Corrective Action Plans

Implementation plan of action: The Business Manager will review these requirements with the Account Clerk responsible for tracking fixed assets to ensure that purchases made with federal dollars are recorded in the database with all the necessary information to meet the compliance requirements. In addition, we will establish a process to perform a physical inventory as required every two years. Person Responsible for Implementation: Jodi Birch, Business Manager and Kristie Smith, Account Clerk Anticipated Completion Date: June 30, 2025

Equipment and Real Property Management – Material Noncompliance and Material Weakness in Internal Control Over Compliance Corrective Action Plan: The Municipality has begun strengthening internal controls over federally funded equipment and real property by developing standardized policies and procedures, enhancing documentation standards, implementing supervisory review processes, and improving coordination between departments responsible for grant administration and capital assets. Management will evaluate the effectiveness of these controls through completion of a full audit cycle. Anticipated Completion Date March 31, 2027

Finding 2023-005 Head Start Equipment Management Contact person responsible for corrective action: Bryana Marsicano, Chief Executive Officer Anticipated completion date: December 31, 2026 Corrective Action: Management agrees with the finding and will implement the following procedures for equipment acquired with federal funds: • Maintain a property record for each item of federally funded equipment containing every element required by 2 CFR 200.313(d)(1), including a description of the property, the serial number or other identification number, the source of funding and the Assistance Listing number, who holds title, the acquisition date and cost, the percentage of federal participation in the project cost, the location, the use and condition of the property, and any ultimate disposition data. • Perform and document a physical inventory of federally funded equipment and reconcile the results to the property records at least once every two years. • Document any discrepancy identified between the physical inventory and the property records, investigate the cause, and record the resolution. • Adopt a written equipment management policy that assigns responsibility for maintaining property records, conducting periodic physical inventories, and approving dispositions, and that establishes control procedures adequate to safeguard equipment against loss, damage, or theft in accordance with 2 CFR 200.313(d)(3). • Obtain written approval from the awarding agency before disposing of federally funded equipment where such approval is required. • Perform supervisory review of the equipment records at each fiscal year end to confirm completeness and agreement with the general ledger. Corrective action already taken: A physical review of equipment has been completed, asset retirements have been confirmed, and the fixed asset records have been rebuilt and reconciled to the general ledger. Equipment acquired with Head Start funds is being separately identified within those records so that the percentage of federal participation can be documented for each item.

Finding No.: 2023-014 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings and recognizes the systemic nature of the deficiencies in equipment management. We acknowledge that the current decentralized approach to safeguarding and maintenance is insufficient to meet the standards of 2 CFR §200.313. PSS is committed to implementing a district-wide, standardized asset management framework to protect federally funded property. Financial and Grants Management policies procedures were promulgated in a SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Payment procedures are being addressed in a separate SOP. Corrective Action Plan: To remediate these findings and ensure consistent compliance across all 27+ locations, PSS will implement the following: I. Capital Asset Listing Enhancement: PSS will immediately update the master inventory database to include all data fields required by 2 CFR 200.313(d)(1). A system-wide data validation will be conducted semi-annually or greater to ensure these fields are populated for all existing federal assets. II. Uniform Safeguarding and Maintenance Guidance: PSS will develop and issue a mandatory guidance on Uniform Safeguarding and Maintenance. This will provide standardized maintenance schedules and safeguarding protocols (e.g., specific tagging requirements and secure storage standards) that must be adopted by every school and office. This eliminates the "lack of standardized controls" across different locations. III. Standardized Maintenance Logs: PSS will require all locations to utilize a standard "Equipment Maintenance Log." This log will serve as the primary documented evidence that maintenance procedures are being performed. IV. Standard Operating Procedures and Policies: PSS will finalize SOPs and policies internal controls and specifically allowability determinations and vendor payments that are currently in draft including an analysis rubric and checklist for review. Where necessary, program specific supplemental guidance for allowability determinations will be provided. PSS central office staff participated in live training in October 2025 regarding allowability of costs. Refresher training on cost principles will be required annually for staff making allowability determinations. Payment processes will be added to this training. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

Finding No.: 2023-011 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding and recommendations regarding Equipment and Real Property Management. We acknowledge that current decentralized practices have led to inconsistencies in asset record-keeping and maintenance. PSS is committed to fully aligning its internal policies with 2 CFR §200.313 to ensure the integrity and protection of all federally funded assets. Property management and inventory control processes were promulgated in the Procurement and Supplies SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to expand property management and inventory control into a separate SOP. PSS central office has contacted the State Infrastructure Technology Department for additional information about an existing inventory tracking system and its potential for implementation and integration with the new financial management system, Tyler Munis. (See 2023-0007) Corrective Action Plan: To remediate these deficiencies and ensure consistent compliance across all locations, PSS will execute the following: I. Comprehensive Asset Data Update: PSS will redesign the Master Capital Asset Listing to include all federally mandated fields and the specific physical condition of each asset. A one-time district-wide data validation check will be conducted to populate these missing fields. II. Standardized Maintenance and Safeguarding Framework: PSS will develop a Unified Asset Protection Guidance that establishes mandatory safeguarding protocols and maintenance schedules for all equipment types. This framework will serve as the minimum standard for all schools and offices, requiring them to maintain localized logs that prove equipment is being serviced and secured. III. Standard Operating Procedures and Policies finalized: PSS will include more detail on property management and inventory control. Identify and evaluate the use of a digital inventory management system with the intent, if feasible, to implement within the next year. PSS staff at each school and in the central office will be identified as property custodians held accountable for annual inventory and property management of assigned assets. Training to be required annually for these personnel. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

Finding No.: 2023-007 AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. We recognize that our current capital asset records and decentralized maintenance practices do not fully meet the rigorous data and oversight standards of 2 CFR §200.313. Property management and inventory control processes were promulgated in the Procurement and Supplies SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to expand property management and inventory control into a separate SOP. PSS central office has contacted the State Infrastructure Technology Department for additional information about an existing inventory tracking system and its potential for implementation and integration with the new financial management system, Tyler Munis. PSS is committed to a comprehensive overhaul of our inventory management system to ensure full compliance and better protection of federal property. Corrective Action Plan: To address the deficiencies in recordkeeping, safeguarding, and physical verification, PSS will implement the following: I. Asset Listing Remediation: PSS will update the Master Capital Asset Listing to include information such as asset condition. II. Standardized Safeguarding & Maintenance Guidance: PSS will finalize SOPs and policies to include more detail on property management and inventory control. PSS will develop and distribute a district-wide equipment maintenance & safeguarding guidance. This will establish the minimum required procedures for all schools and offices, including standardized logs for routine maintenance and specific security protocols (e.g., tagging, restricted access, and secure storage) to prevent loss or theft. III. Formal Inventory Certification: To resolve the issue of missing count sheets, PSS will implement a standardized annual inventory process. This will require each location custodian to submit a signed and dated "Physical Inventory Certification" along with the count sheets to be verified by Procurement personnel. No inventory will be considered complete until the Central Office verifies that the custodian list matches the asset records. PSS staff at each school and in the central office will be identified as property custodians held accountable for annual inventory and property management of assigned assets. Training to be required annually for these personnel. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

Finding No.: 2023-024 AL Program: 20.205 – Highway Planning and Construction (Federal-Aid Highway Program) Area: Equipment and Real Property Management Questioned Costs: Undeterminable Contact Person(s): Stacy Atalig, Federal Programs Coordinator, DPW / Geraldine Cruz, Procurement Services Director Corrective Action Plan: Condition 1: DPW, TSD – Highway Branch agrees with this finding. Highway Branch has consistently tried to work with Procurement Services to update its yearly inventory records to remove all transferred and disposed properties from its inventory record to no avail. Request for Survey-Out forms for damaged, past its useful life or obsolete properties and Request for Transfer of old or inactive but still usable equipment to Divisions within the Department of Public Works were transmitted along with the Fiscal Year inventory list to Procurement Services to update its list but still encounter discrepancies because of Procurement Services overall lump sum master list including inventories of both local and federal properties. Highway Branch conducts its yearly inventory count and submits its list to Procurement Services. However, Procurement Services has not conducted its own inventory for our office for several years. Additionally, the Procurement Services Division agrees with this finding. Improvements are needed in the way federally funded assets are tracked and reported. At present, the inventory management system is not configured to readily identify assets by specific federal award number, which makes it difficult to generate reports identifying assets purchased under individual grants. In addition, staffing limitations have affected the Commonwealth's ability to maintain and readily produce this information. To address this issue, the Property Management Branch has developed a revised Standard Operating Procedure (SOP), which is currently under review and pending finalization. The SOP strengthens procedures related to asset acquisition, tagging, inventory management, record retention, transfers, surveys, disposals, and supporting documentation. The Commonwealth is also evaluating available options to improve tracking and reporting of federally funded assets, including system enhancements, alternative tracking methods, technical assistance, and additional staffing resources where feasible. Finding No.: 2023-024, continued AL Program: 20.205 – Highway Planning and Construction (Federal-Aid Highway Program) Area: Equipment and Real Property Management Questioned Costs: Undeterminable Contact Person(s): Stacy Atalig, Federal Programs Coordinator, DPW / Geraldine Cruz, Procurement Services Director Corrective Action Plan: In the meantime, the Property Management Branch has begun asset reconciliation efforts, including physical inventories, record reviews, asset verification, and updates to inventory records. These efforts will continue while the revised SOP is finalized and implemented. These actions will help improve accountability, strengthen inventory records, and support compliance with federal property management requirements. Proposed Completion Date: Completed - Ongoing Condition 2: DPW, TSD – Highway Branch agrees with this finding. The Highway Branch has updated its Inventory Form to include the following required information: Date Acquired, Item No, Property/Tag No., Description of Property, Manufacturer, Model, Serial No., Purchase Order No./Contract No., Condition Code, Project No., FHWA Project Number, Percentage of Federal Participation, Location, Person Assigned, and the date the inventory was conducted. In September 2025, Federal Program Coordinator IV met with Director of Procurement Services to ensure these line items are incorporated into the inventory log sheet as part of the requirements. The Director agreed to instruct her staff to implement these updates beginning FY2025. Additionally, the Procurement Services Division agrees with this finding. The Division agrees that the annual physical inventory required for FY2023 was not completed. As a result, the existence, location, condition, and accountability of all assets could not be fully verified during the audit period. To address this issue, Section 3 of the CNMI Property Management Policies and Procedures Manual was updated on September 9, 2024, changing the physical inventory requirement from an annual inventory to a biennial (every two years) inventory cycle. Finding No.: 2023-024, continued AL Program: 20.205 – Highway Planning and Construction (Federal-Aid Highway Program) Area: Equipment and Real Property Management Questioned Costs: Undeterminable Contact Person(s): Stacy Atalig, Federal Programs Coordinator, DPW / Geraldine Cruz, Procurement Services Director Corrective Action Plan: Property Management Branch is currently conducting physical inventories and random asset audits throughout the Commonwealth. These efforts include verifying asset locations, confirming accountability, reviewing asset condition and operational status, reconciling inventory records, and identifying assets that require transfer, survey, repair, replacement, or other corrective action. These inventory and reconciliation efforts are already underway and will continue while the SOP is finalized and implemented. Together, these measures will strengthen accountability, improve asset management practices, and help ensure compliance with federal and Commonwealth property management requirements. Proposed Completion Date: Ongoing

Finding No.: 2023-017 AL Program: 15.875 - Economic, Social, and Political Development of the Territories COVID-19 15.875 Economic, Social, and Political Development of the Territories Area: Equipment and Real Property Management Questioned Costs: Undeterminable Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC / Geraldine Cruz, Procurement Services Director Corrective Action Plan: Condition 1: The Procurement Services Division agrees with this finding. Improvements are needed in the way federally funded assets are tracked and reported. At present, the inventory management system is not configured to readily identify assets by specific federal award number, which makes it difficult to generate reports identifying assets purchased under individual grants. In addition, staffing limitations have affected the Commonwealth's ability to maintain and readily produce this information. To address this issue, the Property Management Branch has developed a revised Standard Operating Procedure (SOP), which is currently under review and pending finalization. The SOP strengthens procedures related to asset acquisition, tagging, inventory management, record retention, transfers, surveys, disposals, and supporting documentation. The Commonwealth is also evaluating available options to improve tracking and reporting of federally funded assets, including system enhancements, alternative tracking methods, technical assistance, and additional staffing resources where feasible. In the meantime, the Property Management Branch has begun asset reconciliation efforts, including physical inventories, record reviews, asset verification, and updates to inventory records. These efforts will continue while the revised SOP is finalized and implemented. Finding No.: 2023-017, continued AL Program: 15.875 - Economic, Social, and Political Development of the Territories COVID-19 15.875 Economic, Social, and Political Development of the Territories Area: Equipment and Real Property Management Questioned Costs: Undeterminable Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC / Geraldine Cruz, Procurement Services Director Corrective Action Plan: These actions will help improve accountability, strengthen inventory records, and support compliance with federal property management requirements. Proposed Completion Date: Ongoing Condition 2: The Procurement Services Division agrees with this finding. The Division agrees that the annual physical inventory required for FY2023 was not completed. As a result, the existence, location, condition, and accountability of all assets could not be fully verified during the audit period. To address this issue, Section 3 of the CNMI Property Management Policies and Procedures Manual was updated on September 9, 2024, changing the physical inventory requirement from an annual inventory to a biennial (every two years) inventory cycle. Property Management Branch is currently conducting physical inventories and random asset audits throughout the Commonwealth. These efforts include verifying asset locations, confirming accountability, reviewing asset condition and operational status, reconciling inventory records, and identifying assets that require transfer, survey, repair, replacement, or other corrective action. These inventory and reconciliation efforts are already underway and will continue while the SOP is finalized and implemented. Together, these measures will strengthen accountability, improve asset management practices, and help ensure compliance with federal and Commonwealth property management requirements. Proposed Completion Date: Ongoing

Management agrees with this finding and acknowledges the seriousness of the reported material weakness and material noncompliance related to equipment management for federally funded assets. To remediate this finding, the Fund will establish a comprehensive, centralized fixed asset and equipment register that specifically identifies federally funded equipment and links each applicable asset to the related federal award information. The register will include, where applicable, asset description, serial number or other identifying number, acquisition date, acquisition cost, percentage of federal participation, award identification, location, use, condition, inventory date, and disposition data. Management will also conduct a full physical inventory to establish a verified baseline and implement recurring inventory procedures at least every two years. Corrective action plan: • Create a centralized equipment register for all federally funded equipment and cross-reference each asset to the related federal program, award year, and other available grant or assistance documentation. • Perform a complete physical inventory of federally funded equipment to establish a baseline inventory and validate existence, location, condition, and identifying information. • Reconcile the physical inventory results to accounting records and the centralized register, and research all variances. • Implement procedures for timely recording of acquisitions, transfers, impairments, disposals, and retirements, including retention of supporting documentation. • Adopt written equipment management procedures addressing safeguarding, tagging where practical, periodic review, disposition approvals, and compliance monitoring. • Schedule recurring physical inventories at least every two years, with interim updates for additions, disposals, and transfers performed throughout the year. Responsible party/role: Business Office Manager and in coordination with Operations/Network Management and oversight by the General Manager. Implementation timeline: The centralized federally funded equipment register will be established within 90 days of issuance of the audit report. The initial full physical inventory and reconciliation will be completed by June 30, 2026. The recurring inventory cycle will be formally scheduled upon completion of the baseline inventory and performed at least every two years thereafter. Management further intends to monitor compliance with federal equipment management requirements as part of its ongoing grant and award administration process. Where historical federal award information is incomplete, management will work from available accounting records, grant files, procurement records, and other supporting documentation to reconstruct asset history to the extent practicable.

Finding No.: 2023-014 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings and recognizes the systemic nature of the deficiencies in equipment management. We acknowledge that the current decentralized approach to safeguarding and maintenance is insufficient to meet the standards of 2 CFR §200.313. PSS is committed to implementing a district-wide, standardized asset management framework to protect federally funded property. Financial and Grants Management policies procedures were promulgated in a SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Payment procedures are being addressed in a separate SOP. Corrective Action Plan: To remediate these findings and ensure consistent compliance across all 27+ locations, PSS will implement the following: I. Capital Asset Listing Enhancement: PSS will immediately update the master inventory database to include all data fields required by 2 CFR 200.313(d)(1). A system-wide data validation will be conducted semi-annually or greater to ensure these fields are populated for all existing federal assets. II. Uniform Safeguarding and Maintenance Guidance: PSS will develop and issue a mandatory guidance on Uniform Safeguarding and Maintenance. This will provide standardized maintenance schedules and safeguarding protocols (e.g., specific tagging requirements and secure storage standards) that must be adopted by every school and office. This eliminates the "lack of standardized controls" across different locations. III. Standardized Maintenance Logs: PSS will require all locations to utilize a standard "Equipment Maintenance Log." This log will serve as the primary documented evidence that maintenance procedures are being performed. IV. Standard Operating Procedures and Policies: PSS will finalize SOPs and policies internal controls and specifically allowability determinations and vendor payments that are currently in draft including an analysis rubric and checklist for review. Where necessary, program specific supplemental guidance for allowability determinations will be provided. PSS central office staff participated in live training in October 2025 regarding allowability of costs. Refresher training on cost principles will be required annually for staff making allowability determinations. Payment processes will be added to this training. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

Finding No.: 2023-011 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding and recommendations regarding Equipment and Real Property Management. We acknowledge that current decentralized practices have led to inconsistencies in asset record-keeping and maintenance. PSS is committed to fully aligning its internal policies with 2 CFR §200.313 to ensure the integrity and protection of all federally funded assets. Property management and inventory control processes were promulgated in the Procurement and Supplies SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to expand property management and inventory control into a separate SOP. PSS central office has contacted the State Infrastructure Technology Department for additional information about an existing inventory tracking system and its potential for implementation and integration with the new financial management system, Tyler Munis. (See 2023-0007) Corrective Action Plan: To remediate these deficiencies and ensure consistent compliance across all locations, PSS will execute the following: I. Comprehensive Asset Data Update: PSS will redesign the Master Capital Asset Listing to include all federally mandated fields and the specific physical condition of each asset. A one-time district-wide data validation check will be conducted to populate these missing fields. II. Standardized Maintenance and Safeguarding Framework: PSS will develop a Unified Asset Protection Guidance that establishes mandatory safeguarding protocols and maintenance schedules for all equipment types. This framework will serve as the minimum standard for all schools and offices, requiring them to maintain localized logs that prove equipment is being serviced and secured. III. Standard Operating Procedures and Policies finalized: PSS will include more detail on property management and inventory control. Identify and evaluate the use of a digital inventory management system with the intent, if feasible, to implement within the next year. PSS staff at each school and in the central office will be identified as property custodians held accountable for annual inventory and property management of assigned assets. Training to be required annually for these personnel. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

Finding No.: 2023-007 AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. We recognize that our current capital asset records and decentralized maintenance practices do not fully meet the rigorous data and oversight standards of 2 CFR §200.313. Property management and inventory control processes were promulgated in the Procurement and Supplies SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to expand property management and inventory control into a separate SOP. PSS central office has contacted the State Infrastructure Technology Department for additional information about an existing inventory tracking system and its potential for implementation and integration with the new financial management system, Tyler Munis. PSS is committed to a comprehensive overhaul of our inventory management system to ensure full compliance and better protection of federal property. Corrective Action Plan: To address the deficiencies in recordkeeping, safeguarding, and physical verification, PSS will implement the following: I. Asset Listing Remediation: PSS will update the Master Capital Asset Listing to include information such as asset condition. II. Standardized Safeguarding & Maintenance Guidance: PSS will finalize SOPs and policies to include more detail on property management and inventory control. PSS will develop and distribute a district-wide equipment maintenance & safeguarding guidance. This will establish the minimum required procedures for all schools and offices, including standardized logs for routine maintenance and specific security protocols (e.g., tagging, restricted access, and secure storage) to prevent loss or theft. III. Formal Inventory Certification: To resolve the issue of missing count sheets, PSS will implement a standardized annual inventory process. This will require each location custodian to submit a signed and dated "Physical Inventory Certification" along with the count sheets to be verified by Procurement personnel. No inventory will be considered complete until the Central Office verifies that the custodian list matches the asset records. PSS staff at each school and in the central office will be identified as property custodians held accountable for annual inventory and property management of assigned assets. Training to be required annually for these personnel. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

We will give the instructions to the Property Division of the Municipality to update the inventory related to equipment, furniture and vehicles. However, we recognize that the construction in progress and several real properties and infrastructure assets are not recorded in our capital assets records. To correct this situation, we will give instructions to the Property Division of the Municipality to start identifying all the real property and infrastructure owned by the Municipality and start a process of gathering the necessary information related to the cost, completeness, and ownership of its real property and infrastructure assets, to comply with the requirements. Implementation Date: During fiscal year 2025-2026 and during the next fiscal years.

DEPARTMENT OR BUREAU: BUILDING AND HOUSING DEVELOPMENT CONTACT PERSON: DIRECTOR OF HOUSING AND ECONOMIC DEVELOPMENT, AND ACCOUNTING MANAGER FINDING TITLE: EQUIPMENT AND REAL PROPERTY MANAGEMENT EXPENDITURES OF CDBG GRANT FUNDING FOR CAPITAL OUTLAYS ON EQUIPMENT AND REAL PROPERTY ARE READILY IDENTIFIABLE WITHIN THE CITY'S FIXED ASSETS MODULE OF THE ACCOUNTING SYSTEM, INCLUDING SUBSEQUENT RETIREMENTS OF ANY SUCH CAPITAL ASSETS. THE DEPARTMENT ACKNOWLEDGES RELATED PHYSICAL INVENTORY OBSERVATIONS TO IDENTIFY THESE ASSETS HAVE BEEN ACTIVELY PERFORMED AND WILL WORK TO FORMALIZE SUCH INVENTORY PROCEDURES. THE CITY WILL LOOK TO COMPLETE SUCH PROCESS INTERNALLY AS SOON AS POSSIBLE. ANTICIPATED COMPLETION DATE: BY OR BEFORE 12/31/2026

Equipment and Real Property Management College of the Marshall Islands agrees that capital asset records and reconciliation procedures were not fully maintained in accordance with federal equipment and real property management requirements. The deficiencies were primarily due to reliance on manual recordkeeping processes, incomplete asset documentation, and delays in updating and reconciling the fixed asset records with the general ledger. To address this finding, the College is actively working to automate and strengthen its fixed asset management process through implementation of the MIP Fixed Asset Module.

Develop and implement a comprehensive capital asset and inventory management system. Ensure all federally funded equipment includes required documentation: Funding source (FAIN); Acquisition date and cost; Location, use, and condition. Conduct a full inventory of all federally funded equipment. Establish procedures to ensure proper classificaiton of expenditures as capital outlay. Provide training on Unidorm Guidance (2 CFR 200) requirements to all relevant staff. Inventory and system implementation: Within 90 days. Full compliance: By end of fiscal year.

Cause: While policies were in place, detailed written procedures for consistent grant administration had not been developed or formally documented. Corrective Action Taken: A procedure manual has been written to incorporate required compliance areas, including allowability of costs, procurement, equipment management, cash management, time and effort reporting, suspension and debarment, and record retention. Planned Corrective Actions / Preventive Measures: 1. Procedure Development: Document clear written procedures including requisitioning, approvals, reimbursements, reporting, and monitoring. 2. Training and Implementation: Provide training to all staff involved in grant administration on the new procedures. Establish a schedule for periodic refresher training and updates when regulations or program requirements change. 3. Ongoing Monitoring: Designate the Business Administrator (or designee) to monitor compliance and review procedures annually. Update policies and procedures as needed to reflect changes in federal requirements or internal practices. Timeline: Procedures completed: September 2024. Staff training and implementation: June 2026. Ongoing monitoring: Annually, beginning March 2026 Responsible Parties: Lori Schmidt, Business Administrator: Oversight of policy and procedure revision, implementation, and monitoring. Scott LaFortune, Finance Manager/Grant Manager: Day-to-day adherence to procedures and reporting. School Board: Formal policy approval.

Reference Number: 2023-009 Finding: Improve Controls and Compliance with Equipment and Real Property Management Name of Contact Person: Lorina Esposito Corrective Active Plan: Over the past year staff has ensured that the inventory is up-to-date and accurate. Inventories were performed in 2024 in preparation for the single audit. Now that the division of housing and community development is fully staffed, the inventory can be shared amongst staff as well as uploaded to the shared drive to ensure it can be accessed in the event of staff turnover. Proposed Completion Date: 3/31/26

Name of Contact Person Responsible for Corrective Action Plan: Marcee Pool, Interim Superintendent Corrective Action Plan: Dublin City Schools concur with the finding and are working to implement appropriate internal controls to alleviate the finding. Anticipated Completion Date: December 31, 2026

2023 – 007: Equipment and Real Property Management (Compliance; Internal Controls Over Compliance) Material Weakness Condition: During our review of the Organization’s internal controls over compliance related to the Title V major program, we noted that the Organization did not obtain prior written approval from the funding agency for the purchase of land and a building with Title V funds, with the purchase exceeding the $20,000 threshold included in the Title V contract. Additionally, the Organization did not have an approved budget that included these capital expenditures. The Organization also does not have an adequate system of controls established to identify, mark, record, or maintain equipment and real property purchased with federal funds, and no periodic physical inventory of such assets is being performed. Corrective Action Plan: Management will review internal control policies and procedures to ensure that prior written approval is obtained for all capital expenditures with federal funds. A procedure will be set up for maintaining property records, conducting periodic physical inventories, and ensuring all staff are trained on these requirements.

The School has hired a consultant for training.

2023 – 008: Activities Allowed and Unallowed, Allowable Costs, Period of Performance (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2018-006, 2019-008, 2020-008, 2021-007 and 2022-009) Significant Deficiency ALN 93.441 Indian Self Determination ALN 20.205 Highway Planning & Construction ALN 93.575 Child Care and Development Block Grant Condition: During compliance requirement testing for Activities Allowed and Unallowed, Allowable Costs and Period of Performance for the above noted major programs, the auditors selected 120 transactions for testing from each major program. The following number of transactions were not provided for review during the audit: ALN 93.441 – Indian Self Determination – 18 transactions ALN 20.205 – Highway Planning and Construction – 16 transactions ALN 93.575 – Child Care and Development Block Grant – 7 transactions Corrective Action Plan: The Finance Department will become familiar with the requirements of 2 CFR, Part §200.313(a) and establish appropriate internal control policies and procedures to ensure compliance with the requirements of Uniform Guidance and each major program. In addition, all staff will be trained on those policies and procedures, so they are familiar with the requirements. The Finance Department will not process payment for disbursements that does not contain sufficient, appropriate supporting documentation and necessary approvals. The Finance Department will implement and execute an internal audit, by pulling random vouchers packets to test for compliance mid-year. An internal audit process is being developed and personnel assigned. Forms will be developed to assist with the internal audit process to ensure a timely and consistent process will be followed.

FA 2023-002 Improve Controls over Equipment Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: AL Numbers and Titles: Federal Award Numbers: Questioned Costs: Repeat of Prior Year Finding: Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education COVID-19 - 84.425D - Elementary and Secondary School Emergency Relief Fund COVID-19 - 84.425U - American Rescue Plan Elementary and Secondary School Emergency Relief Fund S425D200012 (Year: 2021), S425U2100012 (Year: 2021) None Identified FA 2022-001 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Elementary and Secondary School Emergency Relief Fund program. Corrective Action Plans: The Superintendent and Finance Director will develop an equipment listing for ESSERS and ARP equipment that consists of all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. The Superintendent and Finance Director will further coordinate with Principals and Directors to ensure that all equipment is accounted for by conducting a complete physical inventory at least once everytwo years. Estimated Completion Date: June 30, 2026 Contact Person: Dr. Angela Williams, Superintendent Telephone: 706-554-5101 Email: amwilliams@burke.kl2.ga.us

The MOF is actively recruiting two dedicated staff members to strengthen asset management, including ensuring the full utilization of the FMIS asset module for tracking, reporting, and monitoring capital assets. These positions will provide technical oversight and support for proper recording, classification, and reconciliation of assets. Furthermore, the MOF continues to coordinate with line Ministries to update and reconcile capital asset records, ensuring accuracy and completeness across all government entities.

The Government concurs with the auditor’s findings and recommendations. VIDE plans to improve management and documentation of federally funded equipment by enhancing its asset tracking system and maintaining centralized records with detailed asset information. The Procurement Division will conduct quarterly inventory audits to reconcile records with actual inventory, resolving discrepancies promptly. The Fixed Asset Director will establish communication protocols among Programs/Divisions, requiring monthly status reports to ensure data accuracy and timely updates.