Corrective Action Plans

Finding 1224396 (2023-013)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands

MP

Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties § 200.303 § 200.403

Finding No.: 2023-013 AL Programs: 11.307 – Economic Adjustment Assistance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Mana...

Finding No.: 2023-013 AL Programs: 11.307 – Economic Adjustment Assistance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: Condition 1: The CNMI Department of Finance respectfully disagrees with this finding related to project number FG17010001 (Economic Resiliency Center). The Department acknowledges that although supporting documentation – such as journal entries, approvals of expense transfers, sole-source justification memo, and grantor approval - was submitted, copies of the related invoices and/or contract agreement were not included. This omission was an oversight and resulted in a documentation-timing deficiency. The Department maintains copies of all required documents, and they are available for review upon request. To prevent recurrence, the department will reinforce our internal review procedures to ensure that all required supporting documentation is consistently compiled, retained within the Tyler MUNIS system, and submitted as part of future audit requests. Proposed Completion Date: Ongoing Condition 2: The CNMI Department of Finance respectfully disagrees with this finding related to PA Journals 478, 360, 2137, and 335. These transactions pertain to the Department’s Economic Resiliency Center (ERC) project. Due to internal scheduling constraints and the compressed 2-day turnaround to provide supporting documentation to the auditors, the requested documents were not submitted by the specified deadline. This timing issue resulted in the finding; however, it does not reflect a Finding No.: 2023-013, continued AL Programs: 11.307 – Economic Adjustment Assistance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: lack of documentation or inadequate recordkeeping. The Department maintains all relevant supporting documentation for these transactions and such documentation is available for review upon request from the Grantor. The Office of Planning and Development (OPD) partially agrees with the finding. OPD reviewed the questioned transactions and supporting documentation available under its custody. Payment documentation has been identified for PA Journals 186, 142, 141, 2670, 270, 4200, 556, 4180, and 913 and is maintained by OPD for review. For PA Journals 191 and 144, OPD verified that the invoice amounts are consistent with Contract No. 32200454; however, the PA Journal effective dates and journal numbers provided in the audit schedule do not correspond with the records reflected in the Munis system. For PA Journals 1585, 1862, 2219, 1138, 197, 593, and 219, additional information is required to complete verification because the PA Journal effective dates and journal numbers differ from the Munis records available to OPD. The referenced invoice amounts alone are insufficient to identify the transactions, as they may represent portions of cost shared expenditures or partial payments associated with larger transactions. Identification of the vendor would significantly assist in locating and reconciling the transactions. OPD further notes that the compilation of requested documentation occurred under significant time constraints. During the audit process, agencies were at one point provided approximately two business days to submit requested samples and supporting documentation. Given the volume of transactions and the age of some records, the limited response timeframe may have affected the ability to fully research, reconcile, and compile all supporting documentation prior to submission. Additional time for both agency response and auditor review may have facilitated a more comprehensive reconciliation and verification of the questioned items. OPD will continue coordinating with the Department of Finance and the auditors to reconcile discrepancies between the audit schedules and Munis records, provide available supporting documentation, and strengthen record-retention and transaction-tracking procedures to ensure supporting documentation is readily identifiable and accessible for future audits. Proposed Completion Date: Ongoing

View Audit 407734

Finding 1224393 (2023-010)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands

MP

Procurement, Suspension & Debarment § 200.303 § 200.317 § 200.318 § 200.326

Finding No.: 2023-010 AL Program: 10.539 – Nutrition Assistance Program Area: Procurement and Suspension and Debarment Questioned Costs: $684,138 Contact Person(s): Margaret Aldan, NAP Administrator / Geraldine Cruz, Procurement Services Director Corrective Action Plan: Condition 1: The Procurement ...

Finding No.: 2023-010 AL Program: 10.539 – Nutrition Assistance Program Area: Procurement and Suspension and Debarment Questioned Costs: $684,138 Contact Person(s): Margaret Aldan, NAP Administrator / Geraldine Cruz, Procurement Services Director Corrective Action Plan: Condition 1: The Procurement Services Division respectfully disagrees with this finding. Procurement Services agrees that the Commonwealth should periodically review its procurement regulations to ensure continued consistency with applicable federal requirements. However, Procurement Services notes that the Procurement Regulations currently establish procurement thresholds and procedures for locally funded procurements and procurements funded through a combination of local and federal funds. Procurements exceeding applicable small purchase thresholds are required to proceed through other procurement methods authorized under the Procurement Regulations, including competitive sealed bidding or other approved procurement methods, as applicable. Procurement Services further notes that procurements exceeding the applicable small purchase thresholds are governed by other provisions of the Procurement Regulations and are therefore not without regulatory direction. Accordingly, Procurement Services does not fully concur that the regulations are inconsistent as described in the finding. Finding No.: 2023-010, continued AL Program: 10.539 – Nutrition Assistance Program Area: Procurement and Suspension and Debarment Questioned Costs: $684,138 Contact Person(s): Margaret Aldan, NAP Administrator / Geraldine Cruz, Procurement Services Director Corrective Action Plan: Nevertheless, Procurement Services recognizes the importance of ensuring that procurement regulations clearly align with applicable federal requirements and are sufficiently clear to avoid differing interpretations. Procurement Services is currently reviewing the applicable regulations, policies, and procedures with legal counsel to determine whether revisions, clarifications, or additional guidance are warranted. Due to the resignation of the Assistant Attorney General previously assigned to Procurement Services, this review will continue with newly assigned legal counsel. Any amendments to the Procurement Regulations will require legal review, drafting, public notice, and formal adoption before they can take effect. Procurement Services will also continue monitoring updates to federal procurement requirements and will incorporate any necessary changes into its policies, procedures, and guidance. These efforts will help improve clarity, consistency, and compliance with applicable procurement requirements. Proposed Completion Date: Ongoing Condition 2: CNMI NAP agrees with this finding. The issue occurred because the previous policies and procedures did not fully document the three allowable verification methods under 2 CFR 180.300 for covered transactions ≥ $25,000. As a result of repeat findings, CNMI NAP developed and implemented the updated “SOP for Procurement of Goods and Servicesv.3”, which explicitly requires verification of vendors in the SAM.gov exclusions list prior to award (Section 4.1 and 4.3) and after contract execution, in full compliance with 2 CFR 200.214 and 2 CFR 180.300. This SOP was approved and effective 5/1/25 and is available for review upon request. Additional step taken by CNMI NAP is to continue adhering to the “CNMI NAP Suspension and Debarment SOP” that requires a screen-print documentation and annual reviews. This SOP was approved on 9/24/24 and is available for review upon request. Finding No.: 2023-010, continued AL Program: 10.539 – Nutrition Assistance Program Area: Procurement and Suspension and Debarment Questioned Costs: $684,138 Contact Person(s): Margaret Aldan, NAP Administrator / Geraldine Cruz, Procurement Services Director Corrective Action Plan: To prevent recurrence, CNMI NAP will deliver targeted training to all procurement, finance, and program staff on the updated SOPs, continue quarterly internal reviews of procurement files using new Google Sheet tracking system to verify ongoing SAM.gov compliance. Full staff training and first quarterly review will be completed by 9/30/26. Additionally, Procurement Services agrees that vendor eligibility was not verified in accordance with 2 CFR Part 180 prior to the covered transactions identified by the auditors. To address this issue, Procurement Services has incorporated suspension and debarment verification into its procurement review process. For federally funded covered transactions, expenditure authorities will be required to provide documentation from the System for Award Management (SAM.gov) verifying that the vendor is not suspended or debarred. This documentation must be submitted with the procurement package and retained in the procurement file prior to award. Procurement Services will review the documentation as part of its procurement review process and will provide additional guidance to procurement personnel and expenditure authorities regarding federal suspension and debarment requirements. These measures are intended to improve compliance with federal requirements and strengthen procurement documentation and oversight. Proposed Completion Date: Completed

View Audit 407734

Finding 1223925 (2023-003)

Material Weakness 2023

Municipality of Camuy

PR

Internal Control / Segregation of Duties Subrecipient Monitoring Material Weakness § 200.303

We acknowledge the finding. The Municipality will be working on scheduling the reports required by each program. It is important to note that all reports are prepared by the accountants assigned to each federal program and reviewed and approved by the Finance Department and the Mayor. This process s...

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

View Audit 407331

Finding 1223580 (2023-002)

Material Weakness 2023

County of Belknap, New Hampshire

NH

Reporting Internal Control / Segregation of Duties Material Weakness § 200.303

Audit Finding Reference: 2023-002 Internal Controls Over Reporting Planned Corrective Action: Finance Director will review quarterly report prior to submission Planned Implementation Date of Corrective Action: Immediately upon notification, June 09, 2025. Person Responsible for Corrective Action: Co...

Audit Finding Reference: 2023-002 Internal Controls Over Reporting Planned Corrective Action: Finance Director will review quarterly report prior to submission Planned Implementation Date of Corrective Action: Immediately upon notification, June 09, 2025. Person Responsible for Corrective Action: County Administrator and Finance Director

View Audit 407004

Finding 1223217 (2023-014)

Material Weakness 2023

Williston Basin Public School District #7

ND

Allowable Costs / Cost Principles § 200.303 § 200.403

2023-014 –TITLE I – INADEQUATE SUPPORTING DOCUMENTATION – ALN 84.010 – MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Condition: Williston Basin Public School District No. 7 was unable to provide supporting documentation for expenses charged to the Title I program. 47 of the 60 expenditures we sampled d...

2023-014 –TITLE I – INADEQUATE SUPPORTING DOCUMENTATION – ALN 84.010 – MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Condition: Williston Basin Public School District No. 7 was unable to provide supporting documentation for expenses charged to the Title I program. 47 of the 60 expenditures we sampled did not have any support, leaving them with known questioned costs of $318,881. Management’s Response: We agree. WBSD#7 created a new Grants Coordinator position in July 2023 with one of the specific responsibilities for that position being oversight of all Federal programs. This oversight responsibility includes monitoring expenditures to ensure all expenditures are allowable within the parameters of each program and also that proper documentation for those expenditures has been maintained. It has taken the district some time to get this area cleaned up. The district is adding another position to this department to assist in maintaining documentation. Anticipated Completion Date: FY 2025

View Audit 406705

Finding 1223216 (2023-013)

Material Weakness 2023

Williston Basin Public School District #7

ND

Allowable Costs / Cost Principles Material Weakness Reporting § 200.303 § 200.403

2023-013 – EDUCATION STABILIZATION FUND - LACK OF SUPPORT OVER ESSER FUNDS – ALN 84.425 - MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Condition: Williston Basin Public School District No. 7 was unable to provide supporting documentation for journal entries that were done to reallocate payroll. There ...

2023-013 – EDUCATION STABILIZATION FUND - LACK OF SUPPORT OVER ESSER FUNDS – ALN 84.425 - MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Condition: Williston Basin Public School District No. 7 was unable to provide supporting documentation for journal entries that were done to reallocate payroll. There were 3 journal entries totaling $6,391,442 that were completed at year end to move salaries into the Education Stabilization Fund program that did not have documentation to support the salary expenditures. Management’s Response: We agree. WBSD#7 created a new Grants Coordinator position in July 2023 with one of the specific responsibilities for that position being oversight of all Federal programs. This oversight responsibility includes monitoring expenditures to ensure all expenditures are allowable within the parameters of each program and also that proper documentation for those expenditures has been maintained. It has taken the district some time to get this area cleaned up. Anticipated Completion Date: FY 2025

View Audit 406705

Finding 1223142 (2023-006)

Material Weakness 2023

MERCER COUNTY

ND

Reporting Subrecipient Monitoring Material Weakness § 200.303

2023-006 – CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS – IMPROPER AND UNTIMELY REPORTING OF EXPENDITURES & OBLIGATIONS – ALN 21.027 – MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Condition: Mercer County did not properly report total cumulative and current period expenditures and obligations on ...

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

View Audit 406671

Finding 1223100 (2023-004)

Material Weakness 2023

County of Tuolumne

CA

Reporting Matching / Level of Effort / Earmarking Questioned Costs § 200.303

Management’s Response or Department’s Response The County agrees with the finding and recommendation. Views of Responsible Officials and Corrective Action Plan The County Auditor’s office will work with department heads to establish a formalized policy of tracking timely reporting and correspondence...

Management’s Response or Department’s Response The County agrees with the finding and recommendation. Views of Responsible Officials and Corrective Action Plan The County Auditor’s office will work with department heads to establish a formalized policy of tracking timely reporting and correspondence procedures with grantors in the case of delayed reporting. In addition the County will appropriately allocate employee resources to ensure compliance with deadlines. Anticipated Completion Date/Completion Date June 30, 2027 Contact Information of Responsible Official Name: Donald McNair Title: County Clerk & Auditor-Controller Phone: 209-533-6593

View Audit 406654

Finding 1222921 (2023-020)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Special Tests & Provisions Subrecipient Monitoring Matching / Level of Effort / Earmarking § 200.303

Finding No.: 2023-020 AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Area: Special Tests and Provisions - Key Level Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Manage...

Finding No.: 2023-020 AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Area: Special Tests and Provisions - Key Level Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management processes were promulgated in a SOP on September 18, 2024. The SOPs are under review by an external consultant and recommendations made to improve documentation of time and effort allocable under federal awards. (See also 2023-004, 2023-0009) Corrective Action Plan: I. Establishment of Time and Effort SOPs: PSS will finalize and implement a dedicated Time and Effort Reporting SOP. This policy will explicitly define the key management Level of Effort (LOE) requirements by position and mandate the collection of specific supporting records, including Notice of Personnel Action (NOPA) forms, payroll registers, and certified timesheets. The SOP will feature robust internal controls and supervisory review procedures designed to prevent improper payments and ensure accurate labor distribution. II. Standardization of Key Management Records: PSS will obtain and systematically retain NOPA forms or equivalent documentation for all six positions identified in the grant agreement. This documentation will serve as the primary evidence to demonstrate compliance. III. Labor Distribution Monitoring Controls: PSS is implementing ongoing monitoring controls to ensure continued compliance. This includes a periodic internal review of payroll registers against the original grant agreements to verify that the labor costs charged to the award remain consistent with the approved personnel budget and documented effort. Proposed Completion Date: August 2026 Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org

View Audit 406425

Finding 1222919 (2023-018)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Allowable Costs / Cost Principles Subrecipient Monitoring Matching / Level of Effort / Earmarking § 200.303

Finding No.: 2023-018 AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding....

Finding No.: 2023-018 AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding. While internal verification of disbursements is a standard part of our fiscal workflow, we recognize that our current process has the space to improve. Corrective Action Plan: To ensure that all disbursements are verified and documented prior to payment, PSS will implement the following: I. High Level Review and Approval: Implementation of Comptroller/ Director of Finance review on the Batch Invoice Summary signifying invoice entries on the said batch are verified and correct. After the review, the Comptroller will sign. II. Updated Payment Verification Process: Payments via check or ACH are reviewed by the Comptroller/ Director of Finance through Payment Manager and marking the Batch Invoice Summary that payments matched the invoice. Proposed Completion Date: December 2025 Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org

View Audit 406425

Finding 1222918 (2023-017)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Special Tests & Provisions Subrecipient Monitoring Allowable Costs / Cost Principles § 200.303

Finding No.: 2023-017 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Special Tests and Provisions - Private School Participation Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management disagrees with the finding. PS...

Finding No.: 2023-017 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Special Tests and Provisions - Private School Participation Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management disagrees with the finding. PSS asserts that timely and meaningful consultations were conducted with private school officials prior to making decisions regarding the size, scope, and funding of equitable services for FY2023. Calculations for the equitable share under the Education Stabilization Funds were performed in accordance with federal regulations, ensuring that per-pupil allocations for eligible private school students and teachers were equitable relative to public school expenditures. PSS maintains that consultation timelines, meeting records, and allocation formulas were maintained. While PSS is continuously refining its administrative workflows, the existing documentation and controls were sufficient to satisfy the requirements of 34 CFR § 299.7. Proposed Completion Date: Resolution in progress and on track for completion by August 2026. Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org

View Audit 406425

Finding 1222916 (2023-016)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Special Tests & Provisions Procurement, Suspension & Debarment Matching / Level of Effort / Earmarking § 200.303

Finding No.: 2023-016 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Special Tests and Provisions - Wage Rate Requirement Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings. We a...

Finding No.: 2023-016 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Special Tests and Provisions - Wage Rate Requirement Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings. We acknowledge that our current procurement and contract administration processes did not consistently incorporate the mandatory Davis-Bacon Act labor standard clauses or the subsequent collection of certified payrolls. PSS is committed to implementing a rigorous compliance framework for all federally funded construction and repair projects. Financial, Procurement, and Grants Management policies procedures were promulgated in a SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Payment procedures are being addressed in a separate SOP. Corrective Action Plan: To ensure full compliance with 29 CFR 5.5 and federal wage rate requirements, PSS will implement the following: I. Standardized Construction Contract Template: PSS Legal Counsel and the Procurement Office will develop a standardized "Federal Construction Contract Addendum." This addendum will contain all mandatory Davis-Bacon Act clauses required by 29 CFR 5.5(a)(1)-(10). Effective immediately, no contract or purchase order exceeding $2,000 for construction, alteration, or repair will be executed without the inclusion of this addendum. II. Mandatory Certified Payroll Submission Protocol: PSS will update its "Notice to Proceed" and project management guidelines to explicitly state that progress payments will be withheld until the contractor submits the required weekly certified payrolls. Contractors will be provided with the Form WH-347 (or an equivalent) to ensure they are using the correct reporting format. III. Pre-Construction Compliance Meetings: For all future Davis-Bacon covered projects, PSS will hold a mandatory pre-construction meeting with contractors to clearly communicate their obligations regarding certified payrolls and the posting of the applicable wage decision at the job site. IV. Document Retention and Review Audit: PSS will implement a "Project Close-out Checklist." Finance will not process the final retention payment for any construction project until the Labor Compliance Monitor certifies that all weekly certified payrolls have been received, reviewed, and filed. V. Updated Standard Operating Procedures and Training: PSS will finalize SOPs and policies internal controls with updated internal controls and procedures for required contract clauses and oversight. Checklists will be updated to include a specific control for Davis-Bacon reporting. Require all current contractors and those identified in this audit to submit certified payrolls for 2023 through the span of their contracts for all Davis-Bacon covered work. PSS Procurement and Supply staff will receive refresher training on cost principles annually regarding required contract clauses and documentation to support compliance with requirements. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

View Audit 406425

Finding 1222914 (2023-015)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Matching / Level of Effort / Earmarking § 200.303

Finding No.: 2023-015 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Matching, Level of Effort, Earmarking Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management does not agree with the finding. PSS has allocated a...

Finding No.: 2023-015 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Matching, Level of Effort, Earmarking Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management does not agree with the finding. PSS has allocated and expended more than 20% on evidence-based interventions to address learning loss. Specifically, projects listed under the ARP expense report are mapped directly to learning loss categories (e.g. expenses for summer school, extended learning opportunities, high dosage tutors, etc.). Based on this documentation, we request that the audit finding be revised to reflect compliance. Proposed Completion Date: Resolution in progress and on track for completion by August 2026. Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org

View Audit 406425

Finding 1222910 (2023-013)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Allowable Costs / Cost Principles Subrecipient Monitoring Matching / Level of Effort / Earmarking § 200.303

Finding No.: 2023-013 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial a...

Finding No.: 2023-013 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures were promulgated in SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: I. Finalization of Allowability and Disbursement SOPs: PSS will finalize comprehensive Standard Operating Procedures (SOPs) and policies specifically governing allowability determinations and vendor payments. II. Enhanced Disbursement Controls: PSS is implementing a documented review and approval controls over the payment process. Before any check or ACH disbursement is finalized, a reviewer must verify that the payment amount agrees exactly with the approved invoice. This verification will be physically or digitally documented on the payment voucher to provide a clear audit trail of the pre-payment review. Proposed Completion Date: In progress for FY 2024 with full implementation and documentation processes expected to be completed in 2026. As part of this improvement, we are designing a standardized, documented review process to ensure all disbursements are verified against approved invoices prior to payment. Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org

View Audit 406425

Finding 1222906 (2023-010)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Allowable Costs / Cost Principles Subrecipient Monitoring Matching / Level of Effort / Earmarking § 200.303

Finding No.: 2023-010 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies proce...

Finding No.: 2023-010 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures were promulgated in SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: I. Finalization of Allowability and Disbursement SOPs: PSS will finalize comprehensive Standard Operating Procedures (SOPs) and policies specifically governing allowability determinations and vendor payments. II. Enhanced Disbursement Controls: PSS is implementing a documented review and approval controls over the payment process. Before any check or ACH disbursement is finalized, a reviewer must verify that the payment amount agrees exactly with the approved invoice. This verification will be physically or digitally documented on the payment voucher to provide a clear audit trail of the pre-payment review. Proposed Completion Date: In progress for FY 2024 with full implementation and documentation processes expected to be completed in 2026. As part of this improvement, we are designing a standardized, documented review process to ensure all disbursements are verified against approved invoices prior to payment. Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org

View Audit 406425

Finding 1222895 (2023-003)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Allowable Costs / Cost Principles Subrecipient Monitoring School Nutrition Programs § 200.303

Finding No.: 2023-003 AL Program: 10.555 National School Lunch Program (NSLP) Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures...

Finding No.: 2023-003 AL Program: 10.555 National School Lunch Program (NSLP) Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures were promulgated in SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: I. Finalization of Allowability and Disbursement SOPs: PSS will finalize comprehensive Standard Operating Procedures (SOPs) and policies specifically governing allowability determinations and vendor payments. II. Enhanced Disbursement Controls: PSS is implementing a documented review and approval controls over the payment process. Before any check or ACH disbursement is finalized, a reviewer must verify that the payment amount agrees exactly with the approved invoice. This verification will be physically or digitally documented on the payment voucher to provide a clear audit trail of the pre-payment review. Proposed Completion Date: In progress for FY 2024 with full implementation and documentation processes expected to be completed in 2026. As part of this improvement, we are designing a standardized, documented review process to ensure all disbursements are verified against approved invoices prior to payment. Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org

View Audit 406425

Finding 1219653 (2023-012)

Material Weakness 2023

The Virgin Islands Hsg Finance Authority - Paradise Mills Apartments

FL

Internal Control / Segregation of Duties Questioned Costs Reporting § 200.303

Director of American Rescue Plan (ARP) Programs, Federal program managers, and Chief Financial Officer January 2024 To ensure timely submission of the quarterly compliance reports, the reporting process was updated to remove the multi-level review requirement. Eliminating the multi-level review proc...

Director of American Rescue Plan (ARP) Programs, Federal program managers, and Chief Financial Officer January 2024 To ensure timely submission of the quarterly compliance reports, the reporting process was updated to remove the multi-level review requirement. Eliminating the multi-level review process allowed management to meet reporting deadlines more efficiently. Further, the Authority will strengthen financial oversight, by requiring all direct reports (monthly to bi-monthly financial reports) be submitted to the CFO. These reports will be used to continuously monitor program performance, identify any discrepancies, and address issues in a timely manner.

View Audit 405194

Finding 1219652 (2023-011)

Material Weakness 2023

The Virgin Islands Hsg Finance Authority - Paradise Mills Apartments

FL

Questioned Costs Eligibility Internal Control / Segregation of Duties § 200.303

Director of American Rescue Plan (ARP) Programs, Federal program managers, and Chief Financial Officer October 2023 Management remains committed to continuous improvement and has taken corrective actions to strengthen internal controls, ensure proper documentation retention, and maintain full compli...

Director of American Rescue Plan (ARP) Programs, Federal program managers, and Chief Financial Officer October 2023 Management remains committed to continuous improvement and has taken corrective actions to strengthen internal controls, ensure proper documentation retention, and maintain full compliance with applicable federal regulations

View Audit 405194

Finding 1218287 (2023-009)

Material Weakness 2023

Lead Academy

AL

Allowable Costs / Cost Principles Questioned Costs Procurement, Suspension & Debarment § 200.303 § 200.430

Responsible Parties: Erik Estill and Russell Raney Finding: Due to the passage of time, the turnover of staff, and the use of a third-party payroll provider, supporting documentation necessary to verify and document vendor payments and payroll transactions was not available, resulting in the inabili...

Responsible Parties: Erik Estill and Russell Raney Finding: Due to the passage of time, the turnover of staff, and the use of a third-party payroll provider, supporting documentation necessary to verify and document vendor payments and payroll transactions was not available, resulting in the inability to obtain sufficient, appropriate audit evidence related to these amounts. Corrective Action: The school (LEAD Academy) contracted with New Schools for Alabama (NSFA) during 2023 to handle all their finance and accounting needs. By the end of 2023, the school also transitioned all payroll services to New Schools for Alabama. Prior to 2024, a third-party vendor was handling/processing payroll for LEAD Academy. Additionally, procedures were not in place to maintain monthly payroll data (timesheets, leave balances, documentation of annual salaries) prior to 2024. All financial records are now maintained digitally, with the original documents residing at the school. Additionally, NSFA worked with existing staff regarding proper documentation and filing of financial records and helped establish a new filing system. In 2024, payroll processing for the school was transitioned to NSFA, utilizing the state approved accounting/payroll software. Monthly procedures are now in place for the submission, approval and documentation of all payroll transactions. Expected Completion Date: September 30, 2024

View Audit 404529

Finding 1218280 (2023-008)

Material Weakness 2023

Lead Academy

AL

Questioned Costs Procurement, Suspension & Debarment Allowable Costs / Cost Principles § 200.303

Responsible Parties: Erik Estill and Russell Raney Finding: Due to the passage of time, the turnover of staff, supporting documentation necessary to verify and document vendor payment was not available, resulting in the inability to obtain sufficient, appropriate audit evidence related to these amou...

Responsible Parties: Erik Estill and Russell Raney Finding: Due to the passage of time, the turnover of staff, supporting documentation necessary to verify and document vendor payment was not available, resulting in the inability to obtain sufficient, appropriate audit evidence related to these amounts. During the testing of ESSER funds, there were 2 instances where the purchase order could not be located and one invoice that could not be located. Corrective Action: The school (LEAD Academy) contracted with New Schools for Alabama (NSFA) during 2023 to handle all their finance and accounting needs. By the end of 2023, the school also transitioned all payroll services to New Schools for Alabama. NSFA helped establish a purchase order procedure and worked with the school to make sure a purchase order or signed contract is in place prior to the purchase of goods and services. Additionally, approval on all invoices is required before NSFA processes them for payment, in order to verify that all goods and services have been received. Prior to 2024, proper procedures were not in place to maintain vendor files and accounts payable documentation. All financial records are now maintained digitally, with the original documents residing at the school. Additionally, NSFA worked with existing staff regarding proper documentation and filing of financial records and helped establish a new filing system. NSFA requires the school to indicate the source of funding for purchases, in order to know how to code the expenditure. We utilize monthly budget to actual reports to verify that expenditures are in line with the approved budget, ensuring that the correct coding has been used. We also ensure that only allowable expenditures are charged to federal funds, based on approved federal Egap applications and budgets.

View Audit 404529

Finding 1218279 (2023-007)

Material Weakness 2023

Lead Academy

AL

Allowable Costs / Cost Principles § 200.303 § 200.430

Responsible Parties: Erik Estill and Russell Raney Finding: Due to the passage of time, the turnover of staff, and the use of a third-party payroll provider, supporting documentation necessary to verify and document payroll transactions was not available, resulting in the inability to obtain suffici...

Responsible Parties: Erik Estill and Russell Raney Finding: Due to the passage of time, the turnover of staff, and the use of a third-party payroll provider, supporting documentation necessary to verify and document payroll transactions was not available, resulting in the inability to obtain sufficient, appropriate audit evidence related to these amounts. Corrective Action: The school (LEAD Academy) contracted with New Schools for Alabama (NSFA) during 2023 to handle all their finance and accounting needs. By the end of 2023, the school also transitioned all payroll services to New Schools for Alabama. Prior to 2024, a third-party vendor was handling/processing payroll for LEAD Academy. The upload file produced by the vendor was not accurately formatted, resulting in incorrect entries to some general ledger accounts, which required extensive corrections by NSFA to the FY 2023 financials. Many of these corrections involved federal ESSER funding, and the school was not able to identify specific individuals paid with ESSER funds or provide backup documentation. Additionally, procedures were not in place to maintain monthly payroll data (timesheets, leave balances, documentation of annual salaries) prior to 2024. All financial records are now maintained digitally, with the original documents residing at the school. Additionally, NSFA worked with existing staff regarding proper documentation and filing of financial records and helped establish a new filing system. In 2024, payroll processing for the school was transitioned to NSFA, utilizing the state approved accounting/payroll software. Monthly procedures are now in place for the submission, approval and documentation of all payroll transactions. Expected Completion Date: September 30, 2024

View Audit 404529

Finding 1217396 (2023-007)

Material Weakness 2023

The Wellness Plan Medical Centers

MI

Allowable Costs / Cost Principles Cash Management § 200.303 § 200.430

Condition: Due to a lack of effectively designed and implemented controls to ensure compliance with allowable cost principles, management requested reimbursement based upon employment contract agreements rather than actual payroll costs incurred for the individuals working under the grant. Planned C...

Condition: Due to a lack of effectively designed and implemented controls to ensure compliance with allowable cost principles, management requested reimbursement based upon employment contract agreements rather than actual payroll costs incurred for the individuals working under the grant. Planned Corrective Action: The organization will implement internal controls to ensure expenditure is allowed in accordance with 2 CFR 200 Subpart E. Costs must be necessary, reasonable, and allocable. Contact person responsible for corrective action: Charles Berry (CFO) Anticipated Completion Date: 06/30/2026

View Audit 403582

Finding 1217393 (2023-006)

Material Weakness 2023

The Wellness Plan Medical Centers

MI

Reporting § 200.303

Condition: A lack of effectively designed and implemented internal controls over the accounting records resulted in material entries identified and recorded during the 2023 financial statement audit of the Organization. Additionally, as the result of a lack of effectively designed and implemented co...

Condition: A lack of effectively designed and implemented internal controls over the accounting records resulted in material entries identified and recorded during the 2023 financial statement audit of the Organization. Additionally, as the result of a lack of effectively designed and implemented controls over financial and performance reporting for the Health Center Program cluster grants, inaccurate performance data and the Federal share of expenditures were submitted to HRSA. Planned Corrective Action: The organization will implement internal controls to prepare and review accurate reconciliations with supporting information over all accounting cycles in a timely manner. Contact person responsible for corrective action: Charles Berry (CFO) Anticipated Completion Date: 9/30/2026

View Audit 403582

Finding 1217390 (2023-005)

Material Weakness 2023

The Wellness Plan Medical Centers

MI

Cash Management § 200.303

Condition: The Organization maintains and tracks Federal expenditures incurred for the year in totality; however, it does not maintain adequate records to track the costs applied to each individual drawdown made throughout the year. Without this linkage, the timeliness between drawdown and either wh...

Condition: The Organization maintains and tracks Federal expenditures incurred for the year in totality; however, it does not maintain adequate records to track the costs applied to each individual drawdown made throughout the year. Without this linkage, the timeliness between drawdown and either when the expenditures for goods and services were incurred or when the disbursement occurred in relation to the drawdown cannot be validated. Planned Corrective Action: The organization will implement controls to ensure cash management and allowability compliance areas are addressed by linking cash drawdowns to Federal expenditures. Contact person responsible for corrective action: Charles Berry (CFO) Anticipated Completion Date: 9/30/2026

View Audit 403582

Finding 1217387 (2023-004)

Material Weakness 2023

The Wellness Plan Medical Centers

MI

Questioned Costs Special Tests & Provisions Material Weakness § 200.303

Condition: The Organization lacked sufficient internal controls to ensure sliding fee discount applications were on file and included all of the necessary information regarding family size and income to support discount determinations made. Further, controls were not sufficient to ensure the correct...

Condition: The Organization lacked sufficient internal controls to ensure sliding fee discount applications were on file and included all of the necessary information regarding family size and income to support discount determinations made. Further, controls were not sufficient to ensure the correct sliding fee discount was applied. Planned Corrective Action: The organization will implement controls to ensure sliding fee applications are maintained and sliding fee adjustments are based on correct family income and resident size. Contact person responsible for corrective action: Charles Berry (CFO) Anticipated Completion Date: 6/30/2026

View Audit 403582

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