CENTER FOR PAN ASIAN COMMUNITY SERVICES, INC.

Finding 2022-001 Compliance Requirement: PROCUREMENT AND SUSPENSION AND DEBARMENT Major Program: CFDA 93.224, Health Center Program Federal Agency: U.S. Department of Health and Human Services Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Category: Procurement, Conflict of Interest Questioned Costs: N/A Status: Corrective action implemented/resolved June 13, 2022 Condition: The Organization has lease commitments under three leases with a related party, a real estate company managed by a Board member of the Organization, in which $190,482 was paid for the year ended June 30, 2022 and two leases with another related party, CEO of the Organization, in which $39,000 was paid during the year ended June 30, 2022. Criteria: The Organization is required to ensure activities, relationships, and financial interests are proper and in accordance with the Organization?s procurement policies and the Organization?s conflict of interest policy pursuant to 34 C.F.R. ? 75.112. Cause: Management did not properly follow the Organization?s procurement and conflict of interest policies in the approval of lease agreements. Effect or Potential Effect: Failure to maintain compliance with Organization procurement and conflict of interest policies may result in the Organization?s ability to detect and prevent misstatements within the Organization?s financial statements. Failure to maintain compliance with Health Resources & Services Administration (?HRSA?) requirements may lead to adverse administrative action which may include reimbursement of grant funds, penalties, suspension or termination of the eligibility of the Organization?s Federally Qualified Health Center (?FQHC?). Recommendations: The Organization should implement procedures to ensure Board approval of all procurement contracts for leases in accordance with Organization procurement and conflict of interest policies pursuant to HRSA guidelines and regulations. The Organization should provide notification to HRSA concerning these conditions and corrective action taken. View of Responsible Officials and Corrective Action Plan: Management agrees with the finding and believes these leases were executed in the best interest of the Organization, specifically, due to the lease fee being at the low end of market value for financial benefit to the Organization. The Organization will ensure that the annual conflict of interest disclosure form is completed by all employees and Board members and any actual or perceived conflicts of interest shall be addressed by the Board. All lease agreements will be approved through the competitive bids process, per the Organization?s procurement policy. Any Board member or officer of the Organization with an actual or perceived conflict of interest will remove themselves from any discussions concerning proposed transaction or arrangement discussions and refrain from voting on any associated matters. On June 13, 2022, management implemented these corrective action procedures and submitted notification to HRSA in accordance with HRSA regulations.

Finding Number: 2022-001 CFDA Number: 93.224, Health Center Program Federal Agency: U.S. Department of Health and Human Services Questioned Cost: N/A Responsible Persons, Title: Chaiwon Kim, CEO Keun Kim, Chief Compliance Officer Corrective Action Implementation/Resolution Date: June 13, 2022 The Organization implemented corrective action procedures to ensure that the annual conflict of interest disclosure form is completed by all employees and Board members and any actual or perceived conflicts of interest shall be addressed by the Board. All lease agreements will be approved through the competitive bids process, per the Organization?s procurement policy. Any Board member or officer of the Organization with an actual or perceived conflict of interest will remove themselves from any discussions concerning proposed transaction or arrangement discussions and refrain from voting on any associated matters. On June 13, 2022, management implemented these corrective action procedures and submitted notification to HRSA in accordance with HRSA regulations.

2021-002

Compliance Requirement: PROCUREMENT AND SUSPENSION AND DEBARMENT Major Program: CFDA 93.224, Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Category: Conflict of Interest Questioned Costs: $143,520 Condition: The Organization has lease commitments under two leases with a related party, a real estate company managed by a Board member of the Organization, in which $143,520 was paid for the year ended June 30, 2021. In addition a third related party lease was entered subsequent to the year ended June 30, 2021 with this related party. Criteria: The Organization is required to establish and maintain a conflict of interest policy pursuant to 34 C.F.R. ? 75.112; and ensure activities, relationships, and financial interests are proper and in accordance with these policies. Cause: Management did not properly follow the Organization?s procurement and conflict of interest policies in the approval of lease agreements. Effect or Potential Effect: Failure to maintain compliance with Health Resources & Services Administration (?HRSA?) requirements may lead to adverse administrative action which may include reimbursement of grant funds, penalties, suspension or termination of the eligibility of the Organization?s Federally Qualified Health Center (?FQHC?). Recommendations: The Organization should implement procedures to ensure Board approval of all procurement contracts for leases in accordance with Organization procurement and conflict of interest policies pursuant to HRSA guidelines and regulations. The Organization should provide notification to HRSA concerning these conditions and corrective action taken. View of Responsible Officials and Corrective Action Plan: Management agrees with the finding and believes these leases were executed in the best interest of the Organization, specifically, due to the management fee being at the low end of market value for financial benefit to the Organization and due to all properties for HRSA programs under the lease commitments having been earmarked for donation to the Organization by the CEO. The Organization will ensure that the annual conflict of interest disclosure form is completed by all employees and any actual or perceived conflicts of interest shall be addressed by the Board. All lease agreements will be approved through the competitive bids process, per the Organization?s procurement policy. Any Board member or officer of the Organization with an actual or perceived conflict of interest will remove themselves from any discussions concerning proposed transaction or arrangement discussions and refrain from voting on any associated matters. Management has submitted notification to HRSA concerning these conflicts of interest in accordance with HRSA regulations.

CFDA Number: 93.224 Federal Agency: U.S. Department of Health and Human Services Responsible Person, Title: Keun Kim, Chief Compliance Officer Questioned Cost: $143,520 Anticipated Completion Date: June 30, 2022 The Organization will ensure that the annual conflict of interest disclosure form is completed by all employees and any actual or perceived conflicts of interest shall be addressed by the Board. All lease agreements will be approved through the competitive bids process, per the Organization?s procurement policy. Any Board member or officer of the Organization with an actual or perceived conflict of interest will remove themselves from any discussions concerning proposed transaction or arrangement discussions and refrain from voting on any associated matters. Management has submitted notification to HRSA concerning these conflicts of interest in accordance with HRSA regulations.