Audit 370401

Identifying Number: 2024-004 Information on the Federal Program: ALN#21.033, U.S. Department of Treasury: COVID-19 Community Development Financial Institutions Fund Equitable Recovery Program (CDFI ERP) Criteria or Specific Requirement: The grant agreement specifies in Section A: Annual Reports, Performance Report Requirements, Performance Progress Reports and Uses of Award Reports must be submitted through AMIS. The CDFI Performance Progress Report and Uses of Award Report for Year 1 period of performance timeframe was from April 10, 2023 through December 31, 2024. Condition: The CDFI Performance Progress Report and Uses of Award Report for Year 1 was prepared by accounting, reviewed by management and submitted to CDFI timely, however the report was only completed for the timeframe January 1, 2024 through December 31, 2024. The reports were corrected and resubmitted. Cause: Management did not have effective controls in place to detect errors in the CDFI reports submitted. Effect: Failure to properly review can result in inaccurate reporting to CDFI and noncompliance with the grant agreement. Questioned Costs: Not applicable. Context: The reporting requirement is applicable only to this grant and therefore isolated. The population was tested 100%, therefore statistically valid. Repeat Finding: Not applicable. Recommendation: Procedures should be implemented and placed in service to ensure required reporting is completed according to the grant agreement. Views of responsible individuals: Management agrees with the Finding and recommendation. See corrective action plan for further information.

Identifying Number: 2024-005 Information on the Federal Program: ALN#21.033, U.S. Department of Treasury: COVID-19 Community Development Financial Institutions Fund Equitable Recovery Program (CDFI ERP) Criteria or Specific Requirement: The grant agreement specifies in Section C Performance Goals, Performance Goals and Measures Number 2a Authorized CDFI ERP Eligible Activities: “CDFI ERP Award funds must be expended on one or more of the two types of Eligible Activities below and as further set forth in PG&M 1A above and in Section 3.9 of Schedule 2.” Per 2A(4) “Total expenditure on Operational Support Activities cannot exceed $317,291.” Condition: The grant agreement stipulated a limited amount of expenditures could be incurred in specific subcategories of allowable costs. For Operational Support Activities, the expenditures could not exceed $317,291, however, the Credit Union’s operational support activities expenditures were $412,728. The Credit Union did not maintain documentation of approval for the additional expenditures. Subsequent to the expenditures, the Credit Union obtained written approval for an increase in the operational support activities limit to cover the total amount expended above. Cause: Management did not have effective controls in place to maintain documentation over approvals of spending over limits outlined in the grant agreement. Effect: Approximately $95,000 was identified in Operational Support Activities overspending without documentation of approval. Questioned Costs: Not applicable. Context: The allowable costs limitation is applicable only to this grant and therefore isolated. The population was tested 100%, therefore statistically valid. Repeat finding: Not applicable. Recommendation: Procedures should be implemented and placed in service to ensure complete and accurate documentation is maintained of approvals. Views of responsible individuals: Management agrees with the Finding and recommendation. See corrective action plan for further information.

Identifying Number: 2024-006 Information on the Federal Program: ALN#21.033, U.S. Department of Treasury: COVID-19 Community Development Financial Institutions Fund Equitable Recovery Program (CDFI ERP) Criteria or Specific Requirement: The grant agreement specifies in Article VII, Miscellaneous, 7.20 “If the Recipient uses the CDFI ERP Award to procure property or services, the Recipient shall comply with the General Procurement Standards as described in the Uniform Requirements at 2 C.F.R. §§ 200.318 – 200.327.” Condition: The Credit Union did not maintain adequate records to support its adherence to suspension and debarment standards outlined under the procurement standards. The Credit Union could not support that procedures had been performed to document vendors used were not suspended or debarred. Cause: Management did not have effective controls to maintain documentation related to suspension and debarment. Effect: Failure to maintain support of procedures required by Uniform Guidance could result in deficiencies relating to accountability, transparency or improper use of federal grant funds. Questioned Costs: Not applicable. Context: This is applicable to all vendors the Credit Union paid with federal funds subject to suspension and debarment testing. Repeat finding: Not applicable. Recommendation: Management should maintain documentation of vendor due diligence related to suspension or debarment. Views of responsible individuals: Management agrees with the Finding and recommendation. See corrective action plan for further information.

Identifying Number: 2024-007 Information on the Federal Program: ALN#21.033, U.S. Department of Treasury: COVID-19 Community Development Financial Institutions Fund Equitable Recovery Program (CDFI ERP) Criteria or Specific Requirement: Section 5.1 of the grant agreement incorporates 2 CFR Part 200, which establishes uniform administrative requirements, cost principles, and audit requirements for Federal awards (Uniform Guidance (UG) Administrative Requirements). UG administrative requirements puts emphasis on written policies and procedures as central in its objective to maintain effective internal controls over federal awards. Condition: The Credit Union did not develop written policies and procedures relating to the administration of its federal grant program. Cause: Management did not have effective controls in place to monitor and comply with grant requirements. Effect: Lack of written policies could result in deficiencies relating to accountability, transparency or improper use of federal grant funds. Questioned Costs: Not applicable. Context: This is applicable to all grants awarded to the credit union. Repeat finding: Not applicable. Recommendation: We recommend the Credit Union establish policies and procedures for its federal grant programs required by the grant agreement. Views of responsible individuals: Management agrees with the Finding and recommendation. See corrective action plan for further information.