CENTER CITY HOUSING CORP

2025-001: Lack of Documentation of Suspension/Debarment Testing at Time of Procurement Federal Department: Department of the Treasury Assistance Listing #: 21.027 Internal Controls Material Weakness & Noncompliance Category of Finding – Procurement, Suspension, and Debarment Criteria - In accordance with 2 CFR 200.214 and 2 CFR part 180, recipients of federal funds must not enter into covered transactions with parties that are suspended or debarred. The Uniform Guidance requires that entities verify the exclusion status of vendors or subrecipients by either (1) checking the System for Award Management (SAM) Exclusions list (https://sam.gov) prior to entering into a covered transaction, (2) Obtaining certifications from vendors or subrecipients that they are not suspended or debarred, if permitted under 2 CFR part 180, or (3) including appropriate suspension/debarment language in contracts and subawards to reflect responsibility not to award to excluded parties; and keeping documentation of this testing being performed before entering into those contracts. Condition - The Organization has a written policy requiring verification that vendors involved in covered procurement transactions under this program are not suspended or debarred, typically by including the required language in the contracts. For the project tested during the audit, management represented that suspension and debarment were performed prior to entering into agreements with vendors subject to this requirement as required. Context: The audit identified two vendors that were funded using these funds during the project and determined that neither contract included the suspension and disbarment language expected. During the audit, the auditor determined that the vendors were not listed as suspended or disbarred on sam.gov. Cause - The Organization typically includes the required suspension and debarment language in their contracts which are based on a template. Due to the ARPA and other unique funding sources of this project, the template contract was not used, and the suspension and debarment language was accidently not included in the alternative contract used. Effect – The Organization was noncompliance with the suspension and debarment requirement under Uniform Guidance. Though these specific vendors were not suspended and debarred, failing to test suspension and debarment prior to entering into contracts could lead to potentially contracting with disallowed vendors which could result in losing federal funding or being required to return funds Recommendation - We recommend that the Organization strengthen its internal controls over contracts as it relates to including the required suspension and debarment language. If that is not possible, we recommend the Organization institute alternative suspension and debarment testing procedures to ensure that all required vendors are tested prior to entering into a contract with a vendor. Auditee’s comments and response - Management plans to ensure, with all contracts, that the vendors sign a statement, either included in the contract or as a rider to the contract which confirms that they are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from covered transactions by a federal department or agency. Responsible party for corrective action: Nancy Cashman, Executive Director Repeat Finding: No

2023-001: Filing of Single Audit Report Federal Departments: Department of Housing and Urban Development Assistance Listing #: All programs Internal Controls Material Weakness & Compliance Category of Finding – Reporting Criteria – Pursuant to 2 CFR section 200.512(a), the reporting package shall be submitted within the earlier of 30 days after receipt of the auditor's report(s), or nine months after the end of the audit period. Condition – The Corporation did not submit the Single Audit Reporting Package for the year ended September 30, 2022 within nine months after the end of the audit period (June 30, 2023). Cause – The Corporation faced turnover in staffing within the accounting department during the year and a key employee had a prolonged illness which caused the Corporation to not complete the year-end close in a timely and efficient manner. As a result, the audit was not completed until after the June 30, 2023 deadline. Effect – Failure to submit the required Single Audit Reporting Package timely automatically results in the Corporation not qualifying for low-risk auditee status for the subsequent year's Single Audit. Recommendation – We recommend that the Corporation develop, document, and implement policies and procedures for to ensure timely submission of the Single Audit Reporting Package. Auditee’s comments and response – The Corporation continues to work on educating their new team on completing efficient and timely financial close procedures. Management believes their processes are properly designed to ensure timely filing of the Single Audit Reporting Package under normal circumstances. Responsible party for corrective action: Kris Meyer, Director of Operations Repeat finding: Yes, 2022-003

2022-001: Audit Adjustments and Oversight of the Financial Reporting Process Material Weakness Criteria ? Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Condition ? During the annual audit, approximately twenty adjustments were made to the Corporation?s financial statements to properly record development activity that in the aggregate, were material to the financial statements. Management reviewed, approved, and accepted responsibility for the audit adjustments before the financial statements were issued. The need for us to record significant audit adjustments indicates a break down in the internal controls related to preparing and reviewing the Corporation?s financial statements which we consider a material weakness because a misstatement of financial statements could occur and not be prevented or detected. Cause ? There was significant staff turnover in fiscal year 2022. The new finance team members had a steep learning curve around properly accounting for certain real estate activities, particularly development related accounting. Also, during the year-end close, the Director of Operations ? the most knowledgeable individual in this area was ill and unable to perform the in-depth review that she ordinarily would have performed before financials were sent to the auditors. Effect ? A material misstatement of the financial statement could occur and not be prevented or detected. Members of management using the Corporation?s internal books and records may not have complete and accurate information throughout the year. Recommendation ? We recommend the Corporation develop and implement a process around properly recording and reviewing development accounting to ensure that necessary adjustments and reconciliations are performed before year-end. This review should ensure that the books for the year under audit make sense, not just the books for the project?s life to date. Additionally, additional education and cross training should be implemented in the accounting team to offset the negative effect of the Director of Operations being unavailable in the future. Auditee's comments and response ? The Corporation continues to work on educating their new team and implementing good financial statement review processes. Management also intends to implement a simplified development accounting process going forward. Responsible party for corrective action: Kris Meyer, Director of Operations

2022-002: Lack of Documentation for Review of Tenant Files Federal Departments: Department of Housing and Urban Development Assistance Listing #: 14.239 Internal Controls Significant Deficiency Category of Finding ? Eligibility Criteria ? Uniform Guidance requires in S200.303 that nonprofit organizations establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition ? Personnel at the Corporation were unable to produce documentation supporting the review of tenant files for tenant eligibility. Cause ? The Corporation has an informal process around tenant file review. It was clearly communicated to the team that reviews are required, and checklist were provided, but it was not clearly communicated that documentation needed to be maintained to show the review occurred. Effect ? A tenant could be ineligible and it would not be caught as a file review was not completed, or the review is not properly completed and no one would know since there was no documentation of the review or lack of review. Recommendation ? We recommend that management create written tenant file review policies and procedures which include a requirement that the review process be documented when reviews are completed. Auditee?s comments and response ? The Corporation created written policies and procedures for affordable housing program compliance and review of the applicable tenant files in fiscal year 2023 and is in the process of adopting these policies and procedures. Responsible party for corrective action: Nancy Cashman, Executive Director

2022-003: Filing of Single Audit Report Federal Departments: Department of Housing and Urban Development Assistance Listing #: All programs Internal Controls Significant Deficiency & Compliance Category of Finding ? Reporting Criteria ? Pursuant to 2 CFR section 200.512(a), the reporting package shall be submitted within the earlier of 30 days after receipt of the auditor's report(s), or nine months after the end of the audit period. Condition ? The Corporation did not submit the Single Audit Reporting Package for the year ended September 30, 2021 within nine months after the end of the audit period (June 30, 2022). Cause ? The Corporation faced turnover and short staffing within the accounting department during fiscal year 2021. Additionally, 12 properties were brought in-house for property management that had historically been managed by a third party, and these properties required additional attention from management to get them properly set-up within the Organization's accounting system. This additional work while short-staffed cause the Corporation to not complete the year-end close in a timely and efficient manner. As a result, the audit was not completed until after the June 30, 2022 deadline. Effect ? Failure to submit the required Single Audit Reporting Package timely automatically results in the Corporation not qualifying for low-risk auditee status for the subsequent year's Single Audit. Recommendation ?We recommend that the Corporation develop, document, and implement policies and procedures for to ensure timely submission of the Single Audit Reporting Package. Auditee?s comments and response ? Management of the Corporation hired additional staff to allow management the additional time necessary to prepare and review internal financial statements in a timely and efficient manner so that the audit can begin and be completed in a timely and efficient manner. A separate issue arose during the 2022 audit which will cause a repeat finding in the 2023 audit, but Management believes their processes are properly designed to ensure timely filing of the Single Audit Reporting Package under normal circumstances. Responsible party for corrective action: Kris Meyer, Director of Operations

SECTION II - FINDINGS - FINANCIAL STATEMENTS AUDIT 2021-001: Lack of Regular Preparation and Review of Reliable Internal Financial Statements Criteria ? Management is responsible for oversight of the Organization, which includes timely recording, processing, summarizing, and review of accounting data (i.e., maintaining and reviewing internal books and records). Condition ? Monthly internal financial statements were not prepared or reviewed by management. Cause ? The Organization faced turnover and short staffing within the accounting department. Additionally, 12 properties were brought in-house for property management that had historically been managed by a third party, and these properties required additional attention from management to get them properly set-up within the Organization's accounting system. Effect ? Without a regular review of financial statements, a misstatement could occur and not be detected by management. Recommendation ? We recommend that management implement a formal process to prepare and review internal financial statements for all reporting entities on a monthly basis. Auditee?s comments and response ? The Organization plans to hire additional staff to allow management the additional time necessary to prepare and review internal financial statements for all reporting entities on a monthly basis as required by their written financial policies. Responsible party for corrective action: Kris Meyer, Director of Operations

2019-001 Out of Date Written Financial Policies Federal Departments: All Programs Pass Through Agency: All Programs CFDA #: All Programs Significant Deficiency & Noncompliance Category of Finding ? Other Criteria ? The Uniform Guidance requires that nonfederal entities establish certain written policies and procedures or standards of conduct to help ensure the entity?s compliance with the terms and conditions of its federal awards. Condition ? The Corporation?s written policies and procedures in use during fiscal year 2019 were outdated and not in compliance with the requirements outlined in the Uniform Guidance for the following specific requirements: ?200.302 Financial Management, ?200.305 Payment (Cash Management), and ?200.320 Methods of Procurement to be Followed. Cause ? The Corporation started updating their policies in 2017, however their processes changed in 2017 making this project more complicated. In addition, the Corporation was overseeing several large development projects during the past few years. This caused the process of updating the policies to take longer than planned and the finalized policies were not completed until late 2019. Effect ? Without documented policies, the risk of noncompliance with grant awards increases. Recommendation ? We recommend that the Corporation review the new policies adopted in 2019, and make sure to implement these new policies in the 2020 fiscal year. Management?s Response and Corrective Action ? The Corporation adopted updated processes in compliance with the Uniform Guidance at the end of September 2019 and has begun implementing the new process. Responsible party for corrective action: Kris Meyer ? Director of Finance and Operations Repeat Finding ? Yes

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