Corrective Action Plans

FINDING 2025-002 Finding Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Contact Person Responsible for Corrective Action: Burzynski Thaddeus Contact Phone Number and Email Address: 219-755-3200, burzytx@lakecountyin.org Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The County filed each quarterly report with the federal government through the ARPA reporting portal every quarter and made sure it balanced. The County will develop and implement a proper system of internal controls and segregation of duties where a County employee verifies the work performed by the consultant. This will ensure accuracy and correctness of all quarterly P & E Reports. Anticipated Completion Date: December 31, 2026

Craig Jones, Town Clerk/Treasurer 400 E Adams St., Wheatland, Indiana, 47597 FINDING 2025-003 Finding Subject: Coronavirus State and Local Fiscal Recovery Funds - Internal Controls Contact Person Responsible for Corrective Action: Craig Jones Contact Phone Number and Email Address: (812) 321-2340, clerk@townofwheatland.in Views of Responsible Officials: We concur with the findings. Description of Corrective Action Plan: We understand the importance of internal controls over federal funds and for the future we will establish the following procedures for advanced grants. The board will be presented with a plan for expenditures of the grant and the clerk treasurer will account for the grant in a separate fund. Before payment is made the board will be presented with all invoices for review to ensure it meets all activities allowed, allowable costs/cost principles and period of performance. We will establish the following procedures for future reimbursable grants. The reimbursement request prepared by the clerk/treasurer office with supporting documentation will be reviewed by the Town Board for activities allowed, allowable costs/cost principles and period of performance. and approved for submission. Any reports required by grantor agency will be prepared by the clerk/treasures office and reviewed by the town board before submission Anticipated Completion Date: 08/2026

FINDING 2025-004 Finding Subject: Federal Transit Cluster – Period of Performance Contact Person Responsible for Corrective Action: Jessica Thome, Controller Contact Phone Number and Email Address: (812) 244-2360 and Jessica.Thome@terrehaute.in.gov Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: We will be implementing a system where an employee double checks all invoice dates. We will also ask our FE Representative if they can create a report to add invoice dates. Anticipated Completion Date: 10/31/2026

FINDING 2025-003 Finding Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Period of Performance Contact Person Responsible for Corrective Action: Jessica Thome, Controller Contact Phone Number and Email Address: (812) 244-2360 and Jessica.Thome@terrehaute.in.gov Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The City will reclass the expense. Anticipated Completion Date: 10/31/2026

The reporting process for federal & state awarded funds will be reviewed with all parties involved in these funds.

FINDING 2025-004 Finding Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Reporting Summary of Findings: Material Weakness, Modified Opinion The information submitted included amounts based on the incorrect period, amounts that should have been omitted, and amounts which were based on budgeted amounts instead of actual amounts, as such the reports were not fairly presented. Errors identified included the following:  Total Current Obligations for Government Services were overstated by $145,000.  Total Current Obligations for Roundabout were overstated by $323,628.  Total Current Obligations for Fairgrounds were overstated by $97,362. Contact Person Responsible for Corrective Action Plan: Janet Lloyd, Clinton County Auditor Contact’s Phone Number: 765.659.6330 Contact’s Email Address: jlloyd@clintoncountyin.gov Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The Auditor did take tremendous care to create a spreadsheet to make sure expenditures were reported in the correct time periods for 2025. However, there were reporting errors. The First Deputy will review the timeframe and expenditures as well as we will ensure there are several sets of eyes on the documentation before submitting the P&E report. We will have both the Auditor and First Deputy create the spreadsheet and review and sign before submitting. Anticipated Completion Date: December 31, 2026

In response to the deficiencies noted in the audit findings referenced above, management has established a comprehensive framework of inter-departmental controls, routine reconciliations, and independent quality assurance testing. To ensure the absolute accuracy and alignment of records, Financial Aid (FA) and Student Accounts (SA) personnel conduct mandatory monthly reconciliation meetings. During this collaborative process, both departments verify that all federal aid disbursements are properly recorded on the student’s ledger with the correct transactional dates, ensuring perfect alignment with records in the COD system. Supplementing this process, the Financial Aid Office performs independent monthly random spot checks of disbursements directly within the COD system to verify that record dates mirror the actual transaction dates on the student accounts ledger. During these same spot checks, FA personnel validate core academic parameters by cross-referencing student enrollment dates and loan period dates against the official institutional academic calendar, while simultaneously reviewing Cost of Attendance (COA) figures to ensure strict adherence to each student's official award letter. To maintain compliance and reporting during non-standard operational shifts, the Financial Aid Office collaborates immediately with Global Financial Services, our third-party servicer, to update federal records in a timely manner whenever academic dates are modified later than normal. Furthermore, to strengthen institutional data integrity and eliminate enrollment reporting gaps, the Financial Aid Office and the Office of the Registrar participated in joint training sessions focused on National Student Clearinghouse (NSC) and NSLDS reporting mechanics to optimize data transmissions between platforms. As an ongoing monitoring control, the Financial Aid Office now executes an independent monthly random sampling of student records directly from NSLDS. This routine sampling allows management to verify that enrollment statuses are being transmitted accurately and seamlessly from the Clearinghouse to NSLDS

FINDING 2025-006 Finding Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Contact Person Responsible for Corrective Action: Catherine MM Lane Contact Phone Number and Email Address: 812-677-3959 clane@vincennes.in.gov Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: All reports will be prepared by the clerk’s office and will be reviewed for errors and omissions by someone who is knowledgeable about the reporting requirements prior to submission. Anticipated Completion Date: The corrective action plan will be implemented by December 31, 2026.

Finding Number 2025-002: Period of Performance – Significant Deficiency in Internal Control Over Compliance and Noncompliance Corrective Action: Management will update its grant allocation procedures to require staff to verify and document that costs were incurred within the applicable grant period before charging them to an award. The accounting system will be used to track grant periods, retain allocation support, and flag costs charged outside the applicable period. A supervisor will review allocations and resolve exceptions before claims are submitted. Any costs charged to the wrong period will be corrected. Name of Responsible Individual(s): Jason Brenier, Judy Bokhari, Luz Gonzales-Toscano Anticipated Completion Date: December 2026

Noncompliance with Period of Performance (Public Housing Capital Fund ALN # 14.872) The Authority’s staff will attend trainings to ensure that the Authority is in compliance with all CFP reporting requirements. Date of completion: Ongoing

Finding Subject: 2025-003 Finding Subject: COVID-19 Coronavirus State and Local Fiscal Recovery Funds - Reporting Contact Person Responsible for Corrective Action: Debbie Bennett-Stearsman Contact Phone Number and Email Address: 812-319-9068 and dbennett-stearsman@warrickcounty.gov View of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: As explained and demonstrated by the County Administrator to the SBOA at the time of the audit, the online reporting system for the U.S. Treasury quarterly reports had malfunctioned. When the County Administrator attempted to enter the correct amounts, the report would be rejected. The only way to get the quarterly reports to be accepted was by adjusting the numbers, resulting in the issues pointed out by the SBOA. As the SBOA is aware, the reports were on a time-sensitive deadline and had to be submitted. The County will follow up with the U.S. Treasury in the event of future problems with the online reporting system. The County Administrator did follow up with the U.S. Treasury in 2025. No response was given. In 2026, the U.S. Treasury provided a webinar stating that if the municipality could not close out or lock awards due to unbalanced figures, then the municipality should leave the project “unlocked.” There was no guidance on reopening previous quarterly reports to correct any mistakes. Therefore, the County Administrator could not correct previous reports. Anticipated Completion Date: September 30, 2026.

Corrective Action Plan Finding 2025-001 Internal Control Deficiency over Allowable Costs Federal Grantor: United States Department of Homeland Security Assistance Listing No.: 97.036 Award Period of Performance: January 1, 2020 – May 11, 2025 Summary of Finding: Management did not consistently retain documentation evidencing the performance of internal controls in place to review and approve FEMA expenditures submitted to the FEMA Portal. Corrective Action Plan: Management implemented corrective action as of December 31, 2024 to ensure detail approval of individual transactions was retained, however many of the expenditures were from prior years, as allowed for by FEMA, when documentation was not retained, thus the finding is repeating in 2025. Responsible Party: Wah-Chung Hsu, Chief Financial Officer Completed Date: December 31, 2024

Name of Contact Person: Rhys Winter, Manager Corrective Action Plan: The Borough has engaged accounting resources and staff with the appropriate time and expertise to expedite the completion of future financial reports. Completion Date: March 30, 2027

2025-001 Auditor’s Recommendation: Convergent Research, Inc. should establish written procedures and management review controls to: ● Reconcile provisional indirect and fringe rates to actual allowable costs; ● Review award-specific provisions related to indirect costs, cost sharing, and budget flexibility; ● Identify all allowable costs incurred during the period of performance; and ● Perform and document a final award reconciliation before submitting final expenditure reports. Corrective Action: Convergent Research has updated its grant closeout procedures to require: 1. reconciliation of provisional fringe and indirect cost rates to actual allowable costs at the time of award closeout; 2. review of award-specific provisions related to indirect costs, cost sharing, and budget flexibility; 3. identification of all allowable costs incurred during the period of performance, including any unbilled amounts, before final reporting; and 4. a documented management review and final award-level reconciliation prior to submission of the final expenditure report. This reconciliation step has been incorporated into the Finance team's standard grant-closing checklist. Responsible for Corrective Action: The assigned Finance & Accounting Manager will complete the closeout procedures for review by the Head of Finance and the grant PI. Anticipated Completion Date: Implemented August 2026 — updated grant-closeout procedures are in effect for all open federal awards. Procedures are documented in Notion under Federal Grant Accounting Policy and Procedures.

FINDING 2025-002 Finding Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Contact Person Responsible for Corrective Action: Michael A. Watkins, Auditor Contact Phone Number and Email Address: 812-385-4927 / mwatkins@gibsoncounty-in.gov Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The Deputy Auditor will prepare the report using the financial information available in LOW, and the Auditor will review and approve it before submitting it to the U.S. Treasury. Moving forward, the County Auditor will strengthen internal control procedures to ensure compliance with 2 CFR 200.303. These improvements will include protocols for communicating with the U.S. Treasury whenever system issues arise that could affect timely or accurate reporting. Anticipated Completion Date: January 1, 2027

Finding 2025-004 – Education Stabilization Fund – ESSER III AL No. 84.425U Department of Education Massachusetts Department of Elementary and Secondary Education Noncompliance and Material Weakness Related to Internal Control over Compliance of the Major Program Criteria: The Period of Performance for the Education Stabilization Fund – ESSER III was October 4, 2021 through September 30, 2024. Condition: During our test of controls over compliance it was noted that there was an expenditure charged to the Education Stabilization Fund – ESSER III for services outside of the period of performance as set forth by the Massachusetts Department of Elementary and Secondary Education. Context: During our test of expenditures and review of the general ledger against the Education Stabilization Fund – ESSER III grant as it is related to compliance it was noted that the School paid in full a four year lease from 3/1/23 to 2/28/27 and charged 10/1/23 to 2/28/27 to the Education Stabilization Fund – ESSER III grant in the amount of $190,869 and thus the period from 10/1/24 to 2/28/27 would be outside the period of performance and thus would not be an allowable cost. Unallowable costs for this period was $52,426. Effect: Assabet Valley Regional Technical High School was not in compliance with the period of performance requirement as set forth by the Massachusetts Department of Elementary and Secondary Education. Questioned Costs: Questioned cost charged to the Education Stabilization Fund – ESSER III grant whose service period was beyond the grant end date of September 30, 2024 was in the amount of $52,426. Cause: Director of Business Operations in FY23 entered into a lease agreement that extended beyond the grant period. Identification as a Repeat Finding: 2024-007 Recommendation: We recommend the Assabet Valley Regional Technical High School follow procedures to ensure that expenditures charged to the grant is within the period of performance as set forth by the Massachusetts Department of Elementary and Secondary Education. Responsible for Corrective Plan: Director of Business Operations Estimated Completion Date: Changes in processes are effective immediately Action Taken: On July 1, 2025, the district reclassified the expense to the non-member tuition revolving fund. Grant purchases will be reviewed and approved by the Director of Business Operations. The district will ensure all grant spending is limited to eligible expenses during the eligible time period for the grant. All grant funded purchases will now be checked for time period compliance.

Finding 2025-002 – Special Education Cluster – AL No. 84.027 Department of Education Massachusetts Department of Elementary and Secondary Education Noncompliance and Material Weakness Related to Internal Control over Compliance of the Major Program Criteria: Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Management of the School is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition: Control deficiencies related to disbursements were noted as a result of the testing of internal controls over expenses. Specifically, a sample of journal entries charged to the major program were tested in order to determine if adequate internal controls were in place. As a result of the testing the journal entries charged to the program, it was noted that expenses where outside the period of performance. Cause: The grant’s effective date was later than it has been historically. The payroll office should have coded the employees’ salaries to the budget, rather than the grant for that first pay period. Context: During our review of journal entries posted to the major program it was noted that a journal entry posted to the FY 2025 Special Education Grants to States grant included an expense that was outside the period of performance as it was for expenses as of 8/28/24 and that grant start date was 9/9/24. The FY 2023 Special Education Grants to States grant included an expense that was outside the period of performance as it was for an expense whose service period was 1/1/25 – 12/31/25 and grant end date was 9/30/24. Effect or Potential Effect: Due to the noncompliance and material weakness in internal controls noted above, there is a risk of unallowable expenditures being charged to the federal grant. Identification as a Repeat Finding: 2024-004 Questioned Costs: Total questioned costs for the expenses charged to the grant that were outside the period of performance was for FY 2025 Special Education Grants to States was $2,499.10 and FY 2023 Special Education Grants to States was $3,612.98. Recommendation: The Assabet Valley Regional Technical High School should improve the internal controls over Allowable Costs by ensuring employee’s payroll charged to the federal grant is within the period of performance and supported with Time and Effort certifications. Responsible for Corrective Plan: Director of Business Operations Estimated Completion Date: Business Office staff have started changing codes for affected accounts. Action Taken: Proper coding procedures were reviewed with Payroll and Business Office staff. They have been instructed to not charge any salaries to a grant until after the start date.

Incomplete FAIN Award Amount Disclosures – TANF – DPHHS - The Montana Department of Public Health and Human Services will revise its existing subaward agreements to update the required federal award disclosures, specifically by identifying the obligation amount associated with each Federal Award Identification Number (FAIN). The department will also include the obligation amount by specific FAIN in all new agreements moving forward. The department plans to fully implement this corrective action in October 2026. Responsible Party - Brenda Crawford, Internal Control and Compliance Officer, Montana Department of Public Health and Human Services Target Implementation Date - 10/30/2026

Inaccurate RSA-911 Case Service Report - Voc Rehab - DPHHS - The Montana Department of Public Health and Human Services strengthened internal controls in August 2026 to ensure employment start dates are consistently and accurately captured in the RSA-911 report. The employment start date information was present in the department's case management system (Madison) and in case documentation; the condition arose in the system's reporting extraction layer, which caused accurate underlying data to be misstated in the submitted report. Because approximately 75 percent of cases in each RSA-911 submission carry forward from one reporting cycle to the next, the defect in the reporting layer affected multiple reporting periods. The department corrected the system's program field data in August 2026, prior to submitting the April through June 2026 RSA-911 report due that month. The department also implemented a validation check to detect and correct mismatches in future reports. The department has implemented corrective action and is working with its federal grantor agency to correct the reports submitted in fiscal year 2026. Responsible Party - Brenda Crawford, Internal Control and Compliance Officer, Montana Department of Public Health and Human Services Target Implementation Date - 8/21/2026

Noncompliant Closeout Reporting - O&M - DMA - The Montana Department of Military Affairs concurs with the finding. In August 2024, the department and the United States Property and Fiscal Office (USPFO) identified older awards that remained open and should have been closed by prior staff. From August through December 2024, the department worked with the USPFO to identify, reconcile, and close the outstanding awards. The department has since implemented a master award tracker to identify each award’s period-of-performance end date, applicable closeout deadline, and report status. The department reviews the tracker regularly and notifies staff of approaching closeouts to ensure final reports are accurate and submitted within required timeframes. Responsible Party - Janae Brower, Chief Financial Officer, Montana Department of Military Affairs Target Implementation Date - 11/30/2026

Inadequate Grant Reconciliations - SPED - OPI - The Montana Office of Public Instruction will update procedures and desk manuals to ensure monthly reconciliations for federal programs between the agency’s grant system, the state’s accounting system, and a manually updated tracking spreadsheet contain adequate documentation and verify federal compliance. Responsible Party - April Grady, Chief Financial Officer, Montana Office of Public Instruction Target Implementation Date - 9/30/2026

Inadequate Payroll Certification Controls - R&D - UM - The University of Montana - Missoula will work with Information Technology to confirm that Personnel Activity Report reminder emails are sent on the correct schedule and to the appropriate individuals, including the Office of Sponsored Programs. The University will provide Personnel Activity Report certification training to the campus and will conduct targeted outreach for departments with outstanding records. After the current cleanup effort is completed, Grants and Contracts Officers will review outstanding Personnel Activity Reports quarterly and follow up as needed to promote timely certification. Responsible Party - Nicole Thompson, Director, Office of Sponsored Programs, University of Montana - Missoula Target Implementation Date - 2/28/2027

Inadequate Grant Expenditure Reconciliations - R&D - UM - The University of Montana - Missoula has implemented the remediation plan from the prior audit by establishing an additional periodic supervisory review to monitor ledger completion. Managers currently review a random sample of five files each month from each grants and contracts officer’s workload to verify that ledgers are current and complete, and any deficiencies identified are promptly addressed to ensure compliance with established procedures. Responsible Party - Nicole Thompson, Director, Office of Sponsored Programs, University of Montana - Missoula Target Implementation Date - 3/1/2026

CORRECTIVE ACTION PLAN2025-001 [2023-001]—TRACKING AND VALUATION OF MORTGAGE RECEIVABLES AND AMOUNTS DUE TO GRANTORType of Finding: (A) Material Weakness in Internal Control Over Financial ReportingStatement of ConditionWhile the Housing Trust has begun a complete review of its loan portfolio, the project has not yet been completed. Therefore, we were unable to obtain sufficient audit evidence to support the Housing Trust’s tracking and valuation of its mortgage receivables and amounts that are due to grantor.Per our audit procedures, we noted that management was unable to provide the following:A reasonable methodology for estimating its allowance for loan losses.Funding provided by grantors for the loan programs that should also be classified as amounts that are due to grantor.Not all current year loans were recorded in the general ledger (approximative $512,066) and approx. $481,201 were recorded twice.A net prior year adjustment of $36,460 for mortgages receivable and $35,000 for land leases held was necessary.Reclassification between loans accounts and grant revenue were necessaryContextThe Housing Trust has a portfolio of over six-hundred individual mortgage receivables that include both non-amortizing and amortizing loans, which management has valued at approximately $25,291,075. These loans have been funded by several sources, including federal, state, and local funding. Some of the grantors have established in their agreements that these funds do not belong to the Housing Trust, but actually belong to the grantor. CriteriaThe Housing Trust should ensure it has a board-approved policy for its loan portfolio to ensure that these assets are properly tracked, classified, and maintained with specialized loan management software that can perform the following:Loan Classification and TrackingEach loan is properly identified with its funding source (federal, state, local, etc.) and type of restriction Each loan agreement has the funding source specifiedThe current status of each loan is tracked (current, delinquent, defaulted)Loan funding that has been established as due to the grantor is properly tracked.Compliance and ReportingEnsure the loans comply with the specific guidelines of their respective funding source. Audit trails are available for all transactions and valuations.The receivables and related interest accruals supported by the loan management software should be reconciled to the Housing Trust’s accounting software.Financial TrackingThe valuation of the portfolio should be updated periodically (at least quarterly) for any changes in loan status or market conditions.All new loans should be recorded in the general ledger A loan loss policy was established that includes a loan loss methodology incorporating risk classes based on the borrower’s ability to repay. However, the calculations seem to follow a different methodology established afterwards. The policy should be updated with calculation methodology and with the backup research of historical data. A loan review committee should be responsible for reviewing and approving the classifications of loans and the associated allowance for loan losses which should be supported by high-quality data collection on each borrower’s payment history and any relevant economic indicators. The calculations and methodology should follow the approved policy, or the policy should be improved to include all factors mentioned above.EffectThe auditors were not able to verify the accuracy of the loan records and financial statements related to mortgage loans, the related accrued loan interest, the allowance for loan losses and loan funding that should also be recorded as due to grantor. CauseWhile the Housing Trust has begun a complete review of its loan portfolio, the project has not yet been completed. Therefore, the loan portfolio tracking and valuation have not yet been designed or implemented to support its policies and procedures or provide the loan review committee with a workable system for reviewing, approving and monitoring the organization’s mortgage receivable portfolio. The methodology seems to be changing, and the calculations do not seem to be accurate,RecommendationWe recommend the Housing Trust update policies and procedures for its loan portfolio as identified in the “Context” section of this finding to include methodology, risk assessment, historical loan data research, calculations method with reasoning.View of Responsible OfficialThe Housing Trust acknowledges the finding. Due to turnover in prior years, historical loan records and tracking systems were incomplete or inaccurate. Since then, SFCHT has taken the following steps:A second title company has been contracted to obtain final loan data for the 2026 loan portfolio. A title company will also be engaged annually at year-end to identify and resolve any differences arising during the year.Establish one master loan inventory using Portfol data. This inventory will serve as the master loan control schedule for monthly financial reconciliations. All differences will have a documented resolution, including reconciliation of receivables and related interest between the two systems. Reconciliations will be completed by the 15th business day of the following month.Create a new loan-recording process for every loan closing.Create a Due to Grantor Matrix based on findings from the annual loan review performed by the title company. Supporting documentation, such as grant agreements, correspondence, or other applicable documentation, will be maintained.Review the ASC 326 loan loss methodology to ensure it reflects the actual calculation methodology and is supported by appropriate research. This review will be performed quarterly.Establish a formal loan review committee and process to review loan calculations and the allowance for loan losses. The committee will meet quarterly and review reports from Portfol. Meeting minutes will document updates, decisions, and changes.Corrective Action Plan TimelineFinalize and implement the loan loss methodology: by December 2026Begin monthly Portfol-to-QBO reconciliations: by September 2026Fully hand over all loans to Amerinat by end of 2026; Land Leases will remain “in-house”Continue staff training and Executive-level reviewDesignated Employee Responsible for Corrective Action-Director of Operations-Accounting Specialist2025-002 [2023-002]—FINANCIAL CLOSE AND RESTATEMENTS TO BEGINNING NET ASSETSType of Finding: (A) Material Weakness in Internal Control Over Financial ReportingStatement of ConditionDuring the audit of the financial statements, we noted that material adjustments and restatements were necessary to correct errors in the current and previously reported financial statements. A summary of the areas and the net effect of the changes are as follows: Type Amount, net Accounts Receivable $ (13,490) Grants and Contracts Receivable 830,747 Accrued Interest 5,798 Amortizing Loan Receivable 419,551 Non-Amortizing Loans Receivable (433,722) Land Held in Trust (61,323) Other Assets (145,000) Prepaid Expenses (61,940) Notes Receivable (195,000) Developments Projects (184,559) Real Estate Inventory to Sell (333,079) Fixed Assets (785,081) ROU Accumulated Amortization (7,511) Accounts Payable (807) Due to Grantor 10,000 Grant Advances (97,963) Accrued Expenses (6,249) Other Current Liabilities 52,841 Lease Liabilities 7,845 Notes Payable (9,710) Net Assets 1,154,733 Total $ 146,081 CriteriaAccounting Standards Codification (ASC) 265 “Presentation of Financial Statements—Communicating Internal Control Related Matters Identified in an Audit” requires that deficiencies in internal control over financial reporting be communicated to those charged with governance when the design or operation of a control does not allow management or employees to prevent or detect misstatements on a timely basis.The correction of material misstatements indicates the existence of a material weakness in internal control over the maintenance of the organization’s financial statements.EffectThe material adjustments and restatements resulted in significant changes to the current year balances and beginning balances of the organization’s unrestricted and restricted net assets. These adjustments could potentially undermine the stakeholders' confidence in the financial information presented by the organization and may lead to difficulties in securing future funding or maintaining current donor relationships.CauseThe material misstatements were caused by a weakness in the development and implementation of internal controls and financial reporting processes, as well as significant turnover in the organization’s management.RecommendationWe recommend the Housing Trust strengthens its internal controls and financial reporting processes to prevent future occurrences of such errors. This could involve adding additional staff, training current accounting staff and implementing more robust review procedures to ensure that all financial reporting is in strict accordance with GAAP. View of Responsible OfficialThe Housing Trust acknowledges the finding. In prior years, however, internal controls were insufficient. There was no formal month-end close or review process, and prior audits relied on outdated balances without verification. Under new leadershipA formal monthly close calendar has been established, with the monthly close to be completed within 10-15 business days.Create a supporting schedule for every balance sheet account. These schedules will be used as part of the monthly reconciliation process and will be certified.A grant receivable roll-forward will be prepared for each grant, compared to QuickBooks, and reconciled monthly.Each development project will have its own subledger, which will be reconciled monthly.A detailed fixed asset register will be maintained and reconciled quarterly.6. To help prevent future restatements, establish a formal journal-entry control process that requires appropriate supporting documentation and approvals.7. Establish a policy requiring documentation and approval for any changes made to beginning balances.8. The CEO and Finance Committee will perform monthly analytical reviews using the balance sheet, profit and loss statement, and actual-to-budget comparisons.9. Establish a reconciliation exception and audit adjustment log to track outstanding issues requiring resolution, including a timeline for resolving each item.Corrective Action Plan Timeline The timeline to complete this is prior to December 31, 2026.Designated Employee Responsible for Corrective Action-Director of Operations-Accounting Specialist2025-003 [2024-003] - GRANT TRACKING AND SEFA RECONCILIATIONFederal Agency: U.S. Department of Housing and Urban Development (HUD)Federal Program: Housing Opportunities for Persons With AIDS (HOPWA)Assistance Listing Number: 14.241Award Number and Period: [NMH240051], [November 1, 2024 – October 31, 2027]Type of Compliance Requirements: Internal Controls Type of Finding: (B) Significant Deficiency in Internal Control Over Financial ReportingKnown Questions Cost: NoneStatement of ConditionDuring our audit, we identified initial differences between expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) and the general ledger. Management subsequently provided additional supporting schedules and completed a reconciliation of the SEFA to the general ledger. However, the reconciliation required manual effort because one federal award included program income amounts that had not been properly reconciled or corrected, another federal award had expenses that did not belong to the award, and recycled funds were tracked separately partially only from new grant funds in the accounting records. Some of expenses did not have appropriate backup documentation, however, the billing to the grant was correct. Expenses from program income for salaries did not match the timesheets. CriteriaPer 2 CFR 200.302 and 200.510(b), recipients of federal awards must maintain accurate, current, and complete records that adequately identify the source and application of funds. Grant expenditures must be traceable to the financial records and properly classified. Program income, including recycled funds, must be used and tracked in accordance with federal requirements and grantee policies. Specifically, all grants should be tracked separately in the general ledger, and the revenue and expenses should match the reimbursement grants. The SEFA reconciliation should be done thoroughly and discrepancies reconciled or resolved, if that is the case. The policies for recycling the funds should be updated with the financial tracking in the general ledger and update with all grantor recommendations. The HOPWA program policy was updated in July 2025.The recycled funds received/spent should be separately tracked and used per policies and grantor recommendations.EffectThe lack of properly tracking expenditures and recycled funds increases the risk of misstating the SEFA, billing non-allowable or duplicate costs to the grantor, and not meeting timeliness or use restrictions related to program income. This may lead to questioned costs or future audit findings.Recycled funds not properly tracked separately may result in noncompliance with the application of loan funding. CauseThe issues stemmed from frequent staff turnover and the complexity of accounting for loans and recycled funds across departments. RecommendationWe recommend the Housing Trust:Revise and implement grant management policy and procedures that ensure each grant has a dedicated general ledger account.Require all reimbursement requests to be supported by general ledger detail.Ensure program income and recycled funds are separately tracked in accordance with federal guidelines (separate classes).Establish regular reconciliations between Finance and Program records to maintain consistency.View of Responsible OfficialThe Housing Trust acknowledges the finding. Corrective Action Plan: 1. A master grant register has been created that includes all active grants and federal awards.2. Each grant will have a unique class/project established in QuickBooks to capture payroll and other grant-related expenses. Reports will be generated monthly.3. Each grant will be reconciled monthly.4. Grant reimbursement requests will be supported by appropriate documentation.5. Payroll review procedures have been established to confirm that payroll costs are properly allocated to grants.6. Program income will be tracked separately for all applicable income and expenditures.7. Monthly SEFA reconciliations will be completed for all grants, including grants that do not meet the definition for inclusion in the SEFA.8. A grant reconciliation exception log will be established to track outstanding issues, responsible parties, and timelines for resolution. Corrective Action Plan Timeline- Finalize and adopt new Grant Management Policies: by September 2026- Implement monthly SEFA reconciliations: by September 2026- Complete staff training on program income and federal grant tracking: by September 2026Designated Employee Responsible for Corrective Action-Director of Operations-Accounting SpecialistCurrent Year Findings 2025-004 - Program Income Federal Agency: U.S. Department of Housing and Urban Development (HUD)Federal Program: Housing Opportunities for Persons With AIDS (HOPWA)Assistance Listing Number: 14.241Federal Award: [NMH240051], [November 1, 2024 – October 31, 2027]Compliance Requirement: Program Income Known Questions Cost: None Type of Finding: (F, G) Significant Deficiency in Internal Control Over Compliance of Federal Awards and Instance of Noncompliance related to Federal Awards Statement of Condition During 2025, the Housing Trust received certain repayments of loans originally funded by HOPWA awards. Of this amount, certain amount may have remained unspent or had not been recorded/reconciled in accordance with HUD requirements as of December 31, 2025. Management did not maintain a documented control to identify HOPWA repayment receipts, determine the applicable award requirements, reconcile receipts and expenditures among IDIS, QuickBooks, and the program-income subsidiary record, and document approval of their disposition. Criteria Under 2 CFR 200.307(c), program income earned after a Federal award’s period of performance is subject to Federal requirements only when required by Federal agency regulations or the terms and conditions of the award, and the Federal agency may establish appropriate disposition requirements through closeout. HUD may require HOPWA-funded loan repayments received after the original award period to be recorded as program income.CauseThe Housing Trust had not designed and assigned ownership of a formal program-income and grant-closeout control addressing repayments generated from HOPWA-funded loans after the originating award’s period of performance. Effect Program income may have been subject to incorrect or untimely reporting/use, increasing the risk of noncompliance and misstatement of federal expenditures. Known questioned costs were unknown. RecommendationHousing Trust should implement a documented monthly program-income reconciliation and grant-closeout control that identifies the originating award, applicable HUD disposition requirement, IDIS receipt, QBO classification, eligible use, remaining balance, reviewer approval, and resolution of differences. Evidence of HUD determinations for post-period receipts should be retained with the reconciliation.Views of Responsible Officials: SFCHT acknowledges the finding and notes that the New Mexico HOPWA program is the only documented HUD grant that funds mortgages.Management has established a formal process to identify and track repayments associated with HOPWA-funded loans. Management will maintain a subsidiary program income register that identifies the originating federal award, receipts, applicable HUD disposition requirements, accounting classification, eligible expenditures, and remaining balance. Program income activity will be reconciled monthly among loan-servicing records, QBO, IDIS, and supporting program records. Written HUD determinations regarding post-period repayments will be retained when applicable.Corrective Action Plan TimelineAn onsite meeting with HUD HOPWA representatives is scheduled for September 10, 2026, at the Santa Fe offices. During this meeting, policies and procedures, including the program income policy, will be reviewed and formalized, and a HUD determination log will be established.The HOPWA Program Income Register will be implemented, and repayment schedules for HOPWA loans will be documented in the master loan inventory. Implementation date: July 2026.HOPWA program income will be expended before additional HOPWA IDIS reimbursement requests are approved.A historical review of HOPWA loans and funding sources will be completed. Target date: August 2026.QBO, Portfol, Amerinat, and IDIS will be reconciled monthly. Beginning: July 2026 and ongoing.Post-period repayments and related HUD determinations will be reviewed. Target date: September 2026.Designated Employee Responsible for Corrective Action Director of Operations, with assistance from the Accounting Specialist and HOPWA HUD program staff, as applicable.Signature Title

THE COALITION WILL MAINTAIN A CENTRALIZED GRANT REGISTER IDENTIFYING EACH AWARD NUMBER, PROJECT CODE, BEGINNING DATE, ENDING DATE, AND APPROVED PERIOD OF PERFORMANCE. FINANCE WILL USE THE REGISTER DURING MONTHLY CLOSE AND GRANT REVIEW TO VERIFY THAT PAYROLL AND NON-PAYROLL EXPENDITURES ARE CHARGED TO THE CORRECT ACTIVE GRANT/PROJECT. BEFORE AND AFTER AN AWARD END DATE, FINANCE WILL REVIEW PROJECT ACTIVITY FOR COSTS POSTED OUTSIDE THE APPROVED PERIOD, CONFIRM WHETHER ANY PRE-AWARD OR CLOSEOUT COST IS AUTHORIZED, AND RECLASSIFY MISCODED TRANSACTIONS BEFORE GRANT REPORTING IS FINALIZED. NEW AWARD/PROJECT CODES WILL BE ESTABLISHED AND COMMUNICATED BEFORE COSTS ARE CHARGED TO A SUCCESSOR AWARD. IN ADDITION, AFTER THE MONTHLY CLOSE PROCESS IS COMPLETE, FINANCE WILL DISTRIBUTE GRANT STATEMENTS TO ADMINISTRATION TO REVIEW EXPENDITURES AND REMAINING GRANT BALANCES FOR REASONABLENESS. THIS PROVIDES AN ADDITIONAL LAYER OF OVERSIGHT TO VERIFY THAT GRANT-RELATED EXPENSES HAVE BEEN RECORDED ACCURATELY.