Audit 415076

Criteria: The owner shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in an interest-bearing account Condition: Management does not have the funds in an interest-bearing account. Cause: No interest was earned on the reserve for repairs and replacement account. Effect or Potential Effect: The Company has not complied with specific requirements for special tests and provisions as described in the Uniform Guidance. Recommendations: We recommend that the Company segregate the reserve for repairs and replacements into a separate interest bearing account. Views of Responsible Officials and Planned Corrective Action: Management has acknowledged the delay and believes it was beyond management's reasonable control since the prior auditor was responsible for the delays for the years ended June 30, 2021-2023. Management believes the Company is on track to ensure timely compliance going forward.

Criteria: The Company is required to follow HUD's guidelines and procedures for returning tenant security deposits within 30 days of the date the tenant moved out. Condition: Security deposits were not returned within 30 days of the tenant's move-out date within the audit year. Cause: Internal controls at the Company are not properly designed to ensure the timely return of tenant security deposits. Effect or Potential Effect: The Project is not in compliance with HUD guidelines. Recommendations: The Company should implement controls to monitor the timely return of tenant security deposits. Views of Responsible Officials and Planned Corrective Action: Management has acknowledged the delay and believes it was beyond management's reasonable control since the prior auditor was responsible for the delays for the years ended June 30, 2021-2023. Management has started to implement more controls on this to ensure a timely return of the tenant security deposits.