SHARON MANOR HOMES, INC.

Finding Resolution Status: Resolved. Population Size: 39. Sample Size 4. Noncompliance Information: I tested four tenant files and found noncompliance in two files. Condition: The files for Unit 4703-3 and Unit 4707-7 did have a signed 92006 by the tenant and an incorrect HUD Model Lease was used for both tenants. Criteria: As part of the tenant certification and recertification, HUD requires certain documentation be maintained in the tenant files and the correct model lease be used. Effect: The Project was not in compliance with HUD rules and regulations. Cause: Managment agent oversight. Recommendation: The management agent should correct all the missing or incorrect informantion and establish procedures to make sure the correct model lease is used.

Management’s comments: We are in agreement with the finding. The compliance manager has instructed the manager as to the importance of the tenants completing all the required paperwork to include signing, dating, and checking the appropriate box or boxes. In regards to the incorrect leases being used, the manager had the residents sign the correct HUD Model Leases. Further, the manager is noting on the correct lease, “Corrected Lease,” when the resident signs and initialing the note along with the resident. She has been instructed to remove any old leases or forms in her computer to ensure this oversight is not repeated. Auditor’s comments: Government Auditing Standards requires the auditor to perform limited procedures on Sharon Manor Homes, Inc.’s response to the findings identified in my audit and described in the accompanying schedule of findings, questioned costs, and recommendations. Sharon Manor Homes, Inc’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, I express no opinion on the response.

Finding Resolution Status: Resolved. Population Size: N/A. Sample Size: N/A. Noncompliance information: I tested the waiting list and found two applicants that had been passed over with no explanation as to why they were passed over. In addition, the move-in for unit 4703-2 had no date or time stamp on the original application. Condition: Two applicants had been passed over on the waiting list with no explanation and applicants with later dates on their applications were moved in. The application for one move-in was not date and time stamped and the correct move in order could not be determined. Criteria: HUD rules and regulations require that the applications and waiting list be maintained in a way so that the tenant move-in order can be determined. Effect: Applicants could be moved-in in an incorrect order and there is no way of telling if applicants that were passed over should have been moved in. Cause: Managment agent oversight. Reccomendation: The management agent should establish procedures to make sure the waiting list is being properly maintained and explanations for passing over an applicant is recorded so that a proper move-in order can be established and verified.

Management’s comments: We are in agreement with the finding. The manager, on the original application for 4703-2, had failed to time stamp the original application. There was an updated application attached to it which was used for the move-in. The manager has been reminded to time stamp all applications to ensure and document applicants are processed in proper order according to the waitlist. In regards to the applicants that had been passed over on the waiting list, the Manager had offered the units, noted as findings, to the respective applicants who were next on the waiting list. However, one applicant was unreachable given the phone number did not work and the letter dispatched to the applicant came back as undeliverable. The other applicant is, currently, in rehab and will not be able to occupy any unit until she has finished her treatment. That applicant will remain on the waiting list and will be contacted when the next unit becomes available. The manager failed to note the activity on the waiting list as she has been instructed to do. The manager has been trained to note when any applicants on the waiting list have been contacted and not to skip any applicants on the waiting list. The property management software allows us to make these notations. Auditor’s comments: Government Auditing Standards requires the auditor to perform limited procedures on Sharon Manor Homes, Inc.’s response to the findings identified in my audit and described in the accompanying schedule of findings, questioned costs, and recommendations. Sharon Manor Homes, Inc’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, I express no opinion on the response.

Finding 2020-001 Finding Resolution Status: Completed Population Size: 39 Sample Size: 4 Noncompliance Information: I tested four tenant files and found noncompliance in one tenant file. Condition: The application for unit 4703-07 was not date and time stamped by the management agent. Criteria: HUD rules and regulations require that the applications be maintained in a way the move-in order can be determined. Effect: It was not possible to determine if the applicant was moved-in in the correct order. Cause: Management agent oversight. Recommendation: The management agent should establish procedures to make sure all applications are date and time stamped when received by the property. Questioned Costs: $-0-

Sharon Manor Homes, Inc. 4703-1 N. Sharon Amity Road Charlotte, NC 28205 Corrective Action Plan Name of auditee: Sharon Manor Homes, Inc. HUD auditee identification number: FHA/Contract #053-11210 Name of audit firm: O. Douglas Covington, C.P.A., P.A. Period covered by the audit: January 1, 2020 thru December 31, 2020 CAP prepared by: Name: Deborah Wright Position: Compliance Manager Telephone: 336-337-5006 1. Finding 2020-001 a. Comments on the Finding and Each Recommendation We are in agreement with the finding. b. Action(s) Taken or planned on the finding The Compliance Manager has instructed the Manager as to the importance of time date stamping the application. We do believe the applicant was not bypassed by any move in due to the application date of the applicant.

Finding 2020-002 Finding Resolution Status: Completed Population Size: 9 Sample Size: 9 Noncompliance Information: I tested nine applications and found non-compliance in one application. Condition: The date on the application was not the same date that was on the waiting list. The waiting list was not being maintained in a manner in which the order of tenant move-ins could be determined. This is a repeat finding. Criteria: HUD rules and regulations require that the waiting list be maintained in a manner in which the move-in order can be determined. Effect: Applicants could be moved-in in an incorrect order. Cause: Management agent oversight. Recommendation: The management agent should correct the waiting list to reflect the correct date the application was received. Questioned Costs: N/A

Sharon Manor Homes, Inc. 4703-1 N. Sharon Amity Road Charlotte, NC 28205 Corrective Action Plan Name of auditee: Sharon Manor Homes, Inc. HUD auditee identification number: FHA/Contract #053-11210 Name of audit firm: O. Douglas Covington, C.P.A., P.A. Period covered by the audit: January 1, 2020 thru December 31, 2020 CAP prepared by: Name: Deborah Wright Position: Compliance Manager Telephone: 336-337-5006 2. Finding 2020-002 a. Comments on the Finding and Each Recommendation. We are in agreement with the finding. b. Action(s) Taken or Planned on the Finding The Manager had offered a unit twice to that applicant ? they told her they wanted to remain on the waiting list, so she told them that they now had to go to the bottom of the waiting list with the current date if they wanted to remain on the list, which they agreed to. She did not know how to change their application date on the waiting list and had just made a note of it. I have now instructed her to remove any applicant that has been offered a unit twice, and if they wanted to remain, they had to fill out a new application.

2019-002

Finding 2019-001 Finding Resolution Status: In Progress Population Size: 4 Sample Size: 4 Noncompliance Information: I tested four tenant move-out files and found noncompliance in two move-outs. Condition: The security deposits for units 4701-07 and 4703-6 were not refunded in thirty days. Criteria: HUD requires tenant security deposits be refunded within thirty days, or the statute set by the state, whichever is shorter. Effect: The tenant security deposit was not refunded within the required timeframe. Cause: Management agent oversight. Recommendation: The management agent should establish procedures to make sure to refund all security deposits within the thirty-day timeframe. Questioned Costs: $-0-

Name of auditee: Sharon Manor Homes, Inc. HUD auditee identification number: FHA/Contract #053-11210 Name of audit firm: O. Douglas Covington, C.P.A., P.A. Period covered by the audit: January 1, 2019 thru December 31, 2019 CAP prepared by: Name: Deborah Wright Position: Compliance Manager Telephone: 336-337-5006 1. Finding 2019-001 a. Comments on the Finding and Each Recommendation We are in agreement with the finding. b. Action(s) Taken or planned on the finding The Compliance Manager has notified the Site Manager as to the importance of sending in move outs in a timely manner. She has been instructed to do the move out inspection immediately and send it to the office as soon as her paperwork is completed, so that it won?t be beyond the 30 days.

Finding 2019-002 Finding Resolution Status: In Progress Population Size: N/A Sample Size: N/A Noncompliance Information: N/A Condition: The waiting list was not being maintained in a manner in which the order of tenant move-ins could be determined. The date the application was received was being incorrectly entered into the computer system. This is a repeat finding. Criteria: HUD rules and regulations require that the waiting list be maintained in a manner in which the move-in order can be determined. Effect: Applicants could be moved-in in an incorrect order. Cause: Management agent oversight. Recommendation: The management agent should correct the waiting list to reflect the correct date the application was received. Questioned Costs: N/A

Name of auditee: Sharon Manor Homes, Inc. HUD auditee identification number: FHA/Contract #053-11210 Name of audit firm: O. Douglas Covington, C.P.A., P.A. Period covered by the audit: January 1, 2019 thru December 31, 2019 CAP prepared by: Name: Deborah Wright Position: Compliance Manager Telephone: 336-337-5006 2. Finding 2019-002 a. Comments on the Finding and Each Recommendation. We are in agreement with the finding. b. Action(s) Taken or Planned on the Finding The manager was trying to update the waiting list, and as she was making some updates, some of the dates were changed to the date she was entering the information in. She has been re-trained into putting information into the correct spot, so the initial dates are not affected. We have also locked waiting lists so that no one can be skipped without an explanation.

2018-002

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2017-001

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2017-002

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2016-005

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2015-001

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2015-006

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2015-005

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