NCR OF MANHATTAN, KANSAS D/B/A GARDEN GROVE APARTMENTS

Finding Type Immaterial noncompliance with major program requirements Title and Assistance Listing Number of Federal Program 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 207/223(f)) Finding Resolution Status Resolved Information on Universe and Population Size The Corporation had 12 move outs during the fiscal year. Sample Size Information A sample size of 2 move outs were tested for the year ended July 31, 2024. Identification of Repeat Finding and Finding Reference Number N/A not a repeat finding Criteria HUD requires the Corporation to refund the security deposit to tenants within 30 days of the move out. Statement of Condition The Corporation failed to refund the security deposit to a tenant within 30 days of their move out date. Cause The Corporation failed to monitor the deposit refund requirements for the security deposits as specified by the regulatory agreement. Effect or Potential Effect Who tenants did not receive their security deposit refund until 45 and 70 days after their move out. Auditor Noncompliance Code M Security Deposits Reporting Views of Responsible Officials Management acknowledged the errors that occurred during the year ended July 31, 2024 and has taken measures to change their process of issuing refunds to reduce the likelihood of late refunds. Recommendation All security deposit refunds should be made within 30 days of the tenant move out. Response Indicator Agree Completion Date March 12, 2024 Response The security deposit has been refunded and management is currently reviewing internal controls over security deposit refunds to ensure all deposits are refunded timely.

Condition: The Corporation failed to refund a security deposit to a tenant within 30 days of their move out date. Planned Corrective Action: The security deposit has been refunded and management is currently reviewing internal controls over security deposit refunds to ensure all deposits are returned timely. Contact person responsible for corrective action: Jill Kolb, Vice President – Housing Accounting Completion Date: March 12, 2024

Finding Type Immaterial noncompliance with major program requirements Title and Assistance Listing Number of Federal Program 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 207/223(f)) Finding Resolution Status Resolved Information on Universe and Population Size The Corporation had 9 move outs during the fiscal year. Sample Size Information A sample size of 2 move outs were tested for the year ended July 31, 2023. Identification of Repeat Finding and Finding Reference Number N/A not a repeat finding. Criteria HUD requires the Corporation to refund the security deposit to tenants within 30 days of the move out. Statement of Condition The Corporation failed to refund the security deposit to one tenant within 30 days of their move out date. Cause The Corporation failed to monitor the deposit refund requirements for the security deposits as specified by the regulatory agreement. Effect or Potential Effect One tenant in the sample did not receive their security deposit refund until 38 days after their respective move out date. Auditor Noncompliance Code M Security Deposits Recommendation All security deposit refunds should be made within 30 days of the tenant move out. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations Management acknowledged the errors that occurred during the year ended July 31, 2023 and has taken measures to change their process of issuing refunds to reduce the likelihood of late refunds. Response Indicator Agree Completion Date February 27, 2023 Response The security deposit has been refunded and management is currently reviewing internal controls over security deposit refunds to ensure all deposits are refunded timely.

The security deposit has been refunded and management is currently reviewing internal controls over security deposit refunds to ensure all deposits are returned timely.

Finding Type: Immaterial noncompliance with major program requirements; Questioned Costs: $13,412Title and CFDA Number of Federal Program: 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 207/223(f))Finding Resolution Status: ResolvedInformation on Universe and Population Size: Management and Occupancy Review (MOR) inspection reports are reviewed in conjunction with our audit procedures.Sample Size Information: n/aIdentification of Repeat Finding and Finding Reference Number: n/aCriteria: Income reported on the tenant's HUD 50059 Form should be calculated in accordance with HUD Handbook 4350.3 REV 1, CHG 4, Chapter 5, Determining Income and Calculating Rent.Statement of Condition The Corporation did not properly enter the information verified in the tenant file into the computer software, as identified in the MOR inspection report dated September 9, 2019 for the review conducted August 21, 2019.Cause: The Corporation's lapse in consistently applying HUD regulations relative to Determining Income and Calculating Rent contributed to this finding.Effect or Potential Effect The incorrect certification led to an overpayment of subsidy through July 31, 2019 totaling $13,412 that is to be repaid to HUD.Reporting Views of Responsible Officials: The Corporation agrees with the finding as reported.Context: The Corporation incorrectly calculated and certified income for one tenant dating back to 2014Recommendation Certified income should be calculated in accordance with the appropriate regulatory guidance referenced above.Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Management should calculate income in accordance with the appropriate regulatory guidance referenced above. Any overpayment of subsidy received should be returned to HUD.Response Indicator: AgreeCompletion Date: April 13, 2020Response: Management agrees with the finding, as identified in the MOR inspection report, and adjusted the Housing Assistance Payment voucher submitted for May 2020 to reflect the adjustment for the overpayment of subsidy. A letter from the Kansas Housing Resource Corporation dated April 13, 2020 verified the finding has been adequately addressed and the finding is considered closed.

Finding Number: 2019-001Condition: The Corporation did not properly enter the information verified in the tenant file into the computer software, as identified in the MOR inspection report dated September 9, 2019 for the review conducted August 21, 2019.Planned Corrective Action: An adjustment to the Housing Assistance Payment voucher submitted for May 2020 to reflect the overpayment of subsidy was made. A letter from the Kansas Housing Resource Corporation dated April 13, 2020 verified the finding has been adequately addressed and the finding is considered closed.Contact person responsible for corrective action: Julia Fratianne, VP ? Housing AccountingAnticipated Completion Date: 04/13/2020