Red Lake Senior Apartment Center, Inc.

Underfunding of Replacement Reserve Significant Deficiency in Internal Control over Compliance and an Immaterial Instance of Noncompliance Criteria - Management is required to monitor and increase the deposits as required by HUD. Condition - During our testing, we identified that the Organization did not increase the monthly deposit to the replacement reserve timely as well as missed one month. The replacement reserve was under funded by $1,555 as of September 30, 2025. Cause - The Organization's review and oversight of the changes in monthly deposits was not operating effectively to ensure that the correct amount was deposited. Effect - This could cause the replacement reserve to be underfunded and in noncompliance with the regulatory agreement. Recommendation - We recommend that management have in place controls to ensure that the required monthly deposits be updated timely. View of Reponsible Officials - Management agrees with this finding.

US Department of Housing and Urban Development - CFDA #14.157 Supportive Housing for the Elderly (Section 202) Applicable Federal Award Number and Year ? Section 202 - 2019 Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance Criteria: Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition: In our testing of procurement, suspension and debarment it was identified that the Organization did not have a written procurement policy that satisfied the requirements of 2 CFR sections 200.318 through 200.326. In addition, the Organization did not have a process in place to identify whether vendors were suspended or debarred. Effect: A lack of a written procurement policy increases the overall risk that employees are not aware of the specific requirements with contracting and awarding contracts to vendors. Cause: Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Questioned Costs: None reported Context/Sampling: 1 transaction tested out of 1 total transactions. Repeat Finding from Prior Year(s): No Recommendation: We recommend that management establish a written policy that addresses all the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.326 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections. In addition, we recommend management implement a process to identify whether vendors are suspended or debarred. View of Responsible Officials: Management agrees with this finding

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION