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Program: Continuum of Care Federal Financial Assistance Listing No.: 14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: Sacramento Steps Forward Award Year: 2024 Compliance Requirement: Procurement, Suspension and Debarment Grant Award Number: CA0955L9T032209, CA0955L9T032310, CA0143L9T032215, CA0143L9T032316, CA1303L9T032208, CA1303L9T032309 Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria: 2 CFR 200.303(a) of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The nonfederal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are met. Condition: The Organization’s documented procurement policy does not incorporate several required elements outlined in 2 CFR §§200.317 through 200.327. Missing elements include, but are not limited to: • Defined procurement methods and thresholds (e.g., micro-purchase, sealed bids), • Procedures to ensure full and open competition, • Requirements for cost or price analysis for purchases above the simplified acquisition threshold, • Affirmative steps to use small and minority businesses and women’s business enterprises, • Procedures for contract administration and oversight, • Inclusion of required contract provisions as listed in Appendix II to 2 CFR Part 200, • Standards of conduct covering conflicts of interest for employees involved in the selection, award, and administration of contracts. Cause: The Organization’s procurement policy has not been updated to reflect the detailed procurement standards required under the Uniform Guidance. Effect: An incomplete procurement policy may lead to inconsistent practices and increase the risk of noncompliance with federal procurement requirements, potentially affecting the allowability and documentation of costs charged to federal awards. Questioned Costs: No questioned costs were identified as a result of our procedures. Context: This finding was identified during testing of the Organization’s procurement policy under the Continuum of Care Program. Repeat Finding from Prior Year: Partial repeat of Finding 2023-003. The prior finding included both procurement policy deficiencies and lack of suspension and debarment documentation. The current year finding relates only to the procurement policy. Recommendation: We recommend that management revise the Organization’s procurement policy to incorporate all required elements outlined in 2 CFR §§200.317 through 200.327, including definitions of procurement methods, competitive requirements, cost/price analysis, contract provisions, and oversight responsibilities. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

Program: Temporary Assistance for Needy Families Assistance Listing No.: 93.558 Federal Grantor: U.S. Department of Health and Human Services Passed-through: County of Sacramento Award No. and Year: DHA-PRTS-NM-07-25-A1; FY 2024 Compliance Requirement: Other - Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) - Schedule of Expenditures of Federal Awards Type of Finding: Material Weakness in Internal Control Over Compliance Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) states that the auditee (the Organization) must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total federal awards expended (including amounts provided to subrecipients) as determined in accordance with §200.502. In addition, section 200.303 of the Uniform Guidance state that that recipients and subrecipients must establish effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition: During our audit procedures performed over the SEFA and expenditures reported for the Temporary Assistance for Needy Families program we noted the Organization overstated expenditures totaling $138,217. The December 31, 2024 SEFA was corrected for this reporting error. Cause: The Organization did not have adequate internal controls to ensure the Schedule was prepared completely and accurately. Effect: Prior to the correction, expenditures for the Temporary Assistance for Needy Families program were overstated by $138,217. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used. Repeat Finding from Prior Years: No. Recommendation: We the recommend the Organization enhance internal controls to ensure federal expenditures are reported accurately and completely on the SEFA in accordance with the Uniform Guidance. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

Program: Continuum of Care Federal Financial Assistance Listing No.:14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: Sacramento Steps Forward Award Year: 2023 Compliance Requirement: Special Tests and Provisions – Reasonable Rental Rates Grant Award Number: CA0955L9T032108, CA0955L9T032209, CA0143L9T032114, CA0143L9T032215, CA1303L9T032107, CA1303L9T032208 Type of Finding: Material Weakness in Internal Controls Over Compliance and Material Noncompliance Criteria: Per 24 CFR section 578.49(b)(1), where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space. Per 24 CFR sections 578.49(b)(2) and 578.51(g) and (j), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month’s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants. Condition Found: • As a result of our procedures performed, we noted for 8 out of 17 rental participants tested, the organization could not provide documentation to demonstrate the reasonableness of contract rents being paid for individual housing units in relation to rents being charged for comparable units. This should have included an analysis of rents in the immediate area of the participants housing. • For 3 out of 41 rental payments tested, we noted the rent paid exceed the HUD-determined fair market rents for the fiscal year. Cause: The Organization was applying a method of determining reasonable rents that had been allowable under prior awards, prior to migration of the program's funding to the Continuum of Care program under assistance listing number 14.267. Effect: Rent paid to landlords on behalf of participants may have been higher in comparison to other rental properties in a similar area during the period the reasonableness assessment was not completed. Also, rental payments made using grant funds exceeded the HUD-determined fair market rents. Questioned Costs: $330 in questioned costs was identified as a result of our procedures. Context/ Sampling: • A nonstatistical sample of 17 out of 109 participants was selected to test for rent reasonableness documentation. • A nonstatistical sample of 41 out of 1,088 rental payments were selected to test compliance over the HUD-determined fair market rents. Our sample was $59,905 in rental payments and the population of rental payments for the year ended December 31, 2023 totaled $2,491,614.94. Repeat Finding from Prior Years: Yes, Finding 2022-002 Recommendation: This is a repeat finding from 2022. It was noted that the Organization implemented procedures in January 2022 to document rent reasonableness checks on a prospective basis, however this was not corrected for the samples tested as part of our audit. We recommend that the Organization continue to implement policies and procedures to ensure compliance with the program’s Special Tests and Provisions – Reasonable Rental Rates requirement. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

Program: Continuum of Care, Emergency Solutions Grant Program Federal Financial Assistance Listing No.:14.267, 14.231 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: Sacramento Steps Forward, Sacramento County Department of Human Assistance Award Year: 2023 Compliance Requirement: Procurement, Suspension and Debarment Grant Award Number: CA0955L9T032108, CA0955L9T032209, CA0143L9T032114, CA0143L9T032215, CA1303L9T032107, CA1303L9T032208, DHA-NM-03-23, DHA-NM-03-24 Type of Finding: Material Weakness in Internal Controls Over Compliance Criteria: 2 CFR 200.303(a) of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The nonfederal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are met. As outlined in 2 CFR 180, recipients must not utilize any contractor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition Found: The Organization’s procurement policy did not include all the required elements as outlined in the Uniform Guidance. Additionally, the Organization did not retain documentation to support the procedures performed to ensure compliance with suspension and debarment requirements. Cause: The Organization does not typically receive federal financial assistance that is subject to procurement and suspension and debarment regulations; consequently, certain elements required by the Uniform Guidance were missing. Effect: Lack of complete procurement, suspension, and debarment policies and not retaining documentation to support compliance with suspension and debarment requirements could result in noncompliance with Uniform Guidance. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/ Sampling: Suspension and debarment was applicable to 9 contractors totaling $1,989,106 under the Continuum of Care Program and three contractors totaling $227,772 under the Emergency Solutions Grant Program. We tested all contractors with total payments exceeding $25,000 during the year. Repeat Finding from Prior Years: Yes, Finding 2022-03. Recommendation: We recommend that management develop a written procurement policy that conforms with Uniform Guidance. In addition, we recommend that management implement procedures and control processes to retain documentation supporting compliance with major federal program compliance requirements regarding suspension and debarment. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

Program: Continuum of Care Federal Financial Assistance Listing No.:14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: Sacramento Steps Forward Award Year: 2022 Compliance Requirement: Special Tests and Provisions – Reasonable Rental Rates Grant Award Number: CA0955L9T032007, CA0955L9T032108, CA0143L9T032013, CA0143L9T032114, CA1303L9T032006, CA1303L9T032107 Type of Finding: Material Weakness in Internal Controls Over Compliance and Material Noncompliance Criteria: Per 24 CFR section 578.49(b)(1), where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space. Per 24 CFR sections 578.49(b)(2) and 578.51(g) and (j), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month’s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants. Condition Found: As a result of our procedures performed, we noted for 56 out of 60 rental payment transactions tested, the Organization did not have policies and procedures in place to ensure the reasonableness of contract rents being paid for individual housing units in relation to rents being charged for comparable units. This should have included an analysis of rents in the immediate area of the participants housing. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 1% to 39% below the 2022 HUD-determined fair market rents. Questioned Costs: No questioned costs were identified as a result of our procedures. ontext/ Sampling: A nonstatistical sample of 60 out of 1,234 rental payments were selected to test compliance over special tests and provisions – reasonable rental rates. Our sample was $80,009 in rental payments and the population of rental payments for the year ended December 31, 2022 totaled $2,231,691. Repeat Finding from Prior Years: Yes, Finding 2021-001 Effect: Rent paid to landlords on behalf of participants may have been higher in comparison to other rental properties in a similar area during the period the reasonableness assessment was not completed. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 1% to 39% below the 2022 HUD-determined fair market rents. Cause: The Organization was applying a method of determining reasonable rents that had been allowable under prior awards, prior to migration of the program's funding to the Continuum of Care program under assistance listing number 14.267. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 1% to 39% below the 2020 HUD-determined fair market rents. Recommendation: This is a repeat finding from 2021. It was noted that the Organization implemented procedures in January 2022 to document rent reasonableness checks on a prospective basis, however this was not corrected for the samples tested as part of our audit. We recommend that the Organization continue to implement policies and procedures to ensure compliance with the program’s Special Tests and Provisions – Reasonable Rental Rates requirement. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

Program: Continuum of Care, Emergency Solutions Grant Program Federal Financial Assistance Listing No.:14.267, 14.231 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: Sacramento Steps Forward, Sacramento County Department of Human Assistance Award Year: 2022 Compliance Requirement: Procurement, Suspension and Debarment Grant Award Number: CA0955L9T032007, CA0955L9T032108, CA0143L9T032013, CA0143L9T032114, CA1303L9T032006, CA1303L9T032107, DHA-PRTS-NM-06-22, DHA-NM-03-22, DHA-NM-03-23, DHA-NM-08-23, DHA-NM-10-23 Type of Finding: Material Weakness in Internal Controls Over Compliance Criteria: 2 CFR 200.303(a) of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The nonfederal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are met. As outlined in 2 CFR 180, recipients must not utilize any contractor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition Found: The Organization’s procurement policy did not include all the required elements as outlined in the Uniform Guidance. Additionally, the Organization did not retain documentation to support the procedures performed to ensure compliance with suspension and debarment requirements. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/ Sampling: Suspension and debarment was applicable to 13 contractors totaling $1,661,410 under the Continuum of Care Program and six contractors totaling $253,310 under the Emergency Solutions Grant Program. We tested all contractors. Repeat Finding from Prior Years: No. Effect: Lack of complete procurement, suspension, and debarment policies and not retaining documentation to support compliance with suspension and debarment requirements could result in noncompliance with Uniform Guidance. Cause: The Organization does not typically receive federal financial assistance that is subject to procurement and suspension and debarment regulations; consequently, certain elements required by the Uniform Guidance were missing. Recommendation: We recommend that management develop a written procurement policy that conforms with Uniform Guidance. In addition, we recommend that management implement procedures and control processes to retain documentation supporting compliance with major federal program compliance requirements regarding suspension and debarment. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

2021-001 Program: Continuum of Care Federal Financial Assistance Listing No.:14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: Sacramento Steps Forward Award Year: 2021 Compliance Requirement: Special Tests and Provisions ? Reasonable Rental Rates Grant Award Number: CA0955L9T032007, CA0143L9T032013, CA1303L9T032006 Type of Finding: Material Weakness in Internal Controls Over Compliance and Material Instance of Noncompliance Criteria: Per the 2021 OMB Compliance Supplement, where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space (24 CFR section 578.49(b)(1)). Where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month?s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). Condition Found: As a result of our procedures performed, we noted for 60 out of 60 rental payment transactions tested, the Organization did not have policies and procedures in place to ensure the reasonableness of contract rents being paid for individual housing units in relation to rents being charged for comparable units. This should have included an analysis of rents in the immediate area of the participants housing. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 1% to 40% below the 2021 HUD-determined fair market rents. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/ Sampling: A nonstatistical sample of 60 out of 1029 rental payments were selected to test compliance over special tests and provisions ? reasonable rental rates. Repeat Finding from Prior Year(s): Yes, Finding 2020-002 Effect: Rent paid to landlords on behalf of participants may have been higher in comparison to other rental properties in a similar area during the period the reasonableness assessment was not completed. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 1% to 40% below the 2020 HUD-determined fair market rents. Cause: The Organization was applying a method of determining reasonable rents that had been allowable under prior awards, prior to migration of the program's funding to the Continuum of Care program under assistance listing number 14.267. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 1% to 40% below the 2020 HUD-determined fair market rents. Recommendation: This is a repeat finding from 2020 and was not corrected by the Organization in 2021. We recommend that the Organization implement policies and procedures to ensure compliance with the program?s Special Tests and Provisions ? Reasonable Rental Rates requirement. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

2020-002 Program: Continuum of Care CFDA No.:14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: Sacramento Steps Forward Award Year: 2020 Compliance Requirement: Special Tests and Provisions ? Reasonable Rental Rates Grant Award Number: CA1303L9T031905, CA0133L9T031811, CA0143L9T031912, CA0955L9T031906 Type of Finding: Material Weakness in Internal Controls Over Compliance and Material Instance of Noncompliance Criteria: Per the 2020 OMB Compliance Supplement, where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space (24 CFR section 578.49(b)(1)). Where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month?s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). Condition Found: As a result of our procedures performed, we noted for 60 out of 60 rental payment transactions tested, the Organization did not have policies and procedures in place to ensure the reasonableness of contract rents being paid for individual housing units in relation to rents being charged for comparable units. This should have included an analysis of rents in the immediate area of the participants housing. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 11% to 55% below the 2020 HUD-determined fair market rents. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/ Sampling: A nonstatistical sample of 60 out of 1,066 rental payments were selected to test compliance over special tests and provisions ? reasonable rental rates Repeat Finding from Prior Year(s): No. Effect: Rent paid to landlords on behalf of participants may have been higher in comparison to other rental properties in a similar area during the period the reasonableness assessment was not completed. However, we noted the rental payments made using grant funds did not exceed the HUD- determined fair market rents and ranged from 11% to 55% below the 2020 HUD-determined fair market rents. Cause: The Organization was applying a method of determining reasonable rents that had been allowable under prior awards, prior to migration of the program's funding to the Continuum of Care program under assistance listing number 14.267. However, we noted the rental payments made using grant funds did not exceed the HUD- determined fair market rents and ranged from 11% to 55% below the 2020 HUD-determined fair market rents. Recommendation: We recommend that the Organization implement policies and procedures to ensure compliance with the program?s Special Tests and Provisions ? Reasonable Rental Rates requirement. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.