ADA S. MCKINLEY COMMUNITY SERVICES, INC. AND SUBSIDIARYNon-Profit

Finding Type Noncompliance which could have a direct and material effect on major programs Material weakness in internal control over compliance Title and Assistance Listing Number of Federal Program U.S. Department of Housing and Urban Development Supportive Housing for the Elderly 14.157 and U.S. Department of Housing and Urban Development Section 8 Housing Assistance Payments Program 14.195 Finding Resolution Status In Process Information on Universe and Population Size Project cash available and used by the Project during the year ended June 30, 2025. Sample Size Information Repayment of $128,376 of the operating loss payable liability due to Ada S McKinley. Identification of Repeat Finding and Finding Reference Number N/A Criteria The regulatory agreement with HUD requires that the Project's cash should only be used to for pay for the Project's expenses and repayment of funds advanced to the Project require proper approval. Statement of Condition The Project made payments of $128,376 on an outstanding operating advance liability without HUD Approval for the year ended June 30, 2025. Cause The Project failed to obtain proper HUD approval prior to payment on the outstanding liability. Effect or Potential Effect The Project improperly disbursed funds to pay down an outstanding balance to the Project sponsor. Auditor Noncompliance Code H Unauthorized distribution of project assets Reporting Views of Responsible Officials Effective controls should exist to ensure that disbursements are being properly and timely approved. Context The Project failed to timely review disbursements to ensure that they are in compliance with HUD regulatory agreement. Recommendation The Project should request HUD approval in advance of disbursing project cash for repayment of operating advance liabilities. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations Management should establish a timely review of all disbursements to ensure proper approvals have been recieved prior to disbursment. Response Indicator Agree Completion Date June 30, 2025 Response Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance.

Finding Type: - Immaterial noncompliance with major program requirements - Significant deficiency in internal control over compliance Title and Assistance Listing Number of Federal Program - U.S. Department of Housing and Urban Development Supportive Housing for the Elderly 14.157 Finding Resolution Status - Resolved Information on Universe and Population Size - Allowable costs incurred and expensed by the Project for the year ended June 30, 2024 Sample Size Information - 25 allowable costs incurred and expensed by the Project for the year ended June 30, 2024. Identification of Repeat Finding and Finding Reference Number - N/A Criteria - The Project should incur allowable costs that are only associated to the Project for the year ended June 30, 2024. Statement of Condition - Expenditures totaling $9,250 were improperly charged to the improper project during the year ended June 30, 2024. Cause - The Project failed to timely review proper location and address for expenditures incurred and recorded expenditures for improper project. Effect or Potential Effect - Expenditures were initially understated during the year ended June 30, 2024. Auditor Noncompliance Code - S - Internal Control Deficiency Reporting Views of Responsible Officials - Effective controls should exist to ensure that incurred expenses are being recorded in the proper project. Management has corrected the expenses reported for the project. Context - The Project failed to timely review proper location and address for the expenditure incurred and initially recorded the expenditure incurred in a different project. Recommendation - The Project needs to review internal controls to ensure that all expenses are being properly recorded in the proper project for which service is performed and determine if any modifications to stated controls are needed. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Management should establish a timely review of all invoices and services incurred or purchased to ensure proper cutoff and coding. Response Indicator - Agree Completion Date - September 26, 2024 Response - Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance.

Assistance Listing, Federal Agency, and Program Name - 93.778, U.S. Department of Health and Human Services, Medicaid Cluster - Medical Assistance Program Federal Award Identification Number and Year - HCBS000020, 2023 Pass through Entity - Illinois Department of Healthcare and Family Services Finding Type - Significant deficiency and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.400(c) The non Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. 2 CFR 200.458 Pre-award costs are allowable only to the extent that they would have been allowable if incurred after the date of the Federal award and only with the written approval of the Federal awarding agency. Condition - A duplicate expense was recorded to the program and expenses were recorded to the program prior to the period of performance Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A, see additional information within the context below Context - Five expenses totaling $4,050 were recorded to the grant as pre award expenses without written approval and another expense of $20,229 was recorded twice to the program. Cause and Effect - The Organization recorded journal entries during the year and the process and reviews for the journal entries did not identify expenses were incurred prior to the start of the period of performance. The duplicate expense was identified but not corrected prior finalization of the SEFA. Recommendation - We recommend the Organization increase controls over manual adjustments to record expenses charged to grants. Views of Responsible Officials and Corrective Action Plan - Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance. Management has instituted procedures to provide a review of journal entries to reclass expenses to grant funded programs and promptly record.

Finding Type Significant deficiency in internal control over compliance Title and CFDA Number of Federal Program U.S. Department of Housing and Urban Development Supportive Housing for the Elderly 14.157 Finding Resolution Status - Resolved Information on Universe and Population Size - Withdrawals from replacement reserve during the year ended June 30, 2021. Sample Size Information - All withdrawals from the replacement reserve during the year ended June 30, 2021 Identification of Repeat Finding and Finding Reference Number - 2020-002 Criteria - The Project should have HUD authorization for all withdrawals from the replacement reserve account, as required by the Regulatory Agreement. Statement of Condition - Withdrawals totaling $3,505 were made from the replacement reserve during the year ended June 30, 2021 without HUD authorization. Cause - The Project withdrew $3,505 from the replacement reserve account without obtaining proper approval from HUD. Effect or Potential Effect The unauthorized withdrawals caused the replacement reserve account to be underfunded at year end by $3,505. Auditor Noncompliance Code - A Unauthorized withdrawals from replacement reserve account Reporting Views of Responsible Officials - Effective controls should exist to ensure that proper authorization from HUD is obtained prior to withdrawing amounts from reserve accounts. Context - The Project is required to obtained authorization from HUD prior to withdrawing funds from the replacement reserve account. Recommendation - The Project needs to implement internal controls to ensure authorization from HUD is received prior to withdrawing funds from the replacement reserve account. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Management should obtain approval from HUD prior to withdrawing funds from the replacement reserve. Response Indicator - Agree Completion Date - December 10, 2021 Response - Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance. Management deposited underfunded amount of $3,505 into the replacement reserve account during fiscal year ended June 30, 2022.

Finding Type - Significant deficiency in internal control over compliance Title and CFDA Number of Federal Program U.S. Department of Housing and Urban Development - Supportive Housing for the Elderly - 14.157 Finding Resolution Status - Resolved Information on Universe and Population Size - Deposits to the replacement reserve account during the year ended June 30, 2021. Sample Size Information - All deposits to the replacement reserve account during the year ended June 30, 2021. Identification of Repeat Finding and Finding Reference Number - N/A Criteria - The Project should have made a one time deposit of $32,203 into the replacement reserve account, to properly fund the account due to unauthorized withdrawals taken during the year ended June 30, 2020. Statement of Condition - The Project failed to make the required reserve for replacements deposit in the current fiscal year. Cause The Project failed to monitor the cash requirements of the reserve for replacement account as specified by the Regulatory Agreement. Effect or Potential Effect - The reserve for replacement account is underfunded by $35,708 ($32,203 unauthorized withdrawals in fiscal year 2020 and $3,505 of unauthorized withdrawals in fiscal year 2021) Auditor Noncompliance Code - N - Reserve for Replacements Deposits Reporting Views of Responsible Officials - Effective controls have been implemented to ensure that the deposits to the replacement reserve account are being properly made. Context - The Project is required to adhere to the stated deposits amount established in the Regulatory Agreement. Recommendation - All required deposits should be made in accordance with the Regulatory Agreement. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Management should make the required reserve for replacements deposits in the current fiscal year. Response Indicator - Agree Completion Date - August 17, 2021 Response - Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance. Management has funded the replacement reserve account by $32,202 for the year ended June 30, 2022.

Finding Type - Significant deficiency in internal control over compliance Title - U.S. Department of Housing and Urban Development - Supportive Housing for Persons with Disabilities - 14.157 Finding Resolution Status - In-Process Information on Universe and Population Size - Withdrawals from replacement reserve during the year ended June 30, 2020. Sample Size Information - All withdrawals from the replacement reserve during the year ended June 30, 2020. Identification of Repeat Finding and Finding Reference Number - 2019-003 Criteria - The Project should have HUD authorization for all withdrawals from the replacement reserve account as required by the regulatory agreement. Statement of Condition - Withdrawals totaling $32,203 were made from the replacement reserve without HUD authorization. Cause - The Project withdrew $32,203 from the replacement reserve account without obtaining prior approval from HUD. Effect or Potential Effect - The unauthorized withdrawals caused the replacement reserve account to be underfunded at year end by $32,203. Auditor Noncompliance Code - A - Unauthorized withdrawals from replacement reserve account Reporting Views of Responsible Officials - Effective controls exist to ensure that the proper authorization from HUD is obtained prior to withdrawing amounts from reserve accounts. Context - The Project is required to obtain authorization from HUD prior to withdrawing funds from the replacement reserve account. Recommendation - The Project needs to implement internal controls to ensure authorization from HUD is received prior to withdrawing funds from the replacement reserve account. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Management should obtain approval from HUD prior to withdrawing funds from the replacement reserve. Response Indicator - Agree Completion Date - June 30, 2021 Response - Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance. Management will obtain HUD approval for the withdrawal or will deposit the underfunded amount of $32,203 to the replacement reserve account during the fiscal year ending June 30, 2021.

Finding Type Significant deficiency in internal control over compliance Title and CFDA Number of Federal Program Supportive Housing for the Elderly 14.157 Finding Resolution Status In progress Information on Universe and Population Size Project expenses Sample Size Information All expenses Identification of Repeat Finding and Finding Reference Number 2018 003 Criteria The Project is required to apply cash payments to specific invoices or payroll charges as they are incurred in a timely manner. Statement of Condition The Project Sponsor processes cash disbursements and payroll on behalf of the Project and reflects the amounts due from the Project in an intercompany account. Cause The Project periodically makes wire transfers to the Project Sponsor and they are applied to the due to Project Sponsor's intercompany account balance. Effect or Potential Effect Balances within the Project Sponsor's account do not relate directly to specific invoices for all of 2019. Auditor Noncompliance Code Z ? Other Reporting Views of Responsible Officials Effective controls to ensure expenses are properly allocated to the Project Context The Project is required to separately record cash disbursements to pay specific invoices and track the detail of what the Project Sponsor is paying on behalf of the Project and remit payments timely. Recommendation Management should more clearly track the detail of what the Project Sponsor is paying on behalf of the Project, and repayments should be made timely. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations Management concurs with the recommendation and will implement the recommended improvement. Response Indicator ? Agree Completion Date June 30, 2020 Response Management concurs with the recommendation and will implement the recommended improvement.

Finding Type Significant deficiency in internal control over compliance Title and CFDA Number of Federal Program Supportive Housing for the Elderly 14.157 Finding Resolution Status In progress Information on Universe and Population Size Withdrawals from replacement reserve during the year ended June 30, 2019 Sample Size Information All withdrawals from the replacement reserve during the year ended June 30, 2019 Criteria The Project should have HUD authorization for all withdrawals from the replacement reserve account, as required by the Regulatory Agreement. Statement of Condition Withdrawals totaling $14,980 were made from the replacement reserve without HUD authorization. Cause The Project withdrew $14,980 from the replacement reserve account without obtaining prior approval from HUD. Effect or Potential Effect The unauthorized withdrawals caused the replacement reserve account to be underfunded at year end by $14,980. Auditor Noncompliance Code A Unauthorized withdrawals from replacement reserve account Reporting Views of Responsible Officials Effective controls exist to ensure that the proper authorization form from HUD is obtained prior to withdrawing amounts from reserve accounts. Context The Project is required to obtain authorization from HUD prior to withdrawing funds from the replacement reserve account. Recommendation The Project needs to implement internal controls to ensure authorization from HUD is received prior to withdrawing funds from the replacement reserve account. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations Management should obtain approval from HUD prior to withdrawing funds from the replacement reserve. Response Indicator ? Agree Completion Date June 30, 2020 Response Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance. Management will deposit the underfunded amount of $14,980 to the replacement reserve account during the fiscal year ending June 30, 2020.

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