NATIONAL CHURCH RESIDENCES OF SURPRISE, AZ D/B/A EAGLE TAIL VILLAGENon-Profit

Finding Type: Immaterial noncompliance with major program requirements Significant deficiency in internal control over compliance Title and Assistance Listing Number of Federal Program 14.155 Mortgage Insurance for the Purchase of Refinancing of Existing Multifamily Housing Projects (Section 207/223(f)) Finding Resolution Status Resolved Information on Universe and Population Size Deposit due to residual receipts calculated as of July 31, 2023 that is required to be deposited into the residual receipt account by October 29, 2023. Sample Size Information N/A Not determined via a sampling method Identification of Repeat Finding and Finding Reference Number N/A Not a repeat finding Criteria The Corporation should deposit surplus cash within the time frame specified in the FRAG Guide. Statement of Condition the Corporation deposited prior year surplus cash 322 days after the deadline as stated in the Real Estate Assessment Center’s Summary of Financial Reporting and Auditing Guidance for HUD (FRAG Guide) under Section 2.8. Cause The Corporation failed to monitor the cash requirements of the residual receipts account as specified by the FRAG Guide. Effect or Potential Effect The residual receipts account was not funded in accordance with the FRAG Guide. Auditor Noncompliance Code B Failure to make required residual receipt deposits Reporting Views of Responsible Officials The Coporation agrees with the finding as reported. Context The Corporation had $9,436 in surplus cash as of July 31, 2023 and failed to deposit the amount within the Residual Receipt account within the 90 day requirement. Recommendation Surplus cash deposit amounts be deposited with the specified time frame as required by the FRAG Guide. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations Management should deposit surplus cash within the time frame required by the FRAG Guide Response Indicator Agree Completion Date June 17, 2024 Response Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance. Management deposited the surplus cash amount of $9,436 into residual receipts on June 17, 2024.

Finding Type Immaterial noncompliance with major program requirements Title 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 Resolved Information on Universe and Population Size The corporation had 5 move outs during the fiscal year. Sample Size Information A sample size of 3 move outs were tested for the year ended July 31, 2022. 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 3 tenants 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 The tenants did not receive their security deposit refund until 109 days, 41 days, and 46 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, 2022 and has taken measures to change their process of issuing refunds to reduce the likelihood of late refunds. Response Indicator Agree Completion Date August 9, 2022 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.