Victory Housing, Inc.

Finding Reference Number: 2021-001 Type of Finding: FA Finding Resolution Status: In Process Information on Universe Population Size: The finding was not a result of a sampling procedure. Sample Size Information: The finding was not a result of a sampling procedure. Identification of Repeat Finding and Finding Reference Number: This is not a repeat finding. Criteria: The regulatory agreement (as amended) requires monthly deposits of $3,334. Statement of Condition: Required monthly deposits to the replacement reserve are deficient in the amount of $2,748. Cause: Procedures in place to ensure that deposits are made were not followed. Effect or Potential Effect: Replacement reserve is deficient. Auditor Non-Compliance Code: N Questioned Costs: There are no questioned costs. The finding does not relate to an undocumented transaction or unreasonable expenditure. Reporting Views of Responsible Officials: Management agrees with the finding. The replacement reserve deficiency will be funded in the amount of $2,748. Management will ensure that the replacement reserve deposits are made on a timely basis in the future. Context: Required monthly deposits to the replacement reserve are deficient in the amount of $2,748. Recommendation: Management should compare the required annual amount to the monthly deposits made to determine if the correct amount is deposited. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Management agrees with the finding. The replacement reserve deficiency will be funded in the amount of $2,748. Management will ensure that the replacement reserve deposits are made on a timely basis in the future. Response Indicator: Agree Completion Date: December 29, 2021 Response: Management agrees with the finding. The replacement reserve deficiency will be funded in the amount of $2,748. Management will ensure that the replacement reserve deposits are made on a timely basis in the future.

Finding Reference Number: 2021-002 Type of Finding: FA Finding Resolution Status: Resolved Information on Universe Population Size: The finding was not a result of a sampling procedure. Sample Size Information: The finding was not a result of a sampling procedure. Identification of Repeat Finding and Finding Reference Number: This is not a repeat finding. 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. Statement of Condition: When the project was acquired by the current owner in the prior year, it still had outstanding advances payable to the previous owner. HUD approved repayment of the advances in a prior year. The monthly approved payment was $800 and was setup to autopay each month. The remaining balance of the advances was repaid in the current year. However, the monthly auto payments continued for a period of time after the advances were paid in full. As a result, the project has a receivable from the prior owner in the amount of $4,836. Cause: The project did not take the proper steps in calculating the balance owed to ensure that the monthly payments were canceled as soon as the advances were paid in full. Effect or Potential Effect: The project has a receivable from the prior owner in the amount of $4,836. Auditor Non-Compliance Code: G Questioned Costs: $4,836 Reporting Views of Responsible Officials: Management agrees with the finding. Context: The project has a receivable from the prior owner in the amount of $4,836. Recommendation: The project should seek reimbursement from the prior owner. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Management agrees with the finding. The prior owner repaid the funds to the project on December 22, 2021 in the amount of $4,836. Response Indicator: Agree Completion Date: December 22, 2021 Response: Management agrees with the finding. The prior owner repaid the funds to the project on December 22, 2021 in the amount of $4,836.