Audit 353354

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Award Period: January 1, 2024 through December 31, 2024 Type of Finding: -Significant Deficiency in Internal Control over Compliance -Other Matters Criteria or specific requirement: HUD requires deposits to be made timely to the replacement reserve on a monthly basis unless suspension of the monthly deposit is approved by HUD. Condition: The required replacement reserve deposit for the month of June 2024 was not made. HUD provided approval for suspension of replacement reserve deposits for the 4-month period of July 2024 through October 2024. Deposits were not made to the replacement reserve for the 5-month period June 2024 through October 2024. Questioned costs: None Context: The Organization made seven deposits to the replacement reserve escrow during the period under audit. The Organization obtained approval from HUD for suspension of 4 months of deposits (July 2024 - October 2024) and therefore 8 deposits should have been made to the replacement reserve during the year. The required replacement reserve deposit for the month of June 2024 was not made. Cause: Due to a miscommunication, the June 2024 replacement reserve deposit was not made. Effect: There were no negative effects to the Organization. Repeat Finding: No. Recommendation: We recommend that the Organization make the missed deposit to the replacement reserve escrow and establish internal controls to ensure required replacement reserve deposits are made in a timely manner. Views of responsible officials: There is no disagreement with the audit finding. The missed June 2024 replacement reserve deposit was made on March 11, 2025.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Award Period: January 1, 2024 through December 31, 2024 Type of Finding: -Significant Deficiency in Internal Control over Compliance -Other Matters Criteria or specific requirement: HUD guidelines require cash to be maintained in financial institutions which meet minimum GNMA ratings when balances exceed FDIC-insured limits. Bank ratings are to be monitored by management on a quarterly basis and documentation maintained for at least three years as required by the HUD Handbook 4350.1. Condition: Management did not maintain documentation of their monitoring of the financial institution's ratings. Questioned costs: None Context: The Organization's cash balances are held in federally insured accounts and the bank meets minimum GNMA ratings. However, management did not maintain documentation of the monitoring of the financial institution's ratings. Cause: Management Oversight. Effect: There were no negative effects to the Organization. Repeat Finding: No. Recommendation: It is recommended that management implement internal controls to document the monitoring of the financial institution's rating on a quarterly basis to ensure consistency with the minimally acceptable ratings as established by the Government National Mortgage Association (GNMA) and maintain documentation of the ratings for at least three years. Views of responsible officials: While management monitored the financial institutions ratings on a quarterly basis to ensure consistency with the minimally acceptable ratings as established by the Government National Mortgage Association (GNMA), management did not maintain documentation of the monitoring of the financial institution's ratings. The management company agrees with this and will begin documenting the financial institutions ratings on a quarterly basis to ensure consistency with the minimally acceptable ratings as established by the Government National Mortgage Association (GNMA) and maintain this documentation in the administrative record for three years, including the current year.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Award Period: January 1, 2024 through December 31, 2024 Type of Finding: -Significant Deficiency in Internal Control over Compliance -Other Matters Criteria or specific requirement: HUD requires deposits to be made timely to the replacement reserve on a monthly basis unless suspension of the monthly deposit is approved by HUD. Condition: The required replacement reserve deposit for the month of June 2024 was not made. HUD provided approval for suspension of replacement reserve deposits for the 4-month period of July 2024 through October 2024. Deposits were not made to the replacement reserve for the 5-month period June 2024 through October 2024. Questioned costs: None Context: The Organization made seven deposits to the replacement reserve escrow during the period under audit. The Organization obtained approval from HUD for suspension of 4 months of deposits (July 2024 - October 2024) and therefore 8 deposits should have been made to the replacement reserve during the year. The required replacement reserve deposit for the month of June 2024 was not made. Cause: Due to a miscommunication, the June 2024 replacement reserve deposit was not made. Effect: There were no negative effects to the Organization. Repeat Finding: No. Recommendation: We recommend that the Organization make the missed deposit to the replacement reserve escrow and establish internal controls to ensure required replacement reserve deposits are made in a timely manner. Views of responsible officials: There is no disagreement with the audit finding. The missed June 2024 replacement reserve deposit was made on March 11, 2025.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Award Period: January 1, 2024 through December 31, 2024 Type of Finding: -Significant Deficiency in Internal Control over Compliance -Other Matters Criteria or specific requirement: HUD guidelines require cash to be maintained in financial institutions which meet minimum GNMA ratings when balances exceed FDIC-insured limits. Bank ratings are to be monitored by management on a quarterly basis and documentation maintained for at least three years as required by the HUD Handbook 4350.1. Condition: Management did not maintain documentation of their monitoring of the financial institution's ratings. Questioned costs: None Context: The Organization's cash balances are held in federally insured accounts and the bank meets minimum GNMA ratings. However, management did not maintain documentation of the monitoring of the financial institution's ratings. Cause: Management Oversight. Effect: There were no negative effects to the Organization. Repeat Finding: No. Recommendation: It is recommended that management implement internal controls to document the monitoring of the financial institution's rating on a quarterly basis to ensure consistency with the minimally acceptable ratings as established by the Government National Mortgage Association (GNMA) and maintain documentation of the ratings for at least three years. Views of responsible officials: While management monitored the financial institutions ratings on a quarterly basis to ensure consistency with the minimally acceptable ratings as established by the Government National Mortgage Association (GNMA), management did not maintain documentation of the monitoring of the financial institution's ratings. The management company agrees with this and will begin documenting the financial institutions ratings on a quarterly basis to ensure consistency with the minimally acceptable ratings as established by the Government National Mortgage Association (GNMA) and maintain this documentation in the administrative record for three years, including the current year.