Audit 405299

2025 – 002: Revenue cutoff Material Weakness Instance of Non-Compliance: Reporting Assistance Listing Number:11.012 Repeat Finding: No Questioned Costs: $0 Condition: NERACOOS recorded federal grant revenue for certain grants related to FY2025 activities in FY2026, based on the timing of reimbursement receipts rather than when the underlying expenditures were incurred. As a result, grant revenue was not recognized in the proper fiscal period. Criteria: According to U.S. GAAP, 2 CFR Part 200, and the accrual basis of accounting, non-federal entities must maintain accounting records that accurately reflect the financial results of federal awards and recognize expenditures and related revenues in the period in which the allowable costs are incurred. For cost-reimbursement grants, revenue should be recognized as eligible expenditures are incurred, regardless of when reimbursement is received. Cause: NERACOOS’ year-end financial reporting procedures did not include a sufficiently detailed review of federal awards to identify expenditures incurred before year-end for which reimbursement had not yet been received or recorded. Effect: As a result, federal grant revenue and related receivables for FY2025 were understated, while revenue in FY2026 was overstated for the related amounts. In addition, this may lead to misstatements in financial reporting if similar cutoff issues occur in future periods. Recommendation: We recommend that NERACOOS strengthen its period-end revenue cutoff procedures, including reviewing grant and contract agreements near year-end to identify allowable expenditures incurred prior to year-end that have not yet been reimbursed and record appropriate grant receivables and revenue accruals before closing the accounting records. Views of Responsible Officials: Management concurs with this finding. NERACOOS acknowledges that period-end grant revenue cutoff procedures were not sufficient to identify all allowable expenditures incurred prior to year-end for which reimbursement had not yet been received. Responsible Official: Emily Silva, Administrative Director Anticipated Completion Date: September 30, 2026

Finding Number 2025-003 Instance of Non-Compliance: Reporting Assistance Listing Numbe: 11.012 Questioned Cost: $ 0 Significant Deficiency Federal Agency: U.S. Department of Commerce Criteria: According to grant terms & conditions and 2 CFR Section 200.332, all awardees of applicable grants and cooperative agreements are required to report to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System on all subawards over $30,000. Required reporting includes timely and accurate information regarding subaward amounts, dates, and other key subaward data. Condition: NERACOOS submitted FFATA reports for the initial subaward agreements; however, the reports were not updated timely for subsequent subaward amendments. Specifically, amended subaward amounts and amendment dates were not reported timely and accurately in SAM.gov. Context: The condition was identified during our review of grant terms and conditions, 2 CFR § 200.332 requirements, and FFATA reporting for selected subawards subject to reporting requirements. Cause: NERACOOS did not have sufficient controls in place to ensure that amendments to subaward agreements were identified, tracked, and reported timely in SAM.gov. In addition, the review process did not ensure that amended subaward amounts and amendment dates were updated accurately after subaward modifications were executed. Effect: NERACOOS was not in compliance with FFATA reporting requirements for fiscal year 2025. Although all initial subawards tested were reported, subsequent amendments were not reported timely and the reported subaward amounts were not updated accurately. Following is a summary of the finding: (See pdf for table) Identification of a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management strengthen controls over FFATA reporting by implementing procedures to identify and track all subaward amendments subject to FFATA reporting requirements. Management should ensure that amended subaward amounts, amendment dates, and other required information are updated in SAM.gov timely and accurately. We further recommend that management perform a periodic review of FFATA reports on SAM.gov to verify completeness and accuracy of reported subaward information. Views of Responsible Officials and Planned Corrective Action Plan: Management concurs with this finding. NERACOOS acknowledges that while initial subaward reporting was completed as required, the organization did not have adequate controls to ensure that subaward amendments were identified, tracked, and reported timely and accurately in SAM.gov pursuant to 2 CFR § 200.332 and FFATA requirements. NERACOOS will develop and implement written FFATA reporting procedures that specifically address the identification and reporting of subaward amendments, including trigger points for updating SAM.gov following execution of any subaward modification. Responsible Official: Emily Silva, Administrative Director Anticipated Completion Date: August 31, 2026 (retroactive corrections); ongoing quarterly reconciliation beginning July 2026