Audit 413892

Department of Energy, Federal Financial Assistance Listing 81.254, DE-GD0000886, 2025 Grid Infrastructure Deployment and Resilience Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the accompanying notes to the schedule. Condition: The Cooperative does not have an internal control system designed to provide for a complete and accurate schedule of federal expenditures of federal awards being audited. As auditors, we were requested to assist with the preparation of the schedule and accompanying notes to the schedule. Cause: Auditor assistance with preparation of the schedule is not unusual as the schedule has unique and specialized requirements and preparation is only required when the Cooperative meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Cooperative would not be able to draft a complete and accurate schedule. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Cooperative is aware of this condition for financial reporting requirements relating to the Cooperative’s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Energy, Federal Financial Assistance Listing 81.254, DE-GD0000886, 2025 Grid Infrastructure Deployment and Resilience Reporting Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During testing of quarterly financial and performance reports, we noted that the Cooperative did not retain the supporting documentation used in the preparation of the reports. As a result, reported amounts could not be reconciled to the documentation subsequently provided by the Cooperative. Cause: The Cooperative's procedures did not require the retention of the specific supporting schedules and records used to prepare and submit quarterly financial and performance reports. Effect: Failure to maintain adequate supporting documentation for quarterly reports increases the risk that reported information may be inaccurate, incomplete, or unsupported and limits the Cooperative's ability to demonstrate compliance with federal reporting requirements. Questioned Costs: None reported. Context/Sampling: A non-statistical sample of 3 out of 8 quarterly reports were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend that the Cooperative establish and implement procedures to retain all supporting documentation, schedules, and records used in the preparation and submission of quarterly financial and performance reports. Such documentation should be maintained in sufficient detail to support reported amounts and facilitate review and verification. Views of Responsible Officials: Management agrees with the finding.

Department of Energy, Federal Financial Assistance Listing 81.254, DE-GD0000886, 2025 Grid Infrastructure Deployment and Resilience Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards to sections 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions to be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parties that are debarred, suspended, or excluded from ineligible participation in Federal assistance programs or activities. Condition: Testing of procurement activities and related controls identified the following exceptions: • The Cooperative's documented procurement policy did not include several elements required by Uniform Guidance. • One contract tested did not contain all applicable Uniform Guidance contract provisions. • In one instance involving a contract exceeding $25,000, the Cooperative did not document a review to verify that the vendor was not suspended or debarred from participation in federal programs. Cause: The Cooperative had not established procedures to periodically evaluate its procurement policy and procurement documentation for compliance with Uniform Guidance requirements, including required contract provisions, documentation of procurement decisions, and suspension and debarment verification procedures. Effect: Failure to maintain effective controls over procurement activities increases the risk of noncompliance with federal procurement requirements. As a result, the Cooperative may enter into contracts that do not contain required federal provisions, fail to adequately document procurement decisions, or engage in covered transactions with vendors that are suspended or debarred from participation in federally funded programs. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend that the Cooperative update its procurement policy to incorporate all applicable Uniform Guidance requirements. Management should also establish and implement procedures to: • Verify and document suspension and debarment reviews for all applicable covered transactions. • Review contracts prior to execution to ensure all required Uniform Guidance contract provisions are included. • Maintain documentation evidencing compliance with federal procurement requirements. Views of Responsible Officials: Management agrees with the finding.