Corrective Action Plans

FINDING 2023-001: Section 811 Capital Advance Program and Project Rental Assistance Contract ALN# 14.181 Recommendation: Management will implement internal controls to ensure timely monthly contributions to the replacement reserve and will address the shortfall by making up the missed deposits in the subsequent period alongside the normal required contributions. Action Taken: Management will make the necessary required deposits to bring the balance of the reserve for replacement in alignment with requirements of Section 811 Capital Advance Program Regulatory Agreement.

FINDING 2023-002: Section 811 Capital Advance Program and Project Rental Assistance Contract ALN# 14.181 Recommendation: Management will implement internal controls to ensure timely monthly contributions to the replacement reserve and will address the shortfall by making up the missed deposits in the subsequent period alongside the normal required contributions. Action Taken: The Organization will make the necessary required deposits to bring the balance of the reserve for replacement in alignment with requirements of Section 811 Capital Advance Program Regulatory Agreement.

FINDING 2023-001: Section 811 Capital Advance Program and Project Rental Assistance Contract ALN# 14.181 Recommendation: Management will implement a comprehensive internal control system to ensure all tenant files include required documentation, and will conduct a thorough review of all current tenant files to verify compliance and completeness. Action Taken: Ownership agrees with the auditor’s finding and recommendation and has hired a new management agent to oversee the implementation of a comprehensive internal control system, ensuring all tenant files include required documentation.

Subsequently, on August 2024, the shortfall in the reserve for replacement was funded.

CORRECTIVE ACTION PLAN Name and Number of the Project: Alamo Area Mutual Housing Association Audit Firm: M Group, LLP Audit Period: The year ended December 31, 2023 Compliance Review A. COMMENTS ON FINDINGS AND RECOMMENDATIONS We concur with the findings and recommendations of our auditors regarding our noncompliance as cited in the accompanying Schedule of Findings and Questioned Costs. ACTIONS TAKEN FINDING 2023-003: Section 223(a)(7) HUD Insured Loan, Assistance Listing 14.135 - AAMHA Western Hills, LLC HUD Project No. 115-115888, AAMHA KPTP, LLC HUD Project No 115-35652 and Section 223(f) HUD Insured Loan, Assistance Listing 14.155 - AAMHA Calcasieu, LLC HUD Project No 115-11280Section 223(a)(7) HUD Insured Loan, Assistance Listing 14.135. Entity expenses and receipts were recorded on the incorrect project’s books. CORRECTIVE ACTION COMPLETED: a. AAMHA Western Hills, LLC - On April 24, 2024, $3,199 was received from an affiliate. b. AAMHA KPTP, LLC - During 2023, $16,321 was received from affiliates. On May 10, 2023, the Project received $8,027. c. AAMHA Calcasieu, LLC – On April 16, 2024, the Project received $5,869 from an affiliate. We have prepared the corrective action plan as required by the standards applicable to financial statements contained in Government Auditing Standards and by the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Any questions regarding the above corrective action plan should be directed to Christine Drennon, Executive Director.

Finding 2023-003 – Federal Award Finding Name of Official Responsible for Corrective Action: Earl Richardson, First AME Housing Association Interim Executive Director Corrective Action Planned: We appreciate the audit team's diligence in reviewing our financial processes and acknowledge the finding related to the untimely reserve deposit. 1. Explanation: Example: "The delay in making the reserve deposit was primarily due to management not fully understanding HUD fund authorization per the HUD Handbook 4350. 2. Corrective Actions Taken: We have taken the following corrective actions: All reserve funds have been deposited in the appropriate reserve accounts at our bank. We have implemented a revised deposit schedule that will deposit reserve funds as required after receipt of direct deposit voucher payment from CMS. 3. Preventive Measures: To prevent a recurrence of this issue, we have instituted additional preventive measures, including producing monthly financial reports showing the deposits in a bank reconciliation line of the item and on the balance sheet. 4. Commitment to Compliance: We uphold the highest financial responsibility and compliance standards. Moving forward, we will remain vigilant to ensure timely reserve deposits and will continue to prioritize adherence to all relevant regulations and internal policies."

Finding 2023-002 – Federal Award Finding Name of Official Responsible for Corrective Action: Earl Richardson, First AME Housing Association Interim Executive Director Corrective Action Planned: Explanation: We acknowledge the oversight and would like to provide context to understand better the circumstances that led to the delay. We had internal challenges when our previous management company departed, leaving us with incomplete files and late recertifications or recertifications that never started, making it next to impossible to catch up promptly. Next, staff staffing issues contributed to the delays because staff members were not properly trained. Despite these challenges, we recognize the importance of adhering to HUD regulations and are committed to taking corrective measures. Corrective Actions Taken: We initiated immediate corrective actions to rectify the situation upon discovering the late recertifications. We have instituted the following measures to prevent the recurrence of late annual recertifications. 1. Created a recertification schedule and calendar with the annual recertification date, specific dates to notify residents that their annual recertification is due, and dates for submitting the information to CMS and to trac. The schedule and calendar are submitted to the executive director every two weeks to monitor progress, and a meeting is scheduled with staff every two weeks to review recertification issues. 2. We hired a consultant specializing in recertification to train the staff and work with staff daily to answer questions concerning our certification. This is not a one-anddone; our recertification consultant is permanently on call to answer certification issues and continuous staff training. These measures are designed to ensure timely compliance with HUD regulations and to strengthen our internal processes.

Finding 2023-001: The Organization did not retain a printed and dated copy of the Failed Verification and Failed EIV Prescreen reports for two out of twelve months of the year. Recommendations (2023-001-a): Auditor recommends that management reevaluate its system and procedures to ensure that the required reports are printed and retained on the required schedule with clear dates of printing, going forward. View of Responsible Officials: Management concurs with this finding and agrees with the auditor’s recommendation. Management considers corrective action to be completed and will reevaluate its system to ensure future compliance.

September 25, 2024 Management's Planned Corrective Action Plan For the Year Ended December 31, 2023 Names of contact person(s) responsible for corrective action: Georgina Acevedo, Chair and Kevin McAllister, Treasurer Federal Award Finding and Questioned Costs Finding Number: 2023-001 - Supportive Housing for the Elderly (Section 202) - CFDA # 14.157 Planned Corrective Action: The Board of Directors acknowledges the required deposits to the replacement reserve account were not made. The Project is applying for a rent increase and deposits will be made as soon as the cash position is available to make the required deposits. Anticipated Completion Date: Upon approval of the rent increase.

September 25, 2024 Management's Planned Corrective Action Plan For the Year Ended December 31, 2023 Names of contact person(s) responsible for corrective action: Malcolm A. Punter, President Federal Award Finding and Questioned Costs Finding Number: 2023-001 - Supportive Housing for the Elderly (Section 202) - CFDA # 14.157 Planned Corrective Action: The Board of Directors acknowledges the required deposits to the replacement reserve account were not made. Management will transfer the funds as soon as the cash position is available to make the required deposits. Anticipated Completion Date: Upon availability of cash flows.

Management concurs with the findings and is working to ensure all employees adhere to control procedures and compliance requirements set by HUD. For finding 2023-003, the Organization is working to deposit surplus cash into a residual receipts account.

Management concurs with the findings and is working to ensure all employees adhere to control procedures and compliance requirements set by HUD. For finding 2023-002, the Organization is working to transfer the funds into an interest-bearing account.

Managing agent subsequently obtained approval from HUD for the questioned replacement reserve withdrawal. All replacement reserve withdrawals will obtain prior approval from HUD.

2023-005 Special Tests and Provisions – Waiting List Moving to Work Demonstration Program AL No. 14.881 Other Matter to be Reported Under the Uniform Guidance Condition: While testing of applicants that reached the top of the waiting list during the year ended December 31, 2023, the Authority was unable to provide sufficient documentation for one of the applicants to support their position on the list. Auditor Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regards to waiting list selection process and document retention requirements. Action Taken: The Houston Housing Authority agrees with this finding. A review of existing procedures revealed that there were issues with the management of the waiting lists. The Houston Housing Authority is transitioning to a new software program during 2024. One of the reasons for the implantation of the new software is to make use of a better wait list management feature that is available within the new software. Waitlists have been reviewed and purged of stale an do dated information which will facilitate better management of the waitlist for future periods.

2023-004 Eligibility Section 8 Project-Based Cluster Material Weakness in Internal Control Material Noncompliance Condition: Out of an approximate population of 670 of tenants, 20 tenant files were tested and the following deficiencies were noted: • Nine files did not have annual recertifications performed during the year, • Eight files did not have 9886 release of information forms within 15 months of annual recertification, • Six files did not have an annual recertification performed within 12 months, • Six files did not have documentation necessary to verify the reported income, and • Three files did not have a 214 declaration form for all members of the household. Auditor Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample. Action Taken: The Houston Housing Authority agrees with this finding. The Houston Housing Authority has for the past several months undertaken a program to review all voucher files for purposes of getting all delinquent recertifications completed. During this process if other required documents are found to be missing steps are being taken to complete the missing documentation and make sure that the files are complete. This review is substantially completed with final completion expected in the third quarter of 2024. Procedures have been implemented with regards to preventing this situation from recurring. Where needed staff will be provided the necessary training to make sure that a HCVP staff have the skills needed to successfully complete their job tasks. To facilitate this training, the Houston Housing Authority has created a training center that is made available to not only Houston Housing Authority staff but also others to provide a wide variety of training classes. Current leadership at the Houston Housing Authority is committed to having a competent trained staff working in the HCVP as well as other departments with the agency. Because the file clean up work was being performed in calendar year 2024 we expected this finding would be present for the 2023 audit. This work is handled by the Voucher Program Operations department. The VP of this department and the Director of this department are primarily responsible for making sure the necessary corrections are made and the fill review is completed within the third quarter of 2024

2022-003 Eligibility Housing Voucher Cluster Material Weakness in Internal Control Material Noncompliance Condition: Out of an approximate population of 484 of Housing Voucher Cluster tenants the following deficiencies were noted: Mainstream Voucher AL #14.879 (a total of 4 tenants selected for testing): • One file did not have an annual recertification performed during the year, • One file did not have an annual recertification performed within 12 months, • Two files did not have 9886 release of information forms within 15 month of the annual recertification, • One file did not have a 214 declaration form for all members of the household, and • One file did not have documentation necessary to verify the reported income. Emergency Housing Voucher AL #14.871 (a total of 5 tenants selected for testing): • Four files did not have an annual recertification performed within 12 months, • Three files did not have a 214 declaration form for all members of the household, • Four files did not have 9886 release of information forms within 15 month of the annual recertification, and • Five files did not have rent reasonableness form performed for the annual certification. The Houston Housing Authority agrees with this finding. The Houston Housing Authority has for the past several months undertaken a program to review all voucher files for purposes of getting all delinquent recertifications completed. During this process if other required documents are found to be missing steps are being taken to complete the missing documentation and make sure that the files are complete. This review is substantially completed with final completion expected in the third quarter of 2024. Procedures have been implemented with regards to preventing this situation from recurring. Where needed staff will be provided the necessary training to make sure that a HCVP staff have the skills needed to successfully complete their job tasks. To facilitate this training, the Houston Housing Authority has created a training center that is made available to not only Houston Housing Authority staff but also others to provide a wide variety of training classes. Current leadership at the Houston Housing Authority is committed to having a competent trained staff working in the HCVP as well as other departments with the agency. Because the file clean up work was being performed in calendar year 2024 we expected this finding would be present for the 2023 audit. This work is handled by the Voucher Program Operations department. The VP of this department and the Director of this department are primarily responsible for making sure the necessary corrections are made and the fill review is completed within the third quarter of 2024. FINDINGS - FEDERAL AWARD PROGRAMS AUDIT 2023-003 Eligibility Housing Voucher Cluster Material Weakness in Internal Control Material Noncompliance Condition: Out of an approximate population of 1,500 of Housing Voucher Cluster tenants the following deficiencies were noted: Mainstream Voucher AL #14.879 (a total of 5 tenants selected for testing): • Five files did not have supporting documents needed to determine eligibility. Emergency Housing Voucher AL #14.871 (a total of 5 tenants selected for testing): • Four files did not have supporting documents needed to determine eligibility, and • One files did not have an annual recertification performed. Auditor Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample. Action Taken: The Houston Housing Authority agrees with this finding. The Houston Housing Authority has for the past several months undertaken a program to review all voucher files for purposes of getting all delinquent recertifications completed. During this process if other required documents are found to be missing steps are being taken to complete the missing documentation and make sure that the files are complete. This review is substantially completed with final completion expected in the third quarter of 2024. Procedures have been implemented with regards to preventing this situation from recurring. Where needed staff will be provided the necessary training to make sure that a HCVP staff have the skills needed to successfully complete their job tasks. To facilitate this training, the Houston Housing Authority has created a training center that is made available to not only Houston Housing Authority staff but also others to provide a wide variety of training classes. Current leadership at the Houston Housing Authority is committed to having a competent trained staff working in the HCVP as well as other departments with the agency. Because the file clean up work was being performed in calendar year 2024 we expected this finding would be present for the 2023 audit. This work is handled by the Voucher Program Operations department. The VP of this department and the Director of this department are primarily responsible for making sure the necessary corrections are made and the fill review is completed within the third quarter of 2024.

2023-002 Eligibility Moving to Work Demonstration Program AL No. 14.881 Material Weakness in Internal Control Material Noncompliance Condition: Out of an approximate population of 18,300 of Section 8 Housing Choice Voucher and 2,300 Low Rent Public Housing tenants the following deficiencies were noted: Section 8 Housing Choice Voucher (a total of 40 tenants selected for testing): • Thirty-five files did not have annual recertifications performed during the year, • Nine files did not have 9886 release of information forms within 15 months of annual recertification, • Four files did not have a annual recertification performed with 12 months of the previous certification, • Three file did not have an inspection performed during the year • Three files did not have documentation necessary to verify the reported income, • Two files did not have a 214 declaration for a member of the household, and • Two files did not have documentation necessary to verify custody of dependents. Low Rent Public Housing (a total of 40 tenants selected for testing): • Fourteen files did not contain flat rent options forms, • Ten files did not have documentation necessary to verify the reported income, • Seven files did not have the annual recertification performed or documented, • Five files did not have a 214 declaration for a member of the household, • Three files did not have support necessary to verify income allowances, • Two files did not have 9886 release of information form within 15 months of the annual recertification, and • One file did not have annual recertifications performed within 12 months of the previous annual certification. Auditor Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample. Action Taken: The Houston Housing Authority agrees with this finding. The Houston Housing Authority has for the past several months undertaken a program to review all voucher files for purposes of getting all delinquent recertifications completed. During this process if other required documents are found to be missing steps are being taken to complete the missing documentation and make sure that the files are complete. This review is substantially completed with final completion expected during the final quarter of 2024. Procedures have been implemented with regards to preventing this situation from recurring. Where needed staff will be provided the necessary training to make sure that all HCVP staff have the skills needed to successfully complete their job tasks. To facilitate this training, the Houston Housing Authority has created a training center that is made available to not only Houston Housing Authority staff but also others to provide a wide variety of training classes. Current leadership at the Houston Housing Authority is committed to having a competent trained staff working in the HCVP as well as other departments with the agency. Because the file clean up work was being performed in calendar year 2024 we expected this finding would be present for the 2023 audit. This work is handled by the Voucher Program Operations department. The VP of this department and the Director of this department are primarily responsible for making sure the necessary corrections are made and the fill review is completed within the final quarter of 2024.

2023-001 Financial Reporting – Disclaimer of Opinion Material Weakness in Internal Control Material Noncompliance Condition: During our audit of the Authority’s financial statements, numerous adjustments were needed to properly report the financial statements in accordance with generally accepted accounting principles. Certain accounts had not been properly reconciled and corrective entries were not readily available. Significant audit adjustments were necessary for several audit areas and the audit was significantly delayed due to these adjustments. Given the amount of adjustments needed the auditor did not have enough time to complete the necessary audit procedures and as such have issued a disclaimer of opinion on the financial statements. Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over both internal and external reporting, and the year-end close process to ensure reporting remains accurate and timely, with any unexpected financial data being investigated and corrected before it is reported. The Authority should consider additional staff training on development activities. Action Taken: The Houston Housing Authority agrees with this finding and related recommendations. During this audit, as these issues arose, notes were taken, evaluation of what had happened was made so that we could make the necessary adjustments to our procedures to prevent the continuation of these issues. In addition, we hired a firm to come in and undertake a review of the finance department. The purpose of this review was to review our existing staffing levels, workloads, experience, etc., for purposes of proposing a reorganization of the finance department to address any deficiencies. We have reviewed the recommendations from this consultant and are in the process of implementing many of the recommended changes. We are in the process of bringing in additional staff to expand the capacity of the Finance department. As we had fallen behind on our audits we anticipated the weaknesses noted in prior audits would continue to be present in future audits including the 2023 audit. We have been working very diligently to address the issues within the finance department that gave rise to this finding. We fully expected this finding or a similar finding to be present for the 2023 audit as many of the departmental improvements and changes were not in place during the 2023 calendar year. We have also been somewhat limited in the time available to implement changes as we have been working on clearing up the prior audit delinquencies since hiring out new outside auditors. This will be the first time in years where we will have a prior year audit available to us prior to the end of the current year. We will be able to have any 2023 audit adjustments posted to the general ledger prior to yearend 2024 so many of the reconciliation issues that have been encountered on the prior audits are not expected to be present when we move into the 2024 audit. The VP Fiscal and Business Operations as well as the Director of Finance are responsible for implementing the necessary process and procedural changes to eliminate the need for this type of finding for the 2024 audit.

2023-004. Special Tests and Provisions United States Department of Housing and Urban Development Continuum of Care Program ALN: 14.267 Condition: There were instances in which comparable rents for the area were not documented and maintained in tenant files. Recommendation: The Organization should implement procedures for supervisory review of documentation and approval for all tenant files to ensure reasonable rent is charged. Corrective Action: The Organization will ensure written documentation is maintained in tenant files, to support that the grant funds to pay rent were used for reasonable rent in relation to comparable rent in the area. Responsible Contact Person(s): Dolores Kordon, Executive Director, will be responsible for resolving this matter. Anticipated Completion Date: December 31, 2024.

Contact Person Derek Johnson, Managing Agent Corrective Action Plan The Authority’s management recognizes the deficiency and will corroborate with its financial institution to remediate the finding. Planned Completion Date for CAP Immediately.

Contact Person Derek Johnson, Managing Agent Corrective Action Plan The Authority’s management company has hired a Deputy Director who completes quality control audits on all tenant files periodically. The Deputy Director holds monthly meetings with all eligibility staff workers to ensure compliance with policies and procedures. Planned Completion Date for CAP Immediately.

1.The inspector has attended an outsourced training from a reputable company that meetsthe HUD requirements and certification criteria. HQS includes requirements for allhousing types, including single and multi-family dwelling units, as well as specificrequirements for special housing types such as manufactured homes. 2.The Housing Authority HCV supervisor will implement greater oversight over theHousing Quality Standards by reinforcing the quality controls and monitoring failedinspection to improve on the standards mandated by HUD regarding biannual inspectionsand failed inspections.

The Authority concurs with the findings in that PRHA’s Housing Choice Voucher program didn’t provide the EIV Income Report within 120 days for at least one tenant and the PRHA’s HCVP failed to document the biannual Housing Quality Standards (HQS) inspections for two units in accordance with the PHA’S Administrative Plan. The following corrective actions are for the EIV Income Report findings: 1.The HCV staff reviewed the tenant’s files. 2.The EIV policy and procedure has been reiterated to each staff member. 3.Internal controls have been discussed and assigned to ensure the EIV Income Reportswill be run within 120 days of the tenant’s lease date.

We will implement a formal review over monthly payment vouchers submitted to HUD beginning with the September 2024 vouchers to be filed in October 2024. This corrective action is already being done and has been since our last audit. Since our corrective action plan issued in early 2024, we have implemented a process that all grant claims/payment vouchers are formerly reviewed and initialed by our Executive Director.

Management’s Response: Management will begin to comply with the applicable CFR regulations and begin annual reasonable rent determinations.