Corrective Action Plans

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

Finding No.: 2023-015 AL Program: 15.875 – Economic, Social, and Political Development of the Territories Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $4,203 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC Corrective Action Plan: Condition 1: The Office of Grants Management (OGM) disagrees with this finding and questioned costs of $1,400.00. The ATP document is vested with the Division of Energy (DOE) and not OGM. The award is from OIA; however, not all awards are under the possession of OGM. In this matter, CNMI Department of Energy is the recipient. However, we were able to obtain a copy of the document after several phone calls to their office. Document is available for review upon request. Proposed Completion Date: Completed Finding No.: 2023-015, continued AL Program: 15.875 – Economic, Social, and Political Development of the Territories Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $4,203 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC Corrective Action Plan: Condition 2: The Office of Grants Management (OGM) disagrees with this finding and questioned cost of $2,803.00. The documents were obtained for both employees and are available for review upon request. Proposed Completion Date: Completed

Finding No.: 2023-013 AL Programs: 11.307 – Economic Adjustment Assistance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: Condition 1: The CNMI Department of Finance respectfully disagrees with this finding related to project number FG17010001 (Economic Resiliency Center). The Department acknowledges that although supporting documentation – such as journal entries, approvals of expense transfers, sole-source justification memo, and grantor approval - was submitted, copies of the related invoices and/or contract agreement were not included. This omission was an oversight and resulted in a documentation-timing deficiency. The Department maintains copies of all required documents, and they are available for review upon request. To prevent recurrence, the department will reinforce our internal review procedures to ensure that all required supporting documentation is consistently compiled, retained within the Tyler MUNIS system, and submitted as part of future audit requests. Proposed Completion Date: Ongoing Condition 2: The CNMI Department of Finance respectfully disagrees with this finding related to PA Journals 478, 360, 2137, and 335. These transactions pertain to the Department’s Economic Resiliency Center (ERC) project. Due to internal scheduling constraints and the compressed 2-day turnaround to provide supporting documentation to the auditors, the requested documents were not submitted by the specified deadline. This timing issue resulted in the finding; however, it does not reflect a Finding No.: 2023-013, continued AL Programs: 11.307 – Economic Adjustment Assistance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: lack of documentation or inadequate recordkeeping. The Department maintains all relevant supporting documentation for these transactions and such documentation is available for review upon request from the Grantor. The Office of Planning and Development (OPD) partially agrees with the finding. OPD reviewed the questioned transactions and supporting documentation available under its custody. Payment documentation has been identified for PA Journals 186, 142, 141, 2670, 270, 4200, 556, 4180, and 913 and is maintained by OPD for review. For PA Journals 191 and 144, OPD verified that the invoice amounts are consistent with Contract No. 32200454; however, the PA Journal effective dates and journal numbers provided in the audit schedule do not correspond with the records reflected in the Munis system. For PA Journals 1585, 1862, 2219, 1138, 197, 593, and 219, additional information is required to complete verification because the PA Journal effective dates and journal numbers differ from the Munis records available to OPD. The referenced invoice amounts alone are insufficient to identify the transactions, as they may represent portions of cost shared expenditures or partial payments associated with larger transactions. Identification of the vendor would significantly assist in locating and reconciling the transactions. OPD further notes that the compilation of requested documentation occurred under significant time constraints. During the audit process, agencies were at one point provided approximately two business days to submit requested samples and supporting documentation. Given the volume of transactions and the age of some records, the limited response timeframe may have affected the ability to fully research, reconcile, and compile all supporting documentation prior to submission. Additional time for both agency response and auditor review may have facilitated a more comprehensive reconciliation and verification of the questioned items. OPD will continue coordinating with the Department of Finance and the auditors to reconcile discrepancies between the audit schedules and Munis records, provide available supporting documentation, and strengthen record-retention and transaction-tracking procedures to ensure supporting documentation is readily identifiable and accessible for future audits. Proposed Completion Date: Ongoing

2023-012-Subrecipient Monitoring Suggested Action: Enhanced contractual requirements that ensure greater subrecipient monitoring around greater support for any requests or assertions from our subrecipients. Responsible Official: Chief Operations Officer Completion Date: 6/30/2026

Block Grant for Prevention and Treatment of Substance Abuse (CFDA 93.959) - Compliance - Special Testing Corrective Action Plan: Quality Management Coordinator has conducted in-service training with staff members at the TRA and TRF facilities. Management will continue to emphasize, with the appropriate individuals, the need to complete and document, contemporaneously, each program requirement. Anticipated Completion Date: July 15, 2026 Responsible Party: Land Manor Executive Director, Quality Management Coordinator and Program Directors.

Other Coronavirus State and Local Fiscal Recovery Funds – Assistance Listing No. 21.027 Recommendation: We recommend that the management and finance staff work on retaining documentation and training staff to ensure processes and controls are in place over provider payment calculations and payroll. We also recommend a formal check signing process is implemented to ensure authorization of disbursement is documented appropriately. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action planned/taken in response to finding: We will update our policies and procedures to incorporate the recommendations above. Name of the contact person responsible for corrective action: John C. Jones, President and CEO Planned completion date for corrective action plan: 9/30/2026

Allowable Costs Coronavirus State and Local Fiscal Recovery Funds – Assistance Listing No. 21.027 Recommendation: We recommend the Organization design controls to ensure the expenses allocated to the grant are based on expenses coded in the general ledger. We also recommend that the expenditure reports are prepared and reviewed by separate individuals. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action planned/taken in response to finding: The Organization will put a formal layer of review after preparation of the expenditure report and before submission to the awarding agency and make sure the approved support is kept on file supporting expenses are based on actual payments made. Name of the contact person responsible for corrective action: John C. Jones, President and CEO Planned completion date for corrective action plan: 9/30/2026

Audit Finding Reference: 2023-001 Document Policies and Procedures Over Federal Awards Planned Corrective Action: A Uniform Guidance policy and Procedures document has been adopted. Planned Implementation Date of Corrective Action: The policy was effective 03/21/2025. Person Responsible for Corrective Action: Finance Director

Finding 2023-002 - Reporting (Significant Deficiency in Internal Control Over Compliance and Instance of Noncompliance) Corrective Action Plan: To prevent the same costs being reported and reimbursed by more than one grant program, the Organization has created and implemented a policy that governs the comprehensive review of program expenditures that could be allowable un'der multiple programs. Responsible Person: Bruce Houlihan, CFO Completion Date: May 2026

2023-014 –TITLE I – INADEQUATE SUPPORTING DOCUMENTATION – ALN 84.010 – MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Condition: Williston Basin Public School District No. 7 was unable to provide supporting documentation for expenses charged to the Title I program. 47 of the 60 expenditures we sampled did not have any support, leaving them with known questioned costs of $318,881. Management’s Response: We agree. WBSD#7 created a new Grants Coordinator position in July 2023 with one of the specific responsibilities for that position being oversight of all Federal programs. This oversight responsibility includes monitoring expenditures to ensure all expenditures are allowable within the parameters of each program and also that proper documentation for those expenditures has been maintained. It has taken the district some time to get this area cleaned up. The district is adding another position to this department to assist in maintaining documentation. Anticipated Completion Date: FY 2025

2023-013 – EDUCATION STABILIZATION FUND - LACK OF SUPPORT OVER ESSER FUNDS – ALN 84.425 - MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Condition: Williston Basin Public School District No. 7 was unable to provide supporting documentation for journal entries that were done to reallocate payroll. There were 3 journal entries totaling $6,391,442 that were completed at year end to move salaries into the Education Stabilization Fund program that did not have documentation to support the salary expenditures. Management’s Response: We agree. WBSD#7 created a new Grants Coordinator position in July 2023 with one of the specific responsibilities for that position being oversight of all Federal programs. This oversight responsibility includes monitoring expenditures to ensure all expenditures are allowable within the parameters of each program and also that proper documentation for those expenditures has been maintained. It has taken the district some time to get this area cleaned up. Anticipated Completion Date: FY 2025

VIEWS OF RESPONSIBLE OFFICIALS In response to the single audit finding we will take the following actions. We will establish internal controls that provide certainty, effective monitoring data validation and accountability for those employees who approved expenditures. We will prepare written process in accordance with both state and federal regulations. We will prepare written process in accordance with both state and federal regulations. We will require relevant staff (Staff interacting with procurement, expenditures approval) a comprehensive training program on the requirements of CFR 200. IMPLEMENTATION DATE September 30, 2026 RESPONSIBLE PERSON Ivan Rentas, President

Finding 2023-003 – Improve Controls and Documentation Over Allowability of Costs Condition: Supporting approval documentation for certain expenditures charged to federal awards was incomplete or unavailable. Corrective Action: The City will strengthen controls over invoice approval and record retention for federally funded expenditures. Departments administering federal grants will be required to maintain documentation demonstrating allowability, supervisory approval, and compliance with applicable grant requirements. Periodic monitoring reviews will be conducted to verify compliance. Planned Implementation Date: June 30, 2027 Responsible Official: Director of Finance, School Business Manager, and Grant Administrators

Finding 2023-002 – Improve Controls and Documentation Over Payroll Condition: Supporting documentation for certain employee pay rates and mid-year pay increases charged to federal grants was not readily available for audit review. Corrective Action: The City and School Department will strengthen procedures for maintaining payroll documentation supporting grant-funded salaries and wages. Personnel action forms, collective bargaining agreements, salary schedules, and documentation supporting pay rate changes will be centrally retained and made available for audit purposes. Periodic reviews will be performed to verify that payroll charges to federal awards are adequately supported. Planned Implementation Date: June 30, 2027 Responsible Official: School Business Manager, Human Resources Director, and Payroll Department

Finding 2023-001 – Document Policies and Procedures Over Federal Awards Condition: The City has not fully documented all policies and procedures required under Uniform Guidance, including allowable costs, employee travel, cash management, procurement, conflicts of interest, and subrecipient monitoring. Corrective Action: The City will continue its effort to formalize and document all federal grant policies and procedures required under Uniform Guidance. Existing procurement policies will be updated to incorporate federal requirements related to conflicts of interest, suspension and debarment verification, and other applicable federal procurement standards. Planned Implementation Date: June 30, 2027 Responsible Official: City Manager, Director of Finance, and School Business Office

Finding No.: 2023-018 AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding. While internal verification of disbursements is a standard part of our fiscal workflow, we recognize that our current process has the space to improve. Corrective Action Plan: To ensure that all disbursements are verified and documented prior to payment, PSS will implement the following: I. High Level Review and Approval: Implementation of Comptroller/ Director of Finance review on the Batch Invoice Summary signifying invoice entries on the said batch are verified and correct. After the review, the Comptroller will sign. II. Updated Payment Verification Process: Payments via check or ACH are reviewed by the Comptroller/ Director of Finance through Payment Manager and marking the Batch Invoice Summary that payments matched the invoice. Proposed Completion Date: December 2025 Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org

Finding No.: 2023-017 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Special Tests and Provisions - Private School Participation Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management disagrees with the finding. PSS asserts that timely and meaningful consultations were conducted with private school officials prior to making decisions regarding the size, scope, and funding of equitable services for FY2023. Calculations for the equitable share under the Education Stabilization Funds were performed in accordance with federal regulations, ensuring that per-pupil allocations for eligible private school students and teachers were equitable relative to public school expenditures. PSS maintains that consultation timelines, meeting records, and allocation formulas were maintained. While PSS is continuously refining its administrative workflows, the existing documentation and controls were sufficient to satisfy the requirements of 34 CFR § 299.7. Proposed Completion Date: Resolution in progress and on track for completion by August 2026. Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org

Finding No.: 2023-013 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures were promulgated in SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: I. Finalization of Allowability and Disbursement SOPs: PSS will finalize comprehensive Standard Operating Procedures (SOPs) and policies specifically governing allowability determinations and vendor payments. II. Enhanced Disbursement Controls: PSS is implementing a documented review and approval controls over the payment process. Before any check or ACH disbursement is finalized, a reviewer must verify that the payment amount agrees exactly with the approved invoice. This verification will be physically or digitally documented on the payment voucher to provide a clear audit trail of the pre-payment review. Proposed Completion Date: In progress for FY 2024 with full implementation and documentation processes expected to be completed in 2026. As part of this improvement, we are designing a standardized, documented review process to ensure all disbursements are verified against approved invoices prior to payment. Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org