Corrective Action Plans

Finding 2025-01 Financial Close Process Condition: The auditors noted lack of a strong financial close process which led to several material audit adjustments that were proposed during the audit and recorded by the client to properly reflect various financial statement accounts. These adjustments also resulted in material changes to the total amount reported on the Consolidated Schedule of Expenditures of Federal Awards. Corrective Actions Taken or Planned: The Organizations’ Board and Executive Team consisting of the Chief Executive Officer (CEO) and the Chief Operating Officer (COO) and key Overdose Lifeline (ODL) Staff to include the independent bookkeeper and Grant and Finance Manager recognize the internal control deficiencies identified during the year 2025. We are reviewing the internal and contract staffing to understand gaps in audit compliance experience and will make the necessary adjustments.

Material Weakness in Internal control Over Compliance and Materia Noncompliance – Reporting Condition The Association did not report the current year subaward data to the FSRS within the required time. Additionally, the Association did not retroactively submit the report information for the subawards that were executed in the prior years but had active funding in the current year. Status In Progress Corrective Action In 2026, AVCP has retroactively filed reports in fiscal year 2026 on Tribal Self Governance funding for pass-through funding to Federally recognized Tribes for subrecipient awards including Aid to Tribal Government, Tribal Courts, and emergency funding for the prior years. The Association has implemented controls to ensure that reports are filed within the given timeline.

Finding 2025-002 – Material Weakness in Internal Controls over Federal Award Compliance Criteria – 2 CFR 200.303 requires the recipient to establish, document, and maintain effective internal control over federal awards. Condition – The Organization has not established and documented internal control policies and procedures over compliance with federal award requirements other than procurement. It is also noted that the procurement policy that is documented does not conform to current federal limits. Context and Cause – The Organization’s current policies do not include a review of the fiscal policy for required changes on a scheduled basis. Effect of Condition – Incomplete documentation of policies regarding federal compliance could prevent management and the Board from providing adequate oversight over compliance activities of the Organization. Questioned Cost – None. Recommendation – We recommend the Organization develop and implement policies and procedures addressing the applicable federal compliance requirements for each federal program. Action Taken – Management concurs with the finding and has developed a corrective action plan. We understand that a material weakness is identified in internal controls over compliance. The material weakness is in internal controls over compliance, and not a compliance finding. Draft and adopt written internal control policies and procedures addressing each applicable compliance requirement, including defined roles, responsibilities, and approval processes. Update the Organization's procurement policy to conform to current Federal procurement thresholds and methods under 2 CFR §§ 200.317–200.327, including micro-purchase and simplified acquisition thresholds. Establish a recurring (at least annual) fiscal policy review cycle, with responsibility assigned to a specific role, to identify and incorporate required regulatory changes, including updates to Federal thresholds. Present the updated policies and procedures to the Board (or Finance/Audit Committee) for formal review and approval. Responsible parties: Fiscal Director. Anticipated completion date: October 31, 2026.

Recommendation: The auditor recommends the District implement controls to ensure that the applications used to determine eligibility for participation within the program be retained for three years as required by the relevant grant requirements. Action Taken: The District will strengthen internal controls by implementing procedures, training and monitoring to ensure all eligibility applications and supporting documentation are properly maintained and retained for a minimum of three years in accordance with grant requirements and are available for audit review. Responsible Person: Madalyn Templeton, Student Nutrition Supervisor Anticipated Completion Date: June 30, 2026

Recommendation: The auditor recommends the District implement controls to ensure student files are complete and accurate and conduct training for Title I personnel and school sites over the appropriate level of written documentation required for different situations. Action Taken: The District will implement controls to ensure student files are complete and accurate and conduct training for Title I personnel and school sites over the appropriate level of written documentation required for different situations. Responsible Person: Michelle Hill, Student Information Coordinator Anticipated Completion Date: June 30, 2026

Adjusting Journal Entries, Required Disclosures and Draft Financial Statements Auditor’s Recommendation: Although auditors may continue to provide such assistance both now and, in the future, under the pronouncement, the Borough should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements. Borough’s Response: The Borough has received, reviewed and accepted all journal entries, footnote disclosures and draft financial statements proposed for the current year audit and will continue to review similar information in future years. Further, the Borough believes it has a thorough understanding of these financial statements and the ability to make informed judgments based on these financial statements. Lastly, the Borough considers such assistance provided by the auditors to be the most cost-effective manner to prepare such information. The Borough will also ensure that in the future all transactions will be properly reflected in the accounting software.

Finding 2025-006: Reporting and Expenditure Cutoff - Material Weakness Corrective Action Plan: A Federal grant spreadsheet for each grant year is completed for each award. In addition, the following policies will be implemented. • Implement a Grant Reporting and Period-of-Performance Review Procedure. • Maintain a reporting calendar for each Federal and State award. • Before submission, confirm the grant reporting period, reconcile expenditures to the general ledger, verify transaction dates and period of performance, review receipts/reimbursement activity, and remove subsequent-period activity. • Require documented supervisory review and approval before submission. • Set internal report preparation deadlines at least 10 business days before the external due date whenever possible. Responsible Official: Chief Executive Officer, Chief Financial Officer, Financial Coordinator, Grant Program Director and Grant Administrative Support Anticipated Completion Date: 09/25/2026

Finding #2025-003 – Material Weakness and Material Noncompliance – Allowable Costs. Applicable federal program: National Endowment for the Arts, Promotion of the Arts Grants to Organizations and Individuals, Assistance Listing #45.024, Annual contract periods: 10/01/23 – 09/30/24; 10/01/24 – 09/30/25. Condition and context: M-AAA failed to submit its indirect cost rate application in 2024, which resulted in a lapse in an approved rate. At the direction of the program officer at the National Endowment for the Arts, M-AAA was directed to use the 10% de minimus rate; however, the billings were not adjusted for the change in indirect rates resulting in overbilling to the federal grants. Recommendation: Re-emphasize internal procedures for review of allowable indirect costs based upon an approved indirect cost rate or election to use 10% de minimus rate. Planned corrective action: M-AAA has elected to use de minimus rate approved by the National Endowment for the Arts (NEA). We reported the overbilling to the NEA and resolved the difference in the indirect costs that had been applied. Responsible officer: Todd Stein, CEO and Charley Young, Finance Director. Estimated completion date: March 2026.

Finding #2025-002 – Material Weakness and Other Noncompliance – Cash Management. Applicable federal program: National Endowment for the Arts, Promotion of the Arts Grants to Organizations and Individuals, Assistance Listing #45.024, Annual contract period: 10/01/22 – 09/30/27. Condition and context: The federal contract with M-AAA is a 5-year grant with annual budget periods that end September 30 of each of the years in the contract thru 2027. M-AAA requested advances in the Spring of 2025 when there was uncertainty in the timing of future grant payments. At June 30, 2025, M‑AAA held approximately $578,000 in refundable advances, approximately $368,000 which was spent subsequent to year end for the period of July 1, 2025 to September 30, 2025. Recommendation: Re-emphasize internal procedures to ensure federal funds are not being held for an excess period of time. Planned corrective action: M-AAA was uncertain about the timing of future grant payments and requested advances in April 2025. Because payments to subrecipients were delayed, excess funds remained on hand at fiscal year-end and were distributed in the following fiscal year. With a stronger cash position in the new fiscal year, we have shifted to a reimbursement-based approach for cash requests. Advances will be requested only when grant payments are expected within 30 days and closely monitored to ensure close out. Responsible officer: Todd Stein, CEO and Charley Young, Finance Director. Estimated completion date: December 2025.

Grant Reporting (SF-425 Submissions) Federal Agency Name: Department of Agriculture / Forest Service Assistance Listing Number: 10.720 (Infrastructure Investment and Jobs Act Community Wildfire Defense Grant) Finding Summary: Federal expenditures reported on Line 10e of the quarterly Federal Financial Reports (SF-425) did not reconcile directly to the Cooperative’s general ledger records for the applicable reporting period, resulting in an understatement of reportable expenditures for that period. Views of Responsible Officials & Management Response: Management disagrees with the finding as a Material Noncompliance and Material Weakness. Management acknowledges a timing discrepancy existed between quarterly filings and standard accrual rules, but maintains this matter does not constitute material noncompliance or a material weakness for the following reasons: 1. Reliance on Explicit Federal Directives: While management acknowledges Uniform Guidance under 2 CFR 200 requires financial reporting to align directly with accounting records, the Cooperative prepared and submitted the SF-425 reports in strict good-faith compliance with explicit, written instructions provided by the Forest Service’s Grant Department. See Exhibit B. Seeking out, receiving, and adhering to written directives from the federal oversight agency demonstrates a strong culture of compliance and an active effort to align with funder expectations, rather than a disregard for federal reporting statutes. 2. No Financial Risk or Loss of Funds: All underlying grant expenditures were valid, allowable, and verified. No questioned costs were identified. Because the reporting timing discrepancy was a direct result of following the awarding agency’s specific written guidance, management maintains this does not constitute a systemic control failure. The understatement in expenditures is directly related to a timing issue, resulting in zero financial risk to the federal government. Corrective Action Planned: Management has implemented formal control enhancements covering both grant reporting schedules and contract administration: o Revised Report Timing & Reconciliation Controls: To resolve the conflict between agency-specific guidance and independent audit standards, management has updated the operational timing and preparation method for Form SF-425. All future quarterly reports will be generated directly from general ledger accrual records strictly as of the quarter-end date. The SF425 and SF270 forms will be submitted separately in an effort to mitigate the timing issue. This updated timeline satisfies requirements for accrual reporting while providing an auditable submission trail for the granting agency. Responsible Person(s): Stacie Dellamano, Chief Financial Officer Anticipated Completion Date: December 31, 2026 Exhibit B From: Fusselman, Sarah - FS, ID Sarah.Fusselman@usda.gov Sent: Friday, July 17, 2026 10:09 AM To: Katie Dalton Subject: Re: [External Email]SF 425 Question for Grant 24-DG-11010013-052 Attachments: Grant Reminders for State, Private & Tribal Forestry R1 R4.pdf; POST AWARD Training2025.pptx Hi Katie, Please review the attached documents that outline how to properly complete the SF-425. I’m also including a helpful training video provided by the U.S. Fish and Wildlife Service: Please keep in mind that in the past, as the GMS for this award, I was able to piece together Flathead Electric’s reporting approach and document why certain entries were allowable on earlier SF-425 submissions. Going forward, because some quarters are busier than others, additional Forest Service administrative staff help manage the reporting inbox. They review SF-425s closely, and since fewer than three cooperators out of more than 500 awards submit the SF-425 and SF-270 simultaneously, these submissions will continue to be questioned. When the SF-425 shows an expenditure as “received” during the same period in which the SF-270 was just submitted, FS staff will request corrections from Flathead Electric each time. Additionally, with the upcoming FS reorganization, I may not remain the point of contact for this award. Future reviewers will need Flathead Electric to clearly explain its accounting methodology every reporting cycle. Please have Flathead Electric’s auditor reach out to my supervisor, Kamie Vaux, at kami.vaux@usda.gov so that the Forest Service can better understand what clarification the auditor is seeking. Thank you, and please let me know if you need anything additional. Sarah Fusselman Grants Management Specialist Forest Service State, Private & Tribal Forestry, Region 1 & 4 c: 208-479-3095 sarah.fusselman@usda.gov Exhibit B Continued From: Vaux, Kamie - FS, UT <kamie.vaux@usda.gov> Sent: Tuesday, July 28, 2026 9:18 AM To: Katie Dalton; Kathryn Eigenberg Cc: Stacey Nelson; Stacie Dellamano Subject: RE: [External Email]RE: Form 425 Reporting Good morning, Thank you for the detailed explanation. Yes—your understanding is correct, and the information you outlined aligns with Forest Service expectations. As we discussed, the timing differences between the quarterly SF-270 and SF-425 submissions naturally affect line 10e, and the values you’ve reported previously are exactly what we would expect to see. Adjusting the submission timing as you described may help reduce the variance, but we recognize that invoice timing will not always allow for that approach. And you’re also right that lines 10a, 10b, and 10c are generally not required for this program, and when they are included, they are not reviewed by the Forest Service. Please let me know if any additional clarification would be helpful—I’m happy to assist further. Thank you, Kamie Kamie Vaux Supervisory Grants Specialist Forest Service State, Private & Tribal Forestry Region 1 and Region 4 c: 385-278-3255 kamie.vaux@usda.gov 324 25th Street Ogden, UT 84401

Preparation of Schedule of Expenditures of Federal Awards (SEFA) Federal Agency Name: Department of Agriculture / Forest Service / Rural Business- Cooperative Service Assistance Listing Numbers: 10.720 (Infrastructure Investment and Jobs Act Community Wildfire Defense Grant) Finding Summary: Audit adjustments were made to reportable expenditure amounts on two of the four programs listed on the draft Schedule of Expenditures of Federal Awards (SEFA), and there was no formally documented review or approval process over the client prepared schedule. Views of Responsible Officials & Management Response: Management partially agrees with the finding. Management acknowledges the SEFA preparation requires improvement. However, management respectfully disagrees with the classification of this deficiency as a Material Weakness and maintains that it is more accurately characterized as a Significant Deficiency based on the following facts: 1. Accuracy of General Ledger & Cost Record Integrity: The underlying project expenditures were completely accurate, fully recorded in the Cooperative's accounting records, and immediately available for review and audit. No unrecorded, unsupported, or unallowable expenditures occurred, and no questioned costs were identified. 2. Active Internal Control & Proactive Consultation: Management actively sought to ensure accurate reporting by reaching out via email for technical advice regarding reportable fiscal year expenditures prior to SEFA finalization (see Exhibit A). Eide Bailly offers SEFA preparation as an allowable non-attest service without impairing independence; however, Management prepared the draft schedule internally in good-faith reliance on the technical direction provided. Seeking expert technical advice reflects an active internal control process focused on compliance, rather than a failure of internal controls. 3. Isolated Allocation & Presentation Error: The general ledger was completely accurate and all underlying grant expenditures were valid; the core financial data and grant funds were never at risk. The variance was strictly limited to the post accounting allocation required for SEFA presentation. Under the CWDG grant structure, project invoices contained co-mingled expenses covering both federal and non-federal lands. While 100% of these valid project costs were properly recorded in the accounting system, the initial SEFA draft did not apply the required percentage allocation to isolate the federal portion. This represents an isolated technical reporting calculation rather than a fundamental breakdown in the Cooperative’s internal controls over financial reporting or grant administration. Corrective Action Planned: Management has refined its SEFA preparation methodology to distinguish general ledger project accounting from reportable federal expenditures. Rather than utilizing total GL account balances, internal review controls now ensure SEFA reporting is strictly derived from verified, net federally reimbursable costs after applying all applicable grant allocation formulas. Additionally, management has documented the preparation and review process for the SEFA to ensure appropriate documentation and oversight. Responsible Person(s): Stacie Dellamano, Chief Financial Officer Anticipated Completion Date: Immediately and for December 31, 2026, SEFA presentation Exhibit A From: Stacie Dellamano <s.dellamano@flathead.coop> Sent: Friday, December 12, 2025 10:32 AM To: Stacey Nelson <smnelson@eidebailly.com>; Julie Urban J.Urban@flathead.coop Cc: Parker Van Zee <pvanzee@eidebailly.com> Subject: Re: Flathead Electric - Single Audit Discussion Stacey, I'm working on updating a SEFA. This will be the first year for a single audit on some of these grants, BUT there were quite a few expenditures in 2024. My question is on the SEFA, what number do I enter under the "expenditure" column? Do I enter 2025 related expenditures only or "Grant-To- Date" expenditures? Stacie Dellamano Chief Financial Officer Flathead Electric Cooperative s.dellamano@flathead.coop | Direct (406) 751-4463 | Cell (406) 871--8993 Toll Free (800) 735-8489 2510 US Highway 2 East, Kalispell, MT 59901 www.flatheadelectric.com Exhibit A Continued From: Stacey Nelson <smnelson@eidebailly.com> Sent: Friday, December 12, 2025 11:12 AM To: Stacie Dellamano <s.dellamano@flathead.coop>; Julie Urban <J.Urban@flathead.coop> Cc: Parker Van Zee <pvanzee@eidebailly.com> Subject: RE: Flathead Electric - Single Audit Discussion It should be the expenditures under your fiscal year only. Do not include expenditures from a prior year. Do you have any FEMA Disaster funds? As those have a little different process. If so, we can set up a call to discuss. If not applicable, you can ignore. Thanks! Stacey Nelson Assurance Partner Sioux Falls, SD T 605.367.6746

Recommendation: The Town should implement procedures to reconcile all federal reporting to the general ledger. Response: A full reconciliation of the ARPA accounts has been performed and aligned with the previous compliance reporting. A chart of accounts conversion is under way which will segregate federal funds from one fund to six funds for comprehensive oversight in the general ledger.

Condition: A competitive procurement process was not performed for one vendor selected for testing. Corrective Action Planned: The District has reviewed procurement procedures related to the Child Nutrition Program and has taken corrective action to ensure compliance with federal procurement requirements under 2 CFR 200.318-200.326. All food service vendors are now procured through appropriate procurement procedures, including solicitation and documentation of vendor selection as required by federal regulations. The District will maintain procurement records including solicitations, bids or quotes received, vendor selection documentation, contracts, invoices, and payment records. The Business Office will work with the Food Service Department to ensure that all future procurements under federal programs follow required federal, state and local procurement standards. Staff responsible for procurement will be reminded of documentation and competitive bidding requirements. Procurement documentation will be periodically reviewed by the Business Office to ensure ongoing compliance. Anticipated Completion Date: Implemented March 1, 2026 Contact: Nancy J. Konisky, Business Manager

Condition: The Town incurred and charged expenditures totaling $30,826 to a FEMA Public Assistance project after the approved period of performance ended on October 31, 2024. The Town submitted a formal request to extend the period of performance on September 8, 2025. As of March 19, 2026, FEMA had communicated that the extension request has been denied. However, FEMA reimbursed the Town for the expenditures incurred after October 31, 2024. As of the date of this audit report, FEMA has not indicated whether the reimbursement will ultimately be retained or subject to recovery. Corrective Action Plan Corrective Action Planned: The Town will implement a grant expenditure review checklist requiring pre-approval for any costs beyond the approved period; train all grant staff on compliance requirements; update internal controls. The Town will also document all correspondence whether that be by phone, email or written correspondence with FEMA when it comes to deadline extensions. The Town’s FEMA-funded recovery projects are complex, multi-year projects associated with rebuilding the community. Many projects have extended beyond their original completion dates due to factors including the pandemic, supply-chain and world trade impacts, weather, labor availability, construction timelines, and contract procurement requirements. In addition, frequent turnover among FEMA personnel assigned to the Town’s recovery projects has at times resulted in changes in points of contact, delays in responses, and extended processing times for approvals, determinations, and extension requests. These circumstances have contributed to the length and complexity of administering projects that already require significant coordination over multiple years. The Town has continued to work closely with FEMA throughout this process and has received approvals for extensions on recovery projects. In this instance, the expenditures identified in the finding occurred after the original October 31, 2024 period and were ultimately reimbursed by FEMA. Name(s) of Contact Person(s) Responsible for Corrective Action: Aimee Beleu, Finance Director Anticipated Completion Date: The corrective action will be implemented to take effect for the audit of the FY 2025-26 financial statements.

Condition: The Town did not submit its single audit reporting package or data collection form within the required timeline. Corrective Action Plan Corrective Action Planned: The Town will establish internal deadlines to submit the report at least 30 days before the federal due date. The responsibility to track audit milestones and communicate progress to management weekly will be assigned to the Grant Accountant, and the Town will schedule earlier engagement with the external auditor and ensure all required documentation is accurately prepared. The Town’s delay in submitting the Single Audit was due in part by the timing of the prior-year audit, which was not received until late and compressed the timeline for beginning and completing the subsequent audit. This occurred during a period of significant turnover within the Finance Department, including the loss of institutional knowledge related to grant reporting, audit preparation, and year-end closing procedures. The department has since restructured and expanded staffing, strengthened training, and developed additional procedures, workbooks, and guides to improve continuity and reduce reliance on individual staff knowledge. The Town has also improved its grant tracking and audit preparation processes, including standardized project account structures, enhanced reconciliation workbooks, and earlier preparation of the SEFA and supporting documentation. Finance is in the process of FY 2025-26 closing process earlier so that reconciliations, year-end adjustments, grant documentation, and audit schedules can be completed well in advance of fieldwork and prevent prior-year audit delays from continuing into future audit cycles. Name(s) of Contact Person(s) Responsible for Corrective Action: Aimee Beleu, Finance Director Anticipated Completion Date: The corrective action will be implemented to take effect for the audit of the FY 2025-26 financial statements.

The Morgan County Economic Development Office acknowledges the status and final reports for the CDBG and Home grant programs must be submitted by the required due dates. The office will actively monitor all deadlines and ensure that all reports are completed and submitted in a timely manner in accordance with those requirements.

Finding 2025-001: Material Weakness in Internal Control Over Compliance and Scope Limitation Over Special Tests and Provisions (Special Tests and Provisions) Condition: The Authority was unable to provide sufficient documentation and system data necessary for us to perform required audit procedures over certain Special Tests and Provisions applicable to the Federal Family Education Loans (Lenders) Program, ALN 84.032L. Specifically, support was not available for seven of the ten Special Tests and Provisions selected or required for testing. Because the required documentation and system data were not available, we were unable to obtain sufficient appropriate audit evidence to determine whether the Authority complied with the Special Tests and Provisions compliance requirement for the FFEL Program for the year ended June 30, 2025, The Reporting compliance requirement was tested without exception. In conjunction with our FY2025 program audit, please see the Authority's corrective action plan below: Management acknowledges that sufficient documentation was not available to support all audit requirements and agrees with the recommendation. The circumstances described in this finding resulted from the transition of FFEL Program loan servicing to Higher Education Servicing Corporation (HESC) and the subsequent sale of the FFEL loan portfolio to Kentucky Higher Education Student Loan Corporation (KHESLC). Although OSLA transferred borrower-level history and transaction data to the new servicing system, access to the legacy system was discontinued, eliminating access to certain detailed records needed to support portions of the compliance testing. Because the Authority no longer owns or services the FFEL portfolio, the specific circumstances that led to this finding are not expected to recur. Nonetheless, management has implemented enhanced records management controls to help ensure the retention and accessibility of supporting documentation and to mitigate similar risks in the future. Expected completion date: March 31, 2026

The County agrees with this recommendation and will verify the expenditures as well as the Cardinal Report for reporting.

2025-002 a. Name of Contact Person Responsible for Corrective Action: Dr. Terri Rhea, Superintendent b. Corrective Action Planned: We will implement policies or procedures to establish an internal control system that will ensure strong financial accountability, including compliance with state and federal grant requirements. c. Anticipated Completion Date: Immediately.

#2025-003 - Accounts Payable Cut-Off/ Period of Performance Corrective Action Planned: Certain grants - particularly at the Center for Adult College Success - were prepaid by the funder in order to disburse funds quickly, with grant conditions permitting continued work beyond the nominal completion date. TalentFirst closed these grants out in the accounting records before the full period of performance had concluded, resulting in expenses recorded in the wrong period. Management has implemented a contract timeline document that tracks each grant and contract's actual period of performance and governs when a grant is closed out in the accounting records - grants are no longer closed out until the full period of performance has concluded. Management is also moving away from structuring large prepaid contracts, in part to ease the cash flow pressure that structure creates. Anticipated Completion Date: Already implemented. Responsible Party: Finance Manager, with oversight by the President.

Commingling of Federal Award Funds in the General Ledger Finding Type: Material Weakness in Internal Control Over Compliance Corrective Action: The Organization will redesign its accounting structure to separately identify federal grant activity. Specific actions include: 1. Establishing grant-specific codes within the chart of accounts. 2. Tracking revenues and expenditures by: o Federal program o Funding source o Assistance Listing Number o Grant period 3. Requiring transaction-level coding for all federal grant activity.4. Generating reimbursement requests and financial reports directly from grant-specific accounting records. 5. Implementing written grant accounting policies and procedures. 6. Providing grant accounting and Uniform Guidance training to accounting and program personnel. Responsible Person: CFO Implementation Date: September 30, 2026 Expected Outcome: Federal expenditures will be separately tracked and readily identifiable, improving compliance with Uniform Guidance requirements and supporting accurate reporting and monitoring of grant funds.

Finding #2025-002- Material Adjustments Condition: Johnson Block and Company, Inc. proposed adjusting journal entries during the audit process. We deem these entries to be material in relation to the financial statements. Since the Village did not make these adjustments in its accounting system prior to the audit, a material weakness exists in the Village’s internal controls. Criteria: Material adjusting journal entries not prepared by the Village before the audit are considered an internal control weakness. Cause: The Village does not have policies and procedures in place to ensure that all transactions are properly recorded on the general ledger prior to the audit. Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner. Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner. Response: The Village will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor. Contact Person: Katherine Drake, Village Clerk/Treasurer, 608-523-4521, clerk@blanchardvillewi.gov Anticipated Completion: December 31, 2026

Program: HOME Investment Partnerships Program Federal Financial Assistance Listing Number: 14.239 Federal Grantor: U.S. Department of Housing and Urban Development Award Number and Year: M16-MC060227; M17-MC060227; M20-MC060227; M21-MC060227; M23- MC060227; M24-MC060227 Compliance Requirement: Special Tests and Provisions – Wage Rate Requirements Management’s Response: We concur. Views of Responsible Officials and Corrective Action: The City Engineering Department is the lead for all city capital projects and monitors prevailing wage requirements. The Housing Division is responsible for compliance with HUD specific requirements. This shared responsibility requires a high level of coordination and information sharing. The Housing Division does have draft of HOME Policies &Procedures which were prepared by a consulting firm contracted for the Five-year Consolidated Plan. These policies and procedures include Davis-Bacon and other related federal prevailing wage laws. Name of Responsible Person: Director of Development Services – currently vacant City Engineer - Daryl Jordan Housing Program Supervisor - Kimberly Nutt Projected Implementation Date: The consultant assisting the City has prepared a Draft of Policies and Procedures which are currently being reviewed. We anticipate final approval and implementation by end of January 2027.

Program: HOME Investment Partnerships Program Federal Financial Assistance Listing Number: 14.239 Federal Grantor: U.S. Department of Housing and Urban Development Award Number and Year: M16-MC060227; M17-MC060227; M20-MC060227; M21-MC060227; M23- MC060227; M24-MC060227 Compliance Requirement: Special Tests and Provisions – HQS Enforcement Management’s Response: We concur. Views of Responsible Officials and Corrective Action: The City’s Housing Division are aware of HUD’s requirement to have written policies and procedures in place for each HUD formula grant funding source (CDBG & HOME), including environmental reviews, financial management, uniform relocation assistance, and lead paint abatement. The barriers to carrying out rental housing monitoring activities have largely been centered around: 1) lack of sufficient number of staff to perform all job tasks, including training and monitoring and, 2) insufficient training information and opportunities on the subject of rental housing monitoring, including how to properly calculate restricted rent amounts and tenant income. As part of the Five-Year Consolidated Plan implementation creation and adoption of Policies and Procedures to perform this work was identified. Name of Responsible Person: Director of Development Services – currently vacant Housing Program Supervisor - Kimberly Nutt Projected Implementation Date: The consultant assisting the City has prepared a Draft of the Policies and Procedures which are currently being reviewed. We anticipate final approval and implementation by end of January 2027.

Federal Agency Name: Department of Treasury Pass-Through Entity: State of Iowa Department of Management Assistance Listing Number: #21.029 Program Name: Coronavirus Capital Projects Fund Finding Summary: The Cooperative does not have an internal control system designed to provide for a complete and accurate schedule of federal expenditures of federal awards (the schedule) being audited. We requested our auditors to assist with the preparation of the schedule and the accompanying notes to the schedule. Corrective Action Plan: It is not cost effective to have an internal control system designed to provide for the preparation of the schedule of federal expenditures of federal awards and the accompanying notes to the schedule. We requested that our auditors, Eide Bailly, prepare the schedule and accompanying notes. We have designated a member of management to review the drafted schedule and accompanying notes to the schedule. Responsible Individuals: Jeremy Richert ,Chief Executive Officer and Kelly Gibbs, Chief Financial Officer. Anticipated Completion Date: Ongoing