New Visions Housing CorporationNon-Profit

Finding No. 2025-001: Financial Reporting (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Supportive Housing for Persons with Disabilities (Section 811) Federal Assistance Listing Number: 14.181 Compliance Requirement: Reporting Statement of condition The lack of appropriate policies, procedures, and internal processes led to inaccurate recording of depreciation, total rental revenue, vacancies, and amounts owed to a related a party. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include levels of review, reconciling accounting records at month-end and year-end close, and maintaining accurate books and records. Cause Management did not have sufficient internal controls in place to accurately report the results of the Organization's operations during the year. Effect Insufficient controls could result in accounting errors and theft. A lack of controls over financial reporting can result in inaccurate filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Identification of repeat finding The finding is a repeat of Finding No. 2024-002. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2025-002: Cash, Disbursements, and Classifications (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Supportive Housing for Persons with Disabilities (Section 811) Federal Assistance Listing Number: 14.181 Compliance Requirement: Allowable costs, Activities allowed or unallowed Statement of condition During the year ended June 30, 2025, the Organization: - did not properly classify certain expenditures between expense accounts; - did not properly cut off disbursements at fiscal year end, resulting in expenses not being recorded accurately within the current audit period; - recorded expenses in the current audit period that apply to future periods; and - did not monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash accounts to ensure they were in compliance with the minimally acceptable ratings as established by the Government National Mortgage Association ("GNMA"). Criteria Management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Additionally, management should review expenditures for accurate expense account classification and proper period recording. In accordance with Chapter 2 of the HUD Handbook 4370.2, management should monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash on a quarterly basis to ensure they are in compliance with the minimally acceptable ratings as established by the GNMA. Cause Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts, in the appropriate period, and were fully accrued. Sufficient controls were not in place to ensure quarterly monitoring of the risk ratings of the financial institutions holding the Organization's cash and restricted cash was being performed and assessed. Effect Certain charges were excluded from the current fiscal year reporting, resulting in overstated expenses. Certain charges related to both the current and next fiscal year were recorded as expense in the current fiscal year, resulting in overstated expenses. Additionally, inaccurate expense classifications could result in improper financial and HUD reporting. Failure to monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash could result in loss of financial assets. Recommendation Management should revisit and enhance its internal controls and procedures over expenditures to ensure expenses are captured in the correct fiscal period and are properly classified. Management should implement a quarterly review of the risk ratings of all financial institutions holding the Organization's cash and restricted cash to ensure they are in compliance with the minimally acceptable ratings as established by the GNMA. Identification of repeat finding The finding is a repeat of Finding No. 2024-001. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2025-003: Timely Work Order Address (Significant Deficiency) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Supportive Housing for Persons with Disabilities (Section 811) Federal Assistance Listing Number: 14.181 Compliance Requirement: Activities allowed or unallowed Statement of condition During the year ended June 30, 2025, management was unable to provide supporting documentation regarding timely completion of 25 of 72 work orders selected. Criteria HUD projects are required to complete work orders timely. Cause The Organization did not have sufficient controls in place to ensure the timely completion of work orders as required by HUD. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should continue to review and enhance its internal controls and procedures over work orders to ensure they are completed on a timely basis. Identification of repeat finding The finding is a repeat of Finding No. 2024-003. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2024-001: Cash Disbursements and Classifications (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Supportive Housing for Persons with Disabilities (Section 811) Federal Assistance Listing Number: 14.181 Compliance Requirement: Allowable costs, Activities allowed or unallowed Statement of condition During the year ended June 30, 2024, the Organization: did not properly classify certain expenditures between expense accounts; did not properly record prepaid expenses; and did not accurately record gross potential rent, vacancy, and due to and from affiliates. Criteria Management should review expenditures for accurate expense account classification and review revenue classifications to the appropriate revenue account recording to ensure proper financial and HUD reporting. Cause Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts and properly recorded as prepaid, and that revenue was recorded in the appropriate revenue account and in the appropriate amounts. Effect Inaccurate expenses, improperly recorded prepaid expenses, and revenue over or understatement could result in improper financial and HUD reporting. Recommendation Management should implement an additional period-end review to ensure proper classification, proper recording of prepaid expenses, and accurate recording of revenue, due to and from affiliates, and receivables. Identification of repeat finding The finding is a repeat of Finding No. 2023-002. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2024-002: Financial Reporting (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Supportive Housing for Persons with Disabilities (Section 811) Federal Assistance Listing Number: 14.181 Compliance Requirement: Reporting Statement of condition The lack of appropriate policies, procedures, and internal processes led to inaccurate recording of depreciation, accounts payable and accrued expenses, expenses, and cash, and late filing of required reporting. Certain information technology controls and procedures were not documented, properly designed, or followed appropriately, including, but not limited to: segregation of administrative user roles from the accounting function, user access review, removal of terminated users, complementary user entity controls assessment, backup restoration testing, penetration testing, and cybersecurity awareness training. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include documenting of levels of review, reconciling accounting records at month-end and year-end close, and maintaining a well-documented, designed, and applied information technology environment. Cause Management did not have sufficient internal controls in place to accurately and timely report the results of the Organization's operations and maintenance and maintain the information technology environment. Effect Insufficient controls, late closing and reconciliation of accounting records, and insufficiently maintained information technology environment could result in accounting errors and theft. A lack of controls over financial reporting can result in untimely filing of required reports or incomplete filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its internal controls, policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Management evaluate its controls and procedures over the information technology environment to ensure they are properly documented, designed, and followed, including but not limited to: ensuring segregation of administrative user roles from the accounting function, performing a regular review of user access, ensuring terminated users are removed from all systems and software, performing an assessment of complementary user entity controls for relevant software vendors, performing backup restoration tests and penetration tests, and providing cybersecurity awareness training. Identification of repeat finding The finding is a repeat of Finding No. 2023-003. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2024-003: Timely Work Order Address (Significant Deficiency) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Supportive Housing for Persons with Disabilities (Section 811) Federal Assistance Listing Number: 14.181 Compliance Requirement: Activities allowed or unallowed Statement of condition During the year ended June 30, 2024, management was unable to provide supporting documentation regarding timely completion of 27 of 80 work orders selected. Criteria HUD projects are required to complete work orders timely. Cause The Organization did not have sufficient controls in place to ensure the timely completion of work orders as required by HUD. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should continue to review and enhance its internal controls and procedures over work orders to ensure they are completed on a timely basis. Identification of repeat finding The finding is a repeat of Finding No. 2023-004. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2023-001: Restricted Cash (Material Weakness) Statement of condition Special Tests and Provisions During the year ended June 30, 2023, management did not segregate the residual receipts deposits into a segregated, restricted cash account. For two months of the fiscal year, the monthly replacement reserve deposit was funded in the subsequent month. The replacement reserve was underfunded by one month's deposit at June 30, 2023. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for all security deposits collected and for residual receipts deposits. The Regulatory Agreement requires a monthly deposit of $235 in the replacement reserve. Cause The residual receipts deposits were deposited into the replacement reserve account and were not transferred into segregated accounts as of June 30, 2023. The monthly replacement reserve transfer was delayed by several days into the subsequent month due to it being on a set interval of time rather than on a monthly date. This late funding resulted in only 11 deposits being made during the year ended June 30, 2023. Effect Management commingled the residual receipts deposits with its replacement reserve, resulting in the potential use of residual receipts deposits to fund repairs or replacements without obtaining the required prior approval of HUD. Late deposits to the replacement reserve could result in insufficient funds for repairs and replacements. Recommendation Management should review and enhance its policies, procedures and internal controls to ensure that residual receipts deposits are segregated into a separate, restricted cash account. Management should review and enhance policies, procedures and internal controls to ensure that the replacement reserve deposits are made timely. Identification of repeat finding The finding is a repeat of Finding No. 2022-001. Auditor non-compliance code D - Commingling funds Questioned costs None Finding resolution status In process

Finding No. 2023-002: Cash Disbursements and Classifications (Material Weakness) Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2023, the Organization: did not properly classify certain expenditures between expense accounts; did not obtain bids for an expenditure over $10,000; did not properly cut off disbursements at fiscal year end, resulting in expenses not being recorded within the current audit period; and did not accurately record gross potential rent, due to and from affiliates, and receivables. Criteria Management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Additionally, management should review expenditures for accurate expense account classification and review revenue classifications to the appropriate revenue account recording to ensure proper financial and HUD reporting. The Uniform Guidance requires bidding be obtained for expenditures over $10,000. Cause Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts and revenue was recorded in the appropriate revenue account. Review procedures were not adequately followed to review subsequent invoices for relevance to the current fiscal period. Review procedures were not sufficient to ensure expenditures over $10,000 received competitive bids. Effect Certain utility expenses presented for the current fiscal year were not recorded until the next fiscal year, resulting in understated expenses. Additionally, improperly capitalized expenditures and inaccurate expenses, fixed assets, and revenue classification could result in improper financial and HUD reporting. Recommendation Management should revisit and enhance its internal controls and procedures over subsequent expenditures to ensure expenses are captured in the correct fiscal period. Management should implement an additional period-end review to ensure proper classification of expenses, complete accrued expenditures, and accurate recording of revenue, due to and from affiliates, and receivables. Management should review its controls over expenditure authorization to ensure competitive bids are obtained where necessary. Identification of repeat finding The finding is a repeat of Finding No. 2022-002. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2023-003: Financial Reporting (Material Weakness) Statement of condition Reporting The lack of appropriate policies, procedures, and internal processes led to inaccurate recording of depreciation, accounts payable, property insurance expense, and the tenant security deposit liability, and late filing of required reporting. Certain information technology controls and procedures were not documented, properly designed, or followed appropriately, including, but not limited to: segregation of administrative user roles from the accounting function, user access review, removal of terminated users, physical access, complementary user entity controls assessment, backup restoration testing, penetration testing, and cybersecurity awareness training. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include documenting of levels of review, reconciling accounting records at month-end and year-end close, and maintaining a well-documented, designed, and applied information technology environment. Cause Management did not have sufficient internal controls in place to accurately and timely report the results of the Organization's operations and maintenance and maintain the information technology environment. Effect Insufficient controls, late closing and reconciliation of accounting records, and insufficiently maintained information technology environment could result in accounting errors and theft. A lack of controls over financial reporting can result in untimely filing of required reports or incomplete filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its internal controls, policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Management evaluate its controls and procedures over the information technology environment to ensure they are properly documented, designed, and followed, including but not limited to: ensuring segregation of administrative user roles from the accounting function, performing a regular review of user access, ensuring terminated users are removed from all systems and software, ensuring restriction of physical access to the system, performing an assessment of complementary user entity controls for relevant software vendors, performing backup restoration tests and penetration tests, and providing cybersecurity awareness training. Identification of repeat finding The finding is a repeat of Finding No. 2022-003. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2023-004: Timely Work Order Address (Significant Deficiency) Statement of condition Activities allowed or unallowed During the year ended June 30, 2023, management was unable to demonstrate timely completion of 9 of 38 work orders selected. Criteria HUD projects are required to complete work orders timely. Cause The Organization did not have sufficient controls in place to ensure the timely completion of work orders as required by HUD. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should review and enhance its internal controls and procedures over work orders to ensure they are completed on a timely basis. Identification of repeat finding The finding is not a repeat finding. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2023-005: Verification of Tenant Assets (Significant Deficiency) Statement of condition Eligibility During the year ended June 30, 2023, management did not perform a verification of tenant assets as part of tenant certification and recertification procedures. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to verify tenant assets to ensure appropriate subsidy calculations. Cause The Organization's tenants are multi-handicapped blind low-income adults. The cash accounts held by the tenants are maintained by the Sponsor on behalf of the tenants and therefore other assets are not verified. Effect Subsidy receipts could be overstated. Recommendation Management should review and enhance its certification and annual recertification procedures to include a verification of tenant assets. Identification of repeat finding The finding is a repeat of Finding No. 2022-005. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2022-001: Restricted Cash (Material Weakness) Statement of condition During the year ended June 30, 2022, management did not segregate certain tenant security deposits and the residual receipts deposits into a segregated, restricted cash account. For three months of the fiscal year, the monthly replacement reserve deposit was funded in the subsequent month. Security deposit funding liability was not properly tracked. Criteria In accordance with the U.S. Department of Housing and Urban Development ("HUD") Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for all security deposits collected and for residual receipts deposits. The Regulatory Agreement requires a monthly deposit of $235 in the replacement reserve. Security deposits owed to tenants are required to be tracked for accurate financial and HUD reporting. Cause Certain tenant security deposits and the residual receipts deposits were deposited into the replacement reserve account or operating cash account and were not transferred into segregated accounts as of June 30, 2022. The Therapeutic Living Centers for the Blind, Inc. (the "Sponsor") funds tenant security deposits and the deposits funded during the year were included within the amounts owed to the Sponsor instead of within the tenant security deposit liability. The monthly replacement reserve transfer was delayed by several days into the subsequent month due to it being on a set interval of time rather than on a monthly date. Effect Management commingled certain tenant security deposits and residual receipts deposits with its replacement reserve and operating cash accounts, resulting in the potential use of tenant security deposit cash or residual receipts deposits to fund repairs or replacements without obtaining the required prior approval of HUD. Inaccurate tracking of the tenant security deposit liability could result in understated liability and improper refunding of tenant security deposits. Late deposits to the replacement reserve could result in underfunding of the replacement reserve. Recommendation Management should review and enhance policies, procedures and internal controls to ensure that all tenant security deposits and residual receipts deposits are segregated into separate, restricted cash accounts in the name of New Visions Housing Corporation (the "Organization"). Management should revisit its review procedures for tracking tenant security deposits and its timing schedule for making deposits to the replacement reserve. Identification of repeat finding The finding is a repeat of Finding No. 2021-001. Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will ensure that security deposits are tracked so they can be recorded accordingly when there is a move in and/or move out. Management is also in the process of opening a new account for this HUD entity. Moving forward management will put in place controls to ensure that the calculation is done at the end of the fiscal year.

Finding No. 2022-002: Cash Disbursements and Classifications (Material Weakness) Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2022, the Organization did not properly capitalize certain expenditures as fixed assets in accordance with the Organization's capitalization policy. Management did not properly cut off disbursements at fiscal year end, resulting in expenses not being recorded within the current audit period. Management did not properly classify certain expenditures between expense accounts, properly classify certain capitalized charges between fixed asset accounts, and revenue items between revenue classifications during the current fiscal year. Criteria Management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Additionally, management should review expenditures for accurate expense account classification, capitalize charges to the appropriate fixed asset account, and review revenue classifications to the appropriate revenue account recording to ensure proper financial and HUD reporting. Cause Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts, charges were appropriately capitalized and classified to the appropriate fixed asset account, and revenue was recorded in the appropriate revenue account. Review procedures were not adequately followed to review subsequent invoices for relevance to the current fiscal period. Effect Certain utility expenses presented for the current fiscal year were not recorded until the next fiscal year, resulting in understated expenses. Additionally, improperly capitalized expenditures and inaccurate expenses, fixed assets, and revenue classification could result in improper financial and HUD reporting. Recommendation Management should revisit and enhance its internal controls and review procedures regarding subsequent expenditures to ensure expenses are captured in the correct fiscal period. Management should implement an additional period-end review to ensure all expenses, fixed assets, and revenue are appropriately classified. Identification of repeat finding The finding is a repeat of Finding No. 2021-002. Auditor non-compliance code S - Internal control deficiencies 50 NEW VISIONS HOUSING CORPORATION (A California Nonprofit Corporation) HUD PROJECT NO. 122-HD037-WDD-NP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2022 Section III - Federal Award Findings and Questioned Costs (Continued) Finding No. 2022-002: Cash Disbursements (Material Weakness) (Continued) Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will ensure that moving forward there are controls in place to ensure expenses are captured in the correct fiscal period and that at year end there is a final review of the transactions to ensure that everything is not only properly entered, but properly classified as well.

Finding No. 2022-003: Financial Reporting (Material Weakness) Statement of condition Reporting The lack of appropriate policies, procedures, and internal processes led to untimely year end close and recording procedures, late filing of required reporting, and incomplete submissions of required data collection forms. Certain information technology controls and procedures were not documented, properly designed, or followed appropriately, including, but not limited to: segregation of administrative user roles from the accounting function, user access review, removal of terminated users, physical access, complementary user entity controls assessment, backup restoration testing, penetration testing, and cybersecurity awareness training. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include documenting levels of review, reconciling accounting records at month-end and year-end close and maintaining a well-documented, designed, and applied information technology environment. Cause Management did not have sufficient internal controls in place to accurately and timely report the results of the Organization's operations and maintain the information technology environment. Effect Insufficient controls, late closing and reconciliation of accounting records, and insufficiently maintained information technology environment could result in accounting errors and theft. A lack of controls over financial reporting can result in untimely filing of required reports or incomplete filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its internal controls, policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Management evaluate its controls and procedures over the information technology environment to ensure they are properly documented, designed, and followed, including but not limited to: ensuring segregation of administrative user roles from the accounting function, performing a regular review of user access, ensuring terminated users are removed from all systems and software, ensuring restriction of physical access to the system, performing an assessment of complementary user entity controls for relevant software vendors, performing backup restoration tests and penetration tests, and providing cybersecurity awareness training. Section III - Federal Award Findings and Questioned Costs (Continued) Finding No. 2022-003: Financial Reporting (Material Weakness) (Continued) Identification of repeat finding The finding is a repeat of Finding No. 2021-003. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put in place controls and procedures to ensure financial reporting is complete, accurate, and timely.

Finding No. 2022-004: Expense Allocations (Material Weakness) Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions Management has not reviewed its allocated costs calculations for accuracy and completeness of insurance and payroll costs incurred by the Organization. Criteria The Organization is required to have controls and procedures in place in order to accurately record costs incurred by the Organization. Cause Management did not have appropriate controls in place to review the allocation percentages for completeness and accuracy. Effect Out-of-date allocations could result in understated or overstated expenses and liabilities of the Organization, as well as theft. Recommendation Management should review and enhance its internal controls over payroll and insurance allocations to ensure the costs recorded by the Organization are representative of its share of the charges. Identification of repeat finding The finding is a repeat of Finding No. 2021-005. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put in place controls and procedures to annually evaluate the percentage of time staff dedicate to the organization to determine the correct allocation for payroll.

Finding No. 2022-005: Verification of Tenant Assets (Significant Deficiency) Statement of condition Eligibility During the year ended June 30, 2022, management did not perform a verification of tenant assets as part of tenant certification and recertification procedures. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to verify tenant assets to ensure appropriate subsidy calculations. Cause The Organization's tenants are multi-handicapped blind low-income adults. The cash accounts held by the tenants are maintained by the Sponsor on behalf of the tenants and therefore other assets are not verified. Effect Subsidy receipts could be overstated. Recommendation Management should revisit and enhance its certification and annual recertification procedures to include a verification of tenant assets. Identification of repeat finding The finding is a repeat of Finding No. 2021-006. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put in place procedures to ensure verification of tenant assets is done during recertification.

Finding No. 2022-006: Work Order Log (Significant Deficiency) Statement of condition Activities allowed or unallowed During the year ended June 30, 2022, management did not maintain a log of work orders processed. Criteria HUD projects are required to maintain a log of work orders processed. Cause The Organization did not have a system in place to summarize and collect work orders for the fiscal year. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should revisit and enhance its internal controls and procedures over the initial certification and annual recertification process to include a verification of tenant assets. Identification of repeat finding The finding is a repeat of Finding No. 2021-007. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status Remediated subsequent to year end. Reporting views of responsible officials and planned corrective actions Management put in place an electronic work order system that keeps track of the work orders for the property and has put controls in place to actively monitor the system to ensure appropriate repairs are being completed in a timely manner.

Finding No. 2021-001: Restricted Cash (Material Weakness) Statement of condition Special Tests and Provisions During the year ended June 30, 2021, management did not segregate the residual receipts deposits into a segregated, restricted cash account. For three months of the fiscal year, the monthly replacement reserve deposit was funded in the subsequent month. Security deposit funding liability was not properly tracked and certain tenant security deposits were commingled with operating funds. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for all security deposits collected and for residual receipts deposits. The Regulatory Agreement requires a monthly deposit of $235 in the replacement reserve. Security deposits owed to tenants are required to be tracked for accurate financial and HUD reporting. Cause Certain tenant security deposits and the residual receipts deposits were deposited into the replacement reserve account or operating cash account and were not transferred into segregated accounts as of June 30, 2021. The Therapeutic Living Centers for the Blind, Inc. (the "Sponsor") funds tenant security deposits and the deposits funded during the year were included within the amounts owed to the Sponsor instead of within the tenant security deposit liability. The monthly replacement reserve transfer was delayed by several days into the subsequent month due to it being on a set interval of time rather than on a monthly date. Effect or potential effect Management commingled certain tenant security deposits and residual receipts deposits with its replacement reserve and operating cash accounts, resulting in the potential use of tenant security deposit cash or residual receipts deposits to fund repairs or replacements without obtaining the required prior approval of HUD. Inaccurate tracking of the tenant security deposit liability could result in understated liability and improper refunding of tenant security deposits. Late deposits to the replacement reserve could result in underfunding of the replacement reserve. Recommendation Management should review and enhance policies, procedures, and internal controls to ensure that all tenant security deposits and residual receipts deposits are segregated into separate, restricted cash accounts. Management should revisit its review procedures for tracking tenant security deposits and its timing schedule for making deposits to the replacement reserve. Identification of repeat finding The finding is a repeat of Finding No. 2020-006 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code D - Commingling funds Questioned costs None Finding resolution status In process

Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2021, the Organization was unable to demonstrate approval of 2 of 30 expenditures selected. Management did not properly cut off disbursements at fiscal year end, resulting in expenses being recorded incorrectly within the current audit period. Management did not properly classify certain expenditures between expense accounts during the current fiscal year. Criteria Funds disbursed must be supported by an invoice, bill, or other supporting documentation evidencing an approval by a designated member of management. Furthermore, management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Finally, management should review all expenditures for accurate expense account classification to ensure proper financial and HUD reporting. Cause Review procedures were not sufficient to ensure disbursements are only paid when approved support is provided nor to ensure proper classification of expenditures. Review procedures were not adequately followed to review subsequent invoices for relevance to the current fiscal period. Effect Payments of unapproved expenditures could result in ineligible costs and/or an unreasonable operational expense of the Organization. Furthermore, certain utility expenses presented for the current fiscal year were not recorded until the next fiscal year, resulting in understated expenses. Additionally, inaccurate expense classification could result in improper financial and HUD reporting. Recommendation We recommend that management enhance its review procedures to ensure that no disbursements are made without approved support. Management should revisit and enhance its review procedures over subsequent expenditures to ensure expenses are captured in the correct fiscal period. Management should implement an additional period-end review to ensure all expenses are appropriately classified. Identification of repeat finding The finding is a repeat of Finding No. 2020-002 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions During the year ended June 30, 2021, the Organization did not maintain its permanent records, including but not limited to: the promissory note and loan agreement supporting the HUD Section 811 Capital Advance and the Organization's Tenant Selection Plan. Criteria In order to maintain compliance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, the Organization must utilize and refer to its permanent records. Cause The Organization failed to maintain permanent document records required by HUD. Effect Management did not properly maintain the permanent records of the Organization, resulting in possible unidentified noncompliance, inaccurate reporting, or other exceptions to the HUD regulatory provisions. Recommendation Management should implement a record-storing function of its internal controls to prevent future lost documentation, and reviews of that function to ensure the storage is properly maintained. Identification of repeat finding The finding is a repeat of Finding No. 2020-004 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions Management has not reviewed its allocated costs calculations for accuracy and completeness of insurance and payroll costs incurred by the Organization. Criteria The Organization is required to have controls and procedures in place in order to accurately record costs incurred by the Organization. Cause Management did not have appropriate controls in place to review the allocation percentages for completeness and accuracy. Effect Out-of-date allocations could result in understated or overstated expenses and liabilities of the Organization, as well as theft. Recommendation Management should review and enhance its internal controls over payroll and insurance allocations to ensure the costs recorded by the Organization are representative of its share of the charges. Identification of repeat finding The finding is a repeat of Finding No. 2020-005 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code S - Internal control deficiencies Questioned costs $27,373 Finding resolution status In process

Finding No. 2021-006: Verification of Tenant Assets (Significant Deficiency) Statement of condition Eligibility During the year ended June 30, 2021, management did not perform a verification of tenant assets as part of tenant certification and recertification procedures. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to verify tenant assets to ensure appropriate subsidy calculations. Cause The Organization's tenants are multi-handicapped blind low-income adults. The cash accounts held by the tenants are maintained by the Sponsor on behalf of the tenants and therefore other assets are not verified. Effect Subsidy receipts could be overstated. Recommendation Management should revisit and enhance its certification and annual recertification procedures to include a verification of tenant assets. Identification of repeat finding This finding is not a repeat finding. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Finding No. 2021-007: Work Order Log (Significant Deficiency) Statement of condition Activities allowed or unallowed During the year ended June 30, 2021, management did not maintain a log of work orders processed. Criteria HUD projects are required to maintain a log of work orders processed. Cause The Organization did not have a system in place to summarize and collect work orders for the fiscal year. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should revisit and enhance its procedures over work orders to ensure a log is maintained. Identification of repeat finding This finding is not a repeat finding. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process

Statement of condition Eligibility In connection with the procedures applied to a sample of four tenant lease files, we noted the following instances of noncompliance with HUD regulations regarding tenant eligibility and the maintenance of lease files: ? For all of the tenant lease files selected, the Project did not maintain the tenant applications in their lease files. ? For two of the tenant lease files selected, the Project did not maintain the signed lease agreement in their lease files. ? For one of the tenant lease files selected, the Project did not maintain a HUD-approved lease agreement in the lease file. ? For all of the tenant lease files selected, the Project did not maintain the lead-based paint disclosure in their lease files. ? For all of the tenant lease files selected, the Project did not have confirmed citizen status in their lease files. ? For one of the tenant lease files selected, the Project did not maintain the background checks in their lease file. ? For all of the tenant lease files selected, the Project did not maintain executed or dated HUD 9887-A Forms in their lease files. ? For two of the tenant lease files selected, the Project did not retain documentation of the income verification portion of the annual recertification in the tenant lease files. ? For one of the tenant lease files selected, the Project did not submit the income verification portion of the annual recertification timely. ? For all of the tenant lease files selected, the Project did not maintain executed HUD 50059 Forms in their lease files. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management?s policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This noncompliance could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Auditor noncompliance code Z - Other Questioned costs None Recommendation Management should review and enhance procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification as a repeat finding The finding is a repeat of Finding No. 2019-002 reported in the audit for the year ended June 30, 2019. Finding resolution status In process

Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2020, the Project paid expenses in the amount of $12,520 without obtaining a contract, bill, invoice, or other vendor-produced support. Additionally, management did not properly cut off disbursements at the prior fiscal year end, resulting in expenses being recorded incorrectly within the current audit period. Criteria Project funds disbursed must be supported by accurate and approved invoices, bills, or other supporting documentation. Furthermore, management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Cause Procedures were not in place to ensure disbursements are only issued when accurate, approved third-party support is provided. Review procedures were not adequately followed to review subsequent invoices for relevance to the fiscal period. Effect The payment of $12,520 is unsupported by third-party documentation, resulting in a potential portion of the disbursement not being eligible and/or being deemed a reasonable operational expense of the Project. Furthermore, certain utility and contract expenses presented for fiscal year 2020 were for the prior audit period and/or were understated for the current audit period. Auditor noncompliance code S - Internal control deficiencies Questioned costs $12,520 Recommendation We recommend that management implement a requirement that no disbursements be made without accurate, approved third-party invoices for amounts above a certain threshold, and without an approved estimate or executed contract for large or nonroutine projects. Management should establish an expectation of which expenses are typically received after a fiscal period closes and perform a secondary review of those invoices to ensure the expenses are captured in the correct fiscal period. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status In process

Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions During the year ended June 30, 2020, the Project did not maintain its permanent records, including but not limited to: the original Project Rental Assistance Contract, promissory note and loan agreement supporting the HUD mortgage note, the Project's Affirmative Fair Market Housing Plan, and the Sponsor's Management Agent Certification. Criteria In order to maintain compliance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, the Project must utilize and refer to its permanent records. Cause The Project failed to maintain permanent document records required by HUD. Effect Management did not properly maintain the permanent records of the Project, resulting in possible unidentified noncompliance, inaccurate reporting, or other exceptions to the HUD regulatory provisions. Auditor noncompliance code S - Internal control deficiencies Questioned costs None noted Recommendation Management should implement a record-storing function of its internal controls to prevent future lost documentation, and reviews of that function to ensure the storage is properly maintained. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status Not started

Statement of condition Allowable costs Activities allowed or unallowed Management has not reviewed its allocated costs calculations for accuracy and completeness of insurance and payroll costs incurred by the Project. Criteria The Project is required to have controls and procedures in place in order to accurately record costs incurred by the Project. Cause Management did not have appropriate controls in place to review the allocation percentages for completeness and accuracy. Effect Out-of-date allocations could result in understated or overstated expenses and liabilities of the Project, as well as theft. Auditor noncompliance code S - Internal control deficiencies Questioned costs $27,213 Recommendation Management should review and enhance its internal controls over payroll and insurance allocations to ensure the costs recorded by the Project are representative of its share of the charges. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status In process

Statement of condition Special tests and provisions During the year ended June 30, 2020, management did not segregate the cash from tenant security deposits and residual receipts into restricted cash accounts. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for tenant security deposits collected and residual receipts. Cause The Project?s security deposit and residual receipts were deposited into the replacement reserve or operating cash accounts and were not transferred into segregated accounts as of June 30, 2020. Effect Management commingled tenant security deposits and residual receipts with its replacement reserve account and operating cash account, resulting in the potential use of tenant security deposit cash or residual receipts to fund repairs or replacements without obtaining the required prior approval of HUD. Auditor noncompliance code D - Commingling of funds Questioned costs $68,558 Recommendation Management should review and implement policies, procedures, and internal controls to ensure that security deposit cash and residual receipts are segregated into cash accounts. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status In process

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