Corrective Action Plans

2024-007 Reporting (repeat of finding 2023-003) Corrective action planned: The new accounting system which OMC implemented in April 2024, allows for better tracking of UDS related costs, primarily financial related data. Documentation for UDS reporting will be maintained and updated when needed. Internal auditing has already been implemented to ensure compliance with reporting requirements. Anticipated completion date: 11-30-2024 Contact person responsible for corrective action: Richard Bruce, Chief Operating Officer

2024-005 Period of Performance Corrective action planned: The Fiscal Supervisor and/or the Director of Fiscal Operations will review expenditures before payment to ensure that GAAP and the accrual basis of accounting are being followed. Month-end closing procedures will include a review of all prepaid expenses to assure that a separate schedule is maintained and reconciled to the general ledger. Anticipated completion date: 11-30-2024 Contact person responsible for corrective action: Cathy Liles, Director of Fiscal Operations

2024-004 Allowable Costs/Cost Principles Corrective action planned: The Fiscal Supervisor and/or the Director of Fiscal Operations will review expenditures before payment and will ensure that goods and/or services have been received before expenditure is posted into the accounting records. OMC clerical and other staff will be trained on expenditure coding, based on the current year’s budget. Financial reports for each grant cost center will be reviewed each month and reconciled to the cash disbursements shown in the Payment Management System. Anticipated completion date: 11-30-24 Contact person responsible for corrective action: Cathy Liles, Director of Fiscal Operations

Findings Reference Number: 2024-001 Federal Agency: Department of Housing and Urban Development Federal Program:Supportive Housing for Persons with Disabilities CFDA Number: 14.181 Management's response: Management concurs with the finding. Corrective Action Plan: Management will re -evaluate controls around cost identification and authorization in efforts to minimize potential error going forward. Implementation Date: Immediately.

1. Finding 2024-001 a. We concur with the finding and recommendation. b. Management realizes the duties are reevaluated regularly and with the size of the District it is not feasible to add additional employees. They believe that they have adequate safeguards against material misstatements; however, they will continue to strive to improve this deficiency. c. The Board of Directors is responsible for evaluating safeguards against material misstatements to the financial statements. d. This is an ongoing process, therefore, there is no anticipated completion date.

Return of Title IV Funds Corrective Action Plan: The College Financial Aid Office and Business Office will implement new internal controls and procedures to ensure all student Title IV calculations are calculated correctly, reviewed in a timely manner, and ensure funds are returned promptly. Deadlines have been created to submit student withdrawals timely to the Financial Aid Department. A monthly reconciliation between the Registrar and Financial Aid Office will ensure withdrawals and correct withdrawal dates are reported to the Financial Aid Office in a timely manner. The Business Office will review the Financial Aid Office's calculation of funds for accuracy to ensure the correct amount is returned to the Department of Education. Anticipated Completion Date: Fiscal year 2025. Name of Contact Person Responsible for the Corrective Action Plan: Rashad Rogers

In Finding 2024-004, it was reported that time and activity report are not maintained for salaried employees. The Organization’s operating processes in place do not require salaried employees to certify time and efforts on a monthly basis. Procedures will be established to maintain time and effort certifications by all salaried employees. Procedures will be established to ensure that salaried employees certify time and effort that coincide with the Organization’s payroll cycle (at least on a monthly basis).

Finding Number: 2024-001 Condition: We noted no formal evidence that required inspections were performed prior to contract approval in one instance. We also noted no formal evidence that inspections were performed upon project completion to ensure that work was carried out in accordance with contract specifications in one instance. Planned Corrective Action: After the inspector has done the initial walk through to identify required repairs, a full comprehensive write-up and cost is established for all rehabilitation projects that document additional repairs to be completed that are more preventative in nature. Any additional items discovered during the project or requested by the homeowner will be added to the write-up. For any emergency repairs, a memorandum will be added to the file. To ensure that pre_x0002_rehabilitation and post-rehabilitation inspections are taking place, the Assistant Planning Director will review a list of ongoing rehabilitation projects at a minimum on a monthly basis. Contact person responsible for corrective action: Edwin Manninen Anticipated Completion Date: Immediately

CORRECTIVE ACTION PLAN FOR THE YEAR ENDED MARCH 31, 2024 Title 2, U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Subpart F, Section 511 – Audit Findings Follow-up requires the auditee to prepare a corrective action plan to address each audit finding included in the current year auditor’s reports. The Corrective Action Plan for Current Year Findings present our corrective action plan for the Financial Statement and/or Federal Award Findings described in the accompanying Schedule of Findings and Questioned Costs for the period ended March 31, 2024. Finding 2024-001 Responsible Party Name: Tamara Wallace Position: Executive Director – Management Agent Telephone Number: 816-233-4250 Federal Agency Department of Housing and Urban Development Federal Program Supportive Housing for the Elderly (Section 202) Compliance Requirements A/B - Activities Allowed or Unallowed and Allowable Costs/Cost Principles, C – Cash Management, E – Eligibility, L – Reporting, and N – Special Tests and Provisions Finding Type Financial Statement and Federal Awards Auditee’s Comment on Finding We agree with the auditor’s finding. Corrective Action Management reported that the failure(s) involved records related to the period managed by the predecessor management company. We will request and keep all required documentation from HUD and establish processes and procedures to ensure compliance with the Regulatory Agreement. Anticipated Completion Date September 30, 2024

Response and Corrective Action Plan: The District will review current processes for identifying, coding and reporting federal expenditures and implement processes to ensure amounts reported are supported by the District’s general ledger.

In Finding 2024-002, it was reported that time and activity reports were not maintained for salaried employees. Although the Organization’s policies require that time records be maintained by salaried employees, current operating procedures are not in place to ensure the time records are completed. Procedures will be established to require all salaried employees to maintain time and effort certifications that coincide with the Organization’s payroll cycle (at least on a monthly basis) in accordance with the Organization’s policies.

This finding is due to the Village not having formal written policies in place required by Uniform Guidance. The Village is now aware that these policies are required and will adopt all necessary policies. The Village does not believe that there were any actual nonallowable costs or transactions because of the lack of written policies as required by Uniform Guidance. The Village will adopt all necessary policies to be in compliance. The person responsible for the corrective action is the Village Manager. The anticipated completion date of the corrective action plan is before the end of the 2025 fiscal year. The plan for adherence is the Council will review all proposed policies and adopt them, the Council will also monitor any changes to policy requirements to ensure that they are in compliance in the future.

This finding is due to the Village not having formal written policies in place required by Uniform Guidance. The Village is now aware that these policies are required and will adopt all necessary policies. The Village does not believe that there were any actual nonallowable costs or transactions because of the lack of written policies as required by Uniform Guidance. The Village will adopt all necessary policies to be in compliance. The person responsible for the corrective action is the Village President. The anticipated completion date of the corrective action plan is before the end of the 2025 fiscal year. The plan for adherence is the Council will review all proposed policies and adopt them, the Council will also monitor any changes to policy requirements to ensure that they are in compliance in the future.

August 20, 2024 Department of Housing and Urban Development Washington DC East Central Kansas Economic Opportunity Corporation respectfully submits the following corrective action plan for the year ended March 31, 2024. SSC CPAs, PA 3320 Clinton Parkway Court, Suite 120 Lawrence, KS 66047 Audit Period: Year ended March 31, 2024 The finding from March 31, 2024, schedule of findings and questioned costs are discussed below. The finding is numbered consistently with the number assigned in the schedule. FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS 2024-001 Compliance and Controls over Eligibility of the Section 8 Housing Choice Vouchers Program (Significant Deficiency) Federal Agency: U.S. Department of Housing and Urban Development Program Name: Section 8 Housing Choice Vouchers Assistance Listing Number: 14.871 Award Period: March 31, 2024 Recommendation: The Board of Directors and management review the controls over the eligibility process to ensure the process is being followed and implemented correctly. Action Taken (Unaudited): ECKAN will create a policy in its Admin Plan, using any new HOTMA rules that may apply, to require zero-income forms in client files for households claiming zero-income. This Admin Plan edit will be presented to the ECKAN Board of Trustees for approval. Effective immediately (as of date of file inspection) ECKAN will use the Zero Income Verification Form for any new families claiming zero income. This had been a practice within the department but had not been formalized or provided oversight. ECKAN will also take steps to ensure current client files are searched for any families who claimed zero income prior and either locate the form or initiate contact with the family to obtain a completed form. A tracking spreadsheet will be created to ensure a complete list of zero-income households is maintained and monitored by the ECKAN housing staff. Anticipated completion date is March 31, 2025. If the Department of Housing and Urban Development has questions regarding this plan, please call Crystal Anderson at 785-242-7450. Sincerely yours, Crystal Anderson Crystal Anderson CEO East Central Kansas Economic Opportunity Corporation

Reporting Recommendation: We recommend that the auditee implement procedures to ensure that Form 19-lA reimbursement requests are reviewed prior to submission to confirm that expenditures are charged to the correct approved budget line items. This may include maintaining a reconciliation between the general ledger, the approved grant budget, and the Form 19-lA, as well as implementing supervisory review and approval of reimbursement submissions. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. 2026 Action taken in response to finding: Reoccurring bills such as utilities, loan payments, contract services and credit card payments do not require an expense request to be included for on going bills. We will review our procedures and update our financial policy. 2023 Our financial process includes at least two reviews prior to creating a bill in our accounting system, payments are reviewed by the director or the Deputy Director when signed. We do not use a auto signature all checks are reviewed. 2023 The Grantor billing is a P&L detailed report for that grant and provides reconciliation monthly This is sorted into grant line items designated billable and non-billable for compliance. Total program cost and billable to grant are tracked every month, by the grant finance manager for compliance prior to billing any grants. Timecards are reviewed, expense requests are reviewed and payments are reviewed. Prior to submission of the invoice to grantor. 2023 Grant finance manager pulls copy of timecards, bills and checks to ensure compliance with reimbursements are accurate. Name(s) of the contact person(s) responsible for corrective action: Cora Alyea Planned completion date for corrective action plan: July 2023

Allowable Costs/Payroll Disbursements Recommendation: We recommend that the auditee implement procedures to ensure that: all employee pay rates charged to Federal awards are appropriately approved and documented, and complete and accurate timesheets or equivalent time-and-effort records are maintained for all payroll costs charged to Federal awards. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Most Federal grants are renewed annually and have not requested any salary rate adjustments. Payroll line items are a lump sum. Serenity House since 2020 performs annually in May a market rate survey for all job positions to ensure wage rates are equitable to fair market for our County and Non-Profit job type. The sources are documented in the workbook that the annual raise percentages; wage adjustments are calculated for board approval. Our annual performance raises and adjustments is a pool of 1 to 5%, and 3 to 6 employees are below market rate each year. People with a market adjustment do not receive a merit increase. 2023 Merit increase is% that is allocated based on performance scores and management team comparison to everyone in that job category. People are scored by manager this score is reviewed by all managers that have employees in that grouped job class. The reviewing managers agreed highest performer with a 5% and lowest performer 1% Raise distribution is based on the performance review score. 2022 Employees are hired for a specific job when they are given their first time card grant line items for the grant they work on are on the time sheet. That time sheet is reviewed and corrected by the immediate supervisor then reviewed by the operations manager. Turned into the main office receptionist who checks submission against the employee list. Checks math and signatures, initials the times card takes up to payroll. 2023 Payroll double checks each time card when entering time into the payroll module. After all time is enter another employee checks the system addition to timecard. 2020 When Checks are manually signed the time is on the timecard and each check is reviewed. Each employee Name(s) of the contact person(s) responsible for corrective action: Kristin Cowan Planned completion date for corrective action plan: July 1 2023

Allowable Costs/General Disbursements Recommendation: We recommend that management reinforce the consistent execution and documentation of existing disbursement approval and documentation procedures. This should include ensuring that all expenditure charged to federal awards are appropriately approved and supported by sufficient documentation prior to payment, and that management periodically monitors compliance with these procedures to confirm they are operating as designed. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Reoccurring bills such as utilities, loan payments, contract services and credit card payments do not require an expense request to be included for on going bills. We will review our procedures and update our financial policy. Our financial process includes at least two reviews prior to creating a bill in our accounting system, payments are reviewed by the director or the Deputy Director when signed. We do not use a auto signature all checks are reviewed. The Grantor billing is a P&L detailed report for that grant. This is sorted into grant line items designated billable and non-billable for compliance. Total program cost and billable to grant are tracked every month, by the grant finance manager for compliance prior to billing any grants. Timecards are reviewed, expense requests are reviewed and payments are reviewed. Prior to submission of the invoice to grantor. Name(s) of the contact person(s) responsible for corrective action: Cora Alyea Planned completion date for corrective action plan: Completed in 2023

Finding No.: 2023-048 AL Program: 97.036 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) COVID-19 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Area: Allowable Costs/Cost Principles Questioned Costs: $305,995 Contact Person(s): Patrick Guerrero, Governor’s Authorized Rep., PAO Corrective Action Plan: Condition 1: The CNMI Public Assistance Office (PAO) partially agrees with the finding and disagrees with the questioned cost. PAO acknowledges that improvements are needed to strengthen recordkeeping and document retrieval procedures to ensure supporting documentation is readily available during audits and monitoring reviews. However, PAO believes several questioned costs resulted from documentation submission and retrieval issues rather than actual unallowable expenditures. The CNMI PAO was provided approximately two business days to gather and submit documentation supporting the audit sample selections. Due to the nature of the Program, project files are often extensive and contain numerous supporting documents. For example, one sampled project contained approximately eighteen separate attachments, several of which exceeded 300 pages. As a result, while PAO made every effort to provide complete documentation within the allotted timeframe, certain supporting records were inadvertently omitted from the submission package despite being available within program records. Regarding the questioned cost, the cleared check associated with the transaction exists and was available within PAO records. The document was inadvertently omitted from the documentation package submitted during the audit process due to the volume of records requested and the limited Finding No.: 2023-048, continued AL Program: 97.036 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) COVID-19 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Area: Allowable Costs/Cost Principles Questioned Costs: $305,995 Contact Person(s): Patrick Guerrero, Governor’s Authorized Rep., PAO Corrective Action Plan: timeframe provided for document production. Therefore, PAO does not believe this expenditure represents an unsupported or unallowable cost. PAO will take better care for future audit requests to verify that all supporting documentation, including payment records, has been included prior to submission. Proposed Completion Date: Ongoing Condition 2: The CNMI Public Assistance Office (PAO) disagrees with this finding and questioned cost. The payment was made to the correct vendor. The vendor operates under multiple DBA names associated with the same parent company. During the Government's transition from JD Edwards (JDE) to Munis, vendor information was not consistently standardized, resulting in a discrepancy between the vendor’s name appearing on the invoice and the payee reflected on the check. The payment was nevertheless made to the intended vendor and the expenditure was incurred for an allowable Public Assistance purpose. PAO notes that vendor master file maintenance and vendor profile administration are functions performed by the Department of Finance. Since FY 2023, the vendor profile has been updated to reflect the parent company name and eliminate confusion regarding DBA designations. Proposed Completion Date: Completed Condition 3: The CNMI Public Assistance Office (PAO) agrees with this finding. PAO acknowledges the importance of maintaining documentation demonstrating supervisory review and approval of personnel costs charged to federal awards. Although the timesheet was maintained, documentation evidencing management approval was not available for audit review. Finding No.: 2023-048, continued AL Program: 97.036 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) COVID-19 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Area: Allowable Costs/Cost Principles Questioned Costs: $305,995 Contact Person(s): Patrick Guerrero, Governor’s Authorized Rep., PAO Corrective Action Plan: PAO will implement periodic reviews of personnel documentation to verify that supervisory approvals are properly documented and retained. Proposed Completion Date: June 30, 2027 Condition 4: The CNMI Public Assistance Office (PAO) agrees with the finding. PAO acknowledges the need to maintain complete personnel documentation supporting payroll expenditures charged to federal awards. Required supporting records were not available during the audit process. PAO will strengthen filing procedures for personnel action forms, timesheets, and related payroll records. Both physical and electronic files will be maintained and periodically reviewed for completeness. Proposed Completion Date: June 30, 2027 Condition 5: The CNMI Public Assistance Office (PAO) disagrees with this finding and questioned cost. The applicable timesheet supporting the sampled payroll transaction exists and remains in PAO custody. During the audit process, a timesheet from an incorrect pay period was inadvertently provided in response to the sample request. Therefore, PAO believes sufficient supporting documentation exists for the payroll charge and does not believe the questioned cost represents an unsupported expenditure. PAO will implement additional quality control procedures to verify that documents submitted during audits correspond to the specific pay period and transaction selected for testing. Proposed Completion Date: Ongoing Finding No.: 2023-048, continued AL Program: 97.036 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) COVID-19 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Area: Allowable Costs/Cost Principles Questioned Costs: $305,995 Contact Person(s): Patrick Guerrero, Governor’s Authorized Rep., PAO Corrective Action Plan: Condition 6: The CNMI Public Assistance Office (PAO) agrees with the finding that documentation was unavailable but partially disagrees with the questioned cost. The inability to produce the payroll labor distribution report resulted from issues associated with the Department of Finance's migration to the Munis financial system. The journal entry was released despite the labor distribution details not being readily distinguishable within the system. PAO notes that labor distribution reporting and payroll system administration are functions performed by the Department of Finance rather than PAO. While PAO agrees that supporting documentation was unavailable for audit review, PAO does not believe the condition necessarily indicates that the underlying payroll costs were unallowable. PAO will coordinate with timekeepers to identify and obtain payroll support documentation necessary to substantiate personnel costs charged to federal awards. PAO will also perform periodic reviews of payroll records to identify missing supporting documentation before audit periods. Proposed Completion Date: December 31, 2026

Finding No.: 2023-039 AL Program: 93.489/93.575/93.596 – CCDF Cluster COVID-19 93.489/93.575/93.596 CCDF Cluster Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $71,972 Contact Person(s): Roselle Teregeyo, CCDF Co-Administrator/Accountant Corrective Action Plan: The CNMI CCDF Program agrees with this finding. For seven (or 18%) out of the forty samples tested, CNMI did not provide the purchase order, contract, and/or invoice(s) supporting the allowability of the costs. To strengthen internal controls and ensure adequate accountability over Federal awards, the CNMI CCDF Program has implemented a filing system where all documents relating to a federal award are properly maintained and labeled for accessibility. This implementation became effective on October 1, 2025. Proposed Completion Date: Completed

Finding No.: 2023-035 AL Program: COVID-19 84.425H – Education Stabilization Fund – Governors (Outlying Areas) (ESF-Governor) Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Contact Person(s): Tracy B. Norita, Secretary of Finance Corrective Action Plan: The CNMI Department of Finance agrees with this finding. While approval controls are implemented within the Munis financial system and, since the FY2022 system migration, all federal expenditure approvals have been processed in Munis, the supporting evidence was provided to the auditors on April 9, 2026, after the agreed documentation deadline of February 19, 2026, resulting in evidence timing deficiency. CNMI established a Standard Operating Procedure for Internal Control for Federal Grants Management on May 1, 2025, to govern these processes, and management will ensure that going forward the expenditure workflow, not solely the journal entry workflow, is attached to documentation submitted with audit requests and will be included in the required documents checklist; documents of approval are available upon request. Proposed Completion Date: Completed

Finding No.: 2023-033 AL Program: COVID-19 21.027 - Coronavirus State and Local Fiscal Recovery Funds Area: Reporting Questioned Costs: $-0- Contact Person(s): Tracy B. Norita, Secretary of Finance Corrective Action Plan: Condition 1-3: The CNMI Department of Finance agrees with this finding. Required Project and Expenditure Reports were not submitted for certain periods and supporting documentation and revenue loss calculations were unavailable for audit review. The primary cause was staff turnover and reorganization following a change in administration in FY 2023, which highlighted gaps in reporting capacity. This occurred alongside issues identified in the finding, including insufficient processes following CNMI’s transition from JD Edwards to Tyler Munis, missing supporting documentation, and lack of structured reporting controls. The proposed corrective actions are described below: a. Cross Training of Personnel (Implemented) CNMI DOF has cross trained multiple staff to ensure continuity and eliminate dependency on any single employee for revenue loss analysis and reporting and documentation retention. This improves data accuracy and prevents operational disruptions. b. Strengthening Data Extraction & Documentation Processes (In Progress) DOF is developing processes to reliably extract revenue related data from Tyler Munis to support timely revenue loss calculations, as recommended by auditors. Finding No.: 2023-033, continued AL Program: COVID-19 21.027 - Coronavirus State and Local Fiscal Recovery Funds Area: Reporting Questioned Costs: $-0- Contact Person(s): Tracy B. Norita, Secretary of Finance Corrective Action Plan: c. Municipal Training and Oversight Clarification (In Progress) CNMI will work closely with municipalities—particularly Rota, which is less familiar with federal grant requirements—to: • Clarify who is responsible for SLFRF reporting oversight • Verify the municipality’s elected option under the Final Rule • Provide training and technical assistance to ensure full compliance d. Development of reports DOF will formalize a written SOP establishing: • Required timelines • Documentation standards • Review procedures • Data retention requirements Proposed Completion Date: October 31, 2026 (Some actions already implemented; others underway)

Finding No.: 2023-030 AL Program: COVID-19 21.027 – Coronavirus State and Local Fiscal Recovery Funds Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $17,671,782 Contact Person(s): Tracy B. Norita, Secretary of Finance Corrective Action Plan: Condition 1-2: The CNMI Department of Finance agrees with this finding. These transactions were subsequently closed and finalized and CNMI can provide documents upon request. CNMI was still familiarizing itself with the financial management system implemented in FY 2022, as well as a new mechanism of “travel cards” for employee travel. Effective in February 2023, the CNMI ceased using the travel cards as we had determined that it was difficult to maintain effective monitoring. Also, Finding No.: 2023-030, continued AL Program: COVID-19 21.027 – Coronavirus State and Local Fiscal Recovery Funds Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $17,671,782 Contact Person(s): Tracy B. Norita, Secretary of Finance Corrective Action Plan: subsequently in 2025, SOPs were formally effective. Throughout the SOP development, we learned best practices to effectively monitor travel transactions. No further action is needed. Proposed Completion Date: Completed Condition 3-6: The CNMI Department of Finance agrees with this finding. Due to operational inefficiencies present in FY 2023, document archives were not maintained, and effectively were not provided to auditors in the time allotted. In addition, this transaction related to a purchasing card mechanism, and the CNMI did not maintain proper controls and monitoring. We have since stopped using purchasing cards broadly across the CNMI government—it is allowed on a case-by-case basis—so that the CNMI can monitor purchases more effectively. With standardization of processes and additional training, CNMI has since maintained its records and documents for improved financial accountability and transparency. CNMI can provide documents upon request. No action is needed at this time. Proposed Completion Date: Completed Condition 7-8: The CNMI Department of Finance agrees with this finding. The Payroll and HR management modules of Munis went live in October 2022, and early implementation challenges affected payroll distribution reporting and documentation gaps. CNMI worked with Munis implementation consultants to correct issues and has since implemented SOPs to ensure proper payroll documentation, reporting, and reconciliation. This prevents recurrence. Proposed Completion Date: Completed Condition 9-11: The CNMI Department of Finance agrees with this finding. Due to the large nature of the transaction, and the limited time available during the audit review, CNMI was unable to provide details of the transaction. CNMI can provide documents upon request. Proposed Completion Date: Completed

Finding No.: 2023-027 AL Program: COVID-19 21.023 – Emergency Rental Assistance Program Area: Allowable Costs/Cost Principles Questioned Costs: $53,435 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC Corrective Action Plan: Condition 1a: The Office of Grants Management (OGM) respectfully disagrees with this finding. Under the U.S. Department of the Treasury's Emergency Rental Assistance Program 2 (ERA2), states, territories, and other eligible grantees were expressly authorized to pay rental arrears (past-due rent) on behalf of eligible households. Treasury guidance states that ERA2 financial assistance could include current rent, rental arrears (back rent), utility and home energy costs, utility and home energy arrears, and other housing-related expenses. Finding No.: 2023-027, continued AL Program: COVID-19 21.023 – Emergency Rental Assistance Program Area: Allowable Costs/Cost Principles Questioned Costs: $53,435 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC Corrective Action Plan: Treasury's FAQ further clarifies that: A grantee may provide assistance for rental arrears that accrued on or after March 13, 2020. A grantee was not required to pay the full amount of arrears and could structure the program to provide partial assistance if desired. For the CNMI specifically, if your ERA2 award was active during the period of performance, payment of eligible rental arrears was an allowable use of funds. However, Treasury closed the ERA2 program on September 30, 2025, and ERA2 funds may no longer be used to provide new rental assistance, including rental arrears. As a practical matter, many ERA programs adopted policies of paying up to three months of future rent at a time, but that was often a program design choice or carried over from ERA1 administration rather than a statutory ERA2 limitation. The controlling Treasury guidance limits total assistance to 18 months combined across ERA1 and ERA2. The CNMI followed US Treasury Guidelines and pushed for a combined 18-month max limit, if financially needed, across ERA1 and ERA2. Therefore, the Office disagrees with the $30,336 questioned cost and we are requesting that this finding be removed based on our explanation above. Proposed Completion Date: Ongoing Condition 1b: The Office of Grants Management (OGM) respectfully disagrees with this finding. Under the U.S. Department of the Treasury's Emergency Rental Assistance Program 2 (ERA2), states, territories, and other eligible grantees were expressly authorized to pay rental arrears (past-due rent) on behalf of eligible households. Treasury guidance states that ERA2 financial assistance could include current rent, rental arrears (back rent), utility and home energy costs, utility and home energy arrears, and other housing-related expenses. Treasury's FAQ further clarifies that: A grantee may provide assistance for rental arrears that accrued on or after March 13, 2020. A grantee was not required to pay the full amount of arrears and could structure the program to provide partial assistance if desired. For the CNMI specifically, if your ERA2 award was active during the period of performance, payment of eligible rental arrears was an allowable use of funds. However, Treasury closed the Finding No.: 2023-027, continued AL Program: COVID-19 21.023 – Emergency Rental Assistance Program Area: Allowable Costs/Cost Principles Questioned Costs: $53,435 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC Corrective Action Plan: ERA2 program on September 30, 2025, and ERA2 funds may no longer be used to provide new rental assistance, including rental arrears. As a practical matter, many ERA programs adopted policies of paying up to three months of future rent at a time, but that was often a program design choice or carried over from ERA1 administration rather than a statutory ERA2 limitation. The controlling Treasury guidance limits total assistance to 18 months combined across ERA1 and ERA2. Therefore, the Office disagrees with the $5,452 questioned cost and we are requesting that this finding be removed based on our explanation above. Proposed Completion Date: Ongoing Condition 1c: The Office of Grants Management (OGM) respectfully disagrees with the findings because using the Purchase Requisition or Purchase Order methodology is not the only method of obtaining goods or services in the CNMI Government. In this situation, the Office opted to use the Invoice Central method in MUNIS. Items for purchase were specifically identified in the portal and it was approved by the Division of Financial Services. The items being purchased are allowable items (office supplies); however, the method used by the Office may not be acceptable by the auditor. Again, the Office disagrees as DOF officials approved the transaction and paid the item out with check#619104. The invoice # for this transaction is 739384-0. If the transaction is not allowable, then DOF should update their SOPs or not allow the Invoice Entry module to be used. Again, we disagree with the finding and questioned cost amounting to $3,485.39. Therefore, the Office disagrees with the $3,485.39 questioned cost and we are requesting that this finding be removed based on our explanation above. Proposed Completion Date: Ongoing Finding No.: 2023-027, continued AL Program: COVID-19 21.023 – Emergency Rental Assistance Program Area: Allowable Costs/Cost Principles Questioned Costs: $53,435 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC Corrective Action Plan: Condition 2a: The Office of Grants Management (OGM) respectfully disagrees with this finding. After the audit inquiry, the supporting timesheet associated with the questioned payroll costs was located and is available for review. The documentation substantiates the payroll charges previously questioned. Accordingly, the Office respectfully disagrees with the questioned costs of $1,159 and requests removal of this finding. Proposed Completion Date: Ongoing Condition 2b: The Office of Grants Management (OGM) respectfully disagrees with this finding. The payroll costs in question are traceable within the financial management system; however, the reporting format aggregates payroll and fringe benefit expenditures in a manner that may make individual employee costs difficult to identify without familiarity with the system's reporting structure. The questioned amount of $658.17 can be reconciled to supporting payroll records and underlying accounting data. The Office is prepared to provide additional supporting documentation and reconciliation schedules to demonstrate the traceability of these costs. Accordingly, the Office respectfully disagrees with the questioned costs of $658 and requests removal of this finding. Proposed Completion Date: Ongoing Condition 3: The Office of Grants Management (OGM) respectfully disagrees with the findings and questioned costs of $12,345.00. According to our records and using budgetary print template reports, the following has been spent: Finding No.: 2023-027, continued AL Program: COVID-19 21.023 – Emergency Rental Assistance Program Area: Allowable Costs/Cost Principles Questioned Costs: $53,435 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC Corrective Action Plan: The CCERA Program spent in total $10,398,930.38 out of the total award of $10,400,669.30, leaving an unspent balance of $1,738.92. This is also reported in the final submitted report to US Treasury. US Treasury accepted the report and advised us to return the unused funds plus 5% interest, which changed the total owed to $1,746.41. This is substantiated by a notice from US Treasury to Collect for Delinquent Indebtedness under Invoice# OCAERA0411A dated March 11, 2025. Thus, confirming that the CNMI only spent $10,398,930.38 under ERA1. Furthermore, there are internal controls built into the MUNIS System that will not allow us to exceed the budgeted amount, so we are not able to exceed the budgeted amount. Thus, the Office disagrees with the $12,345 questioned cost and we are requesting that this finding be removed based on our explanation above. Proposed Completion Date: Ongoing

Finding No.: 2023-023 AL Program: 20.205 – Highway Planning and Construction (Federal-Aid Highway Program) Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $-0- Contact Person(s): Stacy Atalig, Federal Programs Coordinator, DPW Corrective Action Plan: The Department of Public Works, Technical Services - Highway Branch agrees with the finding. The Highway Branch agrees to be more vigilant in ensuring that all documents are properly reviewed and approved. The disbursement process of program funds, specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting documents. DPW, TSD – Highway utilizes the Master PR20 log sheet for each fiscal year to track all Voucher for Work performed under Provisions of the Federal Aid and Federal Highway Acts as Amended (form PR20), Current Bills (drawdowns), and payments made on each. However, payments are either mailed or electronically transferred directly to the vendors by the CNMI Treasury Office. Effective immediately, the Highway Branch will download a copy of all payments made to its vendors directly to each PR20 file. Proposed Completion Date: June 2026

Finding No.: 2023-021 AL Program: COVID-19 17.225 – Unemployment Insurance (UI) Area: Activities Allowed or Unallowed / Allowable Costs/Cost Principles Questioned Costs: $224,846 Contact Person(s): Zachary Taitano, PUA Program Manager, DOL Corrective Action Plan: Condition 1: The CNMI Department of Labor agrees with this finding, as the supporting documents extracted from Munis were insufficient to support the referenced line items based on the documentation requested. The corresponding payment registers were uploaded on June 8, 2026, to support the entries. Finding No.: 2023-021, continued AL Program: COVID-19 17.225 – Unemployment Insurance (UI) Area: Activities Allowed or Unallowed / Allowable Costs/Cost Principles Questioned Costs: $224,846 Contact Person(s): Zachary Taitano, PUA Program Manager, DOL Corrective Action Plan: Additionally, in response to the need for stronger internal controls, the CNMI Department of Finance developed and implemented the "CNMI Journal Entry (FS-Ops) Procedures" Standard Operating Procedure, effective October 1, 2025. The procedure establishes requirements for the timely uploading of supporting documentation to ensure that adequate records are maintained and readily available for future audit and reviews. Proposed Completion Date: Completed Condition 2: The CNMI partially agrees with this finding. The payroll records for Employee Numbers 4381 and 5600 did not reflect the adjusted hourly rates during the weeks selected for testing because the Requests for Personnel Action (RFPAs) associated with the funding awards could not be finalized until the funding was officially awarded. The funding awards tied to the employee contracts during that time were provided through funding opportunities made available under UIPL 16-20, Change 7. The initial application was due to the Employment and Training Administration (ETA) on January 6, 2023. Following submission, communication between the CNMI and ETA regarding revisions and clarifications continued through March 26, 2023. The Notices of Award (NOAs) were subsequently issued on May 19 and May 22, 2023. The budget narrative submitted to ETA included position modifications and salary adjustments intended to be effective April 1, 2023. However, because the NOAs and associated funding were received after that effective date, retroactive RFPAs were initiated beginning June 13, 2023, and were not fully completed until mid-July 2023. As a result, the updated hourly rates were not reflected in the payroll registers for the periods selected for testing. With respect to employee no. 2293, the employee was a regular Department of Labor employee whose employment contract was scheduled to expire on September 30, 2022 and was subsequently renewed to include a salary adjustment. The RFPA for this employee was initiated in September 22, 2022 but did not complete the routing process until late October 2022. As a result, the adjusted hourly rate was not reflected in the payroll registers for the period selected for testing. Finding No.: 2023-021, continued AL Program: COVID-19 17.225 – Unemployment Insurance (UI) Area: Activities Allowed or Unallowed / Allowable Costs/Cost Principles Questioned Costs: $224,846 Contact Person(s): Zachary Taitano, PUA Program Manager, DOL Corrective Action Plan: All employees received the difference between their adjusted salary and initial salary at a later date in the form of a retroactive lump-sum payment. Proposed Completion Date: Completed