TUCOEMAS FEDERAL CREDIT UNION

SECTION III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 2021-001 CDFI Program ? CFDA No. 21.024; Grant Nos. 21RRP057423: Grant period ? December 31, 2021. SIGNIFICANT DEFICIENCY Condition: Total financial products (loans) deployed in the designated target market (TM) as Reported on the Annual Performance Report were originally unable to be supported or reconciled by the Credit Union to the underlying loan data. Criteria: Eligible loans meeting an established threshold (performance goal) as outlined in the Grant Assistance Agreement are to be deployed within the TM. Cause: Internal controls did not exist to identify and track eligible loans deployed or reconcile the deployments to the total amount of financial products closed as reported on the Annual Performance Reports. Effect: Performance goals as stipulated in the Grant Assistance Agreement may not be met or reported inaccurately. Context: Eligible loan deployment as reported in the Annual Performance Reports were unable to be supported. Recommendation: Establish control procedures to identify and track eligible loans deployed during a grant performance period and reconcile the totals to the underlying loan date. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has established procedures to identify eligible loans deployed in the TM. These loans will be reconciled to the total financial products closed reported on future Annual Performance Reports. Questioned Costs: None

CORRECTIVE ACTION PLAN September 26, 2022 Department of the Treasury ? CDFI Fund Grant Tucoemas Federal Credit Union respectfully submits the following corrective action plan for the year ended December 31, 2021. Name and address of independent public accounting firm: Doeren Mayhew Audit period: January 1, 2021 ? December 31, 2021 The findings from the December 31, 2021 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. FINDINGS?FEDERAL AWARD PROGRAMS AUDITS DEPARTMENT OF TREASURY CDFI Program ? CFDA No. 21.024 Significant Deficiency: See Finding 2021-001. Recommendation: Establish control procedures to identify, track and reconcile eligible loans deployed during a grant performance period. Action Taken: Since the date of the exit conference, to address the internal control issue noted, we have created reports from our loan servicing systems and initiated procedures in which to identify and track eligible loan deployments on an individual loan basis. These totals will be reconciled to the loan deployments (financial products) reported annually on the Performance Progress Reports.