Audit 396408

2025-002 Written Procedures of Internal Control over Compliance (Significant Deficiency) Federal Agency: Department of Housing and Urban Development Program Name: Section 811 Supportive Housing for Person with Disabilities Assistance Listing Number: 14.181 HUD Project Number: 102-HD018 Award period: Year ended June 30, 2025 Criteria: According to 2 CFR 200, Subparts D and E an Organization is required to maintain written policies for the internal control over compliance of federal awards. Condition: The Organization does not maintain these written policies for the internal control over compliance of federal awards. Cause: The Organization’s policies and procedures were not designed to include written policies for the internal control over compliance of federal awards. Effect: The Organization's lack of written policies for the internal control over compliance of federal awards increases the risk of non compliance of its major federal programs. Recommendation: We recommend that the Organization develop written policies for the internal control over compliance of federal awards. Repeat Finding: Yes. Prior year reference number 2024-002. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and plans to develop proper written policies for the internal control over compliance of federal awards.

2025-003 Required Deposits to the Replacement Reserve Fund (Significant Deficiency) Federal Agency: Department of Housing and Urban Development Program Name: Section 811 Supportive Housing for Person with Disabilities Assistance Listing Number: 14.181 HUD Project Number: 102-HD018 Compliance Requirement: Special Tests and Provisions Questioned Costs: $10,800 Award period: Year ended June 30, 2025 Criteria: According to HUD a replacement reserve fund must be deposited in a federally insured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD must be deposited in the reserve fund (Regulatory Agreement , item 5 (a)). Condition: Audit tests revealed that no required monthly deposits were made into a federally insured depository in an interest-bearing account during the fiscal year ended June 30, 2025. Cause: The Organization failed to make the required payments to the replacement reserve fund as they were awaiting certain payments to be received. Effect: The Organization's failure to make the required payments to the replacement reserve could result in regulatory action by HUD. Recommendation: We recommend that the Organization make the required monthly deposits as required by the regulatory agreement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and will implement procedures that will ensure that the required monthly deposits are made by the Organization as required by the regulatory agreement.