Corrective Action Plans

Finding 1191953 (2025-022)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Reporting Subrecipient Monitoring Allowable Costs / Cost Principles

Finding Number: 2025-022 Finding: The Department of Health did not have adequate internal controls over and did not comply with reporting requirements for the Epidemiology and Laboratory Capacity for Infectious Diseases and the Immunization Cooperative Agreements programs. Program: 93.268 – Immuniza...

Finding Number: 2025-022 Finding: The Department of Health did not have adequate internal controls over and did not comply with reporting requirements for the Epidemiology and Laboratory Capacity for Infectious Diseases and the Immunization Cooperative Agreements programs. Program: 93.268 – Immunization Cooperative Agreements 93.268 – COVID-19 Immunization Cooperative Agreements 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases 93.323 – COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Compliance Requirement: Reporting Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Department will strengthen internal controls over the preparation and review of the SF-425 Federal Financial Reports for the Epidemiology and Laboratory Capacity for Infectious Diseases and Immunization Cooperative Agreements programs. The Department will: • Implement additional validation procedures to confirm that financial data used to prepare the reports is accurate and consistent with the Department’s accounting records. • Review grant coding and related chart of account structures used for financial reporting to reduce the risk of reporting errors. • Enhance procedures for preparing SF-425 reports to ensure that obligations, expenditures, and unobligated balances are reported in accordance with federal guidance. • Document management review performed to verify completeness and accuracy of information prior to report submission. Prior Findings: The conditions noted in this finding were previously reported in finding 2024-033. Completion Date: Estimated June 2027 Agency Contact: Jeff Arbuckle External Audit Manager (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

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Finding 1191952 (2025-021)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

Finding Number: 2025-021 Finding: The Department of Health did not have adequate internal controls to ensure payments to subrecipients were allowable and met cost principles for the Epidemiology and Laboratory Capacity for Infectious Diseases and the Immunization Cooperative Agreements programs. Pro...

Finding Number: 2025-021 Finding: The Department of Health did not have adequate internal controls to ensure payments to subrecipients were allowable and met cost principles for the Epidemiology and Laboratory Capacity for Infectious Diseases and the Immunization Cooperative Agreements programs. Program: 93.268 – Immunization Cooperative Agreements 93.268 – COVID-19 Immunization Cooperative Agreements 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases 93.323 – COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Subrecipient Monitoring Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Department will strengthen internal controls over subrecipient payments by formalizing the approval and communication process between program and accounting staff. Specifically, the Department will: • Provide additional staff training on the requirement of documenting program review and approval of subrecipient payment requests in program files. • Standardize procedures for programs to communicate payment approval to the accounting unit before issuing payments. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-037, 2024-032, 2023-046, 2023-044, 2022-033, and 2022-031. Completion Date: Estimated May 2026 Agency Contact: Jeff Arbuckle External Audit Manager (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

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Finding 1191951 (2025-006)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Cash Management Questioned Costs

Finding Number: 2025-006 Finding: The Department of Health did not have adequate internal controls over cash management for the Epidemiology and Laboratory Capacity for Infectious Diseases, the Immunization Cooperative Agreements and the WIC Special Supplemental Nutrition Program for Women, Infants,...

Finding Number: 2025-006 Finding: The Department of Health did not have adequate internal controls over cash management for the Epidemiology and Laboratory Capacity for Infectious Diseases, the Immunization Cooperative Agreements and the WIC Special Supplemental Nutrition Program for Women, Infants, and Children programs. Program: 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children 93.268 – Immunization Cooperative Agreements 93.268 – COVID-19 Immunization Cooperative Agreements 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) 93.323 – COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Compliance Requirement: Cash Management Questioned Costs: $160,206 Status: Corrective action in progress Corrective Action: The Department is taking steps to strengthen internal controls over cash management and related system processes. During the audit period, the Department identified issues within the Grants Management System but were unable to implement system enhancements prior to the end of the audit period. The Department will continue to address these system issues to ensure compliance with federal requirements. Additionally, the Department will: • Review and strengthen controls over the accuracy and maintenance of accounting data used in cash draw calculations. • Improve review and monitoring procedures to ensure amounts used to support federal cash draws are accurate, complete, and supported by appropriate documentation. • Evaluate existing roles and responsibilities to ensure appropriate oversight, review, and segregation of duties related to cash management activities. The Department is reviewing the questioned costs identified by the auditors and will take appropriate action in accordance with federal requirements, which may include adjustments or repayment, as necessary. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-036 and 2024-033. Completion Date: Estimated December 2026 Agency Contact: Jeff Arbuckle External Audit Manager (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

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Finding 1191936 (2025-019)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding Number: 2025-019 Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to perform program monitoring for subrecipients of the Coronavirus State and Local Fiscal Recovery Funds. Program: 21.027 – COVID-19 Coronavirus State and Lo...

Finding Number: 2025-019 Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to perform program monitoring for subrecipients of the Coronavirus State and Local Fiscal Recovery Funds. Program: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Subrecipient Monitoring Questioned Costs: $0 Status: Corrective action in progress Corrective Action: To ensure compliance with 2 CFR 200 the Coronavirus State and Local Fiscal Recovery Funds subrecipient monitoring requirements, the Local Government Division program staff will complete the following procedures: Infrastructure Program: • Require active subrecipients to submit a project status report with each reimbursement request before reviewing and approving the invoice for payment. State Broadband Office: • Obtain missing project status reports from subrecipients for the audit period. • Ensure all future invoice documents have a project status report submitted before approving payment, as required in the grantee agreements. Prior Findings: None Completion Date: Estimated April 2026 Agency Contact: Gena Allen, CFE Internal Control Officer (360) 480-5149 Gena.Allen@Commerce.wa.gov

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Finding 1191935 (2025-018)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding Number: 2025-018 Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to perform risk assessments for subrecipients of the Coronavirus State and Local Fiscal Recovery Funds. Program: 21.027 – COVID-19 Coronavirus State and Loca...

Finding Number: 2025-018 Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to perform risk assessments for subrecipients of the Coronavirus State and Local Fiscal Recovery Funds. Program: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Fund Compliance Requirement: Subrecipient Monitoring Questioned Costs: $0 Status: Corrective action complete Corrective Action: The Infrastructure Program requires risk assessments to be completed for new subawards only. The Department will not be making any additional subawards to subrecipients under the Coronavirus State and Local Fiscal Recovery Fund (SLFRF) award because all funds were obligated as of December 31, 2024. The risk assessment requirement is no longer applicable for SLFRF. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-022, 2023-031, and 2022-021. Completion Date: June 2025 Agency Contact: Gena Allen, CFE Internal Control Officer (360) 480-5149 Gena.Allen@Commerce.wa.gov

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Finding 1191934 (2025-017)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

Finding Number: 2025-017 Finding: The Department of Commerce did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Coronavirus State and Local Fiscal Recovery Funds received required single audits, and that it appropriately followed ...

Finding Number: 2025-017 Finding: The Department of Commerce did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Coronavirus State and Local Fiscal Recovery Funds received required single audits, and that it appropriately followed up on findings and issued management decisions. Program: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Subrecipient Monitoring Questioned Costs: $0 Status: Corrective action complete Corrective Action: The Department partially agrees with the finding. The Department acknowledges that there were subrecipients who should have received management decision letters but were not identified during monitoring. Additional monitoring steps have been added to identify these entities. The Department concludes that the other deficiencies reported were not supported by requirements included in the Code of Federal Regulations (CFR) but were based on the State Auditor’s Office’s preferences. In October 2024, the Internal Controls Office (ICO) added a Management Analyst 5 dedicated to ensuring the requirements in 2 CFR 200.501 Audit Requirements are followed. The ICO also updated processes to ensure compliance with subrecipient monitoring requirements. The ICO maintains that key controls are in place and the Department materially complied with all compliance requirements regarding monitoring subrecipients’ single audit submissions. The ICO will continue to issue management decision letters as required and communicate subrecipients’ non-compliance issues to program management. Prior Findings: The conditions noted in this finding were previously reported in finding 2024-023. Completion Date: July 2025 Agency Contact: Gena Allen, CFE Internal Control Officer (360) 480-5149 Gena.Allen@Commerce.wa.gov

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Finding 1191933 (2025-016)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Questioned Costs Subrecipient Monitoring

Finding Number: 2025-016 Finding: The Department of Corrections improperly charged $222 to the Coronavirus State and Local Fiscal Recovery Funds program. Program: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Activities Allowed or Unallowed and Allowable...

Finding Number: 2025-016 Finding: The Department of Corrections improperly charged $222 to the Coronavirus State and Local Fiscal Recovery Funds program. Program: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $222 Status: Corrective action complete Corrective Action: The Department concurs that the questioned costs identified by the auditors were charged to the grant due to an employee’s overpayment. The Department is committed to ensuring compliance with federal grant requirements. In response to this audit finding, the Department: • Provided education to local payroll liaisons to ensure the Automated Time & Labor Advanced Scheduling (ATLAS) system checklist and standard processes are followed. • Reviewed the logic around shift differential in ATLAS and determined that the cause of the shift differential errors identified in the audit was the result of shifts not assigned to employees’ schedules. • Worked with the vendor to provide a report identifying employees whose shifts in ATLAS show a discrepancy that may affect shift differential overtime logic. The Department will discuss any repayment of questioned costs through the normal audit resolution process with the U.S. Department of the Treasury. Prior Findings: None Completion Date: November 2025 Agency Contact: Sandra Morrison Comptroller (360) 480-4596 svmorrison@doc1.wa.gov

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Finding 1191856 (2025-015)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles Internal Control / Segregation of Duties

Finding Number: 2025-015 Finding: The Housing Finance Commission did not have adequate internal controls over and did not comply with reporting requirements for the Homeowner Assistance Fund program. Program: 21.026 – COVID-19 Homeowner Assistance Fund Compliance Requirement: Reporting Questioned Co...

Finding Number: 2025-015 Finding: The Housing Finance Commission did not have adequate internal controls over and did not comply with reporting requirements for the Homeowner Assistance Fund program. Program: 21.026 – COVID-19 Homeowner Assistance Fund Compliance Requirement: Reporting Questioned Costs: $0 Status: Corrective action complete Corrective Action: To address the deficiencies identified by the auditors in prior years’ findings, the Commission has strengthened internal controls in completing annual performance reports for the Homeowner Assistance Fund program. The Commission has refined its management review process and updated procedures to require additional review and approval by Finance Division management prior to submitting the annual report. This will be evidenced with submission of the federal fiscal year 2026 report. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-017 and 2023-025. Completion Date: November 2025 Agency Contact: Lucas Loranger Senior Finance Director (206) 464-7139 Lucas.Loranger@wshfc.org

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Finding 1191854 (2025-014)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding Number: 2025-014 Finding: The Department of Transportation did not have adequate internal controls over and did not comply with requirements to perform risk assessments for subrecipients of the Highway Planning and Construction program. Program: 20.205 – Highway Planning and Construction Com...

Finding Number: 2025-014 Finding: The Department of Transportation did not have adequate internal controls over and did not comply with requirements to perform risk assessments for subrecipients of the Highway Planning and Construction program. Program: 20.205 – Highway Planning and Construction Compliance Requirement: Subrecipient Monitoring Questioned Costs: $0 Status: Corrective action complete Corrective Action: The Department is committed to ensuring its grant programs comply with federal regulations regarding subrecipient risk assessments. The responsibility for conducting risk assessments for subrecipients under the Federal Highway Administration grant programs primarily rests with the Department’s Regional Local Programs Engineers located in six regions across the state. The Department had plans to complete a risk assessment at each phase of a project; however, staff turnover contributed to the lack of consistency and timeliness in completing these assessments. The Department revised the risk assessment procedures in March 2022. As part of ongoing efforts and to help ensure consistency of the risk assessment process, the Department shared the audit findings and exceptions with regional staff and reminded them of the updated risk assessment program guidelines. The Department will continue to work with Regional Local Programs Engineers and regional management to ensure compliance with federal requirements. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-012 and 2023-012. Completion Date: December 2025 Agency Contact: Jesse Daniels Audit Liaison (360) 705-7035 jesse.daniels@wsdot.wa.gov

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Finding 1191853 (2025-012)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Eligibility Special Tests & Provisions

Finding Number: 2025-012 Finding: The Employment Security Department did not have adequate internal controls over and did not comply with requirements to ensure it profiled all claimants under the Unemployment Insurance program to identify people likely to need reemployment services and ensure repor...

Finding Number: 2025-012 Finding: The Employment Security Department did not have adequate internal controls over and did not comply with requirements to ensure it profiled all claimants under the Unemployment Insurance program to identify people likely to need reemployment services and ensure reports are reviewed before submission to the federal government. Program: 17.225 – Unemployment Insurance Compliance Requirement: Special Tests and Provisions – UI Reemployment Programs: Worker Profiling and Reemployment Services (WPRS) and Reemployment Services and Eligibility Assessments Questioned Costs: $0 Status: Corrective action in progress Corrective Action: In response to the finding and recommendations, the Department has taken the following actions: • In December 2025, reviewed the design of the Unemployment Tax and Benefits (UTAB) calculation and risk profile score and performed testing on its accuracy. • In January 2026: o Implemented additional internal controls to ensure claimants are profiled and prioritized for reemployment services based on their risk of exhausting unemployment benefits, in accordance with federal requirements. o Provided additional guidance to staff to ensure quarterly Employment and Training Administration (ETA) reports are completed accurately and submitted timely in accordance with ETA procedures. o Implemented a process to improve oversight in the reporting procedures to include adequate review and approval before submission to the grantor, and the proper retention of filed reports. The Department continues work to fully staff the unit and is working with the federal grantor and state partners regarding training and guidance on new accounting and reporting system changes. The Department partially concurs with the recommendation to reconcile the UTAB and Reemployment Appointment Scheduler (RAS) interface. There is currently a process in place to notify the RAS team if a record fails at the time of data transmission between UTAB and RAS. The Department is working on prioritizing resources to review the processes to verify that the complete UTAB exit file was successfully received by RAS. This work is anticipated to be completed in June 2026. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-009 and 2023-010. Completion Date: Estimated June 2026 Agency Contact: Joshua Summers External Audit Manager (360) 529-6718 Joshua.Summers@esd.wa.gov

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Finding 1191852 (2025-011)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Questioned Costs Allowable Costs / Cost Principles

Finding Number: 2025-011 Finding: The Employment Security Department did not have adequate internal controls over the 2208A reporting requirements for the Unemployment Insurance program. Program: 17.225 – Unemployment Insurance Compliance Requirement: Reporting Questioned Costs: $0 Status: Correctiv...

Finding Number: 2025-011 Finding: The Employment Security Department did not have adequate internal controls over the 2208A reporting requirements for the Unemployment Insurance program. Program: 17.225 – Unemployment Insurance Compliance Requirement: Reporting Questioned Costs: $0 Status: Corrective action complete Corrective Action: The Department notified our federal grantor when we became aware of the issue and submitted corrected reports for the periods in question. To improve internal controls, the Department: • Updated internal processes for reviewing reports and retaining all supporting documentation. • Implemented a new process to run a cumulative report to provide additional backup and to detect variances throughout the fiscal year. Prior Findings: None Completion Date: December 2025 Agency Contact: Joshua Summers External Audit Manager (360) 529-6718 Joshua.Summers@esd.wa.gov

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Finding 1191849 (2025-009)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Reporting Internal Control / Segregation of Duties Subrecipient Monitoring

Finding Number: 2025-009 Finding: The Department of Social and Health Services did not have adequate internal controls over financial reporting for the Summer Electronic Benefits Transfer Program for Children. Program: 10.646 – Summer Electronic Benefits Transfer Program for Children Compliance Requ...

Finding Number: 2025-009 Finding: The Department of Social and Health Services did not have adequate internal controls over financial reporting for the Summer Electronic Benefits Transfer Program for Children. Program: 10.646 – Summer Electronic Benefits Transfer Program for Children Compliance Requirement: Reporting Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Department concurs with the finding. For the two reports that the auditors determined lacked secondary review and approval, the Department maintains that both instances were anomalies that occurred during a staffing transition within the Division of Finance and Financial Resources. The reports were complete, accurate, and submitted timely. To strengthen internal controls over financial reporting, the Department will: • Update federal reporting procedures to designate a backup reviewer and approver. • Communicate the expectations in the updated procedures and provide training to the designated backup reviewer and approver. Prior Findings: None Completion Date: Estimated April 2026 Agency Contact: Richard Meyer External Audit Compliance Manager Richard.Meyer@dshs.wa.gov

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Finding 1191848 (2025-008)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles School Nutrition Programs Questioned Costs

Finding Number: 2025-008 Finding: The Department of Social and Health Services did not have adequate internal controls to ensure payments were allowable and made only to eligible beneficiaries for the Summer Electronic Benefits Transfer Program for Children. Program: 10.646 – Summer Electronic Benef...

Finding Number: 2025-008 Finding: The Department of Social and Health Services did not have adequate internal controls to ensure payments were allowable and made only to eligible beneficiaries for the Summer Electronic Benefits Transfer Program for Children. Program: 10.646 – Summer Electronic Benefits Transfer Program for Children Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Eligibility Questioned Costs: $55,454 Status: Corrective action in progress Corrective Action: The Department concurs with the finding. The improper payments identified by the auditors resulted from the challenges of a new program in its first year of implementation. Errors occurred when users from the Department and the Office of Superintendent of Public Instruction migrated data onto new templates and inadvertently included ineligible students and inaccurate dates of birth. The Department agrees that thorough data validation prior to issuance of benefits would have better identified systemic issues related to age and enrollment. Upon discovery, the Department promptly removed ineligible issuances to limit the state’s liability. The Department does not process overpayments on spent benefits based on 7 CFR 292.27(c)(2): “To the maximum extent practicable, Summer EBT agencies should limit claims against households to situations where there is evidence that the household knowingly obtained benefits through fraudulent activities.” In addition, the approved state plan with the federal grantor included a provision that the Department will not process overpayments for improper benefits unless there is evidence of fraud. By April 2026, the Department’s Community Services Division (CSD) will: • Implement a review process to verify age of applicants and address questionable data before submission to the contractor. • Amend the contract with the contractor to include specific reporting requirements for duplicate issuances and identification of ineligible participants. By July 2026, the Department’s CSD will: • Implement a mandatory data reconciliation process in which the contractor must provide full participant datasets, including dates of birth and eligibility status, to the CSD for review and approval prior to benefit issuance. • Request the contractor to complete an enhancement to its eligibility determination system to automatically flag participants under age one or over age 22 for further review. • Request the Electronic Benefits Transfer vendor to create a standard monthly report to show expenditures and expired benefits by client. If the grantor contacts the Department regarding the questioned costs identified in this finding, the Department will consult with the grantor to determine whether repayment is required. Prior Findings: None Completion Date: Estimated July 2026 Agency Contact: Richard Meyer External Audit Compliance Manager Richard.Meyer@dshs.wa.gov

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Finding 1191845 (2025-007)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding Number: 2025-007 Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with requirements to ensure it communicated federal award identification elements to subrecipients of the Child and Adult Care Food Program. Program: 1...

Finding Number: 2025-007 Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with requirements to ensure it communicated federal award identification elements to subrecipients of the Child and Adult Care Food Program. Program: 10.558 – Child and Adult Care Food Program Compliance Requirement: Subrecipient Monitoring Questioned Costs: $0 Status: Corrective action complete Corrective Action: In response to the prior year’s finding, the Office had updated procedures for distributing federal award information and requirements to all subrecipients of the Child and Adult Care Food Program to ensure compliance with federal requirements. To further strengthen internal controls to address the exceptions identified during the audit, the Office has made additional procedural updates to address situations where new program operators and sponsors renew outside of the typical renewal cycle. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-004 and 2023-003. Completion Date: January 2026 Agency Contact: Chaundi Barbosa Director, CACFP (360) 725-0411 chaundi.barbosa@k12.wa.us

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Finding 1191809 (2025-002)

Material Weakness 2025

Government of Puerto Rico Department of Corrections and Rehabilitation

PR

Subrecipient Monitoring Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking

The DCR's management acknowledged the delay in preparing and retaining OP-15 documentation and stated that the Department's immediate priority was to ensure that employees received their authorized salary increases in a timely manner. To address this priority, management updated the internal payroll...

The DCR's management acknowledged the delay in preparing and retaining OP-15 documentation and stated that the Department's immediate priority was to ensure that employees received their authorized salary increases in a timely manner. To address this priority, management updated the internal payroll database by developing an electronic listing of affected employees and implementing approved salary changes directly within the system. Management indicated that this approach ensured that employees were compensated in accordance with approved salary adjustments, although the supporting documentation in personnel files lagged behind. Management further indicated that corrective efforts are currently underway to address a more recent, similar personnel action involving fewer than 50 employees and that, upon completion, the Department intends to proceed with preparing the OP-15 forms related to the broader population of over 4,000 employees. Management expects to complete the preparation and filing of the outstanding OP-15 documentation prior to the end of fiscal year 2026.

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Finding 1191808 (2025-003)

Material Weakness 2025

Capstone Community Action, Inc.

VT

Eligibility Questioned Costs Subrecipient Monitoring

Weatherization Assistance Program (ALN 81.042) Low-Income Home Energy Assistance (ALN 93.568) U.S. Department of Energy U.S. Department of Health and Human Services State of Vermont Agency of Human Services Finding 2025-003 Compliance Finding - Eligibility Views of Responsible Officials Management a...

Weatherization Assistance Program (ALN 81.042) Low-Income Home Energy Assistance (ALN 93.568) U.S. Department of Energy U.S. Department of Health and Human Services State of Vermont Agency of Human Services Finding 2025-003 Compliance Finding - Eligibility Views of Responsible Officials Management acknowledges the eligibility determination error involving a two-unit dwelling and agrees that eligibility verification procedures were not sufficiently applied in accordance with DOE requirements for multiunit properties. The Organization takes this finding seriously and is committed to strengthening controls to prevent recurrence. The Organization is actively working with the pass-through entity to resolve the questioned costs of $4,048.39 and will repay any disallowed costs as required. Corrective Action Plan 1. Multi-Unit Eligibility Control Protocol A new Multi-Unit Eligibility Determination Checklist has been implemented requiring: • Individual income verification for each unit • Calculation worksheet demonstrating compliance with: o 66% rule, OR o 50% rule (where applicable), OR o HUD categorical eligibility per WPN 22-5 • Written supervisory approval prior to job authorization No multi-unit property may proceed to audit or production until eligibility documentation is approved. 2. Pre-Service Supervisory Approval Requirement • All multi-unit eligibility determinations must be reviewed and signed by: o Will Eberle (Weatherization Director) • Documentation must be verified before work order issuance. This adds a preventive control prior to expenditure of funds. 3. Executive Oversight Review • Will Eberle (Weatherization Director) will receive a monthly eligibility compliance report. • Any exceptions will trigger immediate review. • Quarterly summary reporting will be presented to senior leadership. 4. Targeted Eligibility Training • Staff will complete focused training on: o DOE WAP multi-family eligibility requirements o Income documentation standards o HUD categorical eligibility • Training will be conducted within 45 days and annually thereafter. • Attendance logs and materials will be maintained by Scott Hall. 5. File Audit & Continuous Monitoring • Will Eberle (Weatherization Director) will conduct monthly random sampling of: o 100% of multi-unit approvals for the next 6 months o Minimum 20% thereafter • Findings will be documented and tracked. 6. Resolution of Questioned Costs • The Organization is in communication with the pass-through entity regarding the $4,048.39 in questioned costs. • Repayment will occur promptly if required. • A repayment tracking file will be maintained by finance and reviewed by Chris Locarno. Implementation Timeline Summary Action, Responsible Party, Completion Target: Multi-unit checklist implemented, Scott Hall, Completed Supervisory sign-off requirement, Scott Hall, Immediate Staff eligibility training, Scott Hall, Within 45 days Executive reporting framework, Chris Locarno Completed Monthly sampling audits, Will Eberle, Ongoig Resolution of questioned costs WX Finance / Chris Locarno, Within 90 days Statement of Commitment The Organization is committed to restoring and maintaining full compliance with all federal and state Weatherization program requirements. Leadership, including, but not limited to: Will Eberle (Weatherization Director), Scott Hall (Weatherization Associate Director), and Chris Locarno (Business Manager), has implemented structural safeguards, enhanced supervisory review, and reinforced a culture of compliance and accountability to ensure that these deficiencies do not recur. Management believes the corrective actions outlined above address both the immediate deficiencies and the underlying control weaknesses identified in the audit. Responsible Person: Will Eberle Date of Completion: April 1, 2026

View Audit 395614

Finding 1191799 (2025-002)

Material Weakness 2025

Capstone Community Action, Inc.

VT

Internal Control / Segregation of Duties Special Tests & Provisions Subrecipient Monitoring

Community Services Block Grant (ALN 93.569) U.S. Department of Health and Human Services State of Vermont Department for Children and Families Finding 2025-002 Compliance Finding - Special Tests and Provisions Corrective Action Plan Board Composition Matrix In response to the audit comment concernin...

Community Services Block Grant (ALN 93.569) U.S. Department of Health and Human Services State of Vermont Department for Children and Families Finding 2025-002 Compliance Finding - Special Tests and Provisions Corrective Action Plan Board Composition Matrix In response to the audit comment concerning the need for a Board Composition Matrix, we reviewed our current Board Roster. This review indicates our Roster meets the requirements listed (sector designation, term start and end dates, public official designation expiration, as applicable, and vacancy status). The board is sent an updated roster upon request. and it is updated each time a board member and/or seat is changed. The Board Development and Governance Committee reviews this most of the months that they meet, especially when discussing board recruitment, which is an ongoing agenda item while a seat is vacant. Current Procedure Currently, the Board Chair (Abby White) and Governance Committee Chair (Karen Lowry Reed) are both regularly consulted about board vacancies by the Executive Director (Alison Calderara), both to commit to outreach, and to review current candidates for the board. The Board Bylaws currently reference that the Board Development & Governance Committee is responsible for "[filling] any vacancies on the Board as soon as reasonably Possible." Additionally, all Board members sign an acknowledgement of the Bylaws annually, which reference the board composition. Recruitment is the responsibility of the Development and Governance Committee. Proposed Update of Procedure With the assistance of associated staff, the Development & Governance Committee will create a procedure to follow when vacancies arise, that covers unforeseen vacancies, as well as planned ones (such as when a board member's term limit is approaching). This will also include reference for different sectors, each of which have slightly different requirements for coming on the board. Capstone will complete this written procedure within 90 days. Current Status The Board seat that resulted in the organizational standard finding was filled November 2025. Three of the four required public sector seats are now filled. Responsible Person: Alison Calderara Date of Completion: June 28, 2026

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Finding 1191798 (2025-001)

Material Weakness 2025

Capstone Community Action, Inc.

VT

Internal Control / Segregation of Duties Special Tests & Provisions Subrecipient Monitoring

Weatherization Assistance Program (ALN 81.042) Low-Income Home Energy Assistance (ALN 93.568) U.S. Department of Energy U.S. Department of Health and Human Services State of Vermont Agency of Human Services Finding 2025-001 Compliance Finding - Special Tests and Provisions Material Weakness in Inter...

Weatherization Assistance Program (ALN 81.042) Low-Income Home Energy Assistance (ALN 93.568) U.S. Department of Energy U.S. Department of Health and Human Services State of Vermont Agency of Human Services Finding 2025-001 Compliance Finding - Special Tests and Provisions Material Weakness in Internal Control Over Compliance Views of Responsible Officials Management acknowledges the deficiency identified in the Quality Control Inspection (QCI) process. While questioned costs were not identified, we recognize that the breakdown in controls represents a material weakness requiring immediate and sustained corrective action. Since the Office of Economic Opportunity (OEO) monitoring review, the Organization has undergone structural and cultural changes within the Weatherization Department. Leadership has taken decisive steps to reinforce compliance expectations, supervisory accountability, and documentation integrity. Corrective Action Plan 1. Immediate Structural Oversight Enhancement • Will Eberle (Weatherization Director) is designated as the primary responsible official for QCI program compliance. • Scott Hall (Weatherization Associate Director and Quality Control Lead) is responsible for direct oversight of all QCI staff and inspection standards. • Chris Locarno (Business Manager) will provide executive-level oversight and ensure crossdepartmental accountability and reporting to senior leadership and the Board. Effective immediately: • No weatherization unit may be reported or invoiced until: o QCI documentation is fully complete, o All required test results (blower door, combustion safety, final inspection) are included, o Client signature is present, o Secondary supervisory review is completed. 2. Secondary File Review Control A new Two-Tier Review Process has been implemented: Tier 1 - QCI Review (Performed by Certified BPI QCI) • Full compliance with Vermont Weatherization Program Standards • Documentation of all required final tests • Verification that QCI was not performed by supervising crew members or project participant Tier 2 - Supervisory File Review • Conducted by Scott Hall • Random sampling at minimum 25% of completed units monthly • Monthly summary report submitted to Will Eberle • Quarterly compliance summary reviewed with Chris Locarno No unit will be considered production-complete until Tier 2 review confirms documentation sufficiency. 3. Mandatory QCI Refresher Training • All QC I-certified staff will complete refresher training on: o DOE and HHS requirements o Vermont Weatherization Program Standards o Documentation standards o Independence requirements • Training will occur semi-annually at minimum. • Scott Hall will document attendance and maintain training logs. • Chris Locarno will verify annual compliance training completion as part of management review. Additionally, peer case reviews will be incorporated quarterly to reinforce quality standards. 4. Cultural and Performance Accountability • QCI compliance metrics will be incorporated into staff performance evaluations. • Repeated documentation failures will result in retraining or removal of QCI approval authority. • Monthly compliance meetings led by Scott Hall will include trend review and corrective tracking. 5. Monitoring & Reporting Timeline Action Two-tier review implemented, Will Eberle, Completed Refresher training session, Scott Hall, Within 60 Days Executive compliance review structure , Chris Locarno, Completed Quarterly internal audit sampling, Scott Hall / Will Eberle, Ongoing Responsible Person: Scott Hall Date of Completion: April 1, 2026

View Audit 395614

Finding 1191785 (2025-001)

Material Weakness 2025

Elk City Independent School District No. 06

OK

Questioned Costs Subrecipient Monitoring Material Weakness

Elk City Public Schools will ensure that on all future construction contracts that deal with federal awards, requirements of the Davis-Bacon Act will be included. Prevailing wages will be inserted into the language of the contract and shall be signed by contractors and subcontractors. All contracts ...

Elk City Public Schools will ensure that on all future construction contracts that deal with federal awards, requirements of the Davis-Bacon Act will be included. Prevailing wages will be inserted into the language of the contract and shall be signed by contractors and subcontractors. All contracts will also spell out weekly reporting requirements of certified wages paid by contractors and subcontrators. In addition, ECPS will ensure that Davis-Bacon information is posted at all job sites. These policy changes will be implemented immediately and be in place as of October 9, 2025.

View Audit 395599

Finding 1191772 (2025-007)

Material Weakness 2025

Northeastern Illinois University

IL

Questioned Costs Subrecipient Monitoring Reporting

Condition: Northeastern Illinois University (University) did not report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) for the Higher Education Institutional Aid grants. Planned Corrective Action: The University wil...

Condition: Northeastern Illinois University (University) did not report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) for the Higher Education Institutional Aid grants. Planned Corrective Action: The University will review applicable guidelines and assign the responsibility to the appropriate office. Contact person responsible for corrective action: Jannica Henry, Controller’s Office Anticipated Completion Date: 6/30/2026

View Audit 395581

Finding 1191771 (2025-008)

Material Weakness 2025

Northeastern Illinois University

IL

Subrecipient Monitoring Cash Management Reporting § 200.305

Condition: Northeastern Illinois University (University) did not pay reimbursements within 30 days for certain subrecipients in the Research and Development Cluster. Planned Corrective Action: The University will explore procedures to address this issue. Contact person responsible for corrective act...

Condition: Northeastern Illinois University (University) did not pay reimbursements within 30 days for certain subrecipients in the Research and Development Cluster. Planned Corrective Action: The University will explore procedures to address this issue. Contact person responsible for corrective action: Jannica Henry, Controller’s Office Anticipated Completion Date: 6/30/2026

View Audit 395581

Finding 1191766 (2025-001)

Material Weakness 2025

Illinois Housing Development Authority

IL

Subrecipient Monitoring HUD Housing Programs § 200.303 § 200.332

The Authority agrees with the finding. The Authority will implement additional internal controls, including quality control of completed inspection, documentation, and inspection scheduling. Additionally, the Authority recognizes that the volume of required annual inspections has increased beyond ex...

The Authority agrees with the finding. The Authority will implement additional internal controls, including quality control of completed inspection, documentation, and inspection scheduling. Additionally, the Authority recognizes that the volume of required annual inspections has increased beyond existing Full Time Equivalent (FTE) capacity; therefore, an RFP for the third-party inspection vendor has been issued to supplement internal resources and support timely completion of inspections.

View Audit 395570

Finding 1191763 (2025-001)

Material Weakness 2025

Dawn Center for Independent Living

NJ

Internal Control / Segregation of Duties Questioned Costs Subrecipient Monitoring

Responsible Executive: CEO – Carmela Slivinski Implementation Status: Effective Immediately Full Implementation Date: No later than June 30, 2026 Finding — Compliance (Period of Performance) Significant Deficiency Condition: Auditor noted while testing period of performance, 1 of the 10 expenses rec...

Responsible Executive: CEO – Carmela Slivinski Implementation Status: Effective Immediately Full Implementation Date: No later than June 30, 2026 Finding — Compliance (Period of Performance) Significant Deficiency Condition: Auditor noted while testing period of performance, 1 of the 10 expenses recorded in June 2025 pertained to subsequent months outside of the contract period. Effect: One expense was included in the expenditure report under the incorrect grant period ending June 30, 2025. Cause: The Organization noted that this finding came about due to a clerical error. The bookkeeper inadvertently recorded a July invoice on June 30th and this led to an incorrect charge to the grant period ending June 30th. Recommendation: Auditor recommends management continue to perform a second review on the grant submission especially towards the end of the grant period. Management’s Response: Management concurs with the finding regarding deficiencies in grant period-of-performance compliance. Corrective Action Plan - Review existing Accounts Payable and Accounting Controls processes and revise as needed to ensure expenses are recorded as required. - Staff Training and Competency Development conducted annually to review accounting controls and ensure accounting personnel understand period of performance grant compliance requirements. - Ongoing Monitoring and Internal Compliance Review conducted periodically to ensure oversight of financial controls and grant compliance.

View Audit 395564

Finding 1191761 (2025-003)

Material Weakness 2025

County of Los Angeles

CA

Subrecipient Monitoring Internal Control / Segregation of Duties Questioned Costs

Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Deputy Director, Department of Public Health 2. Corrective action plan: DPH agrees with the finding and recommendation. VPDCP will develop and implement written procedures for the centralized and secure storage of do...

Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Deputy Director, Department of Public Health 2. Corrective action plan: DPH agrees with the finding and recommendation. VPDCP will develop and implement written procedures for the centralized and secure storage of documentation supporting grant deliverables and required progress reports. The procedures will include, at a minimum, the following: • Define required documentation, storage location, staff responsibilities, and retention requirements. • Require all supporting documentation to be maintained in a designated centralized repository and ensure documentation is complete, organized, and readily accessible for review. • Detail the steps during staff transitions that new staff must follow to access, maintain, and update grant-related documentation, ensuring consistency and completeness of records. VPDCP will perform periodic reviews of the centralized repository and formally document and sign-off on the reviews to verify that required documentation is maintained. 3. Anticipated implementation date: June 19, 2026

View Audit 395559

Finding 1191760 (2025-002)

Material Weakness 2025

County of Los Angeles

CA

Subrecipient Monitoring § 200.332 § 200.425 § 200.513 § 200.521

Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Administrative Deputy, DCBA 2. Corrective action plan: DCBA concurs with the findings and the recommendation, however, the total expenditure amount of $5,917,341 is inclusive of expenditures from a different contract...

Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Administrative Deputy, DCBA 2. Corrective action plan: DCBA concurs with the findings and the recommendation, however, the total expenditure amount of $5,917,341 is inclusive of expenditures from a different contract held by the same agency who was identified as a contractor and not a sub-recipient. As such, expenditures under that contract would not be subject to monitoring as set forth in 2 CFR § 200.332. Therefore, the total expenditures for the four (4) subrecipient agreements that are missing monitoring reports are $585,756. To address the finding, DCBA will establish a formal monitoring plan that will include a monitoring checklist, monitoring schedule, and a detailed tracking log to ensure timely monitoring of its subrecipients. DCBA will work with CEO and/or the Auditor-Controller to identify resources to implement ongoing monitoring of subrecipients, with clear documentation and reporting. Additionally, DCBA already implemented a risk assessment process to ensure an assessment of all subrecipients is completed at least once a year. This process will be formalized in writing. The process involves identifying risk areas, including reviewing financial stability, legal risks, capacity, and performance history. The assessment process uses a risk scoring model that rates organizations using a risk level scale between 1-5 that takes into consideration operating reserves, program and fundraising efficiency, and their ability to meet financial obligations. 3. Anticipated implementation date: September 30, 2026.

View Audit 395559

Corrective Action Plans

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