FULTON GARDENS II CORPORATION

Findings reference number: 2025-001 - Title and AL Number of Federal Program: Supportive Housing for the Elderly - Section 202 Capital Advance (AL 14.157) - Type of finding: Federal Award (Compliance) -Resolution Status: In process - Population size: N/A - Sample size: N/A - Repeat finding: Yes - Criteria: Funds should not be withdrawn from the reserve for replacement without HUD's written authorization. - Condition: Review of the reserve for replacement account showed that $17,705 had been withdrawn without HUD's approval. - Cause: The Project had a shortfall of operational cash and used some funds from the reserve for replacement account to pay for operating expenses. - Effect: The Project needs to redeposit such funds to the reserve for replacement or obtain authorization for the withdrawal. - Noncompliance code: A. Unauthorized withdrawal - Questioned costs: N/A. - Reporting views of officials: Auditee agrees with the finding. - Contract Number: 114-EE150 - Context: The funds were withdrawn because of a shortfall of operating cash. - Recommendation: Management should not withdraw funds from the reserve for replacement without HUD authorization. - Auditee's comments: Auditee agrees with the finding and will replenish the money to the reserve for replacement account as soon as possible. - Auditors' summary of auditee's comments: They are in agreement. - Completion date: 12/31/2026 - Response: Management will transfer the unauthorized withdrawals when cash becomes available.

Findings reference number: 2024-001 - Title and AL Number of Federal Program: Supportive Housing for the Elderly - Section 202 Capital Advance (AL 14.157) - Type of finding: Federal Award (Compliance) - Resolution Status: In process - Population size: N/A - Sample size: N/A - Repeat finding: Yes - Criteria: Funds should not be withdrawn from the reserve for replacement without HUD's written authorization. - Condition: Review of the reserve for replacement account showed that $6,000 and $12,799 had been withdrawn in 2022 and 2023, respectively, without HUD's approval. The $12,799 from 2023 was paid back in 2024, but the $6,000 was not paid back until February 2025. Additionally, the Project withdrew $34,598 in 2024 without HUD's approval, of which $25,283 was paid back in 2024 and $9,315 in 2025. - Cause: The Project had a shortfall of operational cash and used some funds from the reserve for replacement account to pay for operating expenses. Effect: The Project had to redeposit such funds to the reserve for replacement or obtain authorization for the withdrawal. - Noncompliance code: A. Unauthorized withdrawal - Questioned costs: N/A. - Reporting views of officials: Auditee agrees with the finding. - Contract Number: 114-EE150 - Context: The funds were withdrawn because of a shortfall of operating cash. - Recommendation: Management should not withdraw funds from the reserve for replacement without HUD authorization. - Auditee's comments: Auditee agrees with the finding and has replenished the money to the reserve for replacement account in February 2025. - Auditors' summary of auditee's comments: They are in agreement. - Completion date: 12/31/2025 - Response: Management transferred all the shortfalls during February 2025.

Findings reference number: 2024-002 Title and AL Number of Federal Program: Project Rental Assistance Contract, AL 14.157 - Type of finding: Federal Award (Compliance) -Resolution Status: In process - Population size: N/A - Sample size: N/A - Repeat finding: Yes - Criteria: The tenant security deposits bank account should have enough cash to cover the tenant security deposit liability. - Condition: Review of the security deposit account showed that the balance as of December 31, 2024 was insufficient to cover the tenant security deposit liability. - Cause: The Project had a shortfall of operational cash and used some funds from the security deposit account. - Effect: The Project may not be able to refund the security deposit for tenants moving out. - Noncompliance code: M. Security deposits. - Questioned costs: N/A. - Reporting views of officials: Auditee agrees with the finding. - Contract Number: 114-EE150 - Context: The funds were withdrawn because of a shortfall of operating cash. - Recommendation: Management must transfer enough funds to the security deposit account to cover the tenant security deposit liability. - Completion date: 12/31/25 - Auditee's Response: Auditee agrees with the finding and will replenish the money to the security deposit account as soon as possible.

Findings reference number: 2023-001 Title and AL Number of Federal Program: Supportive Housing for the Elderly - Section 202 Capital Advance (AL 14.157) Type of finding: Federal Award (Compliance) Resolution Status: In process Population size: N/A Sample size: N/A Repeat finding: Yes Criteria: Funds should not be withdrawn from the reserve for replacement without HUD's authorization. Condition: Review of the reserve for replacement account showed that $6,000 that had been withdrawn in the prior year without HUD's approval had not yet been paid back. Additionally, the Project withdrew $12,799 in 2023 without HUD's approval. This amount was paid back in 2024. Cause: The Project had a shortfall of operational cash and used some funds from the reserve for replacement account to pay for operating expenses. Effect: The Project will have to redeposit such funds to the reserve for replacement or obtain authorization for the withdrawal. Noncompliance code: A. Unauthorized withdrawal Questioned costs: N/A. Reporting views of officials: Auditee agrees with the finding. Contract Number: 114-EE150 Context: The funds were withdrawn because of a shortfall of operating cash. Recommendation: Management should transfer enough funds to the reserve for replacement account to cover the withdrawal. Auditee's comments: Auditee agrees with the finding and will replenish the money to the reserve for replacement account as soon as possible. Auditors' summary of auditee's comments: They are in agreement. Completion date: 12/31/2024 Response: Management will transfer the $6,000 remaining shortfall from the operations to reserve for replacement account to cover the withdrawal, as soon as the funds become available.

Findings reference number: 2023-002 Title and AL Number of Federal Program: Project Rental Assistance Contract, AL 14.157 Type of finding: Federal Award (Compliance) Resolution Status: In process Population size: N/A Sample size: N/A Repeat finding: Yes Criteria: The tenant security deposits bank account should have enough cash to cover the tenant security deposit liability. Condition: Review of the security deposit account showed that the balance as of December 31, 2023 was insufficient to cover the tenant security deposit liability. Cause: The Project had a shortfall of operational cash and used some funds from the security deposit account. Effect: The Project may not be able to refund the security deposit for tenants moving out. Noncompliance code: M. Security deposits. Questioned costs: N/A. Reporting views of officials: Auditee agrees with the finding. Contract Number: 114-EE150 Context: The funds were withdrawn because of a shortfall of operating cash and need for necessary repairs to the property. Recommendation: Management must transfer enough funds to the security deposit account to cover the tenant security deposit liability. Completion date: 12/31/24 Auditee's Response: Auditee agrees with the finding and will replenish the money to the security deposit account as soon as possible.