Audit 393530

Questioned Cost $ – Finding No. 2025-001: Reporting (Significant Deficiency) Federal Agency: U.S. Department of Commerce AL Number and Title: 11.029 – Tribal Broadband Connectivity Program (“TBCP”) Award Number and Award Year: NT23TBC0290054 2025 Repeat Finding? No Condition During our audit, we tested the performance reporting for the semi-annual reporting period ended March 31, 2025, and noted that the total expenditures reported did not agree with the federal expenditures reported on SF-425, resulting in a variance. Criteria Per 2 CFR 200.329, recipients must submit accurate and complete performance reports that are consistent with financial data reported on the Federal Financial Report (SF-425). Effect The performance report did not accurately reflect the total federal expenditures for the reporting period, leading to inconsistencies between the financial and performance data submitted to the federal awarding agency. This reduces the reliability of reported information and represents a deficiency in internal control over compliance. Cause and View of Responsible Officials The discrepancy occurred because the program personnel lacked a clear understanding of the difference between cash and accrual basis accounting. As a result, the Cash on hand amount reported on the SF-425 was incorrectly included in the total expenditures on the performance report. The review control did not identify this error prior to submission. Recommendation We recommend that management provide training to staff responsible for preparing and reviewing performance and financial reports to ensure a proper understanding of cash versus accrual basis reporting. Management should also implement a reconciliation and review process to verify that the total federal expenditures reported in the performance report agree to the federal share of expenditure reported on SF-425 prior to submission.

Ques􀆟oned Cost $ – Finding No. 2025-002: Repor􀆟ng (Material Weakness) Federal Agency: U.S. Department of Commerce AL Number and Title: 11.029 – TBCP Award Number and Award Year: NT23TBC0290054 2024 Repeat Finding? No Condition During our audit, we tested a non-statistical sample of one subaward and found that the reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of Federal Funding Accountability and Transparency Act (“FFATA”) was not completed. Criteria In accordance with the FFATA and the requirements of 2 CFR Part 170, Appendix A, prime recipients of federal grants are required to report each subaward of greater than or equal to $30,000. Each subaward must be reported to the Federal Funding Accountability and Transparency Act Subaward Reporting System (“FSRS”) no later than the end of the following month in which the subaward was made. Effect Failure to file required reports reduces transparency on the use of program funds and represents an instance of noncompliance with the requirements of 2 CFR Part 170. Cause and View of Responsible Officials Program personnel incorrectly classified the associated subaward as a contract and were unaware of the FFATA reporting requirement applicable for subawards until the audit. Recommendation We recommend that management should strengthen their internal controls over subaward identification and reporting. This includes mandatory training for staff involved in federal grant administration and a management-level review of all subawards to ensure FFATA reporting is completed timely.

Questioned Cost $ – Finding No. 2025-003: Subrecipient Monitoring (Material Weakness) Federal Agency: U.S. Department of Commerce AL Number and Title: 11.029 – TBCP Award Number and Award Year: NT23TBC0290054 2024 Repeat Finding? No Condition During our audit, we examined a non-statistical sample of one subaward and noted the following instances of noncompliance: - Subaward agreements did not include certain required federal award information. - A risk assessment was not performed for the subrecipient prior to execution of the subaward agreement. - No evidence of pass-through entity verifying that subrecipients are audited. Criteria 2 CFR Section 200.332(b) requires subawards to clearly identify information, such as Federal Award Identification Number, identification of whether the award is for research and development, period of performance, and indirect costs. 2 CFR Section 200.332(c) requires the pass-though entity to evaluate each subrecipient’s risk of noncompliance to determine the appropriate level of monitoring. 2 CFR Section 200.332(g) requires a pass-through entity to verify that every subrecipient is audited as required by 2 CFR Section 200, Subpart F, when it is expected that the subrecipient’s expenditures exceed applicable thresholds. Effect By not including the required information in the subaward, not performing the risk assessment, and verifying whether the subrecipient is audited, the Department may not be providing the appropriate level of monitoring over its subrecipients and represents noncompliance with 2 CFR Section 200.332. Cause and View of Responsible Officials Program personnel indicated that subaward information was provided and verification of audit was performed. However, no formal documentation was retained and no risk assessment was performed. Recommendation We recommend that program management retain evidence of the process, including who performed the procedure and the date performed, perform risk assessments, and provide the required federal award information to subrecipients.

Ques􀆟oned Cost $ – Finding No. 2025-004: Repor􀆟ng (Material Weakness) Federal Agency: U.S. Department of Defense AL Number and Title: 12.600 – Community Investment Award Number and Award Year: HQ00052310045 2024 Repeat Finding? No Condition During our audit, we tested a non-statistical sample of one subaward and found that the reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of FFATA was not completed at all. Criteria In accordance with the FFATA and the requirements of 2 CFR Part 170, Appendix A, prime recipients of federal grants are required to report each subaward of greater than or equal to $30,000. Each subaward must be reported to the FSRS no later than the end of the following month in which the subaward was made. Effect Failure to file required reports reduces transparency on the use of program funds and represents an instance of noncompliance with the requirements of 2 CFR Part 170. Cause and View of Responsible Officials Program personnel incorrectly classified the associated subaward as a contract and were unaware of the FFATA reporting requirement applicable for subawards until the audit. Recommendation We recommend that management should strengthen their internal controls over subaward identification and reporting. This includes mandatory training for staff involved in federal grant administration and a management-level review of all subawards to ensure FFATA reporting is completed timely.