Audit 392726

Finding No. 2025-001 – Replacement Reserve Funding Federal Assistance Listing Number Name of Federal Program or Cluster 14.181 Supportive Housing for Persons with Disabilities Information on the Universe Population Size Twelve (12) monthly payments. Sample Size Information Twelve (12) monthly payments Identification of Repeat Finding Reference Number N/A Criteria The regulatory agreement requires monthly payments to fund the replacement reserve. Statement of Condition The Entity did not make one required replacement reserve deposit in accordance with the regulatory agreement and related reserve funding requirements. The missing deposit was identified during the audit and was subsequently remitted prior to issuance of the financial statements. Cause During the year, the automatic or routine transfer process was disrupted, which resulted in the required replacement reserve deposit being missed Effect or Potential Effect The replacement reserve fund is underfunded by a total of $482. Auditor Non-Compliance Code N – Reserve for Replacements Deposits Questioned Costs There were no known questioned costs. Section III – Federal Award Findings and Questioned Costs (continued) Reporting Views of Responsible Officials The auditee agrees with this finding and will make the required deposits timely going forward. FHA/Contract Number 000-HD071 Questioned Costs $0 Context The finding represents an instance of management oversight. An unknown error occurred which prevented the automatic transfer for June to be made to the accounts. Recommendations We recommend that management fund the reserve immediately to make it current and create a better system of internal controls allowing for automatic debits to be made monthly from the operating account to fund the replacement reserve and ensure no future underfunding. Auditors’ Summary of the Auditee’s Comments on the Findings and Recommendations Management agrees with the finding. The missed replacement reserve deposit was made in September 2025, prior to issuance of the financial statements. Management determined that the exception resulted from a missed bank transfer. Management has since reviewed recurring transfer settings, confirmed reserve funding requirements, and implemented an additional monthly review control to verify that all required reserve deposits are made timely. Response Indicator Agree Completion Date DATE Response Management agrees with the finding and has made a deposit to the replacement reserve account to fund the shortfall prior to the issuance of the financial statements and have established a system in order to ensure no future occurrences.