HARMONY COMMUNITY DEVELOPMENT CORPORATION, INC.

Matching and Earmarking Significant Deficiency U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ALN #: 14.267 Federal Award Identification #: TX0724L6T002300 Condition: The Organization was not in compliance with matching and earmarking requirements. Criteria: 24 CFR 578.73, 24 CFR 578.59 Questioned Costs: $25,824 Context: The Organization could not locate support for all match costs claimed against federal funding provided. The Organization was required to have $40,726 in matching costs at a minimum, which is 25% of $372,678 total costs reported. Only $37,916 was able to be supported, which left $2,811 in unmet matching costs. $2,811 in unmet matching costs divided by the 25% match requirement results in $11,243 questioned costs reported that are unsupported by match. Additionally, the Organization exceeded the 10% threshold for costs to administer the grant. The Organization was limited to 10% of total costs of $372,678 to administer the grant out, which is $37,268. The Organization reported $51,848 in costs to administer the grant, which exceeds the threshold by $14,581, resulting in questioned costs. Total questioned costs of $11,243 for the matching requirement and $14,581 for the earmarking requirement is $25,824. Cause: Oversight by management. Effect: Questioned costs for the grant agreement. Identification as repeat finding, if applicable: Not applicable. Recommendation: We recommend that the Organization implement a documented formal review process to ensure that the Organization is in compliance with matching and earmarking requirements throughout the life of the grant. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Eligibility and Allowable Costs Material Weakness U.S. DEPARTMENT OF HOMELAND SECURITY – FEMA Passed through from United Way Worldwide ALN #: 97.024 Federal Award Identification #: LRO #782600077 Condition: Documentation was not retained to prove eligibility and allowable costs to the program for both rental assistance and utility assistance participants. Criteria: 2 CFR Part 200.403 Questioned Costs: $28,604 Context: Out of 26 tested for eligibility, 11 recipients did not have adequate support to prove eligibility for both rental assistance and utility assistance. Harmony could not locate documentation to support certain participants including the participant's lease and did not maintain proper participant identification on file. Additionally, within the sample selected, there were individuals who received utility assistance; however, Harmony could not locate the utility bill to support the amounts paid on behalf of the participant. Therefore, there was not a way to verify that the utility assistance met the various utility assistance eligibility requirements as outlined in the grant agreement. Lastly, for one rental assistance recipient, the amount of support provided was greater than three months of assistance as limited by the program. Cause: Lack of supporting documentation or not properly retaining documentation to support the eligibility of recipients. Effect: Lack of supporting documentation or not retaining the documentation to support the eligibility causes the funds to become questioned costs. Identification as repeat finding, if applicable: Not applicable. Recommendation: We recommend the Organization periodically review supporting documentation for completed applications to ensure all support is retained. We also recommend implementing enhanced internal controls to verify all support is properly retained. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.