DREXEL SQUARE APARTMENTSNon-Profit

Criteria: In accordance with Uniform Guidance, the data collection form and reporting package must be submitted to the Federal Audit Clearinghouse ("FAC") within the earlier of 30 calendar days afer receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or federal holiday, the reporting package is due the next business day. Also, in accordance with the Consolidated Audit Guide for Audits of HUD Programs, the annual audited financial statements must be electronically submitted to the Real Estate Assessment Center ("REAC") within 90 days after fiscal year-end. Condition: Drexel Square Apartments failed to submit its data collection form and reporting package for the year ended Decemver 31, 2022 to the FAC within nine months after its fiscal year-end and to electronically submit its annual audited financial statements for the years ended December 31, 2023 and 2022 to the REAC within 90 days after is fiscal year-end. Effect: Drexel Square Apartments could lost its federal funding. Cause: Management of Drexel Square Apartments encountered the following difficulties resulting in the untimely submission of the data collection form and reporting package to the FAC and the annual financial statements to the REAC. With respect to the audit, management's 2022 auditor, Morrison and Morrison, Ltd. ("Morrision and Morrison"), was expected to complete the 2023 audit; however, Morrison and Morrison was acquired be EisnerAmper LLP, which delayed the commencement of the 2023 audit. Management could not find another audit firm to commence the 2023 audit in early 2024. Consequently, the 2023 audit did not commence until May 2024. With respect to the FAC filing for the 2022 audit, Morrison and Morrison staff was reassigned, which delayed the filing. The FAC system also required new registration from the auditor and auditee, which further delayed the filing.

FINDING #21-01 REAC Inspection Condition: The Project received on November 10, 2021 a REAC Physical Inspection Report with a score of 47. Criteria: The REAC score below 59 is a failing score which may indicate a default in the regulatory agreement. Effect: The Project may be deemed not to be in a decent, safe and sanitary condition. Cause: This audit?s REAC inspection indicates a low score for building exterior, building systems, common area and unit components. Recommendation: The Project should correct all defects noted and obtain an acceptable REAC score. Auditor's Summary of the Auditees Comments on Findings and Recommendation Date: Auditee has completed all REAC required repairs except for the major building modernization tuckpointing which has been extended until July 2022. The Project has multiple response letters to HUD REAC addressing the findings of the REAC inspection. The Project has requested a HUD re-inspection and is awaiting re-scheduling. Completion Date: The REAC required repairs are completed with the exception of tuckpointing as of 07 15 2022. Response: Project has addressed the REAC deficiencies noted and is seeking a HUD re-inspection.

FINDING #2019-01 West Suburban Bank wrongly paid account funds totaling $37,515.41 to fraudulent payees in February and March 2019. Criteria: Only HUD defined project expenses are allowed to be withdrawn from project accounts. Condition: West Suburban Bank allowed funds to be paid to fraudulent payees from project funds. The managing agent notified the bank of the fraudulent payees and took all actions as required by West Suburban staff. Despite fulfilling all bank requests the bank did not reimburse the project. The project then hired legal counsel to recover the project funds. Context: The bank is required to pay only actual project expenditures and must reimburse the project bank account in accordance with Illinois law. Effect: Unallowed withdrawal of project funds by West Suburban Bank. Cause: West Suburban Bank authorized payments to fraudulent payees. Recommendation: Continue to demand West Suburban Bank repay the $37,515.41 back to the project bank account through legal actions to recover funds. Auditor?s Summary of the Auditees Comments on Findings and Recommendation Date: Auditee is in agreement with the reported finding and recommended action. Completion Date: Pending-West Suburban Bank received Drexel?s legal counsel?s demand to repay funds to the project on May 15, 2020. Response: West Suburban Bank has not yet responded to counsels demand.

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