Corrective Action Plans

CORRECTIVE ACTION PLAN (Concerning Finding 2023-006) Contact Person Responsible for Corrective Action: Carrie Castonguay, Town Manager Corrective Action: The Town Manager and Select Board will take the following actions to address finding 2023-006 The current Town Manager was appointed by the Select Board on August 14, 2023, and had no knowledge of this material weakness. She is an experienced Manager and has drafted, had approved and has implemented the new Internal Controls Policy that addresses this deficiency. This policy will includes sections on risk assessment and management, annual audit, chart of account, general ledger, reconciliation and verification, reserve funds and reserve accounts, investments, financial reporting, fraud, accounting software, online transactions and banking, documentation daily cash-ups, grants and projects, AR process, AP process, and payroll. Anticipated Completion Date: This was completed February 20, 2024.

CORRECTIVE ACTION PLAN FISCAL YEAR OF FINDING: June 30, 2023 AUDITOR FINDING: 2023-005 According to 2 CFR Part 200.403 factors affecting allowability of costs - costs must meet the following general criteria in order to be allowable under Federal awards: (a) be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity, (d) be accorded consistent treatment, (e) be determined in accordance with generally accepted accounting principles, (f) to be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period and (g) be adequately documented. In addition, according to 2 CFR Part 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Organization did not maintain documentation to support that costs and reimbursement invoices had been approved in accordance with their internal control design. CLIENT PLANNED ACTION: To address the audit finding, we affirm that all reimbursement invoices and cost-related documentation are submitted to a Director-level staff member for review and approval prior to sending. All approved invoices and associated documentation are now stored in a centralized shared drive and onsite file cabinets accessible to relevant finance staff to ensure consistent retention and accessibility for audit and review purposes. These documents will also be accessible within the accounting information system, when organization switches to Sage, which is accessible to all parties that have approval responsibilities. CLIENT RESPONSIBLE PARTY: Cassie Kenney, Director of Accounting COMPLETION DATE: This process started as of June 30, 2024. Documents will be stored within Sage as soon as the switch to this software is effective (tentative July 1st, 2025).

Finding 2023-001: Material Restatement to Fund Balance/Net Position Condition: During audit fieldwork, our testing resulted in a restatement of fund balance in order to correct a change in the Reporting Entity and split out funds required for separate reporting. Plan: The County Administrator's Office and all other offices impacting financial reporting will implement internal controls to properly record necessary funds to be reported at the Entity level. Anticipated Date of Completion: Audit for Fiscal Year Ended November 30, 2024 Name of Contact Person: Erica Firnhaber, County Treasurer Management Response: Manag:3ment acknowledges this finding and will work to correct it by the anticipated date identified above.

2023-006 Cash Receival – Proper Procedures Recommendation: Auditors recommend that CIES modifies its internal control policies for general review and approval of the reporting requirements set forth by the criteria listed. Criteria: 2 CFR 200.8(a) – Federal agencies responsible for ensuring that specific Federal award conditions and performance expectations are consistent with the program design. 2 CFR 200.208(c)(1) Specific conditions may include requiring payments as reimbursements rather than advance payments. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action planned in response to finding: As feasible, CIES will implement proper procedures and controls surrounding the receival of cash to ensure proper segregation of duties for funds received. Cash, including checks, received will be received and deposited by one of the CIES’ administrative staff and a different CIES’ administrative staff member will enter the data into the CIES’ financial records. Verification of entry and deposit will be conducted through monthly reconciliations of bank accounts. Name(s) of the contact person(s) responsible for corrective action: Michael Parker, Executive Director Planned completion date for corrective action plan: March 2026

Federal Agency Name: Department of Health and Human Services Assistance Listing Number: 93.829 Program Name: Section 223 Demonstration Programs to Improve Community Mental Health Services Finding Summary: There was no evidence retained that the Organization's cash management requests were reviewed and approved prior to submission. Corrective Action Plan: The Organization has implemented a process to ensure that formal documentation of review and approval is obtained and retained (i.e. hard copies or email). Responsible Individual: Ashli Glorvigen, CFO Anticipated Completion Date: 12/31/2026

FINDING 2023-002 Finding Subject: CDBG - Entitlement Grants Cluster - Program Income Contact Person Responsible for Corrective Action: Timothy A. Brown Contact Phone Number and Email Address: 219-755-3225 brownta@lakecountyin.org Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: This same finding was part of the 2022 audit in Finding 2022-003. The department was aware that this same finding would be arising in the 2023 audit again due to multiple year errors of previous staff. The corrective action plan proposed and adopted as part of the Corrective Action Plan for finding 2022-003 is still in force and is working to eliminate such findings in the future. The Lake County Redevelopment Commission adopted Resolution 001-2025 on January 16th, 2025 amending the Policy and Procedures Manual of the Department concerning Program Income (PI) internal controls for proper reporting in the IDIS system to address and correct the finding going forward. Anticipated Completion Date: Done

Corrective Action Plan Action Item Responsible Party Monitoring Maintain complete and accurate records of federal drawdowns, disbursements, and related trial balance activity in accordance with record-retention policies. CFO / Accounting Staff Monthly review Implement procedures to review unearned revenue balances and related cash activity to ensure federal funds are drawn and disbursed in compliance with cash management requirements. CFO Monthly reconciliation In FY 2026, management developed and implemented a formal Records Retention Policy to ensure that accounting records, supporting documentation, and organizational records are properly maintained and retained in accordance with applicable regulatory and audit requirements. CFO Management review Strengthen supervisory oversight of drawdowns and reimbursement requests to ensure compliance with Uniform Guidance and applicable federal regulations. CFO / Board Finance Committee Quarterly review ________________________________________ Management Response Management notes that no additional federal grants, other than the HRSA Section 330 program grant (Assistance Listing 93.224), were received in FY2025 or FY2026. Prior management did not provide a reconciled SEFA schedule for earlier reporting periods, which contributed to the documentation limitations identified during the audit. Beginning in FY2026, management has developed a detailed SEFA tracking schedule for the HRSA Section 330 grant that identifies the date federal funds were drawn down, the amount received, the related expenditures, and the corresponding disbursement dates. This schedule is maintained to improve reconciliation between drawdowns, expenditures, and the general ledger and to ensure documentation is readily available for audit and compliance purposes. ________________________________________ Responsible Official: Chief Financial Officer Expected Completion Date: FY 2026

ROE 40 will put into place a system to ensure timely expenditure reporting for both federal and state programs. Regular review will ensure that expenditures are placed into line items properly, thus making sure expenditures do not exceed budgeted amounts. Procedures will be put in place to ensure an expenditure is not submitted for reimbursement prior to the ROE paying for the expenditure.

Views of Responsible Officials and Planned Corrective Action The Organization notes the following existing internal control practices, as it relates to cash management subsequent policy and process development and implementation, and the additional controls to be implemented: A. System, Process & Review Controls In Practice. 1. System Controls. The Organization operates in an environment in which system, process & review controls of the United States Department of Health and Human Services (HHS) are practiced in processing cash (draw) transactions in both the Electronic Handbook (EHB) and Payment Management System (PMS) systems, operated by HHS. Only the director of administrative operations and the CEO have system access to the EHB and PMS systems. 2. Process & Review Controls – EHB & PMS. Cash management requests (aka federal draws) are computed by, and entered into the EHB, including the Organization’s justification of the expenditure, by the director of administrative operations, including the CEO on the approval request. The propriety of the cash draw is reviewed by the HHS assigned grants management specialist; and inquiry action, if needed, documented by e-mail from the grants management specialist; and approval documented in the EHB. Once the draw is approved, the director of administrative operations enters information into the PMS, noting that the CEO, is the authorized organization representative (AOR). The grants management specialist must then approve the draw request once more in the PMS system before a PMS representative approves the draw request. 3. Process & Review Controls – Finance Committee & Full Board. The Organization’s monthly Board process and review controls include review of the Organization’s: Statement of Financial Position, Statement of Revenues and Expenditures, Statement of Revenues and Expenditures – Net Income/(Loss) by Fund, Fund Details – Additional Information and Statistics, Active Subcontract Summary, Active Subcontract Listing Related to Funds – Additional Information and Statistics, Native Hawaiian Health Program (Fund 007V), and Native Hawaiian Health Scholarship Program (Fund 017V). B. Internal Control Environment Policy Establishment – July 2025. In July 2025, the Organization developed the following cash management related policies and related procedures: Internal Control Environment; Implementation of Significant Accounting Policies; Revenue Recognition Policy, Including Federal Draws; Implementation of HRSA Related Policies, including cash management processes and procedures. C. Additional Process & Review Controls – March 2026. Beginning March 2026, for federal draws, process and review internal controls will be implemented, via the chief of staff’s review of the director of administrative operations cash management analyses, federal grant receivable composition, reconciliation and related federal grant revenue computations, prior to any director of administrative operations and chief executive officer action in EHB and PMS, respectively.

Contact Person Responsible for Corrective Action Plan: G. Janina Trzmiel, Chief School Financial Officer Corrective Action Plan: We agree with the auditors’ comments and have taken the following actions: The Board will implement policies to ensure proper submission and approval over ESSER funds for reimbursement. Anticipated Completion Date: September 30, 2024

We will review policies and procedures for expenses to ensure that all payments have an evidenced independent review prior to payment.

Condition: During audit fieldwork, testing resulted in a restatement of fund balance related to the implementation of a new capital asset policy, implementation of GASB Statement No. 87, and the write-off of forgivable loan balances. Plan: The City and its Finance Department will continue implementing revised policies and new accounting standards, some of which may require retroactive restatements. The City will also continue to evaluate the appropriateness of receivable balances, including forgivable loans, prior to audit fieldwork. Anticipated Date of Completion: Fiscal Year 2024 Name of Contact Person: Eric Dubrowski, Finance Director Management Response: As part of its internal review of capital assets, the City implemented a revised capital asset policy. This policy significantly reduced the number of assets required to be tracked while retaining the vast majority of assets on the City’s books, resulting in improved compliance and increased administrative efficiency. The City reviews the implementation of new GASB pronouncements with its auditors in advance of each applicable reporting period. Forgivable loan balances previously corresponded to liens placed on properties and notes issued to borrowers. Upon reevaluation of the criteria required for forgiveness, the City concluded that these loans were highly likely to be forgiven. In the limited circumstance where forgiveness would not occur, such as a borrower ceasing operations, collection of the loan would also be unlikely. As a result, the City determined that these balances should be removed retroactively from the balance sheet, resulting in a restatement of fund balance.

Colfax County agreed to be the fiscal agent for a collaborative project involving several state and federal agencies within NM, CO, and KS along with private corporations including BNSF and AMTRAK. Colfax County did not have the staffing or cash flow necessary to facilitate such a large project. County Manager and Financial Specialist were not trained in Railroad project management. Changes in staff within the County Manager’s Office and private corporations as well as state and federal agencies resulted in change in requirements, poor communication, and delay in reporting ultimately resulting in disruption of reimbursement to the County. Colfax County worked with NM Department of Transportation and Federal Railroad Administration to collect project status information and submit all outstanding progress reports. To date Colfax County has been successful in maintaining open communication and receiving support from NMDOT and FRA. All reporting requirements are current and reimbursement has been issued to the County.

Colfax County agreed to be the fiscal agent for a collaborative project involving several state and federal agencies within NM, CO, and KS along with private corporations including BNSF and AMTRAK. Colfax County did not have the staffing or cash flow necessary to facilitate such a large project. County Manager and Financial Specialist were not trained in Railroad project management. Changes in staff within the County Manager’s Office and private corporations as well as state and federal agencies resulted in change in requirements, poor communication, and delay in reporting ultimately resulting in disruption of reimbursement to the County. Colfax County worked with NM Department of Transportation and Federal Railroad Administration to collect project status information and submit all outstanding progress reports. To date Colfax County has been successful in maintaining open communication and receiving support from NMDOT and FRA. All reporting requirements are current and reimbursement has been issued to the County.

The Organization hired a new grant and partnership specialist. This specialist reviews all draws to ensure that the draw is for reimbursement for actual expenditure and not estimated expenditure. Reports and draws are also reviewed by the vice president of finance.

Reference Number: 2023-005 Finding: Update Documented Policies amt Procedures Over Federal Awards Name of Contact Person: Christine Chamberland Corrective Active Plan: The City will develop and implement comprehensive policies and procedures specifically addressing the management and oversight of federal awards to ensure compliance with the Uniform Guidance. Designated staff will be tasked with drafting these documents, which will be reviewed and approved by senior management. Training sessions will be conducted for all relevant personnel to ensure consistent application of the new policies and procedures. Proposed Completion Date: 3/31/26

Finding Number: 2023-003 Finding Title: Reporting Program: 93.778 Medical Assistance Program Name of Contact Person Responsible for Corrective Action: Taylor Spilde Corrective Action Planned: Taylor has been receiving supporting documents and reports since 1/1/2024. Taylor received notification since 2024 and has been reporting since receiving notification. Anticipated Completion Date: 1/1/2024

December 23, 2025 The City of Colonial Heights respectfully submits the following corrective action plan for the year ended June 30, 2023. Name and address of independent public accounting firm: Brown, Edwards & Company, L.L.P. 3906 Electric Road Roanoke, VA 24018 Audit period: June 30, 2023 The findings from the June 30, 2023 Schedule of Findings and Questioned Costs (the “Schedule”) are discussed below. The findings are numbered consistently with the number assigned in the Schedule. FINDINGS – FINANCIAL STATEMENT AUDIT 2023-001: Fund Balance Adjustments (Material Weakness) Condition: During our review of beginning fund balances, we noted that several fund balances did not agree to the ending amounts on the previous year’s annual comprehensive financial report due to issues with a financial software conversion during the fiscal year. As a result, adjustments were made to beginning fund balances during the audit. Criteria: Due to the financial software conversion, various fund balances were misstated due to the way the software was converting the fold balances and posting some new transactions. Cause: The financial software conversion lead to errors in fund balance reporting. Effect: Fund balance for several funds was materially misstated. Recommendation: We recommend correcting software issues and reconciling the prior year ending fund balances from the annual comprehensive financial report to the current year general ledger prior to fiscal year- end. Corrective Action: Management has noted the software issues for prior year ending fund balance reconciliation. The department has worked with the software vendor to resolve the underlying issues for prior year end fund balances and will continue to monitor for the following fiscal year audit to ensure the issue is fully resolved.. The software vendor also showed management a report to run on a monthly basis to check for any imbalances. Management will run this report at least monthly to check for imbalances going forward. FINDINGS – FINANCIAL STATEMENT AUDIT (CONTINUED) 2023-002: Audit Adjustments (Material Weakness) Condition: During the audit, we noted material year-end audit adjustments were required due to software conversion issues. These audit adjustments were required to ensure that the financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The adjustments were related to fund balance, trial balance discrepancies, and governmental account receivables. Criteria: Fund balance, various trial balance accounts, and governmental accounts receivables were initially materially misstated before audit adjustments were made. Cause: The financial software conversion lead to errors in financial reporting for some accounts. Effect: The ending balance for several accounts were materially misstated. Recommendation: We recommend establishing procedures in which qualified supervisors are reviewing year-end workpapers and reconciliations that feed into the final general ledger and focusing on the accuracy of year-end balances. We also recommend correcting any issues caused by the software conversion. Corrective Action: Management is working to establish procedures for qualified supervisors to review year-end workpapers and reconciliations that feed into the final general ledger. The department continues to correct issues caused by the software conversion. In addition, management has contracted with a consultant who is fully focused on audit work and will consider pre-audit engagements in the future. FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAM AUDIT 2023-003: COVID-19 Elementary and Secondary School Emergency Relief (ESSER) Fund – ALN #84.425D and COVID-19 American Rescue Plan Elementary and Secondary School Emergency Relief Fund (ARP ESSER) – ALN #84.425U, Special Tests and Provisions – Wage Rate (Material Noncompliance) Condition: During our review of the 1 applicable contract related to a federally funded project, we noted that the contract did not include the Wage Rate (Davis Bacon Act) and DOL regulations. Criteria: Federally funded projects under ESSER must comply with the Davis Bacon Act in the written contract. Cause: The omission of this clause was due to oversight. Effect: The written contract was not in compliance with required disclosures related to the Davis Bacon Act. Recommendation: We recommend that a process be put in place that ensures that all contracts related to federally funded projects include necessary DOL regulations. Corrective Action: Management will implement processes to ensure that any future contracts for federally funded projects will include the Wage Rate (Davis Bacon Act) and DOL regulations to ensure compliance. 2023-004: Highway Planning and Construction – ALN # 20.205, COVID-19 Coronavirus State and Local Fiscal Recovery Funds – ALN # 21.027, Special Education - Grants to States – ALN # 84.027, Special Education - Preschool Grants – ALN # 84.173, COVID-19 Elementary and Secondary School Emergency Relief (ESSER) Fund – ALN # 84.425D, and COVID-19 American Rescue Plan Elementary and Secondary School Emergency Relief Fund (ARP ESSER) – ALN # 84.425U, Late Filling of Data Collection Form Condition: The City did not submit the data collection form for the year ended June 30, 2023 timely. For June 30, 2023 year-end audits, under the requirements in the Uniform Guidance and the Office of Management and Budget (OMB), all entities are required to submit the annual data collection form with the Federal Audit Clearinghouse the earlier of either 30 days after the issuance of the entity’s annual audit or nine months after the entity’s fiscal year-end. FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED) 2023-004: Highway Planning and Construction – ALN # 20.205, COVID-19 Coronavirus State and Local Fiscal Recovery Funds – ALN # 21.027, Special Education - Grants to States – ALN # 84.027, Special Education - Preschool Grants – ALN # 84.173, COVID-19 Elementary and Secondary School Emergency Relief (ESSER) Fund – ALN # 84.425D, and COVID-19 American Rescue Plan Elementary and Secondary School Emergency Relief Fund (ARP ESSER) – ALN # 84.425U, Late Filling of Data Collection Form Criteria: The City is required to submit the annual data collection form with the Federal Audit Clearinghouse the earlier of either 30 days after the issuance of the City’s annual audit or nine months after the City’s fiscal year-end. Cause: The data collection for was not filed timely due to the timing of the issuance of the City’s ACFR. Effect: The data collection form was not filed timely. Recommendation: Management should take steps to ensure that the firm is filed in a timely manner. Corrective Action: Management will work to complete the annual audit in a more timely manner, which is necessary to submit the annual data collection form in a more timely manner in future years. If the Federal Audit Clearinghouse has questions regarding this plan, please call Christina Sadler, Director of Finance at 804-520-9261. Sincerely yours, Christina E Sadler Director of Finance

The department will adopt written policies with the Uniform Guidance for Federally Funded Grant Programs accepted by the department.

Jordan CRC concurs with the recommendation to strengthen internal controls over cash management by establishing a formal, written Cash Management Policy. This will ensure compliance with 2 CFR 200.305(b)(1) and enhance oversight of subrecipient cash drawdowns. The following action steps and best practices will be implemented:

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1. Development and Implementation of a Written Cash Management Policy:

A comprehensive Cash Management Policy will be developed to define the procedures, responsibilities, and internal controls related to the timing and oversight of cash drawdowns, particularly for pass-through funding to subrecipients. The policy will be formally adopted and incorporated into the Organization’s 2025 Financial Policies and Procedures Manual.

2. Integration of Best Practices:

Just-In-Time Funding: Federal funds will be disbursed to subrecipients on a reimbursement basis or just-in-time to minimize the time between fund transfer and disbursement.