NLH2 116-HD015

Finding 2022-001 ? Special Tests and Provisions ? Reserve for Replacement Federal program information: Title: Section 811 Capital Advance CFDA Number: 14.181 Resolution Status: Resolved Information on Universe Population Size: Population size is the total amount in the Reserve for Replacement account at year-end, June 30, 2022. Sample Size Information: Reserve for Replacement ending balance at June 30, 2022. Identification of Repeat Finding and Finding Reference Number: This is a new finding for the property. Criteria: Total cash of $4,860 was required to be deposited into the Reserve for Replacement account by June 30, 2022. Statement of Condition: As of June 30, 2022, the Reserve for Replacement only had $4,455 deposited during the year. Cause: Management did not perform the Reserve for Replacement deposit for one month. Effect or Potential Effect: The project was not in compliance with the Capital Advance and current HUD regulations, the project?s Reserve for Replacement was under-funded for the current year by $405. Auditor Non-Compliance Code: B Questioned Cost: $405 Reporting Views of Responsible Officials: Management agrees with the Reserve for Replacement calculations and is aware of the current deposit required to the Reserve for Replacement. A deposit was made to Residual Receipts for $405 on July 17, 2022. Recommendation: Management should implement internal controls to make any required deposits before the year-end deadline. Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations: Management has transferred the full obligation of $405 to the Reserve for Replacement account as of July 17, 2022. This finding is therefore, resolved. Completion Date: July 17, 2022 Response: Management has transferred the full obligation of $405 to the Reserve for Replacement account as of July 17, 2022. This finding is therefore, resolved.

September 23, 2022 To the Department of Housing & Urban Development Re: Corrective Action Plan New Life Homes 2 respectfully submits the following corrective action plan for the year ended June 30, 2022. Name and address of independent public accounting firm: Palmer & Company 701 Osuna NE, Ste 100 Albuquerque, NM 87113 Audit period: June 30, 2021 The findings from the June 30, 2022 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. Section III - Federal Award Findings and Questioned Costs Finding 2022-001 - Special Tests and Provisions - Reserve for Replacement Federal program information: Title: Section 811 Capital Advance CFDA Number: 14.181 Resolution Status: Resolved Criteria: Total cash of $4,860 was required to be deposited into the Reserve for Replacement account by June 30, 2022. Statement of Condition: As of June 30, 2022, the Reserve for Replacement only had $4,455 deposited during the year.