Corrective Action Plans

As explained in Management’s response to Finding 2026-002, Baptist Retirement Village had been approved for MFCS’s reduced (25%) monthly sampling of annual recertifications based on the property’s prior compliance history, its continuous 100% review of move-in and interim certifications, and MFCS’s ongoing availability for certification and compliance support. Because errors were identified during this reduced-sample review, the property is returning to 100% file review for all certifications, which will remain in place until Baptist Retirement Village again meets all criteria for reduced sampling — two consecutive years without MOR resident-file findings, a minimum two-year site manager tenure, and at least one year of error-free annual recertifications. In addition, SPM is updating the standardized tenant file checklist and written internal control procedures covering eligibility determination, income/rent calculation, and required certifications, with a documented compliance sign-off required before a file is considered complete

Contact Person Misty Wanner, CFO Corrective Action Plan Management will obtain and retain all documentation as required by the federal agency. Completion Date The Organization will implement immediately.

Finding 2026-002: Compliance, Inadequate Compliance Monitoring, Regulatory Oversight, and Governance Housing Choice Voucher, 14.871 Material Weakness – Eligibility, Reporting and Special Tests and Provisions Repeat Finding 2025-004 Criteria: Management is responsible for establishing and maintaining effective internal controls over compliance that provide reasonable assurance the Housing Choice Voucher Program is administered in accordance with Federal statutes, regulations, and HUD requirements. Effective controls should include adequate monitoring of compliance requirements, timely implementation of regulatory changes, maintenance of current policies and procedures, and oversight sufficient to compensate for staffing limitations. HUD program requirements and regulatory changes should be reviewed and incorporated into the Authority's Administrative Plan in a timely manner. Similar control expectations are reflected in HCV compliance guidance addressing policy maintenance, Board oversight, monitoring of regulatory changes, and compensating controls where segregation of duties is limited. Condition: The Authority operates only the Housing Choice Voucher Program and employs a single individual responsible for substantially all program administration and compliance responsibilities. Because staffing levels do not permit traditional segregation of duties, the Authority should have established compensating monitoring and oversight controls. However, our audit identified significant weaknesses in the Authority's internal control structure over compliance. Specifically, we noted: • Compliance responsibilities were concentrated in one individual without independent review or documented monitoring procedures. • The Administrative Plan had not been updated to incorporate applicable HOTMA requirements. • Board minutes indicated the Authority was relying upon HUD Notices H-2025-03 and H-2025-07 when evaluating HOTMA implementation. These notices do not apply to the Housing Choice Voucher Program and the Authority was not utilizing the correct guidance in HUD PIH Notices. • The Authority had not established procedures to identify, evaluate, and implement applicable HUD PIH notices and other regulatory updates affecting the Voucher program. • Audit testing identified deficiencies in multiple compliance areas, indicating that compliance monitoring controls were not operating effectively. The existence of compliance deficiencies across multiple program areas demonstrates that the Authority's controls were not reasonably designed or operating effectively to ensure compliance with Federal program requirements. Similar conditions have been identified in other HCV compliance control assessments, including lack of monitoring of regulatory changes, inadequate Board oversight, and insufficient compensating controls where staffing is limited. Cause: The Authority has not established an effective system of internal control over compliance. Management and the Board of Commissioners did not implement sufficient compensating controls to address the risks associated with a single-employee operating structure. In addition, procedures were not established to ensure that changes in HUD regulations, notices, and program requirements were identified, evaluated, and incorporated into Authority policies and operational practices on a timely basis. Effect: The lack of effective compliance oversight increases the likelihood that material noncompliance with Federal program requirements could occur and not be prevented, detected, or corrected timely. Failure to maintain current policies and implement regulatory changes increases the risk of noncompliance in areas including tenant eligibility, rent calculations, utility allowances, inspections, reporting, and other program requirements. The deficiencies identified during the audit demonstrate that the Authority's control environment does not provide reasonable assurance of compliance with Housing Choice Voucher Program requirements. Recommendation: We recommend the Authority: 1. Establish formal procedures for monitoring compliance with Housing Choice Voucher Program requirements. 2. Update the Administrative Plan to incorporate all applicable HOTMA requirements and other current HUD guidance. 3. Develop a process for reviewing HUD PIH notices, regulatory updates, and other program guidance as issued. 4. Implement documented supervisory or independent compliance reviews to compensate for the lack of segregation of duties. 5. Provide periodic compliance reports to the Board of Commissioners and document Board oversight of corrective actions. 6. Establish written procedures to ensure significant regulatory changes are timely evaluated, adopted, and implemented. Views of Responsible Officials The Authority agrees with the finding.

Recommendation – We recommend the Center provide proper training to employees to ensure that the sliding fee discounts are being properly applied and documented. In addition to implementing policies and procedures to ensure the sliding fee discounts are being properly monitored and supervised on a periodic basis to ensure compliance. Action Taken – We concur with the audit finding. While the Center has a policy that meets the compliance requirements, management is responsible for the implementation and monitoring of those processes and procedures. Additional staff training on slide fee discounts is in place and monthly review and testing of compliance with Center sliding fee discount policy will be done.

Name: Mainline Health Systems, Inc. Contact Name: Elyse Knobloch Contact Phone Number: 870.538.5414 Auditor/Audit Firm: Forvis Mazars, LLP Audit Period: January 31, 2026 Estimated Completion Date: June 2026 Finding #2026-001 – Statement of Condition Patients did not receive the proper sliding fee adjustments under the Organization’s policy. Response: The Organization concurs with the finding, and management has continued to implement procedures to ensure that eligible patients receive discounts in accordance with the sliding fee scale. Coordination with Revenue Cycle Management has occurred to ensure awareness across teams. Office Managers review all new sliding fee applications on a monthly basis to ensure accuracy, and the Billing Manager conducts quarterly audits of sliding fee claims to ensure adjustments are entered correctly by the billing department. The Organization also continues to provide staff training for all individuals involved in the sliding fee application process. Management has instructed all outsourced billers not to modify sliding fee adjustments; any required changes must be handled by in-house billing staff. Additionally, sliding fee adjustments auto posted in error will be removed. Management is also working with IT to restrict system access for outsourced users to prevent unauthorized adjustments. Additionally, IT will implement a scheduled monthly audit report to identify improper adjustments and monitor user activity.

Management has reviewed the audit finding and acknowledges the allegation related to improper administration of the applicant wait list. The former project manager is no longer with the Project, and management responsibilities have been reassigned. Management plans to review wait list procedures, strengthen oversight and documentation requirements, and implement additional controls to ensure applicants are processed in accordance with established policies and applicable program requirements.

Noncompliant Eligibility Determinations - Literacy - OPI - The Montana Office of Public Instruction concurs with this finding. This issue was addressed in the prior audit. The grant ended shortly after completion of that audit, and there was no opportunity to change awarded amounts once the issue was identified. The previous superintendent agreed not to pull funds back. The matter has been corrected in the new grant that began in October 2024, and the issue does not appear to affect the new grant. Mechanisms have been implemented to ensure that only schools meeting eligibility requirements receive funds. Responsible Party - April Grady, Chief Financial Officer, Montana Office of Public Instruction Target Implementation Date - 12/31/2026

Inadequate Access and Privilege Controls - TANF - LIHEAP - CHIP - Medicaid - DPHHS - The Montana Department of Public Health and Human Services completed the development of its accounts matrix for the CHIMES eligibility system in October 2025 and implemented an enhanced process for conducting and documenting access reviews, including verification of user permissions. These improvements have been fully incorporated into routine operations, and the department has implemented all aspects of the audit recommendations. Responsible Party - Brenda Crawford, Internal Control and Compliance Officer, Montana Department of Public Health and Human Services Target Implementation Date - 10/24/2025

Inadequate Manual Override Controls - TANF - DPHHS - The Montana Department of Public Health and Human Services implemented a business process in its eligibility system (CHIMES) on May 5, 2026, and revised it on August 25, 2026, to address common override reasons and to document the basis for each override. Effective August 19, 2026, staff added a targeted question to the monitoring tool regarding manual overrides and issuances to ensure these items are consistently reviewed. The department considers this corrective action implemented and will evaluate its effectiveness during the upcoming monitoring cycle. Responsible Party - Brenda Crawford, Internal Control and Compliance Officer, Montana Department of Public Health and Human Services Target Implementation Date - 8/25/2026

Inadequate ACF-199 Reporting Controls - TANF - DPHHS - The Montana Department of Public Health and Human Services implemented additional internal controls over the ACF-199 reports in December 2024 and completed this corrective action. This implementation was in response to the prior audit, and the corrective action plan should have been included with that audit. The timing of the implementation occurred between the prior audit and the current audit period. Responsible Party - Brenda Crawford, Internal Control and Compliance Officer, Montana Department of Public Health and Human Services Target Implementation Date - 12/31/2024

Inaccurate ACF‑204 Reporting Controls - TANF - DPHHS - The Montana Department of Public Health and Human Services revised its instructions and implemented a mandatory review checklist on August 26, 2026. The updated process includes enhanced review steps and requires formal sign-off by both the program manager and the Temporary Assistance for Needy Families (TANF) unit designee prior to final report submission to ensure data accuracy. Responsible Party - Brenda Crawford, Internal Control and Compliance Officer, Montana Department of Public Health and Human Services Target Implementation Date - 8/26/2026

Inadequate Procurement Documentation - HPC - MDT - The Montana Department of Transportation has developed a tracking spreadsheet for independent cost estimates and will continue to provide reminders and training through 2026. The department will update its procedures to ensure documentation for suspension and debarment checks and cost estimates is retained in consultant files. Responsible Party - Kimberly Doherty, Accounting Systems Supervisor, Montana Department of Transportation Dustin Rouse, Chief Engineer, Montana Department of Transportation Target Implementation Date - 12/31/2026

Untimely Eligibility Determinations - CHIP - Medicaid - DPHHS - The Montana Department of Public Health and Human Services prioritized safeguarding continuous coverage for eligible Montanans during the unwinding period while working to minimize delays for new applicants. No questioned costs were identified in connection with this finding, underscoring that the issue was related to processing timeliness rather than improper payments. To ensure timely eligibility determinations going forward, the department implemented case-based processing in May 2026 that prioritizes cases based on aging and processing timelines, along with business processes to communicate with clients regarding necessary documentation for eligibility determinations. Responsible Party - Brenda Crawford, Internal Control and Compliance Officer, Montana Department of Public Health and Human Services Target Implementation Date - 5/15/2026

Erroneous Beneficiary Payments - CHIP - DPHHS - The Montana Department of Public Health and Human Services does not concur. The department identified an interface issue with its contractor and promptly corrected the affected payments. The unadjusted claim amount totaled approximately $26,000 and affected 48 beneficiaries out of $146.6 million in total contractor‑paid claims during the audit period, representing approximately 0.018 percent of total claims paid. The department determined this amount to be immaterial to the fiscal year‑end financial statements. Had the amount been significant, the department would have corrected the affected payments before fiscal year‑end. The department worked with its contractor to resolve the interface issue, which was fully corrected in April 2026. Responsible Party - Brenda Crawford, Internal Control and Compliance Officer, Montana Department of Public Health and Human Services Target Implementation Date - N/A

Inaccurate COA Calculations - SFA - UM - The University of Montana – Missoula conducted additional review and provided supplemental documentation and clarification for the remaining sampled student records; however, one exception could not be fully resolved. The University is committed to strengthening its documentation, retention, and review processes to ensure that support for cost-of-attendance calculations and adjustments is consistently maintained, documented, and adequately substantiated going forward. Responsible Party - Morgan Hahn, Interim Financial Aid Director, University of Montana - Missoula Target Implementation Date - 12/31/2026

Noncompliant Title IV Disbursement Controls - SFA - UM - The University of Montana - Missoula has strengthened fraud prevention and detection efforts through enhanced identity verification procedures, targeted review of higher-risk populations, ongoing monitoring of suspicious activity, and increased collaboration across university departments. The university will continue to evaluate emerging fraud trends, federal guidance, and institutional controls to reduce the risk of future improper disbursements. Responsible Party - Morgan Hahn, Interim Financial Aid Director, University of Montana - Missoula Target Implementation Date - 6/30/2027

Inadequate HDS System Access Controls - HVC - Commerce - The Montana Department of Commerce has developed a user access review procedure to be performed semiannually. The first review was completed in June 2026. Responsible Party - Ingrid Mallo, Chief Financial Officer, Montana Department of Commerce Target Implementation Date - 12/16/2026

Inadequate HAPPY System Access Controls - HVC - Commerce - The Montana Department of Commerce began conducting user access reviews during the audit period. The department’s Chief Information Officer updated the Access Control Policy and distributed it to all employees. Staff received training on access control requirements on May 28, 2026. The department plans to obtain a new vendor to replace the HAPPY system by October 2028. Responsible Party - Ingrid Mallo, Chief Financial Officer, Montana Department of Commerce Target Implementation Date - 10/31/2028

Inadequate Subrecipient Communications - CCDF - DPHHS - The Montana Department of Public Health and Human Services developed a new contract template that includes all required elements and implemented it for state fiscal year 2025 subawards. The Department is following its updated processes. Responsible Party - Brenda Crawford, Internal Control and Compliance Officer, Montana Department of Public Health and Human Services Target Implementation Date - 7/1/2024

Inadequate Monthly Subrecipient Case File Reviews - CCDF - DPHHS - The Montana Department of Public Health and Human Services will further strengthen compliance by enhancing its internal control framework. The Department will refine supervisory review protocols, formalize documentation requirements, and improve monitoring procedures to ensure full alignment with State Plan objectives. The department will also review its State Plan and submit an amendment if necessary. These improvements will ensure continued compliance with State Plan requirements. The Department anticipates full implementation of these strengthened processes in early 2027. Responsible Party - Brenda Crawford, Internal Control and Compliance Officer, Montana Department of Public Health and Human Services Target Implementation Date - 3/26/2027

Corrective Action Plan: The Owner has taken corrective action by terminating the current management agent and engaging a new management company with demonstrated experience in HUD assisted housing compliance. The new management agent will assume responsibility for all occupancy and recertification activities and will implement procedures to ensure that annual and interim recertifications are completed accurately and within HUD required timeframes. The Owner will oversee the performance of the new management agent through regular compliance reviews and will take any additional corrective measures necessary to ensure continued adherence to HUD regulations and prevent recurrence of this finding. Anticipated Completion Date: The implementation of training and procedures is expected to be completed by December 31, 2026.

Corrective Action Plan: The Owner has taken corrective action by terminating the current management agent and engaging a new management company with demonstrated experience in HUD assisted housing compliance. The new management agent will assume responsibility for all occupancy and recertification activities and will implement procedures to ensure that annual and interim recertifications are completed accurately and within HUD required timeframes. The Owner will oversee the performance of the new management agent through regular compliance reviews and will take any additional corrective measures necessary to ensure continued adherence to HUD regulations and prevent recurrence of this finding. Anticipated Completion Date: The implementation of training and procedures is expected to be completed by December 31, 2026.

Corrective Action Plan: The Owner has taken corrective action by terminating the current management agent and engaging a new management company with demonstrated experience in HUD assisted housing compliance. The new management agent will assume responsibility for all occupancy and recertification activities and will implement procedures to ensure that annual and interim recertifications are completed accurately and within HUD required timeframes. The Owner will oversee the performance of the new management agent through regular compliance reviews and will take any additional corrective measures necessary to ensure continued adherence to HUD regulations and prevent recurrence of this finding. Anticipated Completion Date: The implementation of training and procedures is expected to be completed by December 31, 2026.

Finding 2025-002: Eligibility – Temporary Assistance for Needy Families Name of Contact Person: Bobbie Crooker, Director of Energy and Housing Services Management’s Views and Corrective Action Plan: The Department of Energy and Housing Services (EHS) at MaineHousing agrees with the finding. The eligibility determination error occurred because the applicant initially presented a qualifying dependent child that met program requirements. However, the applicant subsequently failed to provide the required verification documentation. Although the applicant should have been deemed ineligible due to noncompliance, the system did not update accordingly to adjust the benefit level. The system has since been corrected to address this issue. Application intake and approval are performed by Community Action Agencies (CAAs) on behalf of MaineHousing. To provide greater assurance that CAAs accurately determine and document participant eligibility, MaineHousing has strengthened its oversight and monitoring procedures. As part of this corrective action, MaineHousing enhanced its monitoring procedures to include additional supervisory review of CAA applications and eligibility determinations. These procedures supplement the annual required risk monitoring performed for each CAA and better enable MaineHousing to identify and address determination errors or related control weaknesses in a timely manner. EHS has reviewed the circumstances surrounding the specific case identified and has determined that it appears that the known questioned costs did not exceed reportable federal thresholds and no further recovery action is necessary. This program was administered as part of a subrecipient agreement with the Maine Department of Health and Human Services (DHHS). Due to structural and fiscal changes at DHHS, MaineHousing concluded its administration of these TANF funds effective July 1, 2026. Proposed Completion Date: Completed

Management agrees with the finding and plans to reinforce eligibility review procedures, provide additional staff training, and perform periodic supervisory reviews to ensure eligibility determinations are properly supported before benefits are authorized.