HOMES FOR SHIPPENSBURG INC

Statement of Condition During the year ended March 31, 2022, in connection with our lease file review we noted the following deficiency: Two out of two existing tenants tested completed their current year recertification after the required recertification date. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Questioned Costs N/A. Effect The procedures for determining tenant eligibility were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: E - Eligibility and N - Special Tests and Provisions. Finding Resolution Status: Resolved. Views of Responsible Officials and Planned Corrective Actions: The Corporation agrees with the finding and the auditor's recommendation has been adopted.

A. Current Findings on the Schedule of Findings and Questioned Costs 1. Finding 2022-001 a. Comments on the Finding and Each Recommendation We agree with the finding and the auditor's recommendation has been adopted. b. Action(s) Taken or Planned on the Finding Management agrees with the finding. In addition to hiring a new Director of Compliance and rebuilding the compliance team in 2021 to review and approve certifications, we have increased our corporate operations team and they are now responsible for reviewing all certification due dates weekly with the site teams to ensure timely completion of certifications.

2021-001

Statement of Condition During the year ended March 31, 2021, in connection with our lease file review we noted the following deficiency: Three out of three existing tenants tested completed their current year recertification after the required recertification date. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Questioned Costs N/A Effect The procedures for determining tenant eligibility were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: E - Eligibility and N - Special Tests and Provisions Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: The Corporation agrees with the finding and the auditor's recommendation has been adopted.

A. Current Findings on the Schedule of Findings and Questioned Costs 1. Finding 2021-001 a. Comments on the Finding and Each Recommendation We agree with the finding and the auditor's recommendation has been adopted. b. Action(s) Taken or Planned on the Finding Management agrees with the finding and has put several procedures in place to ensure compliance with HUD requirements. First, we did have turn over in key compliance positions including a new Director of Compliance ("DOC"). Our new DOC has setup compliance review procedures at the corporate level of all certification due dates both as an audit function and reviewing with the onsite staff. Monthly, the DOC now meets with the RM for the community to review any outstanding compliance/certification issues. Also, the VP of Operations is now meeting with the DOC on a regular basis to review all communities' compliance to be sure that any issues are addressed prior to the due dates and deadlines.

2020-001

Statement of Condition During the year ended March 31, 2020, in connection with our lease file review we noted the following deficiency: Two out of two existing tenants tested completed their current year recertification after the required recertification date.Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Questioned Costs N/A Effect The procedures for determining tenant eligibility were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: E - Eligibility and N - Special Tests and Provisions Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: The Corporation agrees with the finding and the auditor's recommendation has been adopted.

Current Findings on the Schedule of Findings and Questioned Costs 1. Finding 2020-001 a. Comments on the Finding and Each Recommendation We agree with the finding and the auditor's recommendation has been adopted. b. Action(s) Taken or Planned on the Finding We had a turnover in staff, which led to recertification's being performed late. Our Compliance Department is monitoring file compliance.

Statement of Condition During March 31, 2019, in connection with our lease file review we noted the following deficiency: One out of three tenants tested did not have a signed current year recertification or a completed move-in inspection in their lease file. The tenant was a new tenant during the year. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Questioned Costs N/A Effect The procedures for determining tenant and eligibility were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Cause Management's policies with respect to the determination of tenant eligibility in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: E - Eligibility and N - Special Tests and Provisions Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: The Corporation agrees with the finding and the auditor's recommendation has been adopted.

Finding 2019-001 a. Comments on the Finding and Each Recommendation We agree with the finding. b. Action(s) Taken or Planned on the Finding Resident has signed the recertification. We had a turnover in staff, the current staff has had additional training on our procedures. Our Compliance Department is monitoring file compliance.

Statement of Condition: During the year ended March 31, 2019, management did not repay $5,730 of its the excess residual receipts balance to HUD, as required by the Consolidated Appropriations Act, 2016. Criteria The balance of the excess residual receipts is due to HUD upon the notification of approval for required deposit. Questioned Costs $5,730 Effect The repayment of excess residual receipts was not timely. Cause Controls are not in place to ensure that required remittances to HUD are made timely. Recommendation Management should establish internal controls and procedures to ensure that required remittances to HUD are made timely. Auditor Noncompliance Code: S - Internal control deficiencies and Z - Other Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: The Corporation agrees with the finding and the auditor's recommendation has been adopted.

Finding 2019-002 a. Comments on the Finding and Each Recommendation We agree with the finding. b. Action(s) Taken or Planned on the Finding HUD had approved a prior expenditure from residual receipts that reduced the amount recorded so we assumed that we could then reduce the amount paid back to HUD as the excess was reduced. We have sent a residual receipts approval request to HUD to reimburse $5,730 of residual receipt funds back to HUD.

2018-004

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2017-001

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2017-002

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