Audit 401306

FINDING 2024‐001 – Allowable Cost Principles and Activities Allowed or Unallowed Material Weakness in Internal Control over Compliance Assistance Listing Number: 21.029 Federal Program Name: COVID-19 - Coronavirus Capital Projects Fund Award Year: 2024 Criteria: Uniform Guidance requires non-Federal entities to establish and maintain effective internal controls over Federal awards, including ensuring transactions are properly recorded, reported, and allowable. Specifically: • 2 CFR §200.302(b)(1) and (b)(2) require financial management systems to provide accurate, current, and complete disclosure of financial results and to identify expenditures by Federal award. • 2 CFR §200.302(b)(6) requires written procedures for determining the allowability of costs. • 2 CFR §200.303 requires entities to establish and maintain effective internal controls over compliance, including appropriate segregation of duties. Condition and context: The Cooperative does not have formalized written policies and procedures governing the coding, review, and reporting of expenditures charged to Federal awards, including payroll costs. Additionally, adequate segregation of duties is not in place over the review and approval of expenditure coding and financial reporting. As a result, payroll expenditures were not consistently or timely coded to the appropriate grant. Payroll expenditures totaling $16,990 were identified subsequent to year-end and recorded and reported late. These costs were not included in the appropriate reporting period, resulting in delayed recognition of allowable expenditures. Questioned costs: None. Effect: The absence of formal policies, procedures, and proper segregation of duties increases the risk that expenditures are not accurately, completely, or timely recorded and reported by Federal award. This may result in: • Financial reports that do not reflect complete and accurate program expenditures for the reporting period; • Increased risk of noncompliance with Federal reporting requirements; • Potential misstatement or omission of allowable costs; and • Delays in reimbursement or increased risk of questioned costs. Additionally, the late identification and backdating of payroll expenditures contributed to the triggering of Single Audit requirements, which are now being performed after the required timeframe. Cause: The deficiencies are due to a lack of formalized written policies and procedures over expenditure coding, allowability determinations, and reporting, as well as inadequate segregation of duties in the preparation, review, and approval of grant-related expenditures and reports. Repeat finding: No Recommendation: We recommend the Cooperative develop and implement written policies and procedures to ensure timely, consistent, and correct coding of all grant-related expenditures (payroll and non-payroll). Within these policies and procedures, we recommend establishing review and approval controls, including periodic review of expenditure coding by supervisory or accounting personnel. Implementing these policies and procedures will ensure expenditures are recorded within the appropriate reporting period. Views of responsible officials and planned corrective actions: Wabash currently maintains informal procedures for coding and reviewing invoices and payroll records, management recognizes the need for a formalized, written policy governing expenditures charged to federal awards. To address identified material weaknesses, Wabash is committed to implementing a comprehensive written policy by June 30, 2026. This policy will formalize the coding, review, and reporting processes for all federal expenditures. Contact Person(s): Cheryl Gaither, Controller Justin Gephart, Chief Operating Officer

FINDING 2024‐002 – Procurement, Suspension and Debarment Material Weakness in Internal Control over Compliance and Instance of Material Noncompliance Assistance Listing Number: 21.029 Federal Program Name: COVID-19 - Coronavirus Capital Projects Fund Award Year: 2024 Criteria: Uniform Guidance requires non-federal entities to establish and follow documented procurement procedures and ensure compliance with suspension and debarment requirements. 2 CFR §200.318(a): Requires entities to have and use documented procurement procedures consistent with federal standards. 2 CFR §200.318(i): Requires maintenance of records sufficient to detail the history of procurement. 2 CFR §200.214: Prohibits contracting with parties that are suspended or debarred, requiring verification. Condition and context: The Cooperative has not developed or implemented formal written procurement policies and procedures that comply with Uniform Guidance requirements. Additionally, the Cooperative has not established procedures to ensure compliance with suspension and debarment requirements. As a result, for a sample of three vendors and six procurement transactions tested, the Cooperative did not document suspension and debarment verification (e.g., SAM.gov) for vendors and contractors procured under the federal award. The absence of documented procedures also indicates that procurement activities are not being performed under a standardized framework aligned with federal requirements. Questioned costs: None. Effect: Due to the lack of formalized procurement processes and controls there is an increased risk of noncompliance with federal procurement standards. Expenditures could be paid to suspended or debarred vendors resulting in disallowed expenditures, and noncompliance with the grant agreement. Cause: This was a new grant for the Cooperative, management did not have a sufficient understanding of the procurement-related control requirements necessary to comply with the grant agreement and Uniform Guidance. As a result, procurement processes were not formally established or aligned with federal requirements. Repeat finding: No. Recommendation: We recommend the Cooperative develops and implements written procurement policies and procedures in compliance with 2 CFR §200.318–§200.327, including competitive procurement requirements, cost/price analysis, documentation, and record retention. Establish procedures to ensure compliance with suspension and debarment requirements, including performing SAM.gov verification prior to contract award and retaining documentation of verification in procurement files. Lastly, we recommend implementing monitoring controls to ensure procurement documentation and compliance requirements are consistently met. Views of responsible officials and planned corrective actions: Wabash is currently in the process of formalizing its procurement standards and internal controls. While management previously managed contractor selections through established internal practices, management recognizes the requirement for a comprehensive written procurement policy that explicitly outlines selection criteria and mandatory debarment verification procedures. To remediate the identified material weakness, Wabash will implement a formal Procurement Policy and Procedure by June 30, 2026. Contact Person(s): Jason Griffy, Network Operations Manager Justin Gephart, Chief Operating Officer