Corrective Action Plans

Tyler Luce, Executive Vice President & CFO, respectfully submits the following corrective action plan for the year ended September 30, 2025. Name and address of independent public accounting firm: Maner Costerisan, P.C. 2425 E. Grand River Ave, Ste 1 Lansing, MI 48912 Audit period: October 1, 2024 – September 30, 2025 The findings from the September 30, 2025 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. Finding 2025-001 Recommendation: The entity should design and implement stronger internal controls over project funds, including enhanced segregation of duties, documented procurement procedures, conflict-of-interest monitoring, and periodic independent review of project expenditures to ensure compliance with Uniform Guidance. Management Comments: We agree with the facts and circumstances of this finding. Management has taken corrective action in response to this finding. The employees involved are no longer employed in connection with the project, and the matter was reported to the HUD Office of Inspector General. Management has reviewed and strengthened the project's controls over conflict-of-interest monitoring and enforcement of existing time-clock policies. In addition, we have and will continue to perform independent reviews of project expenditures to ensure compliance with Uniform Guidance.

A Purchasing Policy was drafted to require sealed bids for any purchases that are $50,000 or more whether they are construction or not.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2025-005: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 - Material Weakness RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook. In addition, the auditor recommends the Project and management review its internal control policies and procedures. ACTION TAKEN Carrasquillo Management LLC acknowledges the significant deficiency noted and is committed to improving internal controls to ensure full compliance with all HUD program requirements. 1. Policy and Procedure Review Management has initiated a comprehensive review of internal control policies and procedures to identify gaps and align practices with the HUD Handbook 4350.3 and related program regulations. Updates will be made to strengthen compliance checkpoints and clearly define staff responsibilities for each stage of tenant file processing, income verification, certifications, and documentation retention. 2. Training and Capacity Building Carrasquillo Management LLC has committed to ongoing staff development by enrolling relevant personnel in HUD-compliant training programs focused on regulatory requirements, internal controls, and compliance best practices. All staff involved in leasing, recertifications, and program compliance will be required to complete refresher trainings at least annually. 3. Internal Audit and Quality Control A quarterly internal audit process has been established to monitor the effectiveness of internal controls and ensure consistent application across all major program functions. Findings from these audits will be reviewed by senior management, and corrective actions will be taken immediately when deficiencies are identified. 4. Oversight and Accountability Management will assign a dedicated compliance coordinator responsible for overseeing adherence to HUD regulations and internal policies, providing regular updates to leadership, and ensuring follow-through on all audit-related corrective actions. Carrasquillo Management LLC is committed to fostering a culture of compliance and accountability and will take all necessary steps to prevent future deficiencies and ensure the Project remains in good standing with HUD program requirements.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2025-004: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 RECOMMENDATION The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely. ACTION TAKEN Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements: 1. Enterprise Income Verification (EIV) Reports Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward. 2. Timely Tenant Signatures on Recertifications and Move-in Certification A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification and move-in certification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls. 3. Bank Account Balance Calculations Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required. 4. Security Deposit Charges The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines. 5. Date and Time-Stamped Applications Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance. 6. Missing Lease and Application Documents Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup. 7. Move-In Inspections A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in. 8. Training and Oversight Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines. We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2025-003: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 RECOMMENDATION The auditor recommends the replacement reserve be properly funded and the minimum balance be assessed on a monthly basis. ACTION TAKEN Carrasquillo Management LLC acknowledges the finding regarding the required deposits to the replacement reserve account and ensuring the replacement reserve is fully funded. Corrective Actions: 1. Make the necessary deposits to comply. 2. Internal Compliance Controls. 3. Staff Training. 4. Monthly Monitoring and Reporting - Staff will confirm at the end of the month that the monthly deposit to the replacement reserve has been made with each closing to ensure no deposit has been missed. We will increase the monthly deposits to make sure we maintain the accurate balance in the replacement reserve account. Carrasquillo Management LLC is committed to full regulatory compliance and to restoring the integrity of all Project accounts in collaboration with HUD.

FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding, 2025-002: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 RECOMMENDATION The auditor recommends moving some of the Project’s funds to other banks to ensure all bank account balances at each bank remain below the FDIC limit. ACTION TAKEN Carrasquillo Management LLC acknowledges the finding regarding the Project’s bank balances exceeding the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000. Corrective Actions: 1. Risk Mitigation Plan Carrasquillo Management LLC is in the process of restructuring the Project’s banking arrangements to ensure that no single institution holds more than the FDIC-insured limit of $250,000 per ownership category. This will be completed shortly after the refinance of the mortgage takes place in the next few months. Westfield Bank also uses Positive Pay systems to avoid any fraud to occur on the accounts. Any transactions coming out of the units have to be entered prior to being made and have to be approved. 2. Diversification of Funds The Project will open additional accounts with other FDIC-insured financial institutions and transfer excess funds accordingly. This will help safeguard assets and reduce exposure in the unlikely event of bank failure. 3. Ongoing Monitoring Management has implemented a monthly monitoring protocol to review account balances and ensure ongoing compliance with FDIC limits. This process includes scheduled reviews by the finance team to confirm that no account exceeds the insured threshold. 4. Policy Update Internal financial policies are being updated to include FDIC compliance requirements, ensuring that any future account openings or large fund deposits are properly reviewed and managed. Carrasquillo Management LLC is committed to protecting the financial assets of the Project and ensuring full compliance with HUD requirements and FDIC insurance guidelines.

CORRECTIVE ACTION PLAN Name of auditee: Bellflower Oak Street Manor Name of audit firm: Propp Christensen Caniglia LLP Period covered by the audit: October 1, 2024 through September 30, 2025 CAP prepared by: Name: Sean Calendar Position: Director of Accounting Telephone: (916) 357-5300 Comments: Management agrees with the 2025-001 – 2025-003 findings. Actions: Management has agreed to enhance processes, controls, and personnel training under the newly engaged property management company to ensure ongoing compliance with HUD regulations. Additionally, management has agreed to deposit $9,912 into the replacement reserve account to fully fund the current-year requirement and transfer $44,273 into the residual receipts account to address the 2024 surplus cash requirement.

Corrective Action Plan - Interfund receivables and payables. Contact person - Executive Director, Rhonda Baxter., Executive Director, at the Bastrop Housing Authority, 502 Farm Street, Bastrop TX 78602, telephone number (512) 312-3398. Corrective action planned - Interfund receivables and payables will be liquidated each month. Anticipated completion date - Within the next year.

Corrective Action Plan - Individual charge tickets not attached to credit card statements. Contact person - Executive Director, Rhonda Baxter., Executive Director, at the Bastrop Housing Authority, 502 Farm Street, Bastrop TX 78602, telephone number (512) 312-3398. Corrective action planned - Individual charge tickets will be attached to credit card statements each month. Anticipated completion date - Within the next fiscal year.

Finding 2025-005: Special Test – Utility Allowance Schedule Housing Choice Vouchers View of responsible officials: The City agrees with the finding. Corrective action plan: The City will maintain and update utility allowance schedules based on current date and adequately demonstrate segregation of duties over preparation and approval of the schedule. Implementation dates: September 30, 2026 Responsible person: Lola Ogunremi, Chief Financial Officer

Finding 2025-004: Special Test – Reasonable Rent Housing Choice Vouchers View of responsible officials: The City agrees with the finding. Corrective action plan: The City will determine that the rent to owner is reasonable prior to approving the lease and executing the HAP contract. Implementation dates: September 30, 2026 Responsible person: Lola Ogunremi, Chief Financial Officer

Finding 2025-003: Reporting – SEMAP Housing Choice Vouchers View of responsible officials: The City agrees with the finding. Corrective action plan: SEMAP certifications must be formally approved by the City’s governing board and signed by appropriate management prior to submission. Implementation dates: September 30, 2026 Responsible person: Lola Ogunremi, Chief Financial Officer

Finding 2025-002: Reporting – HUD 50058 Housing Choice Vouchers View of responsible officials: The City agrees with the finding. Corrective action plan: Management acknowledges that the filings with HUD were not timely. Staff will work to ensure filings take place within 60 days of the effective date. Implementation dates: September 30, 2026 Responsible person: Lola Ogunremi, Chief Financial Officer

Audit Firm: CohnReznick Period Covered by Audit October 1, 2024 - September 30, 2025 Corrective Action Plan Prepared By: Name: Nancy Thomas Position Chief Financial Officer and Executive Vice President Telephone Number: 336-917-6066 Finding No. 2025-002; Eligibility - Material Weakness PUBLIC HOUSING Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Public Housing Operating Fund Assistance Listing Number: 14.850 Federal Award Identification Number and Year: NC012-00000325D; NC012-00000625D; NC012-00000825D; NC012-00000925D; NC012-00001225D; NC012-00002125D; NC012-00002225D; NC012-00003025D; NC012-00003125D; NC012-00003225D; NC012-00034325D; NC012-00003525D; NC012-00003625D; NC012-00003725D; NC012-00003825D; NC012-00004025D; NC012-00004125D Criteria: In accordance with Uniform Guidance, internal controls are required to be in place to ensure compliance with federal requirements and to maintain complete and accurate participant files as noted in 24 CFR 5.233. Condition and Context: Our testing of 40 participant files noted the following: • No electronic income verification was done within the required time period for 20 of 40 participant selections. Effect or Potential Effect: The Housing Authority of the City of Winston-Salem (“ASPIRE”) is not in compliance with federal requirements regarding Eligibility. Cause: Tenant lease files were not maintained, and tenant eligibility was not determined in accordance with Uniform Guidance. Questioned Costs: Unknown Identification as a Repeat Finding: This finding is not a repeat finding. Recommendation: ASPIRE should maintain complete and accurate participant files to ensure compliance with federal requirements. Views of Responsible Official(s) and Planned Corrective Actions: ASPIRE will improve internal controls to maintain complete and accurate participant files to ensure compliance with federal requirements. CORRECTIVE ACTION TO BE TAKEN: 1. No electronic income verification was done within the required time period for 20 of 40 participant selections. Response: Electronic Income Verification (EIV) reports were not completed within the required timeframe for 20 of the 40 public housing tenant files selected for review. The delays were the result of staff oversight and a lack of adequate monitoring to ensure EIV reviews were completed and documented within HUD-required timeframes. To address this issue, Public Housing staff have been retrained on EIV requirements, including HUD-required review and documentation deadlines. Management has reinforced expectations regarding the timely completion of EIV reviews and implemented additional monitoring procedures to ensure compliance. The Assistant Director has also established a tracking system and compliance calendar to assist staff in monitoring and completing required EIV reviews within the prescribed deadlines. In addition, the Assistant Director of Compliance conducts monthly reviews of a random sample of tenant files to verify compliance with EIV requirements and identify any deficiencies including the 120-day move in EIV reports and requires corrective action. Any findings are addressed through staff coaching, corrective action, and additional training as necessary. These measures are intended to strengthen internal controls, improve compliance monitoring, and ensure EIV reviews are completed in accordance with HUD requirements.

Audit Firm: CohnReznick Period Covered by Audit October 1, 2024 - September 30, 2025 Corrective Action Plan Prepared By: Name: Nancy Thomas Position Chief Financial Officer and Executive Vice President Telephone Number: 336-917-6066 Findings and Questioned Costs - Major Federal Award Program Audit Finding No. 2025-001; Eligibility and Reporting - Material Weakness-HCV Voucher Program Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster (Section 8 Housing Choice Vouchers Program; Mainstream Vouchers Program) Assistance Listing Number: 14.871; 14.879 Federal Award Identification Number and Year: NC012VO 2025; NC012EF 2025; NC012DV 2025 Criteria: In accordance with Uniform Guidance, internal controls are required to be in place to ensure compliance with federal requirements and to maintain complete and accurate participant files as noted in CFR 5.233, 982.151, 982.405(d), and 982.516. Condition and Context: Our testing of 40 participant files noted the following: • No support was able to be provided regarding tenant lease files for 4 of 40 participant selections. • No tenant addendum was able to be provided for 1 of 40 participant selections. • No HAP contract was able to be provided for 2 of 40 participant selections. • No electronic income verification was done within the required time period for 13 of 40 participant selections. • Annual recertifications were not completed timely for 3 of 40 participant selections. Effect or Potential Effect: The Housing Authority of the City of Winston-Salem (“ASPIRE”) is not in compliance with federal requirements regarding Eligibility and Reporting. Cause: Tenant lease files were not maintained, and tenant eligibility was not determined in accordance with Uniform Guidance. Questioned Costs: Unknown Identification as a Repeat Finding: Repeat finding 2024-001 Recommendation: ASPIRE should maintain complete and accurate participant files to ensure compliance with federal requirements. Views of Responsible Official(s) and Planned Corrective Actions: ASPIRE will improve internal controls to maintain complete and accurate participant files to ensure compliance with federal requirements. CORRECTIVE ACTION TO BE TAKEN: 1. No support was able to be provided regarding tenant lease files for 4 of 40 participant selections. Response: The agency underwent a relocation of its main office and experienced the loss of five Housing Choice Voucher Specialists, which necessitated the engagement of a contractor to assume responsibility for more than 1,800 participant case files. Due to the transition of these caseloads to the contractor and the limited storage capacity at the agency's new office location, physical participant files were transferred to an off-site storage facility. During the process of boxing, inventorying, and relocating more than 5,000 physical files, four participant files were inadvertently misplaced. Upon discovery, management took immediate action to reconstruct the missing files using available electronic records, third-party documentation, and information maintained within Yardi. To mitigate the risk of future file loss and strengthen document retention practices, the agency implemented enhanced procedures effective January 1, 2025. Staff are now required to electronically upload and attach all supporting documentation to the applicable HUD Form 50058 action within Yardi, in addition to maintaining the required physical file. This dual-record retention process ensures that participant documentation is preserved in both electronic and hard-copy formats, providing redundancy and improving accessibility, accountability, and compliance with record retention requirements. 2. No tenant addendum was able to be provided for 1 of 40 participant selections. Response: The absence of the tenant addendum was the result of an oversight by the Housing Choice Voucher Specialist. To prevent similar occurrences in the future, staff have been reminded of the requirement to maintain complete participant files, including all required HUD forms and addenda. In addition, the agency now requires that tenant addendums and all supporting documentation be maintained in both the participant's electronic file within Yardi and the physical file. This dual-record retention process provides an additional level of quality control and helps ensure that required documentation is readily available for future reviews and audits. 3. No HAP contract was able to be provided for 2 of 40 participant selections. Response: The agency was unable to provide a copy of the HAP Contract for two of the forty participant files selected for review. This was the result of an oversight in the maintenance of the participant files. Upon notification, management conducted a review of the files and implemented corrective measures to strengthen document retention practices. Staff have been retrained on the requirement to maintain complete participant files, including all required Housing Assistance Payment (HAP) Contracts and supporting documentation. In addition, the agency now requires that HAP Contracts be maintained in both the participant's electronic file within Yardi and the physical file. Management has also implemented periodic file reviews to verify that required documentation is present and properly retained. These measures are intended to improve recordkeeping controls and prevent similar occurrences in the future. 4. No electronic income verification was done within the required time period for 13 of 40 participant selections. Response: Electronic Income Verification (EIV) reports were not completed within the required timeframe for 13 of the 40 participant files selected for review. The delays were the result of staff oversight and workload challenges experienced during a period of significant staffing turnover within the Housing Choice Voucher Program. To address this issue, Housing Choice Voucher staff have been retrained on EIV requirements, including required timeframes for obtaining and reviewing EIV reports. Management has reinforced expectations regarding timely completion and documentation of EIV reviews. Additionally, the department auditor conducts monthly reviews of a random sample of participant files to verify compliance with EIV requirements and identify any deficiencies requiring corrective action. These measures are intended to strengthen compliance monitoring and ensure EIV reviews are completed within HUD-required timeframes. 5. Annual recertifications were not completed timely for 3 of 40 participant selections. Response: Annual recertifications were not completed within the required timeframe for three of the forty participant files selected for review. The delays were primarily attributable to staffing shortages and caseload transitions that occurred during the audit period, resulting in increased workloads and processing delays. To address this issue, staff have been retrained on annual recertification requirements and processing timelines. Management has reinforced expectations regarding the timely completion of annual recertifications and implemented additional monitoring procedures to track upcoming and overdue recertifications. The Director has also developed an Annual Recertification Calendar for staff to follow. This calendar outlines each step of the annual recertification process and establishes deadlines to ensure timely completion of all required actions. In addition, the department auditor conducts monthly reviews of a random sample of participant files to verify compliance and identify any deficiencies requiring corrective action. These measures are intended to improve timeliness, strengthen oversight, and ensure annual recertifications are completed in accordance with HUD requirements.

U.S. Department of Housing and Urban Development Housing Voucher Cluster: ALN-14871 Section 8 Housing Choice Vouchers and ALN-14.879 Mainstream Vouchers Noncompliance - Eligibility A. Comments on Findings and Recommendations: We concur with the auditor’s suggestions for maintaining supporting documentation to provide evidence of the Agency’s compliance with requirements applicable to each program funded under Uniform Guidance requirements. B. Actions Taken or Planned: Management implemented changes to ensure that upon move-ins a copy of the executed lease is obtained, and management has included on the check list completed with each move in a reference to obtaining and scanning the new lease. The lease is scanned into the Corporation’s web-based system and retained for as long as the person remains on the program. Management will continue to evaluate their controls with respect to current federal awards and requirements to ensure accurate information captured, reported and maintained. Anticipated completion date: 9/30/26 Responsible party: Michelle Worthington, Section 8 Housing Director

The Authority will adopt a formal written policy requiring at least quarterly review of each open Capital Fund grant, tracking obligation deadlines and percentage obligated by Budget Line Item. Quarterly reports will be presented to the Board of Commissioners. Management will implement written contracting procedures requiring a fully executed contract or purchase order on file before any Capital Fund draw is initiated in eLOCCS. Contracts will be executed no later than 60 days before the obligation end date. Management will conduct an immediate review of all open Capital Fund grants to confirm compliance with obligation and expenditure deadlines and identify any remaining penalty exposure. Results will be reported to the Board. The Authority will adopt a written cash management policy requiring staff to document anticipated disbursements, expected disbursement dates, and a review of current cash balances before each Federal drawdown. Draws will be limited to amounts needed within three business days in accordance with 2 CFR § 200.305(b)(3), regardless of the source of drawdown instructions. I, as the Executive Director will complete documented training on Federal cash management requirements under 2 CFR §§ 200.302 and 200.305. To ensure that the Authority is prepared for the future, the Housing Administrator will also complete documented training on Federal cash management to prepare for current Executive Director’s retirement come May 2027.

The Authority will adopt a formal written policy requiring at least quarterly review of each open Capital Fund grant, tracking obligation deadlines and percentage obligated by Budget Line Item. Quarterly reports will be presented to the Board of Commissioners. Management will implement written contracting procedures requiring a fully executed contract or purchase order on file before any Capital Fund draw is initiated in eLOCCS. Contracts will be executed no later than 60 days before the obligation end date. Management will conduct an immediate review of all open Capital Fund grants to confirm compliance with obligation and expenditure deadlines and identify any remaining penalty exposure. Results will be reported to the Board. The Authority will adopt a written cash management policy requiring staff to document anticipated disbursements, expected disbursement dates, and a review of current cash balances before each Federal drawdown. Draws will be limited to amounts needed within three business days in accordance with 2 CFR § 200.305(b)(3), regardless of the source of drawdown instructions. I, as the Executive Director will complete documented training on Federal cash management requirements under 2 CFR §§ 200.302 and 200.305. To ensure that the Authority is prepared for the future, the Housing Administrator will also complete documented training on Federal cash management to prepare for current Executive Director’s retirement come May 2027.

2025-005 Allowability – Interprogram Activity Public Housing Operating Fund ALN 14.850 Significant Deficiency in Internal Control Other matter required to be reported in accordance with Uniform Guidance Condition: The Authority maintains a material interprogram receivable balance in the asset management program (“AMP”), which is due from other programs of the Authority. This interprogram receivable increased by $373,091 from the September 30, 2024 balance of $433,981, for a total receivable balance of $807,072 as of September 30, 2025. Auditor Recommendations: We recommend that the Authority immediately discontinue using Public Housing Operating Fund resources to fund costs or cash shortfalls of other programs or component units. The Authority should prepare a detailed reconciliation of all interprogram receivable and payable balances by program and implement a repayment plan to restore the Public Housing Operating Fund. We further recommend that the Authority implement written cash management and interprogram accounting procedures to prevent future unauthorized advances. These procedures should include monthly reconciliation of all interprogram balances, supervisory review, and approval of interprogram activity. Management Response: Management acknowledges and accepts responsibility for the deficiencies in internal control over allowability and eligibility and are committed to implementing corrective actions that address missing documentation and lack of verifiable procurement procedures to ensure compliance. Reconcile intercompany balances • CHA is currently working with its fee accountant to complete this process Cease Additional Borrowing • Effective immediately, CHA will discontinue the practice of increasing interprogram borrowings from AMP 1 except where expressly authorized by HUD regulations. Implementing a Repayment Plan • CHA will implement a repayment plan to prioritize repayment from unrestricted or otherwise eligible funding sources in compliance with HUD requirements. Monthly Interprogram Reconciliation • Finance staff and fee accountant will reconcile all interprogram receivable and payable balances monthly. • Any new interprogram activity will be reviewed by the Executive Director and Fee Accountant to ensure allowability before recording. Strengthen Budget Monitoring • Management will perform monthly budget-to-actual reviews for every program to identify operating deficits before they require interprogram borrowing. • Programs experiencing budget shortfalls will implement corrective spending measures or identify alternative eligible funding sources. Improve Cash Flow Management • With the assistance of the fee accountant, CHA will prepare monthly cash flow projections for each program to monitor liquidity and prevent the use of restricted Public Housing Operating Funds for other programs. Implement Internal Control Procedures • Written procedures governing interprogram transactions will be incorporated into the Authority's financial policies. • All interprogram transactions will require documentation supporting the purpose, funding source, and regulatory allowability. Oversight by Fee Accountant • The Authority's Fee Accountant will review interprogram balances during monthly financial statement preparation and report unusual activity or growing receivable balances to management. Board Oversight • The Board of Commissioners will receive monthly financial reports that include interprogram receivable and payable balances to provide ongoing oversight of repayment progress and compliance. Monitoring • The Executive Director and Finance Department will monitor compliance with this corrective action plan monthly and adjust operating budgets as necessary to eliminate future interprogram borrowing. Name of Responsible Person(s): Jackie Otto, Executive Director, Sherdana Wade, Director of Operations, Michelle Guidry, Finance Director Projected Completion Date: Some of the corrective activities are underway. We anticipate full compliance ahead of the June 30, 2027 audited submission.

2025-004 Eligibility Housing Voucher Cluster Material Weakness in Internal Control Other matter required to be reported in accordance with Uniform Guidance (Repeated in part from prior year, Finding No. 2024-004) Condition: Out of a population of 377 Housing Voucher Cluster tenants, we selected 40 tenants for testing and the following deficiencies were noted: • 6 files had incorrect income calculations, 5 of which impacted the HAP received; • 2 files were missing signatures on their 9886 form; • 2 files were missing 214 declarations for members of the household; • 1 file was missing identification for adults and dependents in the household; • 1 file had the incorrect utility allowance applied; • 1 file was delayed in receiving an annual recertification (13-month recertification); and, • 1 file did not have an annual recertification performed when due, and not able to be provided for testing. 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. Management Response: Management acknowledges the findings and the material weakness in internal control for eligibility. We accept responsibility for the deficiencies in internal control over eligibility and are committed to implementing corrective actions that address missing documentation and lack of verifiable procurement procedures to ensure compliance. • CHA will perform a 100% review of all remaining Housing Choice Voucher participant files not included in the audit sample to determine whether the deficiencies identified are isolated or systemic. Any additional errors or missing documentation discovered during that review will be corrected promptly, and any financial impact will be evaluated. • Correct utility allowances are being applied. • CHA has begun to review and correct all deficiencies identified in the auditor’s sampled files. This includes obtaining missing documents where possible, completing or correcting forms, verifying income, utility allowances, payment standards, inspections, rent reasonableness, identification documents, and 50058 submissions. Any unsupported payments or eligibility determinations will be recalculated and resolved. • CHA uses a mandatory file documentation checklist for all new admissions, interim recertifications, annual recertifications, moves, and contract rent changes. • No file will be finalized and no HAP action processed until a supervisor or designated reviewer verifies completeness, accuracy, and compliance with HUD requirements. This review will be documented and retained in the file. • With the implementation of new housing software in the late summer of 2026, CHA will implement a software-based tickler system to monitor annual recertification due dates, interim actions, inspection due dates, and expiring documents. The system will provide advanced reminders to staff to ensure recertifications and related actions are completed within required timeframes. In addition, the same system will be used to improve inspection monitoring/tracking. • All Housing Choice Voucher staff involved in eligibility, recertifications, inspections, file maintenance, and payment processing will continue to receive training on HUD eligibility requirements, documentation standards, file retention, rent calculations, utility allowances, payment standards, rent reasonableness, and 50058 reporting. • Management will conduct periodic internal quality control reviews of tenant files throughout the year to test compliance and identify issues before year-end. Results of these reviews will be documented, discussed with staff, and used to provide additional coaching or corrective action where needed. Name of Responsible Person(s): Jackie Otto, Executive Director, Sherdana Wade, Director of Operations, and Daporsha Abernathy, HCVP Director Projected Completion Date: Some of the corrective activities are underway. We anticipate full compliance ahead of the June 30, 2027 audited submission.

2025-003 Procurement Material Weakness in Internal Control (Repeated in part from prior year, Finding No. 2024-003) Condition: For two of the four contracts tested, the contracts were not solicited in accordance with the Authority’s procurement policy. The contracts did not go through a formal solicitation process, and instead three informal bids were received. Additionally, none of the contracts tested contained quality control documentation to support internal controls. Auditor’s Recommendations: The Authority should strengthen their internal controls over procurement by implementing standardized procurement procedures, including documentation checklists and supervisory review processes to ensure compliance with procurement requirements. The Authority should also provide training to staff involved in the process to ensure they are aware of the requirements and processes. Management Response: Management acknowledges the findings and the material weakness in internal control and material noncompliance in procurement. We accept responsibility for the deficiencies in internal control over procurement and are committed to implementing corrective actions that address missing documentation and lack of verifiable procurement procedures to ensure compliance. • Implement Standardized Procurement Procedures: Update and implement a formal, written procurement policy that clearly outlines the procedures for sealed bids, proposals, and small purchases. • CHA has established and uses a procurement register to manage the lifecycle of acquired goods and services to ensure payment status and contract compliance. • Mandatory Documentation Checklist: Create a procurement file checklist for every contract to ensure all required documents—such as the independent cost estimate, advertisement, bidder list, evaluations, and justification for award—are included in the procurement file. • Supervisory Review Process: A supervisor will review and sign off on the procurement file document before the good or service is purchased. • Staff Training: Provide comprehensive training to all staff involved in procurement to ensure they understand HUD’s procurement standards, including requirements for full and open competition and proper record-keeping. o CHA is scheduled to have a reputable HUD procurement trainer give a one-and-a-half-day procurement training to staff and a half day board procurement training to help improve compliance and staff knowledge. • CHA is in the process of having a professional third-party vendor update its procurement and disposition policies. • Maintain Records: Ensure that all documentation for the full procurement cycle is maintained, including evidence that contractors are not debarred or suspended. Name of Responsible Person(s): Jackie Otto, Executive Director, Sherdana Wade, Director of Operations, and Natalie Hawks, Procurement Director Projected Completion Date: Some of the corrective activities are underway. We anticipate full compliance ahead of the June 30, 2027 audited submission.

2025-002 Payroll Significant Deficiency in Internal Control (Repeated from prior year, Finding No. 2024-002) Condition: During our audit of payroll expenditures, the Authority was unable to provide adequate supporting documentation and as a result we were unable to verify that employees were paid at the properly approved rates for the periods tested and that internal controls were operating effectively. Auditor’s Recommendations: The Authority should implement internal controls over payroll and human resources to ensure complete and accurate personnel files are maintained on an ongoing basis for all employees. The Authority should review all current employee payroll files to ensure their files are up to date and include documentation supporting their approved pay rates and all subsequent compensation changes. Management Response: Management acknowledges the findings and the significant deficiency in internal control. We accept responsibility for the deficiencies in internal control over payroll reporting and are committed to implementing corrective actions as follows to ensure a robust control environment that ensures payroll transactions are verified against authorized documentation. Action(s) Taken: • Comprehensive File Reviews: • Immediately initiated a full review of all current employee payroll files to confirm completeness. • Acknowledge that some documentation predating the implementation of Paycom may remain incomplete; however, CHA is making every effort to ensure files are as complete as possible. • Documentation Verification: • Began verifying that each employee file contains proper documentation, including: • initial pay rates, • compensation changes, and • job descriptions and offer letters, where applicable. • Implemented a checks-and-balances review process to ensure that: • time is entered accurately, • timesheets are reviewed and signed by both the employee and the employee's supervisor, and • Authority leadership conducts a pre-payroll audit prior to processing. • Internal Controls: • The Authority utilizes a third-party provider, Paycom, for payroll administration and recordkeeping. • Timesheets are submitted, reviewed, and approved electronically within the system. • Pre-payroll audits are performed by the Executive Director prior to final payroll approval. • All payroll records are securely stored, easily searchable, and fully traceable through the electronic system. • Final payroll approval by the Executive Director through an approval memo to the HR Director before payments are allowed to be made. • Ongoing Compliance: • The HR Director will conduct semi-annual internal audits of a sample of employee files to verify and document ongoing compliance. • Staff responsible for inputting and reviewing payroll will receive ongoing compliance training. • A standardized file documentation checklist will be used to support consistent and complete recordkeeping. Name of Responsible Person(s): Jackie Otto, Executive Director, Sherdana Wade, Director of Operations, and Natalie Hawks, HR Director Projected Completion Date: Some of the corrective activities are underway. We anticipate full compliance ahead of the June 30, 2027 audited submission.

Finding ref number: 2025-002 Finding caption: The Housing Authority did not have adequate internal controls for ensuring compliance with Housing Quality Standard inspection requirements. Name, address, and telephone of Housing Authority contact person: Wendy Westby 600 Park Avenue Bremerton, WA 98337 (360) 616-7111 Corrective action the auditee plans to take in response to the finding: BHA agrees with the finding. BHA acknowledges that certain biennial HQS inspections were not completed within required timeframes due to a Yardi notification and scheduling issue, staffing limitations, and reliance on outdated guidance when determining inspection deadlines. BHA has taken and will continue to take corrective action to strengthen internal controls over HQS inspection scheduling, monitoring, and completion. Corrective actions include resolving the primary Yardi scheduling issue, completing additional system refinements and testing, updating procedures for determining biennial inspection due dates, training staff on current HQS inspection requirements and BHA policy, hiring an additional Housing Inspector I, using an additional contract inspector, and using temporary administrative support to assist with inspection scheduling and communication. During fiscal year 2026, BHA will use manual monitoring and quality-control supervisory review to track upcoming, completed, and overdue inspections while the backlog is being cleared. BHA will review inspection reports regularly to monitor progress and ensure inspections are scheduled and completed at least biennially in accordance with federal requirements and BHA policy. Anticipated date to complete the corrective action: BHA expects to complete the inspection backlog and have inspections current by September 30, 2026. BHA expects to return to normal inspection operations effective October 1, 2026.

Finding 2025-004: Section 232 Loan – Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Loan, ALN 14.129 Anticipated Completion Date: December 10, 2025 Recommendation: It was recommended the related party reimburse Cheney Care Community. It was also recommended management of Cheney Care Community review their internal controls over the cash disbursement process with the necessary individuals involved in the process to ensure disbursements are not made outside of HUD’s allowable regulations going forward. Action Taken: The related party reimbursed Cheney Care Community. The Executive Director/Administrator and Accountant will review the process and procedures in place with the new accounts payable clerk, and implement controls to ensure HUD requirements are followed going forward. In addition, they will review the review and monitoring controls in place and revise as needed to ensure the proper checks are in place to catch errors.

Finding 2025-003: Section 232 Loan – Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities Loan, ALN 14.129 Anticipated Completion Date: November 20, 2025 Recommendation: It was recommended the related parties reimburse Cheney Care Community for the expenditures paid on their behalf. In addition, it was recommended management review the disbursements made during the periods of turnover to confirm there were no other unallowable payments made. It was also recommended management of Cheney Care Community review their internal controls over the cash disbursement process with the necessary individuals involved in the process to ensure the controls are consistently performed going forward. Action Taken: The related parties reimbursed Cheney Care Community for the expenditures paid on their behalf. Since the new accounts payable clerk started in the Summer of 2025, they have been reviewing all of the supporting documentation for disbursements made during the period of turnover, and accumulating any additional corrections that need to be made. They will continue this process for all disbursements from the period of turnover. The Executive Director/Administrator and Accountant will review the process and procedures in place with the new accounts payable clerk, and implement controls to ensure the appropriate facility and general ledger account coding are made going forward. In addition, they will review the review and monitoring controls in place and revise as needed to ensure the proper checks are in place to catch errors.