Management agrees with the finding that payroll costs charged to HUD-funded programs were based on estimated allocations and did not consistently reflect actual time and effort in accordance with 2 CFR §200.430 (Compensation—Personal Services) and applicable HUD program requirements. Management acknowledges the requirement that personnel costs charged to HUD awards (e.g., CDBG, HOME, CoC) must be supported by records that accurately reflect work performed on eligible program activities. Corrective Actions Implemented: The Organization has strengthened internal controls over payroll allocation for HUD-funded programs by implementing a formal monthly review and reconciliation process based on after-the-fact determinations of actual activity. Under this enhanced process: • Payroll costs charged to HUD awards are reviewed monthly and supported by documentation that reflects actual time and effort by eligible activity and funding source. • Payroll distribution reports are evaluated for accuracy, allowability, and alignment with HUD-eligible program activities. • Allocated payroll costs are compared to actual program delivery (e.g., beneficiary services, project activities, administrative vs. program caps, where applicable). • Timely cost adjustments are recorded, as necessary, to ensure payroll charges are properly aligned with work performed and eligible cost objectives. • All adjustments are documented, reviewed, and approved by appropriate supervisory and finance personnel. Expected Outcome: Management believes these corrective actions will ensure that payroll costs charged to HUD-funded programs are accurate, allowable, properly documented, and aligned with eligible program activities, and fully compliant with Uniform Guidance and HUD requirements. These enhancements will strengthen internal controls, improve reporting reliability (including IDIS/financial reporting where applicable), and reduce the risk of noncompliance in future monitoring or audit reviews.