Audit 21649

Finding Type - Immaterial noncompliance with major program requirements Title and CFDA Number of Federal Program - 14.155 - U.S. Department of Housing and Urban Development - Mortgage Insurance for Refinancing of Existing Multifamily Rental Housing (Section 223(f)) Finding Resolution Status - Resolved Information on Universe and Population Size - The population size was nine, which includes all tenant move outs that occurred during the audit period. Sample Size Information - A sample size of two was determined based on attribute sampling table. Identification of Repeat Finding and Finding Reference Number - N/A - not a repeat finding Criteria - HUD requires the Corporation to refund the security deposit for tenants within 30 days of the move-out date. Statement of Condition - The Corporation failed to refund the security deposit for one tenant within 30 days of the move out date. Cause - The Corporation failed to refund the security deposit for one tenant within 30 days of the move out date due to turnover of the property manager. Effect or Potential Effect - The tenant did not receive the security deposit refund until 293 days after the move-out date. Auditor Noncompliance Code - M - Security Deposits Reporting Views of Responsible Officials - The Corporation agreed with the finding as reported. Context - The Corporation failed to return the security deposit for one tenant within 30 days of the move out date. Recommendation - All security deposit refunds should be made within 30 days of the tenant move-out. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Management acknowledged the error that occurred during the year ended December 31, 2022 and has taken measures to change the process of issuing refunds to reduce the likelihood of late refunds. Response Indicator - Agree Completion Date - February 17, 2023 Response - Management acknowledges the issue related to timely refund of the tenant security deposit. Management plans to change the process of issuing refunds to reduce the likelihood of late refunds.

Finding Type - Noncompliance which could have a direct and material effect on the major programs. Title and CFDA Number of Federal Program - 14.155 - U.S. Department of Housing and Urban Development - Mortgage Insurance for Refinancing of Existing Multifamily Rental Housing (Section 223(f)). Finding Resolution Status - Resolved Information on Universe and Population Size - The population was the reduction in payables from the prior year. Sample Size Information - Not subject to sampling Identification of Repeat Finding and Finding Reference Number - Not a repeat finding. Criteria - The regulatory agreement with HUD requires that the Corporation's cash should only be used to for pay for the Corporation's expenses. Statement of Condition - The Corporation repaid approximately $188,000 of owner advances without HUD's approval resulting in an unauthorized use of operating cash. Cause - The Corporation did not request approval from HUD prior to repaying the owner advances. Effect or Potential Effect - The Corporation paid amounts owed to related parties in excess of what was permitted by HUD. Auditor Noncompliance Code - H - Unauthorized distribution of project assets. Reporting Views of Responsible Officials - The related parties repaid the $188,000 to the Corporation in March 2023. Context - The Corporation did not request approval from HUD prior to repaying the owner advances. Recommendation - The related parties should repay the $188,000 to the Corporation or request HUD's approval to allow the payment of the owner advances. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Client took the appropriate actions to repay the Corporation $188,000 in 2023. Response Indicator - Agree Completion Date - March 27, 2023 Response - Management acknowledges noncompliance in the current fiscal year and has corrected the repayment of the owner advances by returning $188,000 to the Corporation.

Finding Type - Immaterial noncompliance with major program requirements Title and CFDA Number of Federal Program - 14.155 - U.S. Department of Housing and Urban Development - Mortgage Insurance for Refinancing of Existing Multifamily Rental Housing (Section 223(f)) Finding Resolution Status - Resolved Information on Universe and Population Size - The population size was nine, which includes all tenant move outs that occurred during the audit period. Sample Size Information - A sample size of two was determined based on attribute sampling table. Identification of Repeat Finding and Finding Reference Number - N/A - not a repeat finding Criteria - HUD requires the Corporation to refund the security deposit for tenants within 30 days of the move-out date. Statement of Condition - The Corporation failed to refund the security deposit for one tenant within 30 days of the move out date. Cause - The Corporation failed to refund the security deposit for one tenant within 30 days of the move out date due to turnover of the property manager. Effect or Potential Effect - The tenant did not receive the security deposit refund until 293 days after the move-out date. Auditor Noncompliance Code - M - Security Deposits Reporting Views of Responsible Officials - The Corporation agreed with the finding as reported. Context - The Corporation failed to return the security deposit for one tenant within 30 days of the move out date. Recommendation - All security deposit refunds should be made within 30 days of the tenant move-out. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Management acknowledged the error that occurred during the year ended December 31, 2022 and has taken measures to change the process of issuing refunds to reduce the likelihood of late refunds. Response Indicator - Agree Completion Date - February 17, 2023 Response - Management acknowledges the issue related to timely refund of the tenant security deposit. Management plans to change the process of issuing refunds to reduce the likelihood of late refunds.

Finding Type - Noncompliance which could have a direct and material effect on the major programs. Title and CFDA Number of Federal Program - 14.155 - U.S. Department of Housing and Urban Development - Mortgage Insurance for Refinancing of Existing Multifamily Rental Housing (Section 223(f)). Finding Resolution Status - Resolved Information on Universe and Population Size - The population was the reduction in payables from the prior year. Sample Size Information - Not subject to sampling Identification of Repeat Finding and Finding Reference Number - Not a repeat finding. Criteria - The regulatory agreement with HUD requires that the Corporation's cash should only be used to for pay for the Corporation's expenses. Statement of Condition - The Corporation repaid approximately $188,000 of owner advances without HUD's approval resulting in an unauthorized use of operating cash. Cause - The Corporation did not request approval from HUD prior to repaying the owner advances. Effect or Potential Effect - The Corporation paid amounts owed to related parties in excess of what was permitted by HUD. Auditor Noncompliance Code - H - Unauthorized distribution of project assets. Reporting Views of Responsible Officials - The related parties repaid the $188,000 to the Corporation in March 2023. Context - The Corporation did not request approval from HUD prior to repaying the owner advances. Recommendation - The related parties should repay the $188,000 to the Corporation or request HUD's approval to allow the payment of the owner advances. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Client took the appropriate actions to repay the Corporation $188,000 in 2023. Response Indicator - Agree Completion Date - March 27, 2023 Response - Management acknowledges noncompliance in the current fiscal year and has corrected the repayment of the owner advances by returning $188,000 to the Corporation.