Audit 359422

Finding No.: 2022-001 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $27,380 Area: Allowable Costs/Cost Principles Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with allowable costs/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. Condition 1: For 3 (or 10%) of 29 non-payroll transactions tested aggregating $3,375,773 of $14,205,851 in total non-payroll program expenditures, supporting documentation were not provided for the following: Item # Fund # Encumbrance/ Voucher/JV # Account Total 1 410150 T83102001 Training and Staff Development $ 1,750 2 410100 G22-279W Food Stuff 18,275 3 410102 G22-283C Other Supplies and Materials 5,621 $ 25,646 Condition 2: For 8 (or 21%) of 39 payroll transactions tested aggregating $66,558 of $17,286,417 in total payroll program expenditures, the following deficiencies were noted: Leave hours were not supported by an approved leave form for the following: # Employee # PPE Hours Amount 1 93573 03/12/2022 16 114 2 88856 04/23/2022 8 92 $ 206 Condition 2, continued: Overpayment of or unsupported salaries and wages were noted for the following: # Employee # PPE Amount 1 94419 10/09/2021 $ 170 2 203158 10/23/2021 692 3 62883 11/20/2021 34 4 93669 12/18/2021 185 5 244918 8/13/2022 293 6 205561 9/10/2022 154 $ 1,528 Item # 1 resulted from 126 unsupported additional night differential hours paid. Item # 2 resulted from incorrect payment of 80 differential hours (paid at 20%) as regular hours. Item #s 3 and 4 each resulted from overpayment of 8 hours. Item # 5 resulted from incorrect retroactive pay calculation resulting in overpayment of 102.8 hours. Item # 6 resulted from incorrect standby differential rate used (30%) rather than the Public Service Commission Personnel Manual rate (20%). The above resulted in reportable questioned costs of $1,734 because the projected questioned cost amount exceeds the $25,000 threshold. Cause: Inadequate file maintenance to support expenditures charged to federal programs. RepMar did not effectively monitor the validity and allowability of expenditures. Effect: RepMar is in noncompliance with allowable costs/cost principles requirements. The reportable questioned cost is $27,380. Recommendation: Documents supporting expenditures should be maintained. Further, RepMar management should strengthen monitoring controls so that expenditures are verified for validity and allowability. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-004 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $ Undeterminable Area: Equipment and Real Property Management Criteria: Section 200.313(d) of the Uniform Guidance and Article VI, Section 1(f)(4) of the Fiscal Procedures Agreement states that procedures for managing equipment, whether acquired in whole or in part with grant funds, will follow state laws and procedures. The following requirements are applicable: a. Property records must be maintained that include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date and cost of the property, the percentage of Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property; b. A physical inventory of the property must be conducted and the results must be reconciled with the property records at least once every two years; c. A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal Agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program; d. Regular maintenance procedures must be in place to ensure the property is in proper working condition; and e. If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. Additionally, the carrying amount of long-lived assets and the estimated useful lives of assets should be periodically re-assessed and adjusted, as appropriate, based on actual experience and relevant factors and circumstances. Condition: Capital assets records do not meet the criteria above and are not effectively maintained since updates to the records occur only once a year. Specifically, we noted the following deficiencies: An inventory of capital assets has not been performed in the recent past in accordance with the above criteria; therefore, a reconciliation of capital asset records and physical inventory has not occurred at least once in the past two years. Capital assets records are not effectively maintained. It does not appear that RepMar has implemented an effective control system to adequately safeguard capital assets from loss, damage or theft, or to reasonably investigate such occurrences. RepMar has not established policies and procedures governing property maintenance and has not effectively implemented an entity-wide maintenance plan. Long-lived assets are not routinely evaluated for possible impairment. Capital outlays within the Compact Sector Grants Fund for fiscal years 2022, 2021 and 2020 were as follows: Fiscal Year 2022 $ 4,592,264 Fiscal Year 2021 $ 5,909,859 Fiscal Year 2020 $ 3,358,375 Cause: RepMar lacks adequate internal control policies and procedures to satisfy compliance with federal property rules and regulations and lacks effective procedures governing property maintenance, as well as periodic assessment of asset impairment conditions and useful lives. Moreover, internal control policies and procedures requiring periodic and timely performance and independent review of capital assets reconciliations and related general ledger accounts are not effectively implemented. Effect: RepMar is in noncompliance with applicable equipment and real property management requirements, and possible misstatement of capital assets and related accounts exists. Questioned costs, if any, which may result from inadequate property records, maintenance procedures, and the absence of timely reconciliations are not determinable. Identification as a Repeat Finding: Finding No. 2021-003 Recommendation: The Ministry of Finance, Banking and Postal Services (MOFBPS) should perform an inventory of such inventory in accordance with applicable property rules and regulations, and should develop adequate maintenance procedures in order to keep property in good condition. Furthermore, RepMar should implement internal control policies and procedures requiring periodic and timely performance and independent review of capital assets reconciliation and related general ledger accounts. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-005 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $ Undeterminable Area: Period of Performance Criteria: Grant agreements stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Condition 1: For $573,068 of $31,492,268 in total ALN 15.875 (Compact Sector Grants) expenditures, compliance with period of performance requirements for nine cost centers (CC #s CJ8386, CK6028, CK8113, CK8171, CL6030, CL6031, CL8126, CL8171 and CL8401) could not be ascertained due to lack of underlying grant agreements. Condition 2: For $2,126,731 of $2,199,010 in total expenditures for ALN 15.875 (EULG Food and Agriculture Support Program), such were charged to a single cost center (CM6226) that relates to two grant agreements with different periods of performance. Compliance with period of performance requirements regarding costs totaling $826,606 related to award no. D22AF00084-00 could not be ascertained. Condition 3: For $1,628,416 of $2,880,710 in total expenditures for ALN 93.323 (Epidemiology and Laboratory Capacity for Infectious Diseases), compliance with period of performance requirements for five cost centers (CC #s FK7609, FL7615, FL7616, FN7610 and FN7618) could not be ascertained due to lack of underlying grant agreements. Cause: RepMar lacks adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Effect: RepMar is potentially in noncompliance with applicable period of performance requirements. Questioned costs, if any, that may result from the above conditions, are not determinable. Identification as a Repeat Finding: Finding No. 2021-004 (ALN 15.875 Compact Sector Grant) Recommendation: RepMar should implement adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-006 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $44,942 Area: Procurement and Suspension and Debarment Criteria: Article VI, Section 1(j)(1) of the Fiscal Procedures Agreement (FPA) states that RepMar may use its own procedures for procurement, whether done by the government or its Sub-Grantees, provided that they meet the standards identified in the FPA. (a) Section 124 - unless otherwise authorized by law, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 127 - procurement of goods and services not exceeding $25,000 may be made in purchase procedures are those relatively simple and informal methods for securing services, Banking and Postal Services has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from three qualified sources. (c) Section 128 - a contract may be awarded for a supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. Condition: For 4 (or 7%) of 60 procurement transactions tested, aggregating $2,006,444 of $10,668,605 in total transactions subject to procurement requirements, no procurement file was provided. Fund # Encumbrance # Ref # Amount 410100 A26328 795172 $ 3,826 410102 P86331 764579 8,614 510110 P87912 764652 23,301 510110 P87510 764653 9,201 $ 44,942 Cause: RepMar did not enforce internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $44,942. Identification as a Repeat Finding: Finding No. 2021-005 Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-009 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $0 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $0 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $0 Area: Reporting Criteria: Grant agreements stipulate the type and frequency of reports to be submitted. Furthermore, timely, accurate and complete reporting should be facilitated by an internal control structure conducive to the monitoring, preparation and independent review of required reports. Lastly, financial reports should reconcile with underlying accounting records. Condition 1 (ALN 15.875 and 93.323): There is no monitoring of required reports to be submitted or listing of reports already submitted. It does not appear that RepMar has developed means to monitor compliance with reporting requirements. Condition 2 (ALN 15.875 Compact Sector Grants): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. SF- - underlying accounting 240P report. Furthermore, no SF-425 report ended 9/30/2022 was provided for examination. Condition 3 (ALN 15.875 EULG Food and Agriculture Support Program ): Required reports were not available for examination. Condition 4 (ALN 93.323): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. Required reports were not available for examination. Cause: RepMar lacks adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar lacks adequate internal control policies and procedures over retention of all grant agreements, copies of reports submitted to grantors, and the underlying accounting records. Effect: Sufficient appropriate audit evidence supporting compliance with applicable reporting requirements were not obtained which results in report modification. No questioned cost is reported as the condition relates to inadequacy of internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and underlying accounting records. Identification as a Repeat Finding: Finding Nos. 2021-010 and 2021-012. Recommendation: RepMar should establish adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar should establish internal control policies and procedures requiring retention of all grant agreements and copies of reports submitted to grantors. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-010 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $74,794 Area: Subrecipient Monitoring Criteria: 1) Article VI, Section 1(a)(1) of the Fiscal Procedures Agreement (FPA) states that fiscal control and accounting procedures of RepMar, as well as its Sub-Grantees, shall be sufficient to: (i) permit the preparation of reports required by the FPA and the Compact, as amended; and (ii) permit the tracing of funds to a level of expenditures adequate to establish that such funds have been used in compliance with the provisions of the Compact, as amended, and applicable agreements. Furthermore, Article VI, Section 1(k)(1) of the FPA states that RepMar shall ensure that: (i) every Sub-Grant includes any clauses required by the Compact, as amended, the sector Grant awards, and the FPA; (ii) Sub-Grantees are aware of the requirements imposed upon them by the Compact, as amended, the sector Grants and the FPA; and (iii) Sub-Grantees can meet the financial management standards of the FPA. 2) In accordance with applicable subrecipient monitoring requirements, the pass-through entity (PTE) must follow-up and ensure that the subrecipient takes timely and appropriate action on all deficiencies detected through audits, on-site reviews, and other means, pertaining to the Federal awards provided by the PTE to the subrecipient. Condition 1: RepMar has not implemented effective policies and procedures over subrecipient monitoring, including compliance with related Compact provisions. For 4 (or 100%) subrecipients tested, deficiencies were noted as follows: Item # Subrecipient Fund # Sub-Grant 1 College of the Marshall Islands 410100 $1,900,328 2 Ebeye Seventh Day Adventist 410150 73,463 3 Queen of Peace 410150 35,005 4 Kwajalein Atoll Joint Utilities Resources 410160 663,930 $2,672,726 Condition 1, continued: Document (MOFBPS) monitoring of subrecipient activities was not made available for examination. Consequently, we were unable to ascertain whether MOFBPS monitored subrecipient compliance with subaward agreements, Compact Agreement, grant award, and the FPA. No questioned costs are reported for item #s 1 and 4 since the subrecipients are separately audited. For item #s 2 and 3, the subrecipients submitted the required financial reports. Condition 2: Subrecipient monitoring schedule provided by MOFBPS was incomplete and inaccurate. Condition 1, item # 4, was not included in the schedule. Condition 3: RepMar did not perform the required monitoring activities for one subrecipient. The 2021 Single Audit Report for the College of the Marshall Islands (CMI) dated September 26, 2024 was accepted by the Federal Audit Clearinghouse on October 10, 2024. Such report included findings and questioned costs amounting to $74,794 for noncompliance, as follows: Finding No. Compliance Requirement QC Amount 2021-006 Allowable Costs/Cost Principles $ 4,597 2021-007 Equipment and Real Property Management - 2021-008 Period of Performance 2,107 2021-009 Procurement and Suspension and Debarment 68,090 2021-010 Reporting - $ 74,794 RepMar did not issue a management decision Cause: RepMar lacks effective internal control policies and procedures governing subrecipient monitoring. Effect: RepMar is in noncompliance with applicable subrecipient monitoring requirements. The reportable questioned cost is $74,794. Identification as a Repeat Finding: Finding No. 2021-008 Recommendation: RepMar should comply with the applicable provisions of the FPA and subrecipient monitoring requirements and should develop and implement effective subrecipient monitoring procedures. Furthermore, MOFBPS should enforce compliance with subaward agreements, including timely Single Audits of subrecipients, as applicable. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-002 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $1,763,366 Area: Allowable Costs/Cost Principles Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with allowable costs/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. Condition: Of 39 non-payroll transactions tested, aggregating $1,587,482 of $2,199,010 in total non-payroll program expenditures, the following deficiencies were noted: The grant terms and conditions state that assistance under the award may not be sub-granted or transferred; however, $1,737,620 of the funding was disbursed directly to a subrecipient, of which $685,289 represented reimbursement for payroll costs which were not supported by underlying timesheets, personnel action forms, and registers. Furthermore, no executed subgrant agreement with the subrecipient was made available. The grant terms and conditions state that assistance may not be used for payment of professional legal or administrative fees, however, $24,000 in legal fees were charged to the program (APV #s 770018, 777397, 783370, and 789894). For 1 (or 3%) voucher (#769225) amounting to $1,746, the underlying lease agreement does not support the disbursement duty station is on Enewetak while the leased housing is located on Majuro. Cause: Inadequate file maintenance to support expenditures charged to federal programs. RepMar did not effectively monitor the validity and allowability of expenditures. Furthermore, RepMar lacks adequate internal control policies and procedures to facilitate adherence with grant terms and conditions. Effect: RepMar is in noncompliance with allowable costs/cost principles requirements. The reportable questioned cost is $1,763,366. Recommendation: Documents supporting expenditures should be maintained. Further, RepMar management should strengthen monitoring controls and adopt adequate internal control policies and procedures to facilitate adherence with grant terms and conditions. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-005 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $ Undeterminable Area: Period of Performance Criteria: Grant agreements stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Condition 1: For $573,068 of $31,492,268 in total ALN 15.875 (Compact Sector Grants) expenditures, compliance with period of performance requirements for nine cost centers (CC #s CJ8386, CK6028, CK8113, CK8171, CL6030, CL6031, CL8126, CL8171 and CL8401) could not be ascertained due to lack of underlying grant agreements. Condition 2: For $2,126,731 of $2,199,010 in total expenditures for ALN 15.875 (EULG Food and Agriculture Support Program), such were charged to a single cost center (CM6226) that relates to two grant agreements with different periods of performance. Compliance with period of performance requirements regarding costs totaling $826,606 related to award no. D22AF00084-00 could not be ascertained. Condition 3: For $1,628,416 of $2,880,710 in total expenditures for ALN 93.323 (Epidemiology and Laboratory Capacity for Infectious Diseases), compliance with period of performance requirements for five cost centers (CC #s FK7609, FL7615, FL7616, FN7610 and FN7618) could not be ascertained due to lack of underlying grant agreements. Cause: RepMar lacks adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Effect: RepMar is potentially in noncompliance with applicable period of performance requirements. Questioned costs, if any, that may result from the above conditions, are not determinable. Identification as a Repeat Finding: Finding No. 2021-004 (ALN 15.875 Compact Sector Grant) Recommendation: RepMar should implement adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-007 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $61,961 Area: Procurement and Suspension and Debarment Criteria: Article VI, Section 1(j)(1) of the Fiscal Procedures Agreement (FPA) states that RepMar may use its own procedures for procurement, whether done by the government or its Sub-Grantees, provided that they meet the standards identified in the FPA. (a) Section 124 - unless otherwise authorized by law, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 127 - procurement of goods and services not exceeding $25,000 may be made in purchase procedures are those relatively simple and informal methods for securing services, Banking and Postal Services has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from three qualified sources. (c) Section 128 - a contract may be awarded for a supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. Condition: For 13 (or 52%) of 25 procurement transactions tested, aggregating $1,226,655 of $1,514,067 in total transactions subject to procurement requirements, no procurement file was provided. Item # Encumbrance or EULG check # Ref # Amount QC reported at this Finding 1 unavailable 768401 $ 5,529 $ 5,529 2 unavailable 770642 247,872 - 3 P8937001 772373 33,500 33,500 4 P8937301 774899 22,932 22,932 5 check 38047 787948 13,058 - Condition, continued: Item # Encumbrance or EULG check # Ref # Amount QC reported at this Finding 6 check 63794 789220 10,842 - 7 check 63798 789220 432 - 8 check 38258 789220 52,153 - 9 check 63714 790134 19,476 - 10 check 63559 790134 370 - 11 check 63872 798961 4,200 - 12 check 63941 798961 6,565 - 13 check 38350 798961 38,000 - $ 454,929 $ 61,961 Item #s 2 and 5 through 13 are also reported as matters of noncompliance within Finding 2022-002, including associated questioned costs. Cause: RepMar did not enforce internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $61,961. Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-009 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $0 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $0 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $0 Area: Reporting Criteria: Grant agreements stipulate the type and frequency of reports to be submitted. Furthermore, timely, accurate and complete reporting should be facilitated by an internal control structure conducive to the monitoring, preparation and independent review of required reports. Lastly, financial reports should reconcile with underlying accounting records. Condition 1 (ALN 15.875 and 93.323): There is no monitoring of required reports to be submitted or listing of reports already submitted. It does not appear that RepMar has developed means to monitor compliance with reporting requirements. Condition 2 (ALN 15.875 Compact Sector Grants): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. SF- - underlying accounting 240P report. Furthermore, no SF-425 report ended 9/30/2022 was provided for examination. Condition 3 (ALN 15.875 EULG Food and Agriculture Support Program ): Required reports were not available for examination. Condition 4 (ALN 93.323): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. Required reports were not available for examination. Cause: RepMar lacks adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar lacks adequate internal control policies and procedures over retention of all grant agreements, copies of reports submitted to grantors, and the underlying accounting records. Effect: Sufficient appropriate audit evidence supporting compliance with applicable reporting requirements were not obtained which results in report modification. No questioned cost is reported as the condition relates to inadequacy of internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and underlying accounting records. Identification as a Repeat Finding: Finding Nos. 2021-010 and 2021-012. Recommendation: RepMar should establish adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar should establish internal control policies and procedures requiring retention of all grant agreements and copies of reports submitted to grantors. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-011 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $0 Area: Subrecipient Monitoring Criteria: The Notice of Grant Award states that funding is not to be sub-granted. Condition: Grant funds were passed through to a subrecipient, in violation of grant terms and without a subaward agreement. Refer to Finding No. 2022-002. Cause: RepMar lacks adequate internal control policies and procedures requiring monitoring and adherence with grant terms and conditions. Effect: RepMar is potentially in noncompliance with applicable subrecipient monitoring requirements. Recommendation: RepMar should implement adequate internal control policies and procedures requiring adherence with grant terms. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-003 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $550,115 Area: Allowable Costs/Cost Principles Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with allowable costs/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. Condition 1: For 13 (or 48%) of 27 non-payroll transactions tested, aggregating $1,844,265 of $2,468,210 in total non-payroll program expenditures, the following deficiencies were noted: Item # Encumbrance/ Voucher # Cost Center # COVID Non-COVID Total 1 A25947 FK7608 $ 508 $ - $ 508 2 C15643 FL7615 65,304 - 65,304 3 C14915 FL7615 60,136 - 60,136 4 C16301 FL7615 21,852 - 21,852 5 C14911 FL7615 28,228 - 28,228 6 F00421 FL7615 2,561 - 2,561 7 C15761 FL7615 140,000 - 140,000 8 783849 FL7616 118,476 - 118,476 9 772535 FL7616 17,302 - 17,302 10 015030 FN7603 - 32,215 32,215 11 012629 FN7614 20,000 - 20,000 12 012612 FN7605 - 2,581 2,581 13 012613 FN7610 - 39,008 39,008 $ 474,367 $ 73,804 $ 548,171 Item # 1 pertains to airfare cost for a technician to install IT equipment at Ebeye hospital. Cost allocation to the program was not supported. Item # 2 pertains to IT equipment for which there was inadequate documentation to support cost allocation to the program. Item #s 3 through 5 pertain to construction-related costs which are specifically prohibited by the grant. Condition 1, continued: Item # 6 pertains to a laptop purchased for use by a Procurement and Supply Division employee. There was inadequate documentation to support charging the program for this purchase. Item # 7 pertains to security services for which there was inadequate documentation to support cost allocation to the program. Item # 8 pertains to Ministry of Health and Human Services (MOHHS) communication expenditures for which there was inadequate documentation to support cost allocation to the program. Item #s 9 through 13 pertain to MOHHS utility expenditures for which there was inadequate documentation to support cost allocation to the program. Condition 2: For 3 (or 33%) of 9 payroll transactions tested, aggregating $12,595 of $412,500 in total payroll program expenditures, the following deficiencies were noted: Employee # 247926 was paid $50 (or 8 hours) for leave for pay period ended 7/30/2022; such cost was not supported by an approved leave form. Hazardous pay of $700 (check # 229052) was not supported by documented approval authorizing cost allocation to the program for general fund. Employee # 97944 was paid $1,194 for overtime for pay-period ended 10/23/2021; documented approval for such cost allocation to the program was not provided. The above are expenditures under COVID cost centers and resulted in reportable questioned costs of $1,944 because the projected questioned cost exceeds the $25,000 threshold. Cause: RepMar did not effectively monitor the validity and allowability of expenditures. Effect: RepMar is in noncompliance with allowable costs/cost principles requirements. The reportable questioned cost is $476,311 (COVID) and $73,804 (non-COVID). Recommendation: RepMar management should strengthen monitoring controls so that expenditures are verified for validity and allowability. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-005 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $ Undeterminable Area: Period of Performance Criteria: Grant agreements stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Condition 1: For $573,068 of $31,492,268 in total ALN 15.875 (Compact Sector Grants) expenditures, compliance with period of performance requirements for nine cost centers (CC #s CJ8386, CK6028, CK8113, CK8171, CL6030, CL6031, CL8126, CL8171 and CL8401) could not be ascertained due to lack of underlying grant agreements. Condition 2: For $2,126,731 of $2,199,010 in total expenditures for ALN 15.875 (EULG Food and Agriculture Support Program), such were charged to a single cost center (CM6226) that relates to two grant agreements with different periods of performance. Compliance with period of performance requirements regarding costs totaling $826,606 related to award no. D22AF00084-00 could not be ascertained. Condition 3: For $1,628,416 of $2,880,710 in total expenditures for ALN 93.323 (Epidemiology and Laboratory Capacity for Infectious Diseases), compliance with period of performance requirements for five cost centers (CC #s FK7609, FL7615, FL7616, FN7610 and FN7618) could not be ascertained due to lack of underlying grant agreements. Cause: RepMar lacks adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Effect: RepMar is potentially in noncompliance with applicable period of performance requirements. Questioned costs, if any, that may result from the above conditions, are not determinable. Identification as a Repeat Finding: Finding No. 2021-004 (ALN 15.875 Compact Sector Grant) Recommendation: RepMar should implement adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-008 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $660,990 Area: Procurement and Suspension and Debarment Criteria: Section 200.317 of 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards states that, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Procurement Code states the following: (a) Section 124 - unless otherwise authorized by law, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 127 - procurement of goods and services not exceeding $25,000 may be made in purchase procedures are those relatively simple and informal methods for securing services, Banking and Postal Services has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from three qualified sources. (c) Section 128 - a contract may be awarded for a supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. Condition: For 4 (or 33%) of 12 procurement transactions tested, aggregating $1,041,946 of $1,858,109 in total transactions subject to procurement requirements, no procurement file was provided. Item # Encumbrance # Ref # Amount QC reported at this Finding 1 C15761 767993 $ 135,186 $ - 2 C15945 785944 600,370 600,370 3 C16477 009097 50,620 50,620 4 F01223 793869 10,000 10,000 $ 796,176 $ 660,990 Cause: RepMar did not enforce adequate internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $650,990 (COVID) and $10,000 (non-COVID). Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-009 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $0 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $0 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $0 Area: Reporting Criteria: Grant agreements stipulate the type and frequency of reports to be submitted. Furthermore, timely, accurate and complete reporting should be facilitated by an internal control structure conducive to the monitoring, preparation and independent review of required reports. Lastly, financial reports should reconcile with underlying accounting records. Condition 1 (ALN 15.875 and 93.323): There is no monitoring of required reports to be submitted or listing of reports already submitted. It does not appear that RepMar has developed means to monitor compliance with reporting requirements. Condition 2 (ALN 15.875 Compact Sector Grants): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. SF- - underlying accounting 240P report. Furthermore, no SF-425 report ended 9/30/2022 was provided for examination. Condition 3 (ALN 15.875 EULG Food and Agriculture Support Program ): Required reports were not available for examination. Condition 4 (ALN 93.323): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. Required reports were not available for examination. Cause: RepMar lacks adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar lacks adequate internal control policies and procedures over retention of all grant agreements, copies of reports submitted to grantors, and the underlying accounting records. Effect: Sufficient appropriate audit evidence supporting compliance with applicable reporting requirements were not obtained which results in report modification. No questioned cost is reported as the condition relates to inadequacy of internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and underlying accounting records. Identification as a Repeat Finding: Finding Nos. 2021-010 and 2021-012. Recommendation: RepMar should establish adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar should establish internal control policies and procedures requiring retention of all grant agreements and copies of reports submitted to grantors. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-003 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $550,115 Area: Allowable Costs/Cost Principles Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with allowable costs/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. Condition 1: For 13 (or 48%) of 27 non-payroll transactions tested, aggregating $1,844,265 of $2,468,210 in total non-payroll program expenditures, the following deficiencies were noted: Item # Encumbrance/ Voucher # Cost Center # COVID Non-COVID Total 1 A25947 FK7608 $ 508 $ - $ 508 2 C15643 FL7615 65,304 - 65,304 3 C14915 FL7615 60,136 - 60,136 4 C16301 FL7615 21,852 - 21,852 5 C14911 FL7615 28,228 - 28,228 6 F00421 FL7615 2,561 - 2,561 7 C15761 FL7615 140,000 - 140,000 8 783849 FL7616 118,476 - 118,476 9 772535 FL7616 17,302 - 17,302 10 015030 FN7603 - 32,215 32,215 11 012629 FN7614 20,000 - 20,000 12 012612 FN7605 - 2,581 2,581 13 012613 FN7610 - 39,008 39,008 $ 474,367 $ 73,804 $ 548,171 Item # 1 pertains to airfare cost for a technician to install IT equipment at Ebeye hospital. Cost allocation to the program was not supported. Item # 2 pertains to IT equipment for which there was inadequate documentation to support cost allocation to the program. Item #s 3 through 5 pertain to construction-related costs which are specifically prohibited by the grant. Condition 1, continued: Item # 6 pertains to a laptop purchased for use by a Procurement and Supply Division employee. There was inadequate documentation to support charging the program for this purchase. Item # 7 pertains to security services for which there was inadequate documentation to support cost allocation to the program. Item # 8 pertains to Ministry of Health and Human Services (MOHHS) communication expenditures for which there was inadequate documentation to support cost allocation to the program. Item #s 9 through 13 pertain to MOHHS utility expenditures for which there was inadequate documentation to support cost allocation to the program. Condition 2: For 3 (or 33%) of 9 payroll transactions tested, aggregating $12,595 of $412,500 in total payroll program expenditures, the following deficiencies were noted: Employee # 247926 was paid $50 (or 8 hours) for leave for pay period ended 7/30/2022; such cost was not supported by an approved leave form. Hazardous pay of $700 (check # 229052) was not supported by documented approval authorizing cost allocation to the program for general fund. Employee # 97944 was paid $1,194 for overtime for pay-period ended 10/23/2021; documented approval for such cost allocation to the program was not provided. The above are expenditures under COVID cost centers and resulted in reportable questioned costs of $1,944 because the projected questioned cost exceeds the $25,000 threshold. Cause: RepMar did not effectively monitor the validity and allowability of expenditures. Effect: RepMar is in noncompliance with allowable costs/cost principles requirements. The reportable questioned cost is $476,311 (COVID) and $73,804 (non-COVID). Recommendation: RepMar management should strengthen monitoring controls so that expenditures are verified for validity and allowability. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-005 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $ Undeterminable Area: Period of Performance Criteria: Grant agreements stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Condition 1: For $573,068 of $31,492,268 in total ALN 15.875 (Compact Sector Grants) expenditures, compliance with period of performance requirements for nine cost centers (CC #s CJ8386, CK6028, CK8113, CK8171, CL6030, CL6031, CL8126, CL8171 and CL8401) could not be ascertained due to lack of underlying grant agreements. Condition 2: For $2,126,731 of $2,199,010 in total expenditures for ALN 15.875 (EULG Food and Agriculture Support Program), such were charged to a single cost center (CM6226) that relates to two grant agreements with different periods of performance. Compliance with period of performance requirements regarding costs totaling $826,606 related to award no. D22AF00084-00 could not be ascertained. Condition 3: For $1,628,416 of $2,880,710 in total expenditures for ALN 93.323 (Epidemiology and Laboratory Capacity for Infectious Diseases), compliance with period of performance requirements for five cost centers (CC #s FK7609, FL7615, FL7616, FN7610 and FN7618) could not be ascertained due to lack of underlying grant agreements. Cause: RepMar lacks adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Effect: RepMar is potentially in noncompliance with applicable period of performance requirements. Questioned costs, if any, that may result from the above conditions, are not determinable. Identification as a Repeat Finding: Finding No. 2021-004 (ALN 15.875 Compact Sector Grant) Recommendation: RepMar should implement adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-008 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $660,990 Area: Procurement and Suspension and Debarment Criteria: Section 200.317 of 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards states that, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Procurement Code states the following: (a) Section 124 - unless otherwise authorized by law, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 127 - procurement of goods and services not exceeding $25,000 may be made in purchase procedures are those relatively simple and informal methods for securing services, Banking and Postal Services has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from three qualified sources. (c) Section 128 - a contract may be awarded for a supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. Condition: For 4 (or 33%) of 12 procurement transactions tested, aggregating $1,041,946 of $1,858,109 in total transactions subject to procurement requirements, no procurement file was provided. Item # Encumbrance # Ref # Amount QC reported at this Finding 1 C15761 767993 $ 135,186 $ - 2 C15945 785944 600,370 600,370 3 C16477 009097 50,620 50,620 4 F01223 793869 10,000 10,000 $ 796,176 $ 660,990 Cause: RepMar did not enforce adequate internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $650,990 (COVID) and $10,000 (non-COVID). Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-009 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $0 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $0 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $0 Area: Reporting Criteria: Grant agreements stipulate the type and frequency of reports to be submitted. Furthermore, timely, accurate and complete reporting should be facilitated by an internal control structure conducive to the monitoring, preparation and independent review of required reports. Lastly, financial reports should reconcile with underlying accounting records. Condition 1 (ALN 15.875 and 93.323): There is no monitoring of required reports to be submitted or listing of reports already submitted. It does not appear that RepMar has developed means to monitor compliance with reporting requirements. Condition 2 (ALN 15.875 Compact Sector Grants): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. SF- - underlying accounting 240P report. Furthermore, no SF-425 report ended 9/30/2022 was provided for examination. Condition 3 (ALN 15.875 EULG Food and Agriculture Support Program ): Required reports were not available for examination. Condition 4 (ALN 93.323): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. Required reports were not available for examination. Cause: RepMar lacks adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar lacks adequate internal control policies and procedures over retention of all grant agreements, copies of reports submitted to grantors, and the underlying accounting records. Effect: Sufficient appropriate audit evidence supporting compliance with applicable reporting requirements were not obtained which results in report modification. No questioned cost is reported as the condition relates to inadequacy of internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and underlying accounting records. Identification as a Repeat Finding: Finding Nos. 2021-010 and 2021-012. Recommendation: RepMar should establish adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar should establish internal control policies and procedures requiring retention of all grant agreements and copies of reports submitted to grantors. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-001 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $27,380 Area: Allowable Costs/Cost Principles Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with allowable costs/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. Condition 1: For 3 (or 10%) of 29 non-payroll transactions tested aggregating $3,375,773 of $14,205,851 in total non-payroll program expenditures, supporting documentation were not provided for the following: Item # Fund # Encumbrance/ Voucher/JV # Account Total 1 410150 T83102001 Training and Staff Development $ 1,750 2 410100 G22-279W Food Stuff 18,275 3 410102 G22-283C Other Supplies and Materials 5,621 $ 25,646 Condition 2: For 8 (or 21%) of 39 payroll transactions tested aggregating $66,558 of $17,286,417 in total payroll program expenditures, the following deficiencies were noted: Leave hours were not supported by an approved leave form for the following: # Employee # PPE Hours Amount 1 93573 03/12/2022 16 114 2 88856 04/23/2022 8 92 $ 206 Condition 2, continued: Overpayment of or unsupported salaries and wages were noted for the following: # Employee # PPE Amount 1 94419 10/09/2021 $ 170 2 203158 10/23/2021 692 3 62883 11/20/2021 34 4 93669 12/18/2021 185 5 244918 8/13/2022 293 6 205561 9/10/2022 154 $ 1,528 Item # 1 resulted from 126 unsupported additional night differential hours paid. Item # 2 resulted from incorrect payment of 80 differential hours (paid at 20%) as regular hours. Item #s 3 and 4 each resulted from overpayment of 8 hours. Item # 5 resulted from incorrect retroactive pay calculation resulting in overpayment of 102.8 hours. Item # 6 resulted from incorrect standby differential rate used (30%) rather than the Public Service Commission Personnel Manual rate (20%). The above resulted in reportable questioned costs of $1,734 because the projected questioned cost amount exceeds the $25,000 threshold. Cause: Inadequate file maintenance to support expenditures charged to federal programs. RepMar did not effectively monitor the validity and allowability of expenditures. Effect: RepMar is in noncompliance with allowable costs/cost principles requirements. The reportable questioned cost is $27,380. Recommendation: Documents supporting expenditures should be maintained. Further, RepMar management should strengthen monitoring controls so that expenditures are verified for validity and allowability. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-004 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $ Undeterminable Area: Equipment and Real Property Management Criteria: Section 200.313(d) of the Uniform Guidance and Article VI, Section 1(f)(4) of the Fiscal Procedures Agreement states that procedures for managing equipment, whether acquired in whole or in part with grant funds, will follow state laws and procedures. The following requirements are applicable: a. Property records must be maintained that include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date and cost of the property, the percentage of Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property; b. A physical inventory of the property must be conducted and the results must be reconciled with the property records at least once every two years; c. A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal Agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program; d. Regular maintenance procedures must be in place to ensure the property is in proper working condition; and e. If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. Additionally, the carrying amount of long-lived assets and the estimated useful lives of assets should be periodically re-assessed and adjusted, as appropriate, based on actual experience and relevant factors and circumstances. Condition: Capital assets records do not meet the criteria above and are not effectively maintained since updates to the records occur only once a year. Specifically, we noted the following deficiencies: An inventory of capital assets has not been performed in the recent past in accordance with the above criteria; therefore, a reconciliation of capital asset records and physical inventory has not occurred at least once in the past two years. Capital assets records are not effectively maintained. It does not appear that RepMar has implemented an effective control system to adequately safeguard capital assets from loss, damage or theft, or to reasonably investigate such occurrences. RepMar has not established policies and procedures governing property maintenance and has not effectively implemented an entity-wide maintenance plan. Long-lived assets are not routinely evaluated for possible impairment. Capital outlays within the Compact Sector Grants Fund for fiscal years 2022, 2021 and 2020 were as follows: Fiscal Year 2022 $ 4,592,264 Fiscal Year 2021 $ 5,909,859 Fiscal Year 2020 $ 3,358,375 Cause: RepMar lacks adequate internal control policies and procedures to satisfy compliance with federal property rules and regulations and lacks effective procedures governing property maintenance, as well as periodic assessment of asset impairment conditions and useful lives. Moreover, internal control policies and procedures requiring periodic and timely performance and independent review of capital assets reconciliations and related general ledger accounts are not effectively implemented. Effect: RepMar is in noncompliance with applicable equipment and real property management requirements, and possible misstatement of capital assets and related accounts exists. Questioned costs, if any, which may result from inadequate property records, maintenance procedures, and the absence of timely reconciliations are not determinable. Identification as a Repeat Finding: Finding No. 2021-003 Recommendation: The Ministry of Finance, Banking and Postal Services (MOFBPS) should perform an inventory of such inventory in accordance with applicable property rules and regulations, and should develop adequate maintenance procedures in order to keep property in good condition. Furthermore, RepMar should implement internal control policies and procedures requiring periodic and timely performance and independent review of capital assets reconciliation and related general ledger accounts. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-005 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $ Undeterminable Area: Period of Performance Criteria: Grant agreements stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Condition 1: For $573,068 of $31,492,268 in total ALN 15.875 (Compact Sector Grants) expenditures, compliance with period of performance requirements for nine cost centers (CC #s CJ8386, CK6028, CK8113, CK8171, CL6030, CL6031, CL8126, CL8171 and CL8401) could not be ascertained due to lack of underlying grant agreements. Condition 2: For $2,126,731 of $2,199,010 in total expenditures for ALN 15.875 (EULG Food and Agriculture Support Program), such were charged to a single cost center (CM6226) that relates to two grant agreements with different periods of performance. Compliance with period of performance requirements regarding costs totaling $826,606 related to award no. D22AF00084-00 could not be ascertained. Condition 3: For $1,628,416 of $2,880,710 in total expenditures for ALN 93.323 (Epidemiology and Laboratory Capacity for Infectious Diseases), compliance with period of performance requirements for five cost centers (CC #s FK7609, FL7615, FL7616, FN7610 and FN7618) could not be ascertained due to lack of underlying grant agreements. Cause: RepMar lacks adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Effect: RepMar is potentially in noncompliance with applicable period of performance requirements. Questioned costs, if any, that may result from the above conditions, are not determinable. Identification as a Repeat Finding: Finding No. 2021-004 (ALN 15.875 Compact Sector Grant) Recommendation: RepMar should implement adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-006 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $44,942 Area: Procurement and Suspension and Debarment Criteria: Article VI, Section 1(j)(1) of the Fiscal Procedures Agreement (FPA) states that RepMar may use its own procedures for procurement, whether done by the government or its Sub-Grantees, provided that they meet the standards identified in the FPA. (a) Section 124 - unless otherwise authorized by law, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 127 - procurement of goods and services not exceeding $25,000 may be made in purchase procedures are those relatively simple and informal methods for securing services, Banking and Postal Services has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from three qualified sources. (c) Section 128 - a contract may be awarded for a supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. Condition: For 4 (or 7%) of 60 procurement transactions tested, aggregating $2,006,444 of $10,668,605 in total transactions subject to procurement requirements, no procurement file was provided. Fund # Encumbrance # Ref # Amount 410100 A26328 795172 $ 3,826 410102 P86331 764579 8,614 510110 P87912 764652 23,301 510110 P87510 764653 9,201 $ 44,942 Cause: RepMar did not enforce internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $44,942. Identification as a Repeat Finding: Finding No. 2021-005 Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-009 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $0 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $0 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $0 Area: Reporting Criteria: Grant agreements stipulate the type and frequency of reports to be submitted. Furthermore, timely, accurate and complete reporting should be facilitated by an internal control structure conducive to the monitoring, preparation and independent review of required reports. Lastly, financial reports should reconcile with underlying accounting records. Condition 1 (ALN 15.875 and 93.323): There is no monitoring of required reports to be submitted or listing of reports already submitted. It does not appear that RepMar has developed means to monitor compliance with reporting requirements. Condition 2 (ALN 15.875 Compact Sector Grants): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. SF- - underlying accounting 240P report. Furthermore, no SF-425 report ended 9/30/2022 was provided for examination. Condition 3 (ALN 15.875 EULG Food and Agriculture Support Program ): Required reports were not available for examination. Condition 4 (ALN 93.323): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. Required reports were not available for examination. Cause: RepMar lacks adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar lacks adequate internal control policies and procedures over retention of all grant agreements, copies of reports submitted to grantors, and the underlying accounting records. Effect: Sufficient appropriate audit evidence supporting compliance with applicable reporting requirements were not obtained which results in report modification. No questioned cost is reported as the condition relates to inadequacy of internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and underlying accounting records. Identification as a Repeat Finding: Finding Nos. 2021-010 and 2021-012. Recommendation: RepMar should establish adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar should establish internal control policies and procedures requiring retention of all grant agreements and copies of reports submitted to grantors. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-010 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $74,794 Area: Subrecipient Monitoring Criteria: 1) Article VI, Section 1(a)(1) of the Fiscal Procedures Agreement (FPA) states that fiscal control and accounting procedures of RepMar, as well as its Sub-Grantees, shall be sufficient to: (i) permit the preparation of reports required by the FPA and the Compact, as amended; and (ii) permit the tracing of funds to a level of expenditures adequate to establish that such funds have been used in compliance with the provisions of the Compact, as amended, and applicable agreements. Furthermore, Article VI, Section 1(k)(1) of the FPA states that RepMar shall ensure that: (i) every Sub-Grant includes any clauses required by the Compact, as amended, the sector Grant awards, and the FPA; (ii) Sub-Grantees are aware of the requirements imposed upon them by the Compact, as amended, the sector Grants and the FPA; and (iii) Sub-Grantees can meet the financial management standards of the FPA. 2) In accordance with applicable subrecipient monitoring requirements, the pass-through entity (PTE) must follow-up and ensure that the subrecipient takes timely and appropriate action on all deficiencies detected through audits, on-site reviews, and other means, pertaining to the Federal awards provided by the PTE to the subrecipient. Condition 1: RepMar has not implemented effective policies and procedures over subrecipient monitoring, including compliance with related Compact provisions. For 4 (or 100%) subrecipients tested, deficiencies were noted as follows: Item # Subrecipient Fund # Sub-Grant 1 College of the Marshall Islands 410100 $1,900,328 2 Ebeye Seventh Day Adventist 410150 73,463 3 Queen of Peace 410150 35,005 4 Kwajalein Atoll Joint Utilities Resources 410160 663,930 $2,672,726 Condition 1, continued: Document (MOFBPS) monitoring of subrecipient activities was not made available for examination. Consequently, we were unable to ascertain whether MOFBPS monitored subrecipient compliance with subaward agreements, Compact Agreement, grant award, and the FPA. No questioned costs are reported for item #s 1 and 4 since the subrecipients are separately audited. For item #s 2 and 3, the subrecipients submitted the required financial reports. Condition 2: Subrecipient monitoring schedule provided by MOFBPS was incomplete and inaccurate. Condition 1, item # 4, was not included in the schedule. Condition 3: RepMar did not perform the required monitoring activities for one subrecipient. The 2021 Single Audit Report for the College of the Marshall Islands (CMI) dated September 26, 2024 was accepted by the Federal Audit Clearinghouse on October 10, 2024. Such report included findings and questioned costs amounting to $74,794 for noncompliance, as follows: Finding No. Compliance Requirement QC Amount 2021-006 Allowable Costs/Cost Principles $ 4,597 2021-007 Equipment and Real Property Management - 2021-008 Period of Performance 2,107 2021-009 Procurement and Suspension and Debarment 68,090 2021-010 Reporting - $ 74,794 RepMar did not issue a management decision Cause: RepMar lacks effective internal control policies and procedures governing subrecipient monitoring. Effect: RepMar is in noncompliance with applicable subrecipient monitoring requirements. The reportable questioned cost is $74,794. Identification as a Repeat Finding: Finding No. 2021-008 Recommendation: RepMar should comply with the applicable provisions of the FPA and subrecipient monitoring requirements and should develop and implement effective subrecipient monitoring procedures. Furthermore, MOFBPS should enforce compliance with subaward agreements, including timely Single Audits of subrecipients, as applicable. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-002 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $1,763,366 Area: Allowable Costs/Cost Principles Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with allowable costs/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. Condition: Of 39 non-payroll transactions tested, aggregating $1,587,482 of $2,199,010 in total non-payroll program expenditures, the following deficiencies were noted: The grant terms and conditions state that assistance under the award may not be sub-granted or transferred; however, $1,737,620 of the funding was disbursed directly to a subrecipient, of which $685,289 represented reimbursement for payroll costs which were not supported by underlying timesheets, personnel action forms, and registers. Furthermore, no executed subgrant agreement with the subrecipient was made available. The grant terms and conditions state that assistance may not be used for payment of professional legal or administrative fees, however, $24,000 in legal fees were charged to the program (APV #s 770018, 777397, 783370, and 789894). For 1 (or 3%) voucher (#769225) amounting to $1,746, the underlying lease agreement does not support the disbursement duty station is on Enewetak while the leased housing is located on Majuro. Cause: Inadequate file maintenance to support expenditures charged to federal programs. RepMar did not effectively monitor the validity and allowability of expenditures. Furthermore, RepMar lacks adequate internal control policies and procedures to facilitate adherence with grant terms and conditions. Effect: RepMar is in noncompliance with allowable costs/cost principles requirements. The reportable questioned cost is $1,763,366. Recommendation: Documents supporting expenditures should be maintained. Further, RepMar management should strengthen monitoring controls and adopt adequate internal control policies and procedures to facilitate adherence with grant terms and conditions. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-005 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $ Undeterminable Area: Period of Performance Criteria: Grant agreements stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Condition 1: For $573,068 of $31,492,268 in total ALN 15.875 (Compact Sector Grants) expenditures, compliance with period of performance requirements for nine cost centers (CC #s CJ8386, CK6028, CK8113, CK8171, CL6030, CL6031, CL8126, CL8171 and CL8401) could not be ascertained due to lack of underlying grant agreements. Condition 2: For $2,126,731 of $2,199,010 in total expenditures for ALN 15.875 (EULG Food and Agriculture Support Program), such were charged to a single cost center (CM6226) that relates to two grant agreements with different periods of performance. Compliance with period of performance requirements regarding costs totaling $826,606 related to award no. D22AF00084-00 could not be ascertained. Condition 3: For $1,628,416 of $2,880,710 in total expenditures for ALN 93.323 (Epidemiology and Laboratory Capacity for Infectious Diseases), compliance with period of performance requirements for five cost centers (CC #s FK7609, FL7615, FL7616, FN7610 and FN7618) could not be ascertained due to lack of underlying grant agreements. Cause: RepMar lacks adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Effect: RepMar is potentially in noncompliance with applicable period of performance requirements. Questioned costs, if any, that may result from the above conditions, are not determinable. Identification as a Repeat Finding: Finding No. 2021-004 (ALN 15.875 Compact Sector Grant) Recommendation: RepMar should implement adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-007 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $61,961 Area: Procurement and Suspension and Debarment Criteria: Article VI, Section 1(j)(1) of the Fiscal Procedures Agreement (FPA) states that RepMar may use its own procedures for procurement, whether done by the government or its Sub-Grantees, provided that they meet the standards identified in the FPA. (a) Section 124 - unless otherwise authorized by law, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 127 - procurement of goods and services not exceeding $25,000 may be made in purchase procedures are those relatively simple and informal methods for securing services, Banking and Postal Services has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from three qualified sources. (c) Section 128 - a contract may be awarded for a supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. Condition: For 13 (or 52%) of 25 procurement transactions tested, aggregating $1,226,655 of $1,514,067 in total transactions subject to procurement requirements, no procurement file was provided. Item # Encumbrance or EULG check # Ref # Amount QC reported at this Finding 1 unavailable 768401 $ 5,529 $ 5,529 2 unavailable 770642 247,872 - 3 P8937001 772373 33,500 33,500 4 P8937301 774899 22,932 22,932 5 check 38047 787948 13,058 - Condition, continued: Item # Encumbrance or EULG check # Ref # Amount QC reported at this Finding 6 check 63794 789220 10,842 - 7 check 63798 789220 432 - 8 check 38258 789220 52,153 - 9 check 63714 790134 19,476 - 10 check 63559 790134 370 - 11 check 63872 798961 4,200 - 12 check 63941 798961 6,565 - 13 check 38350 798961 38,000 - $ 454,929 $ 61,961 Item #s 2 and 5 through 13 are also reported as matters of noncompliance within Finding 2022-002, including associated questioned costs. Cause: RepMar did not enforce internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $61,961. Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-009 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $0 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $0 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $0 Area: Reporting Criteria: Grant agreements stipulate the type and frequency of reports to be submitted. Furthermore, timely, accurate and complete reporting should be facilitated by an internal control structure conducive to the monitoring, preparation and independent review of required reports. Lastly, financial reports should reconcile with underlying accounting records. Condition 1 (ALN 15.875 and 93.323): There is no monitoring of required reports to be submitted or listing of reports already submitted. It does not appear that RepMar has developed means to monitor compliance with reporting requirements. Condition 2 (ALN 15.875 Compact Sector Grants): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. SF- - underlying accounting 240P report. Furthermore, no SF-425 report ended 9/30/2022 was provided for examination. Condition 3 (ALN 15.875 EULG Food and Agriculture Support Program ): Required reports were not available for examination. Condition 4 (ALN 93.323): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. Required reports were not available for examination. Cause: RepMar lacks adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar lacks adequate internal control policies and procedures over retention of all grant agreements, copies of reports submitted to grantors, and the underlying accounting records. Effect: Sufficient appropriate audit evidence supporting compliance with applicable reporting requirements were not obtained which results in report modification. No questioned cost is reported as the condition relates to inadequacy of internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and underlying accounting records. Identification as a Repeat Finding: Finding Nos. 2021-010 and 2021-012. Recommendation: RepMar should establish adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar should establish internal control policies and procedures requiring retention of all grant agreements and copies of reports submitted to grantors. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-011 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $0 Area: Subrecipient Monitoring Criteria: The Notice of Grant Award states that funding is not to be sub-granted. Condition: Grant funds were passed through to a subrecipient, in violation of grant terms and without a subaward agreement. Refer to Finding No. 2022-002. Cause: RepMar lacks adequate internal control policies and procedures requiring monitoring and adherence with grant terms and conditions. Effect: RepMar is potentially in noncompliance with applicable subrecipient monitoring requirements. Recommendation: RepMar should implement adequate internal control policies and procedures requiring adherence with grant terms. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-003 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $550,115 Area: Allowable Costs/Cost Principles Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with allowable costs/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. Condition 1: For 13 (or 48%) of 27 non-payroll transactions tested, aggregating $1,844,265 of $2,468,210 in total non-payroll program expenditures, the following deficiencies were noted: Item # Encumbrance/ Voucher # Cost Center # COVID Non-COVID Total 1 A25947 FK7608 $ 508 $ - $ 508 2 C15643 FL7615 65,304 - 65,304 3 C14915 FL7615 60,136 - 60,136 4 C16301 FL7615 21,852 - 21,852 5 C14911 FL7615 28,228 - 28,228 6 F00421 FL7615 2,561 - 2,561 7 C15761 FL7615 140,000 - 140,000 8 783849 FL7616 118,476 - 118,476 9 772535 FL7616 17,302 - 17,302 10 015030 FN7603 - 32,215 32,215 11 012629 FN7614 20,000 - 20,000 12 012612 FN7605 - 2,581 2,581 13 012613 FN7610 - 39,008 39,008 $ 474,367 $ 73,804 $ 548,171 Item # 1 pertains to airfare cost for a technician to install IT equipment at Ebeye hospital. Cost allocation to the program was not supported. Item # 2 pertains to IT equipment for which there was inadequate documentation to support cost allocation to the program. Item #s 3 through 5 pertain to construction-related costs which are specifically prohibited by the grant. Condition 1, continued: Item # 6 pertains to a laptop purchased for use by a Procurement and Supply Division employee. There was inadequate documentation to support charging the program for this purchase. Item # 7 pertains to security services for which there was inadequate documentation to support cost allocation to the program. Item # 8 pertains to Ministry of Health and Human Services (MOHHS) communication expenditures for which there was inadequate documentation to support cost allocation to the program. Item #s 9 through 13 pertain to MOHHS utility expenditures for which there was inadequate documentation to support cost allocation to the program. Condition 2: For 3 (or 33%) of 9 payroll transactions tested, aggregating $12,595 of $412,500 in total payroll program expenditures, the following deficiencies were noted: Employee # 247926 was paid $50 (or 8 hours) for leave for pay period ended 7/30/2022; such cost was not supported by an approved leave form. Hazardous pay of $700 (check # 229052) was not supported by documented approval authorizing cost allocation to the program for general fund. Employee # 97944 was paid $1,194 for overtime for pay-period ended 10/23/2021; documented approval for such cost allocation to the program was not provided. The above are expenditures under COVID cost centers and resulted in reportable questioned costs of $1,944 because the projected questioned cost exceeds the $25,000 threshold. Cause: RepMar did not effectively monitor the validity and allowability of expenditures. Effect: RepMar is in noncompliance with allowable costs/cost principles requirements. The reportable questioned cost is $476,311 (COVID) and $73,804 (non-COVID). Recommendation: RepMar management should strengthen monitoring controls so that expenditures are verified for validity and allowability. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-005 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $ Undeterminable Area: Period of Performance Criteria: Grant agreements stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Condition 1: For $573,068 of $31,492,268 in total ALN 15.875 (Compact Sector Grants) expenditures, compliance with period of performance requirements for nine cost centers (CC #s CJ8386, CK6028, CK8113, CK8171, CL6030, CL6031, CL8126, CL8171 and CL8401) could not be ascertained due to lack of underlying grant agreements. Condition 2: For $2,126,731 of $2,199,010 in total expenditures for ALN 15.875 (EULG Food and Agriculture Support Program), such were charged to a single cost center (CM6226) that relates to two grant agreements with different periods of performance. Compliance with period of performance requirements regarding costs totaling $826,606 related to award no. D22AF00084-00 could not be ascertained. Condition 3: For $1,628,416 of $2,880,710 in total expenditures for ALN 93.323 (Epidemiology and Laboratory Capacity for Infectious Diseases), compliance with period of performance requirements for five cost centers (CC #s FK7609, FL7615, FL7616, FN7610 and FN7618) could not be ascertained due to lack of underlying grant agreements. Cause: RepMar lacks adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Effect: RepMar is potentially in noncompliance with applicable period of performance requirements. Questioned costs, if any, that may result from the above conditions, are not determinable. Identification as a Repeat Finding: Finding No. 2021-004 (ALN 15.875 Compact Sector Grant) Recommendation: RepMar should implement adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-008 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $660,990 Area: Procurement and Suspension and Debarment Criteria: Section 200.317 of 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards states that, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Procurement Code states the following: (a) Section 124 - unless otherwise authorized by law, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 127 - procurement of goods and services not exceeding $25,000 may be made in purchase procedures are those relatively simple and informal methods for securing services, Banking and Postal Services has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from three qualified sources. (c) Section 128 - a contract may be awarded for a supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. Condition: For 4 (or 33%) of 12 procurement transactions tested, aggregating $1,041,946 of $1,858,109 in total transactions subject to procurement requirements, no procurement file was provided. Item # Encumbrance # Ref # Amount QC reported at this Finding 1 C15761 767993 $ 135,186 $ - 2 C15945 785944 600,370 600,370 3 C16477 009097 50,620 50,620 4 F01223 793869 10,000 10,000 $ 796,176 $ 660,990 Cause: RepMar did not enforce adequate internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $650,990 (COVID) and $10,000 (non-COVID). Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-009 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $0 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $0 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $0 Area: Reporting Criteria: Grant agreements stipulate the type and frequency of reports to be submitted. Furthermore, timely, accurate and complete reporting should be facilitated by an internal control structure conducive to the monitoring, preparation and independent review of required reports. Lastly, financial reports should reconcile with underlying accounting records. Condition 1 (ALN 15.875 and 93.323): There is no monitoring of required reports to be submitted or listing of reports already submitted. It does not appear that RepMar has developed means to monitor compliance with reporting requirements. Condition 2 (ALN 15.875 Compact Sector Grants): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. SF- - underlying accounting 240P report. Furthermore, no SF-425 report ended 9/30/2022 was provided for examination. Condition 3 (ALN 15.875 EULG Food and Agriculture Support Program ): Required reports were not available for examination. Condition 4 (ALN 93.323): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. Required reports were not available for examination. Cause: RepMar lacks adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar lacks adequate internal control policies and procedures over retention of all grant agreements, copies of reports submitted to grantors, and the underlying accounting records. Effect: Sufficient appropriate audit evidence supporting compliance with applicable reporting requirements were not obtained which results in report modification. No questioned cost is reported as the condition relates to inadequacy of internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and underlying accounting records. Identification as a Repeat Finding: Finding Nos. 2021-010 and 2021-012. Recommendation: RepMar should establish adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar should establish internal control policies and procedures requiring retention of all grant agreements and copies of reports submitted to grantors. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-003 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $550,115 Area: Allowable Costs/Cost Principles Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with allowable costs/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. Condition 1: For 13 (or 48%) of 27 non-payroll transactions tested, aggregating $1,844,265 of $2,468,210 in total non-payroll program expenditures, the following deficiencies were noted: Item # Encumbrance/ Voucher # Cost Center # COVID Non-COVID Total 1 A25947 FK7608 $ 508 $ - $ 508 2 C15643 FL7615 65,304 - 65,304 3 C14915 FL7615 60,136 - 60,136 4 C16301 FL7615 21,852 - 21,852 5 C14911 FL7615 28,228 - 28,228 6 F00421 FL7615 2,561 - 2,561 7 C15761 FL7615 140,000 - 140,000 8 783849 FL7616 118,476 - 118,476 9 772535 FL7616 17,302 - 17,302 10 015030 FN7603 - 32,215 32,215 11 012629 FN7614 20,000 - 20,000 12 012612 FN7605 - 2,581 2,581 13 012613 FN7610 - 39,008 39,008 $ 474,367 $ 73,804 $ 548,171 Item # 1 pertains to airfare cost for a technician to install IT equipment at Ebeye hospital. Cost allocation to the program was not supported. Item # 2 pertains to IT equipment for which there was inadequate documentation to support cost allocation to the program. Item #s 3 through 5 pertain to construction-related costs which are specifically prohibited by the grant. Condition 1, continued: Item # 6 pertains to a laptop purchased for use by a Procurement and Supply Division employee. There was inadequate documentation to support charging the program for this purchase. Item # 7 pertains to security services for which there was inadequate documentation to support cost allocation to the program. Item # 8 pertains to Ministry of Health and Human Services (MOHHS) communication expenditures for which there was inadequate documentation to support cost allocation to the program. Item #s 9 through 13 pertain to MOHHS utility expenditures for which there was inadequate documentation to support cost allocation to the program. Condition 2: For 3 (or 33%) of 9 payroll transactions tested, aggregating $12,595 of $412,500 in total payroll program expenditures, the following deficiencies were noted: Employee # 247926 was paid $50 (or 8 hours) for leave for pay period ended 7/30/2022; such cost was not supported by an approved leave form. Hazardous pay of $700 (check # 229052) was not supported by documented approval authorizing cost allocation to the program for general fund. Employee # 97944 was paid $1,194 for overtime for pay-period ended 10/23/2021; documented approval for such cost allocation to the program was not provided. The above are expenditures under COVID cost centers and resulted in reportable questioned costs of $1,944 because the projected questioned cost exceeds the $25,000 threshold. Cause: RepMar did not effectively monitor the validity and allowability of expenditures. Effect: RepMar is in noncompliance with allowable costs/cost principles requirements. The reportable questioned cost is $476,311 (COVID) and $73,804 (non-COVID). Recommendation: RepMar management should strengthen monitoring controls so that expenditures are verified for validity and allowability. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-005 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $ Undeterminable Area: Period of Performance Criteria: Grant agreements stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Condition 1: For $573,068 of $31,492,268 in total ALN 15.875 (Compact Sector Grants) expenditures, compliance with period of performance requirements for nine cost centers (CC #s CJ8386, CK6028, CK8113, CK8171, CL6030, CL6031, CL8126, CL8171 and CL8401) could not be ascertained due to lack of underlying grant agreements. Condition 2: For $2,126,731 of $2,199,010 in total expenditures for ALN 15.875 (EULG Food and Agriculture Support Program), such were charged to a single cost center (CM6226) that relates to two grant agreements with different periods of performance. Compliance with period of performance requirements regarding costs totaling $826,606 related to award no. D22AF00084-00 could not be ascertained. Condition 3: For $1,628,416 of $2,880,710 in total expenditures for ALN 93.323 (Epidemiology and Laboratory Capacity for Infectious Diseases), compliance with period of performance requirements for five cost centers (CC #s FK7609, FL7615, FL7616, FN7610 and FN7618) could not be ascertained due to lack of underlying grant agreements. Cause: RepMar lacks adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Effect: RepMar is potentially in noncompliance with applicable period of performance requirements. Questioned costs, if any, that may result from the above conditions, are not determinable. Identification as a Repeat Finding: Finding No. 2021-004 (ALN 15.875 Compact Sector Grant) Recommendation: RepMar should implement adequate internal control policies and procedures requiring retention of all grant agreements and creation of a unique cost center for each grant award. Views of Responsible Officials: We agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-008 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $660,990 Area: Procurement and Suspension and Debarment Criteria: Section 200.317 of 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards states that, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Procurement Code states the following: (a) Section 124 - unless otherwise authorized by law, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 127 - procurement of goods and services not exceeding $25,000 may be made in purchase procedures are those relatively simple and informal methods for securing services, Banking and Postal Services has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from three qualified sources. (c) Section 128 - a contract may be awarded for a supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. Condition: For 4 (or 33%) of 12 procurement transactions tested, aggregating $1,041,946 of $1,858,109 in total transactions subject to procurement requirements, no procurement file was provided. Item # Encumbrance # Ref # Amount QC reported at this Finding 1 C15761 767993 $ 135,186 $ - 2 C15945 785944 600,370 600,370 3 C16477 009097 50,620 50,620 4 F01223 793869 10,000 10,000 $ 796,176 $ 660,990 Cause: RepMar did not enforce adequate internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $650,990 (COVID) and $10,000 (non-COVID). Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.

Finding No.: 2022-009 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact Sector Grants Questioned Costs: $0 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture Support Program Questioned Costs: $0 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $0 Area: Reporting Criteria: Grant agreements stipulate the type and frequency of reports to be submitted. Furthermore, timely, accurate and complete reporting should be facilitated by an internal control structure conducive to the monitoring, preparation and independent review of required reports. Lastly, financial reports should reconcile with underlying accounting records. Condition 1 (ALN 15.875 and 93.323): There is no monitoring of required reports to be submitted or listing of reports already submitted. It does not appear that RepMar has developed means to monitor compliance with reporting requirements. Condition 2 (ALN 15.875 Compact Sector Grants): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. SF- - underlying accounting 240P report. Furthermore, no SF-425 report ended 9/30/2022 was provided for examination. Condition 3 (ALN 15.875 EULG Food and Agriculture Support Program ): Required reports were not available for examination. Condition 4 (ALN 93.323): Due to lack of certain grant agreements as reported in Finding No. 2022-005, we were unable to ascertain compliance with reporting requirements. Required reports were not available for examination. Cause: RepMar lacks adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar lacks adequate internal control policies and procedures over retention of all grant agreements, copies of reports submitted to grantors, and the underlying accounting records. Effect: Sufficient appropriate audit evidence supporting compliance with applicable reporting requirements were not obtained which results in report modification. No questioned cost is reported as the condition relates to inadequacy of internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and underlying accounting records. Identification as a Repeat Finding: Finding Nos. 2021-010 and 2021-012. Recommendation: RepMar should establish adequate internal control policies and procedures governing monitoring, preparation and independent review of required reports. Moreover, RepMar should establish internal control policies and procedures requiring retention of all grant agreements and copies of reports submitted to grantors. Views of Responsible Officials: We partially agree with the finding and provide details in our Corrective Action Plan.