Gates Gardens Housing Development Fund Company, Inc.

Finding 2021-001 Special Tests and Provisions: Replacement Reserve CFDA Number Name of the Federal Program 14.157 Supportive Housing for the Elderly Criteria Per HUD regulations, HUD must approve all withdrawals from the replacement reserve account. Condition One withdrawal of $72,175 and one cash deposit of $140,000 were made during 2021 without HUD authorization. Cause Due to a change in personnel at the company, a withdrawal and deposit from replacement reserve account were made without HUD approval. Context When performing our audit, we tested all withdrawals and deposits, from the reserve for replacement account and noted that one withdrawal and one deposit during the year were made without HUD authorization. Questioned Costs None noted Effect The Company did not comply with HUD?s replacement reserve requirements. Recommendation We recommend that the Company deposit $72,175 and withdrawal $140,000 for the 2021 unauthorized withdrawal and deposit and limit the personnel that can transfer funds from replacement reserve account. Views of the Responsible Official See attached Corrective Action Plan.

Finding 2021-002 Reporting CFDA Number Name of the Federal Program 14.157 Supportive Housing for the Elderly Criteria The Entity?s Uniform Guidance submission to the Federal Audit Clearinghouse ("FAC") was due within nine months of its year end. Condition The Entity?s Uniform Guidance submission to the FAC was not filed on time within nine months of the end of its fiscal year. Cause There were personnel changes at the management company which caused a delay in concluding the audit on a timely basis. Context When performing our audit we noted that the Uniform Guidance submission to the FAC was not filed on a timely basis. Questioned Costs None noted Effect The Entity was not in compliance with the requirement to complete the filing required by the Uniform Guidance within nine months of its year end, and therefore, the Entity cannot be considered a low risk auditee. Recommendation We recommend the Entity's Uniform Guidance submission to the FAC be filed within nine months of its year end as required. Views of the Responsible Official See attached Corrective Action Plan. Section IV ? Summary of Prior Year?s Audit Findings There were no prior year findings.

2019-001: Project Rental Assistance Billing CFDA Number: 14.157 Number of Federal Program or Cluster: Supportive Housing for the Elderly Agency: U.S. Department of Housing and Urban Development Criteria In accordance with the Entity?s project rental assistance contract and HUD regulations, rents may only be billed at approved rate by HUD. Condition The incorrect contract rate was billed on HAP vouchers during 2019. Context During our gross rent calculation, it was noted total income was higher than allowed rental income per contract rent. It was determined that these increased balances were due to HUD voucher overbillings due to incorrect rent charged. Effect The entity has over billed HUD for PRAC subsidy. Cause Internal controls currently in place over billing and processing of HUD approved contract rent. Recommendation Although the excess billing was unintentional and due to human error, we recommend the management company evaluate its internal controls and implement policies to mitigate the chance of overbilling of the approved contract rents. Views of responsible officials and planned corrective action See Corrective Action Plan in Appendix A Section IV ? Summary Schedule of Prior Audit Findings There were no prior year audit findings.

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