Corrective Action Plans

The current Board of County Commissioners acknowledges the finding. The Board is committed to improving the identification, tracking, and reporting of federal awards. County officials will continue working with auditors and department heads to strengthen reconciliation and review procedures and ensure federal activity is accurately reported on the Schedule of Expenditures of Federal Awards.

Finding Number 2025-229: The Division did not verify that vendors were not suspended or debarred prior to making federal grant payments. Federal Program: 84.126 - Rehabilitation Services - Vocational Rehabilitation Grants to States Related to Prior Finding: N/A Agency’s view: The agency agrees with this finding. IDVR acknowledges that it did not maintain documented processes to verify suspension and debarment status before certain federally funded transactions during the audit period. Corrective Action: IDVR implemented additional agency-level procedures in Spring 2026 to strengthen compliance with federal suspension and debarment requirements. Under the enhanced process, the Financial Team conducts and documents quarterly reviews of vendors whose cumulative payments may meet or exceed applicable federal thresholds during that quarter to ensure at least annual review of vendors paid with federal funds for potential suspension or debarment since the last review. Additionally, IDVR’s Contract Specialist performs suspension and debarment verification reviews prior to execution of contracts expected to exceed federal threshold requirements. IDVR has also developed procurement and suspension/debarment policies that are currently under RSA review. Once approved, those policies will be finalized, adopted, and incorporated into Agency training. Importantly, the core review processes outlined in those policies have already been implemented, and the forthcoming policy adoption will formalize and document practices that are presently being utilized. Anticipated Corrective Action Date: January 1, 2027 Responsible for Corrective Action: Heidi Smith, Financial Officer Heidi.Smith@vr.idaho.gov (208) 287-6457

Finding Number 2025-228: The Division is not following Idaho Administrative Rules for Purchasing as required. Federal Program: 84.126 - Rehabilitation Services - Vocational Rehabilitation Grants to States Related to Prior Finding: N/A Agency’s view: The agency agrees with this finding. IDVR acknowledges that procurement practices during the audit period did not fully align with state procurement requirements. Corrective Action: IDVR has worked directly with the Division of Purchasing to revise IDVR procurement-related Policy Directive and is currently finalizing updates to align Agency procedures with state procurement requirements. Additionally, IDVR has developed draft procurement policies, procedures, and internal controls designed to strengthen compliance with both state and federal requirements. These materials have been reviewed with the Vocational Rehabilitation Technical Assistance Center and are currently undergoing RSA review. While awaiting final approval, IDVR has already begun strengthening procurement oversight and monitoring practices. Upon completion of the review process, IDVR will conduct agency-wide training and formally implement the updated policies and procedures. Additionally, IDVR will be developing monitoring dashboards that will provide leadership with enhanced visibility into purchasing activity and spending thresholds to support ongoing compliance with procurement requirements. These efforts reflect IDVR's commitment to establishing sustainable procurement controls that not only address the finding but also enhance transparency and accountability in purchasing activities. IDVR has also developed contracts for CRP services for both the General and Pre-ETS programs that have been approved by RSA for implementation. The Division is currently working on rolling out new CRP contracts with anticipated start date of 02/01/2027 to assure compliance with contracts for procurements for these services that are anticipated to exceed the $150,000 each state fiscal year and would not be covered under the updated policy directive due to this anticipated annual spend based on historical spending analysis for these services. Anticipated Corrective Action Date: February 1, 2027 Responsible for Corrective Action: Heidi Smith, Financial Officer Heidi.Smith@vr.idaho.gov (208) 287-6457

Finding Number 2025-227: The Division does not have documented control procedures in place to ensure compliance with period of performance requirements for the Rehabilitation Services-Vocational Rehabilitation Grants to States. Federal Program: 84.126 - Rehabilitation Services - Vocational Rehabilitation Grants to States Related to Prior Finding: N/A Agency’s view: The agency agrees with this finding. IDVR acknowledges that the controls during the audit period were insufficient to ensure expenditures were consistently allocated to the correct federal award period. Corrective Action: Since November 2025, IDVR has implemented a comprehensive period-of-performance review process designed to ensure compliance with federal grant requirements. As part of this process, the Strategic Leadership Team reviews and determines when obligations should transition between federal fiscal year awards. Based on this direction, IDVR Data Manager updates system configurations and budget parameters within the AWARE case management system to ensure expenditures are assigned to the correct federal award. In addition, IDVR implemented a testing process in which the Data Manager and Program Analyst verify that expenditures are coding appropriately following budget updates. IDVR has also incorporated period-of-performance reviews into its quality assurance and compliance review process for case service expenditures. Invoice batches are reviewed before liquidation, or reimbursement requests are submitted to ensure expenditures are allocated to the proper grant award. These reviews are conducted by Quality Assurance and Compliance Analysts, Financial Specialists, the Financial Officer, and, when appropriate, Agency leadership, including the Deputy Administrator and Administrator. Through these layered review processes, IDVR has established documented internal controls designed to ensure compliance with period-of-performance requirements and has successfully utilized these controls since implementation as evidenced by approved RSA reimbursements of expenditures based upon both period of performance and allowability reviews completed by RSA on all expenditures reimbursed as required under route payment that IDVR has been engaged in with RSA since October 2024. IDVR is in the process of obtaining approval from RSA within drafted Grant’s Management Chapters for the policies, procedures and internal controls related to assurances of proper grant assignment based upon period of performance. Once approval is provided, IDVR will finalize, implement, and train on the approved policies, procedures, and internal controls that align with processes already in practice as of November 2025. Anticipated Corrective Action Date: January 30, 2027 Responsible for Corrective Action: Heidi Smith, Financial Officer Heidi.Smith@vr.idaho.gov (208) 287-6457

Finding Number 2025-226: The Division did not comply with Matching, Level of Effort, and Earmarking requirements for the fiscal year 2023 grant of the Rehabilitation Services-Vocational Rehabilitation Grants to States. Federal Program: 84.126 - Rehabilitation Services - Vocational Rehabilitation Grants to States Related to Prior Finding: N/A Agency’s view: The agency agrees with this finding. It is closely related to the historical reporting issues identified through the forensic review and restatement process described above. Corrective Action: IDVR has completed significant work to increase internal controls through the development of policies, procedures, and internal controls included in IDVR’s Grants Management Manual. RSA has approved several of the policies, procedures, and internal controls as they relate to these processes to ensure adequate SLT level planning and decision making is occurring and documentation is available to support the grants Matching, Maintenance of Efforts, and obligation requirements. Further GMM chapters related to this finding will be re-submitted to RSA for approval with IDVR’s next CAP submission due 10/30/2026. Once policies are approved by RSA for implementation they will be finalized, trained, and implemented by IDVR. To strengthen compliance moving forward as these areas are assessed at the State level, IDVR and ICBVI have also increased the frequency of collaborative financial planning meetings from bi-monthly to monthly, with notes taken, as of September 2026 as these three elements are reported and assessed at the statewide level. In addition, the IDVR Strategic Leadership Team conducts at least monthly reviews of matching, MOE, and Pre-ETS spending to assess progress, identify potential risks, and implement timely corrective measures when necessary and maintains agendas of these meetings to assure record retention for these reviews and decision points as of August 2026. These monitoring activities will continue as implemented and are intended to ensure more proactive management of federal fiscal requirements and reduce the likelihood of future compliance concerns in these areas. Anticipated Corrective Action Date: January 30, 2027 Responsible for Corrective Action: Heidi Smith, Financial Officer Heidi.Smith@vr.idaho.gov (208) 287-6457

Finding Number 2025-225: The Division could not provide supporting documentation for amounts reported on the Rehabilitation Services Administration (RSA) reports required under the Rehabilitation Services-Vocational Rehabilitation Grants to States. Federal Program: 84.126 - Rehabilitation Services - Vocational Rehabilitation Grants to States Related to Prior Finding: N/A Agency’s view: IDVR agrees that retention of supporting documentation aligned with the RSA-17 report submitted to RSA is necessary to ensure adequate documentation of the completed reports is created and maintained to support the submission. Corrective Action: IDVR has completed significant work to complete restatements of the RSA-17 for FFY2019-2024. These restatements have been accepted by the RSA Fiscal Unit and the reports were updated in RSAMIS by RSA after this process was completed in Spring 2026. With the restatement, RSA and IDVR have accepted the data based on an extensive third-party forensic review of IDVR’s financial records for these timeframes. IDVR is currently in the process of submitting the policy, procedures, and internal controls to RSA regarding the federal reporting of the RSA-17 required data elements. The fiscal staff have also worked extensively to ensure all future RSA-17 reports include supporting documentation that have been extracted from Luma and this process has been implemented as of February 2026. Once RSA approves the IDVR RSA-17 policy, procedures, and internal controls IDVR will adopt, train, and implement these documents as standard practice and will complete all future reports in accordance with the outlined controls and maintain the supporting documentation as outlined in the policy. Anticipated Corrective Action Date: January 30, 2027 Responsible for Corrective Action: Heidi Smith, Financial Officer Heidi.Smith@vr.idaho.gov (208) 287-6457

Finding Number 2025-224: The Department overstated federal grant expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package. Federal Program: 21.027 – Coronavirus State and Local Fiscal Recovery Fund Related to Prior Finding: N/A Agency’s view: The department agrees with the finding and asserts that it was a one-of-a-kind error in the timing of recording of one expenditure transaction. The error went undetected for a few months during the very confusing and difficult Luma transition year. When staff detected the error they believed the expenditure was still required to be reported on a SEFA and the only option available was to report it in FY 2025. Corrective Action: Staff have already completely familiarized themselves with the guidance on “New Requirement for Wire Payment Requests” issued by SCO on October 6, 2025. We are confident that our understanding of these new procedures will prevent any future occurrence. Anticipated Corrective Action Date: September 28, 2026 Responsible for Corrective Action: Steve Martin, Financial Officer Steve.Martin@idpr.idaho.gov (208) 869-4120

Finding Number 2025-223: The Division did not complete sufficient subrecipient monitoring for the Homeland Security Grant during fiscal year 2025. Federal Program: 97.067 - Homeland Security Grant Program Related to Prior Finding: N/A Agency’s view: The agency agrees with the issue identified. Corrective Action: Condition- limited formal monitoring occurred in FY 25. IOEM does have evidence of extensive subrecipient communication regarding project eligibility, allocability and allowability through email correspondence, grants management system records, meetings and discussions. IOEM monitoring activity was strained in FY 25 due to FEMA reimbursement delays, federal government shutdown (during which no reimbursements were made), staffing turnover, budget holdbacks and a new grants management system. MilDiv leadership implemented a ‘pause’ on activities incurring costs during the federal government shutdown and the Division of Financial Management issued the MilDiv a line of credit to continue paying staff during the time when FEMA was not processing reimbursements for grant expenditures. This impacted IOEM as well as county and Tribal emergency management programs. Resolution- IOEM has codified a monitoring protocol, meeting agenda template, and is currently scheduling monitoring for subrecipients identified on the risk assessment tool in September and October 2026. IOEM leadership determined that from Memorial Day to Labor Day no monitoring will take place due to the demands on local emergency management programs during fire season. Anticipated Corrective Action Date: December 17, 2026 Responsible for Corrective Action: Kari Harneck, IOEM Finance Section Chief kharneck@imd.idaho.gov (208) 258-6511

Finding Number 2025-222: The Division did not ensure Homeland Security Grant funds were obligated to subrecipients within the required 45 days of receipt of the award. Federal Program: 97.067 - Homeland Security Grant Program Related to Prior Finding: N/A Agency’s view: The agency partially agrees with the issue identified. Corrective Action: Condition - of those sampled, 2 subaward agreements were not issued within the 45- day requirement. IOEM does question whether the Operation Stone Garden Grant Program (OPSG) is subject to the 45-day requirement as Customs and Border Patrol approves the participating jurisdiction’s grant projects. Based on State Administration Agencies request for clarification, Idaho’s FY 25 HSGP Award Amendment states the following: “As required by 6 U.S.C. § 605(c) for SHSP and 6 U.S.C. § 604(d) for UASI, the recipient must make available to local and tribal governments not less than 80 percent of the SHSP and UASI funds awarded under this award, within 45 days. This requirement applies to SHSP and UASI funds only and does not apply to OPSG funds” (bolded for emphasis). The 2025 OMB Compliance Supplement Special Tests for HSGP indicate: “States… must obligate at least 80 percent of funds awarded to them under SHSP and UASI to local or Tribal governments within 45 calendar days of receipt of the funds.” It is of note that OPSG is not included in this Special Test. One of the two grant agreements issued over 45 days is associated with OPSG. Resolution - IOEM’s Grants Branch Chief accepts grant awards on IOEM’s behalf. The Grants Branch Chief will notify the Finance Section Chief and the Grant Analysts via email the date the award is accepted, the date 45 days from award acceptance and a deadline within the 45 days subaward obligation documents are expected to be issued. The Grants Branch Chief will review subaward obligations to assure they are issued within 45 days of award acceptance. Anticipated Corrective Action Date: August 31, 2026. Responsible for Corrective Action: Matt McCarter, IOEM Grants Branch Chief mmccarter@imd.idaho.gov (208) 258-6517

Finding Number 2025-221: The Division did not complete required Federal Funding Accountability and Transparency Act (FFATA) reports for the Homeland Security Grant Program. Federal Program: 97.067 - Homeland Security Grant Program Related to Prior Finding: N/A Agency’s view: The agency agrees with the issue identified. Corrective Action: Condition - subawards of $30,000 or more are to be reported to the FFATA Subaward Reporting System (FSRS). All FFATA reports are due by the end of the month following the month the subawards are obligated. While IOEM utilizes a tracker for FFATA reporting, some reports were late or missing. Federal government shutdowns, the change in FFATA reporting portal (FSRS was retired on March 8, 2025, and all FFATA reporting must be submitted in SAM.GOV), staffing turnover and delayed grant reimbursements resulted FFATA reporting delays. Resolution - The IOEM Finance Section (group responsible for FFATA reporting) is now fully staffed, and a Standard Operating Procedure / Instruction Guide has been developed to assist existing and new staff in adhering to FFATA reporting requirements in the new SAM.GOV interface. This will ensure consistency and thoroughness in FFATA reporting. Anticipated Corrective Action Date: August 31, 2026. Responsible for Corrective Action: Kari Harneck, IOEM Finance Section Chief kharneck@imd.idaho.gov (208) 258-6511

Finding Number 2025-220: Payroll adjustments lacked sufficient internal controls. Federal Programs: 93.777 - State Survey and Certification of Health Care Providers and Suppliers (Title XVIII) Medicare 93.778 - Grants to States for Medicaid 93.958 - Block Grants for Community Mental Health Services Related to Prior Finding: 2024-234 Agency’s view: The agency agrees with the finding. Corrective Action: Updated ISD interface training and procedure documents. The ISD interface protocol has been revised to specifically address the required approval process for corrections. Updated training educates Financial Specialists on the proper procedures and reinforces the requirement to obtain documented approval via email before any corrections are interfaced. The Training documents also stress the importance of attaching the documents to the system to maintain proper records of such approval. Refresher training was also provided for all analysts. Expected outcome: These actions establish consistent, documented approval control for ISD corrections, and ensure that email approval evidence is retained with each transaction. Anticipated Corrective Action Date: June 30, 2026 Responsible for Corrective Action: Brooke Jenkins, Financial Specialist, Principal Brooke.Jenkins1@dhw.idaho.gov (208) 334-5500

Finding Number 2025-219: The Department could not provide sufficient documentation to demonstrate compliance with provider eligibility requirements for managed care network providers. Federal Programs: 93.777 - State Survey and Certification of Health Care Providers and Suppliers (Title XVIII) Medicare 93.778 - Grants to States for Medicaid 93.767 - Children's Health Insurance Program Related to Prior Finding: 2024-217 Agency’s view: The agency agrees with the finding. Corrective Action: The Department will work to enhance its oversight of the Managed Care Organizations (MCOs). Current contract requirements state ‘submit documentation requested by IDHW within three (3) business days for standard requests, and within ten (10) business days for requests that require significant preparation, or a mutually agreed upon date.’ One MCO, Molina, did not fulfill the data requests in a timely manner in accordance with their contract. The Department will impose all available liquidated damage remedies in the current contract for this delay from the MCO. This will be completed by December 31, 2026. Medicaid is in process of writing contract language that will be implemented in the next amendment cycle before the end of the fiscal year. The amended contract language will state that information related to audits will need to be supplied within one (1) business day for urgent, three (3) business days for expedited, and five (5) for average. The Department will work with the Division of Purchasing to determine if it is possible to amend the liquidated damage section to ensure that we can hold the MCO vendors accountable for providing information during such audits in the future. Anticipated Corrective Action Date: June 30, 2027 Responsible for Corrective Action: Sasha O’Connell, Deputy Director Sasha.OConnell@dhw.idaho.gov (208) 334-5500

Finding Number 2025-218: The Department did not ensure compliance with federal requirements that Managed Care Organizations (MCO) were submitting provider roster reports annually to verify that all providers were properly licensed and in good standing. Federal Programs: 93.777 - State Survey and Certification of Health Care Providers and Suppliers (Title XVIII) Medicare 93.778 - Grants to States for Medicaid 93.767 - Children's Health Insurance Program Related to Prior Finding: 2024-218 Agency’s view: The agency agrees with the finding. Corrective Action: In 2025, the Department contracted with four (4) MCOs across six (6) contracts. Rosters were received and reviewed by staff but not noted in the contract monitoring tracker for the two (2) contracts. Moving forward higher levels of leadership (program managers and bureau chiefs) will be required to sign off to confirm that the review was noted in contract monitoring documentation. This will ensure that the provider roster and other reports are properly documented and reviewed. Anticipated Corrective Action Date: December 31, 2026 Responsible for Corrective Action: Sasha O’Connell, Deputy Director Sasha.OConnell@dhw.idaho.gov (208) 334-5500

Finding Number 2025-217: The Department lacked documented evidence of monitoring over provider screening and enrollment activities performed by the Department’s service organization for the Medicaid and CHIP programs. Federal Programs: 93.777 - State Survey and Certification of Health Care Providers and Suppliers (Title XVIII) Medicare 93.778 - Grants to States for Medicaid 93.767 - Children's Health Insurance Program Related to Prior Finding: N/A Agency’s view: The agency agrees with the finding. Corrective Action: The department routinely identifies, evaluates, and addresses areas of deficiency through its established oversight processes for our enrollment and credentialling contractor, Gainwell Technologies. The department reviews and documents, on a monthly basis, the contractor’s performance on 175 measures. The department and Gainwell representatives also participate in five (5) weekly, one (1) biweekly, and two (2) monthly meetings to facilitate issue identification, resolution, and monitoring of contractual performance related to enrollment and credentialling. While there were no providers found to be inappropriately enrolled or credentialled, the department understands that there are outstanding concerns regarding the state’s oversight. The department will coordinate with the Centers for Medicare and Medicaid Services (CMS) to identify gaps between current practices and CMS expectations establish a plan to address the auditors' concerns regarding compliance. The department anticipates completing this plan by January 1, 2027. Anticipated Corrective Action Date: January 1, 2027 Responsible for Corrective Action: Sasha O’Connell, Deputy Director Sasha.OConnell@dhw.idaho.gov (208) 334-5500

Finding Number 2025-216: The Department understated federal expenditures on the Children's Health Insurance Program (CHIP) CMS-21 Base Reports by $1,088,209. Federal Program: 93.767 - Children's Health Insurance Program Related to Prior Finding: N/A Agency’s view: The agency agrees with the finding. Corrective Action: During the FFY 2026, Quarter 1 CMS-21 reporting cycle, the Medicaid Budget Team identified underreported indirect expenditures for State Fiscal Years 2024 and 2025. The discrepancies were traced to initial reporting issues following the LUMA system go-live in July 2023, which resulted in indirect expenditures not being incorporated into the CMS-21 reporting process. To address the underreporting, the Medicaid Budget Team entered prior-period adjustments on CMS 21P forms to claim the eligible expenditures for the affected eight quarters, consistent with applicable CMS reporting requirements. To strengthen internal controls and prevent recurrence, the Medicaid Budget Team developed a new report that automatically incorporates indirect expenditures into the CMS-21 workpapers. This automated process reduces the risk of indirect expenditures being omitted and provides additional control to improve the completeness and accuracy of future CMS-21 reporting. Included is the CMS 21 Summary Sheet which shows the consolidation of the prior period adjustments make to claim all identified expenditures that had been omitted (line 2). Anticipated Corrective Action Date: October 1, 2025 Responsible for Corrective Action: Erica Williams, Financial Specialist Principal Erica.Williams@dhw.idaho.gov (208) 334-5500

Finding Number 2025-215: The Department did not meet the Mental Health Block Grant (MHBG) earmarking requirement for evidence-based programs addressing early serious mental illness. Federal Program: 93.958 - Block Grants for Community Mental Health Services Related to Prior Finding: N/A Agency’s view: The Idaho Department of Health and Welfare (DHW) agrees with the finding. DHW consulted with the Substance Abuse and Mental Health Services Administration (SAMHSA) Grants Project Officer (GPO) regarding the Early Serious Mental Illness (ESMI) earmarking requirement, including how the requirement is calculated, the flexibility available for meeting the requirement, and the potential impact on future Mental Health Block Grant (MHBG) funding. The GPO confirmed that the standard requirement is to expend not less than 10% of the MHBG award on evidence-based programs addressing ESMI. The GPO also confirmed that a State may elect the two-year option to expend not less than 20% of the ESMI set-aside by the end of the succeeding fiscal year. For Idaho's current grant period, this provides additional time to meet the expenditure requirement through qualifying ESMI activities. SAMHSA GPO Guidance The GPO further stated that if Idaho appropriately elects and documents the 20% two-year option, SAMHSA would not expect a penalty or negative impact on future MHBG funding. If the expenditure requirement is not met, unexpended ESMI set-aside funds cannot be drawn down and would revert to the Treasury. If ESMI set-aside funds are spent on non-ESMI activities, the amount used for those expenditures would need to be returned. This repayment requirement would not apply to other MHBG funds that were properly spent on allowable activities outside of the ESMI set-aside. The GPO also clarified that there is no separate waiver or exception process for the ESMI expenditure requirement beyond the 20% two-year flexibility. SAMHSA's MHBG closeout team will provide additional guidance regarding documentation expected at closeout to support use of the two-year flexibility. The GPO also clarified that no-cost extensions are not currently an option for the MHBG grant. The 10% ESMI earmark is calculated based on the total MHBG award amount for the grant period, not the amount drawn down or spent to date. Prior Monitoring Process DHW has historically used grant budget papers, LUMA financial system expenditure information, and spreadsheets to track ESMI expenditures; however, prior processes did not provide sufficient controls to ensure the required earmark was met. LUMA expenditure reporting and data processes have since been improved and are now used as part of the monitoring process. Improvements Already Implemented DHW has already taken steps to strengthen the monitoring of MHBG and ESMI expenditures. The MHBG team is developing an MHBG expenditure tracking tool to monitor expenditures at the program level and the amount needed to meet the ESMI earmark. The MHBG team also reviews LUMA expenditure data to monitor spending, identify issues or discrepancies, and determine whether additional follow-up is needed. The Finance and Budget Unit (FABU) updates the LUMA Data tab in the Realignment Project spreadsheet, and Grant Reporting posts the MHBG workpapers for review. The MHBG team reviews the expenditure information and MHBG workpapers and compares ESMI expenditures to the required earmark. The MHBG team also meets quarterly with internal partners to review MHBG grant activities, expenditures, reporting, progress made, and any challenges or concerns. These meetings provide an opportunity to discuss how the grant is progressing, identify potential issues, and determine whether additional follow-up is needed. For MHBG funding, the MHBG Team has implemented an annual Internal Funding Request process to provide a consistent process for requesting, reviewing, approving, and tracking MHBG funding. These improvements will be incorporated into the formal monitoring process outlined below and will continue throughout the grant period. Corrective Action: Idaho Department of Health and Welfare (DHW) will implement a formal process to monitor compliance with the Mental Health Block Grant (MHBG) 10% Early Serious Mental Illness (ESMI) earmarking requirement throughout each grant period. The Adult Mental Health (AMH) Program Manager will oversee implementation of the monitoring process, with review and oversight by the System Design and Implementation Bureau–Adult Behavioral Health (SDI-ABH) Chief and System Design and Implementation Programs Bureau Chief. The MHBG team, ESMI team, Grant Reporting, and Finance and Budget Unit (FABU) will each have defined responsibilities within the monitoring process. The corrective action will include the following steps: 1. Establish an ESMI expenditure tracking process. The MHBG team will develop and maintain an MHBG expenditure tracking tool to identify and track qualifying ESMI expenditures at the program level and compare the expenditure information to the required 10% earmark for the MHBG grant. FABU will maintain the expenditure information in the Realignment Project spreadsheet, and Grant Reporting will provide the MHBG workpapers through its established process. 2. Calculate the required earmark amount. At the beginning of each grant period, the MHBG team will calculate and document the amount required to meet the 10% ESMI earmark and the timeframe for meeting the requirement before the end of the grant period. 3. Monitor ESMI expenditures quarterly. FABU will provide the ESMI personnel costs monthly and continue to update the LUMA Data tab in the Realignment Project with the expenditure information. Grant Reporting will post the MHBG workpapers. The ESMI team will manage the ESMI contracts, provide support to ESMI providers, and review and process ESMI invoices to ensure providers are submitting invoices in accordance with their contracts. The MHBG team will review the workpapers and expenditure information for accuracy, compare the program-level expenditure tracking to the information provided in the grant workpapers, and compare actual ESMI expenditures to the required 10% earmark. The MHBG team will follow the established workpaper review and approval process. 4. Review expenditure status and address potential shortfalls. The MHBG team will review the quarterly expenditure information to identify potential shortfalls and determine whether additional qualifying ESMI expenditures may be needed to meet the 10% ESMI earmark. If a potential shortfall is identified, the MHBG team will work with internal partners and look for additional qualifying ESMI activities, including opportunities with other providers or programs, to address the shortfall and meet the set-aside requirement before the end of the grant period. FABU and Grant Reporting will complete their respective reviews as part of their established processes. The MHBG team will reach out to FABU or Grant Reporting as needed when questions, discrepancies, or clarification are identified. The AMH Program Manager will oversee this process and provide updates to the SDI-ABH Behavioral Health Chief and System Design and Implementation Programs Bureau Chief as needed. 5. Maintain supporting documentation. The MHBG team will maintain documentation supporting the ESMI expenditure monitoring process, including the expenditure tracking, quarterly reviews, required 10% earmark calculations, MHBG grant workpapers reviewed, the timeframe for meeting the requirement, and any identified discrepancies or corrective actions. Documentation will be maintained in the appropriate grant files in accordance with DHW record retention requirements. 6. Complete the grant closure review. FABU will initiate the established grant closure process approximately two months prior to the closure of each grant phase. During Stage 1, the grant will be reviewed to identify the areas and parties that need to be involved in the closure process. During Stage 2, Grant Reporting, Cash Management, and other identified parties will participate in the closure review. The MHBG team will participate in the closure process and review the ESMI expenditures and documentation to verify that the required 10% earmark has been met. Any questions or discrepancies identified during the closure process will be addressed with the appropriate parties. The results of the review will be documented and maintained with the grant records. Anticipated Corrective Action Date: September 30, 2027 Responsible for Corrective Action: Scott Rasmussen, SDI Programs Bureau Chief Scott.Rasmussen@dhw.idaho.gov (208) 334-5500

Finding Number 2025-214: The Department did not review the Child Care Development Fund (CCDF) Administration for Children and Families (ACF) Form 696 report at a sufficient level to identify an $88,822 misstatement. Federal Program: 93.596 - Child Care Mandatory and Matching Funds of the Child Care and Development Fund Related to Prior Finding: 2024-224 Agency’s view: The agency agrees with the finding. Corrective Action: The Grant Reporting Team Lead, Cash and Grants Supervisor, and/or Financial Manager will strengthen its review by performing and documenting an in-depth review of the ACF-696 workpapers each time a grant budget period or phase is rolled forward. This review will be completed within 90 days of the start of the new budget period and will include verification of applicable formulas and other highrisk calculations. To provide ongoing oversight, the Grant Log will be used as a centralized tracking mechanism to document budget period start dates, assigned reviewer, review completion date, identified discrepancies, and resolution of any issues. Reviewers will retain documentation evidencing the review and any corrections made. The Cash and Grants Supervisor or Financial Manager will periodically verify completion of the reviews and evaluate identified discrepancies to determine whether additional corrective action or process changes are necessary. These procedures are intended to provide a documented, repeatable review process with sufficient precision to identify reporting errors. Anticipated Corrective Action Date: January 31, 2027 Responsible for Corrective Action: Randena P. Darpli, CPA, CGFM, Financial Manager dena.darpli@dhw.idaho.gov (208) 334-4909

Finding Number 2025-213: A Social Services Block Grant (SSBG) financial report was not submitted timely. Federal Program: 93.667 - Social Services Block Grant Related to Prior Finding: N/A Agency’s view: The agency agrees with the finding. Corrective Action: The Department will strengthen its existing grant reporting controls to provide earlier identification and escalation of issues that could prevent timely submission of required financial reports. The Grant Reporting Team will continue to use the Grant Log to monitor reporting due dates and will identify required source information and establish an internal completion date sufficiently in advance of the grantor deadline. If required information is unavailable, incomplete, or otherwise prevents the report from being finalized, the Grant Reporting Team Lead will escalate the issue to the Cash and Grants Supervisor and/or Financial Manager for resolution. When appropriate, the Department will communicate with the grantor regarding the reporting issue and request an extension before the established due date. Documentation of the request, grantor response, and any related resolution will be retained in the grant file. The Report Routing Cover Sheet will be updated to document the completion of required reporting steps, including confirmation that all necessary supporting information has been received, required management review has occurred, and any extension request or related grantor communication has been documented and retained. The Cash and Grants Supervisor will review the Grant Log and Report Routing Cover Sheets at least monthly to identify upcoming reports, unresolved information requests, and reports at risk of missing their due dates. This process will provide management with sufficient advance notice to intervene when necessary and will establish a documented record demonstrating that required financial reports were monitored through completion and submitted timely. Anticipated Corrective Action Date: January 31, 2027 Responsible for Corrective Action: Randena P. Darpli, CPA, CGFM, Financial Manager dena.darpli@dhw.idaho.gov (208) 334-4909

Finding Number 2025-212: A Social Services Block Grant (SSBG) Post-Expenditure Report did not include a review and approval prior to submission. Federal Program: 93.667 - Social Services Block Grant Related to Prior Finding: N/A Agency’s view: The agency agrees with the finding. Corrective Action: The SSBG Post-Expenditure Report has been added to the Department’s Grant Log with the applicable due date and will follow the Department’s established federal financial reporting review process. Prior to submission, the Grant Reporting Team will prepare the report and supporting workpapers, these include reconciliation of reported expenditures to the underlying financial records and documentation supporting the information reported. The report will be routed to the appropriate supervisor and/or Financial Manager for review and approval before submission. The Report Routing Cover Sheet will document the preparer, reviewer, date of review, approval, and any corrections or followup required. The Cash and Grants Supervisor will monitor the Grant Log to ensure the Post-Expenditure Report is routed, reviewed, approved, and submitted by the required due date. Completed Report Routing Cover Sheets and supporting documentation will be retained with the grant records as evidence that the required review and approval occurred prior to submission. This process will provide a documented review and approval control over the SSBG Post-Expenditure Report and ensure that management has evidence that the report was reviewed for accuracy and completeness before it is submitted. Anticipated Corrective Action Date: March 31, 2027 Responsible for Corrective Action: Randena P. Darpli, CPA, CGFM, Financial Manager dena.darpli@dhw.idaho.gov (208) 334-4909

Finding Number 2025-211: Federal Funding Accountability and Transparency Act (FFATA) reports were not reviewed prior to submission and were not submitted timely. Federal Program: 93.568 - Low-Income Home Energy Assistance Related to Prior Finding: N/A Agency’s view: The agency agrees with the finding. Corrective Action: The FFATA Data Worksheet, developed by DHW, includes a list of all obligations of federal funds to subgrantees of $30,000 or more that occurred during the prior month. The due date will be added to the FFATA Data Worksheet to draw particular attention to that. The FFATA Data Worksheet is prepared by the Grant Reporting Team Lead, Financial Specialist, Senior, and the Cash and Grants Supervisor, Financial Specialist, Principal, will be responsible for reviewing it to ensure all applicable subgrants are included for the month. Once that review has occurred and any resulting edits have been made, the FFATA Data Worksheet will be returned to the Grant Reporting Team Lead to enter the data in sam.gov. As sam.gov does not offer a “save” function, there is not a presubmission review. The previously discussed review by the Cash and Grants Supervisor is aimed at preventing any noncompliance related to omission of reportable obligations. A final review aimed at detecting and timely correcting any material misstatements will take place with the Technical Records Specialist completing a data entry review to ensure the data entered into sam.gov agrees with the FFATA Data Worksheet. A FFATA Report Routing Sheet will also be developed to document the above reviews and approvals. The FFATA Report Routing Sheet will also include the due date as another point of monitoring for timely submission. Completed routing sheets and supporting documentation will be retained in the grant file as evidence that the required review, submission, and verification procedures are performed. Anticipated Corrective Action Date: January 31, 2027 Responsible for Corrective Action: Randena P. Darpli, CPA, CGFM, Financial Manager dena.darpli@dhw.idaho.gov (208) 334-4909

Finding Number 2025-210: The Department did not provide documented support to verify the accuracy of a Low Income Energy Assistance Program (LIHEAP) performance report. Federal Program: 93.568 - Low-Income Home Energy Assistance Related to Prior Finding: 2024-230 Agency’s view: The agency agrees with the finding. Corrective Action: The Department has updated a process document that will strengthen our internal controls regarding the LIHEAP performance report. The Department will compile and retain sufficient documentation to support the information included in the LIHEAP Performance report. Anticipated Corrective Action Date: The process document was updated on September 9, 2026, and will be utilized when completing the upcoming LIHEAP performance report. Responsible for Corrective Action: Lisa Johnson, Program Manager Lisa.Johnson@dhw.idaho.gov (208) 334-5739

Finding Number 2025-209: The Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) project and expenditure reports (P&E) contained misstatements. Federal Program: 21.027 - Coronavirus State and Local Fiscal Recovery Fund Related to Prior Finding: N/A Agency’s view: The Division agrees with the finding and recognizes that additional controls are needed to ensure CSLFRF Project and Expenditure reports are accurate, fully supported, and more thoroughly reconciled to the State’s accounting system before submission. The Division notes that the identified errors were below the program’s materiality threshold and did not result in a finding of material noncompliance or a material weakness. The Division also corrects reporting errors when they are identified. However, Treasury’s published FAQ and written correspondence (attached) confirm that submitted reports cannot be reopened after the reporting deadline. Because P&E reports are cumulative, any necessary corrections must be reflected in a subsequent reporting period. This required correction process contributed to some of the differences identified during the audit because adjustments related to prior periods were necessarily recorded in later reports. Accordingly, the timing of these adjustments was consistent with Treasury’s prescribed reporting process. Corrective Action: The Division will implement the following corrective actions for all remaining CSLFRF P&E reports: 1. Required agency support. Each administering agency will submit a completed reporting template for every active project. If no activity occurred, the agency must provide documented confirmation of no change. Missing templates will be tracked and escalated before the report is finalized. 2. Reconciliation to Luma. Current and cumulative expenditures and obligations will be reconciled by administering agency to Lumat. All differences will be documented and resolved before submission. 3. Independent detailed review. The review will cover source templates, Luma reconciliations, current and cumulative amounts, prior-period balances, adjustments, and evidence supporting projects reported with no change. 4. Procedures, training, and retention. The Division will document the reporting process, provide training and cross-training to staff involved in CSLFRF reporting, and retain the templates, reconciliations, agency confirmations, review checklist, and final submission support in a centralized reporting file. 5. Correction of prior reporting errors. The Division will correct the identified errors through Treasury's prescribed process. In written email correspondence to Justin Collins, the U.S. Department of the Treasury confirmed: 'Prior submitted reports are not eligible to be reopened for revisions since the reporting deadline has passed. The SLFRF Project and Expenditure Reports are cumulative reports, and any adjustments needed will need to be made in the next reporting period.' Accordingly, the Division will document and include the necessary adjustments in the next available cumulative P&E report and retain Treasury's email as support for the correction method. Anticipated Corrective Action Date: January 31, 2027. The revised controls will be applied before submission of the next required quarterly CSLFRF P&E report. Responsible for Corrective Action: Justin Collins, Deputy Administrator | State Financial Officer Justin.collins@dfm.idaho.gov (208) 854-3063

Finding Number 2025-208: The Department’s Indirect Cost Rate Proposal contained multiple errors. Federal Program: 66.468 - Drinking Water State Revolving Fund Related to Prior Finding: N/A Agency’s view: Due to staff turnover, DEQ agrees that sufficient supporting documentation could not be located to recreate the data and calculations from the initial indirect cost rate proposal (ICRP) packet. DEQ does not agree with the ‘Cause’ statement of the Management Letter that says, “documentation to support the modified ICRP was not available at the time of our review.” DEQ had the documentation supporting the negotiated rate with the Environmental Protection Agency (EPA). The Legislative Services Office (LSO) Audit Division audited the initial indirect cost rate proposal (ICRP) only, which had errors, but not the final packet that was modified and approved by EPA. The rate used by DEQ for FY25 was reviewed, modified (negotiated) and approved by EPA. Corrective Action: DEQ has had significant turnover in the fiscal office, which has resulted in gaps of knowledge of policies and practices. In summer 2025, DEQ leadership reorganized the fiscal department to improve efficiency, enhance oversight of grants and contracts, and strengthen financial controls. The fiscal office is currently in a rebuilding phase and is dedicated to training and developing staff, implementing best practices, and documenting processes and procedures, including those for federal grant compliance. The agency reached out to our federal oversight agency for assistance and direction with preparing and submitting the indirect cost rate proposal for FY27. We have and are committed to maintaining a file with all supporting documentation used to compile and prepare current and future proposals, as required by 2 CFR 200. Training and developing staff is an ongoing process, along with following updated federal rules and regulations. DEQ staff worked with the Environmental Protection Agency’s Indirect Cost Rate Negotiator to submit the indirect cost rate proposal packet for FY27 and we anticipate significantly reduced errors with the calculations and support for that submittal. Anticipated Corrective Action Date: December 31, 2026 Responsible for Corrective Action: Linda Brown, Financial Executive Officer Linda.Brown@deq.idaho.gov (208) 373-0292

Finding Number 2025-207: The Commission did not verify that vendors were not suspended or debarred prior to making federal grant payments. Federal Program: 84.126 - Rehabilitation Services - Vocational Rehabilitation Grants to States Related to Prior Finding: N/A Agency’s view: The Commission agrees with this finding. ICBVI recognizes the absence of vendor suspension/debarment verifications prior to payment. Corrective Action: • Verification Process: Procedures were put in place to check applicable vendors against the SAM.gov database on an annual basis. Documentation of each check will be retained and periodically reviewed. • Staff Training: Relevant staff will be trained on suspension/debarment requirements, and responsibility for checks will be clearly assigned. Laura Corazar checks that the vendor is not debarred and saves the screenshot demonstrating this. Corey Bresina will review and initial that this has been verified. Procedure as follows: Procedure: Vendor Exclusion Verification – SAM.gov Document Owner: Accounting Department Effective Date: December 1, 2025 Review Cycle: Annually, with quarterly vendor reviews Applicable Regulations: 2 CFR Part 180; 2 CFR Part 200, Subpart C, Appendix I Objective: This procedure establishes the steps for verifying that vendors, contractors, and subrecipients are not suspended, debarred, or otherwise excluded from participation in federally funded programs, in accordance with 2 CFR Part 180. It ensures federal funds are awarded only to responsible parties and provides a documented audit trail for compliance purposes. Scope: These requirements apply to all personnel involved in: • Procurement activities funded as a whole or in part with federal funds • Issuing subawards, contracts, or purchase orders under federal programs • Vendor selection, onboarding, and monitoring • Grant administration and compliance oversight All employees responsible for these functions must follow this procedure. Responsibilities: • All staff involved in procurement, grant management, or vendor selection must perform and document SAM.gov checks. This ensures we remain compliant with 2 CFR Part 180 and protect all federal funds entrusted to our organization. Procedure Steps: • Vendor Identification Gather vendor information: legal name, UEI, CAGE code, and relevant location details. • SAM.gov Exclusion Search Navigate to SAM.gov Click Search Records Select Exclusions under the Domain filter Enter vendor identifiers (Name, UEI, CAGE code, or other applicable criteria) Click Search to retrieve results • Review Results No Results: Vendor is not excluded “Entity” (green): Vendor is active and eligible “Exclusion” (purple): Vendor is suspended or debarred Do not proceed with any transaction Escalate to Administrative Services Manager Contact the issuing federal agency if clarification is needed. • Documentation Save a PDF or screenshot of the search results Record the search and outcome in the Quarterly Vendor Review Log. • Quarterly Review - All active vendors must be reviewed quarterly for exclusion status, based on federal fiscal year Maintain documentation in the designated compliance folder Accounting staff verify completion and records adherence. Recordkeeping: • Maintain PDF/screenshots of each SAM.gov search • Maintain completed Quarterly Vendor Review Logs • Retain records in accordance with federal grant record retention requirements. Non-Compliance: Failure to follow this procedure may result in: • Audit findings • Repayment of federal funds • Suspension or termination of federal awards References: • 2 CFR Part 180 – Non-Procurement Debarment and Suspension • 2 CFR Part 200, Subpart C, Appendix II – Contract Provisions for Non-Federal Entities • SAM.gov Exclusions Database. Anticipated Corrective Action Date: This was corrected in December 2025 Responsible for Corrective Action: Laura Cortazar, Financial Technician lcortazar@icbvi.idaho.gov (208) 334-3220

Finding Number 2025-206: The Commission is not following Idaho Administrative Rules for Purchasing as required for compliance with the requirements applicable to the Rehabilitation Services-Vocational Rehabilitation Grants to States program. Federal Program: 84.126 - Rehabilitation Services - Vocational Rehabilitation Grants to States Related to Prior Finding: N/A Agency’s view: The agency agrees with the finding. However, we have since corrected this finding, as it was found on the previous year’s audit. Corrective Action: In December of 2025, we received training from the Department of Purchasing. Based on that training ICBVI’s management team worked with DOP to create contracts for current and future purchases. ICBVI asked Laura Cortazar to take the lead on the development of contracts for the agency. ICBVI created a procurement checklist and documentation template, which was added to internal controls to support purchases subject to state policy. In August of 2026, all staff who make any purchases were trained using the new guidelines, which ensure compliance with state procurement requirements. In addition, ICBVI worked with DOP’s process to request purchasing exemptions for working with community rehabilitation programs, universities and with a temporary staffing agency. ICBVI understands the state thresholds and has processes in place for creating contracts when needed. ICBVI believes this finding is ready to be closed. Anticipated Corrective Action Date: August 2026 Responsible for Corrective Action: Laura Cortazar, Financial Technician lcortazar@icbvi.idaho.gov (208) 334-3220