VENABLE APARTMENTS II

Finding No. 2024-001 – Timely Submission of Required Reporting, Federal Assistance Listing Number 14.147 Name of Federal Program or Cluster Spportive Housing for the Elderly, Information on the Universe Population Size All regulatory reporting, Sample Size Information All regulatory reporting, Identification of Repeat Finding Reference Number N/A, Criteria The Uniform Guidance requires auditees to submit a completed Standard Form Single Audit Collection (“SF-SAC”) along with other specified reports, to the Federal Audit Clearinghouse (FAC) within the earlier of 30 days after receipt of the auditor’s report(s), or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant oversight agency for audit. Statement of Condition Due to the new SF-SAC, the submission was completed before the due date, but not signed off in the FAC until February 9, 2024. Cause - Due to administrative errors encountered with the new system. Effect or Potential Effect - The failure to complete signoff caused the Entity to submit the SF-SAC late. Questioned Costs - There were no known questioned costs. Perspective - The finding represents an isolated instance of management oversight. Recommendations - The filing has been completed and administrative issues have been corrected. Views of Responsible Officials - Management understands the need to be in compliance with the filing requirements and will ensure that these reports are filed timely. Unexpected delays were encountered due to administrative issues encountered with the new FAC system.

Criteria or Specific Requirement Under the terms of the HUD financing, the Entity was required to deposit $10,000 at inception into an escrow account, Minimum Capital Investment account, and the balance of this account is only available to be released upon approval from HUD. Entity is required to safeguard assets to provide reasonable assurance regarding unauthorized use or disposition of the funds under compliance requirements. Condition As indicated in the two prior year findings, the funds were turned over to the State of Maryland. During 2018, the funds were reclaimed and received from the State of Maryland. However, the funds were deposited in the sponsor?s, GEDCO, account instead of an account under the control of the Entity due to a misunderstanding regarding HUD requirements in 2018. As of April 30, 2020, the sponsor is still in communication with HUD over the reestablishment of the account under the control of the Entity and the funds have not been returned. Context While considering compliance testing of the terms of the HUD financing, it was noted that the reclaimed funds were not deposited into an account of the entity. HUD and GEDCO are in discussions over the appropriate release of the Minimum Capital Investment funds. Questioned Costs There were no known questioned costs. Effect The requirement to deposit the funds into the Entity?s operating account to assure the Owner's commitment to the housing entity was not met. Cause The Sponsor misunderstood the procedures required concerning the Minimum Capital Investment account. Recommendations We recommend the Entity coordinate with GEDCO to immediately transfer the funds to the Entity account and process the appropriate forms to have the Minimum Capital Investment funds released to the Sponsor, if required. Views of Responsible Officials and Planned Corrective Action GEDCO, sponsor, agreed that the funds should be deposited into the Venable II Apartments operating account and they deposited on June 1, 2020 and confirmation received that the issued was resolved on June 1 2020 from Brenda Bowie at HUD. We believe that we have resolved the requirements of HUD by returning the funds back to the Entity.

Finding No. 2019-001 ? Failure to reestablish reclaimed funds (continued) Criteria or Specific Requirement Under the terms of the HUD financing, the Entity was required to deposit $10,000 at inception into an escrow account, Minimum Capital Investment account, and the balance of this account is only available to be released upon approval from HUD. Entity is required to safeguard assets to provide reasonable assurance regarding unauthorized use or disposition of the funds under compliance requirements. Condition As indicated in the prior year finding, the funds were turned over to the State of Maryland. During the current year the funds were reclaimed and received from the State of Maryland. However, the funds were deposited in the sponsor?s, GEDCO, account instead of an account under the control of the Entity due to a misunderstanding regarding HUD requirements. Context While considering compliance testing of the terms of the HUD financing, it was noted that the reclaimed funds were mistakenly deposited into an account of the sponsor. HUD and GEDCO are in discussions over the appropriate release of the Minimum Capital Investment funds. Questioned Costs There were no known questioned costs. Effect The requirement to deposit the funds into the Entity?s operating account to assure the Owner's commitment to the housing was not met. Cause The Sponsor misunderstood the procedures required concerning the Minimum Capital Investment account. Recommendations We recommend the Entity coordinate with GEDCO to immediately transfer the funds to the Entity account and process the appropriate forms to have the Minimum Capital Investment funds released to the Sponsor. Views of Responsible Officials and Planned Corrective Action See Corrective Action Plan.

GSA_MIGRATION