EVANGELINE COUNCIL HOUSING FOR THE ELDERLY, INC.

FINDING No. 2025-001: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, ALN 14.155 Finding Resolution Status: Unresolved. Information on Universe Population Size: Replacement reserve account. Sample Size Information: All replacement reserve deposits for the year ended September 30, 2025. Identification of Repeat Finding and Finding Reference Number: Yes, 2024-001. Criteria: In accordance with HUD, timely monthly deposits must be made to the Project’s replacement reserve account. Statement of Condition: The Project overfunded the replacement reserve account by $634. Cause: The Project over-corrected the prior period finding, depositing more funds than necessary to resolve the issue. Effect or Potential Effect: Overfunding results in noncompliance with HUD deposit requirements and impacts cash availability for operations. Auditor Non-Compliance Code: N – Reserve for Replacements Deposits Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: Management should implement procedures to ensure that the correct amount is deposited into the replacement reserve account each month. An approved form HUD-9250 should be obtained to remove the excess funds. Response Indicator: Agree. Completion Date: 9/30/2026 Response: The verification of the correct funding amounts is now confirmed against the approved form HUD-9250 on a monthly basis. This step has been added to the month-end close process.

FINDING No. 2024-001: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, ALN 14.155 Finding Resolution Status: Unresolved. Information on Universe Population Size: All replacement reserve deposits for the year ended September 30, 2024. Sample Size Information: All replacement reserve deposits for the year ended September 30, 2024. Identification of Repeat Finding and Finding Reference Number: Yes, 2023-002. Criteria: In accordance with HUD, timely monthly deposits must be made to the Project’s reserve for replacement account. Statement of Condition: As a result of not requesting a timely increase to the reserve for replacement account, the funding increase effective January 1, 2024 was not approved by HUD until subsequent to year end and the Project incorrectly made an unauthorized deposit in anticipation of HUD’s approval. Cause: The Project implemented the increase to the reserve for replacement account during the current fiscal year ahead of obtaining HUD approval, which was obtained subsequent to year end on October 29, 2024. Effect or Potential Effect: The Project did not correctly fund the reserve for replacement account on a monthly basis. Auditor Non-Compliance Code: N – Reserve for Replacements Deposits Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted.Recommendation: Management should implement procedures to ensure that the increase to the reserve for replacement account is properly applied with timely HUD authorization via form HUD-9250. Response Indicator: Agree. Completion Date: 9/30/2025 Response: New procedures have been implemented to review the deposits each month to ensure amounts are correct and updated timely.

FINDING No. 2023-001: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, ALN 14.155 Finding Resolution Status: Unresolved. Information on Universe Population Size: All security deposits for the year ended September 30, 2023. Sample Size Information: All security deposits for the year ended September 30, 2023. Identification of Repeat Finding and Finding Reference Number: No. Criteria: In accordance with HUD, the Project must hold tenant security deposits in a segregated interest bearing account and maintain a sufficient balance equal to the total security deposits collected from current tenants, plus accrued interest. Statement of Condition: The Project did not maintain sufficient funds equal to or exceeding the total security deposits collected from current residents. Cause: The Project’s security deposits liability exceeded its cash deposits by $6,980. Effect or Potential Effect: The Project would not have sufficient funds to satisfy its obligations to its tenants strictly using the security deposits account. Auditor Non-Compliance Code: M – Security Deposits Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: Management should implement procedures to ensure adequate funding of the security deposits account that equals or exceeds the corresponding security deposits liability. Response Indicator: Agree. Completion Date: 09/30/2024 Response: The Security Deposit liability is reconciled to the underlying report to ensure proper amounts are maintained. New procedures have been implemented to reconcile the Security Deposit Liability to cash funding.

FINDING No. 2023-002: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, ALN 14.155 Finding Resolution Status: Resolved. Information on Universe Population Size: All replacement reserve deposits for the year ended September 30, 2023. Sample Size Information: All replacement reserve deposits for the year ended September 30, 2023. Identification of Repeat Finding and Finding Reference Number: No. Criteria: In accordance with HUD, required monthly deposits must be made to the Project’s reserve for replacement account. Statement of Condition: The Project underfunded the account by $676. Cause: An increase in funding was not implemented. Effect or Potential Effect: Deficiently funded reserve for replacement account. Auditor Non-Compliance Code: N – Reserve for Replacements Deposits Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations have been adopted. Recommendation: Management should implement procedures to ensure that the correct amount is deposited into the replacement reserve account each month. Response Indicator: Agree. Completion Date: 12/13/2023 Response: Deposits are made to the replacement reserves on a monthly basis. A new checklist is being implemented to ensure the accuracy of the amounts and completeness of the transfers.

FINDING No. 2023-003: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, ALN 14.155 Finding Resolution Status: Resolved. Information on Universe Population Size: One hundred and thirty-seven tenants Sample Size Information: Twenty tenants Identification of Repeat Finding and Finding Reference Number: No. Criteria: HUD regulation requires timely verification of tenant’s current and initial income through the use of Enterprise Income Verification (EIV) reports. Statement of Condition: One tenant file did not contain verification of current income through the use of EIV reports. Cause: The Project did not perform and/or maintain the most current income verification of one tenant. Effect or Potential Effect: Unable to verify tenant eligibility and cost of assistance and residency may be disallowed. Auditor Non-Compliance Code: R – Section 8 Program Admin. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations have been adopted. Recommendation: Management should implement procedures to ensure that the required documentation is performed timely and maintained in the tenant files. Response Indicator: Agree. Completion Date: 03/17/2023 Response: Monthly reminders are being sent to all managers to run their EIV reports for the month. In addition, random files are being reviewed to ensure EIV reports are pulled as required. Training has been conducted with managers on EIV reports and EIV requirements.

FINDING No. 2021-001: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, CFDA 14.155 Finding Resolution Status: Unresolved. Information on Universe Population Size: Escrow accounts. Sample Size Information: Escrow accounts. Identification of Repeat Finding and Finding Reference Number: No. Criteria: As required by the regulatory agreement, the Project is required to pay, when due, all taxes, assessments and other charges. Statement of Condition: The Project is deficient in funding escrow deposits in the amount of $27,323, as required by HUD. Cause: The Project did not properly fund the escrow accounts based on current period insurance premiums and tax rates. Effect or Potential Effect: The escrow deposits are not sufficient to meet future obligations. Auditor Non-Compliance Code: Z - Other Reporting Views of Responsible Officials: Management respectfully disagrees with the finding. Recommendation: The Project should make sufficient deposits to the escrow accounts in a timely manner. Response Indicator: Disagree. Response: The escrow is held with the lender and they do a once a year analysis and automatically adjust the monthly escrow deposit per their requirements. For 2021 said monthly adjustment has started in November.

Finding Resolution Status: Resolved. Information on Universe Population Size: Government grants. Sample Size Information: Service coordinator grants. Identification of Repeat Finding and Finding Reference Number: No. Criteria: As required by GAAP, the Project must record reimbursement grant revenue and corresponding receivables as the expenses are incurred to match revenues with expenses. Statement of Condition: The Project did not record a receivable related to its awarded service coordinator grant totaling $47,932 and an audit entry was required to not materially misstate the financial statements. Cause: The Project did not properly recognize revenue. Effect or Potential Effect: Without correction through audit adjustment, revenue of the current audit period presented on the financial statements and the schedule of expenditures of federal awards would be materially misstated. Auditor Non-Compliance Code: Z - Other Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor?s recommendations have been adopted. Recommendation: The Project should record reimbursement grant revenue and corresponding receivables as the expenses are incurred. Response Indicator: Agree. Completion Date: 09/30/21 Response: The project will record reimbursed grant revenue and a corresponding receivable while waiting for HUD funding.

FINDINGS AND QUESTIONED COSTS ? MAJOR FEDERAL AWARD PROGRAMS AUDIT FINDING No. 2020-001: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, CFDA 14.155 Finding Resolution Status: Resolved. Information on Universe Population Size: One hundred thirty-four tenants. Sample Size Information: Twenty tenants. Identification of Repeat Finding and Finding Reference Number: Yes, 2019-001. Criteria: HUD regulation requires the Project to perform background checks on all tenants prior to move-in acceptance, confirm verification of tenant?s initial income through the use of Enterprise Income Verification (EIV) reports within 90 days of move-in, and maintain EIV forms for all tenants. Statement of Condition: Of the files selected, one tenant file had a background check performed subsequent to move-in, two tenants? initial EIV reports were completed after 90 days, and two tenant files did not contain verification of initial income through use of EIV reports. Cause: The Project did not perform a background check or run an initial EIV timely, and the Project did not maintain appropriate tenant eligibility documentation required by HUD. Effect or Potential Effect: Unable to verify tenant eligibility and cost of assistance may be disallowed. Auditor Non-Compliance Code: R ? Section 8 Program Admin. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor?s recommendations will be adopted. Recommendation: The Project should implement procedures to ensure required documentation is performed timely and maintained in the tenant files. Response Indicator: Agree. Completion Date: 05/06/2020 Response: Management has provided the project with additional training on HUD regulations and implemented new procedures where the regional directors conduct periodic file reviews.

FINDINGS AND QUESTIONED COSTS ? MAJOR FEDERAL AWARD PROGRAMS AUDIT FINDING No. 2019-001: Section 8 Housing Assistance Payments Program, CFDA 14.195 Finding Resolution Status: Resolved. Information on Universe Population Size: One hundred thirty-two tenants. Sample Size Information: Twenty tenants. Identification of Repeat Finding and Finding Reference Number: No. Criteria: In accordance with HUD, eligibility for housing assistance requires the Project to maintain annual Enterprise Income Verification (EIV) forms for all tenants. Statement of Condition: The Project did not maintain the initial EIV for two of the tenants selected. Cause: The Project did not maintain the required documents to be in compliance with HUD requirements. Effect or Potential Effect: Unable to verify tenant eligibility and cost of assistance may be disallowed. Auditor Non-Compliance Code: R ? Section 8 Program Admin. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor?s recommendations will be adopted. Recommendation: The Project should verify eligibility by obtaining all required documentation for potential tenants and adequately maintain tenant files. Response Indicator: Agree. Completion Date: 09/30/2019 Response: Management has provided staff with additional HUD training and implemented a new policy whereas Regional Directors make periodic file reviews.

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