GIBB BAINBRIDGE VILLAGE, INC.Non-Profit

Finding Reference Number: 2022-001 Type of Finding: FA Finding Resolution Status: Unresolved Information on Universe Population Size: The finding was not a result of a sampling procedure. Sample Size Information: The finding was not a result of a sampling procedure. Identification of Repeat Finding and Finding Reference Number: This is not a repeat finding. Criteria: The regulatory agreement (as amended) requires monthly deposits of $616. Statement of Condition: Required monthly deposits to the replacement reserve are deficient in the amount of $7,624. Cause: Deposits were suspended as long as a $65,000 balance was maintained. The project did not resume deposits timely. Effect or Potential Effect: Replacement reserve is deficient. Auditor Non-Compliance Code: N Questioned Costs: There are no questioned costs. The finding does not relate to an undocumented transaction or unreasonable expenditure. Reporting Views of Responsible Officials: Management agrees with the finding. The replacement reserve deficiency will be funded in the amount of $7,624. Management will ensure that the replacement reserve deposits are made on a timely basis in the future. Context: Required monthly deposits to the replacement reserve are deficient in the amount of $7,624. Recommendation: Management should compare the required annual amount to the monthly deposits made to determine if the correct amount is deposited. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Management agrees with the finding. The replacement reserve deficiency will be funded in the amount of $7,624. Management will ensure that the replacement reserve deposits are made on a timely basis in the future. Response Indicator: Agree Completion Date: June 30, 2022 Response: Management agrees with the finding. The replacement reserve deficiency will be funded in the amount of $7,624. Management will ensure that the replacement reserve deposits are made on a timely basis in the future.

Finding 2021-001:Information on the Federal Program: CFDA 14.181 ? Section 811 Capital Advance. Compliance Requirements: All disbursements from the reserve must be approved by HUD. Type of Finding: Noncompliance (Special Tests and Provisions). Criteria: 24 CFR 891.405(d) Funds may be drawn from the reserve and used only in accordance with HUD guidelines and with the approval of, or as directed by, HUD. Condition: For the year ending June 30, 2021, we reviewed the withdrawals from the replacement reserve and noted one withdrawal exceeded the approved amount. Context: Of the $18,542.25 withdrawn from the account during the year ended June 30, 2021, $902.25 was not approved. Subsequent to the audit, the Organization deposited $902.25 to the replacement reserve account. Effect: Organization used reserve funds that were intended for specific purposes risking availability at time of need. Cause: No cause could be determined. Recommendation: We recommend management review and revise controls over replacement reserves to ensure required withdrawals are approved. Responsible Official's Response and Corrective Action Planned: The Non-HUD Approved $902.00 that was paid from the Replacement Reserve Account has been deposited back into the Replacement Reserve account on September 7, 2021. Please see the attached bank verification. Management has taken steps to retrain staff in the Replacement Reserve check disbursements. Planned Implementation Date of Corrective Action: September 7, 2021. Person Responsible for Corrective Action: Melanie Moe, Managing Agent.

Finding 2021-002: Information on the Federal Program: CFDA 14.181 ? Supportive Housing for Persons with Disabilities. Compliance Requirements: PRAC project funds must be used only for expenses that are reasonable and necessary to the operation of the project as provided for in the Regulatory Agreement between HUD and the project owner (24 CFR section 891.400(e)) (Activities allowed). Criteria: 24 CFR 891.400(e) Project funds must be used for the operation of the project. Condition: For the year ending June 30, 2021, we reviewed project fund expenditures and found two instances where activities charged to the program were not allowable costs to the program per HUD section 811. Context: We tested twenty-six (26) randomly selected disbursements totaling $8,550 from a population of $119,763 and found two instances of noncompliance in the amount of $982.26. Effect: Funds that were to be used for the operations of the HUD property may not be available at the time of need. Cause: Management approved finance charges to be charged to the program that are not allowable. Recommendation: We recommend management review and revise controls over credit card transactions to ensure disbursements are allowed for the operation of the project. Responsible Official's Response and Corrective Action Planned: The Organization agrees with the finding and recommendations. Management closed the credit card account and has established a purchasing card (purchasing cards act like a debit card whereas the funds must be available at the time of purchase). Management has full access and control of the card. Planned Implementation Date of Corrective Action: April 27, 2021. Person Responsible for Corrective Action: Melanie Moe, Managing Agent.

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