Audit 282472

2022 ? 003 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Section 202 Capital Advance and Project Rental Assistance Contract, Section 202 Demonstration Planning Grant ALN: 14.157 and 14.159 Award Period: 2022 Type of Finding: Significant Deficiency Criteria or specific requirement: According to the Regulatory Agreement, ?mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank?concurrently with the effective commencement of rental assistance payments under the Project Rental Assistance Contract, the Mortgagor will deposit an amount?per month unless a different date or amount is approved in writing by HUD?. Condition: The Organization did not make all required deposits into the Reserve for Replacements bank account in a timely manner. Questioned costs: None Cause: A process control to ensure the automatic transfer of deposits from the operating account to the replacements reserve on a monthly basis was not in place. Effect: Deposits for six of the twelve months of the year were not made timely. Therefore, the Organization is not in compliance with the Regulatory Agreement. Recommendation: We recommend management implement a control to ensure the monthly transfer is completed automatically and in accordance with the Regulatory Agreement. Views of responsible officials: The Organization agrees with the finding and the recommendation will be implemented. Controls implemented include scheduling of automatic transfers to our reserve for replacement savings account as well as updating our treasury standard operating procedures to ensure funds are available for the transfer. Condition status: In progress. Repeat Finding: Yes; finding is a repeat from prior audit finding 2021-003.

2022 ? 002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Section 202 Capital Advance and Project Rental Assistance Contract, Section 202 Demonstration Planning Grant ALN: 14.157 and 14.159 Award Period: 2022 Type of Finding: Significant Deficiency Condition: The Organization did not submit a budget related to their project rental assistance contract. Criteria: An annual budget must be submitted to HUD for project rental assistance contracts. Questioned costs: None Context: During reporting testing, it was determined that budgets had not been submitted to HUD as required. Effect: The annual budget was not submitted to HUD as required. Cause: The Organization was not able to submit an annual budget to HUD due to delays in previous audit submissions. Recommendation: We recommend audits are completed timely to ensure the annual budget is submitted to HUD as required. Views of Responsible Officials: Annual budgets will begin being submitted in 2023 now that audits are caught up in the hope we can bring our rental rates and approved budgets closer into alignment with current rental rates and cost to operate in the DFW area. Repeat Finding: No.

2022 ? 003 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Section 202 Capital Advance and Project Rental Assistance Contract, Section 202 Demonstration Planning Grant ALN: 14.157 and 14.159 Award Period: 2022 Type of Finding: Significant Deficiency Criteria or specific requirement: According to the Regulatory Agreement, ?mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank?concurrently with the effective commencement of rental assistance payments under the Project Rental Assistance Contract, the Mortgagor will deposit an amount?per month unless a different date or amount is approved in writing by HUD?. Condition: The Organization did not make all required deposits into the Reserve for Replacements bank account in a timely manner. Questioned costs: None Cause: A process control to ensure the automatic transfer of deposits from the operating account to the replacements reserve on a monthly basis was not in place. Effect: Deposits for six of the twelve months of the year were not made timely. Therefore, the Organization is not in compliance with the Regulatory Agreement. Recommendation: We recommend management implement a control to ensure the monthly transfer is completed automatically and in accordance with the Regulatory Agreement. Views of responsible officials: The Organization agrees with the finding and the recommendation will be implemented. Controls implemented include scheduling of automatic transfers to our reserve for replacement savings account as well as updating our treasury standard operating procedures to ensure funds are available for the transfer. Condition status: In progress. Repeat Finding: Yes; finding is a repeat from prior audit finding 2021-003.

2022 ? 002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Section 202 Capital Advance and Project Rental Assistance Contract, Section 202 Demonstration Planning Grant ALN: 14.157 and 14.159 Award Period: 2022 Type of Finding: Significant Deficiency Condition: The Organization did not submit a budget related to their project rental assistance contract. Criteria: An annual budget must be submitted to HUD for project rental assistance contracts. Questioned costs: None Context: During reporting testing, it was determined that budgets had not been submitted to HUD as required. Effect: The annual budget was not submitted to HUD as required. Cause: The Organization was not able to submit an annual budget to HUD due to delays in previous audit submissions. Recommendation: We recommend audits are completed timely to ensure the annual budget is submitted to HUD as required. Views of Responsible Officials: Annual budgets will begin being submitted in 2023 now that audits are caught up in the hope we can bring our rental rates and approved budgets closer into alignment with current rental rates and cost to operate in the DFW area. Repeat Finding: No.