Audit 307342

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Okanogan School District No. 105 September 1, 2022 through August 31, 2023 2023-001 The District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D, 0145073 COVID-19, 84.425U, 0138248 COVID-19, 84.425W, 0459025 COVID-19, 84.425W, 0459580 COVID-19, 84.425U, 137037 COVID-19, 84.425D, 9813 61 COVID-19, 84.425D, 9814 61 COVID-19, 84.425D, 9815 61 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In the fiscal year 2023, the District spent a total of $2,014,915 of its ESF awards. This included $64,916 in the Elementary and Secondary School Emergency Relief Fund (ESSER II) subprogram (84.425D), $1,942,668 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $7,331 in the American Rescue Plan Elementary and Secondary School Emergency Relief – Homeless Children and Youth (ARP-HCY) subprogram (84.425W). The District spent $1,012,834 in program funds for various improvements and repairs to its facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Under federal wage rate requirements, also known as the Davis-Bacon Act, contractors and subcontractors that work on projects financed with more than $2,000 of federal funds must pay laborers and mechanics wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. For construction contracts subject to these wage rate requirements, the District must include a provision that the contractors and subcontractors comply with those requirements and the Department of Labor’s regulations. This includes a requirement for the contractors and its subcontractors to submit to the District weekly, for each week in which any contract work is performed, certified payroll reports. These reports must include a copy of the payroll and a signed statement of compliance. The District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District‘s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition During the 2023 school year, the District spent $1,012,834 for payments to two contractors for two projects for various improvements and repairs to its schools. Our audit found the District did not have adequate internal controls for ensuring compliance with federal wage rate requirements. Specifically, the District did not include the required wage rate provisions in the contract with the prime contractor for one of two contracts we tested. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The District relied on the contract manager for compliance, and staff were not aware they needed to monitor the contract manager. In addition, the District did not notify the contract manager that the project was paid with federal funding and thus subject to federal wage rate requirements. Effect of Condition Without adequate internal controls to ensure it includes the wage rate clauses in its contracts, the District cannot demonstrate it complied with federal wage rate requirements. Additionally, because the District did not notify the contractor that the project was federally funded, the contractor submitted state certified payroll reports instead of federal certified payroll reports. The District could also be liable for paying any additional wages if the contractor and subcontractor did not pay prevailing wage rates to laborers working on the contract. The District did not include federal wage provisions in one out of two contracts. Recommendation We recommend the District strengthen internal controls to ensure compliance with federal wage rate requirements. This should include inserting wage rate clauses into contracts and obtaining the federal certified payroll reports. District’s Response District administration acknowledges that contracts signed prior to the 22-23 school year may not have had adequate federal wage rate language but continues to maintain that contracts signed within the current year audit and beyond contain all required federal wage rate language clauses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit, and acknowledge its commitment to resolving this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation and inspection of weekly payroll records, establishes requirements for contractor or subcontractor submission of weekly certified payroll reports. Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the requirements for the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part with federal funds the clauses listed, which includes but is not limited to the minimum wages to be paid and payrolls and basic records to be maintained (submission of weekly certified payrolls).