ALAMO AREA MUTUAL HOUSING ASSOCIATION, INC.

Finding #2025-001: Management Company’s Internal Controls over Financial Reporting

Type of Finding: Material Weakness in Internal Control over Financial Reporting

Condition: Material audit adjustments were posted to the management company’s accounts, which were necessary to ensure the financial statements are fairly presented in accordance with GAAP.

Criteria: Management is responsible for the accuracy and completeness of all financial records and related information to ensure accuracy and presentation in accordance with GAAP.

Question Costs: Adjusting journal entries were required in order to present the financial statements in accordance with GAAP. The net impact on the change in net assets was $2,075,072.

Effect: The financial statements contained errors and misstatements.

Cause: The management company’s internal control policies and procedures did not prevent or detect the errors or misstatement of the financial statements. The current property management company took over in October 2024.

Repeat Finding: Yes

Recommendation: The management company should review and reconcile all accounts and review the financial data to ensure accuracy, completeness and that financial statements are presented in accordance with GAAP.

Management’s Comment: Management is in agreement with finding.

Cause: The management company’s internal control policies and procedures did not prevent or detect the errors or misstatements of the financial statements.

Auditor’s Comment: ACG plan to transition the operating properties to a new management company during 2026.

Finding #2024-004: Inadequate internal controls over Federal Awards

Finding #2025-002: Inadequate internal controls for ACG Corporate

Type of Finding: Material Weakness in Internal Controls over Financial Reporting

Condition: The Company does not have effective internal control policies and procedures or sufficiently trained or experienced personnel in order to ensure the consolidated statements are accurate and complete and prepared in accordance with generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance.

Criteria: Effective internal controls over financial reporting, proper segregation of duties and trained and experienced personnel are essential to ensure the financial statements are prepared accurately and completely.

Questioned Costs: Unknown

Effect: The monthly consolidated financial statements are misleading and incomplete and not prepared in accordance with Generally Accepted Accounting Principles.

Cause: The Company does not have an adequate internal control system in place to properly monitor and review the financial reporting process.

Repeat Finding: Yes

Recommendation: We recommend ACG implement new policies and internal control procedures to ensure the consolidated financial statements are free from material errors or misstatements and presented accurately and completely and in accordance with GAAP,

Management’s Comment: Management is in agreement with finding.

Auditor’s Comment: Prospera has begun implementing new policies and procedures. Effective January 1, 2026, Prospera has control over ACG and plans to continue to improve the internal control procedures.

Finding #2025-003: Inadequate internal controls over Federal Awards

Type of Finding: Significant Deficiency

Condition: The Company is not consistently following the written policies and procedures over federal awards. The Company did not properly monitor the federal award programs available to the operating properties which resulted in lost revenue.

Criteria: Written policies, procedures and standards of conduct required by 2 Code of Federal Regulations Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements and Subpart E – Cost Principles are required.

Questioned Costs: Unknown

Effect: The Company is not in compliance with specific requirements of Uniform Guidance for non-profits. Federal programs were not utilized by the operating properties.

Cause: The Company does not have an adequate internal control system in place to properly monitor and review the federal awards.

Repeat Finding: Yes

Recommendation: We recommend the Company adhere to the written policies, procedures and standards of conduct. We recommend all federal programs are closely reviewed.

Management’s Comment: Management is in agreement with finding.

Auditor’s Comment: Effective January 1, 2026, Prospera has control over ACG and plans to improve the internal control procedures and monitor the federal awards.

Finding #2024-001: Management Company’s Internal Controls over Financial Reporting Type of Finding: Material Weakness in Internal Control over Financial Reporting Condition: Material audit adjustments were posted to the management company’s accounts, which were necessary to ensure the financial statements are fairly presented in accordance with GAAP. Criteria: Management is responsible for the accuracy and completeness of all financial records and related information to ensure accuracy and presentation in accordance with GAAP. Question Costs: Adjusting journal entries were required in order to present the financial statements in accordance with GAAP. The net impact on the change in net assets was $1,650,694. Effect: The financial statements contained errors and misstatements. Cause: The management company’s internal control policies and procedures did not prevent or detect the errors or misstatement of the financial statements. The current property management company took over in October 2024. Repeat Finding: Yes Recommendation: The management company should review and reconcile all accounts and review the financial data to ensure accuracy, completeness and that financial statements are presented in accordance with GAAP. Management’s Comment: Management is in agreement with finding. Cause: The management company’s internal control policies and procedures did not prevent or detect the errors or misstatements of the financial statements. Auditor’s Comment: The owners have hired an outside consultant to work with the management company to review their policies, procedures and internal controls.

Finding #2024-002: Inadequate internal controls for Alamo Corporate Type of Finding: Material Weakness in Internal Controls over Financial Reporting Condition: The Company does not have effective internal control policies and procedures or sufficiently trained or experienced personnel in order to ensure the consolidated statements are accurate and complete and prepared in accordance with generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. Criteria: Effective internal controls over financial reporting, proper segregation of duties and trained and experienced personnel are essential to ensure the financial statements are prepared accurately and completely. Questioned Costs: Unknown Effect: The monthly consolidated financial statements are misleading and incomplete and not prepared in accordance with Generally Accepted Accounting Principles. Cause: The Company does not have an adequate internal control system in place to properly monitor and review the financial reporting process. Repeat Finding: Yes Recommendation: We recommend Alamo implement new policies and internal control procedures to ensure the consolidated financial statements are free from material errors or misstatements and presented accurately and completely and in accordance with GAAP, Management’s Comment: Management is in agreement with finding. Auditor’s Comment: Alamo has hired consultants to help improve controls over financial reporting. Alamo currently has a Memorandum of Understanding with a non-profit corporation for a potential acquisition or merger who will provide expertise and guidance to improve controls and implement adequate policies and procedures.

Finding #2024-003: Passed through City of San Antonio Community Development Block Grant – Loan, Assistance Listing 14.218

Type of Finding: Material Weakness

Condition: The Company has not paid May 2024 through August 2025 loan payments in accordance with the loan agreement. The Company is in arrears for 16 principal and interest payments as of the report date. The loan with the City of San Antonio is in default due to the payments in arrears.

Criteria: The loan agreement was for monthly principal and interest of $3,796 to be paid monthly beginning November 1, 2014.

Questioned cost: $60,736 in principal and interest payments not paid as of the report date.

Effect: The Lender has placed the loan in default which could result in interest on the unpaid principal to (a) accrue interest at the highest nonusurious rate allowed by law until such default is cured, and (b) be immediately payable in addition to the entire remaining principal amount then owing.

Cause: Management did not pay the monthly principal and interest payments.

Repeat Finding: No

Recommendation: We recommend that the Company pay all outstanding principal and interest to cure the loan default.

Status: Alamo is working with City of San Antonio to make arrangements to pay the $60,736. The Lender did not add additional interest or penalties.

Finding #2024-004: Inadequate internal controls over Federal Awards

Type of Finding: Significant Deficiency

Condition: The Company is not consistently following the written policies and procedures over federal awards. The Company did not properly monitor the federal award programs available to the operating properties which resulted in lost revenue.

Criteria: Written policies, procedures and standards of conduct required by 2 Code of Federal Regulations Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements and Subpart E – Cost Principles are required.

Questioned Costs: Unknown

Effect: The Company is not in compliance with specific requirements of Uniform Guidance for non-profits. Federal programs were not utilized by the operating properties.

Cause: The Company does not have an adequate internal control system in place to properly monitor and review the federal awards.

Repeat Finding: Yes

Recommendation: We recommend the Company adhere to the written policies, procedures and standards of conduct. We recommend all federal programs are closely reviewed.

Management’s Comment: Management is in agreement with finding.

Auditor’s Comment: Alamo is seeking training and support to improve internal controls and policies and procedures for oversight of federal awards. The Board of Directors is providing oversight and researching recommendations to ensure adequate internal controls are functioning. Alamo currently has a Memorandum of Understanding with a non-profit corporation for a potential acquisition or merger who will provide expertise and guidance to improve controls and implement adequate policies and procedures.

Finding #2023-003: Section 223(a)(7) HUD Insured Loan, Assistance Listing 14.135 - AAMHA Western Hills, LLC HUD Project No. 115-115888, AAMHA KPTP, LLC HUD Project No 115-35652 and Section 223(f) HUD Insured Loan, Assistance Listing 14.155 - AAMHA Calcasieu, LLC HUD Project No 115-11280 Type of Finding: Significant Deficiency

Type of Finding: Significant Deficiency over Internal Control over Federal Awards

Condition: The management company did not ensure expenses or subsidies received were recorded on the correct operating property’s books.

Criteria: The HUD regulatory agreement requires all expenses paid from the project’s bank account relate to the entity and requires all project cash receipts are deposited into the entity’s bank account.

Questioned Costs: a. $3,199 for AAMHA Western Hills, LLC b. $24,348 for AAMHA KPTP, LLC c. $5,869 for AAMHA Calcasieu, LLC

Effect: The Company is in violation of the terms of the HUD Regulatory Agreement governing payment of operating expenses and costs and recording cash receipts.

Cause: Oversight

Repeat Finding: Yes

Recommendation: Management should review the Regulatory Agreement to ensure they are familiar with all the terms of the agreement. Management’s Comment: Management is in agreement with finding and will review Regulatory agreement. Management will transfer funds to the appropriate affiliate.

Auditor’s Comment: a. AAMHA Western Hills, LLC - On April 24, 2024, $3,199 was received from an affiliate. b. AAMHA KPTP, LLC - During 2023, $16,321 was received from affiliates. On May 10, 2023, the Project received $8,027. c. AAMHA Calcasieu, LLC – On April 16, 2024, the Project received $5,869 from an affiliate.

Finding #2023-004: Inadequate internal controls over Federal Awards

Type of Finding: Other Matter

Condition: The Company is not consistently following the written policies and procedures over federal awards. The Company did not properly monitor the federal award programs available to the operating properties which resulted in lost revenue.

Criteria: Written policies, procedures and standards of conduct required by 2 Code of Federal Regulations Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements and Subpart E – Cost Principles are required.

Questioned Costs: Unknown

Effect: The Company is not in compliance with specific requirements of Uniform Guidance for non-profits. Federal programs were not utilized by the operating properties.

Cause: The Company does not have an adequate internal control system in place to properly monitor and review the federal awards.

Repeat Finding: No

Recommendation: We recommend the Company adhere to the written policies, procedures and standards of conduct. We recommend all federal programs are closely reviewed.

Management’s Comment: Management is in agreement with finding.

Auditor’s Comment: Alamo is seeking training and support to improve internal controls and policies and procedures for oversight of federal awards. The Board of Directors is providing oversight and researching recommendations to ensure adequate internal controls are functioning. The Company is in the process of selecting a permanent Executive Director.