AYER ELDERLY HOUSING PARTNERSHIP, INC.

U.S. Department of Housing and Urban Development CFDA #: 14.157 – Supportive Housing for the Elderly Other Matter/Significant Deficiency Criteria In accordance with HUD regulations, Owners 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 a federally insured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund (Regulatory Agreement, item 5 A). All disbursements from the reserve must be approved by HUD (24 CFR sections 891.405 and 891.605). Condition The Organization did not make all of the required monthly deposits into the replacement reserve account. The Organization has delinquent deposits to reserve for replacement account in the amount of $35,642. Cause The Organization does not generate sufficient cash flow to make the required monthly deposits. Questioned Costs None identified. Context The Organization is required to make monthly deposits into the reserve for replacement account based on an amount as required by HUD. Effect or Potential Effect The Organization’s reserve for replacement account is not sufficiently funded. Repeat Finding No Recommendation Management should review the Organization’s budget to ensure that the replacement reserve is funded in accordance with HUD regulations. Auditee’s Response and Planned Corrective Action See Corrective Action Plan.

Auditee’s Response and Planned Corrective Action With the increase in the contract rents effective January 1, 2025 will be able to timely fund the reserve. Planned Implementation Date of Corrective Action: Immediately Person Responsible for Corrective Action: Kenneth Martin, Executive Director

2020-001 ? Special Tests and Provisions U.S. Department of Housing and Urban Development CFDA #: 14.157 ? Supportive Housing for the Elderly Other Matter/Significant Deficiency Criteria In accordance with HUD regulations, any funds in the project funds account (including earned interest) at the end of the fiscal year shall be deposited in a federally insured account within 60 days following the end of the fiscal year. Withdrawals from this account may be made only for project purposes and with the approval of HUD (24 CFR section 891.400(e)). Condition The Organization had surplus cash of $1,154 and $2,511 at June 30, 2018 and 2019, respectively, which was required to be deposited into a separate residual receipts account within 60 days following year end. The Organization did not make the required annual deposit timely. Cause Sufficient internal controls were not in place which resulted in failure to deposit the required funds into the residual receipts account in a timely manner. Questioned Costs None identified. Context The Organization is only required to make deposits annually into the residual receipts account based on the surplus cash computation. Effect or Potential Effect The Organization could use funds that require HUD?s approval without prior authorization. Repeat Finding Yes. Recommendation - We recommend that the Organization implement procedures to calculate surplus cash at year end. We also recommend the Organization make the required residual receipts deposit within 60 days after the fiscal year end. Auditee?s Response and Planned Corrective Action See Corrective Action Plan.

2020-001 - Special Tests and Provisions Auditee?s Response and Planned Corrective Action We have established the residual receipts account and deposited $3,655 during fiscal year end June 30, 2020. In October 2020, we had also provided a copy of the residual receipts bank statement to HUD in response to their request for proof of residual receipts account. In addition, we have implemented a process to ensure that surplus cash calculation is performed timely and any surplus cash is deposited within 60 days after fiscal year-end. Planned Implementation Date of Corrective Action: Immediately Person Responsible for Corrective Action: Kenneth Martin, Executive Director

2019-001

2019-001 ? Special Tests and Provisions U.S. Department of Housing and Urban Development CFDA #: 14.157 ? Supportive Housing for the Elderly Significant Deficiency Criteria In accordance with HUD regulations, any funds in the project funds account (including earned interest) at the end of the fiscal year shall be deposited in a federally insured account within 60 days following the end of the fiscal year. Withdrawals from this account may be made only for project purposes and with the approval of HUD (24 CFR section 891.400(e)). Condition The Organization had surplus cash of $1,154 and $2,511 at June 30, 2018 and 2019, respectively, which was required to be deposited into a separate residual receipts account within 60 days following year end. The Organization has not established a residual receipts account to make the required annual deposit. Cause Sufficient internal controls were not in place which resulted in failure to deposit the required funds into the residual receipts account. Questioned Costs None identified. Context The Organization is only required to make deposits annually into the residual receipts account based on the surplus cash computation. Effect or Potential Effect The Organization could use funds that require HUD?s approval without prior authorization. Repeat Finding This finding is not a repeat finding.

2019-001 - Special Tests and Provisions Auditee's Response and Planned Corrective Action Please be advised that it has been brought to our attention, that we had surplus cash in the amount of $1,154 and $2,511 over the past two years and should have established a residual receipts account, regardless of these small amounts of surpluses. We have been in operation for over ten years and have not needed to establish this account, however we recognized the requirement establishing said account and on an annual basis after certification by our independent auditors or we will comply with this requirement. Planned Implementation Date of Corrective Action: Immediately Person responsible for corrective action: Kenneth Martin, Executive Director