Audit 413551

2025-001 Document Policies and Procedures Over Federal Awards Federal Program(s) Information Federal Agency: All Award Name: All Assistance Listing Number: All Award Year: All Compliance Requirement: All Type of Finding Compliance Internal Control Over Compliance – Significant Deficiency Criteria or Specific Requirement OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“UG”) established requirements related to federal awards. The requirements stipulate that federal award recipients must document their policies and procedures over certain aspects of financial program management. Specifically, written policies are required for the following: • Cash management • Determination of allowable costs • Employee travel • Procurement • Conflicts of interest • Subrecipient monitoring and management Condition and Context The Town has not formalized written policies and procedures related to federal awards as required under Uniform Guidance. Cause The Town has not developed written formal documentation of policies and procedures relative to grant federal requirements. Effect or Potential Effect There is a lack of formal documentation of policies and procedures related to federal awards as required by the Uniform Guidance. Questioned Costs None. Identification as a Repeat Finding This is a repeat of finding 2024-001. Recommendation The Town should ensure that written policies and procedures are compiled and adopted as soon as practicable to ensure compliance with Uniform Guidance. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.

2025-002 Improve Internal Controls and Compliance with Procurement Contract Provisions Federal Program(s) Information Federal Agency: U.S. Department of Transportation Award Name: Highway Planning and Construction Assistance Listing Number: 20.205 Award Year: 2025 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Recipients of federal awards must comply with the procurement requirements of 2 CFR Part 200, including the contract provisions required by Appendix II to 2 CFR Part 200. Contracts funded with federal awards must include all applicable provisions prescribed by Appendix II, such as termination for cause and convenience, Equal Employment Opportunity, Davis-Bacon Act requirements (when applicable), Contract Work Hours and Safety Standards Act requirements, rights to inventions, Clean Air Act and Federal Water Pollution Control Act provisions, Byrd Anti-Lobbying Amendment requirements, and procurement of recovered materials, as applicable. Condition and Context During testing of one vendor contract charged to the award, we identified that the contract did not contain one or more contract provisions required by Appendix II to 2 CFR Part 200. Missing provisions included federally required clauses applicable to the nature and dollar amount of the procurement. The Town did not have a control in place to ensure that contracts funded with federal awards were reviewed for inclusion of all required federal contract provisions prior to execution. Cause Management had not established a formal contract review process designed to verify compliance with Appendix II to 2 CFR Part 200 prior to executing vendor agreements funded by federal awards. Effect or Potential Effect Lack of inclusion of all required federal contract provisions increases the risk of noncompliance with Uniform Guidance and could lead to disputes or enforcement issues if regulatory or compliance matters arise. Questioned Costs No questioned costs are reported as the services were procured appropriately and ultimately deemed allowable. Identification as a Repeat Finding This is not a repeat finding. Recommendation Management should enhance its procurement procedures to ensure all contracts funded by federal awards include every provision required by Appendix II to 2 CFR Part 200 as applicable. Regular review of contract templates and procurement checklists should be implemented to support compliance. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.