GRANT COMMUNITY SENIOR CITIZENS HOUSINGNon-Profit

Finding reference number: #2019-001 CFDA title and number: Rural Rental Housing Loans, CFDA No. 10.415 Auditor non-compliance code: Z - Other Finding resolution status: Resolved Universe population size: The universe population size is not applicable to the finding Sample size information: The sample size information is not applicable to the finding Statistically valid sample: N/A Name of Federal Agency: United States Department of Agriculture Rural Development Pass-through entity: N/A Questioned costs: $-0- Statement of condition #2019-001: There were a lack of records for the period January 1, 2019 through June 30, 2019 due to the prior managing agent closing their office. There are inherent limitations of the internal control structure due to inadequate record keeping and document retention due to a change in management companies as of June 30, 2019. Criteria: Pursuant to Section 10(b) of the Regulatory Agreement, the books and records of the Corporation are required to be kept in accordance with the requirements of RD, which includes adequate design and monitoring of controls to safeguard the entity's assets. Effect or potential effect: Lack of monitoring could allow misstatements in the financial statements that would not otherwise be found. Cause: There was a change in management agents as of June 30, 2019. Following this date the prior management agent was dissolved and is difficult to contact and unable to furnish certain documents as such these documents were unavailable to the current management agent. Recommendation: The Corporation's Board of Directors should ensure proper document retention practices going forward. Reporting views of responsible officials: Agreed. The Corporation's Board of Directors agrees and hired a new management agent. The new agent reviewed bank statements for the entire period under audit and reviewed the June 2019 trial balance provided by the prior management agent. No material misstatements were identified during this review.

Finding reference number: #2019-002 CFDA title and number: Rural Rental Housing Loans, CFDA No. 10.415 Auditor non-compliance code: N - Reserve for Replacements Deposits Finding resolution status: Resolved Universe population size: The universe population size is not applicable to the finding Sample size information: The sample size information is not applicable to the finding Statistically valid sample: N/A Name of Federal Agency: United States Department of Agriculture Rural Development Pass-through entity: N/A Questioned costs: $3,774 Statement of condition #2019-002: During the year ended December 31, 2019, the Partnership did not make the required deposits to the reserve for replacements as set forth by RD. At December 31, 2019, the reserve for replacements account was underfunded by $3,774. Criteria: In accordance with the RD Loan Agreement, the Property is required to make deposits to the reserve for replacements account equal to total budgeted deposits as approved by RD. During the year ended December 31, 2019, total required deposits were not made. Effect or potential effect: The Partnership is not in compliance with the RD loan agreement. Cause: Required reserve for replacements deposit in the amount of $3,774 were not made due to an error in reoccurring transactions in the accounting software. Recommendation: The Corporation should oversee the management agent and should develop a plan, either through operations or from support from its affiliates, to make additional deposits of $3,774 to the reserve for replacements account. Reporting views of responsible officials: Agreed. Management agrees with the recommendation and deposited $3,774 from operations on July 9, 2020.

Finding reference number: #2019-003 CFDA title and number: Rural Rental Housing Loans, CFDA No. 10.415 Auditor non-compliance code: J - Unauthorized Management Fees Finding resolution status: Resolved Universe population size: The universe population size is not applicable to the finding Sample size information: The sample size information is not applicable to the finding Statistically valid sample: N/A Name of Federal Agency: United States Department of Agriculture Rural Development Pass-through entity: N/A Questioned costs: $-0- Statement of condition #2019-003: The former management agent was not approved by RD during the period January 1, 2019 through the end of their management of the property. Criteria: In accordance with the RD audit guide chapter 4 attachment 4-J, the management agent must be approved by RD. Effect or potential effect: The Partnership is not in compliance with the RD audit guide. Cause: The former agent did not obtain approval from RD after their previous agreement expired. Recommendation: The new agent should continue to gain RD approval as needed based on the renewal dates of the management agreement. Reporting views of responsible officials: Agreed. Management agrees with the recommendation and obtained RD approval when they assumed management of the property on July 1, 2019 and plan to continue to seek RD approval when their current agreement expires.

Finding reference number: #2019-004 CFDA title and number: Rural Rental Housing Loans, CFDA No. 10.415 Auditor non-compliance code: Z - Other Finding resolution status: Resolved Universe population size: Approximately 100 cash disbursements Sample size information: Approximately 20 cash disbursements Statistically valid sample: Approximately 10 cash disbursements Name of Federal Agency: United States Department of Agriculture Rural Development Pass-through entity: N/A Questioned costs: Unknown Statement of condition #2019-004: There were a lack of records for the period January 1, 2019 through June 30, 2019 due to the prior managing agent closing their office. Specifically, documents to meet the sampling requirements for cash disbursement compliance testing were unobtainable. Criteria: Pursuant to Section 10(b) of the Regulatory Agreement, the books and records of the Corporation are required to be kept in accordance with the requirements of RD, which includes adequate design and monitoring of controls to safeguard the entity's assets. Effect or potential effect: Cash disbursements under the prior management agent were not included in the population. Potentially sampled checks and invoices were unavailable for testing as these documents were not transferred from the prior management agent. Cause: There was a change in management agents as of June 30, 2019. Following this date the prior management agent was dissolved and is difficult to contact and unable to furnish certain documents; therefore, sampling documents, certain checks and invoices were unavailable to the current management agent. Recommendation: The Corporation's Board of Directors should ensure proper document retention practices going forward. Reporting views of responsible officials: Agreed. The Corporation's Board of Directors agrees and hired a new management agent which has a document retention policy in place.

Finding reference number: #2019-005 CFDA title and number: Rural Rental Housing Loans, CFDA No. 10.415 Auditor non-compliance code: Z - Other Finding resolution status: Resolved Universe population size: The universe population size is not applicable to the finding Sample size information: The sample size information is not applicable to the finding Statistically valid sample: N/A Name of Federal Agency: United States Department of Agriculture Rural Development Pass-through entity: N/A Questioned costs: $-0- Statement of condition #2019-005: The Corporation did not submit the Annual Financial Reports for the year ended December 31, 2019 to Rural Development prior to the due date. Criteria: Pursuant to the compliance requirements defined in Attachment 4-J of HB-2-3560 issued by Rural Development, among other requirements: The Owner is responsible for complying with all requirements of the regulatory and loan agreements. The Owner may perform all management functions or contract with a management agent to provide project management, but the responsibility cannot be delegated to the management agent. The owner or management agent must be approved by RD and must certify that it will follow RD's rules and regulations. Section 6(j) of the loan agreement requires that the Partnership "do other things as required by the Government in connection with the operation of the housing, or with any of the Partnership's operations or affairs which may affect the housing, the loan obligations, or the security". This would encompass complying with other applicable regulations issued by Rural Development. Section 4.16(H)(1) of HB-2-3560 states "Annual financial reports including Form RD 3560-7 with 12 months of actual income and expenses, Form RD 3560-10, compilations of prescribed forms, certification of performance standards and audits, as appropriate, must be submitted to the Agency no later than 90 days following the close of the project fiscal year." Effect or potential effect: The Partnership is not in compliance with the compliance requirements defined in Attachment 4-J of HB-2-3560 issued by Rural Development. Cause: Delays related to the change in management agents did not allow for testing to be completed and the audit to be issued before June 30, 2020, the extended due date as communicated by Rural Development. Recommendation: The Corporation's Board of Directors should submit the Annual Financial Reports for the year ended December 31, 2019 to Rural Development as soon as possible. In future periods, the new management agent should provide information to the auditors in a timely manner in order for the audit to be completed prior to the due date. Reporting views of responsible officials: Agreed. The Corporation's Board of Directors concur with the findings and recommendations and will submit the Annual Financial Reports to Rural Development once the audit has been issued for the year ended December 31, 2019.