MARYGROVE NON-PROFIT HOUSING CORPORATION ll

Assistance Listing title and number (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing No. 14.157 (Project identification number 044-EE011, 1997) Auditor non-compliance code: J – Unauthorized Management Fees Finding resolution status: Completed 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: Not applicable Name of federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: N/A Statement of condition #2024-001 (Assistance Listing No. 14.157): There was not a management entity profile able to be provided in effect for the period January 1, 2024 through June 30, 2024. Criteria: The Corporation is required by HUD Management Agent Handbook 4381.5 2.9b to have a management entity profile (form HUD-9832) at all times. Effect or potential effect: The Property is not in compliance with the Regulatory Agreement. Cause: The former board of directors and management agent were unable to provide an executed management entity profile. Recommendation: HUD should approve a new board of directors and management agent. Completion date: July 1, 2024 Management's response: Agree. The new board of directors and new management agent took over the Property effective July 1, 2024 and have executed a management entity profile with HUD.

Assistance Listing title and number (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing No. 14.157 (Project identification number 044-EE011, 1997) Auditor non-compliance code: O – Investment of Reserve for Replacements Finding resolution status: In process 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: Not applicable Name of federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: N/A Statement of condition #2024-002 (Assistance Listing No. 14.157): The replacement reserve balance was not maintained in an interest bearing account during the year ended December 31, 2024. Criteria: Under Section 202 of the National Housing Act of 1959, management is required to maintain replacement reserve funds in a interest bearing account. Effect or potential effect: As a result of this condition, the reserve for replacements account was underfunded during the year ended December 31, 2024 as no interest was earned. Cause: Management has not properly implemented procedures to comply with HUD program requirements related to holding the reserve balance in an interest bearing account. Recommendation: Management should move funds to an interest bearing account. Expected completion date: Year ended December 31, 2025 Management's response: Agree. The new management agent has gained access to the replacement reserve account and will move replacement reserve funds to an interest bearing account.

2023-001 – Eligibility - Tenant File Documentation (Repeated from Prior Year) Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Eligibility) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for performing an examination of and obtaining support for items of income, assets, and expenses, for proper calculation of tenant assistance payments for applying residents and annual recertification and calculation of such information thereafter, and for obtaining signed and properly completed forms. Condition. Out of a sample of 8 tenant files, we noted: 1) One out of eight instances where a tenant EIV was not run within 90 days of move in; 2) One out of eight instances where a tenant's saving and checking accounts were not verified by a third party; 3) One out of eight instances where the incorrect balance was used to determine the tenant's checking account balance; 4) Two out of eight instances where a copy of the tenant's security deposit was not maintained in the tenant file; Cause. Management does not appear to have sufficient internal control procedures in place to properly implement all of HUD's program requirements. Effect. As a result of this condition, certain tenant files did not contain all required supporting documentation. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend management strengthen their current policies and follow a documented review process for all new and existing resident files and ensure that this review occurs on a timely basis. Further, we recommend management ensure all proper supporting documentation is maintained in the residents' files. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

2023-002 – Replacement Reserve Withdrawals Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for obtaining proper documentation and approval by HUD for any withdrawals made from the replacement reserve. Such withdrawals should only be made for qualifying items that have not been previously reimbursed out of the reserve. Condition. Certain capital expenditures, amounting to $6,135, were requested and reimbursed from the reserve for replacements after already having been requested and reimbursed from the reserve. Management corrected this oversight and transferred the duplicate reimbursed funds from the Project's operating account to the reserve for replacements in May 2024. Cause. Management has not properly implemented internal control procedures to ensure previously reimbursed items are not requested for reimbursement from the reserve for replacements again. Effect. As a result of this condition, the reserve for replacements account was underfunded during 2023. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management review all requested items to be approved and ensure they have not been previously approved for reimbursement from the replacement reserve. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

2023-003 – Replacement Reserve Account Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is required to maintain replacement reserve funds in a interest bearing account. Condition. The replacement reserve balance was not maintained in an interest bearing account during 2023. Cause. Management has not properly implemented procedures to comply with HUD program requirements related to holding the reserve balance in an interest bearing account. Effect. As a result of this condition, the reserve for replacements account was underfunded during 2023 as no interest was earned. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. "Recommendation. We recommend that management move funds to an interest bearing account. " View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

2021-001 ? Eligibility - Tenant File Documentation (Repeated from Prior Year) Finding Type. Material noncompliance; Material weakness in internal control over compliance (Eligibility) Federal program U.S. Department of Housing and Urban Development ? Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for performing an examination of and obtaining support for items of income, assets, and expenses, for proper calculation of tenant assistance payments for applying residents and annual recertification and calculation of such information thereafter, and for obtaining signed and properly completed forms. Condition. Out of a sample of 8 tenant files, we noted: 1) One out of eight instances where a tenant EIV was not run within 90 days of move in, however third party support was received upon move in; 2) One out of eight instances where a tenant's saving account was not verified by a third party; 3) Two out of eight instances where a tenant file was missing completely or missing substantial documentation used to support the tenant assistance payment. Further, we noted that a tenant waitlist was not maintained during the year. Cause. Management does not appear to have sufficient internal control procedures in place to properly implement all of HUD's program requirements. Effect. As a result of this condition, certain tenant files did not contain all required supporting documentation. Questioned Costs. The total amount of federal subsidies received during 2022 for the two missing files was $2,377. Recommendation. We recommend management strengthen their current policies and follow a documented review process for all new and existing resident files and ensure that this review occurs on a timely basis. Further, we recommend management ensure all proper supporting documentation is maintained in the residents' files. We also recommend management ensure a waitlist is properly maintained. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

2021-001 ? Eligibility - Tenant File Documentation (Repeated from Prior Year) Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Eligibility) Federal program U.S. Department of Housing and Urban Development ? Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for performing an examination of and obtaining support for items of income, assets, and expenses, for proper calculation of tenant assistance payments for applying residents and annual recertification and calculation of such information thereafter, and for obtaining signed and properly completed forms. "Condition. Out of a sample of 8 tenant files, we noted: 1. Two out of eight instances where the resident's cash balance was verified using the ending balance; however, the 6 month average balance should have been used; 2. One out of eight instances where an Employment Income Verification (""EIV"") was submitted upon initial move-in and no results were returned. An EIV should have been resubmitted within 90 days, but it was not resubmitted until the next recertification. We noted no exceptions to the recertification/income support; 3. One out of eight instances where residents rights & responsibilities acknowledgement was not maintained in the tenant file; 4. One out of eight instances where a move out inspection form and security deposit support were not maintained in the tenant file; and 5. One out of eight instances where there was no verification of pension income performed on the most recent recertification." Cause. Management does not appear to have sufficient internal control procedures in place to properly implement all of HUD's program requirements. Effect. As a result of this condition, certain tenant files did not contain all required supporting documentation. While there were no significant differences in the amount of subsidies allowed compared to subsidies received, the lack of effective internal controls could lead to future significant noncompliance. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management should strengthen their current policies and follow a documented review process for all new and existing resident files and ensure that this review occurs on a timely basis. Further, we recommend that management ensure all proper supporting documentation is maintained in the residents' files. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

2020-001 ? Eligibility - Tenant File Documentation Finding Type. Immaterial noncompliance; Significant deficiency in internal controls over compliance (Eligibility) Federal programs U.S. Department of Housing and Urban Development ? Supportive Housing for the Elderly (CFDA# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, and the Section 8 Housing Assistance Program, Project management is responsible for performing an examination of and obtaining support for items of income, assets, and expenses, for proper calculation of tenant assistance payments for applying residents and annual recertification and calculation of such information thereafter, and for obtaining signed and properly completed forms. Condition. We noted 5 instances out of 10 where a resident's income was not properly calculated. In each of these instances, we noted that either income did not match the EIV or there were income or expense balances used in the calculation of the tenant assistance payment that were not fully and/or independently supported. In 1 out of 10 selections, an instance was noted in which a security deposit refund check was issued after the 30-day deadline. In 1 out of 10 selections, an instance was noted in which a recertification form was not signed by the Site Administrator. Cause. Management does not appear to have sufficient internal control procedures in place to properly implement all of HUD's program requirements. Effect. As a result of this condition, tenant files did not fully contain supporting documentation for all items of income and expense, leading to instances of incorrect tenant subsidy calculations. While no significant differences in resulting tenant subsidies received were noted and former residents received, as applicable, their security deposit refunds, the lack of effective internal controls in this area could lead to future significant actual noncompliance. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management develop a formal and documented review process for all new and existing resident files and ensure that this review occurs on a timely basis. In addition, we recommend that management ensure timely communication between site administration and those responsible for issuance of tenant security deposit refund checks in accordance with State of Michigan requirements. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

2019-002 ? Allowable Costs/Cost Principles - Proper Approval of and Support for Purchases (repeat) Finding Type. Immaterial noncompliance; Significant deficiency in internal controls over compliance (Allowable Costs / Cost Principles) Federal programs U.S. Department of Housing and Urban Development ? Supportive Housing for the Elderly (CFDA# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for approving, correctly classifying, and determining allowability of costs prior to disbursement. Condition. We noted 1 instance out of 40 in which there was a missing or incomplete competitive price check in accordance with policy. Cause. Management has not properly implemented internal control procedures to ensure that all supporting purchase documentation is maintained and that disbursements only occur after required competitive price checks. Effect. As a result of this condition, more favorable pricing may have potentially been obtained. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management implement controls to ensure all purchase support documentation is obtained and retained. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

2019-003 ? Vendor Suspension/Debarment Search Finding Type. Immaterial noncompliance; Significant deficiency in internal controls over compliance (Procurement, Suspension, and Debarment) Federal programs U.S. Department of Housing and Urban Development ? Supportive Housing for the Elderly (CFDA# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959 Project management is responsible for determining whether a contractor engaged for services over $25,000 has been suspended or debarred by the federal government as noted at sam.gov. Condition. Project management did not perform a search for suspended or debarred vendors during the year. Cause. Duties and responsibilities for certain office personnel were recently reassigned. As a result of not having a written policy regarding suspension and debarment, the procedure of searching certain vendors at sam.gov was overlooked. Effect. As a result of this condition, potentially suspended or debarred vendors would not have been identified in a timely manner. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management develop and implement a process to check potential vendors in the sam.gov database prior to acceptance or renewal of a contract for each year that the amount is expected to exceed the $25,000 threshold. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION