Grand Manor Mutual Housing Association, Inc.

Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Project Based Rental Assistance (PBRA) - Section 8 Project-based Cluster Assistance Listing Number: 14.195 Federal Award Identification Number and Year:

Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review we noted the following deficiencies: 2 out of 2 tenants tested did not have their information entered into the EIV system within 90 days of move-in. 2 out of 2 tenants tested did not have their initial certifications completed within 120 days of move-in. Cause Management's policies with respect to the determination of tenant security deposits and eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect The procedures for determining tenant security deposits and eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Recommendations Management should establish procedures and monitor compliance with those procedures to insure that tenant security deposits are correctly recorded, tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R - Section 8 program administration

Reporting Views of Responsible Officials Management will review the HUD Handbook 4350.3 with staff to ensure compliance and provide follow up training of current company policies and procedures.

Criteria The terms of the regulatory agreement require distributions to be limited to available surplus cash computed on an annual or semi-annual basis. Condition During the year ended December 31, 2023, Grand Manor Mutual Housing Association, Inc. distributed $115,000 in excess of surplus cash available for distribution. Cause Procedures were not in place to ensure that distributions of cash were limited to available surplus cash in accordance with HUD regulations. Effect or Potential Effect The payments of $115,000 are unauthorized distributions and therefore considered to be questioned costs. Questioned Costs $115,000 Recommendations 2023-1-a Management should follow its procedures to limit distributions to the surplus cash amount calculated semi-annually and at year end. 2023-1-b Management should immediately reimburse the project's cash account for the unauthorized distribution. Auditor Noncompliance Code: H - Unauthorized distribution of project assets Reporting Views of Responsible Officials Our action plan includes documentation, management approval, and will remedy the problem going forward. Advances are to be recorded in a liability account that does not roll up into the AP module. This will eliminate paying advances in error. The payment is only moved into the AP module, for processing, after we determine we have excess cash and have the appropriate supporting documentation and approval. Surplus cash can only be calculated semi-annually and at year-end. If the calculation reflects excess cash, we must make payment within 90 days.