HIGHLAND TERRACE APARTMENTS, LLC 114-35444

S3800-010 Finding Reference Number: 2019-001 S3800-011 Federal Program: CFDA # 14.135 Mortgage Insurance - Rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate 221(d)(3) and (4) Multifamily - Market Rate Housing Federal Agency: U.S. Department of Housing and Urban Development Pass-through Entity: None Type of Compliance Finding: N - Special Tests and Provisions S3800-015 Type of Finding: Federal Awards Finding S3800-016 Finding Resolution Status: The finding resolution is in progress. S3800-017 Information on Universe Population Size: N/A S3800-018 Sample Size Information: N/A S3800-019 Repeat Finding Number: N/A S3800-020 Criteria: HUD requirements state that the Organization deposit any surplus cash into the residual receipts account within 90 days after year end. S3800-030 Statement of Condition: During our audit of the Organization?s federal award program for the year-ended December 31, 2019, we noted that the Organization failed to deposit the surplus cash as of December 31, 2018 into the residual receipts account within 90 days after year end. The surplus cash has not been deposited as of the date of the 2019 audit report. S3800-032 Cause: The Organization overlooked depositing the December 31, 2018 surplus cash into the residual receipts account within 90 days after year end. S3800-033 Effect or Potential Effect: The Organization was not in compliance with HUD requirements and the regulatory agreement requirement related to deposit of surplus cash into the residual receipts account. S3800-035 Auditor Non-Compliance Code: B - Failure to Make Required Residual Receipts Deposits S3800-040 Questioned Costs: None S3800-045 Reporting Views of Responsible Officials: The Organization agreed with our finding. S3800-050 Context The Organization was required to deposit surplus cash into the residual receipts account within 90 days after year-end. The surplus cash has not been deposited as of the date of the 2019 audit report. S3800-080 Recommendation: The Organization should establish a process to ensure timely deposit of surplus cash into the residual receipts account after year-end and should deposit the surplus cash as of December 31, 2019 into the residual receipts account as soon as possible. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Concur S3800-130 Response Indicator Agree S3800-140 Completion: Date March 30, 2020 S3800-150 Response: The Organization agreed with our recommendation.

Federal Award Finding 2019-001 The Organization agrees with the auditor?s finding and recommendation. The Organization will establish a process to ensure timely deposit of surplus cash into residual receipts account after the year-end and will deposit the surplus cash calculated as of December 31, 2019 no later than March 30, 2020.