CAPITOL GRANGE SENIOR CITIZENS HOUSING CORPORATION (PHASE I)

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 $153,970 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 deposit 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 $153,970 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.

U.S. Department of Housing and Urban Development Capitol Grange Senior CItizen's Housing Corporation (Phase I) respecfully submits the following corrective action plan for the year ended June 30, 2024. Name and address of independent public accounting firm: Maner Costersan, P.C. 2425 E. Grand River Ave., Suite 1 Lansing, MI 48912 Audit period: July 1, 2023 - June 30, 2024 The finding from the June 30, 2024 schedule of findings and questioned costgs is discussed below. The finding is numbered consistent with the number assigned in the schedule. Finding Number 2024-001 - Significant Deficienc;y in Internal Control of Major Federal Program Compliance: Special Tests and Provisions - Residual Receipts Requirements Recommendation: The Project should deposit $153,970 into the residual receipts account. Additionally, procedures should be followed to ensure management identifies the need for required deposits. Action Taken: The Project has deposited the underfunded amount and will review annnual audits to identify the required residual reciept funding amounts.

Finding 2019-001 Considered a significant deficiency in internal control over Federal Award compliance and program noncompliance Condition: The project did not make the required residual receipt deposits in the amount $105,196 for the year ending June 30, 2019. Criteria: Partnership 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 deposit 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 Corporation should deposit $105,196 into the residual receipts account. Additionally, procedures should be followed to ensure partnership management identifies the need for required deposits. Auditor noncompliance code: B - Failure to make required residual receipts deposits.

Action to be taken: The Corporation deposited the underfunded amount and will review annual audits to identify required residual receipt funding amounts.