Audit 414085

Federal Agency: U.S. Department of Agriculture Federal Program Name: Environmental Quality Incentives Program Assistance Listing Number: 10.912 Federal Award Identification Number and Year: NR243A750011G009 - 2024 Award Period: 9/1/24-9/29/29 Type of Finding: Significant Deficiency in Internal Control over Compliance Compliance Requirement: Allowable Costs and Activities Criteria or specific requirement: Standards require that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: Of the 40 payroll disbursements selected for testing, noted 15 did not have a formal review and approval documented over the payroll for time and effort documentation. Questioned costs: None Context: Of the 40 payroll disbursements selected for testing, noted 15 did not have a formal review and approval documented over the payroll for time and effort documentation. Per testing, noted no employee charges more than 100% of their time across federal funding or other funding sources. This was a finding in the prior year audit and a plan was put into place in September 2025 to address the time and effort issue but was not implemented for part of the period under audit. Cause: Due to the timing of when the formal procedures were put in place. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities. Repeat Finding: Repeat Finding 2024-002 Recommendation: We recommend the Organization implement a compensating control to formally document their review and approval over time & effort studies and allocations. This review would include comparing the payroll processed and allocated to the grant to the approved time and effort documentation by funding source to ensure payroll costs are not being overcharged. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Environmental Quality Incentives Program Assistance Listing Number: 10.912 Federal Award Identification Number and Year: NR243A750011G009 - 2024 Award Period: 9/1/24-9/29/29 Type of Finding: Significant Deficiency in Internal Control over Compliance Compliance Requirement: Cash Management Criteria or specific requirement: Grant claims filed by the Organization to granting agencies must be accurate, reconcile to the Organizations general ledger system and for cost-reimbursable grants, represent costs incurred. Internal controls should be signed and implemented to prevent and detect errors in the data reported on the grant claims. Segregation of duties is an internal control intended to prevent or decrease to occurrence of errors or intentional fraud. Segregation of duties ensure that no single employee has control over all phases of a transaction. There should be a secondary review of each grant claim prior to being certified and filed to ensure that there are no errors, irregularities, or misrepresentations. Condition: Of the 5 claims for reimbursement selected for testing, noted 2 did not have a formal review documented by someone other than the preparer. Accordingly, this does not allow for a proper segregation of duties for internal control purposes over the cash management compliance requirement. Questioned costs: None Context: While performing audit procedures, it was noted that two of five grant claims tested that were submitted for reimbursement did not have formal documentation of review by someone other than the preparer. This was a finding in the prior year audit and a plan was put into place in September 2025 to address the issue but was not implemented for part of the period under audit. Cause: Due to the timing of when the formal procedures were put in place. Effect: Over- or under-reporting certain items for reimbursement on claims if there are no reviews in place. Repeat Finding: Repeat Finding 2024-003 Recommendation: We recommend the Organization implement a formal control where someone other than the preparer document their review of the claim prior to submitting to the federal agency. This review would include comparing the amounts in the report to the general ledger or other supporting documents. This review should be supported by documenting the signature and date prior to submission. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Environmental Quality Incentives Program Assistance Listing Number: 10.912 Federal Award Identification Number and Year: NR243A750011G009 - 2024 Award Period: 9/1/24-9/29/29 Type of Finding: Significant Deficiency in Internal Control over Compliance Compliance Requirement: Procurement, Suspension and Debarment. Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement, suspension, and debarment. The Organization should have policies and procedures in place to following in relation to procurement, suspension, and debarment. Condition: During our testing, we noted the Organization did not have adequate internal controls designed to ensure vendors were not suspended or debarred. Questioned costs: None Context: During our testing, it was noted that the Organization did not maintain documentation over verification the vendor was not on the suspended or debarred vendor list maintained by the General Services Administration prior to entering into a signed contract. This was a finding in the prior year audit and a plan was put into place in September 2025 to address the issue but was not implemented for part of the period under audit. Cause: Due to the timing of when the formal procedures were put in place. Effect: The auditor noted no instances of noncompliance with the provisions of procurement, suspension, and debarment; however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance. Repeat Finding: Repeat Finding 2024-004 Recommendation: Internal controls should be implemented to make sure procurement methods are properly followed and documentation is maintained. We recommend the Organization develop and implement controls to ensure compliance with suspension and debarment requirements and keep an electronic or manual file indicating that such review was done to verify that they are following compliance requirements. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Environmental Quality Incentives Program Assistance Listing Number: 10.912 Federal Award Identification Number and Year: NR243A750011G009 - 2024 Award Period: 9/1/24-9/29/29 Type of Finding: Significant Deficiency in Internal Control over Compliance Compliance Requirement: Reporting Criteria or specific requirement: Grant reports filed by the Organization to granting agencies must be accurate and complete by reconciling to the Organizations financial reports and accounting records. Internal controls should be signed and implemented to prevent and detect errors in the data reported on the grant reports. Segregation of duties is an internal control intended to prevent or decrease to occurrence of errors or intentional fraud. Segregation of duties ensure that no single employee has control over all phases of a transaction. There should be a secondary review of each grant report prior to being certified and filed to ensure that there are no errors, irregularities, or misrepresentations. Condition: Of the one financial report, two performance reports tested, and the four FFATA Sam.gov submissions tested there was no formal review documented by someone other than the preparer. Accordingly, this does not allow for a proper segregation of duties for internal control purposes over the reporting compliance requirement. Questioned costs: None Context: Of the one financial report, two performance reports tested, and the four FFATA Sam.gov submissions tested there was no formal review documented by someone other than the preparer who submitted and certified the report. This was a finding in the prior year audit and a plan was put into place in September 2025 to address the issue but was not implemented for part of the period under audit. Cause: Due to the timing of when the formal procedures were put in place. Effect: Over- or under-reporting certain items for reimbursement on claims if there are no reviews in place. Repeat Finding: Repeat Finding 2024-005 Recommendation: We recommend the Organization implement a formal control where someone other than the preparer documents their review of the financial and performance reports prior to submitting to the federal agency. This review would include comparing the amounts in the report to the general ledger or other supporting documents. This review should be supported by documenting the signature and date prior to submission. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Environmental Quality Incentives Program Assistance Listing Number: 10.912 Federal Award Identification Number and Year: NR243A750011G009 - 2024 Award Period: 9/1/24-9/29/29 Type of Finding: Significant Deficiency in Internal Control over Compliance Compliance Requirement: Subrecipient Monitoring Criteria or specific requirement: There should be subrecipient monitoring policies and procedures in place to identify subawards, evaluate risk of noncompliance, and perform monitoring procedures based upon identified risks. Condition: Of the four subrecipients reviewed, none of them had documented risk assessment or monitoring documentation in place as of the date the subrecipient contracts were put in place. Questioned costs: None Context: Of the four subrecipients reviewed, none of them had documented risk assessment or monitoring documentation in place as of the date the subrecipient contracts were put in place. A plan was put into place in 2026. Cause: Due to the timing of when the formal procedures were put in place. Effect: The lack of controls over subrecipient monitoring provides an opportunity for noncompliance. Repeat Finding: None Recommendation: We recommend that the Organization implement a formal control where someone other than the preparer documents their review of the risk assessment and monitoring documentation. The review should be supported by documenting the signature and date prior to the subrecipient contract start date. Views of responsible officials: There is no disagreement with the audit finding.