Margaret Ford Manor, Ltd.

As a result of our audit, we proposed nineteen (19) audit adjusting entries to correct the books as originally provided to us for audit. Most of these adjustments were material to the financial statements. Adjustments were necessary for basis areas such as prepaid insurance, replacement reserve, fixed assets, accumulated depreciation, accrued wages and payroll taxes, capital lease obligation, accrued expenses, note payable-insurance premium finance, mortgage payable, revenue, and expenses.

During our testing of cash disbursements, we noted the following: 1.      The prior year's vendor’s invoices were recorded in the current year's books and records. Five (five) exceptions were noted. 2.      No approval on the vendor’s invoice. Nineteen (19) exceptions were noted.

The Enterprise Income Verifications (EIV) were not obtained after 90 days from the date of move-in from the following tenants:

During our Testing of Eligibility, we noted that the tenants’ utility allowance effective date of the annual gross rent approved by HUD was not properly stated on the lease and Form-HUD 50059 Owner’s Certification of Compliance with HUD’s Tenant Eligibility and Rent Procedures as follows:

During our Testing of Move-Outs, the following tenant’s security deposit was not refunded within 30 days after the move-out date:

Section 202 Capital Advance CFDA 14.157 and Section 8 Housing Assistance Payments-CFDA 14.195 Cash Management and Eligibility-Contract Period Ended December 31, 2021-Contract Rent. Condition: A letter dated 2/7/2022 from Pastor Kevin Anthony Ford, President of Margaret Ford Manor, Ltd. to Ms. Mary Amador, President of Active Residential Management Services, Inc. (Former Management Agent). Per the fourth (4) paragraph of the letter, it stated, ?While reviewing the data in the Project?s OneSite software, it was immediately discovered that the Gross Rent Change for 2020 were never upload to TRACS. As the Gross Rent Changes include a significant Rent decrease, the Project continued to bill HUD a higher rent than was permitted by the HUD Rental Schedule and PRAC Contract renewal.? In summary, all units were billed at the Old Contract Rents of $1,564 for the effective date of 6/16/2019 as opposed to the New Contract Rents of $1,383 for the effective date of 6/16/2020 and 6/16/2021. Per unit, Contract Rents decreased by $181 or 12%. For Housing Owners? Certification and Application for Housing Assistance for 11/2021, the Regular Tenant Assistance Payment was $62,775 in which an Adjustment to Regular Tenant Assistance Payments for the period 6/01/2000 through 10/31/2021 for the total of ($169,072) to correct Contract Rents that was effective 6/16/2020 and 6/16/2021. The Adjustment to Regular Tenant Assistance Payments causes a balance remaining of ($106,297) which is excess income not returned to HUD.View of Responsible Officials: Management agrees with the auditor?s recommendation.

Section 202 Capital Advance CFDA 14.157 Activities Unallowed -Contract Period Ended December 31, 2021-Unathroized LoanCondition: For period 2/1/2021 through 3/29/2021, an employee of Victoria Jennings Residences, Ltd (related party due to common Board Members) worked at Margaret Ford Manor performing maintenance services totaling $4,261.03. This related party transaction was approved by the former management agent and is recorded as 2390-Miscellaneous long term liabilities as of 12/31/2021. View of Responsible Officials: Management agrees with the auditor?s recommendation.

Section 202 Capital Advance CFDA 14.157 and Section 8 Housing Assistance Payments-CFDA 14.195 Eligibility-Contract Period Ended December 31, 2021-Contract Rent. Condition: During our Testing of Tenant Eligibility, three tenants selected for testing was charged the 6/16/2019 Old Contract Rent of $1,564 as opposed to the 6/16/2020 and 6/16/2021 Contract Rent of $1,383 as the following:"See Schedule of Findings and Questioned Cost for chart/table" View of Responsible Officials: Management agrees with the auditor?s recommendation.

Section 202 Capital Advance CFDA 14.157 and Section 8 Housing Assistance Payments-CFDA 14.195 Eligibility-Contract Period Ended December 31, 2021 ?Enterprise Income Verification (EIV)Condition: The Enterprise Income Verification (EIV) was not obtained after 90 days from the date of move in from the following tenants: "See Schedule of Findings and Questioned Costs for chart/table" View of Responsible Officials: Management agrees with the auditor?s recommendation.

Section 202 Capital Advance CFDA 14.157 and Section 8 Housing Assistance Payments-CFDA 14.195 Eligibility-Contract Period Ended December 31, 2021 -Rent Prorate. Condition: During the Testing of Move-In, the following tenant paid a portion of the first month rent at move-in: "See Schedule of Findings and Questioned Costs for chart/table" View of Responsible Officials: Management agrees with the auditor?s recommendation.

Section 202 Capital Advance CFDA 14.157 and Section 8 Housing Assistance Payments-CFDA 14.195 Eligibility-Contract Period Ended December 31, 2021 ?Waiting List. Condition: The following tenants move-in were not on the waiting list as of December 31, 2020:"See Schedule of Findings and Questioned Costs for chart/table" View of Responsible Officials: Management agrees with the auditor?s recommendation.

Section 202 Capital Advance CFDA 14.157 and Section 8 Housing Assistance Payments-CFDA 14.195 Eligibility-Contract Period Ended December 31, 2021 ?Move-Out. Condition: During the Testing of Move-out, tenants? files were unavailable for testing for the following: "See Schedule of Findings and Questioned Costs for chart/table" View of Responsible Officials: Management agrees with the auditor?s recommendation.

Section 202 Capital Advance CFDA 14.157 and Section 8 Housing Assistance Payments-CFDA 14.195 Eligibility-Contract Period Ended December 31, 2021 ?Rejected Tenant Listing. During our Testing of Rejected Applicant, the Project did not provide a listing of rejected (denied) applicants for the period 1/01/2021 through 12/31/2021 for testing. Views of Responsible Officials: Management agrees with the auditor?s recommendation.

Section 8 Housing Assistance Payments-CFDA 14.195 Special Tests and Provisions -Contract Period Ended December 31, 2021?Work Orders. Condition: During the Testing of Work Orders, the following work orders were unavailable for testing: "See Schedule of Finding and Questioned Cost for table".Views of Responsible Officials: Management agrees with the auditor?s recommendation.

Section 202 Capital Advance CFDA 14.157 -Allowable Costs/Cost Principles- Contract Period Ended December 31, 2021? Allowable Cost-Internal Controls over Cash Disbursements Condition: During our testing of cash disbursements, we noted the following:1. No approval for payment noted on vendor?s invoices. Thirty-two (32) exceptions were noted.2. Stamp paid and check number not posted on vendors? invoices to prevent resubmission. Ten (10) exceptions were noted.Vendors? invoices were unavailable for examination purposes. Seven (7) exceptions were noted.3. Vendor?s invoice paid twice for the same service, but different in cost. Two (2) exceptions were noted.4. Electronic payment does not show the payee?s name. Thirteen (13) exceptions were noted.5. Vendor?s invoice paid for service to St. Paul Church. One (1) exception was noted.6. Project paid Victoria Jennings Residences payroll for janitorial services. Three (3) exceptions were noted.Views of Responsible Officials: Management agrees with the auditor?s recommendation.

FINDING NO. 2020-001: Section 8 Housing Assistance Payments, CFDA 14.195 Condition: The Project did not provide adequate supporting documentation for disbursements. Criteria: All disbursements must be supported by invoices or other supporting documentation and the supporting documentation must be in the name of the project. Effect: Appropriate monitoring and verification that only allowable disbursements be made cannot be established without having adequate, accurate, and complete supporting documentation for each disbursement. Context: Of 25 disbursements tested, six did not have supporting documentation generated outside of the Organization. Cause: The Organization?s internal controls over compliance were not effectively monitored. Recommendation: We recommend the Organization enforce their policies and procedures regarding the proper completion of disbursements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation.

FINDING NO. 2019-001: Section 202 Direct Loan, CFDA 14.157 Condition: The replacement reserve was used in place of the operating account to pay operational bills during the transition to a new management company. Criteria: All disbursements from the replacement reserve must be approved by HUD. Effect: Noncompliance with the regulatory agreement and distributions not authorized by HUD. Cause: The new management agent did not immediately have access to the operating account after the transition so the replacement reserve was used to pay bills and deposit checks. Ultimately, the amount left in the replacement reserve at December 31, 2019 was not sufficient to cover the total amount required to be deposited based on the monthly deposit amount leaving the account underfunded. Recommendation: The Organization should review procedures to assure safeguards are adequate to assure against future unallowable activity. The reserve should also be funded as required. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and the auditor?s recommendations have been adopted. The Organization funded the reserve in full subsequent to year end.FINDING 2019-001: Section 8, CFDA 14.195 and Section 202 Direct Loan, CFDA 14.157 Recommendation: The Organization should review procedures to assure safeguards are adequate to assure against future unallowable activity. The reserve should also be funded as required. Action Taken: Corrective procedures have been implemented. All delinquent deposits have been made as of the audit report issuance date.