CHESTERFIELD SQUARE MUTUAL HOMES, INC.

2024-001: Reporting, AL #14.155 Condition Chesterfield Square Mutual Homes, Inc. has not submitted the audit reporting package and the Form SF-SAC to the Federal Audit Clearinghouse for fiscal years ending July 31, 2023 or 2022. Criteria All entities subject to the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), are required to submit the audit reporting package and the Form SF-SAC to the Federal Audit Clearinghouse 30 days after receipt of the auditor’s report, or 9 months after the end of the fiscal year, whichever comes first. Cause Management has been unable to obtain a Unique Entity Identifying Number (UEIN), which is a required field for submission to the Federal Audit Clearinghouse. Effect The Project is not compliance with federal reporting guidelines. Recommendation Management should take immediate steps to obtain the UEIN and submit the audit reporting package and the Form SFSAC to the Federal Audit Clearinghouse for fiscal years ending July 31, 2023 or 2022. Views of Responsible Officials and Planned Corrective Action Management agrees with auditor recommendations. See Corrective Action Plan prepared by management.

2023-001: Replacement Reserve Deposits, AL #14.155 Condition: The required deposit amount to the replacement reserve increased effective March 1, 2022, from $4,075 to $4,177, and then again effective April 1, 2022, from $4,177 to $4,277. During this period, Chesterfield Square Mutual Homes, Inc. did not increase their deposit amount for either of these increases. Management made a catch-up deposit in June 2023, to make up for this deficiency in accordance with the prior year corrective action plan; however, management did not increase their regular deposit amount. As a result, the July 2023 deposit was deficient by $202. Criteria: An amount as required by HUD should be deposited monthly in the replacement reserve. Cause: Management relied upon the mortgage company to invoice monthly for replacement reserve deposits and did not have processes or procedures in place to detect deficiencies in those deposits in the past and did not increase the amount. Effect: The Project is not compliance with its regulatory agreement. Recommendation: Management should take immediate steps to make deposits in arrears and should develop processes and procedures to ensure that mortgage and reserve payments are made in accordance with HUD requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with auditor recommendations. See Corrective Action Plan prepared by management.

2022-001: Replacement Reserve Deposits, AL #14.155 Condition: The required deposit amount to the replacement reserve increased effective March 1, 2021, from $4,075 to $4,177, and then again effective April 1, 2022, from $4,177 to $4,277. Chesterfield Square Mutual Homes did not increase their deposit amount for either of these increases. As a result, deposits for March, 2021, through July, 2022, were deficient. The total deficiency for the period is $2,134. Criteria: An amount as required by HUD should be deposited monthly in the replacement reserve. Cause: Management relied upon the mortgage company to invoice monthly for replacement reserve deposits and did not have processes or procedures in place to detect deficiencies in those deposits. Effect: The Project is not compliance with its regulatory agreement. Recommendation: Management should take immediate steps to make deposits in arrears and should develop processes and procedures to ensure that mortgage and reserve payments are made in accordance with HUD requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with auditor recommendations. See Corrective Action Plan prepared by management.

Condition: The required deposit amount to the replacement reserve increased effective March 1, 2021, from $4,075 to $4,177. Chesterfield Square Mutual Homes did not increase their deposit amount for this. As a result, deposits for March through July, 2021, were deficient by $102 each, totaling a deficiency of $510 for the year. Criteria: An amount as required by HUD should be deposited monthly in the replacement reserve.Cause: Management relied upon the mortgage company to invoice monthly for replacement reserve deposits and did not have processes or procedures in place to detect deficiencies in those deposits. Effect: The Project is not compliance with its regulatory agreement. Recommendation: Management should take immediate steps to make deposits in arrears and should develop processes and procedures to ensure that mortgage and reserve payments are made in accordance with HUD requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with auditor recommendations. See client?s corrective action plan.

Condition: Monthly required replacement reserve deposits totaling $16,300 (four monthly deposits of $4,075 each) were not made in April-July 2020. Criteria: An amount as required by HUD should be deposited monthly in the replacement reserve. Cause: Management relied upon the mortgage company to invoice monthly for replacement reserve deposits and did not have processes or procedures in place to detect deposits missing from those invoices. Effect: The Project is not compliance with its regulatory agreement. Recommendation: Management should take immediate steps to make deposits in arrears and should develop processes and procedures to ensure that mortgage and reserve payments are made in accordance with HUD requirements. Corrective Action Plan: See client?s corrective action plan. Contact Person: Sharon Stover, Controller