Audit 327913

Finding 2024-001 Material Weakness in Internal Controls over Financial Reporting Statement of Condition: Numerous accounts were identified that required adjustment as part of our audit procedures, including accounts receivable -HUD and depreciation expense. Due to the number and nature of the required audit adjustments, we are considering this deficiency to be a material weakness in internal control over financial reporting. The misstatements that were discovered as a result of audit procedures would have had the following impact on the financial statements if left unadjusted: Assets understated by 26,943 Liabilities understated by 7,593 Net assts understated by 19,350 Revenues understated by 9,313 Expenses overstated by 10,037 Criteria: It is the responsibility of the Project’s Sponsor to design and implement internal controls over financial reporting to ensure that Project’s accounts are properly recorded in accordance with U.S. GAAP. Significant adjustments that arise as a result of audit procedures that were otherwise not detected by the Project’s sponsor are required to be reported as a deficiency in internal control over financial reporting. Cause of Condition: There were errors identified in the Project’s depreciation calculations which were not identified and corrected as part of the financial close and reporting process. Amounts due from HUD for HAP requests not filed during the year were not recorded as accounts receivable. Effect of Condition: Failing to review and/or fully reconcile all of the significant accounts of the Project, may cause the financial statements to be materially misstated. Questioned Costs: None Identification of Repeat Finding: Not Applicable. Recommendation: We recommend that the Project’s sponsor review the design and implementation of internal control procedures and identify areas to strengthen the Project’s internal controls. We also recommend the Project’s sponsor ensures there is a process in place to review year-end balances to ensure all transactions have been recorded correctly. Management’s Response: The Project’s sponsor agrees with the recommendations. See Corrective Action Plan.

Finding 2024-002 U.S. Department of Housing and Urban Development Supportive Housing for Persons with Disabilities (Section 811) - Assistance Listing 14.181; Grant period - Year ended June 30, 2024 Material Noncompliance with Program Requirements Material Weakness Over Compliance: Program Administration Statement of Condition: The Project did not request tenant assistance payments for the month of April and failed to re-submit a tenant assistance request for the month of December. Criteria: The Regulatory Agreement requires the Project to ensure controls exist to request the appropriate funds for each tenant on a monthly basis. Cause of Condition: The Project’s controls over monthly housing assistance payments were not working properly due to lack of management oversight due to turnover during the year. Effect of Condition: The Project is not in compliance with the HUD approved Regulatory Agreement. Questioned Costs: None Identification of Repeat Finding: Not Applicable Recommendation: We recommend that the Project’s sponsor review the design and implementation of internal control procedures and identify areas to strengthen management oversight. Management’s Response: The Project’s sponsor agrees with the recommendations. See Corrective Action Plan.

Finding 2024-003 U.S. Department of Housing and Urban Development Supportive Housing for Persons with Disabilities (Section 811) - Assistance Listing 14.181; Grant period - Year ended June 30, 2024 Material Noncompliance with Program Requirements Significant Deficiency Over Compliance: Unauthorized Management Fees Statement of Condition: The Project paid management fees of 104 in excess of the amount approved by HUD. Criteria: The HUD approved management agent certification (Form HUD - 9839-B) provides for payment of management fees equal to 9.13% of residential income collected. Cause of Condition: The Project’s sponsor inadvertently utilized incorrect residential income to calculate management fees. Effect of Condition: The Project is not in compliance with the HUD approved management agent certification and Section 811 Regulatory Agreement. Questioned Costs: 104 Identification of Repeat Finding: Not Applicable Recommendation: We recommend that the Project’s sponsor verify, monthly, the residual income used to calculate management fees. Management’s Response: The Project’s sponsor agrees with the recommendations. See Corrective Action Plan.

Finding 2024-001 Material Weakness in Internal Controls over Financial Reporting Statement of Condition: Numerous accounts were identified that required adjustment as part of our audit procedures, including accounts receivable -HUD and depreciation expense. Due to the number and nature of the required audit adjustments, we are considering this deficiency to be a material weakness in internal control over financial reporting. The misstatements that were discovered as a result of audit procedures would have had the following impact on the financial statements if left unadjusted: Assets understated by 26,943 Liabilities understated by 7,593 Net assts understated by 19,350 Revenues understated by 9,313 Expenses overstated by 10,037 Criteria: It is the responsibility of the Project’s Sponsor to design and implement internal controls over financial reporting to ensure that Project’s accounts are properly recorded in accordance with U.S. GAAP. Significant adjustments that arise as a result of audit procedures that were otherwise not detected by the Project’s sponsor are required to be reported as a deficiency in internal control over financial reporting. Cause of Condition: There were errors identified in the Project’s depreciation calculations which were not identified and corrected as part of the financial close and reporting process. Amounts due from HUD for HAP requests not filed during the year were not recorded as accounts receivable. Effect of Condition: Failing to review and/or fully reconcile all of the significant accounts of the Project, may cause the financial statements to be materially misstated. Questioned Costs: None Identification of Repeat Finding: Not Applicable. Recommendation: We recommend that the Project’s sponsor review the design and implementation of internal control procedures and identify areas to strengthen the Project’s internal controls. We also recommend the Project’s sponsor ensures there is a process in place to review year-end balances to ensure all transactions have been recorded correctly. Management’s Response: The Project’s sponsor agrees with the recommendations. See Corrective Action Plan.

Finding 2024-002 U.S. Department of Housing and Urban Development Supportive Housing for Persons with Disabilities (Section 811) - Assistance Listing 14.181; Grant period - Year ended June 30, 2024 Material Noncompliance with Program Requirements Material Weakness Over Compliance: Program Administration Statement of Condition: The Project did not request tenant assistance payments for the month of April and failed to re-submit a tenant assistance request for the month of December. Criteria: The Regulatory Agreement requires the Project to ensure controls exist to request the appropriate funds for each tenant on a monthly basis. Cause of Condition: The Project’s controls over monthly housing assistance payments were not working properly due to lack of management oversight due to turnover during the year. Effect of Condition: The Project is not in compliance with the HUD approved Regulatory Agreement. Questioned Costs: None Identification of Repeat Finding: Not Applicable Recommendation: We recommend that the Project’s sponsor review the design and implementation of internal control procedures and identify areas to strengthen management oversight. Management’s Response: The Project’s sponsor agrees with the recommendations. See Corrective Action Plan.

Finding 2024-003 U.S. Department of Housing and Urban Development Supportive Housing for Persons with Disabilities (Section 811) - Assistance Listing 14.181; Grant period - Year ended June 30, 2024 Material Noncompliance with Program Requirements Significant Deficiency Over Compliance: Unauthorized Management Fees Statement of Condition: The Project paid management fees of 104 in excess of the amount approved by HUD. Criteria: The HUD approved management agent certification (Form HUD - 9839-B) provides for payment of management fees equal to 9.13% of residential income collected. Cause of Condition: The Project’s sponsor inadvertently utilized incorrect residential income to calculate management fees. Effect of Condition: The Project is not in compliance with the HUD approved management agent certification and Section 811 Regulatory Agreement. Questioned Costs: 104 Identification of Repeat Finding: Not Applicable Recommendation: We recommend that the Project’s sponsor verify, monthly, the residual income used to calculate management fees. Management’s Response: The Project’s sponsor agrees with the recommendations. See Corrective Action Plan.