Shiloh Manor, Inc.

Special Tests and Provisions; Supportive Housing for the Elderly, Federal Assistance Listing Number 14.157 Criteria- In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, funds may only be used with the approval of HUD. Condition - As of December 31, 2024, management had not repaid $40,239 due to reserve for replacement. Cause - Inadequate cash flow to fund operations and return of funds to reserve for replacement. Effect or Potential Effect - Shiloh Manor, Inc. is not in compliance with the funding requirement of the reserve for replacement. Questioned Costs - None Context - On December 31, 2017, HUD had approved a loan to operations from the reserve for replacement of $40,239 to be repaid upon receipt of the past due subsidy. When the past due subsidy was received the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. Identification as a Repeat Finding - This is a repeat finding (see prior year finding number 2023-001). Recommendation - Management should work with HUD to execute the loan waiver for the delinquent amount of $40,239. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: In process. Views of Responsible Officials As of December 31, 2024 management has not repaid $40,239 due to reserve for replacement. The owner and agent met with HUD to discuss the loan repayment. It was determined that the loan payment would be deferred and absorbed into the budget-based increase submitted to HUD and currently under review.

Major Federal Award Programs Audit Comments on the Finding and Recommendation We concur with the auditors finding as follows: On December 31, 2017, HUD had approved a loan to operations from the reserve for replacement of $40,239 to be repaid upon receipt of the past due subsidy. When the past due subsidy was received, the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. As of December 31, 2024, management had not repaid $40,239 due to reserve for replacement Action(s) Taken or Planned on the Finding As of December 31, 2024, management has not repaid $40,239 due to reserve for replacement. Additionally, no deposits were made into the reserve for replacement. The owner and agent met with HUD on September 15, 2022 to discuss the loan repayment. It was determined that the loan payment would be deferred and absorbed into the budget-based increase submitted lo HUD and currently in review. This would cover the loan repayment that has been impossible to repay because the property has not operated efficiently since the Residual Receipt swipe of $241,000 in 2017. The finding is repeated as Finding No. 2024-001

2023-001

Activities Allowed or Unallowed; Supportive Housing for the Elderly, Federal Assistance Listing Number 14.157 Criteria - In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, loans are not permitted to be made from project cash without prior authorization from HUD. Condition - During the year ended December 31, 2023, the project paid payroll expenses in the amount of $76 on behalf of an affiliate from project cash without HUD approval. The amount due to the project as of December 31, 2024 is $76. Cause - Procedures were not in place to ensure that cash disbursements of projects funds were limited to project operating costs. Effect or Potential Effect - The payment of $76 is an unauthorized loan and therefore considered to be questioned costs. Questioned Costs - $76 Context - During 2023, the project paid payroll expenses for an affiliated entity from project cash account resulting in a receivable in the amount of $76. Identification as a Repeat Finding - This is a repeat finding (see prior year finding number 2023-002). Recommendation - Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: G - Unauthorized loans from project assets. Finding Resolution Status: Completed. Views of Responsible Officials - Management reimbursed the funds to the project on September 4, 2025.

Major Federal Award Programs Audit Comments on the Finding and Recommendation During the year ended December 31, 2023, the project paid payroll xpenses in the amount of $76 on behalf of an affiliate from project cash without HUD approval. The amount due to the project as of December 31, 2024 is $76. Action(s) Taken or Planned on the Finding As of December 31, 2024 the $76 of payroll expenses was not reimbursed from the affiliate project account. This has been processed in the current year on September 5,2025.

2023-002

Special Tests and Provisions; Supportive Housing for the Elderly, Federal Assistance Listing Number 14.157 Criteria - HUD regulatory agreement for Section 202 Supportive Housing for the Elderly requires that the project make timely monthly deposits to its replacement reserve. Condition - During the year ended December 31, 2024, the monthly deposits of $5,500 were not timely made. One payment was not made until February 2025. Cause - The project does not generate sufficient cash flow to make the required monthly deposits. Effect or Potential Effect - Failure to make monthly payments resulted in underfunding the replacement reserve and a violation of the regulatory agreement. Questioned Costs - None Context - The deposits were not made timely and only eleven deposits were made as of December 31, 2024. The twelfth deposit was made in February 2025. Identification as a Repeat Finding - This is a repeat finding (see prior year finding number 2023-003). Recommendation - Management should review the project budget to ensure that the replacement reserve is funded timely and in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: Completed. Views of Responsible Officials - The last amount of $5,500 of the reserve funding for 2024 was accounted for in February 2025 to fully fund for the 2024 year.

Major Federal Award Programs Audit Comments on the Finding and Recommendation During the year ended December 31, 2024, the project did not make the required monthly deposits to the replacement reserve in the amount of $66,000 as $5,500 was not made timely. The project is required to make timely monthly deposits to the reserve in the amount of $5,500 per month. Action(s) Taken or Planned on the Finding As of December 31, 2024 the reserve funding amount owed for 2024 in the amount of $5,500. This was deposited to the reserve account on February 9, 2025.

2023-003

Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, funds may only be used with the approval of HUD. Condition As of December 31, 2023, management had not repaid $40,239 due to reserve for replacement. Additionally, during 2022, the property transferred $9,000 of reserve for replacement funds to operations to fund payroll and operating payables which was not reimbursed as of December 31, 2023. Cause Inadequate cash flow to fund operations and return of funds to reserve for replacement. Effect or Potential Effect Shiloh Manor, Inc. is not in compliance with the funding requirement of the reserve for replacement. Questioned Costs None. Context On December 31, 2017, HUD had approved a loan to operations from the reserve for replacement of $40,239 to be repaid upon receipt of the past due subsidy. When the past due subsidy was received the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. During 2022, the property transferred $9,000 of reserve for replacement funds to operations to fund payroll and operating payables; the funds have not been reimbursed as of December 31, 2023. Identification as a Repeat Finding This is a repeat finding (see prior year finding number 2022-001). Recommendation Management should start making monthly repayments on the $9,000 loan as established by HUD. Management should work with HUD to execute the loan waiver for the delinquent amount of $40,239. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: In process. Views of Responsible Officials The transfer from reserve of $9,000 was not returned as of 2023. A conversation with HUD on May 29, 2024, lead to a decision being made with a payment plan of $1,500 per month to start on June 1, 2024. As of December 31, 2023, there was a meeting with HUD representatives on March 23, 2023, which resulted in the decision for the waiver of the balance owed to the reserve of the $40,239. We are awaiting documentation from HUD on this decision.

a. Comments on the Finding and Recommendation We concur with the auditors finding as follows: In 2017, HUD had approved a loan to operations from the reserve for replacement to be repaid upon receipt of the past due subsidy. When the subsidy was received, the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. The loan has not yet been repaid. During 2022, property transferred $9,000 of reserve for replacement funds to operations to fund payroll and operating payables; the funds have not been reimbursed as of December 31, 2023. b. Action(s) Taken or Planned on the Finding The 2022 transfer from reserve of $9,000 was not returned as of 2023. A conversation with HUD on May 29, 2024, lead to a decision being made with a payment plan of $1,500 per month to start on June 1, 2024. As of December 31, 2023, there was a meeting with HUD representatives on March 23, 2023, resulted in the decision for the waiver of the balance owed to the reserve of the $40,239. We are awaiting documentation from HUD on this decision.

2022-001

Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, loans are not permitted to be made from project cash without prior authorization from HUD. Condition During the year ended December 31, 2023, the project paid payroll expenses in the amount of $76 on behalf of an affiliate from project cash without HUD approval. The amount due to the project as of December 31, 2023 is $76. Cause Procedures were not in place to ensure that cash disbursements of projects funds were limited to project operating costs. Effect or Potential Effect The payment of $76 is an unauthorized loan and therefore considered to be questioned costs. Questioned Costs $76 Context During 2023, the project paid payroll expenses for an affiliated entity from project cash account resulting in a receivable in the amount of $76. Identification as a Repeat Finding This is a repeat finding (see prior year finding number 2022-002). Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: G - Unauthorized loans from project assets. Finding Resolution Status: In process. Views of Responsible Officials The finding for the $76 includes items deducted from Shiloh Manor due to an error with the setup of payroll processing with Paychex, which resulted in a few items deducted from the bank account that should have been for First Housing Corp. It was eventually corrected with Paychex in 2024 and the amount was accounted for as accounts receivable - other as a due from First Housing Corp. A transfer will be made in 2024 for the total balance due of $76 from First Housing Corp. to Shiloh Manor to correct the error. Department of Housing and Urban Development

a. Comments on the Finding and Recommendation During the year ended December 31, 2023, the project paid payroll expenses in the amount of $76 on behalf of an affiliate from the project cash without HUD approval. The amount due to the project as of December 31, 2023 is $76. b. Action(s) Taken or Planned on the Finding 1 The finding for the $76 are items deducted from Shiloh Manor due an error with the setup of payroll processing with Paychex that resulted in a few items deducted from the bank account that should have been for First Housing Corp. It was eventually fixed with Paychex in 2024 and the amount was accounted for as Accounts Receivable - Other as a due from First Housing Corp. A transfer will be made in 2024 for the total of the balance due of $75.60 from First Housing Corp to Shiloh Manor to correct.

2022-002

Criteria HUD regulatory agreement for Section 202 Supportive Housing for the Elderly requires that the project make timely monthly deposits to its replacement reserve. Condition During the year ended December 31, 2023, the project did not make the required monthly deposits to the replacement reserve in the amount of $66,000 as $5,500 was not made timely. The project is required to make timely monthly deposits to the reserve in the amount of $5,500 per month. Cause The project does not generate sufficient cash flow to make the required monthly deposits. Effect or Potential Effect Failure to make monthly payments resulted in underfunding the replacement reserve and a violation of the regulatory agreement. Questioned Costs None. Context During 2023, management resumed making deposits into the reserve for replacement; the deposits were not made timely and only eleven deposits were made as of December 31, 2023. The twelfth deposit was made in February 2024. Identification as a Repeat Finding This is a repeat finding (see prior year finding number 2022-001). Recommendation Management should review the project budget to ensure that the replacement reserve is funded timely and in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: Completed. Views of Responsible Officials The last amount of $5,500 of the reserve funding for 2023 was missed and then accounted for in February 2024 to fully fund for the 2023 year.

a. Comments on the Finding and Recommendation During the year ended December 31, 2023, the project did not make the required monthly deposits to the replacement reserve in the amount of $66,000 as $5,500 was not made timely. The project is required to make timely monthly deposits to the reserve in the amount of $5,500 per month. b. Action(s) Taken or Planned on the Finding The last amount of $5,500 for the reserve funding for 2023 was missed and then accounted for in February 2024 to fully fund for the 2023 year.

2022-001

Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly and regulatory agreement, undocumented disbursements are not permitted to be made from project cash and shall be an ineligible project expense. Condition During the year ended December 31, 2023, the project paid real estate tax expenses in the amount of $9,400 from project cash while a tax abatement agreement was in effect. Cause City of Middletown Tax Assessor submitted real estate tax bill that was paid by management during the current year while property has an active real property tax abatement in place. Effect or Potential Effect The payment of $9,400 is an unauthorized distribution and therefore considered to be questioned costs. Questioned Costs $9,400 Context During 2023, the project paid $9,400 of real estate tax expense while a tax abatement agreement was in effect resulting in unauthorized distribution. Identification as a Repeat Finding None. Recommendation Management should implement procedures to ensure payments of this nature are not made in the future. Management should contact City of Middletown officials to investigate the nature of the bill and request refund of funds back to project cash. Auditor Noncompliance Code: H - Unauthorized distribution from project assets. Finding Resolution Status: In process. Views of Responsible Officials Management contacted City of Middletown Tax Assessor who has agreed to reverse the bill. Management is working with the assessor to get the funds reimbursed.

a. Comments on the Finding and Recommendation During the year ended December 31, 2023, the project paid real estate tax expenses in the amount of $9,400 from project cash while a tax abatement agreement was in effect. b. Action(s) Taken or Planned on the Finding Management contacted City of Middletown Tax Assessor who has agreed to reverse the bill. Management is working with the assessor to get the funds reimbursed.

Statement of Condition During the year ended December 31, 2022, no deposits were made into the reserve for replacement. Management had not repaid $40,239 due to reserve for replacement. Additionally, during 2022, the property transferred $9,000 of reserve for replacement funds to operations to fund payroll and operating payables. Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, HUD projects are required to maintain monthly deposits to the reserve for replacement. Funds may only be used with the approval of HUD. Currently, the property is required to make monthly deposits of $5,500 to the replacement reserve. Questioned Costs None. Effect Shiloh Manor, Inc. is not in compliance with the requirement to fund the reserve for replacement monthly. Context On December 31, 2017, HUD had approved a loan to operations from the reserve for replacement of $40,239 to be repaid upon receipt of the past due subsidy. When the past due subsidy was received the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. During 2022, the property transferred $9,000 of reserve for replacement funds to operations to fund payroll and operating payables; the funds have not been reimbursed as of December 31, 2022. The monthly payments of $5,500 into the reserve for replacement could not be resumed due to poor cash flow. Cause Inadequate cash flow to fund operations and required reserve for replacement funding. Identification as a Repeat Finding Finding No. 2018-002, 2019-004, 2020-001 and 2021-001 Recommendation Management should contact HUD to address the delinquent amounts. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: In process. Reporting Views of Responsible Officials and Planned Corrective Action Management is in communication with HUD to address the finding. However, management is not able to commit to any type of repayment plan on 2017 and 2022 loans until the property is in a positive operating cash flow position. Management will transfer $9,000 in 2023 to reimburse reserve for replacement for 2022 payroll funding withdrawal.

Current Findings on the Schedule of Findings, Questioned Costs and Recommendations Financial Statement Audit None Finding 2022-001 - Major Federal Award Programs Audit Comments on the Finding and Recommendation We concur with the auditors finding as follows: In 2017, HUD had approved a loan to operations from the reserve for replacement to be repaid upon receipt of the past due subsidy. When the subsidy was received, the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. The loan has not yet been repaid. During 2022, property transferred $9,000 of reserve for replacement funds to operations to fund payroll, the funds have not been reimbursed as of 12/31/22. Additionally, monthly deposits to the reserve for replacement have not been resumed due to poor cash flow. Action(s) Taken or Planned on the Finding In September 2022, Owner, Management, and HUD met and a plan was made to reset and waived the past due required reserve funding while a Budget Budget Based increase was submitted and approved and new reserve funding amounts established. This was completed and new reserve requirements established effective February 2024.

2021-001

Statement of Condition During the year ended December 31, 2021, the project overpaid payroll expenses in the amount of $3,594 from project cash without HUD approval. During 2022, only partial payment was refunded to the project. The amount due to project as of December 31, 2022 is $2,212. Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, loans are not permitted to be made from project cash without prior authorization from HUD. Questioned Costs $3,594 Effect The payment of $3,594 is unauthorized loans and therefore considered to be questioned costs. Context During 2021, the property overpaid holiday bonus to one employee. The bonus was $300 but the property paid $3,894, resulting in payroll bonus overpayment of $3,594. Cause Procedures were not in place to ensure that cash disbursements of projects funds were limited to project operating costs. Identification as a Repeat Finding Finding No. 2021-002 Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: G - Unauthorized loans from project assets. Finding Resolution Status: Completed. Reporting Views of Responsible Officials and Planned Corrective Action The employee began repayment of the overpaid payroll in May 2022 as a payroll deduction and the funds were fully reimbursed back to the project in 2023.

Finding 2022-002 ? Major Federal Award Programs Audit Comments on the Finding and Recommendation We concur with the auditors finding as follows: During the year ended December 31, 2022, the project overpaid payroll expenses in the amount of $2,212 from project cash without HUD approval. The amount due to project as of December 31, 2022 is $2,212. Action(s) Taken or Planned on the Finding Employee had a payment plan put in place for repayment over a 26 month period. The employee continued with the employee repayment in 2023 and the last installment was made on the payroll date 8/11/2023. Regards Kimalee Williams Management Agent

2021-002

C. Findings and Questioned Costs - Major Federal Award Programs Audit Department of Housing and Urban Development Finding No. 2021-001; Supportive Housing for the Elderly, Federal Assistance Listing Number 14.157 Statement of Condition During the year ended December 31, 2021, no deposits were made into the reserve for replacement. Management had not repaid $40,239 due to reserve for replacement. Additionally, during 2021, the property transferred $3,550 of reserve for replacement funds to operations to fund payroll. Criteria Monthly deposits to the reserve for replacement of $5,500 are currently required. Questioned Costs None Effect Shiloh Manor, Inc. is not in compliance with the requirement to fund the reserve for replacement monthly. Context At December 31, 2017, HUD had approved a loan to operations from the reserve for replacement of $40,239 to be repaid upon receipt of the past due subsidy. When the past due subsidy was received the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. During 2021, property transferred $3,550 of reserve for replacement funds to operations to fund payroll, the funds have not been reimbursed as of December 31, 2021. The monthly payments of $5,500 into the reserve for replacement could not be resumed due to poor cash flow. Cause Inadequate cash flow to fund operations and required reserve for replacement funding. Recommendation Management should contact HUD to address the delinquent amounts. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: In process. Reporting Views of Responsible Officials and Planned Corrective Action Management is in communication with HUD to address the funding. However, management is not able to commit to any type of repayment plan on 2017 loan until the property is in a positive operating cash flow position. Subsequently, management transferred $3,550 to reimburse reserve for replacement for 2021 payroll funding withdrawal.

Project Legal Name: Shiloh Manor, Inc. HUD Project No.: 017-EE012 Audit Firm: CohnReznick, LLP Period covered by the audit:1/1/2021 through 12/31/2021 Corrective Action Plan prepared by: Name: Kimalee Williams Position: Management Agent Telephone Number: 860-528-5000 A. Current Findings on the Schedule of Findings, Questioned Costs and Recommendations 1. Financial Statement Audit None 2. Finding 2021-001 - Major Federal Award Programs Audit a. Comments on the Finding and Recommendation We concur with the auditors finding as follows: In 2017, HUD had approved a loan to operations from the reserve for replacement to be repaid upon receipt of the past due subsidy. When the subsidy was received, the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. The loan has not yet been repaid. During 2021, property transferred $3,550 of reserve for replacement funds to operations to fund payroll, the funds have not been reimbursed as of 12/31/21. Additionally, monthly deposits to the reserve for replacement have not been resumed due to poor cash flow. b. Action(s) Taken or Planned on the Finding The owner and agent met with HUD on September 15th to discuss the loan repayment. It was determined that the loan payment would be deferred and absorbed into the budget based increase submitted to HUD and currently in review. This would cover the loan repayment that has been impossible to repay because the property has not operated efficiently since the Residual Receipt swipe of $241,000 in 2017. Regards Kimalee Williams Management Agent

2020-001

Finding No. 2021-002; Supportive Housing for the Elderly, Federal Assistance Listing Number 14.157 Statement of Condition During the year ended December 31, 2021, the project overpaid payroll expenses in the amount of $3,594 from project cash without HUD approval. The amount due to project as of December 31, 2021 is $3,594. Criteria Loans are not permitted to be made from project cash without prior authorization from HUD. Questioned Costs 3,594 Effect The payment of $3,594 is unauthorized loans and therefore considered to be questioned costs. Context During 2021, the property overpaid holiday bonus to one employee. The bonus was $300 but the property paid $3,894, resulting in payroll bonus overpayment of $3,594. Cause Procedures were not in place to ensure that cash disbursements of project funds were limited to project operating costs. Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: G - Unauthorized loans from project assets. Finding Resolution Status: In process. Reporting Views of Responsible Officials and Planned Corrective Action The employee began repayment of the overpaid payroll in May 2022 as a payroll deduction until the funds are fully reimbursed back to the project.

Project Legal Name: Shiloh Manor, Inc. HUD Project No.: 017-EE012 Audit Firm: CohnReznick, LLP Period covered by the audit:1/1/2021 through 12/31/2021 Corrective Action Plan prepared by: Name: Kimalee Williams Position: Management Agent Telephone Number: 860-528-5000 A. Current Findings on the Schedule of Findings, Questioned Costs and Recommendations 1. Financial Statement Audit None 2. Finding 2021-002 - Major Federal Award Programs Audit a. Comments on the Finding and Recommendation We concur with the auditors finding as follows: During the year ended December 31, 2021, the project overpaid payroll expenses in the amount of $3,594 from project cash without HUD approval. The amount due to project as of December 31, 2021 is $3,594. b. Action(s) Taken or Planned on the Finding The employee began repayment of the overpaid payroll in May 2022 as a payroll deduction until the funds are fully reimbursed back to the project. The error in payment was due to an error keying in an annual bonus to the employee Regards Kimalee Williams Management Agent

Department of Housing and Urban Development Finding No. 2020-001; Supportive Housing for the Elderly, CFDA 14.157 Statement of Condition During the year ended December 31, 2020, no deposits were made into the reserve for replacement. Criteria Monthly deposits to the reserve for replacement of $5,500 are currently required. Questioned Costs None Effect Shiloh Manor, Inc. is not in compliance with the requirement to fund the reserve for replacement monthly. Context At December 31, 2017, HUD had approved a loan to operations from the reserve for replacement of $40,239 to be repaid upon receipt of the past due subsidy. When the past due subsidy was received the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. Additionally, the monthly payments of $5,500 into the reserve for replacement could not be resumed due to poor cash flow. Cause Inadequate cash flow to fund operations and required reserve for replacement funding. Recommendation Management should contact HUD to address the delinquent amounts. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: In process. Reporting Views of Responsible Officials and Planned Corrective Action Management is in communication with HUD to address the funding. However, management is not able to commit to any type of repayment plan until the property is in a positive operating cash flow position. Additionally, as of May 1, 2019, Faith Asset Management, LLC has contracted with Wildwood Property Management, LLC for accounting services and support of their HUD sites. The new internal audit procedures practices by Wildwood will eliminate the recurrence of the finding.

a. Comments on the Finding and Recommendation We concur with the auditors finding as follows: In 2017, HUD had approved a loan to operations from the reserve for replacement to be repaid upon receipt of the past due subsidy. When the subsidy was received, the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. The loan has not yet been repaid and monthly deposits to the reserve for replacement have not been resumed due to poor cash flow. b. In 2020, we reached out to HUD with a request for the suspension of the monthly reserve funding due to the poor cash flow that was not approved. HUD responded that we need to submit detailed information on the expenses that occurred during 2018 - 2020 that resulted in not being able to repay the loan from the reserve and not being able to fund monthly to the reserve.

2019-004

Department of Housing and Urban Development Finding No. 2019-002; Supportive Housing for the Elderly, CFDA 14.157 Statement of Condition During testing of internal controls and compliance over cash disbursement for the year ended December 31, 2019, we noted the controls over approval for payment were inconsistently applied. Our testing identified exceptions related to lack of documentation in authorization for payment in 40 out of 40 invoices tested. Criteria Management has written procedures governing approval of invoices and filing of invoices. The Regulatory agreement also requires that any undocumented expense or distribution shall be an ineligible Project expense. Questioned Costs None. Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement Section 16. Context We identified exceptions in 40 out of 40 invoices tested in lack of documentation of approval for payment. Cause While policies were in place during the year, cash disbursement approvals performed by the site management were sent and retained in an electronic email format. Once approved, emailes were deleted after 30 days creating inconsistent application of the policies and procedures. Recommendation We recommend that management implement a procedure for saving cash disbursement e-mail approvals electronically on a shared network drive, rather than in an email box. Auditor's Noncompliance Code: S - Internal Control Deficiencies Reporting Views of Responsible Officials Effective May 1, 2019, Faith Asset Management has contracted with Wildwood Property Management, LLC to provide consistent levels of experienced staff. Additionally, management will implement a process to keep email documentation approval on a server.

2. Finding 2019-002 ? Major Federal Award Programs Audit a. Comments on the Finding and Recommendation We concur with the auditors finding as follows: During testing of internal controls and compliance over cash disbursement for the year ended December 31, 2019, we noted the controls over approval for payment were inconsistently applied. Our testing identified exceptions related to lack of documentation in authorization for payment in 40 out of 40 invoices tested. b. Action(s) Taken or Planned on the Finding Effective May 1, 2019, Faith Asset Management has contracted with Wildwood Property Management, LLC to provide consistent levels of experienced staff. Additionally, management will implement a process to keep email documentation approval on a server.

2018-001

Department of Housing and Urban Development Finding No. 2019-003; Supportive Housing for the Elderly, CFDA 14.157 Statement of Condition During the year ended December 31, 2017, management over paid the management fee by $5,131. At December 31, 2018 the overpayment was partially repaid by under paying the 2018 management fee, however $2,861 remained due from the management agent at December 31, 2018. During the year ended December 31, 2019, management over paid the management fee by 4,658 resulting in $7,519 due from management agent and is reflected as other asset. Criteria Management fee is earned based on 8.8% of rental income received. Questioned Costs The overpayment of $7,519 has been included as an other asset. Effect The overpaid amount outstanding is an unauthorized distribution and therefore considered to be questioned costs. Context At December 31, 2017 based on rental income received the management fee expense for the year was $35,709; management calculated a fee due and paid $40,840 resulting in an overpayment of $5,131. Payment of the management fee for 2018 was reduced by $2,270; At December 31, 2019, management calculated a fee due and paid $43,205 resulting in additional overpayment of $4,658. Paymet of the management fee for 2019 was increased to $7,519 however the balance of the overpayment was not repaid by December 31, 2019. Cause Lack of management oversight caused management fees due back to the property to remain outstanding. Recommendation Management should establish internal controls and procedures to ensure that the management fee is properly calculated by including a reconciliation to the internal financial statements each month. Additionally the balance of $7,519 should be repaid immediately. Auditor Noncompliance Code: G-Unauthorized loans from project assets. Finding Resolution Status: In process. Reporting Views of Responsible Officials and Planned Corrective Action Management will refund the outstanding amount. Subsequently, $1,380 credit was issued on balance due from the management agent.

3. Finding 2019-003 - Major Federal Award Programs Audit a. Comments on the Finding and Recommendation We concur with the auditors finding as follows: During the years ended December 31, 2017 and December 31, 2019, management overpaid the management fee by $5,131 and $4,658, respectively. During 2018, the fee was partially repaid, however $7,519 remains due from the management agent at December 31, 2019. b. Action(s) Taken or Planned on the Finding The amount due from the management agent is reflected as due from management agent as of December 31, 2019. Subsequently, $1,380 credit was issued on balance due from the management agent.

2018-001

Finding No. 2019-004; Supportive Housing for the Elderly, CFDA 14.157 Statement of Condition During the year ended December 31, 2019, no deposits were made into the reserve for replacement. Criteria Monthly deposits to the reserve for replacement of $5,500 are currently required. Questioned Costs None Effect Shiloh Manor is not in compliance with the requirement to fund the reserve for replacement monthly. Context At December 31, 2017 HUD had approved a loan to operations from the reserve for replacement of $40,239 to be repaid upon receipt of the past due subsidy. When the past due subsidy was received the property was unable to repay the loan because of an unexpected increase in vacancies as a result of tenant turnover. Additionally, the monthly payments of $5,500 into the reserve for replacement could not be resumed due to poor cash flow. Cause Inadequate cash flow to fund operations and required reserve for replacement funding. Recommendation Management should contact HUD to address the delinquent amounts. Auditor Noncompliance Code: N - Reserve for replacement deposits. Finding Resolution Status: In process. Reporting Views of Responsible Officials and Planned Corrective Action Management will contact their HUD asset manager.

4. Finding 2019-004 - Major Federal Award Programs Audit a. Comments on the Finding and Recommendation We concur with the auditors finding as follows: During 2019, no deposits were made into the reserve for replacement account. b. Action(s) Taken or Planned on the Finding We plan to address this issue with our HUD asset manager.

2018-002

GSA_MIGRATION

GSA_MIGRATION

2017-001

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION