Audit 377266

Finding Type: Immaterial noncompliance with major program requirements Significant deficiency in internal control over compliance Title and Assistance Listing Number of Federal Program 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 207/223(f)) Finding Resolution Status Resolved Information on Universe and Population Size Population includes prior year surplus cas Sample Size Information N/A Identification of Repeat Finding and Finding Reference Number N/A Criteria The Corporation should deposit surplus cash within the time frame specified in the FRAG Guide. Statement of Condition The Corporation deposited prior year surplus cash fifteen days after the deadline as stated in the Real Estate Assessment Center’s Summary of Financial Reporting and Auditing Guidance for HUD (FRAG Guide) under Section 2.8. Cause The Corporation failed to monitor the cash requirements of the residual receipts account as specified by the FRAG Guide. Effect or Potential Effect The residual receipts account was not funded in accordance with the FRAG Guide. Auditor Noncompliance Code B Failure to make required residual receipt deposits Reporting Views of Responsible Officials Management agrees with the finding as reported. Context The Corporation did not deposit prior year surplus cash within the time frame specified in the FRAG Guide. Recommendation Surplus cash deposit amounts be deposited with the specified time frame as required by the FRAG Guide. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations Management should deposit surplus cash within the time frame required by the FRAG Guide Response Indicator Agree Completion Date October 15, 2025 Response Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance. Management deposited the surplus cash amount of $49,386 into residual receipts on October 15, 2025.

Finding Type: Immaterial noncompliance with major program requirements Significant deficiency in internal control over compliance Title and Assistance Listing Number of Federal Program 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 207/223(f)) Finding Resolution Status Resolved Information on Universe and Population Size The population size was 8, which includes all tenant move outs that occurred during the audit period. Sample Size Information A sample size of 2 was determined based on attribute sampling. Identification of Repeat Finding and Finding Reference Number N/A Criteria HUD requires the Corporation to refund the security deposit to tenants within 30 days of the move out. Statement of Condition The Corporation failed to refund the security deposit to a tenant within 30 days of their move out date. Cause The Corporation failed to monitor the deposit refund requirements for the security deposits as specified by the regulatory agreement. Effect or Potential Effect The tenant did not receive their security deposit refund until 52 days after their move out. Auditor Noncompliance Code M Security Deposits Reporting Views of Responsible Officials Management agrees with the finding as reported. Context The Corporation did not refund the security deposit to a tenant within 30 days of their move out. Recommendation Management should strengthen controls to ensure security deposits are returned within the 30 day requirement. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations Management acknowledged the error that occurred during the year ended June 30, 2025 and has taken measures to change the process of issuing refunds to reduce the likelihood of late refunds. Response Indicator Agree Completion Date February 21, 2025 Response Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance. Management returned the security deposit to the former tenant on February 21, 2025.