LAKE ANNE FELLOWSHIP HOUSE, SECTION I

Finding 2022-001 - Required Monthly Deposits to the Reserve for Replacement Assistance Listing Number: 14.195 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2021 - June 30, 2022 Pass-Through Entity: Not applicable Criteria: The Corporation is required to make a monthly deposit of $1,887 to the reserve for replacement account. Questioned Cost: None. Condition/Context: The Corporation made monthly deposits of $1,841. Our population included all monthly deposits. Our sample included all months. Effect: The reserve for replacement account was underfunded. Cause: Lack of management oversight. Recommendation: The Corporation should have procedures in place to ensure all required monthly deposits are made. Views of Responsible Officials and Planned Corrective Actions: The Corporation agrees with the finding and made a deposit into the reserve for replacement for the deficiency on September 20, 2022.

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 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 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 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 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.

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.

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

GSA_MIGRATION