KNIGHTS OF PYTHIAS CARE CENTER FHA PROJECT NO. 127-38064Non-Profit

S3800-010 Finding Reference Number ? 2020-001 S3800-011 Title and CFDA Number of Federal Program ? Section 231 Direct Loan, CFDA Number 14.138 Section 231 Loan Guarantee, CFDA Number 14.138 S3800-015 Type of finding ? Financial Statement and Federal Award Finding S3800-016 Find Resolution Status ? In progress S3800-017 Information on Universal Population Size ? N/A S3800-018 Sample of Size Information ? N/A S3800-019 Identification of Repeat Finding and Finding Reference Number ? This is a repeat finding from the immediate previous audit finding 2019-001. S3800-020 Criteria ? Knights of Pythias Care Center is responsible for implementing adequate procedures to ensure that the accounting and reports are accurate and complete. Per regulatory agreement, Section 12(d), the books and accounts of the operations of the mortgaged property and of the project shall be kept in accordance with the requirements of the Secretary. S3800-030 Statement of Condition ? During the course of the 2020 audit, we noted that the Organization had not properly accounted for a number of transactions, including the following: -Incorrect recording of escrow and replacement reserve activity during the year. -The depreciation schedule maintained by the third-party contracted accountant had not been properly reconciled to the general ledger, resulting in the accounts being misstated. -Incorrect recording of the first mortgage payable, other note payable ? surplus cash and related interest expense during the year. -Incorrect recording of debt issuance costs during the year. S3800-032 Cause ? During the year ended December 31, 2020, Knights of Pythias Care Center did not properly reconcile the supporting schedules or documents to the underlying general ledger accounts. S3800-033 Effect of Potential Effect ? The accounts of Knights of Pythias Care Center were materially misstated throughout the reporting period and at year-end. S3800-035 Auditor Non-Compliance Code ? S (Internal Control) S3800-037 FHA/Contract Number ? 127-38064 S3800-038 Questioned Costs ? $0 S3800-040 Questioned Costs ? $0 S3800-045 Reporting Views of Responsible Officials ? As a result of the audit, Knights of Pythias Care Center has recorded adjusting entries to correct misstatements. Management will implement measures to ensure all supporting schedules and documents are reconciled to the underlying general ledger accounts consistently and timely going forward. S3800-080 Recommendation ? We recommend that Knights of Pythias Care Center, in conjunction with their contracted third-party CPA firm, review the month-end and year-end closing procedures in order to determine if additional internal controls are needed to ensure the books and records are in accordance with generally accepted accounting principles throughout the year. We recommend formal month-end and year-end closing schedules which include all tasks necessary to close the books be established. The schedules should include a listing of all tasks needed, the individuals responsible and the date on which each procedure is due and is accomplished. As part of the tasks, Knights of Pythias Care Center should reconcile the general ledger accounts for all significant balances to supporting documentation on a monthly basis. S3800-090 Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations ? As a result of the audit, Knights of Pythias Care Center has recorded adjusting entries to correct misstatements. Management will implement measures to ensure all supporting schedules and documents are reconciled to the underlying general ledger accounts consistently and timely going forward. S3800-130 Response Indicator ? Agree S3800-140 Completion Date ? March 31, 2022 S3800-150 Response ? As a result of the audit, Knights of Pythias Care Center has recorded adjusting entries to correct misstatements. Management will implement measures to ensure all supporting schedules and documents are reconciled to the underlying general ledger accounts consistently and timely going forward. S3800-160 Contact Person First Name ? Don S3800-180 Contact Person Last Name ? James

S3800-010 Finding Reference Number ? 2020-002 S3800-011 Title and CFDA Number of Federal Program ? Section 231 Direct Loan, CFDA Number 14.138 Section 231 Loan Guarantee, CFDA Number 14.138 S3800-015 Type of finding ? Federal Award Finding S3800-016 Find Resolution Status ? In progress S3800-017 Information on Universal Population Size ? N/A S3800-018 Sample of Size Information ? N/A S3800-019 Identification of Repeat Finding and Finding Reference Number ? This is a repeat finding from the immediate previous audit finding 2019-002. S3800-020 Criteria ? Surplus Cash, Incentive Performance Fee and Capital Recovery Payments are to be computed in accordance with the requirements of the Regulatory Agreement and the Mark-to-Market program guidelines. S3800-030 Statement of Condition ? In 2020, HUD/Office of Multifamily Asset Management and Portfolio Oversight Post-Closing Portfolio Management performed a review of the Surplus Cash, Incentive Performance Fee and the Capital Recovery Payment computations. In their final report from February, 2021, they notified Knights of Pythias Care Center of several computation errors made in prior years and required certain corrections. S3800-032 Cause ? Computation errors made by Knights of Pythias Care Center were not detected. S3800-033 Effect of Potential Effect ? Errors in Surplus Cash, Incentive Performance Fee and the Capital Recovery Payment computations resulted in adjustments being required by HUD. HUD required adjustments to Surplus Cash totaling $117,239. S3800-035 Auditor Non-Compliance Code ? Z (Other) S3800-037 FHA/Contract Number ? 127-38064 S3800-038 Questioned Costs ? $0 S3800-040 Questioned Costs ? $0 S3800-045 Reporting Views of Responsible Officials ? Knights of Pythias Care Center will implement measures to ensure Surplus Cash, Incentive Performance Fee and Capital Recovery Payment computations are prepared in accordance with the applicable requirements. S3800-080 Recommendation ? We recommend that Knights of Pythias Care Center implement internal controls to ensure Surplus Cash, Incentive Performance Fee and Capital Recovery Payment computations are prepared in accordance with the applicable requirements going forward. S3800-090 Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations ? Knights of Pythias Care Center will implement measures to ensure Surplus Cash, Incentive Performance Fee and Capital Recovery Payment computations are prepared in accordance with the applicable requirements. S3800-130 Response Indicator ? Agree S3800-140 Completion Date ? March 31, 2022 S3800-150 Response ? Knights of Pythias Care Center will implement measures to ensure Surplus Cash, Incentive Performance Fee and Capital Recovery Payment computations are prepared in accordance with the applicable requirements.

S3800-010 Finding Reference Number ? 2020-003 S3800-011 Title and CFDA Number of Federal Program ? Section 231 Direct Loan, CFDA Number 14.138 Section 231 Loan Guarantee, CFDA Number 14.138 S3800-015 Type of finding ? Federal Award Finding S3800-016 Find Resolution Status ? In progress S3800-017 Information on Universal Population Size ? This is a repeat finding from the immediate previous finding 2019-003. S3800-018 Sample of Size Information ? N/A S3800-019 Identification of Repeat Finding and Finding Reference Number ? N/A S3800-020 Criteria ? Per regulatory agreement, Section 12(g) amended to Section 12(h), all rents and other receipts of the project shall be deposited in the name of the project in a bank, whose deposits are insured by the FDIC. S3800-030 Statement of Condition ? As of December 31, 2020, and during the year then ended, Knights of Pythias Care Center maintained cash balances with a financial institution in excess of FDIC insurable limits. S3800-032 Cause ? Knights of Pythias Care Center maintained cash balances with a financial institution in excess of FDIC insurable limits and did not perform the alternative procedures on the financial institution defined in the HUD Handbook 4350.1. S3800-033 Effect of Potential Effect ? The Organization?s cash is susceptible to loss related to uninsured balances. S3800-035 Auditor Non-Compliance Code ? Z (Other) S3800-037 FHA/Contract Number ? 127-38064 S3800-038 Questioned Costs ? $0 S3800-040 Questioned Costs ? $0 S3800-045 Reporting Views of Responsible Officials ? Knights of Pythias Care Center believes the Organization holds its cash with what it believes to be a highly qualified financial institution thus limiting the project?s credit exposure. Management will implement the alternative procedures on the financial institution defined in the HUD Handbook 4350.1. S3800-080 Recommendation ? We recommend that Knights of Pythias Care Center transfer a portion of their funds to another financial institution, or implement internal controls to perform the alternative procedures on the financial institution defined in the HUD Handbook 4350.1. S3800-090 Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations ? Knights of Pythias Care Center believes the Organization holds its cash with what it believes to be a highly qualified financial institution thus limiting the project?s credit exposure. Management will implement the alternative procedures on the financial institution defined in the HUD Handbook 4350.1. S3800-130 Response Indicator ? Agree S3800-140 Completion Date ? March 31, 2022 S3800-150 Response ? Knights of Pythias Care Center believes the Organization holds its cash with what it believes to be a highly qualified financial institution thus limiting the project?s credit exposure. Management will implement the alternative procedures on the financial institution defined in the HUD Handbook 4350.1.

S3800-010 Finding Reference Number ? 2020-004 S3800-011 Title and CFDA Number of Federal Program ? Section 231 Direct Loan, CFDA Number 14.138 Section 231 Loan Guarantee, CFDA Number 14.138 S3800-015 Type of finding ? Federal Award Finding S3800-016 Find Resolution Status ? In progress S3800-017 Information on Universal Population Size ? All cash receipt deposits into the bank accounts of Knights of Pythias Care Center during the year, totaling 127 cash receipt deposits. S3800-018 Sample of Size Information ? 55 cash receipt deposits, selected systematically, and one transaction per deposit. S3800-019 Identification of Repeat Finding and Finding Reference Number ? This is a repeat finding from the immediate previous audit finding 2019-004. S3800-020 Criteria ? Per regulatory agreement, Section 12(g) amended to Section 12(h), any person receiving funds of the project shall immediately deposit such funds in the project bank account. S3800-030 Statement of Condition ? During the course of the 2020 audit, we noted four cash receipt deposits that were not deposited to the bank within a reasonable amount of time. The first deposit was not made until 11 days after receipt, the second deposit was not made until 9 days after receipt, the third deposit was not made until 17 days after receipt, the fourth deposit was not made until 7 days after receipt. S3800-032 Cause ? There is only one individual at Knights of Pythias Care Center who is responsible for performing the cash receipt deposit responsibilities. If the individual is out of the office or stepped away from their desk, they are not always promptly notified of funds that have been received and input into the secure lock box. S3800-033 Effect of Potential Effect ? Failure to maintain effective internal controls over compliance with federal award requirements increases the risk of unauthorized transactions or misappropriation of funds occurring. S3800-035 Auditor Non-Compliance Code ? S (Internal Control) S3800-037 FHA/Contract Number ? 127-38064 S3800-038 Questioned Costs ? $0 S3800-040 Questioned Costs ? $0 S3800-045 Reporting Views of Responsible Officials ? Knights of Pythias Care Center has reminded all individuals involved in the cash receipts deposit process the importance of notifying the Finance Director when funds are collected, to ensure a timely deposit is made. S3800-050 Context A sample of 55 cash receipt deposits totaling $822,079, with individual transactions totaling $23,940, were selected for audit procedures from a population of 127 cash receipt deposits totaling $1,867,850. The audit procedures found four cash receipts that were not deposited in compliance with Knights of Pythias Care Center?s cash management controls totaling $2,772. Our sample was a statistically valid sample. S3800-080 Recommendation ? We recommend that Knights of Pythias Care Center review their internal controls over the cash receipts deposit process with the necessary individuals involved in the process to ensure all deposits are made in a timely manner consistently going forward. S3800-090 Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations ? Knights of Pythias Care Center has reminded all individuals involved in the cash receipts deposit process the importance of notifying the Finance Director when funds are collected, to ensure a timely deposit is made. S3800-130 Response Indicator ? Agree S3800-140 Completion Date ? March 31, 2022 S3800-150 Response ? Knights of Pythias Care Center has reminded all individuals involved in the cash receipts deposit process the importance of notifying the Finance Director when funds are collected, to ensure a timely deposit is made.

S3800-010 Finding Reference Number ? 2020-005 S3800-011 Title and CFDA Number of Federal Program ? Section 231 Direct Loan, CFDA Number 14.138 Section 231 Loan Guarantee, CFDA Number 14.138 S3800-015 Type of finding ? Federal Award Finding S3800-016 Find Resolution Status ? In progress S3800-017 Information on Universal Population Size ? Total population were all cash disbursements from bank accounts during 2020, 772 cash disbursements totaling $1,802,700. Total population were 21 invoices totaling $101,272 requested for reimbursement from replacement reserve in 2020. Total population were 5 invoices totaling $132,926 of disbursed checks over the $10,000 micro-purchase procurement purchasing policy requirement for bids. S3800-018 Sample of Size Information ? Cash disbursements were selected systematically for testing of the following cash disbursement controls: authorized use of project funds, proper coding and classification of expenditures, and reasonable expense for a proper business purpose. 25 cash disbursements totaling $55,229. Replacement reserve withdrawals were selected haphazardly for testing whether the withdrawal was properly approved by HUD, a reasonable expenditure according with HUD requirements, and properly capitalized or expensed. 5 invoices totaling $55,040. One cash disbursement selected haphazardly for testing of compliance with their procurement purchase policy. One cash disbursement totaling $80,679. S3800-019 Identification of Repeat Finding and Finding Reference Number ? N/A S3800-020 Criteria ? Per regulatory agreement, Section 12 (c), the project is required to maintain a system of internal accounting controls sufficient to provide reasonable assurance that the transactions are in accordance with HUD and permit an efficient audit of books and record. S3800-030 Statement of Condition ? There was one instance where management was unable to locate supporting disbursement backup documentation for cash disbursements selected during testing. There was one instance where management was unable to locate supporting replacement reserve invoice backup documentation for the replacement reserve withdrawal selected during testing. There was one instance where management did not properly document the bid process for the selected sample tested for procurement. S3800-032 Cause ? The Organization experienced turnover in staff during the year ended December 31, 2020, and was unable to locate the supporting disbursement and replacement reserve withdrawal backup documentation. S3800-033 Effect of Potential Effect ? The project is unable to provide reasonable assurance that the transactions are in accordance with HUD. Failure to maintain copies of documents increases the risk of unauthorized transactions or misappropriation of funds occurring. S3800-035 Auditor Non-Compliance Code ? S (Internal Control) S3800-037 FHA/Contract Number ? 127-38064 S3800-038 Questioned Costs ? $90,660 S3800-040 Questioned Costs ? $90,660 S3800-045 Reporting Views of Responsible Officials ? Knights of Pythias Care Center has reminded all individuals involved in the cash disbursement process the importance of maintaining the supporting documents in a manner to access at any reasonable time and will implement measures to ensure cash management controls and procurement controls are followed in accordance with HUD going forward. S3800-050 Context A sample of 25 disbursements totaling $55,229, were selected for audit procedures from a population of 772 cash disbursements totaling $1,802,700. The audit procedures resulted in one cash disbursement totaling $41 that Knights of Pythias Care Center was not able to provide proper documentation and support. Our sample was a statistically valid sample. A sample of 5 replacement reserve withdrawal totaling $55,040, were selected for audit procedures from a population of 21 replacement reserve disbursements totaling $101,272. The audit procedures resulted in one replacement reserve withdrawal totaling $9,940 that Knights of Pythias Care Center?s was not able to provide proper documentation and support. Our sample was a statistically valid sample. A sample of 1 disbursement over the micro-purchase procurement purchasing policy threshold of $10,000 - $250,000 was selected for audit procedures from a population of 5 disbursements totaling $132,926. The audit procedures resulted in the selected disbursement totaling $80,679 that Knights of Pythias Care Center was not able to provide proper documentation and support. Our sample was a statistically valid sample. S3800-080 Recommendation ? We recommend Knights of Pythias Care Center to implement internal controls to ensure all support is kept on file and can be accessed by all authorized personnel in accordance with the Cash Management Controls and Receipt Controls per HUD Handbook 4360.2 Rev- 1 Chapter 2. S3800-090 Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations ? Knights of Pythias Care Center has reminded all individuals involved in the cash disbursement process the importance of maintaining the supporting documents in a manner to access at any reasonable time and will implement measures to ensure cash management controls and receipt controls are followed in accordance with HUD going forward. S3800-130 Response Indicator ? Agree S3800-140 Completion Date ? March 31, 2022 S3800-150 Response ? Knights of Pythias Care Center has reminded all individuals involved in the cash disbursement process the importance of maintaining the supporting documents in a manner to access at any reasonable time and will implement measures to ensure cash management controls and receipt controls are followed in accordance with HUD going forward.

Finding Reference Number ? 2020-006 S3800-011 Title and CFDA Number of Federal Program ? Section 231 Direct Loan, CFDA Number 14.138 Section 231 Loan Guarantee, CFDA Number 14.138 S3800-015 Type of finding ? Federal Award Finding S3800-016 Find Resolution Status ? Resolved S3800-017 Information on Universal Population Size ? N/A S3800-018 Sample of Size Information ? N/A S3800-019 Identification of Repeat Finding and Finding Reference Number ? N/A S3800-020 Criteria ? Per the regulatory agreement Section 12(f) amended under Section 5 of the Rider to Mortgage Restructuring Mortgage Regulatory Agreement 92465, for a Project under the CFDA Number 14.138, the Project is required to submit the audited financial statements to HUD within 90 days of a Project?s fiscal year end. For 2020, HUD issued a global extension through June 30, 2021. Per Uniform Guidance 2 CFR Subpart F 200.512, the audit must be completed and the data collection form and reporting package submitted within the earlier of 30 days after receipt of the auditor?s report, or nine-months after the end of the audit period. For 2020, OMB issued a six-month extension. S3800-030 Statement of Condition ? Knights of Pythias Care Center did not meet HUD?s financial statement filing requirements for the year ended December 31, 2020. S3800-032 Cause ? Additional time was required to obtain certain information to complete the financial statement audit due to remote audit environment, and COVID-19 pandemic impacts on the management team at Knights of Pythias Care Center. S3800-033 Effect or Potential Effect ? HUD does not have the financial information of the project available for review. HUD may request the holder of the note declare the note immediately due for non-compliance with the regulatory agreement. S3800-035 Auditor Non-Compliance Code ? Z (Other) S3800-037 FHA/Contract Number ? 127-38064 S3800-038 Questioned Costs ? $0 S3800-040 Questioned Costs ? $0 S3800-045 Reporting Views of Responsible Officials ? Knights of Pythias Care Center recognizes that they did not submit to HUD within the allotted time period and will follow the HUD financial statement filing requirements going forward. S3800-050 Context Knights of Pythias Care Center?s year-end close was not ready by HUD?s June 30, 2021 extended deadline for the owner certified submission. Knights of Pythias Care Center?s audited financial information will be submitted on time with the Federal Audit Clearinghouse. S3800-080 Recommendation ? We recommend Knights of Pythias Care Center implement internal controls to ensure that the audited financial statements are filed with HUD in accordance with the regulatory agreement. S3800-090 Auditor?s Summary of Auditee Comments on the Findings and Recommendations ? Knights of Pythias Care Center will follow the HUD filing requirements of the regulatory agreement going forward. The financial statements for the year ended December 31, 2020, were submitted electronically to HUD on February 8, 2022. S3800-130 Response Indicator ? Agree S3800-140 Completion Date ? February 8, 2022 S3800-150 Response ? Knights of Pythias Care Center will follow the HUD filing requirements of the regulatory agreement going forward. The financial statements for the year ended December 31, 2020, were submitted electronically to HUD on February 8, 2022.

S3800-010 Finding Reference Number ? 2019-001 S3800-011 Title and CFDA Number of Federal Program ? Section 231 Direct Loan, CFDA Number 14.138 Section 231 Loan Guarantee, CFDA Number 14.138 S3800-015 Type of finding ? Financial Statement and Federal Award Finding S3800-016 Find Resolution Status ? In progress S3800-017 Information on Universal Population Size ? N/A S3800-018 Sample of Size Information ? N/A S3800-019 Identification of Repeat Finding and Finding Reference Number ? This is a repeat finding from the immediate previous audit finding 2018-001. S3800-020 Criteria ? Knights of Pythias Care Center is responsible for implementing adequate procedures to ensure that the accounting and reports are accurate and complete. Per regulatory agreement, Section 12(d), the books and accounts of the operations of the mortgaged property and of the project shall be kept in accordance with the requirements of the Secretary. S3800-030 Statement of Condition ? During the course of the 2019 audit, we noted that the Organization had not properly accounted for a number of transactions, including the following: - Incorrect recording of prepaid property and liability insurance and related expense during the year. - Incorrect recording of mortgage insurance premium expense during the year. - The depreciation schedule maintained by the third-party contracted accountant had not been reconciled to the general ledger, resulting in the accounts being misstated. - Accounts receivable and prepaid revenue was not adjusted during the year. - Incorrect recording of the first mortgage payable, other note payable ? surplus cash and related interest expense during the year. - Incorrect recording of debt issuance costs during the year. S3800-032 Cause ? During the year ended December 31, 2019, Knights of Pythias Care Center did not properly reconcile the supporting schedules or documents to the underlying general ledger accounts. S3800-033 Effect of Potential Effect ? The accounts of Knights of Pythias Care Center were materially misstated throughout the reporting period and at year-end. S3800-035 Auditor Non-Compliance Code ? S (Internal Control) S3800-037 FHA/Contract Number ? 127-38064 S3800-038 Questioned Costs ? $0 S3800-040 Questioned Costs ? $0 S3800-045 Reporting Views of Responsible Officials ? As a result of the audit, Knights of Pythias Care Center has recorded adjusting entries to correct misstatements. Management will implement measures to ensure all supporting schedules and documents are reconciled to the underlying general ledger accounts consistently and timely going forward. S3800-080 Recommendation ? We recommend that Knights of Pythias Care Center, in conjunction with their contracted third-party CPA firm, review the month-end and year-end closing procedures in order to determine if additional internal controls are needed to ensure the books and records are in accordance with generally accepted accounting principles throughout the year. We recommend formal month-end and year-end closing schedules which include all tasks necessary to close the books be established. The schedules should include a listing of all tasks needed, the individuals responsible and the date on which each procedure is due and is accomplished. As part of the tasks, Knights of Pythias Care Center should reconcile the general ledger accounts for all significant balances to supporting documentation on a monthly basis. S3800-090 Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations ? As a result of the audit, Knights of Pythias Care Center has recorded adjusting entries to correct misstatements. Management will implement measures to ensure all supporting schedules and documents are reconciled to the underlying general ledger accounts consistently and timely going forward. S3800-130 Response Indicator ? Agree S3800-140 Completion Date ? December 31, 2020 S3800-150 Response ? As a result of the audit, Knights of Pythias Care Center has recorded adjusting entries to correct misstatements. Management will implement measures to ensure all supporting schedules and documents are reconciled to the underlying general ledger accounts consistently and timely going forward.

S3800-010 Finding Reference Number ? 2019-002 S3800-011 Title and CFDA Number of Federal Program ? Section 231 Direct Loan, CFDA Number 14.138 Section 231 Loan Guarantee, CFDA Number 14.138 S3800-015 Type of finding ? Federal Award Finding S3800-016 Find Resolution Status ? In progress S3800-017 Information on Universal Population Size ? N/A S3800-018 Sample of Size Information ? N/A S3800-019 Identification of Repeat Finding and Finding Reference Number ? This is a repeat finding from the immediate previous audit finding 2018-002. S3800-020 Criteria ? Surplus Cash, Incentive Performance Fee and Capital Recovery Payments are to be computed in accordance with the requirements of the Regulatory Agreement and the Mark-to-Market program guidelines. S3800-030 Statement of Condition ? On February 28, 2020, HUD/Office of Multifamily Asset Management and Portfolio Oversight Post-Closing Portfolio Management performed a review of the Surplus Cash, Incentive Performance Fee and the Capital Recovery Payment computations. In their preliminary report from February, 2020 and final report from August, 2020, they notified Knights of Pythias Care Center of several computation errors made in prior years and required certain corrections. S3800-032 Cause ? Computation errors made by Knights of Pythias Care Center were not detected. S3800-033 Effect of Potential Effect ? Errors in Surplus Cash, Incentive Performance Fee and the Capital Recovery Payment computations resulted in adjustments being required by HUD. HUD required adjustments to Surplus Cash totaling $10,893. S3800-035 Auditor Non-Compliance Code ? Z (Other) S3800-037 FHA/Contract Number ? 127-38064 S3800-038 Questioned Costs ? $0 S3800-040 Questioned Costs ? $0 S3800-045 Reporting Views of Responsible Officials ? Knights of Pythias Care Center will implement measures to ensure Surplus Cash, Incentive Performance Fee and Capital Recovery Payment computations are prepared in accordance with the applicable requirements. S3800-080 Recommendation ? We recommend that Knights of Pythias Care Center implement internal controls to ensure Surplus Cash, Incentive Performance Fee and Capital Recovery Payment computations are prepared in accordance with the applicable requirements going forward. S3800-090 Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations ? Knights of Pythias Care Center will implement measures to ensure Surplus Cash, Incentive Performance Fee and Capital Recovery Payment computations are prepared in accordance with the applicable requirements. S3800-130 Response Indicator ? Agree S3800-140 Completion Date ? December 31, 2020 S3800-150 Response ? Knights of Pythias Care Center will implement measures to ensure Surplus Cash, Incentive Performance Fee and Capital Recovery Payment computations are prepared in accordance with the applicable requirements.

S3800-010 Finding Reference Number ? 2019-003 S3800-011 Title and CFDA Number of Federal Program ? Section 231 Direct Loan, CFDA Number 14.138 Section 231 Loan Guarantee, CFDA Number 14.138 S3800-015 Type of finding ? Federal Award Finding S3800-016 Find Resolution Status ? In progress S3800-017 Information on Universal Population Size ? N/A S3800-018 Sample of Size Information ? N/A S3800-019 Identification of Repeat Finding and Finding Reference Number ? N/A S3800-020 Criteria ? Per regulatory agreement, Section 12(g) amended to Section 12(h), all rents and other receipts of the project shall be deposited in the name of the project in a bank, whose deposits are insured by the FDIC. S3800-030 Statement of Condition ? As of December 31, 2019, and during the year then ended, Knights of Pythias Care Center maintained cash balances with a financial institution in excess of FDIC insurable limits. S3800-032 Cause ? Knights of Pythias Care Center maintained cash balances with a financial institution in excess of FDIC insurable limits and did not perform the alternative procedures on the financial institution defined in the HUD Handbook 4350.1. S3800-033 Effect of Potential Effect ? The Organization?s cash is susceptible to loss related to uninsured balances. S3800-035 Auditor Non-Compliance Code ? Z (Other) S3800-037 FHA/Contract Number ? 127-38064 S3800-038 Questioned Costs ? $0 S3800-040 Questioned Costs ? $0 S3800-045 Reporting Views of Responsible Officials ? Knights of Pythias Care Center believes the Organization holds its cash with what it believes to be a highly qualified financial institution thus limiting the project?s credit exposure. Management will implement the alternative procedures on the financial institution defined in the HUD Handbook 4350.1. S3800-080 Recommendation ? We recommend that Knights of Pythias Care Center transfer a portion of their funds to another financial institution, or implement internal controls to perform the alternative procedures on the financial institution defined in the HUD Handbook 4350.1. S3800-090 Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations ? Knights of Pythias Care Center believes the Organization holds its cash with what it believes to be a highly qualified financial institution thus limiting the project?s credit exposure. Management will implement the alternative procedures on the financial institution defined in the HUD Handbook 4350.1. S3800-130 Response Indicator ? Agree S3800-140 Completion Date ? December 31, 2020 S3800-150 Response ? Knights of Pythias Care Center believes the Organization holds its cash with what it believes to be a highly qualified financial institution thus limiting the project?s credit exposure. Management will implement the alternative procedures on the financial institution defined in the HUD Handbook 4350.1.

S3800-010 Finding Reference Number ? 2019-004 S3800-011 Title and CFDA Number of Federal Program ? Section 231 Direct Loan, CFDA Number 14.138 Section 231 Loan Guarantee, CFDA Number 14.138 S3800-015 Type of finding ? Federal Award Finding S3800-016 Find Resolution Status ? In progress S3800-017 Information on Universal Population Size ? All cash receipt deposits into the bank accounts of Knights of Pythias Care Center during the year, totaling 123 cash receipt deposits. S3800-018 Sample of Size Information ? 23 cash receipt deposits, selected systematically, and one transaction per deposit. S3800-019 Identification of Repeat Finding and Finding Reference Number ? N/A S3800-020 Criteria ? Per regulatory agreement, Section 12(g) amended to Section 12(h), any person receiving funds of the project shall immediately deposit such funds in the project bank account. S3800-030 Statement of Condition ? During the course of the 2019 audit, we noted two cash receipt deposits that were not deposited to the bank within a reasonable amount of time. The first deposit was not made until 10 days after receipt, and the second deposit was not made until 13 days after receipt. S3800-032 Cause ? There is only one individual at Knights of Pythias Care Center who is responsible for performing the cash receipt deposit responsibilities. If the individual is out of the office or stepped away from their desk, they are not always promptly notified of funds that have been received and input into the secure lock box. S3800-033 Effect of Potential Effect ? Failure to maintain effective internal controls over compliance with federal award requirements increases the risk of unauthorized transactions or misappropriation of funds occurring. S3800-035 Auditor Non-Compliance Code ? S (Internal Control) S3800-037 FHA/Contract Number ? 127-38064 S3800-038 Questioned Costs ? $0 S3800-040 Questioned Costs ? $0 S3800-045 Reporting Views of Responsible Officials ? Knights of Pythias Care Center has reminded all individuals involved in the cash receipts deposit process the importance of notifying the Finance Director when funds are collected, to ensure a timely deposit is made. S3800-050 Context A sample of 23 cash receipt deposits totaling $263,261, with individual transactions totaling $7,298, were selected for audit procedures from a population of 123 cash receipt deposits totaling $1,778,950. The audit procedures found two cash receipts that were not deposited in compliance with Knights of Pythias Care Center?s cash management controls totaling $870. Our sample was a statistically valid sample. S3800-080 Recommendation ? We recommend that Knights of Pythias Care Center review their internal controls over the cash receipts deposit process with the necessary individuals involved in the process to ensure all deposits are made in a timely manner consistently going forward. S3800-090 Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations ? Knights of Pythias Care Center has reminded all individuals involved in the cash receipts deposit process the importance of notifying the Finance Director when funds are collected, to ensure a timely deposit is made. S3800-130 Response Indicator ? Agree S3800-140 Completion Date ? December 31, 2020 S3800-150 Response ? Knights of Pythias Care Center has reminded all individuals involved in the cash receipts deposit process the importance of notifying the Finance Director when funds are collected, to ensure a timely deposit is made.

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