Corrective Action Plans

Identifying Number: 2023-002 Finding: Participant Eligibility Corrective Action Taken or Planned: Procedures have been updated to include procedures and internal controls to maintain supporting documentation and ensure the existence and completeness of the participant population. Anticipated Implementation and Responsible Official: April 30, 2024, Suresh Sharma, Chief Financial Officer

2023‐005 – Year Ended June 30, 2023 Department of Health and Human Services Federal Assistance Listing/# 93.498 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Significant Deficiency in Internal Control over Compliance Finding Summary: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Facilities claimed equipment costs under the Provider Relief Fund program for a project that was not complete at the end of the period of availability, or December 31, 2022. Costs were improperly included within the Period 4 report and caused the reporting submitted to the Department of Health and Human Services to be inaccurate. Responsible Individual: Perry Howell, CFO Corrective Action Plan: The Facilities will enhance internal control policies to ensure all amounts are adequately documented and properly recorded in the reports required to be submitted to the federal agency. The Facilities will enhance internal control policies to ensure that the required reports are properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency. Anticipated Completion Date: June 2024

2023‐004 – Year Ended June 30, 2023 Department of Health and Human Services Federal Assistance Listing/# 93.498 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Finding Summary: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Facilities did not consider the impact of the year-end audit adjustments on the quarters applicable to Period 4 when reporting lost revenue. Key line items for reporting related to lost revenue were materially misstated. No lost revenue was claimed during the current period. Responsible Individual: Perry Howell, CFO Corrective Action Plan: The Facilities will enhance internal control policies to ensure all amounts are adequately documented and properly recorded in the reports required to be submitted to the federal agency. The Hospital will enhance internal control policies to ensure that the required reports are properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency. Anticipated Completion Date: June 2024

Finding 2023-002 Condition/Context The Corporation used the Lost Revenues Reporting Method: Alternative Reasonable Methodology (Option 3) for measuring lost revenues. In the Corporation's Period 4 submission for Robert Packer Hospital, TIN 24-0795463, total lost revenues were incorrectly reported as $13,011,879, rather than $12,930,176. Total lost revenues available to be used in this reporting period based on the adjusted amount was $7,142,168 on payments in the period of $7,142,168. This is not a statistically valid sample. Corrective Action Plan Corrective Action Planned: The Corporation agrees with the finding. Management increased the level of review over the lost revenue calculations for future reporting periods. Management did not believe that further corrections to the Period 4 report were necessary as the remaining available lost revenues after adjusting for the error were equal to the payments received in the period and there was no further submissions necessary for Robert Parker Hospital. Name(s) of Contact Person(s) Responsible for Corrective Action: Sean Monahan, Corporate Financial Controller and Fran Macafee, VP, CFO – Guthrie Lourdes Hospital. Anticipated Completion Date: September 30, 2023

Finding 2023-001 Condition/Context The Corporation’s review process failed to detect errors in the calculation of amounts related to the pay for event program that were applied to the Federal award. Errors were discovered in 8 of the 44 items tested for the pay for event program which would have increased the allowable costs eligible for reimbursement under the Federal award by $671. This is not a statistically valid sample. Corrective Action Plan Corrective Action Planned: The Corporation agrees with the finding. Management implemented an enhanced review process to validate all amounts reported on the PRF Reporting Portal Submission, and to ensure compliance with existing policies and terms and conditions of the Provider Relief Funds. Further action was not considered necessary as the errors would result in increased costs eligible for reimbursement under the Federal award and no further funding is available. Name(s) of Contact Person(s) Responsible for Corrective Action: Kristen Maffei, Manager – Nursing Administration, Sean Monahan, Corporate Financial Controller and Fran Macafee, VP, CFO – Guthrie Lourdes Hospital. Kristen Maffei, Manager – Nursing Administration, Sean Monahan, Corporate Financial Controller and Fran Macafee, VP, CFO – Guthrie Lourdes Hospital. Anticipated Completion Date: This was corrected as of June 30, 2023, and the pay for event program was phased-out after the final Provider Relief Funds were released.

2023-033 Oregon Department of Emergency Management Implement controls over FFATA reporting MANAGEMENT RESPONSE: We agree with this recommendation. ODEM has undertaken the following corrective actions to address the recommendations made by the Secretary of State’s Audits Division: a. ODEM has developed procedures for capturing necessary information and ensuring FFATA reports are filed in compliance with federal criteria. b. ODEM has identified all awards since July 1st 2023 and is working to ensure 100% compliance from that date forward. c. ODEM will continue to review older awards to determine what actions should be taken. Anticipated Completion Date: December 30, 2024. Contact person: Jeff Flowers, Chief Financial Officer

2023-038 Department of Early Learning and Care Retain support and improve controls over reporting MANAGEMENT RESPONSE: We agree with this recommendation. DELC will work with the Department of Revenue to substantiate the amount of tax credits used in prior years to meet federal matching and maintenance of effort requirements for FY 20 to FY 22 and ensure this information is retained appropriately outside beyond just email records. In addition, DELC will update processes and procedures to ensure that tax credit amounts used in future reports are properly documented and substantiated by the Department of Revenue. Anticipated Completion Date: October 31, 2024 Contact person: Ali Webb, Operations and Policy Analyst; Connie Range, Fiscal Analyst

2023-021 Oregon Health Authority Implement controls to ensure earmarked expenditures are tracked and compliance achieved MANAGEMENT RESPONSE: We agree with this recommendation. As noted in the audit report, OHA has already taken corrective actions to ensure controls are in place for tracking applicable expenditures in SFMA to ensure compliance with federal Earmarking requirements. The Office of Financial Services, OHA Budget Unit, and block grant planners meet at least once a month to review budgeted earmarked requirements and expenditures to ensure compliance. Block grant planners meet at least once a month with the crisis team and children and family team to review required earmark budgets and expenditures. Anticipated Completion Date: June 30, 2023 Contact person: Annabelle Atalig, Budget and Fiscal Manager; Travis Labrum, Grant Accounting Manager

2023-019 Oregon Housing and Community Services Ensure documentation is retained to support amounts reported MANAGEMENT RESPONSE: We agree with this recommendation. Staff have received training and documentation is now retained consistently to support reported figures. Anticipated Completion Date: June 30, 2024 Contact person: Dean Criscola, Controller

2023-018 Oregon Housing and Community Services Ensure grant management report control is performed and documented MANAGEMENT RESPONSE: We agree with this recommendation. A dedicated staff resource has been trained and has brought grant reconciliations and reporting current. Additional training has been provided for awareness of the earmarking and obligation requirements as well. Anticipated Completion Date: June 30, 2024 Contact person: Dean Criscola, Controller

2023-017 Oregon Housing and Community Services Ensure review of federal cash draws are adequately documented to support the draws are for the immediate cash needs of the program MANAGEMENT RESPONSE: We agree with this recommendation. Additional training has been provided to new team members, to ensure adequate documentation exists to support immediate cash needs. Two-step verification of all draws is also required. Refresher training has been provided to staff to ensure oversight is in place at all times. The funds inadvertently drawn were corrected the first week of March 2024. Anticipated Completion Date: June 20, 2024 Contact person: Dean Criscola, Controller

2023-040 Oregon Department of Education State did not meet maintenance of effort requirement MANAGEMENT RESPONSE: We agree with this recommendation. The Department of Education agrees with this finding; however, context is critical to understand this requirement. The Maintenance of Effort (MOE) requirements in The ARP ESSER III legislation are unique. The purpose of the requirement is to ensure that states are not using the federal pandemic funds to replace state funding and then leaving districts with a more substantial “fiscal cliff” when the pandemic funds recede. ODE administers state funding to Oregon districts, but the levels and formulas governing the distribution of the total state funds are determined by the Oregon Legislature and not ODE. While the non-compliance finding implies that Oregon reduced education funding, that is not true. Education funding in Oregon did increase annually, yet not as much as other non-education funding priorities. The United States Department of Education (USDE) formula required to evaluate MOE does not adequately reflect the investment in public education in Oregon, nor does it acknowledge the complexities of Oregon’s state budget or school funding formulas. ODE worked closely with USDE staff monitoring MOE compliance and submitted a request to USED for an MOE waiver on March 14, 2024. We are awaiting a decision from USDE. A response is anticipated by June 2024. Anticipated Completion Date: June 30, 2024 Contact person: Cynthia Stinson, Senior Manager of Federal Investments and Pandemic Renewal Effort

2023-042 Oregon Department of Education Retain support for pre-approval of equipment purchases MANAGEMENT RESPONSE: We agree with this recommendation. ODE has already developed and implemented updates to the capital expenditure request review and approval process to ensure equipment approvals are retained. Early ESSER capital project tag requests were split between a committee for large projects and the individual grant finance manager. Approvals were primarily sent via email from the grant finance manager. Some of those messages are archived in the ESSER.ODE inbox, however some went out directly from staff email. Records are available for the committee decisions. When the smaller approvals moved from the finance manager to an ESSER team, many of those decisions were made in conjunction with other meetings. Some records are available; however, the Capital Expenditure Tracker was the primary location of decisions. In October 2022, staffing changes allowed the committee and team structure to become more formalized. Committee meeting decisions shifted from a “minute”- style agenda to being more systematized in an online log. Team meeting decisions followed a similar process update in April 2023. The online agenda/log allows for consistent tracking of projects that are up for discussion and which approval are put on hold for elevation approval, correction, or clarification from the district. Committee and team meetings have been established weekly. When all information is received from a district, the project is placed on the appropriate agenda for that week. Approvals are sent out within 2 business days. A column was added to the Capital Expenditure Tracker, which remains the primary location of records, to track when the approval emails were sent. Corrections have already been developed and implemented as of April 2024. Anticipated Completion Date: April 30, 2024 Contact person: Cynthia Stinson, Senior Manager of Federal Investments and Pandemic Renewal Effort

2023-041 Oregon Department of Education Improve FFATA reporting controls MANAGEMENT RESPONSE: We agree with this recommendation. ODE will implement the following corrective action to ensure monthly FFATA reports are independently reviewed to ensure accurate and complete reporting. 1. Review and update list of all FFATA eligible federal awards monthly. 2. Implement a new query tool that will reduce manual processes. 3. Collaborate with ODE partners to access agency-collected unique entity identifier (UEI) information for sub awardees. 4. Monthly review of FFATA reporting by a second accountant. Anticipated Completion Date: June 30, 2024 Contact person: Kristie Miller, Accounting Director

2023-028 Department of Human Services Strengthen controls to ensure adequate supporting documentation and accuracy over reporting MANAGEMENT RESPONSE: We agree with the first recommendation. We disagree with the second recommendation. We agree with the first recommendation and will ensure adequate supporting documentation is maintained and readily available to support information reported in the RSA-911. We disagree with the second recommendation. The RSA-17 is currently reviewed by both Program Leadership as well as the ODHS Grant Accounting Manager. Certification is evidenced by the signed RSA-17. This level of review meets federal requirements. Additional review and discussion may be had as a form of best practice but should not be considered a control mechanism. The Grant Accounting Unit will highlight the certification process in the RSA-17 desk manual to delineate between control functions and best practices. Anticipated Completion Date: June 30, 2024 Contact person: Keith Ozols, Vocational Rehabilitation Services Director; Travis Labrum, Grant Accounting Manager

2023-043 Oregon Business Development Department Management should implement accounting review of quarterly reports before submitting to DAS MANAGEMENT RESPONSE: We agree with this recommendation. We agree with this finding. Business Oregon has gone through significant personnel change during the period of American Rescue Plan Act (ARPA) grant disbursements, from January 2022 to June 2023. The Chief Financial Officer, Accounting Manager, and Accountants had moved on to other state agencies. The accounting positions were left vacant for months due to challenges in timely filling these positions with the right skill sets. Although there were only a few accounting staff left when majority of the grant disbursements were made, the remaining accounting processed the disbursements with very tight deadlines. The accounting staff processed grant disbursements through appropriate internal control procedures, reviewed supporting documents for appropriate signature approval on the requests, and made accounting entries for these grant activity transactions. Below is a list of staff hire dates to illustrate the turnover we faced during this time period: • Federal Grant Accountant – November 2023 • Chief Financial Officer – October 2023 • Deputy CFO/Accounting Manager – May 2023 • Program Accountant 2 – April 2023 • Accounting Technician – April 2023 • Debt Accountant 3 – March 2023 • Program Accountant 3 – January 2023 • Program Accountant 3 – August 2022 Due to the accounting team not having enough personnel at the time to prepare reports for the DAS ARPA Grant Program Coordinator, Business Oregon program staff (not accounting staff) took the initiative to complete the reports and submitted the periodic/quarterly reports to DAS. As the Business Oregon program staff did not have access to the SFMA (state accounting system), the program staff used data from another system (Salesforce, not an accounting system) to fill the needed information for the reports. The initial reports submitted to DAS were not reviewed by accounting staff. The program staff continued to complete the reports for DAS until first quarter of 2023, until accountant positions were filled in 2023. While preparing for the FY 2023 Year-End Closing process (June 2023 to July 2023), the newly hired accountants and Deputy CFO/Accounting Manager reviewed as many FY23 financial transactions as they could and made necessary adjustments and accounting entry corrections. Reporting discrepancies were identified between department accounting records and the reports submitted by program staff to DAS/US Dept of Treasury. Business Oregon accountants worked with DAS on revising the SEFA reports and identified ARPA grant-related items that needs to be corrected. The research continued even after the fiscal year 2023 reporting has closed. A reconciliation of records between department accounting and the reports submitted to the DAS Grant program coordinator was completed in January 2024, and the Business Oregon accounting team submitted a revised FY 2023 SEFA report corrections to the DAS SARS team. Going forward, management will ensure that the completion of quarterly financial reports for grant reporting is performed and submitted by the agency’s accounting team and not program staff to ensure data comes from the accounting system with the review by an accountant or accounting manager. Anticipated Completion Date: June 30, 2024 Contact person: Imee Anderson, Chief Financial Officer; Karl Mielke, Deputy Chief Financial Officer

2023-015 Oregon Housing and Community Services Fully implement controls to ensure subrecipients are in compliance with program requirements MANAGEMENT RESPONSE: We agree with this recommendation. OHCS has hired an outside contractor to complete the requested work. Contractor was not in place in time to complete action prior to end of audit work, however work will be finalized prior to the end of the current fiscal year. Anticipated Completion Date: June 30, 2024 Contact person: Dean Criscola, Controller

Finding 2023-042 – Corrective Action Plan There is no disagreement with the audit finding. The University has enacted an Information Security Policy, “URI Information Technology Standard”, which was issued on December 6, 2023. This standard defines the minimum information security requirements for the University of Rhode Island. The full standard can be found at the following URL: https://uri0.sharepoint.com/sites/URIInformationTechnologyServicesCommunication/SitePages/ITS-Security.aspx?ga=1. Anticipated Completion Date: December 6, 2023 Contact Persons: Gabrile Fariello, Interim Chief Information Officer, University of Rhode Island gfariello@uri.edu Michael Khalfayan, Chief Information Systems Officer, University of Rhode Island mkhalfayan@uri.edu

2023-002 Special Rest; Graduation Cohort Recommendation: We recommend that the schools develop internal controls and procedures to ensure the documentation is consistently maintained to support compliance with grantor’s requirements. Action planned/taken in response to finding: 1. City Schools will draft guidance to schools reminding them of their obligation to maintain documentation for all student transfers as per the MSDE Student Records Manual, P.32. The initial guidance will remind schools that all documentation needs to be saved as part of a student’s transfer packet. For SY24-25, the guidance will be updated to instruct schools to save all transfer requests in Person Documents in Infinite Campus (IC). This will be a collaboration between the Office of Achievement and Accountability (OAA) and the Schools Office. 2. City Schools will create a new data cleansing report (DCR) to ensure that all transfer codes entered in Infinite Campus have transfer documentation uploaded to IC to support the transfer request. The above guidance will be shared with schools as part of the launch of the new DCR report in SY24-25. This will be a collaboration between OAA and the Office of Information Technology (OIT). 3. City Schools’ School Managers will monitor the new DCR to ensure schools are uploading documentation for every transfer into IC. Name(s) of the contact person(s) responsible for corrective action: Holly Bedwell (OAA) and Sabree Barnes (Schools Office) Planned completion date for corrective action plan: September 9, 2024.

2023-003 Allowable Cost- Payroll Recommendation We recommend that the schools develop internal controls and procedures to ensure the documentation is consistently maintained and readily available to support compliance with grantor’s requirements. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action planned/taken in response to finding: 1. Requirements to support documentation of payroll expenditures will be reviewed with school staff annually as part of grant support visits, resource materials provided and other technical assistance sessions. 2. As part of Spring 2024 site visits to be completed prior to June 30, 2024, Title I specialists will review with school staff requirements for documentation to support payroll expenditures using Title I funds. Documentation of stipend and temporary staff payroll will be collected and saved in the school’s grant monitoring folder. This activity will also occur in September 2024 for summer stipend/temp staff payments. 3. Charter schools utilizing Title II and/or Title IV funds will continue to participate in twice annual monitoring by the Office of Data Monitoring and Compliance to review support documentation for any stipend/temporary staff payments. 4. Schools leveraging ESSER funds in SY23/24 for stipend/temporary staff payments will be requested to upload support documentation to a district established SharePoint site prior to June 30, 2024. 5. By April 30, 2024 requirements for payroll expenditure documentation will be reviewed with district offices implementing grant funded district initiatives. These meetings include Title I, Title II, Title III, Title IV, Perkins and COVID relief grant funds. All district offices will be required to save support documentation for stipend and temporary staff payments for district level and/or district coordinated activities to a SharePoint folder to ensure accessibility for future monitoring activities. The district staff person from the Office of Data Monitoring and Compliance assigned to support the federal grant will review uploaded materials to ensure the documentation supports payroll expenditures. Name(s) of the contact person(s) responsible for corrective action: Kimberly Hoffmann Planned completion date for corrective action plan: June 2024.

Identifying Number: Finding No. 2023-003: Documentation of Internal Controls Internal Control over Compliance Material Weakness Finding: Audit procedures noted controls identified by management over material compliance requirements lacked sufficient documentation to conclude application of controls is in place. Corrective Actions Taken or Planned: Responsible Official: T.J. Snowden (Director of Financial Aid), Walter Brown (CFO) Anticipated Completion Date: 05/30/2024 View of Responsible Individuals: Management agrees with the assessment and the finding. Management will identify what controls need to be in place to ensure federal compliance requirements for Student Financial Aid are in place. These controls will include manual or electronic signoff to exhibit proper execution of controls.

This finding is related to activities on our VOCA grants. As was the case in Finding #004, the majority of the exceptions were related to either finding #2 above or were related to the process in place prior to May 2023. Again, in May 2023 FRLS added an electronic transaction approval process via teams, that documents approvals for all our AP, AR and other transactions initiated by our accounting staff. These are reviewed and approved by the CFO before being posted into the GL. It was also noted that our process of allocating costs from our overhead cost centers to our various grants, was not fully documented. The CFO will undertake a review of this process to ensure that we are in compliance with allowable cost documentation requirements. We will also review and update our documentation of allocations and ensure that each month’s allocation is properly approved. This review will be completed within the next 90 days.

The Treasurer will review both the elementary and the jr high/high school lunch and breakfast counts prior to the claims being submitted to CRRS.

Reference Number: 2023-003 Prior Year Finding: No Federal Agency: U.S. Department of Treasury Federal Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: ARP17SL1 (5/23/2021 – 12/31/2026) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: 2 CFR §200.332 - Requirements for Pass-Through Entities states, in part, that all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient's unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per section 200.414. (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F - Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Passthrough entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521 Management decision. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters. (2) Performing on-site reviews of the subrecipient's program operations. (3) Arranging for agreed-upon-procedures engagements as described in § 200.425 Audit services. (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Control: Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Prince George’s County (the County) was unable to provide support that subawards it issued contained all required federal information nor that it properly monitored its subrecipients. Context: Five subrecipients were selected for testing, and the following exceptions were noted: For one of five subrecipients, the County did not have a subaward agreement in place with the subrecipient. As such, all required information was not furnished to the subrecipient. Five of five subaward agreements were missing the following required information: o Federal Award Identification Number (FAIN) For two of five subrecipients, the County was unable to provide support that it conducted during the award monitoring. For one of five subrecipients, the County was unable to provide support that it had verified that the subrecipients were audited as required by Subpart F. Questioned costs: Undetermined. Cause: The County did not establish effective internal controls and procedures over subrecipient monitoring. Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific programs and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Not conducting during the award monitoring may result in a failure of the Division to detect that its subrecipients used subawards for unauthorized purposes, managed them in violation of the terms and conditions of the subawards, or that subaward performance goals were not achieved. Without ensuring subrecipients have obtained audits as required by Subpart F, there is an increased risk that subrecipients could be inappropriately spending and/or inaccurately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by Division personnel on a timely basis. Recommendation: The County should review and enhance internal controls and procedures to ensure that all required information is included in all subawards, that proper subrecipient monitoring is conducted, and that evaluation of independent audits is performed. Action taken in response to findings: OCR has submitted the subaward agreement to include all required information for review and approval in SPEED. The subaward agreement is awaiting approval and will be sent to the Office of Finance in April 2024. Name of the contact person responsible for corrective action: Ameria Williams, Budget and Human Resources Manager. Planned completion date for corrective action plan: April 30, 2024. Explanation of disagreement with audit findings: There is no disagreement with the audit findings. Views of responsible officials: The Office of Community Relations (OCR) is reviewing and working to enhance internal controls and procedures to ensure all required information is included in the subaward, that proper subrecipient monitoring is conducted, and the evaluation of independent audits are performed. OCR is working with the subrecipient to gather payroll receipts and proof of the disbursement of funds to grantees selected through the RFPs managed by the subrecipient. Any questions concerning the findings or corrective action plan can be directed to Euniesha Davis, Director, OCR, at 301-952-4729.

Reference Number: Prior Year Finding: Federal Agency: Federal Program: Assistance Listing Number: Award Number and Year: Compliance Requirement: Type of Finding: Criteria or specific requirement: 2023-002 No U.S. Department of Treasury COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 21.027 ARPl 7SL1 (5/23/2021 - 12/31/2026) Earmarking and Reporting Material Weakness in Internal Control Over Compliance, Material Noncompliance Compliance: Earmarking - Under Treasury's Final Rule that became effective on April 1, 2022, recipients can calculate lost revenue for the years 2020, 2021, 2022, and 2023 based on the formula provided in the Final Rule to determine the amount of State and Local Fiscal Recove1y Funds (SLFRF) that can be used for the "provision of government services." To calculate revenue loss at each of these dates, recipients must follow a four-step process which includes: a. Calculate revenues collected in the most recent full fiscal year prior to the public health emergency (i.e., last full fiscal year before January 27, 2020), called the base year revenue. b. Estimate counterfactual revenue, which is equal to the following formula, where n is the number of months elapsed since the end of the base year to the calculation date: base year revenue x (1 + growth adjustment) n/ 12. The growth adjustment is the greater of either a standard growth rate- 5 .2 percent- or the recipient's average annual revenue growth in the last full three fiscal years prior to the COVID-19 public health emergency. c. Identify actual revenue, which equals revenues collected over the twelve months immediately preceding the calculation date. d. Revenue loss for the calculation date is equal to counterfactual revenue minus actual revenue (adjusted for tax changes) for the twelve-month period. Further, the Final Rule defines the term general revenue to include revenues collected by a recipient and generated from its underlying economy and would capture a range of different types of tax revenues, as well as other types of revenue that are available to supp01t government services. In calculating revenue, recipients should sum across all revenue streams covered as general revenue. Reporting - Per 2 CFR 200.328 and 31 CFR section 35.4(c), States, territories, metropolitan cities, counties, and Tribal governments were required to submit one interim rep01t and quarterly Project and Expenditure repo1ts thereafter. A Key Line Item containing critical info1mation, as defined by Treasury, in these reports is the Revenue Replacement section. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Prince George's County (the County) did not calculate their revenue loss in accordance with the Final Rule. As a result, amounts reported under the Revenue Replacement section of the Project and Expenditure reports were inaccurate for all quarters within the fiscal year ended June 30, 2023. Context: The County used inconect base year revenues in their revenue loss calculation. Only general fund revenue was used in the calculation instead of summing across all revenue streams as defined by the Final Rule. Fmther, the County used an incorrect growth rate of 4.0% instead of 5.2% as required by the Final Rule. The Revenue Replacement section of the Project and Expenditure rep01ts were inaccurate due to these errors. Cause: The County's policies and procedures were not sufficient to ensure that their revenue loss calculation was in accordance with the Final Rule and that accurate information was reported in their Project and Expenditure reports under the Revenue Replacement section. Effect: The County was not in compliance with federal requirements, and failure to comply with those requirements could jeopardize future funding. Questioned costs: Undetermined. Recommendation: We recommend that the County revise the revenue loss calculation to be in accordance with the U.S. Treasury's guidance as outlined by the Final Rule and submit a revised Project and Expenditure report to the U.S. Treasury 's SLFRF p011al. Action taken in response to finding: The Office of Management and Budget (0MB) revised the revenue loss calculation. A revised Project and Expenditure report will be submitted by 0MB through the U.S. Treasury's SLFRF portal in April 2024. Name(s) of the contact person(s) responsible for corrective action: David Juppe Revenue and Legislation Manager. Planned completion date for corrective action plan: April 30, 2024. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Views of responsible officials: At the time that the Office of Management and Budget (0MB) calculated the revenue loss it was unclear whether it applied to only general funds or all funds. Guidance from the U.S. Treasury Department was updated frequently following enactment of the American Rescue Plan Act of 2021. Based on the finding of the audit that the revenue loss calculation is not in accord with the Final Rule, 0MB staff re-calculated the data using all funds . Any questions concerning the findings or corrective action plan can be directed to Stanley A. Earley, Director, 0MB at 301 -952-3300.