PORCHLIGHT, INC.

Condition – During our audit, Wipfli, LLP identified several deficiencies related to Porchlight, Inc.'s internal controls and compliance over financial reporting. Wipfli noted deficiencies in both the design and the execution of the fiscal policies and procedures. Matters identified were as follows: Management was unable to provide individual profit and loss statements for each specific grant award that could be used to verify the accuracy of the information provided on the schedule of expenditures of federal awards. Expenses were recorded to the program expense categories identified in the Statement of Activities but management was unable to provide sufficient audit evidence to identify the specific expenses to specific grant awards. Management was unable to provide adequate audit evidence to substantiate how indirect expenses were allocated to specific expense categories. Proper review and approval of reconciliation's and journal entries in accordance with fiscal policies and procedures was not evident. Essentially all significant general ledger accounts were not reconciled in a timely manner throughout the year. Proper authorizations of cash disbursement transactions was not evident. Financial reports provided to the Board of Directors did not provide an accurate presentation of Porchlight, Inc's financial results based on material adjustments made to signficant account balances during the audit. Material adjusting journal entries to cash, investments, accounts receivable, allowance for credit losses, promises to give and accounts payable were proposed by the auditor and recorded by management during the audit. The financial statements and schedule of expenditures of federal awards were prepared by Wipfli, LLP as the audit information provided did not provide an accurate presentation of Porchlight, Inc's financial results. The primary cause of these deficiencies was the resignation of the Finance Director during the year. Porchlight, Inc. did hire an outside contractor as well as additional finance team members to reconcile accounts in preparation of the financial audit. Subsequent to fiscal year end, a new Finance Director was hired to oversee the fiscal department of Porchlight, Inc. Based on the items noted above, a material weakness exists in Porchlight, Inc.’s internal control and compliance over financial reporting. Criteria – Proper design and execution of Internal controls are essential to ensure effective control over, and accountability for all funds, property and other assets for all programs operated by Porchlight, Inc. Cause – During the audit year, there was turnover in Porchlight, Inc.’s business office which contributed to the lack of timely reconciliation's.Porchlight, Inc. is working on streamlining and implementing processes to address the deficiencies noted in the condition paragraph. Effect – As a result of the financial reporting matters identified in the condition paragraph, a material weakness exists in Porchlight, Inc.'s internal control and compliance over financial reporting. Recommendation – We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled appropriately and all reconciliation's/purchases/reports are being reviewed. View of Responsible Officials – Management agrees with the assessment and has committed to a corrective action plan.

Condition – Under Uniform Guidance, Porchlight, Inc.'s audited financial statements for the year ended December 31, 2023 were due to the federal single audit clearinghouse by September 30, 2024.  Porchlight Inc.'s December 31, 2023 audited financial statements were not completed for submission to the federal audit clearinghouse until after September 30, 2024. Criteria – Uniform Guidance 200.302(b)(4) states each non-federal entity must provide for “effective control over, and accountability for, all funds, property, and other assets.”  In addition, Uniform Guidance requires audited financial statements to be submitted to the federal audit clearinghouse within nine-months after an entity’s year-end. Cause – During the audit year, there was turnover in Porchlight, Inc.’s business office which contributed to the lack of timely reconciliation's. Porchlight, Inc. is working on streamlining and implementing processes to address the deficiencies noted in the condition paragraph. Effect – A significant deficiency in internal control over compliance and an instance of noncompliance exists due to failure to provide financial statements in a timely manner in order to meet audit submission deadlines. Recommendation – We recommend Porchlight, Inc.'s implement procedures to ensure timely completion of the filing of the reporting package to the federal audit clearinghouse. View of Responsible Officials – Management agrees with the assessment and has committed to a corrective action plan.

Condition – Wipfli,LLP was unable to verify the period of performance for the program due to Porchlight, Inc.'s inability to provide detailed transaction reports for the program for the period January 1, 2023 through December 31, 2023. In addition, Porchlight was not able to provide documentation to show proper procurement procedures were followed on purchases. Lastly, Porchlight, Inc. did not file its performance report for the grant award in a timely manner. Criteria – Uniform Guidance 200.302(b)(4) states each non-federal entity must provide for “effective control over, and accountability for, all funds, property, and other assets.”  In addition, the federal grant contract provided a requirement for specific procurement requirements for the purchase of goods and materials. Lastly, the federal grant contract provided a performance report be submitted within the provided guidelines. Cause – During the audit year, there was turnover in Porchlight, Inc.’s business office which contributed to the lack of transaction tracking. Porchlight, Inc. is working on streamlining and implementing processes to address the deficiencies noted in the condition paragraph. Effect – A material weakness in internal control over compliance and an instance of noncompliance exists due to failure to provide accurate data for testing of period of performance, documentation that procurement procedures were followed and the performance report in order to meet contract submission deadlines. Recommendation – We recommend Porchlight, Inc.'s implement procedures to ensure accurate tracking of data for testing of period of performance, procurement procedures are followed in accordance with policies and procedures and the grant award and performance reports are prepared accurately and submitted timely. View of Responsible Officials – Management agrees with the assessment and has committed to a corrective action plan.

Condition – During our audit, Wipfli, LLP identified several deficiencies related to Porchlight, Inc.'s internal control over financial reporting. Wipfli found the design of Porchlight, Inc.'s fiscal policies and procedures to be sufficient but the execution of the fiscal policies and procedures were lacking. The matters identified were as follows: Proper review and approval of reconciliation's in accordance with fiscal policies and procedures was not evident. Essentially all significant general ledger accounts were not reconciled in a timely manner throughout the year. Proper authorizations on some payroll and cash disbursement transactions was not evident. Financial reports were not reconciled to the general ledger Financial reports provided to the Board of Directors were not timely and did not provide an accurate presentation of Porchlight, Inc's financial results. Material adjustments to cash, promises to give and property and equipment were proposed by the auditor and recorded by management during the audit. The primary cause of these deficiencies was the resignation of the Finance Director during the year. Porchlight, Inc. did hire and outside contractor as well as additional finance team members to reconcile accounts in preparation of the financial audit. Based on the items noted above, a material weakness exists in Porchlight, Inc.’s internal control over financial reporting. Criteria – Internal controls need to be in place to assure effective control over, and accountability for all funds, property and other assets for all programs operated by Porchlight, Inc. Cause – During the audit year, there was turnover in Porchlight, Inc.’s business office which contributed to the lack of timely reconciliation's. In addition, the circumstances surrounding the COVID-19 pandemic continued to affect the timeliness of the reconciliation process. Porchlight, Inc. is working on streamlining and implementing processes to address the deficiencies noted in the condition paragraph. Effect – As a result of the financial reporting matters identified in the condition paragraph, a material weakness exists in Porchlight, Inc.'s internal control over financial reporting. Recommendation – We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled appropriately and all reconciliation's/purchases/reports are being reviewed. View of Responsible Officials – Management agrees with the assessment and has committed to a corrective action plan.

Condition – Under Uniform Guidance, Porchlight, Inc.'s audited financial statements for the year ended December 31, 2022 were due to the federal single audit clearinghouse by September 30, 2023.  Porchlight Inc.'s December 31, 2022 audited financial statements were not completed for submission to the federal audit clearinghouse until after September 30, 2023. In addition, Porchlight, Inc. did not file its quarterly expense status reports for its federal and state grants in a timely manner. Criteria – Uniform Guidance 200.302(b)(4) states each non-federal entity must provide for “effective control over, and accountability for, all funds, property, and other assets.”  In addition, Uniform Guidance requires audited financial statements to be submitted to the federal audit clearinghouse within nine-months after an entity’s year-end. The federal and state grant contract provided deadlines for when the quarterly reports were to be submitted. Cause – During the audit year, there was turnover in Porchlight, Inc.’s business office which contributed to the lack of timely reconciliation's. In addition, the circumstances surrounding the COVID-19 pandemic continued to affect the timeliness of the reconciliation process. Porchlight, Inc. is working on streamlining and implementing processes to address the deficiencies noted in the condition paragraph. Effect – A significant deficiency in internal control over compliance and an instance of noncompliance exists due to failure to provide financial statements and grant quarterly reports in a timely manner in order to meet audit and contract submission deadlines. Recommendation – We recommend Porchlight, Inc.'s implement procedures to ensure timely completion of the annual audit and quarterly expense reports. View of Responsible Officials – Management agrees with the assessment and has committed to a corrective action plan.