Kay Goss Apartments, Inc.Non-Profit

Findings and Questioned Costs – Major Federal Award Programs Audit U.S. Department of Housing & Urban Development Finding 2024-001 – Reserve for Replacements, Federal Asset Listing Number 14.181 Finding Resolution Status – Unresolved Information on Universe Population Size – N/A Sample Size Information – N/A Identification of Repeat Finding and Finding Reference Number – N/A Criteria - HUD requires monthly deposits to be made to the replacement reserve account on a timely basis. Statement of Condition - The replacement reserve account is underfunded in the amount of $777 for the year ended June 30, 2024. Cause - The Organization is experiencing cash flow shortages due to high vacancies. The management company is working to reduce vacancies to allow for a more stable cash flow to enable the Organization to make the required monthly deposits on a timely basis. Effect or Potential Effect - The Organization’s replacement reserve account is underfunded $777 at year end. Auditor Non-Compliance Code – N – Reserve for Replacements Deposits Questioned Costs – Zero Reporting views of Responsible Officials – agrees with finding. Recommendation - Deposit shortage should be funded as soon as possible. Auditor’s Summary of the Auditee’s Comments on the findings and Recommendations – The auditee’s comments appear to be accurate and consistent with the auditor finding. Response indicator – Agree Completion date - 6/30/2025 Response - Shortage will be funded prior to June 30, 2025.

U.S. Department of Housing & Urban Development Finding 2022-001 - Reserve for Replacements, Federal Asset Listing Number 14.181 Finding Resolution Status - Unresolved Information on Universe Population Size - N/A Sample Size Information - N/A Identification of Repeat Finding and Finding Reference Number - This finding is a repeat of previous year findings 2021-001 and 2020-001. Criteria - HUD required monthly deposits to be made to the replacement reserve account on a timely basis. Statement of Condition - The replacement reserve account is underfunded in the amount of $7,845 for the year ended June 30, 2022, which consists of $1,961 from the year ended June 30 2020, $2,942 from the year ended June 30, 2021, and $2,942 from the year ended June 30, 2022. Cause - The Organization is experiencing cash flow shortages due to high vacancies. The management company is working to reduce vacancies to allow for a more stable cash flow to enable the Organization to make the required monthly deposits on a timely basis. Effect or Potential Effect - The Organization's replacement reserve account is underfunded $4,903 at year end. Auditor Non-Compliance Code - N - Reserve for Replacement Deposits Questioned Costs - Zero Reporting Views of Responsible Officials - The Organization agrees with the finding and is working to make the required deposits as funds become available. Context - The Organization did no have sufficient operating cash to make the required deposits. Recommendation - The Organization should deposit amounts into the replacement reserve account as soon as possible to properly fund the account. Auditor's Summary of the Auditee's Comments on the Finding and Recommendations - The Organization agrees with the finding and is working to make the required deposits as funds become available. Response Indicator - Agree Completion Date - June 30, 2023 Response - The Organization should deposit amounts into the replacement reserve account as soon as possible to properly fund the account.

U.S. Department of Housing & Urban Development Finding 2021-001 - Reserve for Replacements, CFDA 14.181 Condition - The replacement reserve account is underfunded in the amount of $4,903 for the year ended June 30, 2021, which consist of $1,961 from the year ended June 30, 2020 and $2,942 from the year ended June 30, 2021. Criteria - HUD requires monthly deposits to be made to the replacement reserve account on a timely basis. Effect - The Organization's replacement reserve account is underfunded $4,903 at year end. Cause - The Organization is experiencing cash flow shortages due to high vacancies. The management company is working to reduce the vacancies to allow for a more stable cash flow to enable the Organization to make the required monthly deposits on a timely basis. Recommendation - The Organization should deposit amounts into the replacement reserve account as soon as possible to properly fund the account. Views of Responsible Officials and Planned Corrective Actions - The Organization agrees with the finding and is working to make the required deposits as funds become available.

U.S. Department of Housing & Urban Development Finding 2020-001 - Reserve for Replacements, CFDA 14.181 Condition - The replacement reserve account is underfunded in the amount of $1,959 for the year ended June 30, 2020. Criteria - HUD requires monthly deposits to be made to the replacement reserve account on a timely basis. Effect - The Organization's replacement reserve account is underfunded $1,959 at year end. Cause - The Organization is experiencing cash flow shortages due to high vacancies. The management company is working to reduce vacancies to allow for a more stable cash flow to enable the Organization to make the required monthly deposits on a timely basis. Recommendation - The Organization should deposit amounts in to the replacement reserve account as soon as possible to properly fund the account. Views of Responsible Officials and Planned Corrective Actions - The Organization agrees with the finding and is working to make the required deposits as funds become available.

Federal Program: US Department of Housing and Urban Development CFDA No. 14.181 ? Supportive Housing for Persons with Disabilities Criteria: Kay Goss Apartments, Inc.?s Capital Advance Program Regulatory Agreement, Section 5(c) states mortgagor will establish and maintain a reserve fund for replacements and will deposit an amount equal to $245.17 per month unless a different date or amount is approved in writing by HUD. Condition: The Project failed to deposit one required monthly deposit. Questioned Costs: $-0- Context: The Project did not have sufficient operating cash to make the required deposit. Effect: The required reserve for replacement deposit was not made in accordance with HUD requirements. Cause: The Project was aware of the requirement. However, due to unavailable funds, the deposit was not made. Auditors Recommendation: We recommend the Project establish a process to ensure the required monthly deposits are made timely to the replacement for reserve account. Views of Responsible Officials and Corrective Action: The Project is aware of the required deposit. However, the Project had insufficient cash flow to make the deposit due to a low occupancy rate. The deposit was properly made subsequent to June 30, 2019.