BERKSHIRE RETIREMENT HOME INC

2025 – 001 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 232 Mortgage Insurance for Nursing Homes Assistance Listing Number: 14.129 Award Period: June 1, 2024 – May 31, 2025 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or specific requirement: The Project must obtain a fidelity bond that is equal to or exceeds two months gross potential collections. Condition: Actual fidelity bond coverage amount in FY2025 was less than 2 months of calculated gross potential collections. Questioned costs: $0 Context: No sampling, entire population tested. Cause: The Project did not update coverage amount to keep pace with revenue growth. Effect: Result of the finding is that actual fidelity bond coverage amount fell below the required minimum. Repeat finding: Yes Recommendation: The auditor recommends that management increase their coverage amount to come into compliance with HUD requirements, as well as develop policies and procedures to monitor required coverage minimums to ensure that actual coverage amount is kept at least at that level. Views of responsible officials: There is no disagreement with the audit finding.

FINDINGS-FEDERAL AWARD PROGRAMS AUDITS United States Department of Housing and Urban Development Berkshire Retirement Home, Inc. Audit period: June 1, 2024 - May 31 , 2025 2025-001 Section 232 Mortgage Insurance for Nursing Homes -Assistance Listing No. 14.157 Recommendation: The Project should increase their coverage amount to come into compliance with HUD requirements, as well as develop policies and procedures to monitor required coverage minimums to ensure that actual coverage amount is kept at least at that level. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Fidelity Bond insurance coverage was increased from $1,182,615 to $1 ,282,815 effective 6/1/2025 with annual insurance renewals to be above the minimum required threshold. The new process implemented will now assess the budgeted potential organizational revenue growth prospectively in the current fiscal year and any calculation increase required will be made prior to the end of the current fiscal year before the insurance renewal for the next fiscal year to maintain at least the minimum required coverage threshold. Name(s) of the contact person(s) responsible for corrective action: Edward Forfa Completion date for corrective action plan: 06/01/2025 If the U.S. Department of Housing and Urban Development has questions regarding this plan, please call Edward Forfa, Executive Director at 413-445-4056 ext. 160.

2024-001

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 232 Mortgage Insurance for Nursing Homes Assistance Listing Number: 14.129 Award Period: June 1, 2023 – May 31, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or specific requirement: The Project must obtain a fidelity bond that is equal to or exceeds two months gross potential collections. Condition: Actual fidelity bond coverage amount in FY2024 was less than 2 months of calculated gross potential collections. Questioned costs: $0 Context: No sampling, entire population tested. Cause: The Project did not update coverage amount to keep pace with revenue growth. Effect: Result of the finding is that actual fidelity bond coverage amount fell below the required minimum. Repeat finding: No Recommendation: The auditor recommends that management increase their coverage amount to come into compliance with HUD requirements, as well as develop policies and procedures to monitor required coverage minimums to ensure that actual coverage amount is kept at least at that level. Views of responsible officials: There is no disagreement with the audit finding.

Section 232 Mortgage Insurance for Nursing Homes – Assistance Listing No. 14.157 Recommendation: The auditor recommends that management increase their coverage amount to come into compliance with HUD requirements, as well as develop policies and procedures to monitor required coverage minimums to ensure that actual coverage amount is kept at least at that level. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Fidelity Bond insurance coverage was immediately increased from $1,135,927 to $1,182,615 to be above the minimum required threshold of $1,164,177 when identified. The new process implemented will assess potential organizational revenue growth ahead of insurance renewal to maintain at least the minimum required coverage threshold. Name(s) of the contact person(s) responsible for corrective action: Edward Forfa Planned completion date for corrective action plan: 8/12/2024

2020-001 ? Material Weakness ? Financial Reporting Criteria ? Financial statements prepared in accordance with generally accepted accounting principles requires management to properly close the books and records in a timely manner and ensure all required reconciliations supporting the reported amounts are prepared. Condition ? During our audit, we identified numerous adjustments that were required to correct the original trial balance. Lack of recording all transactions in accordance with generally accepted accounting principles can lead to inaccurate financial information to those who make financial decisions based thereon. Cause ? The Organization has recently experienced a period of rapid growth and is unable to prepare a complete set of consolidated financial statements and related footnotes in accordance with generally accepted accounting principles. Effect or possible effect ? The inability to prepare complete consolidated financial statements and footnotes resulted in material misstatements that were discovered during our audit. Recommendation ? We recommend the Organization obtain additional bookkeeping education to increase skills and knowledge to further assist with completion of financial statements in accordance with generally accepted accounting principles. Further, we recommend that the Organization strengthen its internal control system over financial reporting to ensure all transactions are appropriately reconciled and accounted for on an interim basis and at fiscal year end to ensure accuracy of financial information. Views of Responsible Officials ? See management?s corrective action plan.

Name and address of independent public accounting firm: Marcum LLP City Place I 185 Asylum Street, 25th Floor Hartford, CT 06103 Audit Period: May 31, 2020 Financial Statement Finding 2020-001: Finding: Material audit adjustments were discovered during the financial statement audit. Recommendation: We recommend the Organization obtain additional bookkeeping education to increase skills and knowledge to further assist with completion of financial statements in accordance with generally accepted accounting principles. Further, we recommend that the Organization strengthen its internal control system over financial reporting to ensure all transactions are appropriately reconciled and accounted for on an interim basis and at fiscal year end to ensure accuracy of financial information. Actions Taken: Management agrees with the recommendation and will seek additional bookkeeping training for its staff. U.S. Department of Housing and Urban Development may contact Edward Forfa, executive director at 413-445-4056 or EForfa@berkshireplace.com.

2019-001 ? Significant Deficiency ? Special Tests and Provisions (Bank Monitoring) U.S. Department of Housing and Urban Development Mortgage Insurance ? Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities (CFDA 14.129) Criteria ? The Regulatory Agreement requires that all project funds including escrow funds held by the Mortgagee/loan servicer, are insured at all times. If the project balances on deposit at any one financial institution exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits, the Company is required to monitor the ratings of the financial institutions to insure that the institutions ratings meet minimal standards of the Government National Mortgage Association (Ginnie Mae) Condition ? Project cash was in excess of the Federal Deposit Insurance Corporation (FDIC) and the Company had no documentation it was reviewing the ratings of the financial institutions that holds its deposits. Cause ? A lack of proper written policies and procedures surrounding documentation. Effect or Potential Effect ? Although there is no dollar effect, failure to follow these required procedures could expose the Company to unnecessary risk of loss due to bank failure. Questioned Costs ? None Perspective Information ? The population includes the Project?s operating account balances. Prior Year Finding ? No Recommendations ? The Company should prepare appropriate written policies and procedures to ensure its financial institutions are monitored at least quarterly to determine that they meet minimum GNMA standards set allowed. Documentation of its reviews of these financial institutions should be maintained for the time period provided for under HUD requirements. Views of Responsible Officials ? See management?s corrective action plan.

Name and address of independent public accounting firm: Marcum LLP City Place II 185 Asylum Street, 17th Floor Hartford, CT 06103 Audit Period: May 31, 2019 Federal Award Finding 2019-001: - CFDA 14.129 Finding: The project did not properly review and document its quarterly monitoring of banks in which the Project maintains balances in excess of FDIC insurance. Recommendation: The Project should prepare and disseminate quarterly bank monitoring procedures that meet minimum standards set by HUD. Actions Taken: Management is in the process of documenting appropriate monitoring procedures and will ensure the Organization?s finance committee oversees this quarterly. If the U.S. Department of Housing and Urban Development has any questions regarding management?s corrective action plan, please call Edward Forfa, executive director at 413-445-4056

2019-002 ? Material Weakness ? Special Tests and Provisions (Intercompany Activity) U.S. Department of Housing and Urban Development Mortgage Insurance ? Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities (CFDA 14.129) Criteria ? The HUD Regulatory Agreement states that any loaned project funds should be returned to the project immediately. Condition ? During 2018, there were balances totaling $25,461 received for shared expenses paid by the Project that were to be reimbursed by affiliated entities. Cause ? Lack of internal control over processing intercompany balances. Effect or Potential Effect ? Not paying funds back to the Project in a timely manner makes these funds unavailable for the Project. Questioned Costs ? None Perspective Information ? The population includes amounts that were recorded in the Project?s due to related party general ledger account. Prior Year Finding ? No Recommendations ? We recommend the Project institute proper procedures and controls to ensure that all project cash is repaid timely and accurately into the operating account of the Project. Views of Responsible Officials ? See management?s corrective action plan.

Name and address of independent public accounting firm: Marcum LLP City Place II 185 Asylum Street, 17th Floor Hartford, CT 06103 Audit Period: May 31, 2019 Federal Award Finding 2019-002: - CFDA 14.129 Finding: The project made payments of $25,461 to a related party that are required to be reimbursed to the project. Recommendation: The Project should prepare written procedures and controls to ensure that any payments from the project to related parties are only for operating purposes and any excess payments are immediately paid back to the project. Actions Taken: As of the date of this report, the related party reimbursed the project $25,461. Management will prepare written controls and monitoring procedures to ensure no loans are made by the project that are unauthorized by HUD. If the U.S. Department of Housing and Urban Development has any questions regarding management?s corrective action plan, please call Edward Forfa, executive director at 413-445-4056