Beloit Assisted Living, Inc. HUD #075-EE099-WAH

Finding 2024-001 – Reserve for Replacement Required Deposits Information on the Federal Program: Department of Housing and Urban Development, AL 14.157 Supportive Housing for the Elderly Questioned Costs: None How the questioned costs were computed: N/A Condition: The required monthly deposit to the reserve for replacement was made for 9 out of 12 months during the year ended December 31, 2024. Criteria: An amount, as required by HUD, is to be deposited monthly in the reserve fund (Regulatory Agreement, item 5 A). Cause: The requirement to monthly deposit to the reserve for replacement was not met due to cash flow. Effect: The monthly deposits to the reserve for replacement was not made in accordance with HUD guidelines. Repeat Finding: No Recommendation: Financial management of the project should be reviewed to improve cash flow so the required monthly deposits to the reserve for replacement can be made. Views of Responsible Officials and Planned Corrective Actions: Beloit Assisted Living, Inc. agrees with the finding and will review policies and procedures to ensure timely remittance.

Beloit Assisted Living, Inc. submits the following corrective action plans for the identified finding for the audit period January 1, 2024, through December 31, 2024. Finding 2024-001: Reserve for Replacement Required Deposits Corrective Action Plan: 1. Community Action Inc, of Rock and Walworth Counties (CAI), contracts with Wisconsin Management Company Inc. (WiMCI) to provide property management services to CAI for Beloit Assisted Living Inc. 2. CAI conducts monthly meetings with WiMCI to review tenancy, financial performance and facility management. To address the Finding identified by WIPFLI, CAI will receive a monthly written confirmation from WMCI that the monthly Reserve for Replacement Deposits required by the U. S. Department of Housing and Urban Development (HUD) are made as required. 3. If WMCI anticipates that they are not able to make the deposit, CAI will be notified a minimum of 15 days prior to work with WIMCI to identify other payment options. Person(s) Responsible: Russ Enders, CEO, Wisconsin Management Company Inc. Marc Perry, Executive Director, Community Action Inc. of Rock and Walworth Counties. Timing for Implementation: Monthly meetings are currently scheduled for the 4th Monday of each month at 9:00 AM. The meeting schedule will remain with the addition of the monthly update regarding the deposit to the reserve.

Finding 2021-001 ? Reserve for Replacement Required Deposits Information on the Federal Program: Department of Housing and Urban Development, CFDA 14.157 Supportive Housing for the Elderly Questioned Costs: None How the questioned costs were computed: N/A Condition: The required monthly deposit to the reserve for replacement was increased by HUD, effective August 1, 2022. During the year ended December 31, 2022, the Project did not increase its monthly deposits to the replacement reserve to comply with the new requirement. Criteria: An amount, as required by HUD, is to be deposited monthly in the reserve fund (Regulatory Agreement, item 5 A). Cause: The requirement to adjust the monthly deposit to the reserve for replacement was overlooked. Effect: The monthly deposits to the reserve for replacement was not made in accordance with HUD guidelines. Repeat Finding: No Recommendation: Policies and procedures should be reviewed to ensure timely adjustments to the monthly reserve for replacement deposits when necessary. Views of Responsible Officials and Planned Corrective Actions: Beloit Assisted Living, Inc. agrees with the finding and will review policies and procedures to ensure timely remittance.

Beloit Assisted Living, Inc. will review their policies and procedures surrounding required replacement for reserve deposits when the requirement is adjusted by HUD.

2021-001 Criteria: Owners are required to remit any surplus cash generated at the end of the fiscal year to the residual receipt account within the required timeframe. Condition: Surplus cash generated at the end of fiscal year December 31, 2020 in the amount of $2,628 was not remitted to the residual receipts account within the required timeframe. Effect and Questioned Costs: The surplus cash remittance to the residual receipts account was not made in accordance with HUD guidelines. Cause: Due to turnover within the management agent company, the requirement to remit the surplus cash to the residual receipts account was overlooked. Repeat Finding: Yes. Finding 2020-001 Recommendation: Policies and procedures should be reviewed to ensure timely remittance of surplus cash into the residual receipts account within the required timeframes.

Views of Responsible Officials and Planned Corrective Actions: Beloit Assisted Living, Inc. agrees with the finding and review policies and procedures to ensure timely remittance.

2020-001

Finding 2020-001 ? Surplus Cash Submission Information on the Federal Program: Department of Housing and Urban Development, CFDA 14.157 Supportive Housing for the Elderly Criteria: Owners are required to remit any surplus cash generated at the end of the fiscal year to the residual receipt account within the required timeframe. Condition: Surplus cash generated at the end of fiscal year December 31, 2019 in the amount of $2,676 was not remitted to the residual receipts account within the required timeframe. Effect and Questioned Costs: The surplus cash remittance to the residual receipts account was not made in accordance with HUD guidelines. Cause: Due to turnover within the management agent company, the requirement to remit the surplus cash to the residual receipts account was overlooked. Recommendation: Policies and procedures should be reviewed to ensure timely remittance of surplus cash into the residual receipts account within the required timeframes. Views of Responsible Officials and Planned Corrective Actions: Beloit Assisted Living, Inc. agrees with the finding and review policies and procedures to ensure timely remittance.

Beloit Assisted Living, Inc. will review their policies and procedures surrounding surplus cash remittance to the residual receipts account within the required HUD timeframes. Person Responsible: J Marc Perry Timing for Implementation: Immediate