CORRECTIVE ACTION PLAN
Breakthrough Phase I, Inc. respectfully submits the following corrective action plan for the year ended
June 30, 2023.
Purkey, Carter, Compton, Swann, & Carter, PLLC
PO. Box 727
Morristown, Tennessee 37815
Audit period: July 1, 2022 —June 30, 2023
The findings from the schedule of findings and questioned costs are discussed below. The findings are
numbered consistently with the numbers assigned in the schedule. Section A of the schedule, Summary
of Audit Results, does not include findings and is not addressed.
FINDINGS — FINANCIAL STATEMENT AUDIT
None
FINDINGS — FEDERAL AWARD PROGRAMS AUDITS FINDING N0. 2023-002: Ineffective operation of internal controls by management
Management conducted recertifications of the Project’ 5 tenants; however, cannot locate any tenant files
for the fiscal year under audit.
Criteria: According to HUD Handbook 4350.3, owners must conduct a recertification of family income and
composition at least annually by the tenant’s recertification anniversary date. Owners then must recompute
the tenants’ rents and assistance payments, if applicable, based on the information gathered. Owners must
also keep all tenant file and recertification documentation as required by HUD.
Cause of Condition: Management did not have systems in place to ensure tenant files and recertification
documentation were kept in accordance with HUD requirements.
Recommendation: Auditor recommends management review HUD Handbook 4350.3 and put proper
internal controls in place to ensure tenant files are in compliance with HUD and kept in accordance with
HUD requirements.
Action Taken: Personnel at Breakthrough Corporation that are handling the operations of the Project have
gone through HUD—related training and are working diligently to get the tenant files up to date and in
accordance with HUD compliance.