Corrective Action Plans

Finding 2023-001 Federal Agency Name: US Department of Health & Human Services, California Department of Social Services Program Name: Child Care and Development Fund Cluster CFDA #93.575 Finding Summary: The Commission has not established written procedures for determining allowability of costs in accordance with Subpart E- Cost principles or the conditions of the Federal award. Responsible Individuals: Debora Dickerson-Sims, Chief Financial Officer Corrective Action Plan: Review current policies and procedures to revise or develop new procedures for determining allowability of costs in accordance with Subpart E – Cost principles or the conditions of the Federal award. Anticipated Completion Date: June 30, 2024

The Hannibal School District received millions of one-time federal grant monies to assist with expenditures incurred as a result of the effects of the coronavirus pandemic. Although these funds were hugely helpful, minimal guidance was available. This is not a finding that has been presented to us in the past. The school district has received federal and state grants annually that are reconciled to the appropriate project codes and this process will be diligently followed as in prior years. For example, the district was awarded the Immediate Responses Services grant in Fall 2023. The expenditure project codes for this grant have been provided by grant guidance and any and all expenditures will be coded using these expenditures codes. This should prevent any need for future journal entries moving forward. This process is an example of the systematic process that will be followed for all grants.

This following is submitted as our management response to the audit finding regarding Allowable Costs Reporting in the District’s FY23 Audit. At the close of Fiscal Year 2023, the District submitted a payment request for federal ESSER reimbursement, encompassing eligible employee expenses spanning multiple years in accordance with ESSER guidelines. However, an administrative oversight became apparent, as the expense codes and ASBRs for the relevant years had not been amended to align with the represented expenditures. To address this, the District is undertaking a meticulous correction process through adjusting journal entries. This corrective action will ensure that the expense codes accurately reflect the corresponding project codes and Fiscal Year expenditures. Simultaneously, the ASBRs for the affected years will be resubmitted, aligning with the requisite financial standards. Looking ahead, the District is instituting a proactive measure to prevent recurrence. The superintendent, or a designated district representative, will verify that the District's accounting software records, as compiled by the District Bookkeeper, impeccably mirror the accurate totals for expense codes, incorporating the requisite accounting codes, including project codes. This validation will be a prerequisite before any future reimbursement request for federal funds is submitted, ensuring a heightened level of precision and compliance in financial reporting. These measures underscore the District's commitment to fiscal accountability, rectifying oversights, and fortifying internal controls to uphold the integrity of financial processes. The district will begin immediately implementing the revised proactive measures and is in the process of rectifying the noted issues with corrective journal entries. This process will be updated prior to January 15, 2024. Should you need anything further from the district, please do not hesitate to contact me.

Background: One repeat finding from the 2022 fiscal year audit was identified on the Schedule of Expenditures and Federal Awards during 2023 fiscal year end audit conducted by Aldrich CPAs + Advisors LLP (Aldrich). For fiscal year 2022, Aldrich performed an audit on the major program Disaster Grants – Public Assistance (Presidentially Declared Disasters) for the monies received from the Department of Homeland Security passed through the Oregon Office of Emergency Management awarded to the City for the February 2021 Ice Storm. Management recognizes the importance of adequate procedures and internal control oversight and has rectified this finding. Management’s response and corrective plan of action for the finding follows. Finding 2023-001: 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: 2 CFR Part 200.302(b)(7) requires the financial management system to include written procedures for determining the allowability of costs. Condition: City of Oregon City has not developed written procedures for determining the allowability of costs. Cause: Administration did not have written procedures for determining the allowability of costs. Effect: Unallowable costs could be charged to the program. Questioned Costs: None   Perspective: Written procedures for determining the allowability of costs is integral to the proper design of internal controls. However, the results of audit procedures did not detect any costs which are not allowable charged to the program. Recommendations: Management should develop written procedures as required by 2 CFR Part 200.302(b)(7). Responsible Official: Matt Zook, Finance Director Views of Responsible Officials: Management understands the requirement for written procedures for determining the allowability of costs. A formal policy and procedure was approved and adopted August 22, 2023. The opportunity to identify this finding arose due to new management staff and a new audit firm engage with the June 30, 2022 audit, and we appreciate the opportunity to improve compliance.

Corrective Action Plan: AlaHA will accomplish the following: 1) Send guidance to hospital systems with multiple facilities reported on their 941s that they should retain general ledger detail reconciliations to support the funds received. 2) Request the hospital involved in the exception cited for not having submitted general ledger evidence submit additional support for the reconciliation they submitted. 3) Should a similar tranche of funds become available in the future, AlaHA will ensure disbursements are not made before receipt of general ledger evidence to support the amount reported by the hospital. Target Date: For items 1 & 2 in the corrective action plan, November 6, 2023.

Albuquerque Health Care for the Homeless, Inc.’s Finance Team will work to ensure that Policy and Procedure 4011 regarding the use of corporate credit cards is followed. All management staff that have organizational corporate cards will be retrained by the Accounting Manager on the importance of obtaining itemized receipts. In the event a receipt is lost, regardless of verifying the legitimacy of the purchase with the direct supervisor, the finance team will ensure that the expense is not charged to any federal funding. Persons Responsible: Leon Paboucek, Accounting Manager Estimated Completion Date: October 25, 2023

I am acknowledging the finding of the Federal Audit team in which an error in my spreadsheet was documented resulting in requesting a recurring expenditure on two different pay requests. The correction was made the day of the audit through coding other expenditures matching the qualifying expenditures. In the future, the district spreadsheets will include review by the bookkeeper and superintendent to ensure the fund pay requests are correct and not repeated. By multiple review and the addition of PO number and date of pay request this will easily define a possible "doubling up" of items for a pay request. This was one finding and all other accounts reviewed were correct and accurate. Additional expenditures were corrected and easily matched the grant funds obtained through reimbursement. The new procedure will begin immediately. Tara Lewis Superintendent

Management is currently confident with the abilities of the accounting staff to prepare interim financial statements. The District has also accepted the additional risk associated with the auditor drafting year-end financial statements including the notes to the financial statements. Management will review, approve, and take responsibility for the financial statements.

Findings: Major Federal Program Audit Significant Deficiency Written Uniform Guidelines Policies and Procedures Recommendation: We recommend Crowhaven Apartments, Inc. draft and adopt written procedures in accordance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and are in process of developing and implementing the appropriate policies and procedures.

FINDINGS- MAJOR FEDERAL AWARD PROGRAMS AUDIT Material Weakness U.S. Department of Education- Education Stabilization Fund Under the Coronavirus Aid, Relief and Economic Security Act- AL 84.425 Finding No.: 2023-007 Condition: The District did not maintain adequate financial reocrds in accordance with 2 CFR 200.302(b)(3). Recommendation: The District should maintain adequate financial reocrds capable of adequately identifying the source and application of grant funds in accordance with 2 CFR 200.302(b)(3). Action Taken: The District concurs with the recommendation. The District will work to maintain records capable of adequately identifying the source and application of grant funds.

Management acknowledges this finding and agrees that during the period under audit-while the organization was experiencing rapid growth and increased program activity-our documentation and approval processes did not consistently keep pace with operational demands. Since that time, we have taken significant steps to strengthen accounting procedures and internal controls, reinforce our invoice approval policies, and ensure all expenditures charged to Federal awards are properly reviewed and authorized prior to processing. We have enhanced our Accounts Payable workflow by implementing standardized process approval requirements, added additional leadership staffing and oversight within the Finance and Accounting team and provided targeted training to all personnel involved in invoice processing to ensure understanding of Federal cost principles and documentation standards. These corrective actions have improved our control environment since the audit period, and management is committed to continuing to develop and maintain strong financial controls and to prevent recurrence of this issue.

Condition: The District has not adopted written policies or procedures regarding procurements or the determination of allowable costs in accordance with the Uniform Guidance. Criteria: 2 CFR 200.302(b)(7), 2 CFR 200.318(a), and 2 CFR 200.319(d). Cause of Condition: Unfamiliarity with requirements stated in 2 CFR 200 of the Uniform Guidance.Effect of Condition: Effect is a state of noncompliance which may impact future grant awards or failure to identify and reject un-allowed costs charged to grant programs. Questioned Costs: none. Recommendation: Draft and adopt policies and procedures to become compliant with Uniform Guidance. Corrective Action Plan: Agency policies and procedures, including a guidance template will be clearly defined to ensure compliance with Uniform Guidance. All department managers and administrative staff will attend training and routine follow-up training on purchasing policies and procedures. A sign in sheet will be required for those attending. Contact Person: Grant Accounting Specialist Anticipated Completion Date: 01/31/2026

Condition: 1- Gross payroll calculations could not be supported for several employees tested due to missing pay rate support. 2- Gross payroll calculations could not be supported for several employees tested due to missing timesheets. 3- Classification errors were noted in 2 of 11 periods tested (34 of 86 individuals tested). Criteria: Generally accepted control procedure and 2 CFR 200.302 Cause of Condition: Missing documentation resulted in conditions 1 and 2. The cause of the classification differences between the accounting department’s payroll worksheet and the general ledger postings are unknown. Due to staff turnover, the cause could not be determined. Effect of Condition: Employees may be paid at unapproved rates or for unworked time. Classification errors may result in over/under charging grant programs.Questioned Costs: Condition 1: Known: $ 412.54 Questioned: $ 5,580.24 Condition 2: Known: $ 20,357.31 Questioned: n/a Condition 3: Known: $ 91,593.05 Questioned: n/a Recommendation: We recommend: - Records be retained to support all transactions recorded to the general ledger. - Department managers review and approve all payroll-related source documents (personnel action forms, timesheets, etc.) prior to finalizing the payroll run. - Administrative manager review and approve payroll worksheet prior to finalizing the payroll run and posting to the general ledger. Corrective Action Plan: Beginning January 2025, the District strengthened payroll documentation and review procedures to ensure compliance with 2 CFR 200.302. Personnel Action Forms and timesheets will be required, approved by department managers, and retained electronically for all employees. The Administrative staff reviews and approves payroll worksheets prior to posting to the general ledger. All department managers and administrative staff will attend training and routine follow-up training on purchasing policies and procedures. A sign in sheet will be required for those attending. Contact Person: Grant Accounting Specialist Anticipated Completion Date: 01/31/2026

Condition: Support for expenditure transactions does not indicate approval from an appropriate manager with authority over the department/program. Auditor tested 57 transactions of which 17 did not include evidence of approval (excluding routine expenditures such as utility bills). Criteria: Generally accepted control procedures and 2 CFR 200.302. Cause of Condition: Initiating procurement transactions without proper approval or failing to document that approval was obtained prior to initiating the transaction. Effect of Condition: Unapproved charges, including potential unallowable costs, may be incurred and charged to the District, including federal or state programs. Additionally, the potential exists for fraud or errors to go undiscovered and uncorrected in a timely manner. Questioned Costs: none.Recommendation: We recommend that a purchase order or purchase requisition system be devised to ensure all expenditures, including those paid for by credit cards, are approved by an appropriate manager prior to making the purchase. Corrective Action Plan: Beginning January 2026, all purchases, including credit card transactions, will require Purchase approval by the Program Manager and administration prior to purchase. A Purchase Order tracking process will be implemented in Blackbaud Financial Edge NXT by April 2026 to ensure all expenditures are properly documented. All department managers and administrative staff will attend training and routine follow-up training on purchasing policies and procedures. A sign in sheet will be required for those attending. The Financial Procedures Manual will be created and updated by June 2026 to include revised procurement approval requirements. Contact Person: Grant Accounting Specialist Anticipated Completion Date: 06/01/2026

Condition: The District’s accounts payable process does not have a procedure that clearly documents when and by whom the expenditure was authorized nor does the process include cut-off procedures to apply the expenditure to the proper period. Criteria: Controls should be in place to ensure that expenses are recorded in the period in which the expenses are incurred and to ensure that staff with the appropriate level of authority approves the transaction. 2 CFR 200.302. Cause of Condition: Procurement transactions are initiated by several individuals within the District at times without review and approval by a District or program supervisor. Procurement transactions are not entered into the account system with the date the liability was incurred. Effect of Condition: Expenditures could be processed and paid without proper authorization and posted to an improper period. Questioned Costs: none. Recommendation: Develop procedures to ensure purchases are authorized prior to recording and paying the invoice. The procedures may include development of lines of authority whereby an individual is approved to authorize purchases up to a particular dollar threshold and require that all invoices/documentation be signed/initialed by authorized approver. Accounts payable process should include cutoff procedures to ensure expenditure is recorded in period that liability is incurred. Corrective Action Plan: Policies and procedures will be clearly defined both administratively and within each department to ensure purchases are authorized prior to recording and paying the invoice. The procedures will include development of lines of authority for approval and to authorize purchases, including up to a particular dollar threshold where applicable. The procedures will also require that all invoices/documentation, purchase order forms and packing slips be signed/initialed by authorized approver. Accounts payable process will include cutoff procedures to ensure expenditure is recorded in period that liability is incurred. All department managers and administrative staff will attend training and routine follow-up training on purchasing policies and procedures. A sign in sheet will be required for those attending. Contact Person: Grant Accounting Specialist Anticipated Completion Date: 01/31/2026

Management will enforce existing internal control procedures and train staff to maintain appropriate documentation.

Will have a policy for FEMA allowable expenditures in the future

Planned Corrective Action: The Organization will implement and reinforce a comprehensive system for retaining all invoices, payment records, and supporting documentation associated with federal awards. Additionally, the Organization will create and maintain a clear record retention policy. Invoice and Payment Documentation: • All invoices related to the federal program will be promptly reviewed and approved by the appropriate personnel to ensure they reflect allowable costs under the specific terms and conditions of the award. • Management will establish clear procedures for the proper recording and classification of payments, ensuring that they are linked directly to the corresponding federal program expenses. • All supporting documentation (e.g., purchase orders, contracts, receipts) will be retained in electronic formats within the accounting system, in accordance with the Organization’s record retention policy, ensuring availability for future audits or reviews. Retention and Accessibility: • The Organization will maintain a secure, organized filing system for all invoices and payments, ensuring that each record is easily accessible for audit purposes. This system will include electronic records that are stored in a centralized database, with restricted access to authorized personnel. • Retained invoices and payment documentation will be kept for the full duration required by federal regulations, typically for a period of at least seven years after the final expenditure report for the federal award has been submitted, or as otherwise required by the specific federal agency. Periodic Reviews and Monitoring: • To ensure ongoing compliance, Management will perform periodic reviews of federal program expenditures and documentation. This will include random sampling of invoices and payment records to confirm that they are complete, accurate, and in compliance with federal regulations. • In the event of any discrepancies or issues identified during these reviews, Management will take immediate corrective action to address the issue and prevent recurrence. By maintaining thorough records of all invoices and payments, the Organization aims to not only comply with federal audit requirements but also to ensure transparency, accountability, and sound financial management of federal funds.

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

2022‐009 Cash Disbursements (Material Weakness) Recommendation: We recommend policies and procedures over the segregation of duties between the accounting and banking functions be strengthened. In addition, policies and procedures should be implemented to ensure support for expenditures is retained and includes evidence of approval. Additional oversight should be provided by those charged with governance. Action Taken (Unaudited): Management has updated its control procedures to include proper written policies for the internal control over financial reporting to ensure conformity with U.S. GAAP. Dan Watkins is responsible for this corrective action. Implementation of updated policies was completed November 2024. Accounting and banking functions are segregated.

2022‐008 Grant Expenditures (Material Weakness) Recommendation: The Organization’s accounting system should be modified to accommodate expense tracking by individual grant and policies and procedures should be implemented to require direct expenses be assigned to specific grants. A method should be established to allocate indirect costs in accordance with federal regulations. Policies and procedures are also needed to provide appropriate oversight of all grant accounting including reporting. Action Taken (Unaudited): Management has updated its control procedures to include proper written policies for the internal control over financial reporting to ensure conformity with U.S. GAAP. Dan Watkins is responsible for this corrective action. A review process and coding within the accounting system was completed in January 2025. All invoices and staff time are evaluated for the level of effort towards each grant.

2022 – 005: Reporting (Compliance; Internal Controls Over Compliance) Material Weakness – 93.U01 Title V Condition: The Organization was unable to provide any of the required reports for the Title V program, including the financial report, activity narrative, third-party income report, GPRA/GPRAMA, urban data standards, and property inventory. Without these reports, we were unable to perform the necessary audit procedures to assess compliance with federal requirements. Corrective Action Plan: As of October 1, 2024, the start of FY25 QuickBooks has been the only software used and Revenue and Disbursements are being classed by Fund. General ledgers are reconciled monthly so this should take care of this issue. Management has worked on procedures and training to assure financial report, activity narrative, third-party income report, GPRA/GPRAMA, urban data standards, and property inventory are completed.

2022 – 004: Procurement and Suspension and Debarment (Compliance; Internal Controls Over Compliance) Material Weakness – 93.U01 Title V Condition: The Organization was unable to provide sufficient documentation to support compliance with federal procurement and suspension and debarment requirements for purchases made under the Title V program. The general ledger did not allow for sufficient identification of transactions related to the Title V program as all expenditures were recorded through journal entries without supporting transaction-level detail. Due to this limitation, we were unable to select procurement transactions for testing or verify whether vendors had been screened for suspension and debarment before contracts were awarded. Corrective Action Plan: As of October 1, 2024, the start of FY25 QuickBooks has been the only software uused,and Revenue and Disbursements are being classed by Fund. General ledgers are reconciled monthly. The following are updated procedures that are now in place. All purchases must come with a purchase order request and be signed by the supervisor prior to purchase. All purchases over $1000 must be CEO approved too. All purchases over $5000 must have 3 bids and be Board approved. All purchase orders must be completed completely in all fields to know what grant/funding source is covering the cost for draw downs. Anyone who uses the SDUIH credit cards must sign a credit card statement

2022 – 003: Activities Allowed and Unallowed, Allowable Costs, Period of Performance (Compliance; Internal Controls Over Compliance Material Weakness – 93.U01 Title V Condition: The Organization’s general ledger did not allow for sufficient identification of transactions related to the major program, Title V. Title V expenditures were recorded through journal entries without supporting transaction-level detail. Because of this, the population of expenditures could not be tied to individual transactions, and pulling samples from this population would not provide a reasonable basis for drawing conclusions about the population tested. As a result, we were unable to select transactions for testing or perform the necessary audit procedures to assess compliance with federal requirements. Corrective Action Plan: As of October 1, 2024, the start of FY25 QuickBooks has been the only software used, and Revenue and Disbursements are being classed by Fund. General ledgers are reconciled monthly.

The funds from the project came from several different grant sources. Bills were due and our consultant DLZ advised us on how to pay these bills even if they were paid from grants other than from the correct grant sources.