Audit 414253

Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly (Section 202) Assistance Listing Number: 14.157 Federal Award Identification Number and Year: N/A Name of Pass-through Entity (if applicable): N/A Criteria: Loans are not permitted to be made from Project cash without prior authorization from HUD. Condition: During the year ended December 31, 2025, the Project paid expenses in the amount of $384 on behalf of an affiliate from Project cash without HUD approval. The amount due to the Project as of December 31, 2025 is $384. Cause: Procedures were not in place to ensure that cash disbursements of Project funds were limited to Project operating costs. Effect or potential effect: The payments of $384 were unauthorized loans and therefore considered to be questioned costs. Question costs: $384 Context: The project is billed for a shared invoice, and was not reimbursed from the affiliates timely. Identification as a repeat finding: yes Recommendation: Management has already reimbursed the Corporation. Management should revisit the procedures in place to ensure payments of this nature, being joint invoices, are either approved by HUD or not made in the future from the Corporation, but from the Sponsor. Compliance Code: G. Unauthorized loans from project assets Finding Resolution status: Resloved Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation as the payment was processed in error. Management implemented an additional approval control to prevent one project from paying expenses on behalf of another project or affiliate going forward. Management will continue to monitor compliance with these procedures.

Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly (Section 202) Assistance Listing Number: 14.157 Federal Award Identification Number and Year: N/A Name of Pass-through Entity (if applicable): N/A Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times a fully funded separate bank account for tenant security deposits collected. Condition: As of December 31, 2025 management has not fully funded the tenant security deposits cash account. The tenant security deposits cash account was underfunded by $7,581. Cause: The tenant security deposits liability exceeds the tenant security deposits cash account by $7,581 as of December 31, 2025. Effect or potential effect: Management commingled tenant security deposits with its operating cash and did not have sufficient cash balance in the tenant security deposits cash account to cover the tenant security deposits liability as of December 31, 2025. Question costs: $7,581 Context: N/A Identification as a repeat finding: yes Recommendation: Management should transfer $7,581 from the operating account in order to fully fund the tenant security deposits account. Compliance Code: M. Security deposits Finding Resolution status: Resloved Reporting Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. The transfer amount was understated, resulting in the tenant security deposit account being underfunded Management corrected the deficiency by transferring $7,581 from the operating account to fully fund the tenant security deposit account on January 14, 2026. Management has implemented enhanced reconciliations of tenant security deposits to ensure the security deposit account remains fully funded and accurate going forward.