DISTRICT ALLIANCE FOR SAFE HOUSINGNon-Profit

DISTRICT ALLIANCE FOR SAFE HOUSING, INC. AND SUBSIDIARY MANAGEMENT CORRECTIVE ACTION PLAN For the Year Ended September 30, 2022 TO: MARCUM LLP 1899 L Street NW, Suite 850 Washington, DC 20036 Audit Period: The findings from the September 30, 2022 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. FINANCIAL STATEMENT FINDINGS Finding 2022-001: Donor Restricted Net Assets ? Time Restrictions Condition and Context: Several grants and contributions had time restrictions incorrectly applied as the donor made the funds available to DASH in the current year, including the payment of those funds. Although the impact was not material, it resulted in net assets with donor restrictions being overstated in the financial statements. Recommendation: The auditors recommended additional training be delivered to enhance understanding of time restrictions under GAAP. The auditors also recommended that, as part of monthly and year-end closing procedures, analysis and reconciliations of donor-restricted net asset activity continue to be performed and all needed adjustments be posted prior to closing. Views of Responsible Officials and Planned Corrective Action: The Organization agrees with the finding and the auditors? recommendation. The Organization will update its policies and procedures to reflect the auditors? advice about what constitutes a donor time restriction under generally accepted accounting principles (GAAP). Analysis and reconciliations of donor-restricted net asset activity will continue to be performed as part of monthly and year-end closing procedures, with adjustments posted prior to closing. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding 2022-002: Reporting ? Compliance Finding and Significant Deficiency in Internal Control Over Compliance Condition and Context: The auditors identified that certain financial and performance reports were submitted late and documentation of review and approval of performance reports by someone other than the report preparer was not available. Recommendation: The auditors recommended that management review policies and procedures over reporting to ensure a review and approval process that allows for timely submission and documented approval of performance reports. Views of Responsible Officials and Planned Corrective Action: The Organization agrees with the finding and the auditors? recommendations. The Organization has hired a qualified finance team who have implemented a revised monthly closing routine to ensure timely submission of financial reports. The Data, Impact, Systems & Coaching (DISC) team responsible for performance reporting was expanded in FY22 to include an additional FTE to support data and reporting. Revised end-to-end processes for performance reports are being documented and implemented, including the necessary documented reviews and approvals to ensure compliance with funder and organizational requirements.

DISTRICT ALLIANCE FOR SAFE HOUSING, INC. AND SUBSIDIARY MANAGEMENT CORRECTIVE ACTION PLAN For the Year Ended September 30, 2021 TO: MARCUM LLP 1899 L Street NW, Suite 850 Washington, DC 20036 Audit Period: The findings from the September 30, 2021, schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. FINANCIAL STATEMENT FINDINGS Finding No. 2021-001: Financial Close Process and Intercompany Account Reconciliations ? Material Weakness in Internal Control Over Financial Reporting Condition and Context: During the audit engagement, auditors noted reconciliation errors in accounts for net assets, intercompany, fixed assets, and interest payable resulting in the auditors recommending adjusting entries in the $400,000 range. Auditors noted that the apparent lack of control was directly related to the staff turnover in the accounting department exhibited during the 2021 fiscal year. Recommendation: Auditors recommended that accounts like these be subject to more rigorous and regular review particularly during the monthly close process. Views of Responsible Officials and Planned Corrective Action: The Organization agrees with the finding and the auditors? recommendation. As of the new calendar year following the audit period, the Organization began hiring qualified finance personnel whose backgrounds include the creation of accounting regimes that review and report transactions and financial positions regularly and accurately to both internal and external stakeholders. A revised monthly closing routine will be established to reduce the potential for these errors. Findings 2021-002 and 2021-003: Schedule of Expenditures of Federal Awards (SEFA) and Schedule of Expenditures of State Awards (SESA) ? Compliance Finding and Significant Deficiency in Internal Control Over Compliance Condition and Context: The Organization erroneously reported a pass-through federal award as part of the Schedule of Expenditures of State Awards (SESA). Total expenditures incurred on the grant award with pass-through federal funding was $104,105; therefore, the SEFA was initially understated by $104,105 while the SESA was overstated by the same amount. Recommendation Auditors recommended that management review each federal and state subaward carefully to properly report each award properly on either the SEFA or SESA. If necessary, discuss the grant characterization with the funder and document the discussion for future reference. Views of Responsible Officials and Planned Corrective Action: The Organization agrees with the finding and the auditors? recommendation. As part of a revamped accounting regime, documentation of the actual source of all awards shall be documented and maintained. For further discussion, please contact Joshua Winston, Chief Financial Officer at 202-462-3274 x 119.

2020-002

Finding No. 2020-001: Eligibility ? Compliance Finding and Significant Deficiency in Internal Control Over Compliance U.S. Department of Housing and Urban Development, CFDA No. 14.239, Home Investment Partnerships Program Condition and Context The auditors tested eight out of the 37 tenants during the year. One of eight samples tested reported a certain income in their income self-certification form but the Organization did not maintain supporting documents to verify the reported income. While the income reported was not above the low income or very low income threshold, the auditors were unable to verify the accuracy of the information for the sample noted above due to missing documentation. Recommendation It was recommended that the Organization enhance its internal control procedures over tenant income verification. Each tenant file must have a tenant income certification, and supporting documentation, that should be updated upon lease renewal, but no less frequently than on an annual basis. In addition, an employee can also be assigned to perform a periodic review of tenant files to check for completeness and/or accuracy of information. Views of Responsible Officials and Planned Corrective Actions The Organization does not dispute that one out of eight samples selected did not include income verification support for the 2018 ? 2019 period. This issue was identified during the 2019 fiscal year audit and is not a new deficiency. Residents may live at Cornerstone for up to 24 months (two years) while working with coaches to address their needs and ultimately live safely and independently. Given the length of stay, any initial income verification backup not collected for intakes pre-2019 fiscal year audit close may show up again in subsequent audits until all program participants admitted during these times transition out of Cornerstone. Unfortunately, the Organization cannot make retroactive corrections to past years? intakes. The Organization has taken this issue very seriously and instituted a corrective action plan in 2020, namely: hired an independent audit firm to perform a 360 internal audit of DASH LLC, instituted an operational plan that strengthened compliance and internal control, brought on a new property management company for the management of the Cornerstone building, and established executive-level reporting structure overseeing the property management. Income re-certifications have been completed for all current residents with all necessary backups. We are confident this deficiency has been addressed adequately and will monitor for continued full compliance.

2019-001

Finding 2020-002: Schedule of Expenditures of Federal Awards (SEFA) ? Compliance Finding and Significant Deficiency in Internal Control Over Compliance Condition and Context The Organization erroneously reported a pass-through federal award as part of the schedule of expenditures of state awards (SESA). Total expenditures incurred on the grant award with pass-through federal funding was $103,918; therefore, the SEFA was initially understated by $103,918. Recommendation It was recommended that management review each federal and state subaward carefully to properly report them to either the SEFA or SESA. If management is unsure, we recommend that management obtain clarification with the funder, and that the discussion be documented. Views of Responsible Officials and Planned Corrective Action The Organization agrees with the finding and the auditors? recommendations. The Organization will continue expanding finance and operations team capacities, strengthening our grant award documentation and compliance review further.

Finding No. 2019-001: Eligibility ? Compliance Finding and Significant Deficiency in Internal Control Over Compliance U.S. Department of Housing and Urban Development, CFDA No. 14.239, Home Investment Partnerships Program Criteria: The HOME program has income targeting requirements. Only low income or very low income persons, as defined in the regulations, can receive housing assistance. The Organization must determine if each person or family is income eligible by determining the person or family?s annual income. The Organization must maintain records for each family assisted. Condition and Context: The auditors tested eight out of the 37 tenants during the year. Three out of the eight samples tested did not have the tenant income certification files, while the income reported for the other three samples were based on information provided by the tenant several years ago. While none of the income reported were above the low income or very low income threshold, the auditors were unable to verify the accuracy of the information for the samples noted above due to missing documentation. Cause: There were employee turnovers both in the Organization and in the property management company for the LLC. During the tenant application process, the Organization receives verbal communication of resident income, if provided. Further controls are needed to ensure that tenant income verification files are effectively maintained by the property management service provider, and tenant income verification is updated at least annually by the property management service provider to determine that tenants continue to be low income. Effect: The Organization may provide assistance to persons not meeting the income requirements of the programs. Repeat Finding: No. Recommendation: It was recommended that the Organization enhance its internal control procedures over tenant income verification. Each tenant file must have a tenant income certification, and supporting documentation, that should be updated upon lease renewal, but no less frequently than on an annual basis. In addition, an employee can also be assigned to perform a periodic review of tenant files to check for completeness and/or accuracy of information. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding. The Organization has engaged EMY Consulting LLC to complete a 360-degree operational internal audit of the LLC and prepare a business operation manual for property management services. The audit will involve a holistic end-to-end evaluation of the LLC?s infrastructure and operations, providing the Organization a ?how to? guide to improve operations by identifying gaps, providing recommendations and a future state roadmap. The business operations manual will incorporate activities and actions of personnel and serve multiple purposes: compliance, training, and detailed steps for continuity of operations as well as considering operational processes, documentation required and the property management aspects of the Organization?s operations. Specific to this finding, the Organization will enhance its internal control procedures relative to tenant income verification. This includes, yet is not limited to, implementing specific income verification and certification policies and procedures that also include document retention standards internal monitoring for the recertification process. These requirements will also be included in any current and future property management written procedures for consistency in the tenant certification and recertification processes. The Organization expects this project to be completed by February 2021 with implementation of new procedures, staffing and operation structure to ensure compliance throughout the 2021 fiscal year.

GSA_MIGRATION