Corrective Action Plans

Recommendation: We recommend that the College review and update current procedures to ensure subrecipient payments are paid timely. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Collaborative workflows will be established between Grant PI's and the Accounts Payable department to ensure that subrecipient payments are submitted and paid timely. These workflows will be included in the Accounts Payable procedures. Name of the contact person responsible for corrective action: Clarissa Salhus, Finance Manager, Duane VanderGriend, CFO Planned completion date for corrective action plan: Completed as of January 14, 2026

• Strengthening internal controls and oversight consistent with 2 CFR 200.303 and applicable federal program regulations.

• Implementing structured compliance monitoring reviews across all major programs.

• Enhancing monthly financial reconciliations with supervisory review and documentation retention.

• Improving segregation of duties in key financial and compliance processes.

• Updating written policies and procedures for financial management and compliance.

• Providing ongoing staff and leadership training on Federal Uniform Guidance and program-specific requirements.

Management agrees with the finding presented by the audit. Management has taken corrective actions to meet this standard. The Organization has taken corrective actions to meet this standard for FY23. These actions include the Organization implementing a grant reimbursement approval system with three levels of review. The controls include segregation of duties between the employee who process the data and the employees who review in order to ensure any errors are identified and remediated prior to submission to the grantor. The Staff Accountant and Shared Services team process data for reimbursement and provides the data to the Finance Manager to review and create the grant filing. Once the grant filing is prepared, the Grant Administrator reviews the grant filing and provides the completed filing to the Operations Director to review and approve prior to submission to the grantor.

Planned Corrective Action: A Uniform Guidance policy and Procedure document has been adopted. Planned Implementation Date of Corrective Action: The policy was effective 03/21/2025. Person Responsible for Corrective Action: Finance Director

Corrective Action Plan The organization recognizes that the absence of formalized procedures contributed to delays in completing invoice reconciliations and inconsistencies in billing periods reflected in submitted invoices.

The Tribes, in collaboration with the Interim CFO, will review cash flow projection and monitoring processes to strengthen management of operating and grant funds. The Tribes will obtain external funding, as needed, to meet general fund and reimbursement grant cash needs and to reimburse advance-funded grants for any interfund borrowing incurred. General fund budgets will be evaluated to ensure adequate cash is available for planned expenditures, and procedures will be enhanced to improve the timeliness of billing and collection for reimbursement-based grants. James Russ, Tribal Business Administrator, Wendy Wilson, Interim CFO and Sonia Horne, Grants and Contracts Accountant December 31, 2025

The Tribes will evaluate options to either enter into a collateralization agreement with a financial institution or invest advanced federal grant funds in U.S.-backed securities to ensure compliance with grant requirements. Staff will also receive training on applicable federal regulations governing advanced payments. James Russ, Tribal Business Administrator, Wendy Wilson, Interim CFO and Sonia Horne, Grants and Contracts Accountant December 31, 2025

We will review policies and procedures for disbursements to ensure that all payments have an evidenced independent review prior to payment. We plan to implement these changes January 1, 2026.

Finding Number: 2022-004 Condition: The Organization was unable to provide supporting documentation to substantiate the allowability and accuracy of the expenses and lost revenue submitted in the portal. Planned Corrective Action: Company is an emergency services (ambulance, first responder, and was instrumental in the administration of the monoclonal antibodies) – healthcare company and was during the pandemic. Company was able to provide general ledger information by personnel classification in aggregate monthly with percentages related to the Covid pandemic. Company changed payroll companies in June 2022 from Trion to DM Payroll – where we were unable to access the payroll registers by personnel name. Medstar has full access to payroll registers through DM Payroll. Contact person responsible for corrective action: Lalainia Budzynowski, VP of Finance Anticipated Completion Date: 06/30/2022 - Completed

The County will implement procedures and coordinate with outside grant management sources to ensure all grant documentation is received, approved, and reconciled to the general ledger prior to submitting requests for reimbursement. The Commissioners will ensure adequate training is provided. Anticipated Completion Date: Full implementation should be accomplished by fiscal year 2026. Responsible Parties: Sherry Moore, County Auditor and Commissioners

Finding No.: 2022-046 AL Program: 97.039 - Hazard Mitigation Grant Program Area: Cash Management Questioned Costs: $2,687,277 Contact Person(s): Patrick Guerrero, Governor’s Authorized Rep., PAO Corrective Action Plan: Condition 1: HMGP respectfully disagrees with this finding. According to 31 CFR part 205, which is the default procedure if a Treasury-State Agreement (TSA) is not formally in effect, it is permissible and standard practice for a reimbursement check to clear after the disbursement request date, provided the subrecipient has submitted proof of prior payment with local funds. All checks in the samples tested are from local funds and all documents attached verified the expenses. Reimbursable funding is a recognized funding technique under 31 CFR 205.12(b)(e). This technique means that a Federal Program Agency transfers federal funds to a state after that state has already paid out the funds for Federal assistance program purposes and provided all necessary documentation. HMGP’s process operates under this reimbursement methodology: subrecipients incur costs using local funds first, then submit required documentation to HMGP for reimbursement. Consequently, the timing of reimbursement payments clearing after the request date is an inherent and necessary characteristic of this system. In absence of the TSA, the CNMI adheres to this prescribed default and the reimbursement method procedures are acceptable under the default. All expenses were processed, recorded, and supported by documentation and shows that the expense has initially been paid by non-federal, local government funds, had been processed through Munis on a reimbursement basis, and was processed no later than 30 calendar days after the reimbursement request was received. The finding suggests a deficiency, HMGP’s procedures are standard and compliant practice when operating under a reimbursement system and the default procedure. Although HMGP does believe that the current process meets federal and FEMA requirements, HMGP will develop and document a formal written procedure clearly outlining the expenditure timing process under the reimbursement system. This procedure will explain how costs are verified as incurred and demonstrate compliance with applicable federal and FEMA standards for fund control and accountability. Provide additional clarification and support documents to the auditor, if requested. Proposed Completion Date: September 30, 2025.

Finding No.: 2022-045 AL Program: 97.039 - Hazard Mitigation Grant Program Area: Allowable Costs/Cost Principles Questioned Costs: $99,924 Contact Person(s): Patrick Guerrero, Governor’s Authorized Rep., PAO Corrective Action Plan: The Hazard Mitigation Grant Program (HMGP) agrees with this finding. During the audit submission process, HMGP provided the support documents for the journal entries and reversals associated with the $99,923.27 to the auditor, as requested. However, it was only upon receiving this audit finding # 2022-049, that the discrepancy of a duplicate audit drawdown was called into question. HMGP’s ledger for this project as well as the Munis drawdown history does not indicate a remaining balance of $99,923.73 and the project related to this finding has already been closed out. To address this audit finding that HMGP received this last week on September 17th, HMGP reached out to the Department of Finance to provide related documents for the drawdowns. Based on the documents provided by DOF, the questioned cost was not a direct result of the duplicate drawdown but as a result of the reverse journal entries made by Tyler Munis staff in an effort to correct the duplicate drawdown. HMGP accurately completed all required steps to process and provided the necessary justification to process a total of $99,923.73 for professional services and submitted it to DOF. Based on the supporting documents, the $99,923.73 was comprised of: • $53,451.01- under Request for Payment Application #11, letter reference # GAR22-HM-005 received by DOF on 10/18/2021 and requested to be charged to M142352.62060. • $46,472.72- under Request for Payment Application #12, letter reference # GAR22-HM-031 received by DOF on 11/05/2021 and requested to be charged to M142352.62060. Both HMGP payment application requests show the project string was meant to be charged to 62060 which stands for Professional Services and was submitted to DOF for processing. Since the new Munis financial system portal was launch in the CNMI a month prior, HMGP personnel were not able to enter transactions directly, unlike the current process. However, when the transaction was processed on Munis, it was entered in by a Tyler Munis representative, as identified by the staff initials SMD, who was assigned to assist DOF employees with data input during the transition period and, according to the Munis transaction history, accidentally entered the debit for the $99,923.27 under the Construction project string instead of Professional Services on 12/2/2021. On 12/13/2021, SMD credited the $99,923.27 back to Construction and debited $99,923.27 to Professional Services with Journal entry # 2125. The Munis transaction history also shows various entries and reversals made under the project account that serve to correct the same journal error. HMGP personnel would not be able to review the transactions entered prior to posting, and based on the transaction logs, even after the transactions were posted, HMGP would see that those involved in processing the transactions corrected their errors. Additionally, the supporting documents associated with the drawdowns on Munis display a bank statement with a lumpsum total of various project accounts. Furthermore, most of the journal entries during the time in question either contained the same supporting documents or indicated “access denied” when selected by HMGP personnel with Munis access. The document provided to HMGP on 9/24/2025 indicated the final two transactions related to this expense was entered by Tyler Munis staff on August of 2022. In an effort to reverse the duplicate drawdowns that occurred in Professional Services, SMD reversed the $99,923.27 from professional services labeled as "REV JE 2125 DONE IN ERROR". Journal Entry (JE) 2125 refers to the debit they initially made on 12/13/2021. This credit effectively canceled out and corrected one of the two drawdowns that occurred within the Professional Services Project String. However, on the same day, SMD made a second journal entry reversal under the Construction project string with an identical PA journal comment ""REV JE 2125 DONE IN ERROR."" It is unclear as to why this transaction occurred given that original error under construction was made and corrected on December 2021. Since this incorrect journal entry was made as a debit to construction and the correct journal entry was made as a credit to professional services, the net draw would have been $0. Since $0 worth of funds were paid out and no check was cut as a result, this additional debit would not have been conspicuous to HMGP or the DOF staff. HMGP is prepared to provide the additional documentation upon request. Additionally, acknowledging that the second debit to construction in August of 2022 for $99,923.73 was recorded and was not corrected for this project, HMGP will work with DOF to correct the journal entry and return the funds to FEMA. To address the finding, a significant action step already taken is the transition that occurred in 2024 for agencies to initiate their own drawdowns. This drawdown process ensures HMGP’s direct oversight of all expenditures moving forward to reduce the risk of future duplications. HMGP created an internal drawdown tracker upon DOF’s transition to agency-initiated drawdown requests for 2024 expenses to present. HMGP will work with DOF to correct the journal entry on Munis in relation to the questioned cost and process the return of funds to FEMA. HMGP will create a tracker for all requested transactions made to DOF, such as reversals or corrections if needed as that function cannot be completed on Munis by HMGP. HMGP will review the tracker on a bi-weekly basis to ensure that all MUNIS journal entries and transfers related to HMGP to ensure expenditures are completed accurately and on a timely basis to avoid future misclassifications or duplications. HMGP will continue to ensure that all payments are correctly coded and submitted into Munis with the appropriate documentation and supporting details. HMGP will update the financial management portion of the HMGP standard operating procedures to reflect these action items. Proposed Completion Date: September 30, 2026

Finding No.: 2022-014 AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Cash Management Questioned Costs: $482,041 Contact Person(s): Tracy B. Norita, Secretary of Finance / Nerissa B. Karakaya, CIP COTR Corrective Action Plan: Condition 1 (N. Karakaya): CIP agrees with the finding. However, this timing is inherent in our established process. For the Capital Improvement Program (CIP), once an expense is entered into Tyler Munis and posted, we request a drawdown for those expenses. The check clearing date will naturally occur after the drawdown request date because payment disbursement and check clearing are subsequent steps in the payment process. Our practice ensures that: • Drawdowns are based on recorded, approved, and posted expenditures, not on projected or unverified costs. • Requests for reimbursement are fully supported by documented and posted expenses, which comply with grant requirements. Corrective Action / Process Enhancement: Although we believe the current procedure meets federal and grantor requirements, we will: 1. Document the Existing Process: Prepare a written procedure that explains the sequence of posting expenses in Tyler Munis, requesting drawdowns, and issuing checks, to clarify why check clearing dates follow drawdown requests. 2. Communicate with Auditor/Grantor: Provide the written procedure to the auditors and grantor to ensure shared understanding of the process. 3. Consider Additional Controls (if recommended): If the grantor or auditor recommends further safeguards, CIP will evaluate and implement feasible enhancements. Proposed Completion Date: December 31, 2025

Cash Management: The College agrees with the finding. To strengthen internal controls over cash management, the College will establish written guidelines that will clearly define timelines, responsibilities, and approval processes for drawdown and disbursements. The College will reconcile drawdowns to expenditures on a monthly/quarterly basis.

Cash Management College of the Marshall Islands acknowledges the finding and agrees that the absence of written cash management procedures and the lack of supporting expenditure listings for drawdowns created gaps in compliance with federal requirements. These issues stemmed from inadequate internal controls and the limitations of the previous manual filing system, which made it difficult to verify that drawdowns were fully supported by incurred expenditures during the audit fieldwork. To address this, the College has drafted new cash management policies and procedures in accordance with 2 CFR 200.305, which are now being circulated for review and approval. These policies will require maintaining detailed expenditure listings to support every reimbursement request and ensuring that funds are drawn only after related costs have been incurred. The College has also upgraded and institutionalized a cloud-based filing system to ensure complete documentation and easy retrieval of drawdown support records. With the upgraded systems and the support of newly hired skilled staff, the College is now better equipped to comply with cash management requirements. Staff have been trained and will continue to be trained twice a year on federal cash management and documentation standards to prevent recurrence of similar issues in future audits.

Management will ensure that all nongrant expenditures are kept to a minimum until the cash balance of NVT is in excess of the unearned grant revenue and restricted fund balance. A large part of this problem in the current year was the amount of money paid to the Village’s accountants/consultant in prior years. This has been resolved and the new accountant’s fees are much more in line with reasonable amounts.

Planned Corrective Action: ACCEPT was approved by the Nevada Department of Public and Behavioral Health to submit RFRs as soon as possible in FY22. ACCEPT has followed this approval and submitted all requests by the 15th day of the month following the aforementioned month. Name of Contact Person: Gwen Taylor, Executive Director

Planned Corrective Action: The Quality Management Director and Executive Director have worked together to create a process with appropriate checks and balances regarding moving expense across individual grants and major funds. This process will consist of multiple levels of approval and specific documentation. Any entries will be processed in a timely manner and all expenditure reports will be checked for errors monthly. This process will ensure that expenditure reports are accurate at the time they are submitted for reimbursement. Name of Contact Person: Gwen Taylor, Executive Director

The Government concurs with the auditor's findings and recommendations. DHS is in the process of composing the solicitation for bid on the project to cover all periods outstanding.

The Government concurs with the auditor's findings and recommendations. VIDE acknowledges the findings related to cash management processes under the U.S. Department of Education Consolidated Grant. VIDE is committed to implement corrective actions to enhance cash management procedures and maintain compliance with U.S. Department of Education conditions. VIDE will reinforce its procedure that mandates completion of all drawdown requests within 24 hours after receiving the request from the TPFA. To maintain compliance and prevent any delays in processing drawdown requests, VIDE will ensure designated individuals are trained to process requests when the primary staff member is unavailable. VIDE will conduct weekly reconciliations of all drawdown requests and disbursements, developing a process for investigating and resolving discrepancies, and maintaining detailed records of all reconciliations.