CASA BARRANQUITAS, INC.

Finding No. 2025-001 – Residual receipt deposit. Federal Program ALN 14.157 - U.S. Department of Housing and Urban Development Section 202 Capital Advance Program – Supportive Housing for the Elderly Name of Federal Agency U. S. Department of Housing and Urban Development (HUD) Category Other Matter Compliance requirement Special Tests Criteria Per HUD guidelines and the Project's regulatory agreement, any residual receipt cash surplus must be deposited into the residual receipt account within 90 days of fiscal year-end. Condition As of March 31, 2024, the Project had a surplus cash balance of $49,570. This surplus was deposited into a Residual Receipts account after the required 90-day period had elapsed. The deposit was ultimately made on March 31, 2025, approximately 12 months after fiscal year-end. Per HUD guidelines and the Project's regulatory agreement, any residual receipt cash surplus must be deposited into the residual receipt account within 90 days of fiscal year-end.Cause The delay in depositing the surplus cash into the residual receipts restricted account was due to an issue with the client's entity Employer Identification Number (EIN) on file with the financial institution. This discrepancy prevented the timely opening of the required account. The Project indicated that the process to correct the EIN and open the new bank account involved multiple steps and coordination with the bank, which significantly extended the timeline beyond the required deposit period. Effect Noncompliance with the 90-day deposit requirement may subject the Project to regulatory scrutiny and potential sanctions, including findings in the annual audit and additional oversight from HUD. Questioned Cost None. Context Projects operating under HUD regulatory agreements are required to deposit any residual cash surplus into a restricted residual receipts account within 90 days after the fiscal year-end. These funds are intended to be used for future project needs as approved by HUD, and the timely deposit is a critical compliance measure to ensure appropriate financial oversight and fund availability. This process helps HUD monitor the financial health of the project and prevent misuse of surplus cash. Report of a prior year finding No Recommendation We recommend that management implement procedures to track and ensure timely deposits of residual receipt cash surpluses in accordance with HUD requirements. This may include setting calendar reminders, assigning responsibilities, and performing periodic reviews after each fiscal year-end. Views of responsible officials and planned corrective actions. The Project’s management agrees with this finding. Please refer to the corrective action plan on page 41.

Finding No. 2024-001 – Repayment agreement requested in voucher. Federal Program ALN 14.157 - U.S. Department of Housing and Urban Development Section 202 Capital Advance Program – Supportive Housing for the Elderly Name of Federal Agency U. S. Department of Housing and Urban Development (HUD) Category Other Matter Compliance requirement Cash Management Criteria Under CFR 200.305 Federal payment states the following: (1) The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non_x0002_Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. Condition During the audit testing of cash management, we identified one voucher for the month of August 2023, that incorrectly included $1,348 of funds pertaining to a tenant repayment agreement. The management of the Project acknowledged that they did not detect that the repayment agreement amount had been included in the voucher. Additionally, the tenant disappeared after signing the repayment agreement without fulfilling her obligation. Cause The inclusion of the incorrect amount corresponding to a repayment agreement was due to administrative errors and to lack of effective internal controls for the review and approval of vouchers to be submitted to HUD. Effect Funds amounting to $1,348 had to be returned due to inaccuracies in the original voucher requests submitted to HUD. Questioned Cost Total known question cost to be reimbursed to HUD amounting to $1,348. Context The population consists of twelve vouchers. We selected a sample of two vouchers from this population. Upon audit procedures, we identified an error in one of the vouchers, which amounted to a total of $1,348 that needs to be refunded. Prior year finding No Recommendation We recommended that the Project administrator implement a more thorough review process for voucher details before finalization. This should include a verification step specifically focused on ensuring all amounts, including repayment agreement amounts, are accurately included. Training on the importance of detailed data entry and implementing a secondary review by another staff member could also help identify and correct errors before vouchers are processed. Views of responsible officials and planned corrective actions. The Project’s management agrees with this finding. Please refer to the corrective action plan on page 41

Finding Number: 2021-001 SECURITY DEPOSITS Type of finding: Noncompliance Category: Compliance/Internal Control Program Title: U.S. Department of Housing and Urban Development Section 202 Supporting Housing for the Elderly Name of Federal agency: U. S. Department of Housing and Urban Development (HUD) CFDA Number: 14.157 Criteria As stated on regulation 24 CFR 891.435, Security deposits, the owner, subject to State and local laws, and other regulations, may use the security deposit, plus any accrued interest, as reimbursement for any unpaid family contribution or other amount which the family owes under the lease. Within 30 days (or shorter time if required by State, or local law) after receiving notification of the family's forwarding address, the owner must: (1) Refund to a family owing no rent or other amount under the lease the full amount of the security deposit, plus accrued interest, (2) Provide to a family owing rent or other amount under the lease a list itemizing any unpaid rent, damages to the unit, and estimated costs for repair, along with a statement of the family's rights under State and local law. If the amount which the owner claims is owed by the family is less than the amount of the security deposit, plus accrued interest, the owner must refund the unused balance to the family. If the owner fails to provide the list, the family will be entitled to the refund of the full amount of the security deposit plus accrued interest. Condition During our examination of eligibility compliance requirement, we noted four (4) instances where the required security deposit was not reimbursed within thirty (30) days.Cause Noncompliance was caused by remote work adjustments caused by the COVID-19 lockdown. Effect Tenants moving out of the project received the security deposit after the required thirty (30) days timeframe. Most of the move outs occurred in the peak of the pandemic, as such, a tenant may have had a financial need at that time. Questioned cost None Context During our eligibility test we examined five (5) cases of move outs during the year where reimbursement of the security deposit was required. Total population of tenants that moved out from the project for the period under audit is sixteen (16). Average reimbursement days since move out for the sample examined was forty-four days (44). Prior year finding This is not a repeat finding. Views of responsible officials and planned corrective actions Please refer to the corrective action plan on page 40. Recommendation We recommend establishing control and monitoring mechanisms to identify those deposit returns that are necessary in order to comply with the provisions of the regulation. These measures should consider the management of the entity's operations even in circumstances that require special handling, as part of a contingency plan established by management.

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