Department of Housing and Urban Development, Kan-Do Apartments, Inc. respectfully submits the following corrective action plan for the year ended December 31, 2022. Name and address of independent public accounting firm: Ifft & Co. PA, 11030 Granada Lane, Overland Park, Kansas 66211 Audit period: Year ended December 31, 2022 The findings from December 31, 2022 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. Financial Statement Findings None Federal Award Findings FINDING NO 2022-001: Section 811, CFDA 14.181 Condition: Replacement reserve deposits were not made on a monthly basis and only nine deposits were made in 2022. Criteria: The regulatory agreement requires monthly deposits to the replacement reserve account. Effect: The replacement reserve account was underfunded at year-end. Context: All 2022 bank statements for the replacement reserve account were reviewed and the deposit dates noted. There were no deposits made for April, July or August 2022. There were no questioned costs. Cause: Due to cash flow, management was not able to make the deposits to the replacement reserve account on a monthly basis. Recommendation: Management should prioritize replacement reserve deposits to ensure they are made on a monthly basis. Additionally, management should make the deposits for the three months as soon as possible. Management Response and Corrective Action Plan Response: The required monthly deposit of $700 to the Reserve for Replacement Account was not made in April 2022, due to cash flow issues resulting from high expenses for snow removal in prior months which required completion of a payment plan in order to assure continued service. The required monthly deposits of $700 to the Reserve for Replacement Account were not made in July or August 2022, due to turnover in the Finance Department. A total of $2,100 is due to be deposited into this account; this will be done as soon as possible in 2023. Corrective Action Plan: Deposits to the Reserve for Replacement Account will be prioritized. Payment plans to vendors for non-critical items will be established and followed; payment of management fees to the managing agent, Mental Health America of the Heartland, will be deferred as needed until cash flow improves. Effort will be made to make all payments due to the managing agent within the calendar year, and efforts to seek additional funding for the property to improve overall funds available and cash flow will continue. The President/CEO and Director, Housing will review the Reserve for Replacement Account at semi-monthly cash planning meetings to assure that deposits are not overlooked.