Audit 376913

Type of Finding – Federal Award Finding Finding Resolution Status – Resolved Identification of Repeat Finding and Finding Reference Number – N/A Criteria or Specific Condition – The owner is responsible for annually reexamining incomes of households occupying assisted units and make appropriate adjustments to the tenant payment and the project rental assistance payment (24 CFR section 891.410). Statement of Condition – Annual recertification of existing tenants were not completed in a timely manner for 1 out of 15 units during the year ended June 30, 2025, resulting in the Project not being able to bill rents for a tenant that had moved in prior to the start of the year. Tenant and subsidy rent for this unit for the full year, in the amount of $9,768, was not received and subsequently written off to vacancy. This tenant subsequently moved out of the unit on November 15, 2025. Cause – The annual recertification was not done in a timely manner due to the tenant being a transfer from another project, resulting in insufficient paperwork at the time of move into the Project. There were also staffing changes at the third party vendor that processes the HAP billings to HUD, which delayed resolving the issue. Effect or Potential Effect – The Project is not in compliance with the regulatory requirements. Auditor Non-Compliance Code – Z – Eligibility Questioned Costs – None Reporting View of Responsible Officials – We concur with the auditor’s recommendation. Recommendation – The Project should complete the recertification process for the tenants in a timely manner. Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations – Agree Response Indicator – Agree Completion Date – November 15, 2025 Response – The tenant recertifications will be monitored by the owner to ensure they are being completed in a timely manner.

Type of Finding – Federal Award Finding Finding Resolution Status – In process Identification of Repeat Finding and Finding Reference Number – N/A Criteria or Specific Condition – The owner is responsible for determining that utility allowances are applied to tenants correctly in accordance with HUD determinations. Statement of Condition – Utility allowances of $52 were approved by HUD for the contract rent renewal on the subsidized units, effective July 1, 2024. However, the utility allowances on the HAP billings for all units remained at $47, and have not been updated to reflect the amount approved by HUD. The difference of $5 affects all 14 subsidized units for all 12 months of the year ended June 30, 2025, for a total difference of $840. Cause – There were staffing changes at the third party vendor that processes the HAP billings to HUD, which caused the oversite. Also, management did not verify that the utility allowance change was applied correctly. Effect or Potential Effect – The Project is not in compliance with the regulatory requirements. Auditor Non-Compliance Code – Z – Eligibility Questioned Costs – $840 Reporting View of Responsible Officials – We concur with the auditor’s recommendation. Recommendation – The Project should monitor approved utility allowances to ensure they are applied properly. Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations – Agree Response Indicator – Agree Anticipated Completion Date – January 1, 2026 Response – Management will have the third party vendor complete a retroactive corrective billing on the next HUD billing. The utility allowances will be monitored by the owner to ensure they are being applied properly.