Audit 398013

Finding reference number: 2025-001 Assistance Listing (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing 14.157 (034-EE145 and 2008) Auditor non-compliance code: A-Unauthorized withdrawal from replacement reserve Finding resolution status: Cleared Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Statistically valid sample: N/A Name of Federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $6,288 Statement of condition 2025-001: During the years ended December 31, 2025 and 2024, the Corporation withdrew funds totaling $726 and $5,562, respectively, from the reserve for replacements account without receiving approval from HUD. Criteria: Pursuant to item 5(a) of the HUD Regulatory Agreement, the Corporation shall not make withdrawals from the reserve for replacements account except after receiving the written consent of HUD and for the purpose of replacing structural elements and mechanical equipment of the Community. Effect: The Corporation is not in compliance with the terms of the HUD Regulatory Agreement. As of December 31, 2025, the reserve for replacements account is underfunded by $6,288. Cause: Management inadvertently submitted reserve for replacement withdrawal requests to HUD, which included duplicate or reduced invoices totaling $6,288. Recommendation: Management should transfer funds of $6,288 from the operating cash account to the reserve for replacements account. Management's response: Management concurs with the finding and auditor's recommendation and on March 3, 2026 transferred $6,288 from the operating cash account to the reserve for replacements account.