accrued expenses to convert the cash basis internal accounting records to the accrual basis in accordance with GAAP for audit purposes. The Corporation's management company is preparing the internal financial statements on a cash basis for the Board of Directors and management to monitor cash flows, and will convert them to the accrual basis of accounting in accordance with GAAP for future years. The Corporation should have procedures in place to ensure that financial statements are prepared on the accrual basis of accounting in accordance with GAAP.

The Corporation is required to maintain and follow documented policies and procedures for procurement and fixed assets. The Corporation did not follow its capitalization policy as set forth in the documented policies and procedures. Audit adjustments were required to adjust noncapitalizable expenditures.The Corporation's management company is preparing additional guidelines for site managers to follow relating to adhering to the established policies and procedures for procurement and fixed assets. The Corporation should have procedures in place to ensure that the proper policies and procedures are being followed.

The Corporation is required to deposit residual revenue, as defined within the Regulatory Agreement with HUD, into a residual receipts account within 90 days of year-end. The Corporation was required to make a deposit of $210,491 into the residual receipts account for its year ended June 30, 2019. The Corporation failed to make the required deposit in the required timeframe. The Corporations' management did not make the required deposit timely due to internal communication error. The current year residual receipts account does not have an appropriate balance. The Corporation should have procedures in place to ensure that surplus cash is deposited in the appropriate account timely. The Corporation's management company will work with the audit firm to verify the amount of surplus cash to be deposited. Management is currently working on a process to be more precise on its surplus cash calculation internally. The Corporation's management has made the deposit of $210,491 and estimated interest income of approximately $600 on July 31, 2020. The Corporation should have procedures in place to ensure that deposits to residual receipts account, if any, are being followed in accordance with compliance requirements with HUD.

Accrual Basis of Accounting Condition and Criteria: The Corporation is required to maintain its books and records on an accrual basis in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Corporation?s internal accounting records were completed on a cash basis during the year ended June 30, 2019. Cause: The Corporation's management company is keeping the internal books and records on a cash basis and is not properly accounting for accounts receivable, payables, accrued expenses, and depreciation in accordance with GAAP. Effect: Audit adjustments were required to record accounts receivable, accounts payable, accrued expenses, and depreciation to convert the cash basis internal accounting records to the accrual basis in accordance to GAAP for audit purposes.

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