Corrective Action Plans

February 16, 2024 Southwestern Virginia Transit Management Company (SVTMC) 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: Segregation of Duties and Management Oversight (Material Weakness) Cot1dilio11: Due to st aff turnover, duties handled by the Director of finance included incompatible duties dur ing the year under audit such as: collection of cash, post receipts to general ledger. and prepare bank deposit s li ps. Criteria: A fundamental concept of internal controls is the separation of duties. No one employee should have access to both physical assets and the related accounting records. or to all phases of a transaction . In addition, all significant transactions and controls should involve reconciliations and supervisory, or management level. reviews of those processes. An effective and timely revie w process is intended to prevent and detect both fraud and errors. Turnover in key positions can result in individuals performing duties that are not appropriately segregated. In addition, turnover can also create challenges in the oversight or review functio n. E,ffecr: Inte rnal co ntro ls are designed to safeguard assets and detect losses from employee's dishonesty or error. Reco mmemlation: Steps shou ld be taken to eliminate conflicti ng duties and implement compensating cont ro l<:. where possible. Greater Roanoke Transit Company P.O. Box 13247 Roanoke, Virginia 24032 Phone: (540J 982-030S Fax: (540) 982-2703 www.valleymetro.com 2023-001: Segregation of Duties and Management Oversight (Material Weakness)-(Continued) Corrective Action: In June 2023, The Director of Finance removed the aforementioned duties from the position. The two Accounting Associates and the Money Room Shift Leader process bus station and accounts receivable rece ipts. Cash fares are counted twice weekly by a minimum of three staff members, not including the Director of Finance. With minimal exceptions , all monies received are kept in a locked safe and transported to the bank by an annored cash handling company. The Director of Finance and the Accounting Supervisor do not process deposits or collect cash, nor do they post the entries to the general ledger. Goal for correction is by close of FY24. 2023-002: Grant Management and Operating Assistance (Material Weakness) Condition: During 2023, various functions related to financial management were not perfonned timely resulting in difficulties and delays in completion of the annual audit. Criteria: Internal controls related to financial management should be designed to ensure timely reconciliations are performed, including submission of reimbursement requests and reconciling grant and local revenue. Timely and effective reconciliations ensure the financials provided for the annual audit are provided based on the agreed upon schedule with the auditors which allows timely inclusion in the City's financial report as well as to meet federal reporting deadlines. In addition, these reconciliations will ensure that financials do not require adjustments. Cause: Turnover in financial positions and increased levels of federal and state grants caused significant delays in perfonnance of and reduction in effectiveness of certain financial duties. Effect: Current and prior period audit adjustments were required to prepare the financials in accordance with Generally Accepted Accounting Principles. In addition, there were significant delays in completion of the annual audit. Recommendation: We recommend that the Company establish financial management procedures to ensure that timely reconciliations and submissions of reimbursement requests. We would recommend these procedures be perfonned monthly and include tracking and reconciling grant activity by type (federal, state, and loc al). 2023-002: Grant Management and Operating Assistance (Material Weakness) - (Continued) Corrective Action: The Director of Finance and Accounting Supervisor is currently in the process of reviewing operating procedures and have created a monthly close checklist to create consistency in the timing and manner of recording financial activities. Beginning in FY2024, staff will be assigned specific monthly closing duties and monthly activity should be fully recorded by the 20th of the subsequent month. Members of the Accounting Team have been receiving financial system training on various topics from the system vendor and management is researching additional outside training opportunities. For this to happen, we must hire additional staff to get caught up and remain so. 2023-003: Bank Reconciliations (Material Weakness) Condition: Monthly bank reconciliations were not prepared by an accountant and reviewed and approved by a supervisor in a timely manner. Criteria: Monthly bank reconciliations should be performed by the 15 th of next month. Cause: Staff shortage and lack of cash flow management. Effect: Poor cash flow management resulting in vendor and contractor invoices not being paid in a timely manner. Recommendation: We recommend bank reconciliations be prepared by an accountant and reviewed by a supervisor to ensure unreconciled or unusual items, or other matters noted in the reconciliation, are detected and addressed in a timely manner. Corrective Action:. The Company agrees and is working towards completing the newly established monthly close checklist each month by the end of FY2024. Specific Team members have been assigned responsibility for reconciling individual bank activity. Staff will receive the required system training and delinquent reconciliations will be completed by June 30, 2024. A new monthly closing checklist has been developed and includes prepardtion and review oof these reconciliations. Beginning in FY2024, all monthly closing items should be completed by the 20th of the subsequent month. This is our plan moving forward, but being caught up must come first. 2023-004: Virginia Public Procurement Act Prompt Payment Requirement Condition: The Company did not pay a certain contractor for the construction of the bus transfer station on a timely basis. Criteria: Section 2.2-4352 of the Code of Virginia requires that every agency of local government that acquires goods or services shall promptly pay for the completed delivered goods or services by the required payment date. The required payment date shall be either (i) the date on which payment is due under the terms of the contract for the provision of the goods or services or (ii) if a date is not established by contract, not more than forty-five days after goods or services are received or the invoice is rendered. Cause: Due to a lack of cash flow and grant management, insufficient funds were available to pay a certain contractor in a timely ma nne r. Effect: The contractor was not paid timely as required by the Code of Virginia. Recommendation: All vendors are to be paid in a timely manner as defined by the Code of Virginia. Corrective Action:. Due to technical issues, staff were unable to submit grant draw requests to the Federal Transit Authority through their Electronic Clearing House Operation [ECHO] system, significantly affecting the company's cash flow. This system access issue was resolved during FY2023, and grant drawdowns started back in March of 2023. Additionally, detailed spreadsheets tracking grant activity have been developed, which will allow staff members to better monitor reimbursement requests and ensure vendors are paid timely moving forward. 2023-00S: Parts Inventory (Material Weakness) Condition: There were several instances where the quantity and value of items did not agree between the supplied inventory listing and the physical inventory counted during the inventory observation. Criteria: The inventory management system and the general ledger should be reconciled on a periodic basis and annual inventory counts should be performed. Cause: Significant staff turnover during the year and a general staff shortage. 2023-005: Parts Inventory (Material Weakness)- (Continued) Effect: Untimely reconciliations could result in discrepancies between the inventory management system and the general ledger. In addition, inventory that has been used could be erroneously counted in the inventory management system with the absence of an annual inventory count. Recommendation: We recommend that management perfonn annual inventory counts, reconcile inventory amounts on a periodic basis between the inventory management system and the general ledger, and that obsolete or otherwise outdated inventory items be disposed of. Corrective Action: Management is in agreement and plans to perfonn monthly counts of parts to ensure all parts are counted within the fiscal year. Spot counts will be perfonned each month and reconciled to the inventory management system. Once input into the inventory management system, updated inventory values will be provided to Finance so they can reconcile the general ledger to the inventory system. In addition, management plans on disposing obsolete inventory items through public auction. 2023-006: Paid Time Off (Material Weakness) Condition: The Company did not reconcile third-party reports used to calculate year-end Paid Time Off (PTO) accruals and expenses are not reconciled to internal Human Resources records used to track each employee's earned PTO. In addition, these third-party reports were not retained by the Company's staff for reference and the Company's PTO accrual and expense were only recorded once at year-end. Criteria: Third-party reports should be reconciled to internal records, third-party reports used to calculate PTO accruals and expenses should be retained for reference, and PTO expense and accruals should be periodically recorded and recognized. Cause: Significant staff turnover during the year and a general staff shortage. Effect: Not reconciling third-party PTO reports to internal Human Resources records could lead to PTO inconsistencies between internal and external records - leading to employees having two different amounts of available PTO during the year, depending on which system they are using. This could also lead to a discrepancy between the amount of PTO accrued at year-end and the actual amount of PTO the Company is actually obligated to pay out. 2023-006: Paid Time Off (Material Weakness) - (Continued) Recommendation: We recommend that management perform periodic reconciliations between the third-party PTO reports and the internal Human Resources records to ensure that the third-party reports are accurate and complete. If there are discrepancies, the Company can resolve them quickly. We also recommend that the client retain each third-party report for reference and for inspection. Corrective Action: Management is in agreement. Management is aware of the importance of inter-departmental communication between Human Resources and Finance and is currently working to establish a standard operating procedure regarding PTO accruals. The Company will seek to retain third­ party reports for easy inspection and periodically reconcile these reports to internal Human Resources records moving forward. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT 2023-007: Federal Transit Cluster - Assistance Listing #20.507, Cash Management - Material Noncompliance/Material Weakness in Controls over Compliance Condition: A lack of cash flow and grant management oversight resulted in contractors and vendors not being paid timely for the construction of the bus transfer station and construction of bus shelters. Criteria: All grant activities should include management level oversight to ensure timeliness, accuracy, and compliance with specified grant requirements. Cause: A Jack of proactive cash flow and grant management occurred when invoices were received. Effect: Contractors were not paid for over 30 days after receipt of invoice. Repeated delays in payments could result in work stoppage and project delays. Recommendation: A designated management level individual should have oversight to require timely drawdowns of capital grants and timely payment of invoices. Repeat Finding: Yes Recommendation: A designated management level individual should have oversight to require timely drawdowns of capital grants and timely payment of invoices. Corrective Action: Due to technical issues, staff were unable to submit grant draw requests to the Federal Transit Authority through their Electronic Clearing House Operation [ECHO] system, significantly affecting the company's cash flow. This system access issue was resolved during FY2023, and grant drawdowns started back in March of 2023. Additionally, detailed spreadsheets tracking grant activity have been developed, which will allow staff members to better monitor reimbursement requests and ensure vendors are paid timely moving forward. If the Federal Audit Clearmghouse has questions regarding th is plan, please call Kevin Pric_c . General Managg_ru 540-982-0305.

There are 10 audit findings total in calendar year 2022 and are all connected to a former staff person in the accounting function and also in the Trio Upward Bound program. In January 2023, we hired a new Manager of Account Services who immediately implemented new procedures and prepared the appropriate level of detail backup information for the TRIO reimbursements. Each reimbursement was also reviewed and signed by the Controller, who verified the information and transactions before any funds were transferred. This process currently complies with cash management requirements. A new Trio Upbound Bound Director was also hired in fall 2023. Contact person(s) responsible for corrective action: Cassandra Turner, Manager of Account Services, and Sheila M. Brooks, Controller/Director of Business Services (new January 2024) Anticipated Completion Date: Immediate

Contact Person: Interim Executive Director Fred Bazemore Corrective Action: The Organization agrees with the finding and is working to establish a clear understanding of the grant reimbursement process to ensure the proper amounts are charged to each grant. Anticipated Completion Date: This corrective action will be implemented by June 30, 2024.

Contact Person: Interim Executive Director Fred Bazemore Corrective Action: The Organization agrees with the finding and will implement the recommended procedures as soon as possible. Anticipated Completion Date: This corrective action will be implemented by June 30, 2024.

Description of Corrective Action Plan: The Director of Grants prepares the Annual Data Report as well as tracks the expenditures pertaining to the Education Stabilization Funds (ESF). The Director of Grants will ensure that disbursements and receipts are recorded to the appropriate funds in order to track the ESF activity for each year. The Treasurer will use the underlying funds ledgers to then determine the amount of ESF draws to request in each respective period. This will ensure that funds are not drawn in advance of expenditures taking place. Employee contracts will be maintained on file and when applicable, timecards will be completed and reviewed timely to ensure the time recorded to the ESF grant is accurate. Responsible Party and Timeline for Completion: Treasurer, Jill Wagoner, Director of Grants, Eric Knebel and Superintendent, Dr. Angela Piazza. The corrective action will be implemented starting immediately.

Contact Person: Tina Paccione, Director of Student Accounts Corrective Action: A turnover in personnel led to inconsistent refund processing for the Summer 2023 semester. There are multiple terms within the summer semester and the new personnel did not run refund files during the first term but ran them during the 2nd term. This is when the loan disbursement was realized and returned. Policies have been set in place outlining disbursement dates that coincide with refund processing dates. Anticipated Completion Date: February 29, 2024

Finding 2023-001: Inadequate Controls over Cash Management Condition During the audit, management disclosed that $179,155 in federal funding had been overdrawn. The excess cash on hand was not returned to the funding source in a timely manner. Correction action At the time the condition occurred in August 2022, one person was preparing and submitting the cash draw requests and they were done manually. In September 2022, management changed the process to require the cash draw requests be calculated electronically and all draws must be reviewed by a second party prior to submission. Drawdowns are done in arrears and tied to invoices already paid to avoid the risk of overdrawing funds. Monthly reconciliations are completed to verify no funds were overdrawn. If any funds were found to be overdrawn, they would be addressed timely with the granting agency or subtracted from the subsequent drawdown. At the time the overdraw was discovered was a time of transition in the executive director role and the steps to return the funds promptly were not completed. We are in the process of working with the agency to remedy this and return the overdrawn funds. Responsible Person Michael Jones, Secretary/Treasurer, Whitney Alexander, Interim Executive Director, Jaclyn Simon, Financial Controller Anticipated completion date The corrective action plan was put in place immediately in September 2022

We recommend that steps are taken, including oversight by a second employee, to ensure that all quarterly expenditure reports are filed by the due dates.

Cash Management Planned Corrective Action: The SFS office will provide the Business Office the types and amounts of funds disbursed. The Business Office will drawdown those amounts from the G5 system. The SFS Office will maintain a roster of the disbursements to validate the amount of funds requested. Person Responsible for Corrective Action Plan: Bryan Taylor, Associate Director of SFS Processing Anticipated Date of Completion: April 2024

Higher Education Emergency Relief Fund (HEERF) Earmarking Planned Corrective Action: Funds are to be returned. Person Responsible for Corrective Action Plan: Gary E Estes, Director of Accounting Anticipated Date of Completion: June 2024

2023-003 – Student Financial Aid Cluster – (a) Federal Pell Grant (b) Federal Supplemental Educational Opportunity Grant (c) Federal Work Study Grant (d) Federal Perkins Loan Program (e) Federal Direct Student Loans (f) Teacher education Assistance for College and Higher Education ALN No. (a) 84.063 (b) 84.007 (c) 84.033 (d) 84.038 (e) 84.268 (f) 84.379 – Year Ended June 30, 2023 Condition: We examined 40 student files and we noted 3 out of 40 students were not properly awarded Direct Loans. One of these students was improperly awarded subsidized loans and instead should have received unsubsidized loans. Additionally, the College did not report actual loan disbursement dates to the Common Origination and Disbursement (COD) system for 1 of the 40 students in the sample (2.5%). We consider these conditions to be instances of noncompliance in internal control over compliance relating to the Eligibility compliance requirement. Management Response: Cost of Attendance (COA) calculations were not updated to ensure ratio of subsidized versus unsubsidized loans were correct. It looks like awards were not being recalculated as additional need based aid was added to awards for these students. Corrective Action Plan: New financial aid software (JFA) was implemented for the 2023-2024 academic year. A component of this software is a compliance check for COA and other issues. The compliance check for over awards should catch instances of the wrong sub/unsub ratio in the future. Responsible Person: Tim Marten, Director of Financial Aid Implementation Date: Fall 2023

2023-003 Reporting (Financial) Federal Agency: Student Financial Assistance Cluster - U.S. Department of Education Program Titles and ALN: Federal Pell Grant Program (ALN 84.063) and Federal Direct Student Loans (ALN 84.268) Federal Grant Numbers: E-P063P130272 (7/1/2022 - 6/30/2023), P268K130272 (7/1/2022 - 6/30/2023) Contact Person: Jean McDonald Rash, AVP Enrollment Services, 848-932-2605 Corrective Action: OSFP was notified of the error in reporting the correct cost of attendance to the Common Origination and Disbursement (COD) system and the code was changed to prevent the error from reoccurring. The correct cost of attendances are now being reported to COD. A testing plan has been developed that includes confirmation that all system start and end dates align with the University’s published academic calendar. Anticipated Completion Date: Completed

Contact Person – Thomas A. Jerome, Superintendent Corrective Action Plan – The District has implemented new meal count procedures effective May 2023. Completion Date – May 1, 2023

The District will be reconciling and correcting the next quarterly report by reconcile the expenditures to date on the General Ledger.

The application was submitted to Department of Education with our BankMobile link on 1/29/2024. The Department of Education has not updated our information yet.

Recommendation: Management should establish internal controls and procedures to ensure that required residual receipt remittances are made when required. Action Taken: The Corporation agrees with the finding and the auditor’s recommendations have been adopted.

Finding 2023-006 Period of Performance Condition: Northern Illinois University (the University) charged an expenditure to the grant whereby a portion of the expenditure had a service period extending beyond the grant's period of performance, and the University’s controls did not detect the error. Corrective Action Plan: University has taken the following corrective actions that will eliminate all material exceptions: 1) The University will provide additional training on cost allocation to staff. 2) University is taking immediate steps to resolve the questioned cost. Individual(s) Responsible for Corrective Action: Sponsored Programs Staff Anticipated Completion Date: June 30, 2024

Finding 2023-005 Cash Management – Timeliness of Subrecipient Payments Condition: Northern Illinois University (the University) did not make certain subrecipient payments timely under the Research and Development Cluster and the Professional and Cultural Exchange Program. Corrective Action Plan: University has taken the following corrective actions that will eliminate all material exceptions: 1) The University will review and update its current processes, policies and procedures to minimize the time between the transfer of federal funds to the subrecipient. Individual(s) Responsible for Corrective Action: Sponsored Programs Staff Anticipated Completion Date: June 30, 2024

Finding Number: 2023-001 Condition: Out of 20 payments to subrecipients that were tested, 3 were made after the 30 calendar day requirement. Planned Corrective Action: The University has established subrecipient monitoring procedures. Included in those procedures is the control to monitor the 30 day payment requirement. 2 of the payments were during the major service disruption of the entire university network. We have now implemented weekly backups to the network folders that contain our subrecipient monitoring files. 1 of the payments was due to the department not sending us the invoice timely. We plan to do follow up trainings to educate departments and PIs on the requirement for providing payment within 30 days of receipt of invoice to assure payment is made within the 30 day requirement. Contact person responsible for corrective action: Betty McKain, Sr Director Research Administration Anticipated Completion Date: 06/30/2024

Action Taken: To correct the issues identified in finding 2023-002 related to employee time sheets and their accurate allocation among departments/programs, AACA will implement the following corrective actions: Time Tracking System Improvement: AACA will evaluate the current time tracking system to ensure it allows for detailed and accurate allocation of hours to specific departments or programs. Training and Guidelines: AACA will conduct training for all relevant employees on the importance of accurate time reporting and its impact on grant compliance and financial management. AACA will create written guidelines detailing how to allocate time across different departments or programs. Management Review and Oversight: All employee time sheets will be reviewed and approved by the Supervisor or Department Head to verify the accuracy of the time allocations for the employees. Documentation and Record Keeping: All adjustments to time sheets will be accompanied by written explanations, including the reason for the adjustment and the approval signature of a supervisor or manager. Employees will be notified of any changes made. Implementation Plan: AACA will develop a detailed implementation plan for these corrective actions, including specific tasks, responsible individuals, and timelines.

Action Taken: To address the corrective action for the findings related to material weaknesses in the financial statement audit, particularly concerning Grant/Contract Requests for Reimbursement, the Asian American Civic Association (AACA) will take the following steps: Enhance Training and Awareness: Management will reinforce the importance of adhering to grant conditions and the necessity of charging costs to the correct grant periods. AACA will emphasize the distinction between the date costs are incurred and the date they are paid, ensuring expenses are allocated accurately in accordance with the grant's effective period. Documentation and Record Keeping: AACA will maintain supporting documentation for all expenses, including dates incurred and the purpose of the expense, to facilitate easy review and verification against grant terms. Communication with Grantors: In cases of ambiguity or uncertainty regarding allowable expenses, AACA will seek clarification from grantors to ensure compliance and prevent future discrepancies. Implementation Plan: AACA will develop a detailed implementation plan for these corrective actions, including specific tasks, responsible individuals, and timelines.

Action Taken: To address the corrective action for finding 2023-004, where the payroll charged to the program exceeded what was documented in employee time sheets, AACA will undertake the following steps: Time Tracking System Improvement: AACA will evaluate the current time tracking system to ensure it allows for detailed and accurate allocation of hours to specific departments or programs. Training and Guidelines: AACA will conduct training for all relevant employees on the importance of accurate time reporting and its impact on grant compliance and financial management. AACA will create written guidelines detailing how to allocate time across different departments or programs. Management Review and Oversight: All employee time sheets will be reviewed and approved by the Supervisor or Department Head to verify the accuracy of the time allocations for the employees. Documentation and Record Keeping: All adjustments to time sheets will be accompanied by written explanations, including the reason for the adjustment and the approval signature of a supervisor or manager. Employees will be notified of any changes made. Implementation Plan: AACA will develop a detailed implementation plan for these corrective actions, including specific tasks, responsible individuals, and timelines.

Action Taken: To address and correct the issue identified in finding 2023-003 regarding payroll incurred prior to the effective date of the grant, AACA will undertake the following corrective actions: Enhance Training and Awareness: Management will reinforce the importance of adhering to grant conditions and the necessity of charging costs to the correct grant periods. AACA will emphasize the distinction between the date costs are incurred and the date they are paid, ensuring expenses are allocated accurately in accordance with the grant's effective period. Documentation and Record Keeping: AACA will maintain supporting documentation for all expenses, including dates incurred and the purpose of the expense, to facilitate easy review and verification against grant terms. Communication with Grantors: In cases of ambiguity or uncertainty regarding allowable expenses, AACA will seek clarification from grantors to ensure compliance and prevent future discrepancies. Implementation Plan: AACA will develop a detailed implementation plan for these corrective actions, including specific tasks, responsible individuals, and timelines.

The City of Wilmington, Real Estate and Housing Department as the HOPWA grantee remains responsible for collecting, reviewing (for accuracy and completeness), and transmitting to HUD the Consolidated APR/CAPER workbooks. Submission of the complete set of Grantee and Provider Workbooks together constitutes the Grantee’s annual performance report to HUD. Included in this submission is the Grantee Performance Report and all of the Provider Performance Reports together. Staff in the Real Estate and Housing Department review them to the best of our ability for accuracy and completeness. The finding notes that the documentary evidence of this review was not retained other than the subsequent data validation which occurs with HUD’s Technical Assistance (TA) HOPWA Data Validation team and through Cloudburst email. In the future the Real Estate and Housing Department will note to file the email confirmation of the received report is as complete and error free as possible.

Finding: Management did not remit payment to HUD for the amount in excess of $250 per unit for their fifteen units. Uniform Guidance states that controls should be implemented to ensure the Project is in compliance with special tests and provisions. As stated in the Coronavirus Disease 2019 memorandum released by HUD, remittance of residual receipts were suspended through December 31, 2021. Residual receipts were due to HUD by the next Project Rental Assistance Contracts renewal which was October 1, 2022. Management was unaware the funds needed to be remitted back to HUD in the time frame noted. We recommend management review their processes and controls surrounding residual receipts to ensure amounts due to HUD are properly remitted. Corrective Action: Management has updated their internal controls to ensure a proper review of residual receipts is conducted quarterly. This review will be completed by an assigned staff member, with a secondary review completed by management. Residual receipts in excess of allowed amounts will be properly accounted for as a liability on the books and records of the Project. Residual receipts in excess of the allowed amounts will be remitted when due.