The ARC of Cape May County, Inc & Affiliate

US Department of Housing and Urban Development HUD Section 811 Capital Advance and Rental Assistance Payments Assistance Listing No. 14.181 Criteria: HUD requires the Project to make monthly deposits to the replacement reserve in accordance with the regulatory agreement. Condition: The Project did not make the required monthly deposits to the replacement reserve during the year under audit. Cause: Management oversight resulted in deposits not being made. The Project did not have adequate procedures in place to monitor compliance with the monthly deposit requirement. Effect: The Project was not in compliance with HUD requirements regarding monthly deposits to the replacement reserve. Perspective Information: At June 30, 2025, cumulative deposits to the replacement reserve were $3,168 less than required. Recommendation: Management should make a catch-up deposit of $3,168 to the replacement reserve and strengthen controls to ensure monthly deposits are made as required. View of Responsible Officials: Management concurs with the finding and agrees with the auditors' recommendation. Management made a deposit of $3,168 on September 29, 2025. No further action is required.

CFO concurs with the finding and agrees with the auditors' recommendation. We are working on implementing policies and procedures to ensure compliance requirements are being met in a timely manner. Management made a deposit of $3,168 on September 29, 2025. No further action is required.