Audit 404682

Department of Housing and Urban Development Finding 2025-002 Section 8 New Construction and Substantial Rehabilitation, AL 14.182 and Section 223(f) Mortgage Insurance Program AL 14.155 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. Statement of 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. Cause Management 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 Due to delays in the performance of the September 30, 2024 audit, the FAC submission was also delayed. 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 Reporting Views of Responsible Officials Management agrees with the finding and is taking steps to address the issue that caused it.

Department of Housing and Urban Development Finding 2025-003 Section 223(f) Mortgage Insurance Program AL 14.155 Criteria Residual receipts reserve deposits should be made within 90 days of year end and in the full amount required by HUD. Statement of Condition During the year ended September 30, 2025, management did not make the full required residual receipts reserve deposit in the amount of $268,771 within 90 days of year end, as required by HUD. The deposit made was based on draft financial statements, resulting in a shortage of $21,305. Management plans to deposit the shortage during the year ended September 30, 2026. Cause Controls were not in place to ensure that the final audited amount was used for the residual receipts reserve deposit. Effect or Potential Effect The Company is not in compliance with the requirements of the regulatory agreement. Questioned costs: $21,305 Context: Management deposited the full amount based on draft financial statements within a timely manner, however, the final financial statements included an increase in the required deposit amount which was not noted by management. Identification as a repeat finding: Yes. See 2024-003 Recommendation Management should establish internal controls and procedures to ensure that residual receipts reserve deposits are made both timely and in the correct amount based on final audited financial statements. Auditor’s Noncompliance Code: B – Failure to make required residual receipts deposits Finding Resolution Status: In process Views of Responsible Officials Management agrees with the finding and will deposit the shortage of $21,305 during fiscal year end September 30, 2026.

Department of Housing and Urban Development Finding 2025-004 Section 223(f) Mortgage Insurance Program AL 14.155 Criteria Management fee payments are limited to amounts determined in accordance with the terms of the management agreement. Statement of Condition During the year ended September 30, 2025, the project paid management fees totaling $2,648 in excess of the amount approved by HUD in 2024, and this excess was not reimbursed. Cause Lack of management oversight with respect to residual receipts HAP offsets 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: $2,682 Context: Management incorrectly overestimated the use of residual receipts HAP offsets, resulting in an overstatement of revenues used to calculate the management fee. Identification as a repeat finding: Yes. See 2024-004 Recommendation Management should establish additional procedures and monitor any modifications or material changes to revenues that may impact the management fee calculation. Management should pay back the overpaid management fee. Auditor Noncompliance Code: J - Unauthorized management fees Finding Resolution Status: In process Reporting Views of Responsible Officials We agree with the finding. We are reviewing our procedures to ensure we do not overpay management fees in the future.