Assistance Listing (Federal award identification number and year): Supportive Housing for the Elderly (Assistance Listing No. 14.157, 2025) Auditor non-compliance code: A - Unauthorized withdrawal from replacement reserve Finding resolution status: Resolved Universe population size: 2 invoices from 1 HUD approved 9250 withdrawal Sample size information: 2 invoices from 1 HUD approved 9250 withdrawal Name of Federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $17,400 Statement of condition #2025-001: The Corporation received a reimbursement from the reserve for replacements, as approved by HUD, for $17,400 for HVAC services based on a proposal during the year ended September 30, 2025; however the proposal was never accepted and the scheduled repairs never incurred. At September 30, 2025, the $17,400 had not been deposited back into the reserve for replacements. Criteria: Reserve for replacements withdrawals may be made only after receiving the written consent from HUD. Per HUD regulations, expenditures covered by withdrawals from the reserve for replacements fund are to be used for the purpose authorized by HUD. Effect: The Corporation is not in compliance with HUD regulations. The reserve for replacements account is underfunded by $17,400, and the operating cash account is overstated by $17,400 at September 30, 2025. Cause: The Corporation received approval from HUD for the HVAC services based on a proposal; however the proposal was never accepted and a different vendor was utilized. The initial funding was not deposited back into the reserve for replacements account. Recommendation: Management should transfer $17,400 from the operating account to the reserve for replacements account. Management's response: Management concurs with the finding and recommendation. On November 6, 2025, management transferred $17,400 from the operating account to the reserve for replacements.