CITY OF POPLAR HOUSING AUTHORITY

FEDERAL AWARDS FINDING Year Ended December 31, 2022 Finding 2022-001 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2022 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: Edgewater Estates and Combs Memorial did not establish or adequately fund the security deposit accounts in 2022. Condition and Context: Those Projects did not maintain the full amount of security deposit funds potentially owed to the tenants. Effect: The Projects are not in compliance with RD regulations and procedures. Cause: The Projects did not maintain the full amount of security deposit funds potentially owed to the tenants. Recommendation: The Projects should fully fund the security deposit accounts for the amounts potentially owed to tenants.

FEDERAL AWARDS FINDING CORRECTIVE ACTION PLAN Year ended December 31, 2022 Finding 2022-001 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2022 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Name of Contact Person and Title: Susie Kirker, Board Chair Criteria: Edgewater Estates and Combs Memorial did not establish or adequately fund the security deposit accounts in 2022. Condition and Context: Those Projects did not maintain the full amount of security deposit funds potentially owed to the tenants. Effect: The Projects are not in compliance with RD regulations and procedures. Cause: The Projects did not maintain the full amount of security deposit funds potentially owed to the tenants. Management Response: Management plans on fully funding the security deposit accounts for the amounts owed to tenants. Status: In progress Anticipated Completion Date: Estimated 2023

2021-001

FEDERAL AWARDS FINDING Year Ended December 31, 2022 Finding 2022-002 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2022 Federal agency: United States Department of Agriculture Compliance Requirement: Equipment and Real Property Management Questioned Costs: None Criteria: Assets recorded on the financial statements should be supported by documentation showing the original cost or purchase price. Condition and Context: The Projects did not maintain adequate documentation to support the fixed assets recorded on the financial statements. Effect: The Projects are not in compliance with RD regulations or standards which require that assets recorded on the financial statements be supported with documentation showing the original purchase price or cost. Cause: The City of Poplar Housing Authority did not maintain adequate records to support the purchase price of the apartment buildings or the land on which the apartment buildings were built. Recommendation: We recommend that the Projects continue to look for the documentation which shows the original purchase price or cost of the Projects.

FEDERAL AWARDS FINDING CORRECTIVE ACTION PLAN Year ended December 31, 2022 Finding 2022-002 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2022 Federal agency: United States Department of Agriculture Compliance Requirement: Equipment and Real Property Management Questioned Costs: None Name of Contact Person and Title: Susie Kirker, Board Chair Criteria: Assets recorded on the financial statements should be supported by documentation showing the original cost or purchase price. Condition and Context: The Projects did not maintain adequate documentation to support the fixed assets recorded on the financial statements. Effect: The Projects are not in compliance with RD regulations or standards which require that assets recorded on the financial statements be supported with documentation showing the original purchase price or cost. Cause: The City of Poplar Housing Authority did not maintain adequate records to support the purchase price of the apartment buildings or the land on which the apartment buildings were built. Management Response: Management will continue to look for the supporting documentation for the original purchase price or cost of the Projects and the land on which the apartments were built. Status: In progress Anticipated Completion Date: Estimated 2023

2021-007

FEDERAL AWARDS FINDING Year Ended December 31, 2022 Finding 2022-003 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2022 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: Edgewater Estates did not maintain the replacement reserve funds in interest-bearing accounts in 2022. Condition and Context: The Project did not establish interest-bearing accounts for the replacement reserve funds as required by RD. Effect: RD projects are required to maintain interest bearing accounts for replacement reserve funds. Cause: The Project is not in compliance with RD regulations and procedures. Recommendation: The Project should establish an interest-bearing account for the replacement reserve funds.

FEDERAL AWARDS FINDING CORRECTIVE ACTION PLAN Year ended December 31, 2022 Finding 2022-003 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2022 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Name of Contact Person and Title: Susie Kirker, Board Chair Criteria: Edgewater Estates did not maintain the replacement reserve funds in interest-bearing accounts in 2022. Condition and Context: The Project did not establish interest-bearing accounts for the replacement reserve funds as required by RD. Effect: RD projects are required to maintain interest bearing accounts for replacement reserve funds. Cause: The Project is not in compliance with RD regulations and procedures. Management Response: Management plans on establishing interest-bearing replacement reserve accounts in 2023. Status: In progress Anticipated Completion Date: Estimated 2023

2021-003

FEDERAL AWARDS FINDING Year Ended December 31, 2022 Finding 2022-004 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2022 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: RD projects are required to setup and maintain reserves for insurance payments. Condition and Context: Edgewater Estates did not establish and fund an account for insurance reserves. Effect: The Project is not in compliance with RD regulations and procedures. Cause: The Project has not opened an account for insurance reserves. Recommendation: We recommend that the Project establish an insurance reserve account with the bank as soon as possible.

FEDERAL AWARDS FINDING CORRECTIVE ACTION PLAN Year ended December 31, 2022 Finding 2022-004 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2022 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Name of Contact Person and Title: Susie Kirker, Board Chair Criteria: RD projects are required to setup and maintain reserves for insurance payments. Condition and Context: Edgewater Estates did not establish and fund an account for insurance reserves. Effect: The Project is not in compliance with RD regulations and procedures. Cause: The Project has not opened an account for insurance reserves. Management Response: Management was able to pay the insurance premiums during 2022. The Management plans on establishing an insurance reserve account in 2023. Status: In progress Anticipated Completion Date: Estimated 2023

2021-004

FEDERAL AWARDS FINDING Year Ended December 31, 2021 Finding 2021-001 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: Edgewater Estates and Combs Memorial did not establish or adequately fund the security deposit accounts in 2021. Condition and Context: Those Projects did not maintain the full amount of security deposit funds potentially owed to the tenants. Effect: The Projects are not in compliance with RD regulations and procedures. Cause: The Projects did not maintain the full amount of security deposit funds potentially owed to the tenants. Recommendation: The Projects should fully fund the security deposit accounts for the amounts potentially owed to tenants.

CORRECTIVE ACTION PLAN Year ended December 31, 2021 Finding 2021-001 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: Edgewater Estates and Combs Memorial did not establish or adequately fund the security deposit accounts in 2021. Condition and Context: Those Projects did not maintain the full amount of security deposit funds potentially owed to the tenants. Effect: The Projects are not in compliance with RD regulations and procedures. Cause: The Projects did not maintain the full amount of security deposit funds potentially owed to the tenants. Management Response: Management plans on fully funding the security deposit accounts for the amounts owed to tenants. Status: In progress Anticipated Completion Date: Estimated 2022

FEDERAL AWARDS FINDING Year Ended December 31, 2021 Finding 2021-002 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: Rural Development requires that the replacement reserves be adequately funded for future repairs and maintenance expenses. Condition and Context: The prior management company was not properly funding the replacement reserves for the required annual deposit amounts required. Effect: Combs Memorial and Edgewater Estates are not in compliance with amounts required to be held in the Replacement Reserve accounts. Cause: The prior management company was not aware of the Rural Development regulations requiring annual deposits. Recommendation: Management should continue to adequately fund the replacement reserves and work to make the additional contributions so that the Projects are in compliance with Rural Development regulations.

CORRECTIVE ACTION PLAN Year ended December 31, 2021 Finding 2021-002 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: RD requires that all RD rules and regulations be followed. Condition and Context: The prior management company was not properly funding the replacement reserves for the required annual deposit amounts required. Management Response: Management has evaluated the replacement reserves and made the required reserve annual deposits during 2021. The management will continue to properly fund the replacement reserves and work to fund the additional amounts that need to be deposited into the replacement reserves in the future. Status: In progress Anticipated Completion Date: Estimated 2024

FEDERAL AWARDS FINDING Year Ended December 31, 2021 Finding 2021-003 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: Edgewater Estates did not maintain the replacement reserve funds in interest-bearing accounts in 2021. Condition and Context: The Project did not establish interest-bearing accounts for the replacement reserve funds as required by RD. Effect: RD projects are required to maintain interest bearing accounts for replacement reserve funds. Cause: The Project is not in compliance with RD regulations and procedures. Recommendation: The Project should establish an interest-bearing account for the replacement reserve funds.

CORRECTIVE ACTION PLAN Year ended December 31, 2021 Finding 2021-003 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: Edgewater Estates did not maintain the replacement reserve funds in interest-bearing accounts in 2021. Condition and Context: The Project did not establish interest-bearing accounts for the replacement reserve funds as required by RD. Effect: RD projects are required to maintain interest bearing accounts for replacement reserve funds. Cause: The Project is not in compliance with RD regulations and procedures. Management Response: Management plans on establishing interest-bearing replacement reserve accounts in 2022. Status: In progress Anticipated Completion Date: Estimated 2022

FEDERAL AWARDS FINDING Year Ended December 31, 2021 Finding 2021-004 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: RD projects are required to setup and maintain reserves for insurance payments. Condition and Context: Edgewater Estates and Combs Memorial did not establish and fund an account for insurance reserves. Effect: The Projects are not in compliance with RD regulations and procedures. Cause: The Projects have not opened accounts for insurance reserves. Recommendation: We recommend that the Projects establish insurance reserve accounts with the bank as soon as possible.

CORRECTIVE ACTION PLAN Year ended December 31, 2021 Finding 2021-004 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: RD projects are required to setup and maintain reserves for insurance payments. Condition and Context: Edgewater Estates and Combs Memorial did not establish and fund an account for insurance reserves. Effect: The Projects are not in compliance with RD regulations and procedures. Cause: The Projects have not opened accounts for insurance reserves. Management Response: Management was able to pay the insurance premiums during 2021. The Management plans on establishing an insurance reserve account in 2022. Status: In progress Anticipated Completion Date: Estimated 2022

FEDERAL AWARDS FINDING Year Ended December 31, 2021 Finding 2021-005 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: RD requires that the Management Agent submit annual IOI forms indicating related parties who have performed services for compensation related to the Project. Condition and Context: The Combs Memorial Apartments Management Agent did not file an IOI form with Rural Development indicating the related parties of the Project. Effect: The Project is not following required RD Regulations with regard to Identity of Interest filing requirements. Cause: The Management Agent did not follow the RD regulations with regard to IOI forms. Recommendation: We recommend that the Property Management Company properly complete and submit the Identity of Interest forms annually indicating all related parties.

CORRECTIVE ACTION PLAN Year ended December 31, 2021 Finding 2021-005 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Special tests and provisions Questioned Costs: None Criteria: RD requires that the Management Agent submit annual IOI forms indicating related parties who have performed services for compensation related to the Project. Condition and Context: The Combs Memorial Apartments Management Agent did not file an IOI form with Rural Development indicating the related parties of the Project. Effect: The Project is not following required RD Regulations with regard to Identity of Interest filing requirements. Cause: The Management Agent did not follow the RD regulations with regard to IOI forms. Management Response: The Combs Memorial Management Agent will properly complete and submit the IOI forms to RD beginning in 2022. Status: In progress Anticipated Completion Date: Estimated 2022

FEDERAL AWARDS FINDING Year Ended December 31, 2021 Finding 2021-007 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Equipment and Real Property Management Questioned Costs: None Criteria: Assets recorded on the financial statements should be supported by documentation showing the original cost or purchase price. Condition and Context: The Projects did not maintain adequate documentation to support the fixed assets recorded on the financial statements. Effect: The Projects are not in compliance with RD regulations or standards which require that assets recorded on the financial statements be supported with documentation showing the original purchase price or cost. Cause: The City of Poplar Housing Authority did not maintain adequate records to support the purchase price of the apartment buildings or the land on which the apartment buildings were built. Recommendation: We recommend that the Projects continue to look for the documentation which shows the original purchase price or cost of the Projects.

CORRECTIVE ACTION PLAN Year ended December 31, 2021 Finding 2021-007 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2021 Federal agency: United States Department of Agriculture Compliance Requirement: Equipment and Real Property Management Questioned Costs: None Criteria: Assets recorded on the financial statements should be supported by documentation showing the original cost or purchase price. Condition and Context: The Projects did not maintain adequate documentation to support the fixed assets recorded on the financial statements. Effect: The Projects are not in compliance with RD regulations or standards which require that assets recorded on the financial statements be supported with documentation showing the original purchase price or cost. Cause: The City of Poplar Housing Authority did not maintain adequate records to support the purchase price of the apartment buildings or the land on which the apartment buildings were built. Management Response: Management will continue to look for the supporting documentation for the original purchase price or cost of the Projects and the land on which the apartments were built. Status: In progress Anticipated Completion Date: Estimated 2022