Audit 308638

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Department: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) – Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee’s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90-day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction’s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following system-generated reports: PR29 – CDBG Cash on Hand Quarterly Report Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City of Portsmouth did not document their review of the PR29 Cash on Hand Quarterly Report. Auditors are required to tests specific information extracted from HUD’s IDIS system, the PR29 is one of the identified reports. The City was not aware of that review of the report was a requirement. Context: Evidence of review for one report was not provided. Questioned costs: None noted. Cause: The City was not aware that review of the report was a requirement. Effect: The City was unable to support compliance with the requirements. Recommendation: We recommend that the City review its policies and procedures to ensure that compliance with federal reporting requirements is evident. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Department: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) – Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee’s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90-day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction’s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following system-generated reports: PR29 – CDBG Cash on Hand Quarterly Report Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City of Portsmouth did not document their review of the PR29 Cash on Hand Quarterly Report. Auditors are required to tests specific information extracted from HUD’s IDIS system, the PR29 is one of the identified reports. The City was not aware of that review of the report was a requirement. Context: Evidence of review for one report was not provided. Questioned costs: None noted. Cause: The City was not aware that review of the report was a requirement. Effect: The City was unable to support compliance with the requirements. Recommendation: We recommend that the City review its policies and procedures to ensure that compliance with federal reporting requirements is evident. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Department: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) – Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee’s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90-day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction’s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following system-generated reports: PR29 – CDBG Cash on Hand Quarterly Report Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City of Portsmouth did not document their review of the PR29 Cash on Hand Quarterly Report. Auditors are required to tests specific information extracted from HUD’s IDIS system, the PR29 is one of the identified reports. The City was not aware of that review of the report was a requirement. Context: Evidence of review for one report was not provided. Questioned costs: None noted. Cause: The City was not aware that review of the report was a requirement. Effect: The City was unable to support compliance with the requirements. Recommendation: We recommend that the City review its policies and procedures to ensure that compliance with federal reporting requirements is evident. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Department: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) – Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee’s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90-day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction’s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following system-generated reports: PR29 – CDBG Cash on Hand Quarterly Report Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City of Portsmouth did not document their review of the PR29 Cash on Hand Quarterly Report. Auditors are required to tests specific information extracted from HUD’s IDIS system, the PR29 is one of the identified reports. The City was not aware of that review of the report was a requirement. Context: Evidence of review for one report was not provided. Questioned costs: None noted. Cause: The City was not aware that review of the report was a requirement. Effect: The City was unable to support compliance with the requirements. Recommendation: We recommend that the City review its policies and procedures to ensure that compliance with federal reporting requirements is evident. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Department: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) – Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee’s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90-day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction’s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following system-generated reports: PR29 – CDBG Cash on Hand Quarterly Report Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City of Portsmouth did not document their review of the PR29 Cash on Hand Quarterly Report. Auditors are required to tests specific information extracted from HUD’s IDIS system, the PR29 is one of the identified reports. The City was not aware of that review of the report was a requirement. Context: Evidence of review for one report was not provided. Questioned costs: None noted. Cause: The City was not aware that review of the report was a requirement. Effect: The City was unable to support compliance with the requirements. Recommendation: We recommend that the City review its policies and procedures to ensure that compliance with federal reporting requirements is evident. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-002 Prior Year Finding: No Federal Agency: U.S. Department of Education Department: Portsmouth Public Schools (PPS) Federal Program: Special Education Cluster (IDEA) Assistance Listing: 84.027, 84.173 Federal Award Identification Number and Year: None, 2021, 2022, 2023 Pass-Through Entity: Commonwealth of Virginia Department of Education Pass-Through Award Number and Period: H027A200107 (7/1/20-9/30/22) H027A210107 (7/1/21-9/30/23) H027X210107 (7/1/21-9/30/23) H027A220107 (4/17/23-9/30/23) H173A200107 (7/1/20-9/30/22) H173A210107 (7/1/21-9/30/23) H173X210107 (7/1/21-9/30/23) Compliance Requirement: Allowable Costs/Cost Principles (Time and Effort Certifications) Type of Finding: Material Weakness in Internal Control over Compliance, Maternal Non-Compliance Criteria or specific requirement: Compliance – Per 2 CFR section 403, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also § 200.306(b). (f) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: PPS was unable to provide documentation supporting time and effort for employee’s salary charged to the grant. We were unable to support the allowable salary reported on the grant due to lack of time and effort certification. Context For 13 out of 40 employee’s salary selected for testing were not supported by time and effort certification. Questioned costs: $30,763, represents the employee’s salary charged to the federal program and not supported by time and effort certification. Cause: PPS did not maintain documentation supporting time and effort for employee pay charged to the grant. Effect: Failure to adhere to allowable cost requirements may result in PPS charging expenditures to the program that are not allowable. Recommendation: We recommend that PPS enhance its procedures and internal controls to ensure that it retains documentation supporting time and effort on federal grants and that this documentation is available for audit purposes. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-002 Prior Year Finding: No Federal Agency: U.S. Department of Education Department: Portsmouth Public Schools (PPS) Federal Program: Special Education Cluster (IDEA) Assistance Listing: 84.027, 84.173 Federal Award Identification Number and Year: None, 2021, 2022, 2023 Pass-Through Entity: Commonwealth of Virginia Department of Education Pass-Through Award Number and Period: H027A200107 (7/1/20-9/30/22) H027A210107 (7/1/21-9/30/23) H027X210107 (7/1/21-9/30/23) H027A220107 (4/17/23-9/30/23) H173A200107 (7/1/20-9/30/22) H173A210107 (7/1/21-9/30/23) H173X210107 (7/1/21-9/30/23) Compliance Requirement: Allowable Costs/Cost Principles (Time and Effort Certifications) Type of Finding: Material Weakness in Internal Control over Compliance, Maternal Non-Compliance Criteria or specific requirement: Compliance – Per 2 CFR section 403, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also § 200.306(b). (f) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: PPS was unable to provide documentation supporting time and effort for employee’s salary charged to the grant. We were unable to support the allowable salary reported on the grant due to lack of time and effort certification. Context For 13 out of 40 employee’s salary selected for testing were not supported by time and effort certification. Questioned costs: $30,763, represents the employee’s salary charged to the federal program and not supported by time and effort certification. Cause: PPS did not maintain documentation supporting time and effort for employee pay charged to the grant. Effect: Failure to adhere to allowable cost requirements may result in PPS charging expenditures to the program that are not allowable. Recommendation: We recommend that PPS enhance its procedures and internal controls to ensure that it retains documentation supporting time and effort on federal grants and that this documentation is available for audit purposes. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-003 Prior Year Finding: No Federal Agency: U.S. Department of Education Department: Portsmouth Public Schools (PPS) Federal Program: Special Education Cluster (IDEA) Assistance Listing: 84.027, 84.173 Federal Award Identification Number and Year: None, 2021 Pass-Through Entity: Commonwealth of Virginia Department of Education Pass-Through Award Number and Period: H027A200107 (7/1/20-9/30/22) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance – A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition PPS charged program costs to the grant after the period of performance period ended. We noted that an invoice for $176.05, for goods/services received in October 2022, wase charged to the federal grant ending September 2022. PPS did not obtain prior approval or an extension from the awarding agency before charging the grant. Context: One out of twenty-one samples selected for testing was charged to the grant after period of performance. Questioned costs: $176.05, represents the costs charged to the program after the period of performance. Cause: PPS did not consistently monitor the period of performance for a federal award to ensure that costs were only charged during the allowed period. Effect: PPS expensing of funds out of the period of performance may result in noncompliance and questioned costs from the grantor. Recommendation: We recommend that PPS enhance its procedures and internal controls to ensure that expenditures are not charged to federal awards during the period of performance. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-003 Prior Year Finding: No Federal Agency: U.S. Department of Education Department: Portsmouth Public Schools (PPS) Federal Program: Special Education Cluster (IDEA) Assistance Listing: 84.027, 84.173 Federal Award Identification Number and Year: None, 2021 Pass-Through Entity: Commonwealth of Virginia Department of Education Pass-Through Award Number and Period: H027A200107 (7/1/20-9/30/22) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance – A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition PPS charged program costs to the grant after the period of performance period ended. We noted that an invoice for $176.05, for goods/services received in October 2022, wase charged to the federal grant ending September 2022. PPS did not obtain prior approval or an extension from the awarding agency before charging the grant. Context: One out of twenty-one samples selected for testing was charged to the grant after period of performance. Questioned costs: $176.05, represents the costs charged to the program after the period of performance. Cause: PPS did not consistently monitor the period of performance for a federal award to ensure that costs were only charged during the allowed period. Effect: PPS expensing of funds out of the period of performance may result in noncompliance and questioned costs from the grantor. Recommendation: We recommend that PPS enhance its procedures and internal controls to ensure that expenditures are not charged to federal awards during the period of performance. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2023. Context: Subawards were not reported to FSRS during FY 2023. Total subawards selected were $153,000, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.

Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2023. Context: Subawards were not reported to FSRS during FY 2023. Total subawards selected were $153,000, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.

Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2023. Context: Subawards were not reported to FSRS during FY 2023. Total subawards selected were $153,000, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.

Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2023. Context: Subawards were not reported to FSRS during FY 2023. Total subawards selected were $153,000, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.

Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2023. Context: Subawards were not reported to FSRS during FY 2023. Total subawards selected were $153,000, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Department: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) – Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee’s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90-day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction’s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following system-generated reports: PR29 – CDBG Cash on Hand Quarterly Report Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City of Portsmouth did not document their review of the PR29 Cash on Hand Quarterly Report. Auditors are required to tests specific information extracted from HUD’s IDIS system, the PR29 is one of the identified reports. The City was not aware of that review of the report was a requirement. Context: Evidence of review for one report was not provided. Questioned costs: None noted. Cause: The City was not aware that review of the report was a requirement. Effect: The City was unable to support compliance with the requirements. Recommendation: We recommend that the City review its policies and procedures to ensure that compliance with federal reporting requirements is evident. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Department: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) – Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee’s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90-day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction’s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following system-generated reports: PR29 – CDBG Cash on Hand Quarterly Report Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City of Portsmouth did not document their review of the PR29 Cash on Hand Quarterly Report. Auditors are required to tests specific information extracted from HUD’s IDIS system, the PR29 is one of the identified reports. The City was not aware of that review of the report was a requirement. Context: Evidence of review for one report was not provided. Questioned costs: None noted. Cause: The City was not aware that review of the report was a requirement. Effect: The City was unable to support compliance with the requirements. Recommendation: We recommend that the City review its policies and procedures to ensure that compliance with federal reporting requirements is evident. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Department: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) – Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee’s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90-day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction’s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following system-generated reports: PR29 – CDBG Cash on Hand Quarterly Report Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City of Portsmouth did not document their review of the PR29 Cash on Hand Quarterly Report. Auditors are required to tests specific information extracted from HUD’s IDIS system, the PR29 is one of the identified reports. The City was not aware of that review of the report was a requirement. Context: Evidence of review for one report was not provided. Questioned costs: None noted. Cause: The City was not aware that review of the report was a requirement. Effect: The City was unable to support compliance with the requirements. Recommendation: We recommend that the City review its policies and procedures to ensure that compliance with federal reporting requirements is evident. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Department: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) – Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee’s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90-day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction’s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following system-generated reports: PR29 – CDBG Cash on Hand Quarterly Report Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City of Portsmouth did not document their review of the PR29 Cash on Hand Quarterly Report. Auditors are required to tests specific information extracted from HUD’s IDIS system, the PR29 is one of the identified reports. The City was not aware of that review of the report was a requirement. Context: Evidence of review for one report was not provided. Questioned costs: None noted. Cause: The City was not aware that review of the report was a requirement. Effect: The City was unable to support compliance with the requirements. Recommendation: We recommend that the City review its policies and procedures to ensure that compliance with federal reporting requirements is evident. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Department: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) – Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee’s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90-day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction’s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following system-generated reports: PR29 – CDBG Cash on Hand Quarterly Report Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City of Portsmouth did not document their review of the PR29 Cash on Hand Quarterly Report. Auditors are required to tests specific information extracted from HUD’s IDIS system, the PR29 is one of the identified reports. The City was not aware of that review of the report was a requirement. Context: Evidence of review for one report was not provided. Questioned costs: None noted. Cause: The City was not aware that review of the report was a requirement. Effect: The City was unable to support compliance with the requirements. Recommendation: We recommend that the City review its policies and procedures to ensure that compliance with federal reporting requirements is evident. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-002 Prior Year Finding: No Federal Agency: U.S. Department of Education Department: Portsmouth Public Schools (PPS) Federal Program: Special Education Cluster (IDEA) Assistance Listing: 84.027, 84.173 Federal Award Identification Number and Year: None, 2021, 2022, 2023 Pass-Through Entity: Commonwealth of Virginia Department of Education Pass-Through Award Number and Period: H027A200107 (7/1/20-9/30/22) H027A210107 (7/1/21-9/30/23) H027X210107 (7/1/21-9/30/23) H027A220107 (4/17/23-9/30/23) H173A200107 (7/1/20-9/30/22) H173A210107 (7/1/21-9/30/23) H173X210107 (7/1/21-9/30/23) Compliance Requirement: Allowable Costs/Cost Principles (Time and Effort Certifications) Type of Finding: Material Weakness in Internal Control over Compliance, Maternal Non-Compliance Criteria or specific requirement: Compliance – Per 2 CFR section 403, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also § 200.306(b). (f) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: PPS was unable to provide documentation supporting time and effort for employee’s salary charged to the grant. We were unable to support the allowable salary reported on the grant due to lack of time and effort certification. Context For 13 out of 40 employee’s salary selected for testing were not supported by time and effort certification. Questioned costs: $30,763, represents the employee’s salary charged to the federal program and not supported by time and effort certification. Cause: PPS did not maintain documentation supporting time and effort for employee pay charged to the grant. Effect: Failure to adhere to allowable cost requirements may result in PPS charging expenditures to the program that are not allowable. Recommendation: We recommend that PPS enhance its procedures and internal controls to ensure that it retains documentation supporting time and effort on federal grants and that this documentation is available for audit purposes. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-002 Prior Year Finding: No Federal Agency: U.S. Department of Education Department: Portsmouth Public Schools (PPS) Federal Program: Special Education Cluster (IDEA) Assistance Listing: 84.027, 84.173 Federal Award Identification Number and Year: None, 2021, 2022, 2023 Pass-Through Entity: Commonwealth of Virginia Department of Education Pass-Through Award Number and Period: H027A200107 (7/1/20-9/30/22) H027A210107 (7/1/21-9/30/23) H027X210107 (7/1/21-9/30/23) H027A220107 (4/17/23-9/30/23) H173A200107 (7/1/20-9/30/22) H173A210107 (7/1/21-9/30/23) H173X210107 (7/1/21-9/30/23) Compliance Requirement: Allowable Costs/Cost Principles (Time and Effort Certifications) Type of Finding: Material Weakness in Internal Control over Compliance, Maternal Non-Compliance Criteria or specific requirement: Compliance – Per 2 CFR section 403, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also § 200.306(b). (f) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: PPS was unable to provide documentation supporting time and effort for employee’s salary charged to the grant. We were unable to support the allowable salary reported on the grant due to lack of time and effort certification. Context For 13 out of 40 employee’s salary selected for testing were not supported by time and effort certification. Questioned costs: $30,763, represents the employee’s salary charged to the federal program and not supported by time and effort certification. Cause: PPS did not maintain documentation supporting time and effort for employee pay charged to the grant. Effect: Failure to adhere to allowable cost requirements may result in PPS charging expenditures to the program that are not allowable. Recommendation: We recommend that PPS enhance its procedures and internal controls to ensure that it retains documentation supporting time and effort on federal grants and that this documentation is available for audit purposes. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-003 Prior Year Finding: No Federal Agency: U.S. Department of Education Department: Portsmouth Public Schools (PPS) Federal Program: Special Education Cluster (IDEA) Assistance Listing: 84.027, 84.173 Federal Award Identification Number and Year: None, 2021 Pass-Through Entity: Commonwealth of Virginia Department of Education Pass-Through Award Number and Period: H027A200107 (7/1/20-9/30/22) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance – A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition PPS charged program costs to the grant after the period of performance period ended. We noted that an invoice for $176.05, for goods/services received in October 2022, wase charged to the federal grant ending September 2022. PPS did not obtain prior approval or an extension from the awarding agency before charging the grant. Context: One out of twenty-one samples selected for testing was charged to the grant after period of performance. Questioned costs: $176.05, represents the costs charged to the program after the period of performance. Cause: PPS did not consistently monitor the period of performance for a federal award to ensure that costs were only charged during the allowed period. Effect: PPS expensing of funds out of the period of performance may result in noncompliance and questioned costs from the grantor. Recommendation: We recommend that PPS enhance its procedures and internal controls to ensure that expenditures are not charged to federal awards during the period of performance. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-003 Prior Year Finding: No Federal Agency: U.S. Department of Education Department: Portsmouth Public Schools (PPS) Federal Program: Special Education Cluster (IDEA) Assistance Listing: 84.027, 84.173 Federal Award Identification Number and Year: None, 2021 Pass-Through Entity: Commonwealth of Virginia Department of Education Pass-Through Award Number and Period: H027A200107 (7/1/20-9/30/22) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance – A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition PPS charged program costs to the grant after the period of performance period ended. We noted that an invoice for $176.05, for goods/services received in October 2022, wase charged to the federal grant ending September 2022. PPS did not obtain prior approval or an extension from the awarding agency before charging the grant. Context: One out of twenty-one samples selected for testing was charged to the grant after period of performance. Questioned costs: $176.05, represents the costs charged to the program after the period of performance. Cause: PPS did not consistently monitor the period of performance for a federal award to ensure that costs were only charged during the allowed period. Effect: PPS expensing of funds out of the period of performance may result in noncompliance and questioned costs from the grantor. Recommendation: We recommend that PPS enhance its procedures and internal controls to ensure that expenditures are not charged to federal awards during the period of performance. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2023. Context: Subawards were not reported to FSRS during FY 2023. Total subawards selected were $153,000, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.

Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2023. Context: Subawards were not reported to FSRS during FY 2023. Total subawards selected were $153,000, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.

Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2023. Context: Subawards were not reported to FSRS during FY 2023. Total subawards selected were $153,000, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.

Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2023. Context: Subawards were not reported to FSRS during FY 2023. Total subawards selected were $153,000, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.

Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2023. Context: Subawards were not reported to FSRS during FY 2023. Total subawards selected were $153,000, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.