Audit 404678

Finding 2025-001 - Special Tests and Provisions U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria Management fee payments are limited to amounts determined in accordance with the terms of the management agreement. Condition During the year ended September 30, 2024, the project paid management fees totaling $466 in excess of the amount approved by HUD in 2024, and this excess was not reimbursed during the year ended September 30, 2025. Cause Lack of management oversight caused management fees to be overpaid during the current year. Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Questioned Costs $466 Context The project overpaid $466 in management fees, exceeding the HUD-approved amount during the year ended September 30, 2024. This overpayment is classified as an accounts receivable - entity under HUD regulations and is attributed to insufficient management oversight. Management did not repay this overpayment during the year ended September 30, 2025. Identification as a Repeat Finding: Yes. See 2024-001 Recommendation The management company should reimburse the project for overpaid management fee in the amount of $466 and implement procedures to ensure that the management fee paid does not exceed the amount determined in accordance with the management agreement. Auditor Noncompliance Code J - Unauthorized management fees Finding Resolution Status In Process Reporting Views of Responsible Officials Management will repay the property and update our procedures to correctly calculate management fees.

Finding No. 2025-002 - ReportingU.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria The FAC requires that the annual financial statements be submitted the earlier of 30 days after the report date or nine months after the fiscal year end. Condition The Single Audit was not submitted to the Federal Audit Clearinghouse (FAC) within nine months after the fiscal year end of the Company for the year ended September 30, 2024. CauseManagement does not have controls in place to timely file its financial statements with the FAC. Effect or Potential Effect Management is not in compliance with the requirement to timely submit the Single Audit to the FAC. Questioned Costs None Context Management does not have a process in place to ensure that all audits are submitted to the FAC timely. Identification as a Repeat Finding: No Recommendation Management should implement procedures to ensure that the financial statements are submitted to the FAC in accordance with the FAC filing requirements. Auditor Noncompliance Code Z - Other Finding Resolution Status Resolved Views of Responsible Officials Management agrees with the finding and is taking steps to address the issue that caused it.

Finding No. 2025-003 - Special Tests and ProvisionsU.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant's rights under state and local laws. Condition In connection with the procedures applied to a sample of 2 tenants that moved out of the project during the year, we noted 1 instance where management failed to refund the tenant security deposit and/or provide the tenant with an itemized list of charges deducted from the deposit within thirty days after the move-out date. Cause Management did not have procedures in place regarding timely refunding of tenant security deposits which require refunds or notice to occur within the 30-day requirement established by HUD. Effect or Potential Effect Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Questioned Costs $123 Context: Management did not have monitoring procedures in place to ensure timely refunding of tenant security deposits to the tenant or to their estate. Identification as a Repeat Finding: No Recommendation Management should change its policies and procedures related to refunding of tenant security deposits to comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: M - Security Deposits Finding Resolution Status: In process Views of Responsible Officials Management will review the processes and procedures with site personnel to strengthen controls over the refunding of tenant security deposits.