MUNICIPIO DE COAMOLocal Government

Finding Reference 2025-003 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Federal Program: Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228) Requirement: Equipment and Real Property Management (F) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition: Section II – Financial Statements Findings – Finding Reference 2024-002. Criteria: CFR 570.505 Use of Real Property - The standards described in this section apply to real property within the recipient's control which was acquired or improved in whole or in part using CDBG funds in excess of $25,000. These standards shall apply from the date CDBG funds are first spent for the property until five years after closeout of an entitlement recipient's participation in the entitlement CDBG program or, with respect to other recipients, until five years after the closeout of the grant from which the assistance to the property was provided. Cause of Condition: Section II – Financial Statements Findings – Finding Reference 2025-002. Effect of Condition: We could not identify the property acquired with CDBG funds to realize the proper evaluation as required. Recommendation: Section II – Financial Statements Findings – Finding Reference 2025-002. Questioned Costs: None. Prior Year Finding: This finding is similar to prior year finding 2022-003, 2023-003 and 2024-003. Views of Responsible Officials and Planned Corrective Action: We concur with the audit finding. As expressed in the corrective action related to Finding 2025-002, we are going to identify budgetary resources to engage another staff to work with the capital assets subsidiary ledger completeness. Implementation Date: June 30, 2026 Responsible Person: Mrs. Miraisa David Esparra Finance Department Director

Finding Reference 2025-004 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Program: Community Development Block Grant/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228) Compliance Requirement: Activities Allowed – Housekeepers activity (A) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition: We examined four (4) files of housekeeper program participants and found the following exceptions: a) The Program staff did not visit at least twice per month the participant’s housing unit to ensure the quality of services, according to the activity procedures guide. b) The monthly evaluation of the work carried out by the housekeeper was not carried out. Criteria: 24 CFR, Section 570.484 states that the Municipality must ensure that the program funds benefit very low, low and moderate-income persons and retain documentation justifying its certification. Also, the Municipality has an operational guide approved by its pass-through agency, P.R. Housing Department where it is established all procedures and program requirements for housekeeper activities. Cause of Condition: The Municipality’s controls and procedures failed to ensure that the participant’s files include all the required documents to comply with the Program requirements. Effect of Condition: The Municipality is not in compliance with the Code of Federal Regulations 24, Section 570.484 and with the operational guide. Recommendation: We recommend management follow the procedures established by the P.R. Department of Housing in the procedures manual, including the use of the forms included in it. Questioned Cost: None. Prior Year Finding: This finding is similar to prior year finding 2023-005 and 2024-004.  Views of Responsible Officials and Planned Corrective Action: We acknowledge and accept the observation noted during the Single Audit regarding the frequency of monitoring visits and the completion of monthly evaluations for participants in the Housekeeper Program. We understand that, according to the program’s activity procedures guide, staff are expected to conduct at least two visits per month to each participant’s housing unit and to complete a monthly evaluation of the services provided. However, we would like to provide additional context regarding the operational realities of the program. The assigned Program Coordinator is responsible for overseeing approximately 20 program participants, which would require a minimum of 40 home visits per month to fully comply with the two-visits-per-month requirement. Considering that there are, on average, 20 working days per month, this expectation represents a significant workload within the available time. In addition to conducting home visits and preparing the corresponding reports, the coordinator performs a wide range of essential duties. These include supervising and addressing situations involving approximately 20 housekeeper aides, coordinating services and referrals with external agencies to meet participants’ social needs, organizing meetings, managing administrative responsibilities such as procurement of supplies used by the aides, and participating in program-related administrative meetings. We can attest that the coordinator consistently demonstrates a high level of commitment and diligence in fulfilling these responsibilities. Priority is given to participants with more complex or urgent needs, and in such cases, visits may occur more than once per month. However, meeting the requirement of two visits per month for every participant presents a significant challenge given the scope of responsibilities assigned. We remain committed to evaluating our processes and identifying opportunities to strengthen compliance while ensuring the continued quality and effectiveness of services provided to program participants. Notwithstanding these challenges, we will continue making every effort to comply with the requirements established in the CDBG guidelines. Implementation Date: March 31, 2027 Responsible Person: Mr. Hector R. Sanjurjo Rodríguez Federal Programs Director

Finding Reference 2025-005 Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: P.R. Department of Family Federal Program: Child Care and Development Block Grant (ALN 93.575) Requirement: Earmarking (G) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition: In our Earmarking Test, we found that the Program did not comply with the direct spending earmark limitation that requires the program to spend no less than seventy percent (70%) to fund direct services. Criteria: 45 CFR, Subpart F, Section 95.50 (f) (2) states that from Discretionary amounts provided for a fiscal year, the Lead Agency shall use no less than seventy percent (70%) to fund direct services (provided by the Lead Agency). Cause of Condition: The amounts that were spent on direct services did not meet the minimum amount. Effect of Condition: The program is not in compliance with 45 CFR, Subpart F, Section 98.50. Recommendation: Management should take the necessary steps to ensure that the Program complies with the direct service earmarking requirements. The way to guarantee compliance would be by spending the entire allocation for the fiscal year. If management anticipates that it will not spend the entire allocation, it should request budget modifications from the delegating agency. Questioned Cost: None. Prior Year Finding: Yes. This finding is similar to prior-year finding 2024-005. Views of Responsible Officials and Planned Corrective Action: We concur with the audit finding. The Municipality did not comply with the required direct service spending percentage due to the limited availability of direct service providers under the program’s Child Care Network (Red de Cuido) division. As a result, only 10 children were enrolled, compared to the 18 originally budgeted. This situation ultimately led to the elimination of the Child Care Network division in the 2025-2026 proposal, as the program required a minimum of 10 service providers, a threshold that could not be met due to the lack of available personnel. Implementation Date: June 30, 2026 Responsible Person: Mr. Hector R. Sanjurjo Rodríguez Federal Programs Director

Finding Reference 2025-006 Federal Agency: All agencies and pass-through agencies identified in the Schedule of Expenditures of Federal Awards Federal Program: All Programs identified in the Schedule of Expenditures of Federal Awards Requirement: Single Audit Act Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition: The Single Audit Report for the fiscal year ended June 30, 2025, was not issued within nine (9) months after the end of the audit period. The Data Collection Form and the reporting package were not submitted on a timely basis. Criteria: The Single Audit Act, as amended, requires that the audit report must be submitted to the Federal Audit Clearinghouse no later than nine (9) months after the end of the audit period. Cause of Condition: The Municipality did not comply with the established regulation as prescribed by the Office of Management and Budget (OMB) CFR Part 200. Effect of Condition: The Municipality could lose federal grants due to the noncompliance with the Single Audit Act requirements. Recommendation: Procedures should be implemented to ensure that the Municipality complies with the established Federal Regulation, as prescribed by OMB CFR Part 200. Questioned Cost: None. Prior Year Finding: No. Views of Responsible Officials and Planned Corrective Action: We concur with the finding. The preparation of the financial statements for the fiscal year ending June 30, 2026, has begun. In addition, the progress of the audit will be continuously monitored with the external auditors hired by the Municipality to ensure that they are issued on or before March 30, 2027. Implementation Date: June 30, 2026 Responsible Person: Mrs. Miraisa David Esparra Finance Department Director

Finding Reference 2024-003 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Federal Program: Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228) Requirement: Equipment and Real Property Management (F) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition: Section II – Financial Statements Findings – Finding Reference 2024-002. Criteria: CFR 570.505 Use of Real Property - The standards described in this section apply to real property within the recipient's control which was acquired or improved in whole or in part using CDBG funds in excess of $25,000. These standards shall apply from the date CDBG funds are first spent for the property until five years after closeout of an entitlement recipient's participation in the entitlement CDBG program or, with respect to other recipients, until five years after the closeout of the grant from which the assistance to the property was provided. Cause of Condition: Section II – Financial Statements Findings – Finding Reference 2024-002. Effect of Condition: We could not identify the property acquired with CDBG funds to realize the proper evaluation as required. Recommendation: Section II – Financial Statements Findings – Finding Reference 2024-002. Questioned Costs: None. Prior Year Finding: This finding is similar to prior year finding 2021-003, 2022-003 and 2023-003. Views of Responsible Officials and Planned Corrective Action: We concur with the audit finding. As expressed in the corrective action related to Finding 2024-002, we are going to identify budgetary resources to engage another staff to work with the capital assets subsidiary ledger completeness. Implementation Date: June 30, 2025 Responsible Person: Mrs. Miraisa David Esparra Finance Department Director

Finding Reference 2024-004 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Program: Community Development Block Grant/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228) Compliance Requirement: Activities Allowed – Housekeepers activity (A) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition: We examined four (4) files of housekeeper program participants and found the following exceptions: a) The Program staff did not visit at least twice per month the participant’s housing unit to ensure the quality of services, according to the activity procedures guide. b) The monthly evaluation of the work carried out by the housekeeper was not carried out. Criteria: 24 CFR, Section 570.484 states that the Municipality must ensure that the program funds benefit very low, low and moderate-income persons and retain documentation justifying its certification. Also, the Municipality has an operational guide approved by its pass-through agency, P.R. Housing Department where it is established all procedures and program requirements for housekeeper activities. Cause of Condition: The Municipality’s controls and procedures failed to ensure that the participant’s files include all the required documents to comply with the Program requirements. Effect of Condition: The Municipality is not in compliance with the Code of Federal Regulations 24, Section 570.484 and with the operational guide. Recommendation: We recommend management follow the procedures established by the P.R. Department of Housing in the procedures manual, including the use of the forms included in it. Questioned Cost: None. Prior Year Finding: This finding is similar to prior year finding 2023-005.  Views of Responsible Officials and Planned Corrective Action: We concur with the audit finding. The housekeepers project financed with COVID19-CDBG funds was administered to serve eligible participants within the municipality’s territorial limits. But we gave instructions to the Program Director to assure full compliance with the program guides, including the completeness and submission of any applicable form, and to visit participants housing units as required by the program guide. Implementation Date: March 31, 2025 Responsible Person: Mr. Hector R. Sanjurjo Rodríguez Federal Programs Director

Finding Reference 2024-005 Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: P.R. Department of Family Federal Program: Child Care and Development Block Grant (ALN 93.575) Requirement: Earmarking (G) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition: In our Earmarking Test, we found that the Program did not comply with the quality earmark limitation that requires the program to spend at least nine percent (9%) of the funds on quality activities and at least an additional three percent (3%) on quality improvement for infants and toddlers on the program. Also, we found that the Program did not comply with the direct spending earmark limitation that requires the program to spend no less than seventy percent (70%) to fund direct services. Criteria: 45 CFR, Subpart F, Section 98.50 (b) (1) states that of the aggregate amount of funds expended by a State or Territory, no less that seven percent in fiscal years 2016 and 2017, eight percent in fiscal years 2018 and 2019, and nine percent in fiscal year 2020 and each succeeding fiscal year shall be used for activities designed to improve the quality of child care services and increase parental options for, and access to, high-quality child care as described at 45 CFR Subpart F, Section 98.53. Section 98.50 (b) (2) states that no less than three percent in fiscal year 2017 and each succeeding fiscal year shall be used to carry out activities as such activities relate to the quality of care for infants and toddlers. Also, section 98.50 (b) (3) states that nothing in this section shall preclude the State or Territory from reserving a larger percentage of funds to carry out activities described in paragraphs (b) (1) and (2) of Section 98.50. 45CFR, Subpart F, Section 95.50 (e) states that not less than 70 percent of the Mandatory and Federal and State share of Matching Funds shall be used to meet the child care need of families. Cause of Condition: The program’s budget, approved by the pass-through entity, was not distributed according to the cost limitations required for the administrative, quality and direct costs. Therefore, the amounts spent per category of expenditure did not meet the minimum amounts. Effect of Condition: The program is not in compliance with 45 CFR, Subpart F, Section 98.50. Recommendation: We recommend the Program’s Management to request to the pass-through entity a revision of the approved budgeted amounts in order to make all the required adjustments to comply with the program cost limitations. Questioned Cost: None. Prior Year Finding: No. Views of Responsible Officials and Planned Corrective Action: We concur with the audit finding. The Program budget was determined and approved by the Pass-through Grantor. We are going to discuss the condition reported with the Pass-through Grantor to obtain an explanation about the matter referenced above. Implementation Date: March 31, 2025 Responsible Person: Mr. Hector R. Sanjurjo Rodríguez Federal Programs Director

Finding Reference 2024-006 Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: P.R. Department of Family Federal Program: Child Care and Development Block Grant (ALN 93.575) Requirement: Reporting (L) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition: During our audit procedures, we observed that the Program submitted the partial closing report and final closure report (CC-006) after the date established as agreed in the contract with the agency. Criteria: The contract agreement states in Clause thirteen (13) that the Municipality is responsible for the presentation of the trial balance and annual partial closing report fifteen (15) calendar days after the end of the contract. Ninety (90) days after, the Municipality should liquidate all obligations and present to the pass-through entity the final annual closing report (CC-006). Cause of Condition: The Program does not have effective internal controls to ensure that the required reports and supporting documentation are submitted to the pass-through agency in the requested time frame. Effect of Condition: The Program is not in compliance with the Reporting Requirements. Recommendation: We recommend that the Municipality maintain constant monitoring and updating to achieve better control of the program. The reports must be presented as established in the agreement. This will ensure compliance with reporting requirements under the Child Care and Development Block Grant agreement. Questioned Cost: None. Prior Year Finding: No. Views of Responsible Officials and Planned Corrective Action: We concur with the audit finding. Instructions were given to the Program staff to strengthen existing internal controls and procedures to ensure the submission of financial information according to applicable requirements. Implementation Date: March 31, 2025 Responsible Person: Mr. Hector R. Sanjurjo Rodríguez Federal Programs Director

Finding Reference 2024-007 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Federal Program: Section 8 Housing Choice Vouchers (ALN 14.871) Requirement: Special Tests and Provisions (N) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition: During our audit procedures, we observed that the Program does not meet the requirements of annual and quality control inspections. Criteria: 24CFR, Subpart I, Section 982.405 (c) the PHA must conduct supervisory quality control HQS inspections. Also, the Administrative Plan, chapter 10 establishes that HUD requires the Department to inspect each unit under lease at least once every 24 months to confirm that the unit still meets HQS. The inspection may be conducted in conjunction with the family's annual reexamination but also may be conducted separately. According to the plan, the Municipality will conduct inspections every twelve months. In the same chapter, HUD requires that a sample of units be re-inspected by a supervisor or other qualified individual to ensure that HQS are being enforced correctly and uniformly by all inspectors. Cause of Condition: The personnel in charge did not comply with the annual and quality inspections. In addition, the program does not have adequate follow-up for compliance with the requirements. Effect of Condition: The Program is not in compliance with 24CFR, Subpart I, Section 982.405 (c) and Administrative Plan. Recommendation: We recommend that the Municipality monitor the program to ensure that proper inspections are being conducted. This will ensure compliance with the requirements under the Section 8 Housing Choice Vouchers. Questioned Cost: None. Prior Year Finding: No.   Views of Responsible Officials and Planned Corrective Action: We concur with the audit finding. Instructions were given to the Program staff to strengthen existing internal controls and procedures to ensure the execution of supervisory quality control HQS inspections, as required by the program regulations. Implementation Date: March 31, 2025 Responsible Person: Mr. Hector R. Sanjurjo Rodríguez Federal Programs Director

Finding Reference 2023-003 Federal Agency U.S. Department of Housing and Urban Development Pass-Through Agency P.R. Department of Housing Federal Program Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii Requirement Equipment and Real Property Management (F) Type of Finding Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition Section II – Financial Statements Findings – Finding Reference 2022-002. Criteria CFR 570.505 Use of Real Property - The standards described in this section apply to real property within the recipient's control which was acquired or improved in whole or in part using CDBG funds in excess of $25,000. These standards shall apply from the date CDBG funds are first spent for the property until five years after closeout of an entitlement recipient's participation in the entitlement CDBG program or, with respect to other recipients, until five years after the closeout of the grant from which the assistance to the property was provided. Cause of Condition Section II – Financial Statements Findings – Finding Reference 2023-002. Effect of Condition We could not identify the property acquired with CDBG funds to realize the proper evaluation as required. Recommendation Section II – Financial Statements Findings – Finding Reference 2023-002. Questioned Costs None Prior Year Finding This finding is similar to prior year finding 2021-003 and 2022-003. Views of Responsible Officials and Planned Corrective Action As expressed in the corrective action related to Finding 2023-002, we are going to identify budgetary resources to engage another staff to work with the capital assets subsidiary ledger completeness. Implementation Date: During the Fiscal Year 2023-2024 Responsible Person: Mrs. Miraisa David Esparra Finance Department Director

Finding Reference 2023-004 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Program: Community Development Block Grant/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228) Compliance Requirement: Reporting – Performance Reporting (L) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition In our reporting test, we found that the Municipality did not submit the reports corresponding to audit year in the required time frame: • The first quarter (July-September 2022) and the second quarter (October-December 2022) were submitted on March 3, 2023. • The third quarter (January-March 2023) was submitted to May 24, 2023. • The fourth quarter (April-June 2023) was submitted to August 31, 2023. Criteria Based on the CDBG agreements, the Municipality must submit to the Department of Housing reports on records, collections, and disbursements of Program Income on an annual and quarterly basis. Including the progress of the projects developed with the CDBG program. In addition, the Municipality will submit all the reports required by the Agency. Failure to comply with this provision will be just cause for the Department to stop the fund requisition process. § 200.332 Requirements for pass-through entities. (1) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award. (2) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. Additionally, in OCAM Memorandum Circular 2002-15 of July 17, 2002, it is established that quarterly reports must be submitted within the following 40 days after the expiration date of the quarter. Cause of Condition The personal in charge of the program did not comply with the deadlines for the quarterly reports. Additionally, the program does not have adequate monitoring of the activity and the reports, which were delivered late. Effect of Condition The program is not in compliance with the Reporting Requirements. Recommendation We recommend that the Municipality maintain constant monitoring and updating to achieve better control of the program. The reports must be presented as established in the agreement and guidelines of the Department of Housing. This will ensure compliance with reporting requirements under the Community Development Block Grants/State’s Program and Non-entitlement Grant in Hawaii agreement. Questioned Cost None Prior Year Finding No Views of Responsible Officials and Planned Corrective Action The Program Director is aware about the compliance requirement. We gave instructions to the Program Director to maintain a dateline control sheet to ascertain that required reports were submitted within the due date. Implementation Date: March 21, 2024 Responsible Person: Mr. Hector R. Sanjurjo Rodríguez Federal Programs Director

Finding Reference 2023-005 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Program: Community Development Block Grant/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228) Compliance Requirement: Activities Allowed – Housekeepers activity (A) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition We examined four files of housekeeper program participants and found the following exceptions: a) In four (4) participant’s files, we noted that the results of the evaluation for the application (Form DV-CV-AH-004-A or DV-CV-AH-004-B) that establishes that the service to be offered by the CDBG Program is approved or denied was not completed and sent to participants. b) In four (4) participant’s files, although we did find evidence that visits were performed during the contract period, the Program staff did not visit at least twice per month the participant’s housing unit to ensure the quality of services, according to the activity procedures guide. Criteria 24 CFR, Section 570.484 states that the Municipality must assure that the program funds benefit very low, low – and moderate-income persons and retain documentation justifying its certification. Also, the Municipality has an operational guide approved by its pass-through agency, P.R. Housing Department where it is established all procedures and program’s requirements for housekeeper activities. Cause of Condition The Municipality’s controls and procedures failed to assure that the participant’s files include all the required documents to comply with the Program requirements. Effect of Condition The Municipality is not in compliance with the Code of Federal Regulations 24, Section 570.484 and with the operational guide. Recommendation We recommend management follow the procedures established by the P.R. Department of Housing in the procedures manual, including the use of the forms included in it. Questioned Cost None Prior Year Finding No  Views of Responsible Officials and Planned Corrective Action The housekeepers project financed with COVID19-CDBG funds was administered to serve eligible participants within the municipality’s territorial limits. But we gave instructions to the Program Director to assure full compliance with the program guides, including the completeness and submission of any applicable form, and to visit participants housing units as required by the program guide. Implementation Date: March 21, 2024 Responsible Person: Mr. Hector R. Sanjurjo Rodríguez Federal Programs Director

Finding Reference 2023-006 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Program: Community Development Block Grant/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228) Compliance Requirement: Activities Allowed – Housing Rehabilitation Test (A) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition During our examination of two (2) participant’s files, we found the following situations: a) The participant exceeded the time limit required by the Program to complete the repairs. (One (1) case) b) The rehabilitation was still in process during our audit (agreement expired on April 20, 2023). (One (1) case) Criteria 24 CFR, Section 570.506 states that when CDBG funds are used for rehabilitation, the grantee must assure that the work is properly completed, and appropriate documentation is maintained. Cause of Condition The program has not established adequate internal control procedures to assure that rehabilitations are duly completed as required by regulations and appropriate documentation is maintained. Effect of Condition The Municipality is not in compliance with 24 CFR, Section 570.506. Recommendation We recommend that Program to assure that the participant completes the repairs and rehabilitation process within the period established in the contract. Questioned Cost None Prior Year Finding No Views of Responsible Officials and Planned Corrective Action The participant mentioned in the finding is an exceptional case; a very low-income older adult participant who has limitations to complete your housing unit repairs. But we gave instructions to the Program Director to identify alternatives to provide assistance to the participant in order to complete the housing repairs. Implementation Date: March 21, 2024 Responsible Person: Mr. Hector R. Sanjurjo Rodríguez Federal Programs Director

COMMONWEALTH OF PUERTO RICO MUNICIPALITY OF COAMO Schedule of Findings and Questioned Costs For the Fiscal Year Ended June 30, 2022 Section III ? Federal Award Findings and Questioned Costs Finding Reference: 2022-003 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Federal Program: Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii Requirement: Equipment and Real Property Management (F) Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition: Section II ? Financial Statements Findings ? Finding Reference 2022-002. Criteria: CFR 570.505 Use of Real Property - The standards described in this section apply to real property within the recipient's control which was acquired or improved in whole or in part using CDBG funds in excess of $25,000. These standards shall apply from the date CDBG funds are first spent for the property until five years after closeout of an entitlement recipient's participation in the entitlement CDBG program or, with respect to other recipients, until five years after the closeout of the grant from which the assistance to the property was provided. Cause of Condition: Section II ? Financial Statements Findings ? Finding Reference 2022-002. Effect of Condition: We could not identify the property acquired with CDBG funds to realize the proper evaluation as required. Recommendation: Section II ? Financial Statements Findings ? Finding Reference 2022-002. Questioned Costs: None Prior Year Finding: This finding is similar to prior year finding 2021-003. Views of Responsible Officials and Planned Correctiv Action: During the fiscal year 2021-2022 the Community Development Block Grants ? State?s Program administered by the Municipality of Coamo expended $360,628. Of such total expended, $132,062 were related to capital expenditures; $21,749 for the installation of an elevator in a building whose construction is in progress, and $110,313 for municipal streets paving as specified in the approved proposal. But, as expressed in the corrective action related to Finding 2022-002, we are going to identify budgetary resources to engage another staff to work with the capital assets subsidiary ledger completeness. Implementation Date: During the Fiscal Year 2023-2024 Responsible Person: Mrs. Miraisa David Esparra Finance Department Director

COMMONWEALTH OF PUERTO RICO MUNICIPALITY OF COAMO Schedule of Findings and Questioned Costs For the Fiscal Year Ended June 30, 2022 Section III ?Federal Award Findings and Questioned Costs Finding Reference: 2022-004 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Program: Community Development Block Grant/State?s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228) Compliance Requirement: Reporting ? Performance Reporting (L) Type of Finding: Significant Deficiency in Reporting (SD), Instance of Noncompliance (NC) Statement of Condition: In our Reporting Test, we found that the Municipality did not submit the quarterly report corresponding to the April-June 2022 period, in the required time frame. The Municipality submitted the report during our audit observation. Criteria: Based on the CDBG agreements, the Municipality must submit to the Department of Housing reports on records, collections, and disbursements of Program Income on an annual and quarterly basis. Including the progress of the projects developed with the CDBG program. In addition, the Municipality will submit all the reports required by the Agency. Failure to comply with this provision will be just cause for the Department to stop the fund requisition process. ? 200.332 Requirements for pass-through entities. (1) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award. (2) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. Cause of Condition: There is a lack of knowledge among employees regarding the delivery dates of reports. Additionally, the program does not have adequate monitoring of the activity and the reports, which were delivered after deadlines. Effect of Condition: The program is not in compliance with the Reporting Requirements as established in agreement. Recommendation: We recommend consulting with the agency about the deadlines for the delivery of reports. Constant monitoring and updating must be maintained to achieve a better control of the program. The reports must be presented as established in the agreement and guidelines of the Department of Housing. This will ensure compliance with reporting requirements under the Community Development Block Grants/State?s Program and Non-entitlement Grant in Hawaii agreement. Questioned Cost: None Prior Year Finding: No Views of Responsible Officials and Planned Corrective Action: The new Program Director is aware about the compliance requirement. We gave instructions to the Program Director to maintain a dateline control sheet to ascertain that required reports were submitted within the due date. Implementation Date: April 30, 2023 Responsible Person: Mr. Hector R. Sanjurjo Rodriguez Federal Programs Director

COMMONWEALTH OF PUERTO RICO MUNICIPALITY OF COAMO Schedule of Findings and Questioned Costs For the Fiscal Year Ended June 30, 2022 Section III ?Federal Award Findings and Questioned Costs Finding Reference: 2022-005 Compliance Requirement: Single Audit Act Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC) Statement of Condition: The Single Audit Report for the fiscal year ended June 30, 2022 was not issued within nine (9) months after the end of the audit period. The Data Collection Form and the reporting package were not submitted on a timely basis. Criteria: The Single Audit Act, as amended, requires that the audit report must be submitted to the Federal Audit Clearinghouse, no later than nine (9) months after the end of the audit period. Cause of Condition: The Municipality did not comply with the established regulation as prescribed in OMB Super Circular Uniform Guidance. Effect of Condition: The Municipality could lose federal grants due to the noncompliance with the Single Audit Act requirements. Recommendation: Procedures should be implemented to ensure that the Municipality complies with the established Federal Regulation, as prescribed by OMB Super Circular Uniform Guidance. Questioned Costs: None Prior Year Finding: No Views of Responsible Officials and Planned Corrective Action: The fiscal year 2021-2022 Single Audit Report for Municipality of Coamo will be submitted through the Federal Audit Clearinghouse (FAC) no later than April 30, 2023. About the subsequent year Single Audit, we engaged the audit services on March 31, 2023, and we are going to engage the financial statements preparation consulting services on July 2023, in order to comply with fiscal year 2022-2023 Single Audit submission dateline. Implementation Date: April 30, 2023 Responsible Person: Mrs. Miraisa David Esparra Finance Department Director

Finding Reference: 2021-003 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: P.R. Department of Housing Federal Program: Community Development Block Grants/State?s Program (ALN 14.228) Requirement: Equipment and Real Property Management (F) Type of Finding: Significant Deficiency / Noncompliance Statement of Condition: Section II-Financial Statements Findings ? Finding Reference 2021-002. Criteria: CFR 570.505 Use of Real Property - The standards described in this section apply to real property within the recipient's control which was acquired or improved in whole or in part using CDBG funds in excess of $25,000. These standards shall apply from the date CDBG funds are first spent for the property until five years after closeout of an entitlement recipient's participation in the entitlement CDBG program or, with respect to other recipients, until five years after the closeout of the grant from which the assistance to the property was provided. Cause of Condition: Section II-Financial Statements Findings ? Finding Reference 2021-002. Effect of Condition: We could not identify the property acquired with CDBG funds to realize the proper evaluation as required. Recommendation: Section II-Financial Statements Findings ? Finding Reference 2021-002. Questioned Costs: None Prior Year Finding: No Views of Responsible Officials And Planned Corrective Action: We concur with the finding. During the fiscal year 2020-2021 the Community Development Block Grants ? State?s Program administered by the Municipality of Coamo expended $534,287. Of such total expended, $350,263 were related to capital expenditures; $56,291 for the installation of an elevator in a building whose construction is in progress, and $293,972 for municipal streets paving as specified in the approved proposal. But, as expressed in the corrective action related to Finding 2021-002, we are going are going to identify budgetary resources to engage another staff to accelerate the capital assets subsidiary ledger updating. Implementation Date: During Fiscal Year 2022-2023 Responsible Person: Mrs. Miraisa David Esparra, Finance Department Director

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title and CFDA Number: Section 8 Housing Choice Vouchers (CFDA No. 14.871) Compliance Requirement: Reporting (L) ? Financial Reporting Type of finding: Significant Deficiency in Internal Control (SD), Instance of Noncompliance(NC) Statement of Condition During our audit, we noted differences between the financial information reported in Voucher Management System (VMS) and the amount maintained in the accountings records. We also detected late submission of several months of the VMS and the Unaudited FDS. Criteria 24 CFR Subpart C, Part 85.20 (b) (2) states that the grantees and sub grantees must maintain records which adequately identify the source and application of funds, provided for financially-assisted activities. These records must contain information pertaining to grant or sub grant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. 24 CFR Subpart D Section 982.158 (a), established that the PHA must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be in the form required by HUD, including requirements governing computerized or electronic forms or record-keeping. The municipality must comply with the financial reporting requirements in 24 CFR part 5, subpart K. The financial management system of other grantees and sub-grantees must meet the following standards: ? Financial reporting: Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant. ? Accounting records: Grantees and sub-grantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or sub-grant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. Cause of Condition Program Management do not reconcile the amounts reported monthly through the Voucher Management System (VMS) and the amounts recorded in the accountings records.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title and CFDA Number: Section 8 Housing Choice Vouchers (CFDA No. 14.871) Compliance Requirement: Special Test (N) ? Rolling Forward Equity Balances Type of finding: Significant Deficiency in Internal Control (SD), Instance of Noncompliance (NC) Statement of Condition As part of our audit procedures over the monthly submitted reports, Voucher Management System (VMS), we required evidence of how the Administrative Fee Equity and HAP Equity were calculated. The accountant didn't provide a monthly detail that reconciled with the information submitted in the VMS. In addition, the amounts presented in the VMS at June 30, 2020, do not reconcile with the amounts presented in the Financial Data Schedule (FDS). Criteria 24 CFR 982.158 (a) states that the PHA must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be form required by HUD, including requirements governing computerized or electronic forms of record-keeping. The must comply with the financial reporting requirements in 24 CFR Part 5, Subpart H. Cause of Condition The program accountants do not reconcile the HAP and Administrative Fee Equity balances monthly. Effect of Condition The Municipality did not have proper accounting records to allow them maintain complete and accurate to detect and correct accounting errors in a timely manner. Recommendation We recommend management to prepare the bank conciliations timely, and reconcile on a monthly basis the HAP and Administrative Fee equity balances and document it. Questioned Costs None

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