NEW NEIGHBORS, INC. #176‐HD‐010

Finding 2020-001, Residual Receipts Deposits Statement of condition: The Organization did not transfer project funds to the residual receipts accounts in a timely manner and did not return residual receipts in excess of $250 per unit. Criteria: Pursuant to 24 CFR ?891.400(e) "Use of project funds" any surplus cash following the expiration of the fiscal year shall be deposited in a residual receipts account within 60 days following the end of the fiscal year. Additionally, pursuant to the June 19, 2015 HUD issued memorandum, owners must remit funds from the residual receipts account in excess of $250 per unit to HUD. Cause of condition: Management did not transfer the surplush cash to the residual receipts accounts or return residual receipts balances in excess of $250 per unit to HUD. Effect of condition: The Organization is not in compliance with 24 CFR ?891.400(e) and the June 19, 2015 HUD memorandum. Recommendation: We recommend that management return the amounts over the retained balance level to HUD. Response: See the corrective action plan.

Finding 2020-001, Residual Receipts Deposits Responsible individual: Lori Nealley, Property Management Director of Housing Management's view: Management agrees with the finding. Corrective action: Management will transfer surplus cash to HUD or seek approval to use the funds for operations. Anticipated completion date: October 31, 2020.