Atlantic Housing Foundation, Inc

Finding #2023-001: Section 8 Housing Assistance Payments Program Assistance Listing 14.155– Waters at West Ashley, LP. Condition: The Partnership failed to maintain proper certifications prior to doing on-site transfers governed by the HAP Contract that required multiple months to unravel and resulted in a delay in payment until March 2024. Criteria: The Partnership is required to annually re-certify tenants to ensure they are meeting the HAP Contract requirements and receiving benefits according to their income. Questioned Costs: $639,206 Effect: The Partnership is in violation of the Section 8 Housing Assistance Payments Program. Repeat Finding: No Cause: The Project was undergoing a major rehabilitation and transferred tenants which had lost HUD certification. Recommendation: We recommend the Partnership review the rules that govern the HAP Contract and implement a system to ensure that all new and existing residents are meeting the Contract requirements. Management’s Views: Management is in agreement with the finding and will submit the remaining vouchers with the related certification documentation. Management will implement a process to accurately track unit transfers during a major rehabilitation and maintain the proper tenant certifications. Auditors comment: The Partnership has recertified existing residents, submitted the 2023 vouchers and received payment for the submitted vouchers as of April 3, 2024.

Finding #2023-002: Section 8 Housing Assistance Payments Program 14.195 – Gretna Village, LP Type of Finding: Material Weakness Condition: The Partnership failed to renew their HAP Contract before it expired on April 27, 2023, resulting in the Project not receiving subsidy payments from May through December 2023. Criteria: Management should monitor contract terms to ensure the renewal process is started in sufficient time so there is no lapse in the Project receiving subsidies. Effect: The Partnership is without a valid HAP contract. Repeat Finding: No Questioned Cost: $167,975 Cause: Oversight Recommendation: Management should monitor contract terms and have procedures in place to ensure contract coverage does not lapse. Auditor’s Comment: The Partnership submitted a new HAP Contract for approval and received payment for the May through December 2023 subsidies in May 2024.

Finding #2023-003: Section 8 Housing Assistance Payments Program Assistance Listing 14.195 Project Name of Afton Gardens, LLC, FHA/Contract No. of VA36L00002, Amount of $18,183; Project Name of Boulder Creek, LLC, FHA/Contract No. of SC16M000064, Amount of $42,313; Project Name of Brentwood Crossing, LLC, FHA/Contract No. of NC19M000070, Amount of $266,088; Project Name of Brittany Woods/Park Chase, LLC, FHA/Contract No. of GA06L00060, Amount of $23,154; Project Name of Cedar Moor, LLC, FHA/Contract No. of NC19L000146, Amount of $14,359; Project Name of Crescent Hills, LLC, FHA/Contract No. of SC16M000062, Amount of $33,321; Project Name of Spring Grove, LLC, FHA/Contract No. of SC16L000003 and SC160056002, Amount of $45,038; Project Name of Timber Ridge, LLC, FHA/Contract No. of NC19M000088, Amount of $26,759; Project Name of Gretna Village, LP, FHA/Contract No. of 02-1709-HF/SP and 02-1710-HCD, Amount of $5,839; Project Name of Waters at James Corssing, LP, FHA/Contract No. of VA36L000130, Amount of $9,041; Total of $484,095.

Condition: The Projects paid management fees during 2022 and 2023 at an increased rate of 5% without approval from HUD. Criteria: The Projects property management fees must follow the HUD approved management agreement. Effect: The Projects overpaid property management fees in 2022 and 2023. Questioned Cost: $484,095 Cause: Oversight Repeat Finding: No Recommendation:

The Projects need to submit the new management fee rate on HUD Form 9839 for approval. Auditor’s Comment: The Projects are in the process of submitting the updated Form 9839 to HUD for approval.

Finding #2023-004: Section 8 Housing Assistance Payments Program Assistance Listing 14.195 and Section 221(d)(4) Insured Loan Program Assistance Listing 14.155 Condition: The Corporation did not record credit card charges or reconcile the credit card payable account to the credit card statement during 2023. Criteria: Under GAAP and Uniform Guidance compliance requirements the Corporation is required to account for expenses and liabilities to ensure the financial statements are materially stated and expenses are in compliance with Uniform Guidance requirements. Questioned Costs: $216,657 Effect: The Corporation is not in compliance with Uniform Guidance. Cause: The Corporation has expense report procedures in place, however, these procedures have not been followed. Expense reports and receipts have not been provided or approved by management resulting in the understatement of expenses and liabilities. Repeat Finding: No Recommendation: Management needs to provide oversight and monthly monitoring to ensure employees follow the expense report policies and expenses are proper expenditures of the Corporation and properly recorded in the financial statements. Management’s Views: For unsubmitted expense reports, management will record the proper accrual for expenses.

Finding #2023-005: Section 8 Housing Assistance Payments Program Assistance Listing 14.195 - Waters at James Crossing, LP., Brittany Woods/Park Chase, LLC Condition: The Projects did not recertify or obtain adequate income verification for Section 8 tenants. Criteria: The Projects are required to annually confirm eligibility and maintain documentation in the tenant file including a signed Tenant Income Certification form and income verification documents. Questioned Costs: $125,009 Effect: The Projects are in violation of regulatory requirements governing tenant files and eligibility verification, which could result in the loss of HUD subsidies. Cause: Management’s policies with respect to tenant eligibility and tenant files were not consistently followed. Repeat Finding: No Recommendation: Management should review its tenant eligibility policies and monitoring procedures to ensure compliance. Management Views: Management concurs and agrees to review and monitor policies and procedures regarding tenant eligibility and related documentation.