GRANGE ACRES NONPROFIT HOUSING CORPORATION

Finding Number 2025-001: Significant Deficiency in Internal Control over Major Federal Program and Program Noncompliance: Special Tests and Provisions: Replacement Reserve Requirements Federal Program: U.S. Department of Housing and Urban Development ALN 14.195 – Project Based Rental Assistance Condition: The Project did not make the required replacement reserve deposits in the amount of $429 for the year ended June 30, 2025. Criteria: Project management is responsible for depositing funds into the replacement reserve account in the monthly amount determined by HUD. Effect: The proper cash amount was not deposited, therefore the replacement reserve was not properly funded. Cause: Procedures to deposit funds into the replacement reserve were not followed. HUD increased the deposit requirement effective April 1, 2025. The escrow agent was not notified of this increase, and therefore did not pull the updated monthly requirement accordingly. Recommendation: The Project should deposit $429 into the replacement reserve account. Additionally, procedures should be followed to ensure management identifies the need for required deposits. Auditor noncompliance code: N – Reserve for replacements deposits.

Finding Number 2024-001: Significant Deficiency in Internal Control over Major Federal Program Compliance: Special Tests and Provisions - Residual Receipts Requirements Federal Program: U.S. Department of Housing and Urban Development ALN 14.155 - Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects Condition: The Project did not make the required residual receipt deposits in the amount $174,928 for the year ending June 30, 2023. Criteria: Project management is responsible for depositing funds into the residual receipts account when a surplus cash amount is calculated within 90 days after the close of the fiscal year. Effect: The surplus cash amount was not deposited therefore making the balance in the residual receipts account understated and not correctly showing amount subject to HUD recapture. Cause: Procedures to deposit surplus cash into the residual receipts account were not followed. Recommendation: The Project should deposit $174,928 into the residual receipts account. Additionally, procedures should be followed to ensure management identifies the need for required deposits. Auditor noncompliance code: B - Failure to make required residual receipts deposits.