Corrective Action Plans

We acknowledge the auditors’ recommendation regarding the need for a more arm’s-length approach in determining rent charges between entities. To address this finding, we are making adjustments to our rent allocation methodology to enhance transparency and ensure compliance with best practices. As part of our corrective action plan, we will implement the following measures: • Transition to an Actual Expense Allocation Methodology – VOAWW will modify the rent allocation process to allocate actual expenses incurred, ensuring that charges between entities reflect true costs. This approach eliminates the need for a year-end true-up process while maintaining fairness and accuracy. • Implementation of a True-Up Process for FY25 – While transitioning to the new methodology, we will conduct a true-up process for FY25 to reconcile any discrepancies and ensure that rent allocations align with actual expenses. These actions will help strengthen our internal controls and ensure that inter-entity rent allocations are handled in a compliant and equitable manner. Responsible Individual: Claire Danielson, Controller Estimated time of completion: June 2025

Finding No. 2024-002 – Rental Costs of Real Property and Equipment Condition Found When renewing the rental contract for the administration of the Revolving Fund, the DOH, as the Revolving Fund administrator, complied with statutory laws and procedures governing contract renewal. However, under the applicable regulations, if a contract renewal does not include a fee increase, there is no statutory requirement to evaluate comparable rental properties or conduct a periodic market study to assess potential changes in market conditions. As a result, the Revolving Fund lacks, within its existing processes and documentation, established policies and procedures for performing and documenting such assessments and did not conduct the evaluation required under 2 CFR § 200.465 in a timely manner. However, during discussions with the auditors, the required evaluation was performed, demonstrating that the rental costs remain reasonable in accordance with federal regulations. Views of Responsible Officials and Corrective Action Plan Having addressed and resolved the matter in reference, we also concur what was discussed with the auditors, that the required information was provided demonstrating that the costs for rent are reasonable and are in accordance with the provisions of the federal regulations, proceeded as follows: • In parallel to the current process of renewal of the lease contract, the Program performed the reasonableness study for rent cost, regardless of the non-requirement within the current procedure. The study confirmed that the rent costs are reasonable and cost effective. • For the purpose and as part of the corrective action plan, the Program incorporated as part of its processes a procedure to achieve the implementation of periodic evaluation of rental costs. This procedure incudes among others, the frequency in which such evaluations will be carried out. • The Program, as Administrator, will recommend the Department of Health’s management the need to incorporate the periodic requirement in compliance with the 2 CRF § 200.465 federal section. Name (s) of the Contact Person (s) Responsible for Corrective Action Ángel Pantoja Rodríguez, Secretary of the Treasury Department, Eduardo Rivera Cruz, Executive Director Puerto Rico Infrastructure Financing Authority and Victor Ramos, Secretary of the Puerto Rico Department of Health. Anticipated Completion Date Immediately

Capital Area Community Action Agency has removed the unallowable costs from the rental calculation for related party transactions. Capital Area Community Action Agency satisfied the questioned costs as part of the settlement agreement with grantor; see Note 15 of Consolidated Financial Statements.

Capital Area Community Action Agency has removed the unallowable costs from the rental calculation for related party transactions with Capital Area Community Action Agency, Holdings. Capital Area Community Action Agency will pursue working with the Office of HEad Start regarding use of those questioned costs within the project period.