Catholic Housing Corporation of LansfordNon-Profit

Finding No.: 2024-002: Failure to Make the Required Replacement Reserve Deposits Information on the Federal Program: U.S. Housing of Urban Development (HUD) - 14.157 Supportive Housing for Elderly. Finding Type: Significant Deficiency and Non-Compliance Criteria: The Organization, in accordance with the Regulatory Agreement, is required to maintain a reserve for replacements. The required minimum monthly deposit into this account is $892 for the year ended December 31, 2024. Condition and Context: For the year ended December 31, 2024 , a total of $26,760 ($16,056 pertaining to prior years and $10,704 pertaining to 2024) was to be deposited into the replacement reserve account. However, only $3,568 was deposited. Cause: Due to turnover in the accounting department staff, the required monthly deposits were not made in a timely fashion. Effect or Potential Effect: The Organization did not make the deposits into the replacement reserve account as required by the Regulatory Agreement. Questioned Costs: None Recommendation: The Organization should have procedures in place to ensure all required monthly deposits are made to the reserve for replacements. Management’s Response: Management agrees with the finding above. Both the CEO and Director of Finance have been replaced by a new transitional CEO and Director of Finance and they will review the existing accounting policies and procedures and implement appropriate procedures and controls to incorporate the recommendations above. Planned Implementation Date of Corrective Action: December 2025 Person Responsible for Corrective Action: David Fazio, Director of Finance

Finding No.: 2024-003: Special Tests and Provisions – Project Funds Information on the Federal Program: U.S. Housing of Urban Development (HUD) - 14.157 Supportive Housing for Elderly. Finding Type: Significant Deficiency Criteria: In accordance with 24 CFR 891.400(e), a separate interest-bearing project fund account shall be maintained in a depository or depositories which are members of the Federal Deposit Insurance Corporation or National Credit Union Share Insurance Fund and all tenant payments, charges, income and revenues arising from project operation or ownership shall be deposited to this account. Condition and Context: During our testing, we noted that the project fund account used by the Organization was not an interest-bearing account. Cause: Subsequent to the initial rental assistance contract, changes to HUD regulations resulted in the requirement that the project fund account be an interest-bearing account. This change was an oversight by the Organization’s management. Effect or Potential Effect: Project funds would not earn interest in accordance with HUD requirements. Questioned Costs: None Recommendation: We recommend that the Organization utilize an interest-bearing account for project funds in accordance with HUD requirements. Management’s Response: Although the Corporation does not currently use an interest-bearing account for project funds, due to the ongoing operation of the program and continuous activity within the project funds account, any interest earned in such an account would be negligible. Management is in the process of evaluating this recommendation to determine the appropriate course of action. Planned Implementation Date of Corrective Action: December 2025 Person Responsible for Corrective Action: David Fazio, Director of Finance

FINDINGS AND QUESTIONED COSTS?MAJOR FEDERAL AWARD PROGRAM AUDIT 2023-01 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: CFDA #14.157 Supportive Housing for the Elderly Type of Finding: Noncompliance\significant deficiency in internal control over compliance Criteria The Organization, in accordance with the Regulatory Agreement, is required to maintain a reserve for replacements. The required minimum monthly deposit into this account is $1,338 for the year ended December 31, 2023. Condition For the year ended December 31, 2023, a total of $16,056 was to be deposited into the replacement reserve accounts. However, no amounts were deposited. Additionally, there were replacment reserve amounts of $9,812 from fiscal years 2022 and 2021 which have not been deposited to date. Questioned Costs None Cause Due to turnover in the accounting department staff, the required monthly deposits were not made in a timely fashion. Effect The Organization did not make the deposits into the replacement reserve account as required by the Regulatory Agreement. Recommendation The Organization should have procedures in place to ensure all required monthly deposits are made to the reserve for replacements. Views of Responsible Officials and Planned Corrective Action See accompanying Corrective Action Plan.

FINDINGS AND QUESTIONED COSTS?MAJOR FEDERAL AWARD PROGRAM AUDIT 2022-02 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: CFDA #14.157 ? Supportive Housing for the Elderly Type of Finding: Noncompliance\significant deficiency in internal control over compliance Criteria The Organization, in accordance with the Regulatory Agreement, is required to maintain a reserve for replacements. The required minimum monthly deposit into this account is $892. Condition For the year ended December 31, 2022, a total of $10,704 was to be deposited into the replacement reserve account for 2022 required deposits. However, only $6,244 was deposited, representing seven monthly payments. Questioned Costs None Cause Due to turnover in the accounting department staff, the required monthly deposits were not made in a timely fashion. Effect The Organization did not make the deposits into the replacement reserve account as required by the Regulatory Agreement. Recommendation The Organization should have procedures in place to ensure all required monthly deposits are made to the reserve for replacements. Views of Responsible Officials and Planned Corrective Action See accompanying Corrective Action Plan.

FINDINGS AND QUESTIONED COSTS?MAJOR FEDERAL AWARD PROGRAM AUDIT 2021-01 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: CFDA #14.157 ? Supportive Housing for the Elderly Type of Finding: Noncompliance\ significant deficiency in internal control over compliance Criteria The Corporation, in accordance with the Regulatory Agreement, is required to maintain a reserve for replacements. The required minimum monthly deposit into this account is $892. Condition For the year ended December 31, 2021, a total of $10,704 was to be deposited into the replacement reserve account however, only $892 was deposited, representing one monthly payment. The remaining payments were made to the replacement reserve account subsequent to year end. Questioned Costs None Cause Due to turnover in the accounting department staff, the required monthly deposits were not made in a timely fashion. Effect The Corporation did not make the deposits into the replacement reserve account as required by the Regulatory Agreement. Recommendation The Corporation should have procedures in place to ensure all required monthly deposits are made to the reserve for replacements. Views of Responsible Officials and Planned Corrective Action See accompanying Corrective Action Plan.