Corrective Action Plans

2023-025 Response: Strengthen Controls to Ensure Compliance with Eligibility Requirements for the Emergency Rental Assistance Program (ERA). ALN# 21.023 We acknowledge the finding. The Mississippi Department of Finance and Administration was not appropriated funds for this program nor was the agency given any authority for the administration for the program. As such, DFA was not in a position to assess eligibility determinations or perform monitoring. DFA drew down funds on behalf of Mississippi Home Corp in light of an impending federal deadline. Mississippi Home Corporation had eligibility and fraud prevention policies in place for the ARPA programs. These policies included, but are not limited to, contracting with a third-party law firm to review all applications with a three-tier review system, monitoring with random sample selections for every 10% completed, employing an internal, qualitycontrol auditor, and reviewing any applications submitted that were greater than $10,000. As a result of their monitoring, MHC was able to identify suspicious applications and report them to the Mississippi Attorney General for investigation. MHC continues to report all expenditures directly to U.S. Treasury on a quarterly basis. It is also worth noting that the program stopped taking applications in September of 2022 which was prior to the issuance of the 2022 Single Audit Report that was released on July 31, 2023. Thus, policies and controls in place could not be changed for this. DFA is taking the position that corrective action is no longer necessary for these funds. Corrective Action: A. The Mississippi Department of Finance and Administration is taking the position that corrective action is no longer necessary. The program stopped taking applications in September of 2022, which is prior to the current 2023 single audit report dated November 21, 2024. Policies and controls in place could not be changed for this. B . N/A C. N/A D. The Emergency Rental Assistance program stopped taking applications September of 2022.

Reference Number: 2023-002 Prior Year Finding: Yes, 2022-023 Federal Agency: U.S. Department of Labor Department Name: Mississippi Department of Employment Security Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: 7/1/22 – 6/30/23 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. 2 CFR section 200.332 also states that pass-through entities must: (d) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: 1) The subrecipient's prior experience with the same or similar subawards; 2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F - Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; 3) Whether the subrecipient has new personnel or new or substantially changed systems; 4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (e) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521 Management decision. (f) Verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements. Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Mississippi Department of Employment Security (MDES) was unable to provide documentation of subaward agreements and monitoring activities performed. Context: Six subrecipients were selected for testing and the following exceptions were noted:  1 of 6 subawards was not available for audit. Auditors were unable to verify if the subaward contained all required information nor if it was reviewed and approved by appropriate program staff prior to issuance.  For 3 of 6 subrecipients, MDES was unable to provide documentation that it performed monitoring activities nor that it ensured the subrecipients were audited as required by Subpart F. Questioned costs: Undetermined. Cause: Internal controls were not sufficient to ensure that copies of subaward agreements were maintained and available for audit, nor that it maintained documentation of subrecipient monitoring activities performed. Effect: Auditors were unable to verify that subawards were issued in accordance with Federal requirements nor that the subrecipients had been adequately monitored and were audited as required by Subpart F. Recommendation: MDES should review and enhance internal controls and procedures to ensure that it maintains copies of all subaward agreements, that proper subrecipient monitoring is conducted, and that evaluation of independent audits is performed for all subrecipients. Copies of subawards and documentation of subrecipient monitoring activities should be readily available for audit. Views of responsible officials: MDES Response MDES concurs with this finding. Corrective Action Plan: a. MDES Plan: MDES will establish a checklist to verify receipt of the documents responsive to this compliance requirement. Using the checklist, MDES will ensure that all documents indicated in this finding will be readily available for the auditors as early as possible in the audit process. Additionally, MDES will develop a timeline and plan for the submission of documentation to ensure timely review. b. Contact Person Responsible: Director of Grant Management. c. Anticipated Corrective Action Plan Completion Date: July 31, 2024.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Labor Department Name: Mississippi Department of Employment Security Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: 7/1/22 – 6/30/23 Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report firsttier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Mississippi Department of Employment Security (MDES) did not report subaward information to FSRS within thirty days after issuing the subaward or subaward amendment. Context: Nine subawards were selected for testing which included five original subawards and four amendments. We noted the following exceptions:  1 of 9 subawards should have been reported by 11/30/2022 but was not reported before the end of FY 2023. The subaward was subsequently reported in February 2024.  3 of 9 subawards should have been reported by 5/31/2023 but were not reported before the end of FY 2023. The subawards were subsequently reported in February 2024.  4 of 9 subawards should have been reported no later than 2/28/2023 but they were reported on 3/29/2023, or 29 days late. Cause: MDES’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS no later than the end of the month following the month of issuance. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend MDES establish procedures and internal controls to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance of each subaward. Views of responsible officials: MDES Response MDES concurs that the program year 2022 subawards were not entered into the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) within thirty days of subaward issuance. The practice of MDES has been to enter all subawards into the FSRS at one time and later perform a look back to determine the adjustments needed to bring the reported balances up or down based on subaward amendments made during the year. Specifically, for program year 2022 subawards, the initial entry into FSRS was on 3/29/2023 with the post award adjustment entry made February 23, 2024. Corrective Action Plan: a. MDES Plan: MDES will strengthen controls around FSRS reporting to ensure subawards are reported to FSRS within thirty days of issuance. MDES will also monitor subaward amendments and ensure they are reported within thirty days of issuance. Entries into the FSRS will be reviewed by the supervisor to ensure compliance. This process is effective immediately. b. Contact Person Responsible: Comptroller. c. Anticipated Corrective Action Plan Completion Date: July 15, 2024.

Reference Number: 2023-003 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Mississippi Department of Employment Security Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: 7/1/22 – 6/30/23 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Compliance – Per 20 CFR parts 680, 681, 682, and 683, state workforce agencies must ensure that individuals are eligible to participate in the program. Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Mississippi Department of Employment Security (MDES) was unable to provide documentation that the eligibility determination for a participant had been reviewed and approved. Context: Documentation for one of forty participants selected for testing did not contain a supervisor’s signature indicating that it had been reviewed and approved. Questioned costs: Undetermined. Cause: Internal controls were not sufficient to ensure that documentation supporting participant eligibility was reviewed and approved by a supervisor. Effect: Failure to ensure that all eligibility documentation is properly reviewed and approved could result in ineligible individuals participating in the program. Recommendation: MDES should review and enhance internal controls and procedures to ensure that participant eligibility documentation is properly reviewed and approved by a supervisor. Views of responsible officials: MDES Response MDES concurs with this finding and recommendation. These incidents were isolated and non-reoccurring. MDES will implement procedures to require a review of all eligibility documents for completeness. Corrective Action Plan: a. MDES Action Plan: MDES will require, as a compensating control for each file to contain a checklist of required documentation that will be reviewed and approved by the supervisor responsible for the respective job center. MDES will verify internal compliance with these procedures over the next quarter. b. Contact Person Responsible: Director of Grant Management. c. Anticipated Corrective Action Plan Completion Date: MDES will complete this corrective action on or before September 30, 2024.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Labor Department Name: Mississippi Department of Employment Security Federal Program: Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: 7/1/22 – 6/30/23 Compliance Requirement: Special Tests and Provisions – UI Benefit Payments Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Compliance: The State Workforce Agency (SWA) is required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL’s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is exempted from such requirement (20 CFR section 602.22). The program estimates error rates, that is, numbers of claims improperly paid or denied, and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of statistically sound random samples to the universe of all claims paid and denied in a state. Specifically, the SWA’s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt, and in-depth investigations to determine if the administration of the UC program is consistent with state and federal law (20 CFR section 602.21(d)). As presented in the ET Handbook No. 395, the investigation involves a review of state agency records, as well as contacting the claimant, employers, and third parties (either inperson, by telephone, or by fax) to conduct new and original fact-finding related to all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to federal and state law as well as official policy. The following time limits are established for completion of all cases for the year. (The "year" includes all batches of weeks ending in the calendar year.): • a minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch; • 95 percent of cases must be completed within 90 days of the week ending date of the batch; • a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the calendar year. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Mississippi Department of Employment Security (MDES) was unable to provide documentation that case reviews were reviewed and approved by investigator staff. Context: One of forty cases selected for testing did not have documentation of investigator review and approval. Questioned costs: Undetermined. Cause: The Department’s internal controls were not sufficient to ensure that it maintained documentation of investigator review and approval for all BAM case reviews. Effect: Incomplete documentation of BAM case reviews could delay the detection and correction of inaccurate benefit payments and denied claims. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that documentation of investigator review, and approval of all BAM case reviews is maintained. Views of responsible officials: MDES Response MDES concurs with this finding. Corrective Action Plan: a. MDES Plan: MDES will provide additional training to BAM investigative staff and supervisors to remind them of the importance of complying with federal regulations requiring all investigative staff to document their work on the final approved reviews of the BAM cases with a signature. b. Contact Person Responsible: Director Unemployment Insurance – Tax. c. Anticipated Corrective Action Plan Completion Date: July 31, 2024.

2023-004 Federal Award Subrecipient Monitoring – Material Non-Compliance and Material Weakness in Internal Control over Compliance Recommendation: The Organization should establish written policies and procedures regarding the contracting and monitoring of subrecipients that are in line with Uniform Guidance requirements, as well as establish organizational controls to ensure that such policies and procedures are being followed. Action Taken: Management concurs with the finding and has defined corrective action to address it. Staff have reviewed policies and procedures already in place to ensure compliance of subrecipient monitoring. The Fiscal department has subsequently conducted a fiscal desk review of the subrecipient in question for FY 22/23 and no findings were found. Standard Operating Processes were updated to ensure all subrecipients are fiscally monitored based on the Risk Assessment Determination level. The above identified corrective action was implemented in July 2024. Stacey Wilson, Fiscal Director, has implemented a monitoring calendar for fiscal and Program Director’s will be responsible for ensuring subrecipients are monitored.

2023-003 Federal Award Special Reporting – Federal Funding Accountability and Transparency Act (FFATA) – Material Non-Compliance and Material Weakness in Internal Controls over Compliance Recommendation: The Organization should establish written policies and procedures regarding review of grant agreements for compliance requirements along with written policies and procedures for first-tier subawards including tracking and proper internal control procedures. Action Taken: Management concurs with the finding and has defined corrective action to address it. We have identified gaps in our reporting processes and worked to implement changes to ensure compliance with special reporting requirements. Policies and procedures will be updated regarding special reporting requirements. The Fiscal department will also be responsible for reviewing all contracts to identify all compliance requirements. Tracking procedures will be implemented to ensure reports are filed timely. The above identified corrective action was implemented in July 2024. Stacey Wilson, Fiscal Director, has implemented a tracking system for the FFATA.

U.S Department of Homeland Security Staffing for Adequate Fire and Emergency Response (SAFER) – 97.083 Management’s Response: During 2024, management worked with the Fire Department and Payroll to ensure only straight time was coded to this grant and no overtime was charged to this grant. This was a finding in 2022 but we were not aware until the audit was completed in 2024 there was an issue the existing payroll system was not flagging. This has been corrected in in 2024 and should not be a recurring issue. Views of Responsible Officials and Corrective Action: The reason for recurrence is the finding was communicated late in the prior year. Management will work with stakeholders so that only the allowed costs are used as the basis of the reimbursement packet. We have also created fencing around allowed costs and period of performance in our new ERP system. Management will ensure this is addressed by December 31, 2024. Responsible Official: Dr. Shelley Kneuvean Chief Financial Officer Unified Government of Wyandotte County & Kansas City KS

U.S Department of Treasury COVID 19 – Coronavirus State and Local Fisal Recovery Funds – 21.027 Management’s Response: There was a change in the position of CFO and the Unified Government did not have access to the US Treasury system for a period of time to upload the report. The UG finance team worked with our outside contractor to gain access; and upon getting access to the system, immediately uploaded the form. This was caused by turnover in staff and is not reoccurring. Views of Responsible Officials and Corrective Action: The reason for recurrence is the finding was communicated late in the prior year. In concert with our ARPA consultant, we were able to combine the City & County on the portal and report timely quarterly since this initial issue in the reporting portal will ensure this is addressed by December 31, 2025. Responsible Official: Dr. Shelley Kneuvean Chief Financial Officer Unified Government of Wyandotte County & Kansas City KS

U.S. Department of Health and Human Services, passed through Kansas Department of Aging Aging Cluster – ALN 93.045 – Special Programs for the Aging_Title III, Part C_Nutrition Services – 2301KSOAHD Management’s Response: The department had been using set percentage allocations for grants in the payroll system. They are working with payroll and IT to be able to do real time reporting on personnel, number of daily hours per grant. This should be implemented in 2025. Views of Responsible Officials and Corrective Action: The reason for recurrence is the finding was communicated late in the prior year and due to transition and turnover within the department's staff. Management agrees with the stated finding and has implemented a corrective action plan. Management will ensure this is addressed by December 31, 2025. Responsible Official: Dr. Shelley Kneuvean Chief Financial Officer Unified Government of Wyandotte County & Kansas City KS

U.S. Department of Health and Human Services, passed through Kansas Department of Aging Aging Cluster – ALN 93.044 - Special Programs for the Aging_Title III, Part B_Grants for Supportive Services and Senior Centers - 2301KSOASS ALN 93.045 – Special Programs for the Aging_Title III, Part C_Nutrition Services – 2301KSOAHD Management’s Response: The department of aging is reviewing its current process to track spending and earmarking. A new system for compliance monitoring is planned for early 2025. Views of Responsible Officials and Corrective Action: The reason for recurrence is the finding was communicated late in the prior year and due to transition and turnover within the department's staff. Management will put controls and processes in place to ensure earmarking is being monitored for compliance. Management will ensure this is addressed by December 31, 2025. Responsible Official: Dr. Shelley Kneuvean Chief Financial Officer Unified Government of Wyandotte County & Kansas City KS

U.S. Department of Health and Human Services, passed through Kansas Department of Aging Aging Cluster – ALN 93.044 - Special Programs for the Aging_Title III, Part B_Grants for Supportive Services and Senior Centers - 2301KSOASS ALN 93.045 – Special Programs for the Aging_Title III, Part C_Nutrition Services – 2301KSOAHD Management’s Response: The Aging Department will begin performing risk assessments in January 2025 for all subrecipients. All subrecipients will be required to submit monthly reports as well, which will be evaluated by the Aging Department staff to ensure compliance. Additionally, our current system includes a once-a-year compliance checklist with our subgrantee and is being updated for use in first quarter of 2025. Views of Responsible Officials and Corrective Action: The reason for recurrence is the finding was communicated late in the prior year and due to transition and turnover within the department's staff. Management will ensure this is addressed by December 31, 2025. Responsible Official: Dr. Shelley Kneuvean Chief Financial Officer Unified Government of Wyandotte County & Kansas City KS

U.S. Department of Health and Human Services, passed through Kansas Department of Aging Aging Cluster – ALN 93.044 - Special Programs for the Aging_Title III, Part B_Grants for Supportive Services and Senior Centers - 2301KSOASS ALN 93.045 – Special Programs for the Aging_Title III, Part C_Nutrition Services – 2301KSOAHD Management’s Response: Procurement began performing suspension and debarment checks on all vendors/contracts funded with grants in 2024. This process was implemented in the summer of 2024 as a result of the 2022 Single Audit Finding. Due to the audit not being completed prior to the completion of 2023, this finding was unknown to management. Upon being aware procurement was not doing the checks, immediate correction was undertaken. Checks are being done and documentation maintained in the purchasing file. The language has been included in bid documents as well. Views of Responsible Officials and Corrective Action: The reason for recurrence is the finding was communicated late in the prior year and due to transition and turnover within the department's staff. Procurement has begun the process of checking SAM.gov for debarment for potential suppliers. Also, departments have been informed of this required step for both suppliers and subrecipients. Downstream, need to evaluate if this language can be added to the contract templates. Management will ensure this is addressed by December 31, 2024. Responsible Official: Dr. Shelley Kneuvean Chief Financial Officer Unified Government of Wyandotte County & Kansas City KS

Financial Reporting and Review Process Description of the Finding: BSEDC did not have a secondary review process over the required financial reporting to Federal EDA. The lack of a secondary review process allowed for errors and omissions to go undetected, thus resulting in omission of $3,614 of loan origination fee income and interest income from federal program income calculations. Planned Corrective Actions: BSEDC’s Senior Director of Finance and Director of Business Finance/Program Finance Director have implemented processes for the Senior Director of Finance to perform a secondary review of the required reporting to Federal EDA before it is submitted. Timeline for Completion: BSEDC implemented the secondary review process in October 2024 with the completion and submission of the FY24 annual report to Federal EDA. Responsible Person or Party: BSEDC’s Senior Director of Finance and Director of Business Finance/Program Finance Director are both responsible for ensuring that the secondary review is complete before submitting reporting to Federal EDA.

The School District concurs with the findings reported in Finding 2023-004 and does not dispute the details reported under the Criteria or Specific Requirement section, Condition section, and Effect section of the report. Your findings identify charging of unallowable costs that involved federal funds received by the School District. You noted that the unallowable costs involved payment of employment compensation to an employee on multiple dates, during times and for reasons that were suspect and unauthorized. The School District also concurs with the guidance you provide in the Recommendation section of the report. Corrective actions are already being taken, and training has already begun. The School Board will adopt appropriate policies to ensure appropriate oversight over the manner in which funding is expended for employee compensation, including situations when the sources of funding involve federal awards that obligate the School District to meet specific control requirements. Currently, the School District is reviewing all uses of federal funds, starting with Title 1, the 21st Century Center Learning Center Cohort, and the Education Stabilization Fund. The following additional corrective steps will be taken by the Superintendent: 1. All change of job assignments, program assignments and/or employee compensation must be approved by the Superintendent and memorialized in writing as evidence of approval. The Human Resources Department shall cause the necessary documentation containing the Superintendent's approval to be prepared, signed, and maintained in employee payroll and personnel records, and ensure that employee compensation is paid when owed for the appropriate amount(s). 2. The Superintendent will require the employees, supervisors, and management operating or overseeing individual programs and operations to become and remain familiar with their respective program and/or operation requirements, including those that govern which costs are allowable/authorized and steps required to demonstrate compliance. 3. In light of the Findings, the Superintendent will also identify one or more key administrative staff members who will be tasked with overseeing the use of federal funds for Title I, the 21st Center Learning Center Cohort, and the Education Stabilization Fund. 4. The Superintendent will direct staff to immediately confer with general counsel and with appropriate federal or state agency points of contact when compliance steps or obligations are unknown or require clarification. 5. Individuals compensated through federal funds shall be obligated to comply with applicable rules as a condition of employment. No staff member will have lone or sole responsibility for administering or overseeing administration and/or payment of their own compensation from federal funding sources. 6. At least twice annually, the Superintendent shall direct a review of wheterher funds have been appropriately reused for costs that are authorized and allowable. Title I, the 21st Century Center Learning Center Cohort, the Education Stablization Fund, and other programs/operations where noncompliance is known or suspected will be reviewed at least four times during the following school year, or more frequently when deemed necessary by the Superintendent. Additional program or operation areas may be identified for review through random sampling. Training on the rules governing authorized and allowable costs and expenditures of federal funds shall occur by August 12, 2024, prior to the start of the 2024-2025 school term. Training will be conducted by the Superintendent (Sam Moore), CFO (DaVona Howard), general counsel (Doug Lawrence), members of the School District's business office staff and others designated by the Superintendent.

The Agency agrees with this finding. As part of the subaward review process, the Chief Financial Officer will ensure that first tier subawards are checked to see if FFATA reporting is needed based on the award amount. If FFATA reporting is required, the Chief Financial Officer will assign this task to the Assistant Director for Financial Compliance to ensure that reporting is completed to the FFATA Reporting System FSRS.

The Agency agrees with this finding. As part of the subaward review process, the Chief Financial Officer will ensure that first tier subawards are checked to see if FFATA reporting is needed based on the award amount. If FFATA reporting is required, the Chief Financial Officer will assign this task to the Assistant Director for Financial Compliance to ensure that reporting is completed to the FFATA Reporting System FSRS.

View of Responsible Officials and Corrective Action Plan – Management will monitor the review and approval procedures for reporting to ensure that reports are signed off to indicated and document that review and approval has been made.

The Business and Finance Department at ANHC has mandated, from all departments at ANHC, an approval form for all “Autopay” transactions to be signed by the ED immediately.

Management Response #2023-009: Due to the staff shortages and turnover the Corporation did not have adequate personnel or infrastructure in place to monitor costs in order to calculate and determine Corrective Action Plan: The Finance Team will develop overall operational costs reports to calculate and support a new rate. The proposed rate will be submitted for approval. This will allow us to ensure the calculation for indirect costs and documentation supporting the indirect cost pool conform to the current regulations. Responsible Party: Tamara Barnes, CFO

Cluster Name: Student Financial Assistance Cluster Assistance listing numbers and names: Northern Arizona University 84.007 Federal Supplemental Educational Opportunity Grants 84.033 Federal Work-Study 84.038 Federal Perkins Loan Program—Federal Capital Contributions 84.063 Federal Pell Grant Programs 84.268 Federal Direct Student Loans 84.379 Teacher Education Assistance for College and Higher Education Grants (TEACH Grants) 93.364 Nursing Student Loans 93.925 Scholarships for Health Professions Students from Disadvantaged Backgrounds—Scholarships for Disadvantaged Students (SDS) Agency: Northern Arizona University (NAU) Name of contract person and title: Bradley Miner, NAU Associate Vice President and Comptroller Anticipated Completion Date June 30, 2024 Agency’s Response: Concur The University agrees with this finding and although it relies on the Federal agencies for valid identity verification, the University has already taken significant corrective action to proactively monitor and detect fraudulent student identities. The University has various internal controls, system fraud controls, and integrity measures in place as required or identified as industry best-practice to mitigate and prevent the increasing sophistication of fraudulent activity. In academic year 2023 the University had 282 online students selected for Verification by the Department of Education (ED). The 8 isolated fraud instances were the only identified fraud cases. The University receives valid identity verification checks from the Department of Education (ED) as an input for creating student profiles. Additionally, the University works with administrative agencies and leverages FAFSA checks conducted by Social Security Administration (SSA), Department of Veteran Affairs (VA), Department of Homeland Security (DHS), National Student Loan Data System (NSLDS), Department of Defense (DOD), Department of Justice (DOJ). Financial Aid does not disburse until enrollment verification is complete. 1. The University has reviewed prior fiscal years to determine if additional fraudulently enrolled students received student financial assistance, and if fraudulent loans and awards were awarded. The University conducted an in-depth analysis of multiple qualitative attributes of students receiving financial assistance. This analysis identified high risk students receiving loans and awards. Students in this population were required to complete V4 verification. 2. The University implemented anti-fraud measures as an alternative to automated student Internet Protocol (IP) verification. During the analysis to identify fraudulently enrolled students, the University identified programs at high-risk for fraudulent activity. As a proactive fraudulent activity identification measure, the University will require all students in high-risk programs, with active FAFSAs to submit and complete V4 identity verification. This anti-fraud measure will identify fraudulently enrolled students prior to the disbursement of student financial assistance including loans and awards. 3. The University has put in to place a number of additional verification measures and detective controls to validate online student identities and check for repetitive information and trends. The University is conducting feasibility studies to determine if the suggested guidance for Internet Protocol student verification abides by certain security and privacy standards and policies. Additionally, the University has concern with fraudsters ability to mask Internet Protocols by deploying Virtual Private Networks (VPNs). This renders the advanced protocols ineffective. As a compensating control, the University will begin selecting 5% of online students for V4 verification. Random sampling of online students for identity verification provides enhanced detective measures to combat the risk of identity theft for use in financial aid fraud. Additionally, the University put in place several upfront measures to detect repetitive information and trends to identify potentially fraudulent activity. Detective monitoring reporting identifies duplicate deposit information, redundant student email information, and duplicate student address information. The Department will continue to utilize these successful anti-fraud measures to proactively identify fraudulent student identities. 4. The University will continue its efforts working with law enforcement agencies to recover improper payments for fraudulent claims it paid due to identity theft, to the extent practicable. The University worked with law enforcement agencies to investigate the fraud. At the conclusion of the investigation $138,135 has been repaid. The University will continue to partner with federal, state, and local law enforcement agencies and financial institutions across the country to recover losses and aggressively pursue legal action against perpetrators of fraud.

Assistance listing numbers and program names: 84.425D COVID-19 - Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID-19 - Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance to Non-Public Schools (CRSSA EANS) Agency: Arizona Department of Education (ADE) Name of contact persons and titles: Michelle Udall, ADE Associate Superintendent Dr. Sarka White, ADE Deputy Associate Superintendent Anticipated completion date: November 30, 2024 Agency’s response: Concur ESSER Reporting will be validated by at least 2 people before submitting to U.S. Department of Education. This validation will include the reconciliation of data from the LEA to ADE's report. ADE is finalizing policies and procedures for validating the data prior to submission. ADE has already begun implementing a reconciliation system to ensure accurate reporting in the EANS annual performance report. This system tracks obligations by category, expenses, and appropriate earmarking of nonpublic schools (e.g., DUNS/UEI, grades served). ADE is finalizing general policies and procedures for how this data is compiled, interpreted, and reported based on the initial implementation and corrections of the EANS program.

Assistance listing number and program name: 84.425C COVID-19 - Education Stabilization Fund –Governor’s Emergency Education Relief (GEER) Fund Agency: Arizona Governor’s Office of Strategic Planning and Budgeting (Office) Name of contact person and title: Sarah Brown, Director Anticipated completion date: May 1, 2025 Agency’s response: Concur Corrective Action Plan: The Office agrees with this finding and will begin to take corrective action to bring the program fully into compliance with FFATA reporting requirements under federal and state guidelines. The Office previously reported staff turnover for key personnel directly responsible for preparing, submitting, and reviewing FFATA reporting (i.e., 100 percent turnover). After reviewing supporting documentation and consulting with the U.S. Department of Education, the Office has determined that staff misinterpreted the reporting guidance. The Office understood the reporting did not require submissions on subawards made by another state agency. The Office did report the awards made to that respective state agency but did not include the agency subawards. The Office is working with the state agency to collect subaward data required for accurate reporting. During fiscal year 2025, the Office took significant corrective action to improve FFATA reporting. This corrective action plan includes the following: • FFATA Reporting Reconciliation—The Office will review, correct, and/or resubmit any inaccurately reported information, including subawards. • Annual Performance Reporting (APR) Reconciliation—The Office is unable to amend and resubmit the fiscal year 2022 APR per guidance from the U.S. Department of Education - Education Stabilization Fund Reporting Helpdesk. The reporting portal is unable to accept any revisions for fiscal year 2022. The Office will review any current reporting and ensure subaward data is included. • Update Written Procedures—The Office will update its written procedures to incorporate a process for reviewing federal guidance on a schedule aligned with federal reporting windows as applicable. • Ongoing Training—Office staff now attend ongoing internal and external training to improve their understanding of compliance requirements, identify noncompliance, and actively reduce the risks of reporting errors. As of this date, the Office has allocated sufficient resources to comply with the award terms and program requirements by establishing a Grants Compliance and Reporting Team dedicated to performing necessary FFATA reporting procedures. The Office is committed to ongoing staff training, improved internal reporting processes, and ensuring the State’s stakeholders and the public have access to transparent and timely information about all federal award spending decisions on the USAspending.gov website as federal laws and regulations require.

Assistance listing number and program name: 84.010 Title I Grants to Local Educational Agencies 84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) 84.425D COVID-19 - Education Stabilization Fund-Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425U COVID-19 - Education Stabilization Fund - American Rescue Plan - Elementary and Secondary Schools Emergency Relief (ARP ESSER) Fund Agency: Arizona Department of Education (ADE) Name of contact persons and titles: Nicole Von Prisk, ADE Deputy Associate Superintendent of Grants Management Matt McClary, ADE Compliance Officer Anticipated completion date: October 30, 2024 Agency’s response: Concur Arizona Department of Education has worked in cooperation with our vendor to correct outdated SQL queries that were identified and returning only approved grant award amounts rather than all awarded amounts, regardless of approval status. We will ensure that the original award amounts are being queried and, in return, reported within the FFATA Subaward Reporting System (FSRS). Additionally, through the reconciliation process each month, correct award amounts will align with corresponding Federal Award Identification Number (FAIN). We have implemented an automated monthly reporting workflow/schedule which will help ensure required FFATA reporting is submitted timely. This process automation helps prompt monthly FFATA reporting uploads by leveraging office tools that are readily available and ensures monthly upload deadlines are met by automatically scheduling the task and requiring follow-up by the assignee. In January of 2024 the staff assigned to FFATA uploads changed again (for the fourth time in a year) and at that point a new staff member assumed responsibility for FFATA uploads. As numerous corrections needed were discovered through the reconciliation process, new reports were uploaded. Some of these were original uploads for entities that were missing FSRS information altogether and some were corrections to previously uploaded yet incorrect information. With each monthly upload, a new date was being captured and while some of the information was new entity award information, not all of the information being updated was untimely. This has been a long and arduous process, and we look forward to not having continued FFATA findings, as we are making progress to correcting award information for all federal grants moving forward from this point. Our Compliance Officer reconciles the current FSRS award information monthly with our Lead Grants Coordinator or our Deputy Associate Superintendent. Any missing or duplicate information is corrected prior to the FSRS upload.

Assistance listing numbers and program names: 84.010 Title I Grants to Local Educational Agencies 84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) Agency: Arizona Department of Education (ADE) Name of contact person and title: Dr. Sarka White, ADE Deputy Associate Superintendent Anticipated completion date: December 15, 2024 Agency’s response: Concur The Arizona Department of Education (ADE) has already begun implementing a program to ensure accurate and quality programmatic monitoring for all ESEA programs which specifically requires LEAs to meet 100% of the requirements of all statutorily required items to be monitored regardless of CMO affiliation. This development of programmatic monitoring will design a system of integrity to allow each LEA to have unique monitoring findings and ensure they are treated as all other LEAs regardless of management status. The Arizona Department of Education (ADE) is finalizing all program policies and procedures along with field training and staff training on how this program is implemented. ADE began providing an assurance document to charters in May 2024 which asks the charters to assure that if they do business with a CMO, the CMO does not have fiscal or operational authority for the LEA. The charter is asked to submit to ADE a copy of their organizational chart, along with the assurances document. Grants Management has created a new user role in the Grants Management Enterprise (GME) system, called the LEA Contracted Update role. This role allows a CMO person the access to perform fiscal tasks for which they have been contracted but does not hold the final submit or approve capacity, that must be reserved for authorized employees of the LEA. Grants Management has provided the placeholder for the assurance and organizational chart in the LEA Document Library, along with the communication to eligible entities (charters in this case). Individual program areas within ADE who review and approve funding applications will be responsible for verifying the assurances have been signed and uploaded and only authorized people at the LEA are actioning funding applications in GME prior to the program area giving director approval to the application.