THE SALVATION ARMY RESIDENCE INC., A FLORIDA CORPORATIONNon-Profit

Department of Housing and Urban Development Finding 2025-002 Section 8 New Construction and Substantial Rehabilitation, AL 14.182 and Section 223(f) Mortgage Insurance Program AL 14.155 Criteria The FAC requires that the annual financial statements be submitted the earlier of 30 days after the report date or nine months after the fiscal year end. Statement of Condition The Single Audit was not submitted to the Federal Audit Clearinghouse (FAC) within nine months after the fiscal year end of the Company for the year ended September 30, 2024. Cause Management does not have controls in place to timely file its financial statements with the FAC. Effect or Potential Effect Management is not in compliance with the requirement to timely submit the Single Audit to the FAC. Questioned costs: None Context Due to delays in the performance of the September 30, 2024 audit, the FAC submission was also delayed. Identification as a repeat finding: No Recommendation Management should implement procedures to ensure that the financial statements are submitted to the FAC in accordance with the FAC filing requirements. Auditor Noncompliance Code: Z - Other Finding Resolution Status: Resolved Reporting Views of Responsible Officials Management agrees with the finding and is taking steps to address the issue that caused it.

Department of Housing and Urban Development Finding 2025-003 Section 223(f) Mortgage Insurance Program AL 14.155 Criteria Residual receipts reserve deposits should be made within 90 days of year end and in the full amount required by HUD. Statement of Condition During the year ended September 30, 2025, management did not make the full required residual receipts reserve deposit in the amount of $268,771 within 90 days of year end, as required by HUD. The deposit made was based on draft financial statements, resulting in a shortage of $21,305. Management plans to deposit the shortage during the year ended September 30, 2026. Cause Controls were not in place to ensure that the final audited amount was used for the residual receipts reserve deposit. Effect or Potential Effect The Company is not in compliance with the requirements of the regulatory agreement. Questioned costs: $21,305 Context: Management deposited the full amount based on draft financial statements within a timely manner, however, the final financial statements included an increase in the required deposit amount which was not noted by management. Identification as a repeat finding: Yes. See 2024-003 Recommendation Management should establish internal controls and procedures to ensure that residual receipts reserve deposits are made both timely and in the correct amount based on final audited financial statements. Auditor’s Noncompliance Code: B – Failure to make required residual receipts deposits Finding Resolution Status: In process Views of Responsible Officials Management agrees with the finding and will deposit the shortage of $21,305 during fiscal year end September 30, 2026.

Department of Housing and Urban Development Finding 2025-004 Section 223(f) Mortgage Insurance Program AL 14.155 Criteria Management fee payments are limited to amounts determined in accordance with the terms of the management agreement. Statement of Condition During the year ended September 30, 2025, the project paid management fees totaling $2,648 in excess of the amount approved by HUD in 2024, and this excess was not reimbursed. Cause Lack of management oversight with respect to residual receipts HAP offsets caused management fees to be overpaid during the current year. Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Questioned costs: $2,682 Context: Management incorrectly overestimated the use of residual receipts HAP offsets, resulting in an overstatement of revenues used to calculate the management fee. Identification as a repeat finding: Yes. See 2024-004 Recommendation Management should establish additional procedures and monitor any modifications or material changes to revenues that may impact the management fee calculation. Management should pay back the overpaid management fee. Auditor Noncompliance Code: J - Unauthorized management fees Finding Resolution Status: In process Reporting Views of Responsible Officials We agree with the finding. We are reviewing our procedures to ensure we do not overpay management fees in the future.

Department of Housing and Urban Development Finding 2024-002 Section 8 New Construction and Substantial Rehabilitation, AL 14.182 Statement of Condition During the procedures applied to a sample of two tenant lease files, we noted the following instances of noncompliance with HUD regulations regarding dissemination of Electronic Income Verification (EIV) information. One instance where EIV information was provided in electronic format to the independent public accountant were noted. Criteria Organization is responsible for adhering to the EIV Rules of Behavior in accordance with Section 4.1.1 of the EIV Multifamily Program User Manual. Cause Organization employees failed to follow the policies and procedures which have been established for proper dissemination of EIV information in accordance with HUD guidelines and management policies. Effect or Potential Effect Noncompliance with HUD guidelines could result in tenant personal information being disseminated to unauthorized individuals. Questioned costs: None Context: N/A Identification as a repeat finding: No Recommendation Management should establish additional procedures and monitor compliance with those procedures to ensure proper dissemination of EIV information in accordance with guidelines specified by HUD. Auditor Noncompliance Code: R - Section 8 program administration Reporting Views of Responsible Officials We agree with the finding. Personnel have been retrained and the EIV policy and forms have been reviewed.

Department of Housing and Urban Development Finding 2024-003 Section 223(f) Mortgage Insurance Program AL 14.155 Statement of Condition During the year ended September 30, 2024, management did not make the required residual receipts reserve deposit in the amount of $556,647 within 90 days of year end, as required by HUD. The residual receipts amount was deposited on September 20, 2024. Criteria Residual receipts reserve deposits should be made within 90 days of year end. Cause Controls are not in place to ensure that required residual receipts reserve deposits are made timely. Effect or Potential Effect The Corporation is not in compliance with the requirements of the Regulatory Agreement. Questioned costs: None Context: N/A Identification as a repeat finding: Yes - 2022-001 Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. Auditor Noncompliance Code: B - Failure to make required residual receipts deposits. Reporting Views of Responsible Officials We agree with the finding. We are reviewing our procedures to ensure this information is captured and deposits are timely made.

Department of Housing and Urban Development Finding 2024-004 Section 223(f) Mortgage Insurance Program AL 14.155 Statement of Condition During the year ended September 30, 2024, the project paid management fees of $2,648 in excess of the amount approved by HUD. Criteria Management fee payments are limited to amounts determined in accordance with the terms of the management agreement. Cause Lack of management oversight with respect to residual receipts HAP offsets caused management fees to be overpaid during the current year. Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Questioned costs: $2,682 Context: Management incorrectly overestimated the use of residual receipts HAP offsets, resulting in an overstatement of revenues used to calculate the management fee. Identification as a repeat finding: No Recommendation Management should establish additional procedures and monitor any modifications or material changes to revenues that may impact the management fee calculation. Management should pay back the overpaid management fee. Auditor Noncompliance Code: J - Unauthorized management fees Reporting Views of Responsible Officials We agree with the finding. We are reviewing our procedures to ensure we do not overpay management fees in the future.

Department of Housing and Urban Development Finding 2022-001 Section 223(f) Mortgage Insurance Program, AL 14.155 Statement of Condition For the year ended September 30, 2021, management did not make the required residual receipts reserve deposit in the amount of $109,025 within 90 days of year end, as required by HUD. The residual receipts amount was deposited on February 11, 2022. Criteria Residual receipts reserve deposits should be made within 90 days of year end. Cause Controls are not in place to ensure that required residual receipts reserve deposits are made timely. Effect The Project is not in compliance with the requirements of the Regulatory Agreement. Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. Auditor Noncompliance Code: B - Failure to make required residual receipts deposits (REAC); N - Special tests and provisions (UG) Finding Resolution Status: Resolved. Management is working to get the audit done in a more timely manner so that the calculation for residual receipts can be completed in time to make any necessary deposits within the required deadline. The intent is to begin the FY 23 audit prior to fiscal year end to allow for customary preliminary audit work. Reporting Views of Responsible Officials On February 11, 2022, the Project remitted the funds to HUD.

FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT Department of Housing and Urban Development Finding 2021-001 Section 223(f) Development HUD Insured Loan, CFDA 14.155 Statement of Condition During the year ended September 30, 2021, management did not make the required residual receipts reserve deposit in the amount of $29,721 within 90 days of year end, as required by HUD. The residual receipts amount was deposited on September 30, 2021. Criteria Residual receipts reserve deposits should be made within 90 days of year end. Effect The Project is not in compliance with the requirements of the Regulatory Agreement. Cause Controls are not in place to ensure that required residual receipts reserve deposits are made timely. Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. Auditor Noncompliance Code: B - Failure to make required residual receipts deposits

Department of Housing and Urban Development Finding 2021-002 Section 223(f) Development HUD Insured Loan, CFDA 14.155 Statement of Condition The Single Audit was not submitted to the Federal Audit Clearinghouse (FAC) within nine months after the fiscal year end of the Company for the year ended September 30, 2020. Criteria The FAC requires that the annual financial statements be submitted the earlier of 30 days after the report date or nine months after the fiscal year end. Effect Management is not in compliance with the requirement to timely submit the Single Audit to the FAC. Cause Management does not have controls in place to timely file its financial statements with the FAC. Recommendation Management should implement procedures to ensure that the financial statements are submitted to the FAC in accordance with the FAC filing requirements. Auditor Noncompliance Code: L - Reporting (FAC) , Z - Other (REAC)

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