Corrective Action Plans

Finding 2025-006 – Financial Condition Management agrees with the finding regarding the Agency’s financial condition. The Housing Authority continues to evaluate operational expenses, vacancy loss, maintenance costs, and capital planning needs to improve overall financial stability. Management has implemented budget monitoring procedures and continues to seek operational efficiencies while maintaining safe and sanitary housing conditions for residents. The Board of Commissioners reviews financial statements monthly and management will continue monitoring reserves, occupancy levels, and available HUD funding opportunities. Responsible Party: Executive Director and Board of Commissioners Expected Completion Date: Ongoing

Finding 2025-005 – REAC Submission (Federal Program) Management agrees with the finding. The Housing Authority has implemented additional monitoring procedures to ensure required submissions under HUD and federal reporting requirements are completed timely. Internal calendars and reporting deadlines have been established, and management will coordinate regularly with outside accounting professionals and auditors throughout the reporting cycle. The Agency will also maintain written procedures to ensure continuity during staff turnover. Responsible Party: Executive Director Expected Completion Date: Implemented during Fiscal Year 2026

Finding 2025-004 – Activities Allowed/Allowable Costs/Cost Principles Management agrees with the finding regarding activities allowed, allowable costs, and compliance with federal cost principles. The Housing Authority has reviewed its procedures related to processing and approving program expenditures and recognizes the need to strengthen internal controls and documentation standards. Management will implement additional review procedures to ensure expenses charged to HUD programs are properly supported, allowable under program requirements, and accurately allocated to the appropriate funding source. Corrective actions will include enhanced supervisory review of invoices and disbursements, improved supporting documentation practices, and periodic monitoring of program expenditures. Management will also continue coordination with the fee accountant and auditor to ensure compliance with Uniform Guidance and HUD requirements. The Housing Authority will provide additional staff training regarding allowable costs and documentation requirements to reduce the risk of future noncompliance. Responsible Party: Executive Director and Operations Accountant Expected Completion Date: September 30, 2026

Finding 2025-002- Eligibility- Significant Deficiency in Internal Controls over Compliance and Non-Compliance Federal Program: Home Investment Partnerships Program (HOME) Assistance Listing Number: 14.239 Year(s): 2025 Federal Agency: Department of Housing and Urban Development (HUD) Pass-Through Agencies: Idaho Housing and Finance Association Responsible Party: Jeanne Stromberg, Major - Divisional Finance Secretary-Cascade Division 916-501-6374 RESPONSE: Management will implement a review and approval process to ensure all documentation for applications is maintained in the file and that all applications that are eligible tor participation are properly approved. Effective Date: November 2026

We recommend that the Project implemenRecommendation: We recommend that the Project implement monitoring processes to ensure timely identification and deposit of residual receipts with HUD requirements and to deposit $21,073 into the residual receipts reserve

Tenant Files. 2025-001. Tenant Files Corrective action planned: The Corrective Action plan for this Audit Finding 2025-002 is that the Alexander County Housing Authority is under new management. The Housing Authority of Pulaski County was contracted on February 2, 2025, to manage this housing authority. On this date, all HUD guidelines followed at Pulaski County were implemented at Alexander County Housing Authority. Contact person: JoAnn Pink, Executive Director. Anticipated completion date: September 30, 2026.

Public Housing – Assistance Listing No. 14.850 Recommendation: We recommend the Authority strengthen internal controls over income determination and rent calculation by: • Enhancing procedures to ensure all sources of tenant income are properly identified, verified, and included in calculations • Providing additional training to staff on HUD income determination and rent calculation requirements • Implementing or strengthening supervisory review controls to detect and correct errors in a timely manner Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: PBCHA staff responsible for eligibility determinations will be scheduled for rent calculation training through available resources over the next FY. The PBCHA will continue to conduct internal training for program staff on eligibility documentation requirements and program rules to reinforce compliance standards. Through the implementation of intakes, interims and annual recertifications utilizing Yardi’s online workflows, the PBCHA expects to see increased improvement through automated application and documentation processes. The PBCHA will utilize available dashboards, internal audits and formal monitoring protocols to ensure continued compliance and to minimize the risk of recurring deficiencies. The PBCHA will continue to assess current staffing levels and evaluate the feasibility of restructuring, hiring outside consultants and/or increasing staffing to support consistent and compliant eligibility determinations while being cognizant of current funding uncertainties. Name(s) of the contact person(s) responsible for corrective action: Carol Jones-Gilbert Planned completion date for corrective action plan: September 30, 2027

Housing Voucher Cluster – Assistance Listing No. 14.871 and 14.879 Recommendation: We recommend the Authority strengthen internal controls over HQS enforcement by implementing procedures to track and monitor HQS deficiencies and required correction timelines. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: PBCHA has made significant improvements in inspection compliance and will continue to monitor its third-party inspection vendor to ensure timely submission of inspection reports. The agency will utilize Yardi and other centralized tracking systems to monitor inspection due dates and follow-up activities, ensuring inspections are completed in accordance with HUD requirements. PBCHA will also provide ongoing staff training to reinforce NSPIRE requirements and compliance expectations. Name(s) of the contact person(s) responsible for corrective action: Yvette Bembry Planned completion date for corrective action plan: December 31, 2026

Housing Voucher Cluster – Assistance Listing No. 14.871 and 14.879 Recommendation: We recommend the Authority strengthen internal controls over tenant recertifications to ensure: • Form HUD-50058 and supporting eligibility documentation are current, complete, and properly maintained for all tenants • Timely processing of tenant move-outs and termination of HAP payments • Ongoing monitoring procedures to identify and promptly resolve instances of continued payments after program exit, including timely recovery of any overpayments Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: PBCHA will conduct a review of the participant records to ensure Form HUD-50058 submissions and supporting eligibility documentation are attached, complete and accurate. Staff will use the Yardi Compliance Dashboard to monitor compliance, track processing timelines, and perform ongoing quality-control reviews. The agency will strengthen procedures for processing move-outs and program terminations through tracking mechanisms and supervisory oversight. Staff will receive training on HUD requirements related to tenant exits, terminations, and HAP processing. PBCHA will also perform monthly reconciliations of HAP payments, HUD-50058 terminations, and moveout records to identify and correct improper payments. These actions will help ensure accurate records, timely termination of assistance, prevention of overpayments, and compliance with HUD requirements. Name of the contact person responsible for corrective action: Yvette Bembry Planned completion date for corrective action plan: December 31, 2026

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Supportive Housing for the Elderly Section 232 ALN Number: 14.129 Award Period: Year Ended December 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: HUD requires a signed management fee agreement when such transactions take place. Condition: Unallowed related party transactions were identified in 2025. Context: Affiliate dues were booked to the Home's cash clearing account as a credit for $400,000 with the understanding that these fees would qualify as a service contract rather than a management fee. However, due to the cash infused into the program by The Carmelite System, the $400,000 will not be noted as questioned costs needing to be repaid into the project. Recommendation: The Home should adhere to the Regulatory Agreement and obtain HUD’s approval prior to taking any actions specifically precluded in the Regulatory Agreement. Action taken in response to finding: There is no disagreement with the audit finding. Management will work to obtain proper approval going forward. If the U.S. Department of Housing and Urban Development has questions regarding this schedule, please call Corrinne Schindler at 518-537-7500 or CSchindler@CarmeliteSystem.org.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Supportive Housing for the Elderly Section 232 ALN Number: 14.129 Award Period: Year Ended December 31, 2025 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria or specific requirement: The Home was required to obtain written approval for the member substitution transaction with The Carmelite System, Inc. prior to closing. Condition: Membership transfer agreements must be in place and signed by HUD during the transition of Ownership / Governance. Context: Formal HUD approval was not obtained in relation the Member Substitution in which the Carmelite System, Inc. became the sole member and sponsor of the Home. Recommendation: The Home should adhere to the Regulatory Agreement and obtain HUD’s approval prior to taking any actions specifically precluded in the Regulatory Agreement. Action taken in response to finding: There is no disagreement with the audit finding. Management is working to obtain the necessary HUD approvals.

2025-002 Housing Choice Voucher Tenant Files: Eligibility Program: U.S. Department of HUD: Section 8 Housing Choice Vouchers (ALN #14.871) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters This is a repeat finding of 2024-003 from September 30, 2024 (Originally reported as Material non-compliance and Material Weakness in Internal Control over Compliance under finding 2019-001 from September 30, 2019) Statement of Condition: Out of a total tenant population of approximately 1,086 leased vouchers, 25 files were selected for testing, and the following errors were discovered. • 1 tenant file where the tenant's utility allowance was miscalculated and reported incorrectly on the 50058 form. Correcting this error would decrease the HAP rent by $26. • 1 tenant file where the tenant's utility allowance was miscalculated and reported incorrectly on the 50058 form. Correcting this error would decrease the HAP rent by $23. • 1 tenant file where the tenant's income was miscalculated and reported incorrectly on the 50058 form. Correcting this error would decrease the HAP rent by $266. • 1 tenant file where the tenant's income was miscalculated and reported incorrectly on the 50058 form. Correcting this error would decrease the HAP rent by $40. • 1 tenant file where the tenant's income was miscalculated and reported incorrectly on the 50058 form. Correcting this error would decrease the HAP rent by $318. • 1 tenant file where the tenant’s utility allowance and income was miscalculated and reported incorrectly on the 50058 form. Correcting this error would decrease the HAP rent by $121. • 1 tenant file where the tenant’s income was miscalculated but did not impact the HAP rent. • 1 tenant file where the tenant’s wage income was coded incorrectly as federal income on the 50058 form. Recommendation: The Authority should correct the deficiencies noted in the tested files and utilize an ongoing quality control review process on the entire tenant population to ensure proper compliance with the requirements related to tenant eligibility. Ongoing staff training and timely management reviews should be utilized to ensure staff is aware of acceptable procedures. In addition, the Authority should review staffing levels, skill sets and case load. Action Taken: The Authority has corrected all deficiencies identified in the files reviewed during the audit. To further strengthen compliance and reduce the likelihood of future errors, several corrective actions have been implemented. The Authority has enhanced its quality control procedures by implementing a systematic file review process. At a minimum, every fifth file processed receives a quality control review to verify the accuracy of third-party verifications, income determinations, utility allowance, and subsidy calculations. In addition, management conducts monthly reviews of at least ten percent (10%) of each Housing Counselor's annual recertifications, with the percentage increased as warranted based on performance trends or identified deficiencies. The HCV Program Manager also reviews a minimum of one out of every five intake files, while all new admissions and move-in files are reviewed by the Compliance Director prior to approval. The Compliance Director additionally conducts monthly compliance reviews of a ten percent (10%) sample of processed files. To improve consistency and reduce calculation errors, the Authority developed and implemented a Family Worksheet and an HCV Computation Worksheet. These tools assist staff in verifying household composition, income calculations, and subsidy determinations prior to the completion of annual reexaminations and interim recertifications. The Authority has also revised its filing system to facilitate more comprehensive reviews of participant documentation during admissions, annual recertifications, and interim adjustments. To ensure compliance with citizenship and eligibility requirements, the Authority created an “Other Adult” packet that includes Form HUD-214 declarations and other required documentation for all adult household members. In addition, HCV Counselor caseloads have been redistributed equitably to improve efficiency, workload management, and accuracy. Caseloads are assigned alphabetically and by multifamily developments, allowing management to more effectively monitor performance, identify training needs, and provide targeted oversight where necessary. Specialty voucher programs, including Emergency Housing Vouchers (EHV), Veterans Affairs Supportive Housing (VASH), Family Unification Program (FUP), and Homeownership vouchers, have been assigned to a dedicated Counselor with specialized training, experience, and responsibility for those programs. Management of all Family Self-Sufficiency (FSS) participants has been assigned exclusively to the FSS Coordinator. To strengthen the admissions process, the Authority established an Intake Housing Counselor/Portability Specialist position responsible for determining applicant eligibility, managing the waiting list, and processing portability clients. While the Authority has experienced significant turnover in this position, including three staff changes within the past two years, management recognizes the challenges associated with onboarding and training new staff and has taken steps to improve oversight and support during transition periods. The Authority has also experienced significant turnover within the HCV Department over the past twenty-four months. All current HCV Counselors, with the exception of the newest Intake Counselor, have less than six months of tenure and were not members of the HCV team during the FY 2025 audit period. To ensure staff are fully equipped to administer the program in accordance with HUD requirements, all HCV Counselors will participate in formal external training through Nan McKay & Associates within the next six months, supplemented by ongoing internal training, mentoring, and supervisory review. The Authority believes these corrective actions significantly strengthen internal controls and program oversight and demonstrates its commitment to continuous improvement, regulatory compliance, and the accurate administration of the Housing Choice Voucher Program.

Management agrees with the finding. Management has reviewed the situation with employees i.e. IT and Department Supervisors, who are responsible for contracts and other agreements that may include leases and subscriptions. The need for the accounting department to be provided with such agreements has been emphasized to these employees. Management has also obtained the services of an outside contractor to provide the City with the calculations of assets and liabilities that may need to be recorded by the City under such contracts and agreements.

Management Response: Management concurs with the finding. The withdrawal of $14,853 from the Replacement Reserve account was made to address an emergent roof repair that required immediate action to protect the property and its residents. At the time, management did not obtain HUD approval prior to the expenditure as required. Upon identification of the issue, management promptly consulted with HUD regarding the withdrawal and has worked with HUD to resolve the matter. HUD has accepted the explanation and the issue has been addressed. Management also identified that the required October 2025 Replacement Reserve deposit of $575 was inadvertently omitted. Upon discovery of the missed transfer, the deposit was made on March 27, 2026, restoring the reserve account to the required balance. To prevent future occurrences, management has implemented the following corrective actions: 1. A compliance checklist has been established for all HUD-regulated reserve accounts to ensure required approvals are obtained prior to any withdrawal. 2. Monthly reserve deposits have been incorporated into the organization's recurring accounting procedures and monitored through a monthly compliance review process. 3. Finance staff responsible for HUD properties have been provided additional training regarding reserve account requirements, including HUD approval requirements for withdrawals and required monthly reserve deposits. 4. Reserve account activity will be reviewed periodically by management to verify compliance with HUD regulations and applicable property agreements. Management believes these corrective actions adequately address the finding and strengthen internal controls over compliance with HUD reserve account requirements. Anticipated Completion Date: Completed with ongoing maintenance Responsible Officials: Holly Morgan, Executive Director

Housing Choice Vouchers – CFDA 14.871 Recommendation: The Commission should consider reviewing its current policy regarding rent certifications. The Commission should ensure all persons involved in the certification process are properly trained and understand regulations in order to accurately identify errors. Additionally, the Commission should implement a thorough second party review of annual certifications to verify accuracy. Action Taken: Management will implement stronger controls over tenant files including a more thorough second party review. Anticipated Completion Date of Action: August 31, 2025

Required Monthly Vouchers Were Not Submitted Timely. Criteria: The program requires that organizations submit monthly vouchers to HUD so that rental subsidies can be calculated and paid to the Organization. Condition: Monthly vouchers were not submitted to HUD in a timely manner, therefore HUD is unable to track subsidies and ultimately pay for 2025 amounts timely. Context: The Organization hired an outside consultant and it was unclear who was responsible for filing the monthly vouchers. Vouchers were not filed timely but were filed and amounts were received subsequent to year end. Response: The Organization will ensure access to systems and reports are submitted timely. Management expects these corrective actions to ensure future compliance with applicable federal and HUD reporting requirements.

Required Monthly Vouchers Were Not Submitted Timely. Criteria: The program requires that organizations submit monthly vouchers to HUD so that rental subsidies can be calculated and paid to the Organization. Condition: Monthly vouchers were not submitted to HUD in a timely manner. Context: The Organization hired an outside consultant and it was unclear who was responsible for filing the monthly vouchers. Vouchers were not filed timely but were filed and amounts were received subsequent to year end. Response: The Organization will review policies and procedures to verify reports are submitted timely. Management expects these corrective actions to ensure future compliance with applicable federal and HUD reporting requirements.

Security Deposit Account Does Not Cover Liability Criteria: The amount of the segregated, interest-bearing account maintained by The Village at Oasis Park - Phase I, Inc. for security deposits must at all times equal the total amount collected from the families then in occupancy plus any accrued interest and less allowable administrative costs adjustments. Condition: The amount within the segregated, interest-bearing security deposits account was less than security deposits liability. Context: A separate, interest-bearing account is maintained, but did not total an amount equal or greater than the security deposit liability due to cash flow restraint. Response: The Organization will make a deposit to security deposit account if cash flow allows. Management expects these corrective actions to ensure future compliance with applicable federal and HUD reporting requirements.

2025-001 – Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Section 8 Project-Based Cluster Responsible Official: Ernestine Carter, President Plan Detail: Management will strengthen procedures over tenant documents and income calculations. Corrective actions will include retraining property management staff on HUD income determination and verification requirements and implementing a supervisory review process to verify income calculations prior to tenant eligibility approval.

Finding 2025-001 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 New Construction and Substantial Rehabilitation Federal Assistance Listing Numbers: 14.182 Noncompliance – E. Eligibility Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Eligibility Federal Award Findings and Questioned Costs (continued) Finding 2025-001 (continued) Criteria: Tenant Files. The PHA must do the following: As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). These files are required to be maintained and available for examination at the time of audit. Condition: Based upon inspection of the Authority’s files and on discussion with management, there were documents that were unavailable for examination at the time of audit. Context: There are approximately four hundred fifteen (415) Section 8 New Construction units. Of a sample size of sixteen (16) tenant files, declaration of citizenship forms were missing in six (6) files. Our sample size is statistically valid. Known Questioned Costs: Unknown Cause: There is a significant deficiency in internal controls over the compliance for the eligibility type of compliance related to the maintenance of tenant files. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance. Effect: The Section 8 New Construction and Substantial Rehabilitation Program is in non-compliance with the eligibility type of compliance related to the maintenance of tenant files. Recommendation: We recommend the Authority strengthen internal controls over eligibility compliance by implementing formal procedures to ensure all required tenant eligibility documentation is obtained, reviewed, retained, and readily available for examination. Management should also perform periodic internal reviews of tenant files to confirm completeness and compliance with HUD requirements. These procedures will reasonably assure compliance with the Uniform Guidance and the compliance supplement. Authority Response and Planned Corrective Action: The Authority accepts the recommendation of the auditor. The Authority will improve the maintenance and monitoring of tenant eligibility documentation in the Section 8 New Construction and Substantial Rehabilitation Program to ensure that established internal control policies are being followed on a timely basis. Management’s corrective action plan will include enhanced file review procedures and staff training. Donald Grondahl, Executive Director, is responsible for implementing this corrective action by December 31, 2026.

According to 24 CFR 982.503(d) (3), "A PHA may establish exception payment standard amounts between 110 percent and 120 percent of the applicable FMR for such duration as HUD specifies by notice upon notification to HUD that the PHA meets at least one of the following criteria: (i) Fewer than 75 percent of the families to whom the PHA issued tenant‐based rental vouchers during the most recent 12‐month period for which there is success rate data available have become participants in the voucher program; (ii) More than 40 percent of families with tenant‐based rental assistance administered by the agency pay more than 30 percent of adjusted income as the family share; or (iii) Such other criteria as the Secretary establishes by notice." Additionally, The PHA must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a 10 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). For 2023, the Authority was approved by HUD to use 120% FMRs. During the audit, we found that the Authority's approved payment standards for 2024 continued to use 120% of the HUD's FMR standard. They were using this without continued approval from HUD. During the audit, the auditor selected 40 tenants to test for eligibility and special tests. Out of the 40, 13 tenants on the 50058 used the 120% payment standard. Management continued to use the 120% threshold after the HUD approval had expired. The Authority did not get required approval to continue beyond 2023 to use the 120% FMR threshold. The Authority used incorrect FMR's to approve payments for HAP. This resulted in more HAP expense and revenue because tenants were housed in housing over the hUD approved 120% FMR rate. The Auditor recommends the Auhtority return to the 110% threshold approved by HUD.

Dear Katelyn, Please see below the Corrective Action Plan, number referenced above: New Tenant: 1. Gather intake information 2. Identify apartment close to the Fair Market Value that tenant seeks to sign a lease with. 3. . Gather information about that apartment, enter into the Affordable Housing .com form. 4. Submit the form to Affordable Housing.com. 5. Affordable Housing returns the results to us, showing comparable properties in the area. This form indicates whether the rent is or is not reasonable based on the prevailing market conditions. 6. If the rent is both Reasonable and within the Fair Market Value guidelines, approve the lease. Existing Tenant: 1. Rent reasonableness forms have been added to every chart. 2. Any time there is a change in the rent due, we gather the information again and re-submit it to Affordable Housing for a new comparable analysis. 3. Quarterly review will be done to verify all rents are correct and Rent Reasonableness has been done if warranted. Responsible Staff 1. Patricia Skinner, Assistant Director of Housing and Care Coordination 2. John Lent, Director of Corporate Compliance Expected Date of Correction: already in place

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2025-001: Major Program: Supportive Housing for the Elderly (Section 202 Capital Advance - Accumulated Balance), Federal Assistance Listing Number 14.157 RECOMMENDATION The auditor recommends ensuring all bank account balances at each bank remain below the FDIC limit. ACTION TAKEN The Project will be monitoring bank accounts more frequently throughout the year and has been restructuring the bank accounts ensure bank balances do not exceed the FDIC limit.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) Department of Housing and Urban Development Finding 2025-002: Major Program: Section 8 Housing Assistance Payments Program, Federal Assistance Listing Number 14.195 RECOMMENDATION The auditor recommends management review the HUD Handbook on determining income included in the management fee calculation. ACTION TAKEN Management will review the HUD Handbook on allowable income included in the management fee calculation and ensure monthly calculations be reviewed for out of the ordinary income sources.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding 2025-001: Major Program: Section 8 Housing Assistance Payments Program, Federal Assistance Listing Number 14.195 RECOMMENDATION The auditor recommends implementing greater oversight over HUD tenant compliance and proper employee training on HUD move out procedures. ACTION TAKEN The Project will monitor tenant move outs to ensure security deposits are refunded within the thirty day period specified by HUD and review the HUD move out procedures with their employees.