SHORELINE PLAZA, INC.

U.S. Department of Housing and Urban Development – Federal Financial Assistance Listing 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 223(f)) Special Tests and Provisions Significant Deficiency in Internal Control over Compliance 2024‐002 Management Fees Criteria: Pursuant to the HUD regulatory agreement, management fees are to be charged in accordance with the regulatory agreement. Condition:  During  our  testing  of  management  fees,  we  identified  that  the  Corporation  was  overcharged management fees for $5,697. Cause: Inadequate controls over management fee calculations failed to identify that management fees were incorrectly calculated. Effect: The Corporation overcharged the management company for management fees in 2024. As of  September  30,  2024,  the  management  fees  had  been  paid,  thus  an  audit  adjustment  was  proposed and recorded to reduce the management fee expense and record a receivable for excess management fees paid for 2024. Questioned Costs: None reported. Context/Sampling: No sampling was used. Repeat Finding from Prior Year(s): No Recommendation: Management should implement controls to ensure that management fees are calculated correctly in accordance with the HUD regulatory agreement. Views of Responsible Officials: Management agrees with the finding.

Finding 2,024-002 Federal Agency Name: U.S. Department of Housing & Urban Development Assistance Listing Number: 14.155 Pragram Name: Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 223(f)) Finding Summary: During our testing of management fees, we identified that the Corporation was overcharged management fees of $5,697. Corrective Action Plan: BCACHA is drafting a formalized internal process oversight plan to ensure that our work product is accurate, timely, and within compliance with HUD regulations. We will update our financial policies and internal review processes to prevent errors such as these. Responsible lndividual{s): Glenn Luke, Finance Director Anticipated Completion Date: October 2025