Audit 382473

Finding No. 2025-001: Financial Reporting (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Reporting Statement of condition The lack of appropriate policies, procedures, and internal processes led to inaccurate recording of depreciation, total rental revenue, and amounts owed to a related party. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include levels of review, reconciling accounting records at month-end and year-end close, and maintaining accurate books and records. Cause Management did not have sufficient internal controls in place to accurately report the results of the Organization's operations during the year. Effect Insufficient controls could result in accounting errors and theft. A lack of controls over financial reporting can result in inaccurate filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Identification of repeat finding The finding is a repeat of Finding No. 2024-001. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2025-002: Cash, Disbursements, and Classification (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Allowable costs, Activities allowed or unallowed Statement of condition During the year ended June 30, 2025, the Organization: did not properly classify certain expenditures between expense accounts; did not properly cut off disbursements at fiscal year end, resulting in expenses not being recorded accurately within the current audit period; recorded expenses in the current audit period that apply to future periods; and did not monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash accounts to ensure they were in compliance with the minimally acceptable ratings as established by the Government National Mortgage Association ("GNMA"). Criteria Management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Additionally, management should review expenditures for accurate expense account classification and proper period recording. In accordance with Chapter 2 of the HUD Handbook 4370.2, management should monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash on a quarterly basis to ensure they are in compliance with the minimally acceptable ratings as established by the GNMA. Cause Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts, in the appropriate period, and were fully accrued. Sufficient controls were not in place to ensure quarterly monitoring of the risk ratings of the financial institutions holding the Organization's cash and restricted cash was being performed and assessed. Effect Certain charges were excluded from the current fiscal year reporting, resulting in overstated expenses. Certain charges related to both the current and next fiscal year were recorded as expense in the current fiscal year, resulting in overstated expenses. Additionally, inaccurate expense classifications could result in improper financial and HUD reporting. Failure to monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash could result in loss of financial assets. Recommendation Management should revisit and enhance its internal controls and procedures over expenditures to ensure expenses are captured in the correct fiscal period and are properly classified. Management should implement a quarterly review of the risk ratings of all financial institutions holding the Organization's cash and restricted cash to ensure they are in compliance with the minimally acceptable ratings as established by the GNMA. Identification of repeat finding The finding is a repeat of Finding No. 2024-002. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2025-003: Timely Work Order Completion (Significant Deficiency) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Activities allowed or unallowed Statement of condition During the year ended June 30, 2025, management was unable to provide supporting documentation regarding timely completion of 29 of 54 work orders selected. Criteria HUD projects are required to complete work orders timely. Cause The Organization did not have sufficient controls in place to ensure the timely completion of work orders as required by HUD. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should continue to review and enhance its internal controls and procedures over work orders to ensure they are completed on a timely basis. Identification of repeat finding The finding is a repeat of Finding No. 2024-004. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process