Corrective Action Plans

Finding No.: 2023-033 AL Program: COVID-19 21.027 - Coronavirus State and Local Fiscal Recovery Funds Area: Reporting Questioned Costs: $-0- Contact Person(s): Tracy B. Norita, Secretary of Finance Corrective Action Plan: Condition 1-3: The CNMI Department of Finance agrees with this finding. Required Project and Expenditure Reports were not submitted for certain periods and supporting documentation and revenue loss calculations were unavailable for audit review. The primary cause was staff turnover and reorganization following a change in administration in FY 2023, which highlighted gaps in reporting capacity. This occurred alongside issues identified in the finding, including insufficient processes following CNMI’s transition from JD Edwards to Tyler Munis, missing supporting documentation, and lack of structured reporting controls. The proposed corrective actions are described below: a. Cross Training of Personnel (Implemented) CNMI DOF has cross trained multiple staff to ensure continuity and eliminate dependency on any single employee for revenue loss analysis and reporting and documentation retention. This improves data accuracy and prevents operational disruptions. b. Strengthening Data Extraction & Documentation Processes (In Progress) DOF is developing processes to reliably extract revenue related data from Tyler Munis to support timely revenue loss calculations, as recommended by auditors. Finding No.: 2023-033, continued AL Program: COVID-19 21.027 - Coronavirus State and Local Fiscal Recovery Funds Area: Reporting Questioned Costs: $-0- Contact Person(s): Tracy B. Norita, Secretary of Finance Corrective Action Plan: c. Municipal Training and Oversight Clarification (In Progress) CNMI will work closely with municipalities—particularly Rota, which is less familiar with federal grant requirements—to: • Clarify who is responsible for SLFRF reporting oversight • Verify the municipality’s elected option under the Final Rule • Provide training and technical assistance to ensure full compliance d. Development of reports DOF will formalize a written SOP establishing: • Required timelines • Documentation standards • Review procedures • Data retention requirements Proposed Completion Date: October 31, 2026 (Some actions already implemented; others underway)

Finding No.: 2023-026 AL Program: 20.205 – Highway Planning and Construction (Federal-Aid Highway Program) Area: Special Tests and Provisions – Quality Assurance Program Questioned Costs: $-0- Contact Person(s): Stacy Atalig, Federal Programs Coordinator, DPW Corrective Action Plan: The Department of Public Works (DPW), Transportation Services Division (TSD) - Highway Branch agrees with the conclusions presented in this finding. Finding No.: 2023-026, continued AL Program: 20.205 – Highway Planning and Construction (Federal-Aid Highway Program) Area: Special Tests and Provisions – Quality Assurance Program Questioned Costs: $-0- Contact Person(s): Stacy Atalig, Federal Programs Coordinator, DPW Corrective Action Plan: The Highway Branch would adhere to 2 CFR 200.303(a), which mandates the establishment, documentation, and maintenance of effective internal controls over Federal awards. This system provides reasonable assurance that such awards comply with relevant Federal statutes, regulations, and the specific terms and conditions associated with the awards. Therefore, the Highway Branch will implement the following recommendations: Condition 1: • In accordance with 23 CFR 637.207, the DPW, TSD – Highway Branch will develop a QA program, policies and procedures that is approved by FHWA; and • Train employees and assign as designated agent to perform the functions of the QA Program. Condition 2: DPW, TSD – Highway Branch will develop a log sheet to document the results of the sampling and testing performed to include contractor and sub-contractor (if applicable), project numbers, project titles, date and time, location, and the name of the Highway Inspector/Engineer monitoring the project. Proposed Completion Date: September 2026

Finding No.: 2023-024 AL Program: 20.205 – Highway Planning and Construction (Federal-Aid Highway Program) Area: Equipment and Real Property Management Questioned Costs: Undeterminable Contact Person(s): Stacy Atalig, Federal Programs Coordinator, DPW / Geraldine Cruz, Procurement Services Director Corrective Action Plan: Condition 1: DPW, TSD – Highway Branch agrees with this finding. Highway Branch has consistently tried to work with Procurement Services to update its yearly inventory records to remove all transferred and disposed properties from its inventory record to no avail. Request for Survey-Out forms for damaged, past its useful life or obsolete properties and Request for Transfer of old or inactive but still usable equipment to Divisions within the Department of Public Works were transmitted along with the Fiscal Year inventory list to Procurement Services to update its list but still encounter discrepancies because of Procurement Services overall lump sum master list including inventories of both local and federal properties. Highway Branch conducts its yearly inventory count and submits its list to Procurement Services. However, Procurement Services has not conducted its own inventory for our office for several years. Additionally, the Procurement Services Division agrees with this finding. Improvements are needed in the way federally funded assets are tracked and reported. At present, the inventory management system is not configured to readily identify assets by specific federal award number, which makes it difficult to generate reports identifying assets purchased under individual grants. In addition, staffing limitations have affected the Commonwealth's ability to maintain and readily produce this information. To address this issue, the Property Management Branch has developed a revised Standard Operating Procedure (SOP), which is currently under review and pending finalization. The SOP strengthens procedures related to asset acquisition, tagging, inventory management, record retention, transfers, surveys, disposals, and supporting documentation. The Commonwealth is also evaluating available options to improve tracking and reporting of federally funded assets, including system enhancements, alternative tracking methods, technical assistance, and additional staffing resources where feasible. Finding No.: 2023-024, continued AL Program: 20.205 – Highway Planning and Construction (Federal-Aid Highway Program) Area: Equipment and Real Property Management Questioned Costs: Undeterminable Contact Person(s): Stacy Atalig, Federal Programs Coordinator, DPW / Geraldine Cruz, Procurement Services Director Corrective Action Plan: In the meantime, the Property Management Branch has begun asset reconciliation efforts, including physical inventories, record reviews, asset verification, and updates to inventory records. These efforts will continue while the revised SOP is finalized and implemented. These actions will help improve accountability, strengthen inventory records, and support compliance with federal property management requirements. Proposed Completion Date: Completed - Ongoing Condition 2: DPW, TSD – Highway Branch agrees with this finding. The Highway Branch has updated its Inventory Form to include the following required information: Date Acquired, Item No, Property/Tag No., Description of Property, Manufacturer, Model, Serial No., Purchase Order No./Contract No., Condition Code, Project No., FHWA Project Number, Percentage of Federal Participation, Location, Person Assigned, and the date the inventory was conducted. In September 2025, Federal Program Coordinator IV met with Director of Procurement Services to ensure these line items are incorporated into the inventory log sheet as part of the requirements. The Director agreed to instruct her staff to implement these updates beginning FY2025. Additionally, the Procurement Services Division agrees with this finding. The Division agrees that the annual physical inventory required for FY2023 was not completed. As a result, the existence, location, condition, and accountability of all assets could not be fully verified during the audit period. To address this issue, Section 3 of the CNMI Property Management Policies and Procedures Manual was updated on September 9, 2024, changing the physical inventory requirement from an annual inventory to a biennial (every two years) inventory cycle. Finding No.: 2023-024, continued AL Program: 20.205 – Highway Planning and Construction (Federal-Aid Highway Program) Area: Equipment and Real Property Management Questioned Costs: Undeterminable Contact Person(s): Stacy Atalig, Federal Programs Coordinator, DPW / Geraldine Cruz, Procurement Services Director Corrective Action Plan: Property Management Branch is currently conducting physical inventories and random asset audits throughout the Commonwealth. These efforts include verifying asset locations, confirming accountability, reviewing asset condition and operational status, reconciling inventory records, and identifying assets that require transfer, survey, repair, replacement, or other corrective action. These inventory and reconciliation efforts are already underway and will continue while the SOP is finalized and implemented. Together, these measures will strengthen accountability, improve asset management practices, and help ensure compliance with federal and Commonwealth property management requirements. Proposed Completion Date: Ongoing

Finding No.: 2023-023 AL Program: 20.205 – Highway Planning and Construction (Federal-Aid Highway Program) Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $-0- Contact Person(s): Stacy Atalig, Federal Programs Coordinator, DPW Corrective Action Plan: The Department of Public Works, Technical Services - Highway Branch agrees with the finding. The Highway Branch agrees to be more vigilant in ensuring that all documents are properly reviewed and approved. The disbursement process of program funds, specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting documents. DPW, TSD – Highway utilizes the Master PR20 log sheet for each fiscal year to track all Voucher for Work performed under Provisions of the Federal Aid and Federal Highway Acts as Amended (form PR20), Current Bills (drawdowns), and payments made on each. However, payments are either mailed or electronically transferred directly to the vendors by the CNMI Treasury Office. Effective immediately, the Highway Branch will download a copy of all payments made to its vendors directly to each PR20 file. Proposed Completion Date: June 2026

Finding No.: 2023-020 AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Contact Person(s): Angelina Phillips, Financial Analyst, Office of Management and Budget (OMB), Nerissa B. Karakaya, CIP COTR Corrective Action Plan: Condition 1a (A. Phillips): For Grant Award Nos. D23AF00036 and D22AF00299, the Office of Management and Budget (OMB) agrees with the finding and the need for a formally written policy and procedures for subrecipient monitoring. We have adopted the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 8/4/2025 establishing a formal monitoring suspension and debarment status of each subrecipient prior to granting any subaward. The guidance is reflective of the provisions set by 2 CFR 180.300. Proposed Completion Date: Ongoing Condition 1a and 1c (N. Karakaya): For Grant Award No. D23AP00068, the Capital Improvement Program (CIP) disagrees with this finding because the required verification was performed. Although documentation was not retained, CIP verifies that all subrecipients comply with OPA requirements before federal funds are awarded. Finding No.: 2023-020, continued AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Contact Person(s): Angelina Phillips, Financial Analyst, Office of Management and Budget (OMB), Nerissa B. Karakaya, CIP COTR Corrective Action Plan: To prevent recurrence, CIP will implement the following: 1. CIP will implement the revised Subrecipient Monitoring Standard Operating Procedures (SOP) issued by the CNMI Department of Finance, made effective October 28, 2025. Under these procedures, CIP will conduct a risk assessment to evaluate the subrecipient’s potential for noncompliance. The assessment will consider: a. Financial stability b. Audit history, including findings or questioned costs c. Internal controls, such as documented policies and procedures d. Programmatic capacity, including staffing and experience with similar awards The results of the risk assessment will help determine the level of monitoring required during the award period (e.g., low, moderate, or high risk). In addition, CIP will verify that subrecipients are not suspended or debarred from receiving federal funds by: a. Checking the System for Award Management (SAM.gov) and retaining a screenshot or record of the verification b. Alternatively, obtaining a signed certification from the subrecipient or including a suspension/debarment clause in the subaward agreement 2. No subaward agreement will be approved or executed until the required verification has been completed and reviewed by the CIP Administrator. 3. CIP staff will receive training on federal suspension and debarment requirements, including compliance with 2 CFR 180.300 and the CNMI Department of Finance Subrecipient Monitoring SOP. 4. CIP will conduct quarterly reviews of subaward files to ensure verification documentation is maintained and procedures are consistently followed. Proposed Completion Date: December 31, 2026 Finding No.: 2023-020, continued AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Contact Person(s): Angelina Phillips, Financial Analyst, Office of Management and Budget (OMB), Nerissa B. Karakaya, CIP COTR Corrective Action Plan: Condition 1b (A. Phillips): The Office of Management and Budget (OMB) agrees with the finding. OMB fully executed a Subrecipient Agreement with the subrecipient on 1/27/2023, prior to any grant administration taking place. The adoption of the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 8/4/2025 also further formalizes the process. Proposed Completion Date: Completed Condition 1c (A. Phillips): For Grant Award Nos. D23AF00036 and D22AF00299, the Office of Management and Budget (OMB) agrees with the finding and agree with the need for a formally written policy and procedures for subrecipient monitoring. We have adopted the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 8/4/2025 establishing a formal subrecipient risk assessment prior to entering into the subaward agreement and identifying the type of monitoring procedures to be performed for the subrecipient. Proposed Completion Date: Completed Condition 2 (A. Phillips): For Grant Award No. D23AF00036, the Office of Management and Budget (OMB) agrees with the finding and agree with the need for a formally written policy and procedures for subrecipient monitoring. We have adopted the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 8/4/2025 to perform proper monitoring to ensure that subrecipients are in compliance with single audits. Proposed Completion Date: Completed Condition 2 (N. Karakaya): For Grant Award No. D17AP00132, D21AP10043, D19AP00081, and D21AP10044, the Capital Improvement Program (CIP) agrees with the finding that a subrecipient with expenditures Finding No.: 2023-020, continued AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Contact Person(s): Angelina Phillips, Financial Analyst, Office of Management and Budget (OMB), Nerissa B. Karakaya, CIP COTR Corrective Action Plan: exceeding $750,000 during the year was not verified for compliance with single audit requirements, including whether corrective actions were taken to address prior audit findings. To address this issue, the Capital Improvement Program (CIP) will strengthen its subrecipient monitoring procedures to ensure compliance with single audit requirements by: 1. Developing and implementing a subrecipient monitoring checklist to identify subrecipients that expend $750,000 or more in federal awards during their fiscal year. 2. Obtaining and reviewing applicable Single Audit reports annually to verify compliance with federal requirements. 3. Documenting the review of audit reports and assessing whether any findings related to federal awards affect CIP-funded activities. 4. Requiring subrecipients with audit finding to submit corrective action plans and evidence of implementation. 5. Maintaining a tracking system to monitor the status and resolution of audit findings and corrective actions. 6. Providing training to CIP staff responsible for subrecipient monitoring on federal compliance and the CNMI Department of Finance Subrecipient Monitoring SOP. Proposed Completion Date: December 31, 2026

Finding No.: 2023-018 AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Period of Performance Questioned Costs: $-0- Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC / Nerissa B. Karakaya, CIP COTR Corrective Action Plan: Condition 1-2: The Capital Improvement Program (CIP) agrees with this finding that a subrecipient expending $750,000 or more in federal awards during its fiscal year was not adequately verified for compliance with Single Audit requirements, including whether corrective actions were implemented to address prior audit findings. To prevent recurrence, CIP will implement the following: • Update Policies and Procedures o Revise and strengthen written financial management policies to clearly define documentation requirements to substantiate expenditures and ensure costs are within the award’s period of performance for all projects. o Incorporate federal regulation references, including 2 CFR 200.303 (Internal Controls) and 2 CFR 200.344 (Closeout). • Internal Controls and Review Process o Implement a detailed tracking spreadsheet/ checklist for all CIP-funded transactions to ensure details are verified and that costs are incurred within the period of performance. o Require a secondary review and sign-off by the CIP Administrator for all documents pertaining to cost share projects. • Training and Capacity Building o Conduct an annual training for CIP staff on federal period of performance requirements and required supporting documentation standards. o Provide refresher sessions before each audit cycle. • Monitoring and Compliance o Establish a quarterly self-audit of grant files to verify that documentation is complete and properly supports expenditures. o Document results of each review and address deficiencies immediately. Proposed Completion Date: September 30, 2026 Finding No.: 2023-018, continued AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Period of Performance Questioned Costs: $-0- Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC / Nerissa B. Karakaya, CIP COTR Corrective Action Plan: For Grant Award No. D22AF00298 and D20AP10168, the Office of Grants Management (OGM) is unable to provide a response because the Grant Award # provided cannot be located in the current FMIS, nor does the Division of Financial Services, Federal Section, have records of their existence. Proper searches were conducted in the legacy system and in Tyler-MUNIS but were not successful. We recommend that the auditor provide additional details regarding the specific grant award so that the appropriate responsible office can be accurately identified. Furthermore, we do not know whether OGM is the responsible party to answer on behalf of these non-titled projects. Proposed Completion Date: Ongoing

Finding No.: 2023-017 AL Program: 15.875 - Economic, Social, and Political Development of the Territories COVID-19 15.875 Economic, Social, and Political Development of the Territories Area: Equipment and Real Property Management Questioned Costs: Undeterminable Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC / Geraldine Cruz, Procurement Services Director Corrective Action Plan: Condition 1: The Procurement Services Division agrees with this finding. Improvements are needed in the way federally funded assets are tracked and reported. At present, the inventory management system is not configured to readily identify assets by specific federal award number, which makes it difficult to generate reports identifying assets purchased under individual grants. In addition, staffing limitations have affected the Commonwealth's ability to maintain and readily produce this information. To address this issue, the Property Management Branch has developed a revised Standard Operating Procedure (SOP), which is currently under review and pending finalization. The SOP strengthens procedures related to asset acquisition, tagging, inventory management, record retention, transfers, surveys, disposals, and supporting documentation. The Commonwealth is also evaluating available options to improve tracking and reporting of federally funded assets, including system enhancements, alternative tracking methods, technical assistance, and additional staffing resources where feasible. In the meantime, the Property Management Branch has begun asset reconciliation efforts, including physical inventories, record reviews, asset verification, and updates to inventory records. These efforts will continue while the revised SOP is finalized and implemented. Finding No.: 2023-017, continued AL Program: 15.875 - Economic, Social, and Political Development of the Territories COVID-19 15.875 Economic, Social, and Political Development of the Territories Area: Equipment and Real Property Management Questioned Costs: Undeterminable Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC / Geraldine Cruz, Procurement Services Director Corrective Action Plan: These actions will help improve accountability, strengthen inventory records, and support compliance with federal property management requirements. Proposed Completion Date: Ongoing Condition 2: The Procurement Services Division agrees with this finding. The Division agrees that the annual physical inventory required for FY2023 was not completed. As a result, the existence, location, condition, and accountability of all assets could not be fully verified during the audit period. To address this issue, Section 3 of the CNMI Property Management Policies and Procedures Manual was updated on September 9, 2024, changing the physical inventory requirement from an annual inventory to a biennial (every two years) inventory cycle. Property Management Branch is currently conducting physical inventories and random asset audits throughout the Commonwealth. These efforts include verifying asset locations, confirming accountability, reviewing asset condition and operational status, reconciling inventory records, and identifying assets that require transfer, survey, repair, replacement, or other corrective action. These inventory and reconciliation efforts are already underway and will continue while the SOP is finalized and implemented. Together, these measures will strengthen accountability, improve asset management practices, and help ensure compliance with federal and Commonwealth property management requirements. Proposed Completion Date: Ongoing

AL Program: 15.875 – Economic, Social, and Political Development of the Territories Area: Cash Management Questioned Costs: $972,335 Contact Person(s): Angelina Phillips, Financial Analyst, Office of Management and Budget (OMB) Corrective Action Plan: Condition 1-2: The Office of Management and Budget (OMB) agrees with this finding. The underlying cause of this issue was the absence of succession planning and cross training, which resulted in a loss of institutional compliance knowledge during a staff transition. When the primary grant administrator unexpectedly left the organization, there was no transition plan, no cross trained backup staff, and no documented standard operating procedure in place. As a result, the departing administrator processed a drawdown request without leaving documentation of the drawdown or the corresponding vendor invoices. The untrained coverage staff, having only been informed that funds were received, subsequently processed the invoices for payment, which led to the timing discrepancy noted in the finding. To correct this issue, we have formally adopted the CNMI Department of Finance’s Internal Control for Federal Grants Management Manual effective May 1, 2025; the Department of Finance’s Federal Grant Drawdown Procedures effective June 20, 2025; and the Department of Finance’s Cash Management Policies and Procedures effective October 1, 2025. Collectively, these policies ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The step by step Standard Operating Procedures we have adopted for internal controls and the drawdown process clearly outline required documentation, approval workflows, and compliance timelines. In addition, we have initiated succession and continuity planning to ensure that at least Finding No.: 2023-016, continued AL Program: 15.875 – Economic, Social, and Political Development of the Territories Area: Cash Management Questioned Costs: $972,335 Contact Person(s): Angelina Phillips, Financial Analyst, Office of Management and Budget (OMB) Corrective Action Plan: one alternate staff member is trained and capable of performing grant administration responsibilities to prevent future disruptions. Proposed Completion Date: Completed

Finding No.: 2023-014 AL Programs: 11.307 – Economic Adjustment Assistance Area: Reporting Questioned Costs: $-0- Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: Condition 1: For project no. FG17010001 (related to the Economic Resiliency Center), the CNMI Department of Finance respectfully disagrees with this finding. The Department was not aware that a documentation request had been submitted through the EY portal. This occurred because the ERC project was grouped with other OPD-related projects within the same EY portal request, resulting in the Department not receiving clear notification that additional documents were required. The Department maintains all relevant supporting documentation for these transactions and such documentation is available for review upon request from the Grantor. The Office of Planning and Development partially disagrees with the finding related to Project No. FG26050001 and FG26050006. OPD has located the SF-425 Federal Financial Report for Project No. FG26050001 / Grant Award No. 07-79-07631 for the reporting period ending September 30, 2022, and the report is maintained by OPD and available for review. With respect to Project No. FG26050006 / Grant Award No. ED22SEA3070013, OPD has been unable to locate the referenced SF-425 reports for the reporting periods ending September 30, 2022, and March 31, 2023. However, although the grant was awarded in 2022, the project was not established until June 12, 2023, and grant activities had not commenced during the reporting periods cited in the finding. OPD will coordinate with the Department of Finance to determine whether reporting requirements applied during the referenced periods. Should additional guidance or clarification indicate that such reporting requirements were applicable, OPD will review the information provided and take appropriate action, as necessary. Correspondence from the Department of Finance confirming the project establishment date is available for review. OPD will continue coordinating with the Department of Finance and reviewing grant award documentation to determine whether reporting requirements applied during the referenced reporting periods and to identify any records relevant to the audit finding. No further corrective action is proposed at this time pending clarification of the applicable reporting requirements. Proposed Completion Date: Ongoing Condition 2a: For project no. FG17010001 (related to the Economic Resiliency Center), the Department of Finance respectfully disagrees with this finding. The Department was not aware that a documentation request had been submitted through the EY portal. This occurred because the ERC Finding No.: 2023-014, continued AL Programs: 11.307 – Economic Adjustment Assistance Area: Reporting Questioned Costs: $-0- Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: project was grouped with other OPD-related projects within the same EY portal request, resulting in the Department not receiving clear notification that additional documents were required. The Department maintains all relevant supporting documentation for these transactions and such documentation is available for review upon request from the Grantor. The Office of Planning and Development (OPD) respectfully disagrees with the finding related to Project No. 2605210018. OPD has located the SF-271 Outlay Reports and Requests for Reimbursement for Construction Program for Project No. 2605210018 / Grant Award No. 07-79-07562 covering the periods July 1, 2022, through October 31, 2022, and November 1, 2022, through January 9, 2023. These records are maintained by OPD and are available for review. No further corrective action is proposed. OPD has located the requested SF-271 reports and confirmed that they are maintained within its grant records and available for review. OPD will continue maintaining grant records in accordance with applicable record-retention requirements. Proposed Completion Date: Ongoing Condition 2b: The Office of Planning and Development (OPD) respectfully disagrees with the finding. OPD has located supporting accounting records associated with the SF-271 for Project No. 2605210018 / Grant Award No. 07-79-07562 covering the period August 29, 2022, through April 30, 2023, including invoices, purchase orders, and check copies. These records are maintained by OPD and are available for review. No further corrective action is proposed. The requested supporting records have been located and are maintained by OPD for review. OPD will continue maintaining supporting financial documentation in accordance with applicable record-retention requirements. Proposed Completion Date: Ongoing Condition 3a: For project no. FG17010001 (related to the Economic Resiliency Center), the Department of Finance respectfully disagrees with this finding. The Department was not aware that a documentation request had been submitted through the EY portal. This occurred because the ERC project was grouped with other OPD-related projects within the same EY portal request, resulting in the Department not receiving clear notification that additional documents were required. The Department maintains all relevant supporting documentation for these transactions and such documentation is available for review upon request from the Grantor. Finding No.: 2023-014, continued AL Programs: 11.307 – Economic Adjustment Assistance Area: Reporting Questioned Costs: $-0- Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: The Office of Planning and Development (OPD) respectfully disagrees with the finding. OPD has located the performance reports for Project No. FG26050001 / Grant Award No. 07-79-07631 and Project No. 2605210018 / Grant Award No. 07-79-07562 for the reporting period ending September 30, 2022. OPD believes the reports referenced in the finding as Periodic Performance Reports are maintained and submitted by OPD as Quarterly Progress Reports (QPRs). These records are maintained by OPD and are available for review. No further corrective action is proposed. The requested performance reports have been located and are maintained by OPD for review. OPD will continue maintaining programmatic records in accordance with applicable record-retention requirements. Proposed Completion Date: Ongoing Condition 3b: The Office of Planning and Development (OPD) agrees with the finding. The Periodic Performance Report for Project No. 2605210018 / Grant Award No. 07-79-07562 for the reporting period ending December 31, 2022, was submitted after the required due date. Although operational circumstances at the time contributed to the delay, OPD recognizes the importance of timely reporting and will strengthen internal monitoring procedures to improve tracking of reporting deadlines and support timely submission of all required reports. OPD will implement a reporting calendar and periodic internal reviews to monitor upcoming reporting deadlines and ensure timely submission of all required reports. Proposed Completion Date: Ongoing Condition 4: For project no. FG17010001 (related to the Economic Resiliency Center), the CNMI Department of Finance respectfully disagrees with this finding. Based on the project’s Special Award Conditions, the only reporting requirements identified for this award are the submission of Project Progress Reports and Financial Reports (SF-425). No additional reporting or documentation requirements – beyond those explicitly stated – were communicated to the Department. Accordingly, the Department requests further clarification from the auditor regarding the specific authority or requirement that forms this basis of this finding, including where such a requirement Finding No.: 2023-014, continued AL Programs: 11.307 – Economic Adjustment Assistance Area: Reporting Questioned Costs: $-0- Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: is documented. A copy of the Special Award Conditions is maintained by the Department and is available for review upon request. The Office of Planning and Development (OPD) respectfully disagrees with the finding. OPD reviewed the grant files, including the applicable Special Award Conditions, for Project No. 2605210018 / Grant Award No. 07-79-07562 and Project No. FG26050001 / Grant Award No. 07- 79-07631. OPD was unable to identify a requirement for submission of an Annual Performance Technical Report within the grant terms and conditions governing these awards. The applicable Special Award Conditions have been identified and are available for review. OPD respectfully requests clarification regarding the specific report referenced in the finding and will provide any applicable documentation should an applicable reporting requirement be identified. OPD will review any additional guidance or clarification provided regarding the reporting requirements applicable to these grants and will take appropriate action, if necessary. OPD will continue reviewing grant award requirements and maintaining documentation of applicable reporting obligations to support compliance and future audit reviews.

Management should establish and implement a robust tracking system to monitor reporting deadlines, ensure timely financial statement preparation, and improve coordination with external auditors. Additionally, assigning a compliance officer or designated staff member responsible for tracking audit progress and submission deadlines can help prevent future delays.

2023-012-Subrecipient Monitoring Suggested Action: Enhanced contractual requirements that ensure greater subrecipient monitoring around greater support for any requests or assertions from our subrecipients. Responsible Official: Chief Operations Officer Completion Date: 6/30/2026

2023-011-Suspension and Debarment support Suggested Action: Enhanced our customer and subcontractor reviews to ensure we retain documentation demonstrating that IFDC does not do business with suspended and debarred contractors. Responsible Official: Vice President of Business Development Completion Date: 4/30/2026

Monitoring Corrective Action Plan: Each Program Director audits charts on a monthly basis and the Quality Management Coordinator audits them on a quarterly basis. Management continues to assess the need for a formal monthly compliance review checklist and has assigned its Quality Management Coordinator, a licensed counselor, to conduct Quality Assurance Reviews quarterly. Anticipated Completion Date: July 15, 2026 Responsible Party: Land Manor Executive Director, Quality Management Coordinator and Program Directors.

Block Grant for Prevention and Treatment of Substance Abuse (CFDA 93.959) - Compliance - Special Testing Corrective Action Plan: Quality Management Coordinator has conducted in-service training with staff members at the TRA and TRF facilities. Management will continue to emphasize, with the appropriate individuals, the need to complete and document, contemporaneously, each program requirement. Anticipated Completion Date: July 15, 2026 Responsible Party: Land Manor Executive Director, Quality Management Coordinator and Program Directors.

We acknowledge the finding. The Municipality will be working on scheduling the reports required by each program. It is important to note that all reports are prepared by the accountants assigned to each federal program and reviewed and approved by the Finance Department and the Mayor. This process sometimes results in late report submissions. Staff have been instructed to work on the reports before the 10th of each month to allow sufficient time for proper review and submission, ensuring they are duly reviewed and approved. The reports due on September 15, 2022, and October 15, 2022, were delayed due to Hurricane Fiona's passage through Puerto Rico on September 14, 2022. We experienced power and internet outages at the Municipality. Personnel in charge: Daiana González Hernández, Finance Office Director Projected Completion Date: August 31, 2026

Audit Finding Reference: 2023-001 Document Policies and Procedures Over Federal Awards Planned Corrective Action: A Uniform Guidance policy and Procedures document has been adopted. Planned Implementation Date of Corrective Action: The policy was effective 03/21/2025. Person Responsible for Corrective Action: Finance Director

The Business Office staff is currently training with Jenzabar support staff on specific modules to gain a better understanding of the system and how it can be utilized more effectively. Internal controls and policies and procedures are being reviewed and changes are being made as needed to ensure timely implementation and compliance with all financial reporting requirements. The expected date of completion is June 30, 2025. The staff responsible is the Finance Director.

The Finance Director will work closely with the Foundation staff to ensure that policies and procedures are implemented for the reconciling of Title V federal fund balances. The recommendation to have the Foundation Board adopt the Title V balance as correct in a meeting will be provided to the Foundation staff and the minutes of this meeting will be forwarded to the Finance Director. The expected date of completion will be June 30, 2025. The staff responsible is the Finance Director and the Foundation Staff.

VIEWS OF RESPONSIBLE OFFICIALS In response to the single audit finding we will take the following actions. We will establish internal controls that provide certainty, effective monitoring data validation and accountability for those employees who approved expenditures. We will prepare written process in accordance with both state and federal regulations. We will prepare written process in accordance with both state and federal regulations. We will require relevant staff (Staff interacting with procurement, expenditures approval) a comprehensive training program on the requirements of CFR 200. IMPLEMENTATION DATE September 30, 2026 RESPONSIBLE PERSON Ivan Rentas, President

2023-006 – CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS – IMPROPER AND UNTIMELY REPORTING OF EXPENDITURES & OBLIGATIONS – ALN 21.027 – MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Condition: Mercer County did not properly report total cumulative and current period expenditures and obligations on the March 31, 2023, Project and Expenditure Report for the Coronavirus State and Local Fiscal Recovery Funds program. The total reported cumulative expenditures and obligations were overstated by $37,577 and $484,435. The total reported current period expenditures were understated by $345,365, and the total current period obligations were overstated by $780,000. In addition, the 2023 report was submitted on May 15, 2023, roughly two weeks after the April 30, 2023 deadline. Corrective Action Plan: We agree. We will ensure the future obligation reports that are sent are proper. Anticipated Completion Date: FY 2026

2023-012 Financial Statement Reconciliations/Tie-In Procedures Material Weakness Recommendation: The Housing Authority should adopt written reconciliation and tie-in procedures into its financial policies and procedures manual. These policies should require timely reconciliations to take place as defined under policy. Action Taken: The Housing Authority agrees with this finding and will implement this recommendation within 120 days of this audit report.

2023-011 Timely Grant Draws Material Weakness Recommendation: The Housing Authority should adopt written grant draw policies into its financial policies and procedures manual. Financials should be reviewed monthly, and drawdowns made as needed. Action Taken: The Housing Authority agrees with this finding and will implement this recommendation within 120 days of this audit report.

2023-006 Minutes/Resolutions Material Weakness Recommendation: Written minutes should be prepared for each council meeting along with any approved resolutions/recommendations. The minutes and resolutions should be centrally filed, maintained by the Council’s Secretary, and easily accessible to the auditor. Action Taken: The Housing Authority agrees with this finding and will implement this recommendation within 120 days of this audit report.

2023-001 Segregation of Duties – Loan Program Significant Deficiency Recommendation: The Housing Authority’s fiscal policies should be revised to ensure that preventive controls are in place over check disbursements for loan disbursements, such that checks must be signed with live signatures at least the signature of one Tribal Council member. Further, individuals who benefit from the loan program should not have complete discretion over recording and processing of advances and repayment. We recommend a complete list of outstanding balances be presented to the Tribal Council, or its designee, for continued monitoring. Action Taken: The SCCHA discontinued the Loan Program as of November 2019. A complete list of balances owed has been submitted to the Tribal Council with the outstanding balances of those whom had signatory authority forwarded to the St. Croix Tribal Court for further repayment actions.

Management’s Response or Department’s Response The County agrees with the finding and recommendation. Views of Responsible Officials and Corrective Action Plan The County will implement a formalized monitoring program and agreement template to identify subrecipients based on criteria in § 200.332. The County will provide a comprehensive training to program managers to implement the monitoring program and subrecipient agreement template. In addition, the County will include direction to project managers to review current awards to identify existing subrecipients that were not provided a subrecipient agreement with all of the required elements from CFR § 200.332. Anticipated Completion Date/Completion Date June 30, 2026 Contact Information of Responsible Official Name: Donald McNair Title: County Clerk & Auditor-Controller Phone: 209-533-6593