HOLIDAY DRIVE HOUSING CORPORATIONNon-Profit

Condition: The $26,447 of surplus cash at June 30, 2023 was not deposited into the residual receipts account within ninety days. Criteria: According to HUD’s guidelines, a Project must deposit surplus cash due to residual receipts within ninety days after the fiscal period ends (REAC submission due date) Cause Project management did not transfer the surplus cash of $26,447 from the operating account to the residual receipts account. Effect: The Project held excess cash and did not make the required residual receipts deposits. This has been a finding for the last four years. Recommendation: Surplus cash was recalculated at the end of June 30, 2023. The Project should make a deposit of $26,447 for the year ended June 30, 2023. Procedures should be improved to ensure that surplus cash is calculated and transferred to the residual receipt account timely.

The $43,426 of surplus cash at June 30, 2022 was not deposited into the residual receipts account within ninety days.

Finding 2021-001- Residual Receipt Deposits Federal Agency U.S. Department of Housing and Urban Development Program: Section 811 Capital Advance Section 811 Project Rental Assistance Payment CFDA# and Program Expenditures 14.181 ($1,358,100) 14.181 ($70,295) Award Number None Federal Award Year July 1, 2020 to June 30, 2021 Questioned Costs None Condition: The $66,747 of surplus cash at June 30, 2021 was not deposited into the residual receipts account within ninety days. Criteria: According to HUD?s guidelines, a Project must deposit surplus cash due to residual receipts within ninety days after the fiscal period ends (REAC submission due date) Cause Project management did not transfer the surplus cash of $66,747 from the operating account to the residual receipts account. Effect: The Project held excess cash and did not make the required residual receipts deposits. This has been a finding for the last four years. Recommendation: Surplus cash was recalculated at the end of June 30, 2021. The Project should make a deposit of $66,747 for the year ended June 30, 2021. Procedures should be improved to ensure that surplus cash is calculated and transferred to the residual receipt account timely. Management Response: Management will fund residual receipts within the required timeframe going forward.

FINDING 2020-001 ? Residual Receipt Deposits Federal Agency: U.S. Department of Housing and Urban Development Pass through Entity: Not applicable Program Name: Section 811 Capital Advance Program Section 811 Project Rental Assistance Payments CFDA# and Program Expenditures: 14.181 ($1,358,100) 14.181 ($ 68,957) Award Number: N/A Federal Award Year: July 1, 2019 to June 30, 2020 Questioned Costs: None Condition Found: The $56,706 of surplus cash at June 30, 2019 was not deposited into the residual receipts account within ninety days. In addition, the $54,725 and $35,414 of surplus cash at June 30, 2018 and 2017, respectively, has not been deposited into the residual receipts account. Criteria: According to HUD?s guidelines, a Project must deposit surplus cash due to residual receipts within ninety days after the fiscal period ends (REAC submission due date). Cause: Project management did not transfer the surplus cash of $56,706 from the operating account to the residual receipts account. Possible Asserted Effect: The Project held excess cash and did not make the three required residual receipts deposits. $56,706, $54,725, and $35,414 was due for the years ended June 30, 2019, 2018, and 2017, respectively. Repeat Finding: See Finding 2019-002 for a similar finding in the prior year. Recommendation: Surplus cash was recalculated at June 30, 2020. The Project should make a $65,628 deposit to residual receipts for the year ended June 30, 2020. The Project should wait for further instructions from HUD for the residual deposits that were due June 30, 2017, 2018, and 2019. In addition, procedures should be improved to ensure that surplus cash is calculated and transferred to residual receipts timely. Management Response: Management will transfer $65,628 from operating to residual receipts based on the June 30, 2020 surplus cash calculation. The Project will wait for further instructions from HUD for the residual deposits that were due June 30, 2017, 2018, and 2019. In addition, procedures will be improved to ensure that surplus cash is calculated and transferred to residual receipts timely.

FINDING 2020-002 ? Replacement Reserve Deposits Federal Agency: U.S. Department of Housing and Urban Development Pass through Entity: Not applicable Program Name: Section 811 Capital Advance Program Section 811 Project Rental Assistance Payments CFDA# and Program Expenditures: 14.181 ($1,358,100) 14.181 ($ 68,957) Award Number: N/A Federal Award Year: July 1, 2019 to June 30, 2020 Questioned Costs: None Condition Found: Monthly payments were not made to the replacement reserve deposit account as required by the Project?s regulatory agreement. However, a lump sum deposit totaling the annual replacement reserve deposit amount was made in June 2020. Criteria: The regulatory agreement requires that $490 be deposited in the replacement reserve account each month from July 2019 through June 2020. Cause: The required deposits were not transferred from the operating account to the replacement reserve account on a monthly basis. Possible Asserted Effect: The Project was not following its regulatory agreement. The replacement reserve account did not earn as much interest income as it possibly could have if the deposits were made monthly. Repeat Finding: In 2019, the replacement reserve deposits were not made. See Finding 2019-001. Recommendation: The Project should create an automatic $490 monthly transfer from the operating account to the replacement reserve account. Management Response: Management began making the replacement reserve deposit on a monthly basis in July 2020.

FINDING 2019-001 ? Replacement Reserve Deposits Federal Agency: U.S. Department of Housing and Urban Development Pass through Entity: Not applicable Program Name: Section 811 Capital Advance Program CFDA# and Program Expenditures: 14.181 ($1,358,100) Award Number: N/A Federal Award Year: July 1, 2018 to June 30, 2019 Questioned Costs: None Condition Found: The reserve for replacement was not funded for the year ended June 30, 2019. Monthly deposits totaling $5,880 for the year should have been deposited in the account. In addition, replacement reserve deposits totaling $5,880 and $2,940 were not made for the years ending June 30, 2018 and 2016, respectively. A total of $14,700 is due to the replacement reserve account. Criteria: The regulatory agreement requires that $490 be deposited in the replacement reserve account each month from July 2018 through June 2019. Cause: The required deposits were not transferred from the operating account to the replacement reserve account. Possible Asserted Effect: The replacement reserve was underfunded by $5,880 for the year ended June 30, 2019. The replacement reserve was also underfunded by $5,880, and $2,940 for the years ended June 30, 2018, and 2016, respectively. The cumulative total due to the replacement reserve fund is $14,700. Repeat Finding: This finding was reported in the immediately prior audit as Finding 2018-002. Recommendation: The overall reserve shortage of $14,700 should be funded as soon as possible. Management should consider requesting a replacement reserve deposit waiver or a rent increase from HUD. Management Response: Management will transfer $14,700 from operating to reserve after evaluating available cash. In the absence of available cash, a waiver from HUD will be requested.

FINDING 2019-002 ? Residual Receipt Deposits Federal Agency: U.S. Department of Housing and Urban Development Pass through Entity: Not applicable Program Name: Section 811 Capital Advance Program CFDA# and Program Expenditures: 14.181 ($1,358,100) Award Number: N/A Federal Award Year: July 1, 2018 to June 30, 2019 Questioned Costs: None Condition Found: The $54,725 of surplus cash at June 30, 2018 was not deposited into the residual receipts account within ninety days. In addition, the $35,414 of surplus cash at June 30, 2017 has not deposited into the residual receipts account. Criteria: According to HUD?s guidelines, a Project must deposit surplus cash due to residual receipts within ninety days after the fiscal period ends (REAC submission due date). Cause: Project management did not transfer the surplus cash of $54,725 from the operating account to the residual receipts account. Possible Asserted Effect: The Project held excess cash and did not make the two required residual receipts deposits. $54,725 and $35,414 was due for the years ended June 30, 2018 and 2017, respectively. Repeat Finding: See Finding 2018-003 for a similar finding in the prior year. Recommendation: Surplus cash was recalculated at June 30, 2019. The Project should make a $56,706 deposit to residual receipts for the year ended June 30, 2019. The Project should wait for further instructions from HUD for the residual deposits that were due June 30, 2017 and 2018. In addition, procedures should be improved to ensure that surplus cash is calculated and transferred to residual receipts timely. Management Response: Management will transfer $56,706 from operating to residual receipts based on the June 30, 2019 surplus cash calculation. The Project should wait for further instructions from HUD for the residual deposits that were due June 30, 2017 and 2018. In addition, procedures will be improved to ensure that surplus cash is calculated and transferred to residual receipts timely

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