Central Manor Apartments, Inc.

Finding 2024-001: Unauthorized Reserves Withdrawal: Condition: A withdrawal was made from a reserve for replacements account without proper authorization from HUD. Criteria: Withdrawals from the reserve for replacements account must be properly authorized by HUD. Effect: Potential noncompliance with HUD agreement provisions. Cause: A portion of the reserve for replacements balance was held in a certificate of deposit. In March 2024, the certificate of deposit matured and the funds were deposited into a money market account. A check for legal fees was written from this account. Recommendation: The Project needs to determine if these funds must be submitted to the new owner. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. Questioned costs: $12,913

Finding 2024-002: Unallowed Expenditures: Condition: Expenditures were made for costs which were not Project-related operating expenses. Criteria: Project funds may be used only for expenses that are reasonable and necessary to the operation of the Project as provided for in the Regulatory Agreement between HUD and the Project owner. Effect: Potential noncompliance with HUD agreement provisions. Cause: Legal expenses related to the sale of the Project by the Board were paid with Project funds. Recommendation: Consult with HUD to determine the corrective action. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. Questioned costs: $25,825

Finding 2024-003: Required Reserves Deposit Shortage: Condition: There was a shortage in the total required deposits into the replacements reserve account. Criteria: Deposits are required to be made in accordance with the required deposit schedule provided by HUD. Effect: Potential noncompliance with HUD agreement provisions. Cause: Monthly deposits were not increased when the required monthly deposit amount was changed effective July 1, 2024. Recommendation: The Project needs to determine if these funds must be submitted to the new owner. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. Questioned costs: $788

Finding 2024-004: Uninsured Banking Account Balance: Condition: At November 14, 2024, the Project had deposits which exceeded the Federal Deposit Insurance Corporation’s (FDIC) coverage. Criteria: Certain provisions of the HUD agreement. Effect: Potential noncompliance with HUD agreement provisions. Cause: Certain financial institution’s banking accounts exceeded the Federal Deposit Insurance Corporation’s (FDIC) coverage. Recommendation: The Project needs to monitor its banking account balances to ensure compliance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. Questioned costs: $27,000

Finding 2024-005: Residual Receipts Deposit: Condition: At November 14, 2024, the Project had a calculated annual surplus which has not been deposited into the residual receipts account. Criteria: The calculated annual surplus is required to be deposited into the residual receipts account. Effect: Potential noncompliance with HUD agreement provisions. Cause: A deposit into the residual receipts account has not been made. Recommendation: The Project needs to determine if these funds must be submitted to the new owner. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. Questioned costs: $54,839