Finding reference number: 2025-001 Assistance Listing (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing No. 14.157, 122-EE166-WAH-NP and 2002 Auditor non-compliance code: H – Unauthorized distribution of project assets Finding resolution status: Unresolved Universe population size: The universe population size is not applicable to this finding Sample size information: The sample size information is not applicable to this 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: $6,950 Statement of condition 2025-001: The Corporation paid entity costs of $6,950 from operating cash. Criteria: The Corporation shall not without the written approval of HUD disburse or payout any funds except for operation of the Property as provided in the Regulatory and Capital Advance Agreements. Effect: The Corporation is not in compliance with terms of the Regulatory and Capital Advance Agreements and the Property's operating account is underfunded by $6,950. This amount is included on computation of surplus cash, distributions, and residual receipts so not to understate the deposit due to the residual receipts account. Cause: Management paid debt issuance costs in anticipation of an anticipated refinancing. Recommendation: The Sponsor should reimburse the Corporation $6,950 or management should request HUD approval for funds to be reimbursed from the reserve for replacement. Management's response: Management concurs with the finding and agrees with the auditor's recommendation. Management plans to request reimbursement from the reserve for replacement in 2026.
Finding reference number: 2025-002 Assistance Listing (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing No. 14.157, 122-EE166-WAH-NP and 2002 Auditor non-compliance code: N – Reserve for Replacement Deposits Finding resolution status: Unresolved 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: $62,856 Statement of condition 2025-002: During the year ended December 31, 2025, management submitted a 9250 to withdraw funds from the reserve for replacements fund that included 16 of the same invoices as a previously approved 9250. The reserve for replacements account was not reimbursed for the duplicate withdrawal. In addition, management submitted and received approval for two proposals for work that was not completed. Criteria: Pursuant to the Regulatory Agreement, reserve for replacements withdrawal may be made only after receiving written consent from HUD. Pursuant to HUD regulations, expenditures covered by withdrawal from the reserve for replacements fund are to be used for the purpose authorized by HUD. Effect: The Corporation is not in compliance with the term of the Regulatory Agreement. The reserve for replacements account is underfunded by $62,856. Cause: Management submitted 16 invoices for reimbursement from the reserve for replacements twice in error and did not complete work for two proposals. Recommendation: Management should transfer $62,856 from the operating account to the reserve for replacements account. Management's response: Management concurs with the finding and the auditor's recommendation. Management will deposit the $62,856 during 2026.
Finding reference number: 2025-003 Assistance Listing (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing No. 14.157, 122-EE166-WAH-NP and 2002 Auditor non-compliance code: Z – Other Finding resolution status: In process 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: N/A Statement of condition 2025-003: The Corporation's accounting books and records as submitted for audit included certain accounts which were not presented in accordance with accounting standards generally accepted in the United States of America ("GAAP"). As a result, audit adjustments provided by management were required to present the December 31, 2025 financial statements in accordance with GAAP. Criteria: Pursuant to the Regulatory Agreement, the books and records of the Company are required to be kept in accordance with the requirements of HUD, which includes adequate design and monitoring of controls to safeguard the Corporation's assets. Chapter 2 of the Financial Operations and Accounting Procedures of Insured Multi-Family Projects Handbook (Handbook 4370.2 Rev.1) provides the accounting and financial operations requirements of a HUD insured multi-family property including: maintenance of books and records, completeness and accuracy of books and records, and an auditable paper trail. Effect: The Corporation is not in compliance with the terms of the Regulatory Agreement. Audit adjustments provided by management were required to present the December 31, 2025 financial statements in accordance with GAAP. Cause: Certain reconciliations were not completed or reviewed timely which resulted in unrecorded journal entries. Recommendation: Management should review the internal controls to ensure that the accounting software allows for timely recording of information and that a timely review of the reconciliations is completed by another accountant not responsible for the month end close. Management's response: Management concurs with the finding and the auditor's recommendation.