Corrective Action Plans

Sliding Fee Documentation Type: Material Weakness in Internal Control Over Compliance Corrective Actions: - Ensure complete documentation is obtained and retained. - Implement monitoring and periodic reviews. - Provide staff training. Responsible Parties: Chief Executive Officer and Chief Financial Officer

Finding 2025-003 — LIHEAP Allocation of Multi-Period Costs (DocuSign) Description of Finding: The preliminary audit reports that a full annual DocuSign subscription expense was charged to the LIHEAP grant period January 1 through December 31, 2025, although the subscription term extended beyond that period. The finding cites $25,641 in tested expenditures and indicates that $15,385 could have been charged outside the authorized period of performance. The auditor designates the matter a repeat of 2024-004. Statement of Concurrence: Management concurs with the recommendation that prepaid subscriptions and other multi-period expenditures be allocated to the periods receiving the benefit and charged only to eligible award periods. Corrective Action: WCAI implemented procedures during 2026 to review subscription agreements and multi-period service contracts before posting costs to grants. Prepaid or multi-period costs are to be recorded on a supporting schedule, allocated over the benefiting service period, and expensed monthly. Accounting staff will verify award eligibility and period of performance before charging grant funds, and will document any required correction or reallocation identified through review. Responsible Party: Accounting Manager, with review by the Chief Financial Officer. Implementation Status / Timeline: Implementation began during the FY2024 audit process, was formalized by April 2026, and was targeted to be fully operational by May 2026 under the FY2024 plan; ongoing review. Monitoring and Evidence: Subscription contracts and invoices; prepaid expense amortization schedules; award-period verification; monthly reconciliations; review and approval of any correcting entries. Any grant-specific resolution of the cited amount should be documented separately.

Finding Number: 2025-053 Finding Name: Inadequate Procedures to Determine and Document Beneficiary Eligibility Finding Condition(s): The Illinois Department of Healthcare and Family Services (DHFS) could not locate case file documentation supporting certain eligibility requirements for beneficiaries of the Children’s Health Insurance Program (CHIP) and Medicaid Cluster program. Additionally, the auditors noted that the State does not have adequate resources to perform and document eligibility determinations. Additionally, the State has not established appropriate monitoring procedures to ensure eligibility determinations are properly documented in accordance with program requirements. Name of Contact Person(s): Clarrissa Hupp, Senior Public Service Administrator – Illinois Department of Healthcare and Family Services, Bureau of Eligibility Administration Corrective Action(s): The DHFS will reinforce (through training) with the eligibility workers the requirement to remove the COVID overrides, maintain the support required for eligibility determinations and process redeterminations timely. The DHFS will continue to identify and redetermine eligibility for the 19-year-old population group monthly by systemically identifying and manually redetermining eligibility. In addition, the DHFS will monitor the status of the Project Initialization Request (54841), which is the system change request written to ensure eligibility that is closed in the Illinois Eligibility System (IES) is also closed in the payment system, the Medicaid Management Information System (MMIS). Efforts continue on troubleshooting the various causes of eligibility being closed on the IES and remaining open or more often being reopened on the MMIS. Once validated solutions are reached, a new PIR will be logged and implemented. During the interim, the DHFS will continue to run the monthly procedure to reconcile the systems. The DHFS is averaging around 4,000 eligibility closures per month through its special MMIS update process. Proposed Completion Date: January 1, 2027

Finding Number: 2025-051 Finding Name: Failure to Perform Reviews over Home and Community Based Waiver Services (HCBS) Finding Condition(s): The Illinois Department of Healthcare and Family Services (DHFS) failed to conduct utilization reviews over Home and Community Based Waiver Services (HCBS) for the nine waivers contracted out to its vendor during fiscal year 2025. Name of Contact Person(s): • Pamela Winsel, Bureau Chief, Waiver Operations Management - Illinois Department of Healthcare and Family Services, Medical Division • Cynthia Mester, Waiver Liaison, Waiver Operations Management - Illinois Department of Healthcare and Family Services, Medical Division Corrective Action(s): A vendor has been procured, and quality assurance reviews began in June 2026. Proposed Completion Date: July 1, 2026 – Complete

Finding Number: 2025-050 Finding Name: Failure to Report Drug Rebates on the Medicaid CMS 64 Report in a Timely Manner Finding Condition(s): The Illinois Department of Healthcare and Family Services (DHFS) did not accurately report certain Medicaid Cluster program drug rebates on quarterly federal financial (CMS 64) reports. The auditors also noted that the DHFS did not obtain approval from USDHHS relative to how these prior period adjustments should be reported. Additionally, in considering the reporting process for the CMS-64 report, the auditors noted that the DHFS does not perform analytical or other procedures during the report preparation process at a level of precision to ensure amounts reported are reasonable in relation to previously reported information or expectations relative to current program activities. Name of Contact Person(s): Jamie Tripp, Deputy Finance Administrator - Illinois Department of Healthcare and Family Services Corrective Action(s): The DHFS will work with its incoming pharmacy benefit manager information technology system vendor to develop drug rebate billing reports containing the data elements and level of detail requested by the auditors. The incoming pharmacy benefit manager information technology system vendor is currently projected to begin services on April 1, 2027. Therefore, the estimated completion date will be the first quarter of State fiscal year 2028. Proposed Completion Date: September 30, 2027

Finding Number: 2025-049 Finding Name: Failure to Perform Drug Rebate Activities within Required Timeframes Finding Condition(s): The Illinois Department of Healthcare and Family Services (DHFS) did not perform certain Medicaid Cluster program drug rebate activities within required timeframes. Additionally, the auditors noted that the DHFS has not established adequate internal control procedures to ensure drug rebate activities are performed within required timeframes and appropriate corrective actions are taken. Name of Contact Person(s): Jamie Tripp, Deputy Finance Administrator - Illinois Department of Healthcare and Family Services Corrective Action(s): The DHFS noted in the cause statement above and as discussed below, the reason for the late invoicing for calendar year 2024 quarter four was an information technology system issue with the contracted pharmacy benefit manager (PBMS) vendor which was beyond the DHFS’ control. After identifying the information system error, the DHFS elected to delay issuance of invoices until the system corrections were completed. This decision was made to prevent the distribution of inaccurate invoices to drug manufacturers for that invoicing cycle. The DHFS does track outstanding drug rebate receivables but will focus efforts on collections of amounts outstanding beyond the federal guidelines. To this end, 1. The DHFS will research and develop a delinquent drug rebate collection plan that is compliant with relevant federal and State laws. (Proposed Completion Date: 01/31/27) 2. The DHFS will implement the finalized collection plan. (Proposed Completion Date: 06/30/27) Proposed Completion Date: June 30, 2027

Finding Number: 2025-048 Finding Name: Failure to Ensure Managed Care Organizations Properly Prepare Financial Reports Finding Condition(s): The Illinois Department of Healthcare and Family Services (DHFS) did not ensure the annual financial audits prepared during the year ended June 30, 2025, for Managed Care Organizations (MCOs) of the Children’s Health Insurance Program (CHIP) and the Medicaid Cluster programs met the requirements of the MCO contracts and federal regulations. Name of Contact Person(s): • Amy Roberts, Bureau of Managed Care - Illinois Department of Healthcare and Family Services, Medical Division • Keshonna Lones, Bureau Chief, Bureau of Managed Care - Illinois Department of Healthcare and Family Services, Medical Division Corrective Action(s): The DHFS has implemented a report tracking process. In this process, the DHFS uses an Excel spreadsheet to track the timely report submissions from each MCO, as outlined in MCO Policy 049 and in accordance with the report due dates as provided in the SharePoint Report list. As captured in MCO Policy 049, failure of the MCO to submit deliverables in compliance with reporting timelines may result in the DHFS issuing sanctions to the MCO, including monetary penalties as provided under the contract. Follow-up procedures are formally documented when an MCO submits a non-compliant or modified audit report. (Completed as of 12/31/25) It is important to take into consideration the unfortunate timing of when the MCO audit reports are available and when the State’s fiscal year ends. The MCOs’ audit reports for the preceding calendar year are completed near the State’s fiscal year end, and therefore, the DHFS cannot reasonably receive and review them until the beginning of the State’s next fiscal year. As part of DHFS’ corrective action, DHFS will request USHHS to review DHFS’ current procedures to ensure it sufficiently complies with the federal regulations. If the current process is deemed to be insufficient by USHHS, DHFS will request USHHS to provide additional guidance to alleviate the timing issue in order to aid DHFS in its compliance efforts. Completion Date: December 31, 2026

Finding Number: 2025-045 Finding Name: Unallowed Costs Charged to the CHIP and Medicaid Cluster Programs Finding Condition(s): The Illinois Department of Healthcare and Family Services (DHFS) consistently and sufficiently document the rates charged for medical services expenditures charged to the CHIP and Medicaid Cluster programs. Additionally, the auditors noted that the DHFS has not performed a comprehensive analysis to determine if other similar documentation or calculation errors occurred during the year ended June 30, 2025. Furthermore, the auditors noted that the DHFS’ controls over the determination of the rates used for medical services provided under the CHIP and Medicaid Cluster programs do not operate at an appropriate level of precision to ensure they are properly calculated and supported. Finally, the auditors also noted that the DHFS lacks adequate systemic or manual internal controls to ensure claims are automatically or manually routed to the correct Medicaid Diagnosis-Related Grouping (DRG) pricing calculator based on the applicable service date. Name of Contact Person(s): • Katey Staley, Bureau Chief, Bureau of Rates Development & Analysis - Illinois Department of Healthcare and Family Services, Medical Division • Dan Jenkins, Deputy Administrator, Rates and Finance - Illinois Department of Healthcare and Family Services, Medical Division Corrective Action(s): The DHFS’ Bureau of Rate Development and Analysis (BRDA) will implement a review of rates entered into the Medicaid Management Information System (MMIS) after notification that rates have been updated to ensure that pricing and payment is consistent with the rates provided in the calculators. Completion Date: December 31, 2026

Finding Number: 2025-044 Finding Name: Failure to Adequately Document Payment of Medical Expenditures Finding Condition(s): The Illinois Department of Healthcare and Family Services (DHFS) could not provide sufficient supporting documentation to evidence that certain expenditures claimed under the Children’s Health Insurance Program (CHIP) and the Medicaid Cluster program were disbursed (paid) during the year ended June 30, 2025. Additionally, the auditors noted that the DHFS has not established internal controls at a sufficient level of precision to ensure evidence supporting amounts claimed under CHIP and the Medicaid Cluster program were paid by the IOC during the fiscal year. Name of Contact Person(s) and Title: Michael Erickson, Deputy Finance Administrator - Illinois Department of Healthcare and Family Services Corrective Action(s): The DHFS will complete the following corrective actions: 1. Review and adjust internal control procedures surrounding the financial reporting process to address timing issues to properly reflect the transactions on the cash-basis Schedule of Expenditures of Federal Awards (SEFA). 2. Explore necessary improvements to the level of detail associated with transactions presented for federal claiming by other state agencies. Proposed Completion Date: September 30, 2027

Finding Number: 2025-043 Finding Name: Failure to Discontinue CHIP Benefits for Ineligible Individuals Finding Condition(s): The Illinois Department of Healthcare and Family Services (DHFS) improperly continued providing benefits under the Children’s Health Insurance Program (CHIP) program to individuals who were over the age of 18. In addition, the auditors noted that the DHFS has not established adequate controls to identify and remove individuals over the age of 18 from the CHIP program and to determine if they are eligible for benefits under the Medicaid Cluster program. Name of Contact Person(s): • George Jacaway, Deputy Administrator - Illinois Department of Healthcare and Family Services, Division of Eligibility • Jacqueline Myers, Bureau Chief - Illinois Department of Healthcare and Family Services, Division of Eligibility Corrective Action(s): The DHFS implemented a monthly process to identify 19+ year old CHIP recipients and submits this list each month for caseworker action. This will continue on an ongoing basis. As of October 2026, there are fewer than 100 cases currently past due. Proposed Completion Date: May 31, 2025 – Complete

Finding Number: 2025-035 Finding Name: Failure to Follow Established Program Subrecipient Monitoring Procedures Finding Condition(s): The Illinois Department of Human Services (IDHS) did not follow its established program monitoring policies and procedures for subrecipients of the Temporary Assistance for Needy Families (TANF), Child Care Development Fund Cluster (CCDF), Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. Further, the IDHS did not have adequate policies or procedures to ensure fiscal and administrative reviews were completed timely to detect potential non compliance. Name of Contact Person(s): • Rochelle Chambers-Hyndman, Audit and Quality Assurance Administrator – Illinois Department of Human Services, Division of Rehabilitation Services (DRS) • Christina Miller, Fund Disbursement Manager – Illinois Department of Human Services, Prevention and Treatment of Substance Abuse (SAPT) Program • Kasey Reagan, Division Director – Illinois Department of Human Services, Family and Community Services (FCS) • Maureen Bilek, Audit Compliance and Programmatic Monitoring Administrator – Illinois Department of Human Services, Division of Early Childhood (DEC) Corrective Action(s): This finding covers multiple programs and requires corrective actions from various divisions with the IDHS, including the DRS, the SAPT Program area, the FCS, and the DEC. In summary, the IDHS will work to ensure programmatic on-site and expenditure report reviews are completed and documented in accordance with policies and procedures and will review its process for reporting and follow up on program findings resulting from on-site reviews. Additionally, the IDHS will continue to work to fill vacancies, administer training programs, increase oversight, develop automated processes, implement tracking tools, and review and revise procedures to improve internal controls over these functions. Specific corrective actions from each division are listed below. DRS • Establish written policies and procedures. (Proposed Completion Date: 01/31/27) • Identify roles and responsibilities, including back-up roles. (Proposed Completion Date: 01/31/27) • Publish programmatic review cycle or timetable for the SSBG. (Proposed Completion Date: 01/31/27) • Create OneDrive folders to house all programmatic onsite reviews. (Proposed Completion Date: 08/31/26) • Evaluate effectiveness of policies and procedures biannually. (Proposed Completion Date: 01/31/27) SAPT Program • Hire an administrative assistant to assist with compliance monitoring tracking activities to maintain communication about important deadlines. (Completed as of 03/01/25) • Hire compliance monitors to engage in conducting compliance reviews. (Completed as of 02/17/26) • Meet weekly to track monitoring activities to ensure deadlines are met. (Completed as of 08/30/26) • Review policy and procedures to assess timelines associated with the monitoring process. (Completed as of 08/30/26) • Train all monitors to use the updated tool, templates, and updated policies and procedures. (Completed as of 08/30/26) FCS • The SSBG team is requiring program managers to submit required proof of monitoring annually to centralize records and identify programs and grantees that were not compliant. This step will occur every fiscal year to allow reverification of records and monitoring requirements and awareness across multiple divisions of compliance. (Proposed Completion Date: 05/30/27) • The SSBG team informed all program/grant managers that failure to maintain monitoring compliance could result in reduction or denial of access to SSBG funds. This is the second year this step has occurred. Starting in FY28, non-compliance will result in executive review of award amount. (Proposed Completion Date: 05/30/27) • The SSBG team created a unified dashboard of monitoring for all offices and grantees to track compliance, last visit dates, and to advise divisions and offices of monitoring requirements. The IDHS continues to follow up with all teams who are out of compliance. Non-responsive teams and teams who continue to be out of compliance risk losing or having reduced awards. (Completed as of 09/30/26) • The SSBG team will send follow up messages to program managers across the agency whose records were missing, incomplete, or lacking sufficient information to determine if monitoring had occurred. (Completed as of 08/31/26) • The SSBG Monitoring team will utilize the plan to eliminate the backlog of subrecipient monitoring reviews to reach full compliance across all SSBG funded programs. (Proposed Completion Date: 07/31/27) • The IDHS’ Office of Workforce Development (OWD) Leadership met with staff responsible for annual monitoring to reinforce the need for thorough, accurate, and timely adherence to established processes and timeframes. Leadership reviewed the FY26 Monitoring Standard Operating Procedures (SOP) and Checklist, made updates based on staff feedback, and posted the final version to SharePoint. These expectations continue to be emphasized in weekly meetings with monitoring staff. (Completed as of 03/04/26) • OWD Associate Director and Manager hosted Monitoring Office Hours every Monday and Friday to answer staff questions and ensure adherence to the new Monitoring SOP. (Completed as of 04/30/26) • OWD Leadership has implemented tracking tools and incorporated them into the ongoing office workflow. Leadership will continue regular follow-up with staff to ensure full adherence to the Monitoring SOP. (Completed as of 06/30/25) • OWD Leadership is reinforcing the importance of Monitoring SOP compliance by incorporating adherence into annual performance evaluations for staff who conduct monitoring. (Completed as of 06/30/25) • The IDHS’ Office of Community and Positive Youth Development (OCPYD) hired one new staff person in March 2023. In fiscal year 2024, seven site visits were conducted in person. In fiscal year 2025 and fiscal year 2026, in-person site visits were conducted for 100% of providers in this program. Beginning in fiscal year 2027 (07/01/26), the IDHS’ Comprehensive Community Based Youth Services Program (CCBYS) was transferred to the Illinois Department of Children and Family Services (DCFS) and is no longer with the IDHS. (Completed as of 06/30/26) • The OCPYD program staff retained a time-stamped email replying to the three providers included in this audit that their in-person site visit was completed, and there were no findings. (Completed as of 06/30/26) DEC • Develop and implement a standardized deadline tracking tool to monitor review completion dates and required subrecipient notifications, including documented supervisory review and management oversight to ensure timeliness. (Completed as of 03/16/26) • Establish and implement internal corrective action plan (CAP) procedures that outline standardized processes for CAP tracking, documentation, escalation efforts, and define protocols when subrecipients fail to submit required CAPs within established timeframes (Completed as of 09/30/26) • Initiate and implement a CAP tracking tool to monitor review dates, findings issuance, subrecipient notification dates, CAP receipt, and implementation follow-up activities, with documented management oversight and approval to ensure timeliness, accountability, and consistent monitoring. (Completed as of 07/01/25) • Conduct formal staff training on procedures for accurately completing and maintaining the CAP tracking tool, including documentation standards, required data elements, and supervisory review expectations to ensure consistent and compliant use. (Completed as of 12/10/25) • Increase management capacity to provide supervision and oversight of programmatic monitoring activities, including monitoring review completion and provider notification timeframes. Management will routinely review monitoring activity and tracking information to identify outstanding or approaching deadlines. (Completed as of 08/03/26) • Continue implementation and finalize the centralization of subrecipient monitoring activities for the Home Visiting program to ensure consistent oversight of monitoring schedules, completion of reviews, timely notification of findings, and tracking and follow-up of corrective actions through resolution. (Proposed Completion Date: 06/30/27) • Complete required training for Home Visiting monitoring staff to ensure staff have the knowledge and skills necessary to consistently perform and document subrecipient monitoring reviews, communicate findings in a timely manner, and track and follow up on corrective actions through resolution in accordance with established policies and procedures. (Proposed Completion Date: 06/30/27) Proposed Completion Date: July 31, 2027

Finding Number: 2025-034 Finding Name: Inadequate Process for Monitoring Interagency Program Expenditures Finding Condition(s): The Illinois Department of Human Services (IDHS) does not have an adequate process for monitoring interagency expenditures claimed under or used to meet maintenance of effort (MOE) requirements of the WIC Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the Temporary Assistance for Needy Families (TANF) and the Child Care Development Fund Cluster (CCDF) programs. Name of Contact Person(s): Sarah Eves, Deputy Chief Financial Officer – Illinois Department of Human Services Corrective Action(s): The IDHS will establish additional monitoring procedures, including sampling interagency expenditures and reviews of support documentation to ensure expenditures related to federal grants (including those made by other agencies and those made to subrecipients) are accurately reported in accordance with federal program requirements. Specific corrective actions are listed below. • Develop procedures wherein 1) The IDHS will request Quarterly Certifications, Control Assessments, and Program Expenditure Questionnaires for those agencies receiving funds from federal awards, and 2) If a response is not received within 10 business days, the IDHS’ Chief Financial Officer (CFO) will be contacted to assist with obtaining these documents. • Develop procedures wherein 1) The IDHS will sample interagency expenditures and request that the agency provide supporting documentation for the expenses, 2) If a response is not received within 10 business days, the IDHS’ CFO will be contacted to assist with obtaining these documents, and 3) Documentation will be reviewed by the IDHS to ensure the expenditures meet federal program requirements. Proposed Completion Date: December 31, 2026

Finding Number: 2025-033 Finding Name: Improper TANF Beneficiary Payments Finding Condition(s): The Illinois Department of Human Services (IDHS) made improper payments to beneficiaries of the Temporary Assistance for Needy Families (TANF) program. The auditors also noted that one TANF beneficiary payment was improperly calculated due to a diverted income system error. Further, the auditors noted that the IDHS did not establish control procedures at an adequate level of precision to ensure TANF program benefits were accurately calculated based on the beneficiary’s case file supporting documentation. Name of Contact Person(s): • Elizabeth Lusk, Social Service Program Planner – Illinois Department of Human Services, Family and Community Services • Kasey Reagan, Division Director – Illinois Department of Human Services, Family and Community Services Corrective Action(s): The IDHS reviewed its current process for calculating beneficiary payments and make changes necessary to ensure payments are properly calculated and paid. Furthermore, Temporary Assistance for Needy Families (TANF) training was provided in 2026 to address policies and procedures. Additionally, monthly communications have been established by the Associate Director for the Office of Family and Community Resource Centers (FCRCs) to ensure TANF reviews are prioritized and findings are addressed. Finally, agency leadership has scheduled needed system enhancements. The IDHS has noted the following actions for implementation: • A repair ticket has been issued and will be released in the Illinois Eligibility System (IES) on the diverted income error. The original ticket was combined with a larger TANF budgeting ticket to ensure all factors are functioning in accordance with policy. This ticket is currently awaiting a final release date. (Proposed Completion Date: 08/31/27) • An IES enhancement will be implemented to allow telephonic signatures for TANF Responsibility and Service Plans (RSPs). This will eliminate the need to use a paper process. (Proposed Completion Date: 03/31/27) • TANF training was released in April 2026 to all staff to ensure proper documentation for TANF programs, specifically targeting the RSP signatures and child support documentation rules and regulations. (Completed as of 04/30/26) • Regional Administrators will discuss TANF review trends and RSP signature errors with their Local Office Administrators (LOAs) monthly during their regularly scheduled LOA meeting or via email to ensure ongoing priority is given to this matter. (Proposed Completion Date: 12/31/26) • Regional Administrators will track the number of TANF completed reviews for the 4th quarter of 2026, and then again in 1st quarter of 2027, to compare date trends. Specifically, they will note the number of correct cases and the number of reviewed cases missing RSP signatures (Proposed Completion Date: 12/31/26) Proposed Completion Date: August 31, 2027

Finding Number: 2025-032 Finding Name: Missing Documentation in Beneficiary Files Finding Condition(s): The Illinois Department of Human Services (IDHS) could not locate case file documentation supporting certain eligibility and special test requirements for beneficiaries of the Temporary Assistance for Needy Families (TANF), the Children’s Health Insurance Program (CHIP), and the Medicaid Cluster program. The auditors also noted the State does not have adequate resources to perform and document eligibility determinations. Additionally, the State has not established appropriate monitoring procedures to ensure eligibility determinations are properly documented in accordance with program requirements. Name of Contact Person(s): • Elizabeth Lusk, Social Service Program Planner – Illinois Department of Human Services, Family and Community Services • Kasey Reagan, Division Director – Illinois Department of Human Services, Family and Community Services Corrective Action(s): The IDHS will work to ensure that support for all eligibility items is properly retained in the record. Improved collection and retention of eligibility items will be achieved through Integrated Eligibility System (IES) enhancements and through implementation of quarterly administrative reviews of TANF cases to track trends and address any issues identified. Specific corrective actions include the following: • An IES enhancement will be implemented to allow telephonic signatures for TANF Responsibility and Service Plans (RSPs). This will eliminate the need to use a paper process. (Proposed Completion Date: 03/31/27) • Regional Administrators will discuss TANF review trends and RSP signature errors with their Local Office Administrators (LOAs) monthly during their regularly scheduled LOA meeting or via email to ensure ongoing priority is given to this matter. (Proposed Completion Date: 12/31/26) • Regional Administrators will track the number of TANF completed reviews for the 4th quarter of 2026, and then again in 1st quarter of 2027, to compare data trends. Specifically, they will note the number of correct cases, the number of reviewed cases missing RSP signatures, and the number of budgeting errors. (Proposed Completion Date: 12/31/26) Proposed Completion Date: March 31, 2027

Finding Number: 2025-031 Finding Name: Unallowable Costs Charged to the TANF and CCDF Cluster Programs Finding Condition(s): The Illinois Department of Human Services (IDHS) could not provide documentation to support payments made on behalf of beneficiaries of the Temporary Assistance for Needy Families (TANF) and the Child Care and Development Fund (CCDF) Cluster programs. The auditors also noted that the IDHS does not have adequate controls in place to ensure billing information from providers is accurate and the IDHS does not obtain source documentation (certified attendance records) for child care billings and did not obtain them for our audit procedures. Name of Contact Person(s): Maureen Bilek, Audit Compliance and Programmatic Monitoring Administrator – Illinois Department of Human Services, Division of Early Childhood Corrective Action(s): The IDHS has started to implement corrective actions to obligate and liquidate CCDF grant funding within the applicable period of performance and to strengthen internal controls related to Child Care Assistance Program (CCAP) payments. These corrective actions include the following: • Develop and implement internal procedures to conduct quarterly reviews of billing certificates for payments entered through the Interactive Voice Response (IVR) system. (Completed as of 04/30/26) • Assess existing deliverables, CCAP policy, and CCDF State Plan responses related to IVR payments and determine and implement any necessary revisions. (Completed as of 06/30/26) • Develop external guidance for providers and Child Care Resource and Referral (CCR&R) agencies outlining IVR payment requirements, documentation standards, record-retention expectations, and the review process. (Completed as of 03/09/26) • Initiate and continue implementation of a communication plan to announce upcoming reviews, including the Service Employees International Union (SEIU), the Illinois Department of Early Childhood (IDEC), the CCR&R agencies, and all providers utilizing the IVR. Additional communications will be issued as the process is refined. (Completed as of 04/09/26) • Commence IVR payment reviews in June 2026 and continue a quarterly basis. (Completed as of 09/30/26) • Establish and maintain a master tracking log of provider reviews by year, subject to management review and oversight. (Completed as of 03/15/26) • Develop a centralized tracking tool identifying each grant’s period of performance, obligation deadline, liquidation deadline, and extension requirements. (Proposed Completion Date: 06/30/27) • Establish written procedures requiring monthly review of grant obligations, expenditures, and remaining grant balances, including documented management review. (Proposed Completion Date: 06/30/27) • Implement a notification and escalation process requiring program and fiscal management to be notified when a grant is within six months of its obligation or liquidation deadline. (Proposed Completion Date: 06/30/27) • Provide training to fiscal and program staff responsible for grant administration on federal period of performance, including obligation and liquidation deadlines, extensions, and new tracking and escalation procedures. (Proposed Completion Date: 09/30/27) Proposed Completion Date: September 30, 2027

Finding Number: 2025-029 Finding Name: Failure to Retain Detailed Transactions for Summer EBT Program Beneficiary Payments Finding Condition(s): The Illinois Department of Human Services (IDHS) did not retain transaction-level detail for beneficiary payments under the Summer Electronic Benefits Transfer Program for Children (Summer EBT) program. Name of Contact Person(s): • Elizabeth Lusk, Social Service Program Planner – Illinois Department of Human Services, Family and Community Services • Kasey Reagan, Division Director – Illinois Department of Human Services, Family and Community Services Corrective Action(s): The IDHS and its partners maintain detailed records of beneficiaries and the data will be made available in future inquiries. Specific corrective actions that the IDHS will complete to ensure the data is available for future audits include the following: • The IDHS has reached out to its partners to prepare for potential information requests for fiscal year 2025 and future fiscal year inquiries. (Completed as of 09/14/26) • The IDHS’ SNAP staff and the IDHS’ Federal Reporting staff will meet to discuss the Summer EBT process and the data used in reconciliation. (Completed as of 09/21/26) • The SNAP program area will draft procedures related to how the program is funded initially and throughout each grant year. (Proposed Completion Date: 12/01/26) • The SNAP staff will create a data reconciliation spreadsheet and save the document on a SharePoint site for shared use with Federal Reporting staff. (Proposed Completion Date: 12/01/26) • The Federal Reporting staff will add claiming data to the data reconciliation spreadsheet. (Proposed Completion Date: 12/01/26) • The Federal Reporting staff will document the process used to sample data from the reconciliation spreadsheet and compare it to the detail on the Fidelity Information Services (FIS) transaction file. Proposed Completion Date: December 1, 2026

Finding Number: 2025-028 Finding Name: Inadequate Process to Communicate Award Information to Subrecipients Finding Condition(s): The Illinois Board of Higher Education (IBHE) does not have an adequate process in place to ensure required award information is accurately communicated to subrecipients of the Child Care and Development Fund (CCDF) Cluster (CCDF Cluster) program. Name of Contact Person(s): • Rebecca Heath, Assistance Chief Accountant - Illinois Board of Higher Education • Bill McCarty, Chief Financial Officer - Illinois Board of Higher Education Corrective Action(s): The IBHE is updating its grant procedure manual, adding a provision to ensure that the IBHE has an adequate process in place to ensure required information is accurately communicated to subrecipients of federal grant programs. Proposed Completion Date: September 30, 2026 – Complete

Finding Number: 2025-025 Finding Name: Inadequate Process for Foster Care Daycare Maintenance Assistance Payments Finding Condition(s): The Illinois Department of Children and Family Services (DCFS) does not have an adequate process in place to ensure Foster Care daycare maintenance assistance payments are accurately paid based on its approved rate schedule. Name of Contact Person(s): • Stacy Mixon, Daycare Eligibility Administrator – Illinois Department of Children and Family Services • Will Blount-Stephens, Deputy Director – Illinois Department of Children and Family Services, Office of Contract Administration • Kiersten Neswick, Chief Fiscal Officer – Illinois Department of Children and Family Services Corrective Action(s): All childcare providers now receive the State-established reimbursement rate, regardless of the rate they charge private-paying families. This change ensures that all childcare providers receive the funding that they are entitled to. Proposed Completion Date: July 1, 2025 – Complete

Finding Number: 2025-024 Finding Name: Failure to Provide Supporting Documentation for Payroll and Related Costs Finding Condition(s): The Illinois Department of Children and Family Services (DCFS) could not provide adequate supporting documentation to substantiate payroll and related costs claimed for federal reimbursement under the Foster Care – Title IV-E (Foster Care), Adoption Assistance, and Temporary Assistance for Needy Families (TANF) programs. Additionally, the auditors noted that the controls to ensure required documentation is obtained to support payroll and related costs and maintained to evidence management approval of payroll information were not operating effectively. Finally, the auditors also noted that adequate internal controls have not been established to ensure the data included in the timekeeping system and used to allocate personal services expenditures to Foster Care, Adoption Assistance, TANF, and other programs operated by the DCFS is consistent with the hours reported on manual timesheets prepared by the employees and approved by supervisor. Name of Contact Person(s): • David Riley, Payroll Administrator – Illinois Department of Children and Family Services • Sarah Tucker, Associated Chief Fiscal Officer – Illinois Department of Children and Family Services • Kiersten Neswick, Chief Fiscal Officer – Illinois Department of Children and Family Services Corrective Action(s): The new quality controls, introduced in October 2024, have helped to identify and correct errors, but system modernization is needed to be fully implemented. The DCFS is working with the Illinois Department of Innovation and Technology (DoIT) and the Illinois Department of Central Management Services (CMS) to implement the systems to shift to electronic timesheets. The DCFS intends to begin using the CMS’ Central Payroll System with eTime. Proposed Completion Date: June 30, 2027

Finding Number: 2025-005 Finding Name: Untimely Review of Subrecipient Performance Reports Finding Condition(s): The Illinois State Board of Education (ISBE) did not review subrecipient performance reports in a timely manner according to its program monitoring policies and procedures for subrecipients of the Education and Stabilization Fund - Elementary and Secondary Education (ESF) program for fiscal year 2025. Name of Contact Person(s): Denise Blaney, Director of Title Grants – Illinois State Board of Education Corrective Action(s): To ensure proper review procedures are performed in a timely manner in accordance with its program monitoring policies and procedures, ISBE’s fiscal department will continue to send weekly lists of submitted, past due, and disapproved Grant Periodic Reports (GPRS) to each applicable department. Program areas worked with Information Technology Department and enhanced the report to provide a daily detailed GPRS report beginning December 22, 2025. This report allows management staff to review and ensure that reports are not overlooked. Program staff analyzes the GPRS reports and prioritizes reviews based on submission dates. Proposed Completion Date: December 22, 2025 - Complete

The Business Manager will work to create policies and procedures to address all the items listed in this finding. The Principal and Superintendent will assist in enforcing the procedures are followed. All staff involved with the administration of Federal funds will be trained on these policies and procedures. The Business Manager will work to make sure the policies and procedures stay consistent with current Uniform Guidance requirements and the School Districts federal grant activities. Our auditors assist the business manager to assure we are in step with the changes.

Audit Finding Reference: 2025-001 Maintain Documentation Supporting Employee Pay Rates Planned Corrective Action: We will maintain a current Memorandum of Understanding supporting the hourly pay rate charge to the program for employee pay rates. Planned Implementation Date of Corrective Action: November 2026 Person Responsible for Corrective Action: Valerie L. Williams

FINDING 2025-017: Controls Over SRF Reimbursement Requests Response: The City again agrees with the auditor’s recommendation and will include reporting and reimbursement rules and guidelines in the new Grant & Federal Funding policy currently being developed by the Finance Department. We have also created a central location for all grant documentation to be stored in order to keep all documentation available to everyone involved in grant-related transactions. The new process/policy will also include additional review requirements.

Finding 2025-002 Lack of Internal Control Over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness Name of Contact Person: President, Nora Tom; Tribal Coordinator, Jacinta Martin Corrective Action Plan: The Stebbins Community Association will strengthen its internal controls over program expenditures by establishing and implementing written procedures to ensure that all costs charged to federally funded and other restricted programs are properly reviewed, supported, approved, and allowable. Management will implement the following corrective actions: 1. Written Policies and Procedures The Association will establish written procedures for reviewing expenditures to determine whether costs are allowable under applicable federal requirements, grant agreements, funding restrictions, and Association policies. 2. Pre-Approval of Expenditures Program expenditures will be reviewed and approved by authorized personnel before payment whenever practical. The reviewer will verify that the expenditure is related to an approved program activity and is necessary to accomplish the program's objectives. 3. Allowability and Cost Principles Review Before costs are charged to a federal award, designated accounting or management personnel will review the expenditure for: • Reasonableness; • Allowability; • Allocability to the applicable program or award; • Proper accounting treatment; • Consistency with applicable cost principles; • Compliance with grant or award restrictions; and • Adequate supporting documentation. 4. Supporting Documentation All expenditures will be supported by appropriate documentation, including invoices, receipts, purchase orders, contracts, timesheets, travel documentation, approval records, or other documentation demonstrating the purpose and allowability of the expenditure. 5. Program/Grant Coding Accounting personnel will ensure that expenditures are charged to the correct program, grant, funding source, and account code. Costs will not be charged to a federal award merely because funds are available. 6. Review of Unallowable Costs Management will establish procedures for identifying costs that are specifically prohibited or otherwise unallowable under applicable laws, regulations, grant agreements, or cost principles. Unallowable costs will not be charged to federal awards and, if identified after recording, will be promptly reclassified or otherwise corrected. 7. Periodic Expenditure Review Management will conduct periodic reviews of expenditures charged to federal and restricted programs. The review will include testing supporting documentation and determining whether expenditures were incurred for authorized program purposes. 8. Correcting Improper Charges If an expenditure is determined to be unallowable or improperly charged to a program, the Association will make the necessary accounting correction and, when applicable, reimburse or return funds to the appropriate funding source. 9. Employee and Management Training Employees and management personnel responsible for purchasing, accounts payable, grant administration, and financial reporting will receive training regarding allowable and unallowable costs, applicable cost principles, grant requirements, documentation requirements, and expenditure approval procedures. 10. Management Oversight The Executive Director and designated financial personnel will be responsible for monitoring compliance with these procedures and ensuring that appropriate corrective action is taken when deficiencies are identified. Proposed Completion Date: The corrective action will be implemented immediately and incorporated into the Association's ongoing purchasing, accounts payable, grant administration, and financial reporting procedures.

Audit Finding Reference: 2025-001 Document Policies and Procedures Over Federal Awards Planned Corrective Action: The Town has received a draft policy addressing requirements related to Federal Awards. The Town will review the policy and work toward presenting it to the Board for consideration and adoption during FY27. Planned Implementation Date of Corrective Action: Within Fiscal Year 2027. Person Responsible for Corrective Action: Michelle Leary and Bethiny Moseley