Corrective Action Plans

Finding 2025-003 a. Name of Contact Person Responsible for Corrective Action: Jeff Jones, Business Manager b. Corrective Action Planned: Additional Training has been provided during professional development sessions to keep in the forefront the importance of preventing conflicts of interest as well as possible nepotism as defined by Miss. Code Ann. § 25-1-53 and Miss. Code Ann. § 25-4-105(1). New hires are required to disclose possible conflicts of interest during the application process. Department heads making recommendations for hire are required to disclose if they are related to the person they are recommending for hire. c. Anticipated Completion Date: Training was provided in February, 2026, after disclosures were added to the employment applications in the human resource software asking the applicant to disclose if they are aware if they are related to anyone currently working in the district. As soon as the violation was identified, the Office of Child Nutrition at the Mississippi Department of Education was notified

Management agrees with the finding that subrecipient monitoring procedures were insufficient to ensure subrecipient audit reports are obtained and reviewed. Monitoring procedures were not in place to ensure adequate documentation was obtained regarding the use of payment advances. The Pandemic Recovery Office has communicated with the Executive Office of Housing on the best practices to be employed to ensure that effective subrecipient monitoring takes place. To that end the Executive Office of Housing has implemented policies and procedures to: • Ensure the timely review of subrecipient audit reports and the issuance of management decisions in accordance with the Uniform Guidance. In particular, the Executive of Housing (EOH) now requires that subrecipients submit their Single Audit Report or financial audit report when submitting for annual funding. At that time, these reports are reviewed by EOH, and action is taken as needed regarding management decisions. • Develop and implement internal controls to ensure that adequate documentation of monitoring procedures and support for subrecipient expenditures is obtained. EOH executes periodic site visits of subrecipients at which time expenditures are reviewed and documentation for said expenditures is obtained (i.e., invoices, demonstration of services performed, etc.). • Strengthen and improve subrecipient monitoring procedures to ensure compliance with the terms and conditions of the grant award. PRO will communicate to EOH the need to provide the proper reconciliation documentation for payment advances made to subrecipients and acquire supporting documentation for reimbursement of subrecipient expenditures. • Enhance controls to ensure all award identifying information required by 2 CFR §200.332(b)(1) is accurately included in the subaward. PRO will reiterate to EOH the need for subrecipients to have an accurate Unique Entity Identification (UEI) number, issued by SAM.gov, to receive funding under the State Fiscal Recovery Fund and/or the Emergency Rental Assistance programs. Further, EOH will review all subawards to ensure that every subaward includes the Federal Award Identification Number, Assistance Listing Number, and program title. Anticipated Completion Date: September 30, 2026 Contact Persons: Paul Dion, Director, Pandemic Recovery Office, Department of Administration paul.l.dion@doa.ri.gov Brianna Ruggiero, Chief of Staff, Pandemic Recovery Office, Department of Administration brianna.ruggiero@doa.ri.gov

Corrective Action: What we've already been doing to correct the issue LifeWire has strengthened oversight within Services by consolidating the Services and Rapid Rehousing programs under a single Director, creating clearer accountability for expenditure documentation. The expanded multi-tier approval workflow (Advocate → Manager → Director → Finance) now includes a documentation completeness check at each stage, requiring that underlying support for all charges be attached and verified before a transaction advances toward payment. LifeWire has updated its policies and procedures to explicitly require that underlying documentation supporting the nature and amount of each expenditure be retained at the time the charge is generated from the program services department, consistent with 2 CFR §200.403(g). This will include clear guidance on what constitutes sufficient documentation (e.g., invoices, receipts, lease agreements, or other source documents) and the requirement that payment confirmation alone is not sufficient. What else we are putting in place LifeWire has implemented training for all Services staff on federal documentation standards, reinforcing that charges to federal programs must be supported by documentation that evidences both the nature and the amount of the expense. The Services Director is responsible for delivering and maintaining this training on an ongoing basis. All staff will be required to formally acknowledge completion of the training and their understanding of the updated requirements. Responsible Staff: Olivia Montgomery •Advocates and program staff (generating and attaching underlying documentation at pointof charge) •Services Managers (first level review for documentation completeness) •Services Director (program oversight and secondary review) •Executive Director (internal audit oversight; reviews Director of Services approvals andmonitors compliance) •Finance Director / Finance Department (final documentation review, approval, and paymentoversight) Anticipated Completion Date: Policy and procedure updates and staff training will be completed, with full implementation and demonstrated compliance expected by Q3 2026.

Management concurs with the finding. During the audit period, the Organization maintained payroll records, compensation documentation, and payroll allocation schedules; however, it did not maintain personnel activity reports, periodic certifications, or other after-the-fact documentation sufficient to support compensation costs charged to the Community Development Financial Institutions Program in accordance with 2 CFR § 200.430. The Organization's methodology relied on management-established allocation percentages based on employee responsibilities and anticipated level of effort supporting CDFI Fund activities. While management believes the costs charged to the award were incurred in support of eligible program activities, the Organization recognizes that documentation supporting the allocation methodology did not meet the standards required under Uniform Guidance. Planned Corrective Action: Beginning July 1, 2026, the Organization will implement formal time and effort reporting procedures for all personnel whose compensation is charged, in whole or in part, to federal awards. Specifically, the Organization will: 1.The CFO will establish a cost allocation plan which includes a methodology to support salary, wage, and fringe benefit charges, and other applicable costs, to the federal award and to support allocation among cost objectives. 2. The CFO will implement a documented process for personnel activity reporting and/or periodic certifications (or other equivalent documentation) that reasonably reflects actual work performed and supports the allocation of compensation costs to eligible activities. 3. CFO will reconfigure the current workforce management system to ensure projects, departments, and contextual details are logged at the source. 4. The COO will review existing timesheet submission and review policy to ensure compliance with federal requirements. The policy will require supervisory review and approval of personnel activity documentation/ certifications consistent with the payroll cadence and retain documentation in the grant file and/or payroll file. The CFO will review and enforce compliance with timesheet submission requirements. 5. The CFO will implement a dynamic allocations module within Sage Intacct to facilitate automated allocation of time and fringe benefits to federal and other programs. 6. The CFO will ensure that the systems established perform periodic reconciliation and after-thefact review of payroll and fringe benefit allocations. The CFO will make timely adjustments when actual activity differs from budget estimates or planned allocations. 7. The CFO, COO, and other personnel working on federal programs will receive training on the documentation standards in 2 CFR § 200.430 and allowability factors in 2 CFR § 200.403. 8. The CFO and COO will provide training to program and finance personnel on the documentation standards. in 2 CFR § 200.430 and allowability factors in 2 CFR § 200.403. 9. The CFO will, as part of the monthly close process, review compensation charged to federal awards to ensure all costs are appropriate and supported prior to requesting reimbursement. Management believes these actions will strengthen internal controls over compensation costs charged to federal awards and ensure compliance with Uniform Guidance requirements going forward. Responsible Official: Julia Gazizova, Chief Financial Officer Anticipated Completion Date: September 30, 2026.

The Foundation, through its outsourced bookkeeping firm, acknowledges the audit observation regarding the duplicate reimbursement of lender expenditures. Management believes this was an isolated administrative error rather than the result of a deficiency in the Foundation's internal control environment. The Foundation maintains controls designed to ensure that expenditures charged to federal awards are reviewed for allowability, properly supported, and approved before submission for reimbursement. In this instance, a subsequent reimbursement from the lender was not identified through the Foundation's normal monitoring process. Management contacted the grantor and resolved the matter by applying other allowable expenditures to the federal award, thereby eliminating any duplicate recovery of federal funds. To further strengthen existing controls, the Foundation has enhanced its procedures to specifically track expenditures submitted for reimbursement under federal programs and monitor any subsequent refunds, credits, rebates, or reimbursements received from vendors or other third parties related to those expenditures. In addition, management will document a post-submission review process to identify vendor credits or recoveries received after reimbursement requests have been submitted and determine whether any adjustment to future reimbursement requests or repayment to the granting agency is required.

The Airport has incorporated the addition of electronic approvals for Airport Improvement Plan invoices within its existing procurement policy.

2025-003 – Allowable Costs Corrective Action: Implement a process to ensure that unallowable costs are not charged to the grants. Person Responsible: Executive Director, Seth Kirshenberg Estimated corrective action completion date: Fiscal year 2026\

The Society of American Foresters has enhanced their exis􀆟ng expense recogni􀆟on controls for event-related invoices by reques􀆟ng more detailed vendor invoices that clearly iden􀆟fy the event and applicable service period, implemen􀆟ng addi􀆟onal review for vendors with recurring or overlapping billing arrangements, and reinforcing current invoice review procedures to ensure that the period of benefit is adequately documented, par􀆟cularly for transac􀆟ons occurring near year-end. These enhancements are intended to further strengthen the Society’s already effec􀆟ve control environment and support consistent and accurate recogni􀆟on of event expenses in accordance with federal requirements and GAAP.

Finding 2025-003: Lack of Authorization for Expenses - The Organization is currently updating their approval process and including an additional approval form. This form will require accounts payable staff to verify that the expense has appropriate signatures before any federal grants are charged.

2025-003 ACTIVITES ALLOWED/ALLOWABLE COST PRINCIPLES Planned Corrective Action: This CMHSP will strengthen its grant financial management procedures. Finance staff will verify that all indirect cost calculations comply with the approved grant budget and the requirements of the federal award before indirect costs are charged to the grant. A grant expenditure tracking process will be established to monitor direct and indirect costs against the approved budget throughout the grant period. The Chief Financial Officer will review indirect cost calculations and budget-to-actual expenditures monthly to ensure expenditures remain within approved budget limitations and comply with applicable federal regulations and grant requirements. This CMHSP will create grant management policies and procedures, outside of the County of Lapeer’s grant management policy, to include documented reviews of indirect cost calculations, monthly budget monitoring, and supervisory approval of grant expenditures to ensure compliance with federal awards. Responsible Party: Emma McQuillan, Chief Financial Officer Anticipated Completion Date: 09/30/2026

View of Responsible Officials and Corrective Actions: We agree with the auditor's recommendation. Although the referenced invoices were reviewed by the CEO from the vendor for eligibility and reasonableness upon receipt of the automatic e-mailed invoice, there was no procedure to print and retain this documentation in the accounting files for Instacart invoices. Effective June 1, 2026, each month the Director of Finance will compare a checklist of all credit charges to the physical copies prior to filing and obtain any missing invoices as part of the monthly closing process.

Management acknowledge the improper treatment of the expenditure for the specific period. The expenditure in question was for a one-year marketing services agreement supporting activities under the FDA 503B award. The vendor required payment in advance as a condition of service delivery, and the cost was incurred for legitimate grant-related purposes within the approved scope of work and period of performance. The expenditure was fully documented, allocable to the award, reasonable in nature, and directly connected to approved programmatic objectives. Management acknowledges that the transaction involved payment for services extending across a future service period. Specifically, 2 CFR 200 does not prohibit recipients from entering into prepaid contractual arrangements for allowable services necessary to support award implementation, particularly where such arrangements reflect standard vendor business practices and operational necessity. Further, the organization’s actions must be evaluated in the context of significant federal payment administration changes that began in February 2025. Historically, the organization received advance funding under the award consistent with the cash management principles contemplated under 2 CFR 200.305. Beginning in 2025, however, the organization was required to operate under a reimbursement-based process requiring submission of supporting documentation prior to payment release. This materially altered the organization’s working capital position and limited its ability to independently finance operational expenditures for extended periods pending reimbursement. As a result, management was required to make operational decisions necessary to ensure continuity of approved grant activities while balancing vendor requirements, cash flow limitations, and evolving federal reimbursement practices. The organization did not receive excess federal cash, improperly retain federal funds, incur unallowable costs, or use award funds outside the approved project scope. The questioned transaction reflects a timing and payment structure issue rather than a violation of fundamental federal compliance requirements. Management also notes that 2 CFR 200.305 expressly contemplates advance payment methodologies and recognizes that reimbursement-only environments may create operational hardships for recipients lacking sufficient working capital. The organization’s actions were undertaken in good faith to maintain uninterrupted program operations under materially changed federal payment conditions. Importantly, the expenditure was allowable, the services supported approved award objectives, the costs were incurred during the award period, supporting documentation exists, no misuse or diversion of federal funds occurred, and no financial harm to the federal government resulted. Note also that going forward, PDA will record future services and subscriptions to prepaid and amortize based on the periods stipulated on the vendor invoices.

Identifying Number: 2025-001 Finding: Material Weakness in Internal Control and Material Noncompliance, Activities Allowed or Unallowed and Allowable Costs/Cost Principles Corrective Actions Taken or Planned: While the ARP ESSER Federal programs are no longer funded, there are other Federal programs that the District receives funding from. Therefore, the administrators in the District who apply and write the grants, specifically the Director of Learning & Instruction, Amabel Crawford, and the Director of Student Support Services, Jackie Janicke, will continue to participate, effective July 1, 2025, in all trainings from the Illinois State Board of Education regarding the programs they have applied for and will additionally confirm that the expenditures written into the grant are allowable under the federal guidelines for each program.

Management agrees with the finding and acknowledges that documentation supporting review, approval, and segregation of duties for certain nonpayroll transactions was not consistently maintained during the audit period. To address this finding, management has formalized procedures requiring documented approval of invoices and nonpayroll expenditures prior to payment. These procedures require a clear separation between the individual requesting or managing a transaction and the individual approving the invoice or payment. Management has also implemented standardized approval workflows to strengthen segregation of duties, enforce approval requirements, and maintain a complete audit trail. Management will incorporate these procedures into formal policies and standard operating procedures and will periodically monitor compliance to ensure controls are consistently applied across programs. Anticipated Implementation Date: Implemented and ongoing; formal policy incorporation expected by September 1, 2026 Contact Person Responsible for Corrective Action: Shahara Wright, Chief Operating Officer & General Counsel and Brook Abitz, Director of People and Operations

View of Responsible Officials and Corrective Action Plan WESST acknowledges this finding, remains committed to continuous improvement, and has already taken proactive, substantive corrective action. During the fiscal year under review, the organization experienced a leadership transition when a new Chief Executive Officer assumed responsibility following the departure of a CEO who had served for 33 years. At the same time, WESST faced significant and sudden changes in long-term funding sources, requiring prompt financial and operational adjustments. A significant finance department change occurred in October 2025. As noted in the Statement of Condition above, no exceptions were identified after that point. In connection with this change, WESST implemented key control processes, including: o All expenses will be reviewed for allowability, allocability, and reasonableness before being charged to the grant. o Payroll charges recorded in the general ledger will be reconciled to employee time records or approved allocation schedules each month. Variances will be investigated and corrected in a timely manner. o All changes to payroll allocations require documented justification and formal review and approval. o Monthly expense reviews will be performed by the: • Staff Accountant • Program Director • Accounting Controller o These reviews will support proper classification of direct and indirect costs and help prevent inconsistent treatment Corrective Action Plan Timeline Completed implementation in March of 2026. Designation of Employee Position Responsible for Meeting Deadline Chief Executive Officer

2025-005 Auditor’s Recommendation: UCM should develop and implement comprehensive written policies and procedures addressing allowability and documentation standards. Controls should ensure only actual costs are charged. Staff responsible for grant accounting should receive Uniform Guidance training. Corrective Action: UCM will develop and implement comprehensive written policies and procedures addressing cost eligibility, documentation standards, and the requirement that only actual costs are charged to Federal awards. The procedures will be designed to ensure costs charged to Federal awards are permitted under the award terms, properly supported, accurately recorded, and consistent with Uniform Guidance requirements. UCM will update its grant accounting procedures to require supporting documentation for all costs charged to Federal awards, including invoices, receipts, payroll records, allocation schedules, contracts, purchase approvals, proof of payment, and other relevant source documents. Estimated, unsupported, or budgeted amounts will not be charged to Federal awards unless specifically permitted by the award terms and adjusted to actual costs within the required reporting period. UCM will also implement a documented review process to confirm that Federal award expenditures are based on actual costs incurred. The review will include verification that the expense was incurred during the grant period, relates to the approved program, is supported by adequate documentation, is charged to the correct funding source, and agrees to the general ledger and supporting records. Evidence of review and approval will be retained with the grant files. Staff responsible for grant accounting, Federal award reporting, payroll allocation, accounts payable, and program budget oversight will receive Uniform Guidance training. Training will include cost eligibility, documentation standards, actual cost requirements, cost allocation, and grant expenditure review procedures. Responsible for Corrective Action: Shruti Jha, Senior Director of Finance Liya Tseye & Carmen Romero, Accountants Gina Macanlalay, Director of Family Achievement Program Laura D’Ambrogi, Grants Manager Anticipated Completion Date: December 31, 2026

2025-003 Auditor’s Recommendation: UCM should develop and implement comprehensive written policies and procedures addressing time and effort, employee benefits, payroll allocations, and documentation standards. Staff responsible for grant accounting should receive Uniform Guidance training. Corrective Action: UCM is implementing Insperity, a new Human Resource and Payroll software system, to improve the accuracy and documentation of time allocation, payroll processing, and benefit allocation across programs and funding sources, including the Family Achievement Program federal award. UCM will configure Insperity and related procedures to support time allocation by program, grant, or cost objective, supervisor approval, payroll allocation reporting, and retention of supporting documentation. In addition, UCM will develop and implement written policies and procedures addressing time and effort reporting, employee benefit allocations, payroll allocation methodology, review and approval requirements, and documentation retention standards. These procedures will require that employee benefits charged to the federal award are based on actual benefit costs incurred, rather than budgeted or estimated amounts, unless otherwise permitted by the award terms and adjusted to actual costs within the required reporting period. UCM will establish a review process to ensure payroll and benefit costs charged to the federal award are accurate, allowable, based on actual costs incurred, properly supported, and consistent with Uniform Guidance requirements. Staff responsible for grant accounting, payroll processing, and federal award compliance will receive Uniform Guidance training. Responsible for Corrective Action: Shruti Jha, Senior Director of Finance Deborah Ewell, Director of Human Resources Laura D’Ambrogi, Grants Manager Anticipated Completion Date: September 30, 2026

VIEWS OF RESPONSIBLE OFFICIALS The Puerto Rico Department of Education (PRDE) acknowledges the audit findings presented by the auditors regarding the Activities Allowed or Unallowed// Allowable Costs/Cost Principles (ALN 10.553, 10.555, 10.559, 10.582, 84.010, 84.027, 84.425D, 84.425U. The PRDE recognizes that the recoup procedures established in the "Manual de Procedimiento de Nómina" are in place; however, the Department acknowledges that the detail of Accounts Receivable shows $3,756,580 corresponding to invoices generated during the audit year. The PRDE is working with the existing manuals, along with the new changes being implemented, to strengthen the recoup process for these overpayments. As such, the PRDE has implemented several procedures which have helped in this collection process. The PRDE is committed to strengthening its documentation practices and internal oversight mechanisms to ensure full compliance with 2 CFR § 200.403(g) and other applicable federal requirements. The PRDE further acknowledges that this is a repeat finding (prior year Finding 2024-005) and accepts the auditors’ recommendation to establish and implement formal procedures to obtain and review subrecipient audit reports in a timely manner, follow up on relevant audit findings, and maintain documentation of all monitoring activities performed IMPLEMENTATION DATE Fiscal Year 2025-2026 RESPONSIBLE PERSON Giovanni Siarez Deputy Director of Payroll Wilfredo Falcón Negrón Human Resources Area Director Office Time Attendance & Leave Evelyn E. Rodríguez Cardé Finance Director

VIEWS OF RESPONSIBLE OFFICIALS As a result of a Specific Conditions letter issued by the United States Department of Education (USDE), in March 2021 the Puerto Rico Department of Education (PRDE) signed a contract with a Third-Party Fiduciary Agent (“TPFA”) to oversee the administration of federal funds. As this was the first time the PRDE was required by the USDE to contract a TPFA, the PRDE received support and guidance from the USDE. The USDE reviewed and approved the key procurement terms of the RFP, including the stipulated fixed fee provision for payment of TPFA services and expenses. The following is the PRDE's response to Finding Reference Number 2025-003. Statement of Condition 1 — Reasonableness of the Average Hourly Rate The PRDE does not agree with the implication, in Statement of Condition 1, that the average hourly rate is unreasonable. As the contract stipulates a fixed monthly fee, the reasonableness of the hourly rate should be calculated over an extended performance period, as the hours worked during a particular month fluctuate depending upon the level of work required to be performed. In the sample of invoices examined for the twelve-month period beginning June 2024 and ending May 2025, the total invoice amounts over the twelve-month period, less related expenses and the 1.5% contribution fee to the Government of Puerto Rico, divided by the total hours worked, results in an average hourly rate of $407.83, which is slightly above the noted “reasonable” rate which was addressed over 5 years ago in the RFP. Adjusting for a cumulative inflation rate of 24.48% since 2020, the RFP range of rates would have been between $81 and $438, so the average hourly rate of $407.83 is within that range. However, it should be noted that the rates in the RFP were expected to be local billing rates and not rates of a global consulting firm providing TPFA services from a team of experienced international senior professionals. The range of rates noted in the invoice template, i.e., $195–$695, and highlighted in each TPFA monthly invoice, approximates rates of the US General Services Administration (GSA). The PRDE does not agree with the recommendation that contract terms with the vendor should be revised before the contract expires. As this was the first time the PRDE was required to contract the services of a TPFA, the PRDE received guidance from the USDE, which reviewed and approved the key procurement terms of the RFP, including the stipulated fixed fee provision for the payment of TPFA services and expenses. The fixed fees were a result of extensive negotiations between the PRDE and the selected vendor and, although the hours and expenses are disclosed in each monthly invoice, this is provided for informational purposes only and, as stated in each invoice, “is not to be used to calculate the Total Amount Due,” which in each month is the applicable fixed fee. In addition, the PRDE does not agree with the recommendation that the TPFA submit supporting evidence for the reimbursement of expenses because (i) the TPFA contract is a fixed fee that is inclusive of all professional service fees and expenses, (ii) the TPFA provides an explanation of major expenses incurred within each monthly invoice, and (iii) the monthly fixed fee invoice is not requesting any specific reimbursement for expenses incurred. Statement of Condition 2 — Allocability Between Federal and Non-Federal Funds The PRDE does not agree with the finding that there is no basis for the allocation of costs between Federal and non-Federal funds. The funding of TPFA invoices from various federal funds was a result of (i) reasonable discussions between the PRDE and the USDE, (ii) the USDE's authorization for the availability of federal funds to pay TPFA invoices, and (iii) the actual availability of both federal and state funds at the PRDE from which to pay TPFA invoices. Furthermore, the TPFA services are applicable to all federal funds under the TPFA's administration, and its work is not directly tied to any specific grant. The funding for TPFA services is divided between federal and state funds as agreed to between the PRDE and the USDE, and payment for those services is determined based upon the availability of both federal and state funds. TPFA services are conducted for the benefit of the entire PRDE organization and, as such, are overhead costs not directly tied to any specific program or purpose. In addition, funds used to pay TPFA invoices are sourced from grant administration accounts that are specifically designated for the payment of overhead costs. Auditor Comment on Management Response for Finding No. 2025-003 The 2 CFR 200.1 establishes that: “Indirect [facilities & administrative (F&A)] costs mean those costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be necessary to establish a number of pools of indirect (F&A) costs. Indirect (F&A) cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived.” This information was not provided for our evaluation. Also, we made reference to the Program Determination Email for ALNs. 84.938 and 84.425 dated September 18, 2024 (Audit Control Number 02-21-39634), received from Ms. Catherine Miers of the Office of Elementary and Secondary Education of the US Department of Education (USDE), in which they required that the PRDE provide documentation for the following corrective actions: “revised the contract terms to include a reconciliation of total hours and rates to adjust the payments made to the vendor before the contract expiration; requested that adequate supporting evidence from the vendors be presented for any expenses to be reimbursed by the PRDE; and develop an adequate review of the vendors invoice to properly identify the actual hours of services that benefited the Federal programs so a correct allocation of the costs incurred can be made within Federal programs and state funds”. IMPLEMENTATION DATE None RESPONSIBLE PERSON Jullymar Octtaviani Vega Sub-Secretary of Administration Edgar Delgado Serrano Interim Director of Federal Affairs Office

VIEWS OF RESPONSIBLE OFFICIALS The Puerto Rico Department of Education (PRDE) accepts the finding identified by the auditors regarding the incorrect coding of five (5) reimbursement payments for equipment purchases in account E6170 (Donations and Contributions to Private Entities), rather than in the appropriate E5000-series accounts, and the omission of said assets from the institutional property register. The PRDE has initiated the necessary corrective actions to address this deficiency. Specifically, all assets included within the affected reimbursement transactions have been identified, and a detailed inventory is being prepared in which each asset is classified according to the capitalization criteria established in the Restart Program Fiscal Process Guide (unit cost equal to or greater than $500.00 and useful life greater than two (2) years). This inventory distinguishes between capitalizable equipment (E5000 series) and non-capitalizable equipment (E4414), in accordance with applicable regulatory requirements. Once finalized, the inventory file will be submitted to the PRDE’s Office of Property for review and mass upload into the institutional property register, ensuring that all assets acquired with Restart Program funds are properly recorded under PRDE ownership, in compliance with Section 102(h)(3) of the 2018 Hurricane Relief Act and the requirements of 2 CFR §200.302(b)(3)(4). IMPLEMENTATION DATE Fiscal Year 2026-2027 RESPONSIBLE PERSON Edgar Delgado Serrano Interim Director of Federal Affairs Office

VIEWS OF RESPONSIBLE OFFICIALS The Puerto Rico Department of Education (PRDE) acknowledges the audit findings presented by the auditors regarding the Activities Allowed or Unallowed / Allowable Costs/Cost Principles compliance requirement under the IDEA Special Education Cluster (Assistance Listing Nos. 84.027 and 84.173). The PRDE recognizes that certain deficiencies identified by the auditors relate to inconsistencies in supporting documentation, documentation retained in departmental systems, and the need to strengthen administrative controls over the documentation supporting disbursements for private educational and therapy services. The Department further acknowledges opportunities to improve the consistency of information maintained in supporting schedules, contract documentation, proposals, and other records used during the invoice review and payment process. The PRDE respectfully clarifies that, in several instances identified during the audit, the questioned conditions were attributable to documentation inconsistencies, system-generated reporting errors, or documentation that supports the transactions but was not maintained or presented in a standardized manner during the audit process. Specifically, the Department notes that adjustment reports recorded in the financial system agreed with the disbursement vouchers despite errors identified in certain Excel master schedules; that invoice validations performed by the Centers are based on the corresponding "Carta de Aprobación de Consulta de Ubicación," which establishes the approved services and applicable rates for each student; and that federal regulations authorize IDEA Part B (ALN 84.027) funds to be used for eligible children ages 3 through 21, including expenses otherwise allowable under the Preschool Grant (ALN 84.173), as permitted under 34 CFR §300.202(a). With respect to students identified as over 21 years of age, the PRDE conducted an individual review of the affected student records and determined that the population includes students who exited the program at age 21 as well as students for whom documentation exists supporting the continuation of services through individualized educational determinations, transition planning activities, or compensatory educational services. The Department recognizes, however, that documentation supporting these determinations was not maintained in a standardized manner that facilitated timely retrieval during the audit. The PRDE further acknowledges that improvements are needed to ensure that procurement documentation, contract amendments, proposals, invoice support, Excel master schedules, and student-level supporting documentation are complete, accurate, consistent, and readily available for audit and monitoring purposes. Accordingly, the Department accepts the auditors' recommendations and is committed to implementing corrective actions designed to strengthen internal controls, standardize documentation practices, improve supervisory review procedures, and enhance coordination among the responsible program and administrative units IMPLEMENTATION DATE Fiscal Year 2026-2027 RESPONSIBLE PERSON Enid Diaz Nieves Executive Director III Alayra Figueroa Gonzalez Associate Secretary for Special Education

Provide funder-led training sessions for management and staff, maintain current budget tracking incorporated federal program compliance into relevant staff performance evaluations, implement a dual-storage documentation methodology combining a shared drive and a document management system (DMS) and update the Finance Manual.

Provide all management staff with annual training on federal grant requirements, perform periodic internal reviews and a final year-end reconciliation, maintainall grant-related records on a shared organizational drive accessible to all responsible staff, provide formal onboarding and off boarding procedures for federal grant management, and update the Finance Manual .

Corrective Action Plan: Management acknowledges the finding relative to formal documentation for eligible project costs and will enhance review procedures for monthly WIFIA loans draws to have written contemporaneous evidence from the lender in addition to preliminary approval received for project transfers or changes (i.e. renaming of subprojects listed in the loan closing documents within the same scope approved in the loan). The project changes materialized due to a change in expected timing of Sewer Utility work included in joint projects with the City’s Department of Public Works. As a result, standalone projects were executed to complete the required work by the October 2025 deadline mandated in the Sewer Consent Decree. The changes were discussed with the lender upon notification from the Department of Public Works and included in WIFIA quarterly reporting while the formal project approvals are in process. The Utility’s Project Delivery Unit Director is responsible for ensuring that this corrective action is accomplished with an estimated timeline for completion by September 30, 2026. The WIFIA project scope is defined as: I. Water Line Replacement via the Joint Infrastructure (JIRR) Program; II. Sewer Line Replacement via the Joint Infrastructure Recovery Roads (JIRR) Program; III. Sewer System Evaluation and Rehabilitation Program (SSERP); and IV. Sewer Force Main Replacement and Improvement. The eligible activities include, restoration and replacement of damaged gravity sanitary sewer mains, manhole rehabilitation and repair, CIPP lining and point repairs, Water line replacement and repair, Roadway restoration and ADA curb ramp improvements associated with the utility work.

2025-005 Allowability – Interprogram Activity Public Housing Operating Fund ALN 14.850 Significant Deficiency in Internal Control Other matter required to be reported in accordance with Uniform Guidance Condition: The Authority maintains a material interprogram receivable balance in the asset management program (“AMP”), which is due from other programs of the Authority. This interprogram receivable increased by $373,091 from the September 30, 2024 balance of $433,981, for a total receivable balance of $807,072 as of September 30, 2025. Auditor Recommendations: We recommend that the Authority immediately discontinue using Public Housing Operating Fund resources to fund costs or cash shortfalls of other programs or component units. The Authority should prepare a detailed reconciliation of all interprogram receivable and payable balances by program and implement a repayment plan to restore the Public Housing Operating Fund. We further recommend that the Authority implement written cash management and interprogram accounting procedures to prevent future unauthorized advances. These procedures should include monthly reconciliation of all interprogram balances, supervisory review, and approval of interprogram activity. Management Response: Management acknowledges and accepts responsibility for the deficiencies in internal control over allowability and eligibility and are committed to implementing corrective actions that address missing documentation and lack of verifiable procurement procedures to ensure compliance. Reconcile intercompany balances • CHA is currently working with its fee accountant to complete this process Cease Additional Borrowing • Effective immediately, CHA will discontinue the practice of increasing interprogram borrowings from AMP 1 except where expressly authorized by HUD regulations. Implementing a Repayment Plan • CHA will implement a repayment plan to prioritize repayment from unrestricted or otherwise eligible funding sources in compliance with HUD requirements. Monthly Interprogram Reconciliation • Finance staff and fee accountant will reconcile all interprogram receivable and payable balances monthly. • Any new interprogram activity will be reviewed by the Executive Director and Fee Accountant to ensure allowability before recording. Strengthen Budget Monitoring • Management will perform monthly budget-to-actual reviews for every program to identify operating deficits before they require interprogram borrowing. • Programs experiencing budget shortfalls will implement corrective spending measures or identify alternative eligible funding sources. Improve Cash Flow Management • With the assistance of the fee accountant, CHA will prepare monthly cash flow projections for each program to monitor liquidity and prevent the use of restricted Public Housing Operating Funds for other programs. Implement Internal Control Procedures • Written procedures governing interprogram transactions will be incorporated into the Authority's financial policies. • All interprogram transactions will require documentation supporting the purpose, funding source, and regulatory allowability. Oversight by Fee Accountant • The Authority's Fee Accountant will review interprogram balances during monthly financial statement preparation and report unusual activity or growing receivable balances to management. Board Oversight • The Board of Commissioners will receive monthly financial reports that include interprogram receivable and payable balances to provide ongoing oversight of repayment progress and compliance. Monitoring • The Executive Director and Finance Department will monitor compliance with this corrective action plan monthly and adjust operating budgets as necessary to eliminate future interprogram borrowing. Name of Responsible Person(s): Jackie Otto, Executive Director, Sherdana Wade, Director of Operations, Michelle Guidry, Finance Director Projected Completion Date: Some of the corrective activities are underway. We anticipate full compliance ahead of the June 30, 2027 audited submission.