Corrective Action Plans

View ofResponsible Officials and Planned CorrectiveActions:Managementacknowledges this findingrelatedtoinconsistentretentionoflease extensionsorrenewals forrentalassistanceprovided beyond originallease terms duringfiscalyear2023.Originalleases were retained forallparticipants;however,extensionswerenotconsistently obtained. We implementedalease trackingprocess to monitorlease expirationdates.Weupdatedproceduresto requirelease renewalsorextensions priorto issuingassistancebeyondtheoriginallease term.Weimplementedstandardizedfile checklists.Supervisorystaffconductperiodic filereviewsto confirmleasedocumentation coverage.Corrective actionshavebeenimplementedand are operatingonanongoingbasis.

View of Responsible Officials and Planned Corrective Actions: Management acknowledges this finding related to documentation retention for a single participant-related expense during fiscal year 2023. While isolated in nature, management recognizes the importance of complete documentation to support allowability under Uniform Guidance. We updated procedures to require receipt and verification of all required documentation prior to charging costs to federal awards. We implemented standardized documentation checklists to support consistent compliance. We reinforced documentation standards through staff training and supervisory review to ensure proper adherence. Supervisory staff conduct periodic file reviews prior to reimbursement and drawdown activity. Corrective actions have been implemented and are operating on an ongoing basis.

The Department of Human Services (DHS) adopted the electronic Timeforce (STATS) system for payroll, replacing manual processes. Time and attendance are approved through management levels, with payroll based on Notice of Personnel Action (NOPA) cost centers. Financial Analysts reconcile payroll, and a workflow ensures accurate NOPA listings for payroll purposes. Additionally, in order to ensure that Notice’s of Personnel Actions are updated on a timely basis, ensuring that salaries are charged to the respective account, DHS has implemented the following process: (1) Provisional Payroll Codes are requested prior to the close of the Fiscal Year by the Department of Finance through the Office of Management and Budget through the established process. (2) Once the codes are received, the Division of Human Resources will update the most current Personnel Distribution Sheets to reflect active employees. (3) The sheets will be submitted to Fiscal certification by the CFO, (4) NOPAS are updated with the provisional codes.

Once payroll is processed by the Department of Finance, on the payday, a Flex Earnings Report is generated by the staff. A reconciliation is performed to ensure that all employees and their respective fringe benefits are captured and drawn. The Department of Finance posts said payroll. Staffing continues to identify deficiencies in the posting which occur in varying periods after the actual pay day. DHS has incorporated into its internal controls a step to ensure that the accounts, in retrospect, are reconciled to the actual Flex earning report. DHS intends on meeting with the Department of Finance to identify the nuances that create postings to occur contrary to the Flex Earning Report account coding.

VIDE acknowledges the audit findings regarding the Special Education Cluster payroll discrepancies and concurs with the recommendation. VIDE is taking immediate action to align payroll controls with established fiscal improvement plan. To address the pay rate discrepancies between NOPAs and the payroll register, the Budget Team and the Deputy Commissioner of Fiscal and Administrative Services will review and approve every personnel action in the ERP prior to the NOPA being executed. This review matches the action against the approved grant application or staffing list to ensure the pay rate is accurate before the payroll cycle begins.

VIDE acknowledges the audit findings regarding the Special Education Cluster payroll discrepancies and the unreported fraud incident and concurs with the recommendation. VIDE is taking immediate action to align payroll controls with the established fiscal improvement plan and to institutionalize a mandatory federal reporting protocol for fraud. To address the pay rate discrepancies between NOPAs and the payroll register, the Budget Team and the Deputy Commissioner of Fiscal and Administrative Services will review and approve every personnel action in the ERP prior to the NOPA being executed. This review matches the action against the approved grant application or staffing list to ensure the pay rate is accurate before the payroll cycle begins. To address fraud reporting, VIDE will implement a Federal Mandatory Disclosure Policy in strict accordance with 2 CFR §200.113 that designates the Office of the Commissioner and the Internal Audit Division as the responsible parties for reporting any credible evidence of fraud, bribery, or gratuity violations to the Federal awarding agency and the OIG. Accordingly, the specific incident cited in the finding regarding the $5,221 theft related to bus driver timesheets will be immediately reported to the U.S. Department of Education’s Office of Inspector General via the online hotline and formal written correspondence to cure the non-compliance. Furthermore, to prevent recurrence of the specific falsified timesheet scheme, VIDE will implement a Service Verification Log for bus drivers and similar service staff wherein supervisors will be required to cross-reference timesheets against daily trip logs or service logs before approving time in the payroll system. Finally, to ensure ongoing compliance, the Office of Fiscal and Administrative Services will conduct monthly spot checks of ERP logs to ensure pre-execution reviews are occurring, and the Internal Audit Division will maintain a log of all investigations to verify that a Notification of Federal Disclosure is attached to any file involving federal funds.

We acknowledge that some timesheets were currently unavailable because the employees in question are no longer employed at DPNR, and as a result, their user profile is no longer active within the system. We have requested assistance from the Department of Finance in retrieving the necessary timesheets unfortunately, the required information has not yet been provided. DPNR will continue to collaborate with the Department of Finance to ensure the retrieval of any relevant files or reports, and we remain committed to resolving all the findings. We recognize that these findings highlight areas where improvements are necessary to ensure better compliance with applicable policies and regulations governing payroll and grant management. We are committed to implementing corrective actions and enhancing internal controls to prevent recurrence.

The Government concurs with the finding. OTAG implemented enhanced payroll controls including a dual manual and electronic timesheet system, verification of pay rates against NOPA forms, and separation controls to discontinue benefit charges upon employee separation or retirement.

VIDE acknowledges the audit finding regarding the Child Nutrition Cluster payroll and concurs with the recommendation. Because this is a recurring finding from prior year 2022-023, VIDE will develop and institute stricter fiscal controls to address the root causes of documentation and allocation discrepancies for this program. To prevent discrepancies including unapproved project codes and pay rate mismatches between NOPAs and payroll registers, the Fiscal Team will take the lead in preparing and maintaining the official staffing list for federally funded personnel within this program, an effort that involves reviewing the grant application for all positions and informing HR of required action entries. Furthermore, VIDE will implement a control where the Budget Team and the Deputy Commissioner of Fiscal and Administrative Services will review and approve every personnel action in the ERP prior to the NOPA being executed to match the action against the approved grant application or staffing list and ensure the project code and pay rate are accurate before the payroll cycle begins. To address the unavailability of timesheets, the program will implement a strict reconciliation protocol wherein the Program Director or designee will verify that the payroll register aligns with approved timesheets prior to performing the drawdown and posting. These timesheets will then be digitally archived in a centralized SharePoint repository organized by pay period to ensure that time and effort documentation is securely retained and immediately available for audit review. To support these new protocols, mandatory training will be conducted for relevant staff and supervisors on these new timesheet procedures, federal time and effort requirements, and the new NOPA reconciliation workflow. Finally, the Office of Fiscal and Administrative Services will conduct monthly spot checks of the SharePoint repository and ERP logs to measure the effectiveness of these controls.

The Department of Human Services (DHS) adopted the electronic Timeforce (STATS) system for payroll, replacing manual processes. Time and attendance are approved through management levels, with payroll based on Notice of Personnel Action (NOPA) cost centers. Financial Analysts reconcile payroll, and a workflow ensures accurate NOPA listings for payroll purposes. Additionally, in order to ensure that Notices of Personnel Actions are updated on a timely basis, ensuring that salaries are charged to the respective account, DHS has implemented the following process: Provisional Payroll Codes are requested (1) Provisional Payroll Codes are requested prior to the close of the Fiscal Year by the Department of Finance through the Office of Management and Budget through the established process.(2)Once the codes are received, the Division of Human Resources will update the most current Personnel Distribution Sheets to reflect active employees. (3) The sheets will be submitted to Fiscal for certification by the CFO. (4) NOPA's are updated with the provisional codes.

We acknowledge that the purchase of gift cards was not an allowable expense under federal grant guidelines. During the COVID-19 pandemic, our staff were tasked with responding to urgent and overwhelming public health demands, particularly as the New Mexico Department of Health became overextended. To recognize staff who went above and beyond to ensure timely case reporting and investigations for tribal communities, gift cards were used as a form of appreciation. Moving forward, we will ensure full compliance with federal grant requirements. Specifically: 1. We will adhere strictly to the cost principles and allowability guidance outlined in federal regulations and the terms of each Notice of Award. 2. In instances where the allowability of an expense is unclear, we will proactively seek guidance and written approval from our Federal Grant Management Officer before incurring the cost. 3. We will provide refresher training to program and fiscal staff on allowable costs under federal awards to prevent recurrence of similar findings. These corrective actions will ensure future expenditures are fully compliant with federal guidelines and that staff recognition practices remain appropriate, allowable, and consistent with award terms. • Immediate (Already in Effect): Ceased use of gift cards and other unallowable incentives. • Within 30 Days: Finance and program leadership will review current grant guidance and distribute a written summary of allowable/unallowable costs to all program managers. • Within 60 Days: Refresher training on federal cost principles (2 CFR 200) and Notice of Award guidance will be provided to all program and fiscal staff. • Ongoing: When ambiguity exists regarding allowable costs, staff will consult with the Federal Grant Management Officer prior to obligating or expending funds. Designation of Employee Position Responsible for Meeting Deadline Program Managers/Directors, Finance Officer, and Accounting Manager.

Personnel Responsible for Corrective Action: Jim Keeney, CFO Anticipated Completion Date: Completed. Review and Approval continue consistently. Corrective Action Plan: Management has implemented a time and activity method that meets the requirements of federal regulations. It includes the use of JIRA Software and an Excel Spreadsheet. Staff are entering time on an ongoing and consistent basis, including both actual and allowable time, for federal and non-federal contracts/agreements. These tools are reviewed and approved by executive management before any billing has transpired. Management is providing ongoing training for existing staff and new staff on an annual basis. This includes review and analysis from the accounting department to ensure proper expense accrual and revenue recognition. Management has also written an improved and detailed policy and procedure on recording actual and allowable time.

Recommendation: We recommended the City enhance its subrecipient monitoring activities and establish a formal record-keeping policy to ensure complete and timely documentation of expenses. Views of Responsible Officials: Management concurs with the finding. The City of Adelanto experienced higher than expected staff turnover in the finance department during the timeframe noted in this audit, which caused a backlog in audit preparation and submission, along with certain financial controls implementation interruption. At the time of this audit publishing, Management believes that implementation of such procedures is in compliance with the noted recommendation. Persons Responsible for Corrective Action: City Finance Staff (various) City Department Heads applying for grant funding (various) Anticipated Completion Date for Corrective Action: Corrective action has been immediately implemented in response to the auditors’ recommendation. As financial reporting is still in the process of becoming current, the City anticipates finding to be removed in future fiscal years.

SAOP will establish more robust internal contols to guarantee that all non-payoll charges are incurred within the tauthoized period of performance. This should involve consistent monitoring of gran periods, providing staff training on the perfoormance period, and conducting periodic reviews of expenditure documentation.

2023-003 Compliance and Internal Controls over Matching (Material Weakness) Internal Controls over Period of Performance and Earmarking (Material Weakness) U.S. Department of Housing and Urban Development 14.267 – Continuum of Care Program 2023 Funding Recommendation: We recommend that part of the review process for payroll include verification that the cost charged to the grant does not exceed the grant hours reported on employee timesheet. Corrective Action: In response to the first finding, we have implemented a comprehensive payroll review process that addresses both the initial concern and the subsequent finding. The new payroll process that has been established will ensure that costs charged to the grant do not exceed the hours reported on employee timesheets, effectively eliminating both issues: Responsible Parties: Sandra Robicheaux – Executive Director Claudia Dixon – CFO Tyler Starkel - YPTC Date to be Corrected: Implementation for above changes went into effect 6/01/2024

As noted above, we are working with consultants and our government partners to determine and define the requirements for each relevant program. We understand the recommendations offered and will review, and possibly revise, our policies and procedures, including supervisory review of documentation to support the allowability of costs charged to federal agreements. We will also review existing policies and procedures for preventing or detecting and correcting unallowable costs charged to federal agreements to ensure consistent application of those policies and procedures for all costs charged to federal agreements.

As noted above, we are working with consultants and our government partners to understand the requirements for each relevant program. We understand the recommendations offered and are exploring a comprehensive indirect cost allocation policy that would align with applicable requirements.

Finding 2023-005 – Allowable Cost Documentation In response to the finding, GEM addressed allowable cost documentation by instituting the following: A formal policy was established on 9/30/23, and going forward, GEM will implement additional oversight procedures to ensure the policy is followed and that all requirements are met. GEM has also incorporated the formal credit card policy into the employee handbook, outlining the procedures for submitting receipts on a monthly basis. Anticipated date of completion: This policy has been in effect since September 30, 2023. Responsible party: Jamie Hicks, Senior Accounting Manager

Description: Management’s schedule of Expenditures of Federal Awards was incomplete, resulting in lack of identification of the need for a Single Audit and the delay in its completion. The State funder indicated that no Federal Single Audit was required. Management had not implemented a formal process for preparation of the SEFA. Recommendation: Management should prepare a master tracking schedule for government grants which includes the source of funding and audit and reporting requirements. The schedule should be prepared by someone with knowledge of the grant agreements and reviewed by a leader in the accounting department to ensure completeness. Responsible Contact: Laura McQuay, Vice President & Chief Financial Officer Corrective Action Planned: Management has implemented a master tracking schedule for government grants that includes the source of funding and audit and reporting requirements. This tracker is a joint effort between finance and grants management teams. Anticipated Completion Date: December 31, 2025

We will allocate shared costs appropriately among federal awards

FINDING 2023-003 Finding Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Contact Person Responsible for Corrective Action: Tyler Pearson, Clerk Treasurer Contact Phone Number and Email Address: 574-739-1416 clerktreasurer@cityoflogansport.org Views of Responsible Officials: We concur with the findings. Description of Corrective Action Plan: As a measure of corrective action, I will be implementing a check sheet that will be attached to every claim sheet. This new procedure requires that you go through the check sheet and initial each item to ensure that all procedures have been followed correctly before submission. Additionally, I will also maintain a check sheet in my office since I am the last person to review each claim. This will help to ensure thoroughness and accuracy in our claims processing. Furthermore, moving forward, any grant funds will be placed into their own individual funds and distributed through an individual account. This approach will allow us to track payments for any expenses associated with these funds more effectively. Additionally, the BOT expenditure is done and in the future we will do a better job. Anticipated Completion Date: October 31,2025

Finding Number 2023-104 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action The Oklahoma Department of Human Services (OKDHS) respectfully does not concur with the finding as written. We believe the State Auditor and Inspector (SAI) has not fully considered the federal flexibility afforded under the American Rescue Plan (ARP) Act, and that some conclusions were drawn from incomplete documentation. The Child Care Desert Grant program was thoughtfully developed in response to urgent needs during the COVID-19 recovery, with the goal of expanding access to child care in underserved communities using the discretion and authority granted to states under federal guidance. While OKDHS acknowledges that improvements could have been made to certain aspects of the program’s implementation—particularly regarding documentation clarity, post-award monitoring, and technical assistance— the SAI findings do not reflect the intent, structure, or compliance framework outlined in federal guidance. 2 CFR § 200.303(a) – Internal Controls DHS has strengthened internal controls consistent with federal expectations. For example, in the instance involving a grantee related to a DHS official, the potential conflict was identified and escalated by OKDHS to SAI as well as the Ethics Commission, and the individual was not directly involved in the reviewing and approving award process. In addition, the employee’s spouse was not included on any documentation included in the facilities application. This demonstrates that internal controls operated effectively. 2 CFR § 200.403 – Allowability of Costs This regulation applies to allowability under the Uniform Guidance, but per 45 CFR § 75.101(d), Subpart E (which ncludes § 200.403) does not apply to CCDF ARP discretionary funds unless explicitly stated. Federal guidance, including ACF-IM-2021-03, affirms that states were given broad flexibility in the design and implementation of such programs. Accordingly, DHS used its discretion to structure payments and allowable uses consistent with that guidance. Many costs questioned by SAI—such as business technology, minor remodeling, and start-up costs—were clearly allowable per the Desert Grant Guidance. 42 U.S. Code § 9858c(c)(2)(I) DHS did not fund sectarian instruction or activities. Expenditures were related to facility compliance and licensing, which is expressly permitted under this section when needed to meet health and safety standards. Providers affirmed compliance in their applications. 42 U.S. Code § 9858k(a) No funding was used for sectarian worship or instruction. All grantees signed affirmations that they would comply with all federal requirements, including those related to religious neutrality. Where expenditures were found that may raise concerns, they are being reviewed for compliance with these requirements. 42 U.S. Code § 9858k(b) DHS did not provide funding for services rendered during the regular school day or for academic credit. In the referenced after-school program, funds were used to expand access to licensed child care outside of regular instructional hours. Documentation of use is being reviewed, and additional guidance will be provided to ensure clarity in future programs. 42 U.S. Code § 9858d(b) and 45 CFR § 98.2 – Construction and Renovation DHS recognizes that one provider exceeded the $350,000 minor remodeling limit. This was an isolated case. At the time, DHS did not interpret the project scope as meeting the federal definition of "major renovation." DHS is enhancing its oversight process and guidance to providers to ensure full alignment with federal cost limits moving forward. Additional Clarifications • Expenditures cited as unallowable often fall within the scope of minor remodeling, technology, or business development explicitly allowed in Desert Grant FAQs and ACF guidance. • SAI’s estimate of questioned costs includes speculative assumptions based on documentation gaps—not confirmed misuse. • Many of the questioned costs SAI appears to be extrapolating were supplied directly from OKDHS’ own internal audit team and have either been addressed or are under investigation and should not be included in any additional questioned cost extrapolation. • The program was developed under severe federal timelines (obligation by 9/30/23), and ACF’s memoranda explicitly encouraged innovative approaches, including expansion grants to new and small providers. Corrective Actions (Planned or Completed) to be implemented on future emergency awards 1. Policy & Procedure Enhancements – Revised award language, documentation standards, and milestone disbursement options are being implemented. 2. Conflict of Interest Controls – OKDHS had a conflict of interest control in place to try and capture all potential conflicts based on the structure of the agency. OKDHS is expanding the process to extend to any staff members that have decision making approval. 3. Improved Monitoring – Targeted post-award reviews, site checks, and spending verification measures are being conducted. 4. Provider Training & Technical Assistance – Providers are receiving additional education on fiscal documentation, grant compliance, and reporting expectations. Anticipated Completion Date N/A Responsible Contact Person Kayla Urtz

Finding Number 2023-099 Subject Heading (Financial) or AL no. and program name (Federal) 93.575 – CCDF Cluster Planned Corrective Action The Oklahoma Department of Human Services (DHS) respectfully disagrees with several assertions made in this finding and believes the State Auditor has misapplied certain federal guidance, including Section 2202(e)(1) of the ARP Act, and incorrectly characterized the Department’s internal controls and program intent. Specifically: 1. Allowability of Costs: The activities cited as “unallowable” by the auditor do not appear to violate Section 2202(e)(1) of the ARP Act. That provision explicitly allows for a broad set of uses including “goods and services necessary to maintain or resume child care services.” DHS maintains that the expenditures made by the providers fall within the permissible categories outlined in the statute and that the audit applies a narrower interpretation than what federal guidance supports. 2. Documentation and Internal Controls: DHS issued grant funding as stabilization support to preserve child care operations during a critical period of recovery and transition, as encouraged by the federal guidance. In accordance with ARP Act expectations around expediting support, DHS designed a simplified reapplication process focused on accessibility and participation, especially for providers historically underrepresented in the quality rating system. While DHS did not require pre-spending documentation from providers—consistent with the stabilization nature of the funding—it did provide clear guidance on allowable uses and will further strengthen post-award monitoring protocols going forward. DHS acknowledges that improvements could be made in documentation expectations and will take steps to implement a structured sampling and review process for provider expenditures to enhance accountability without deterring participation. 3. Stars System Reapplication and Ratings: The temporary policy to waive certain visits and allow self-nominated Stars levels was a deliberate effort to incentivize participation and improve provider engagement with the new QRIS. The assertion that increased Star ratings led to unjustified funding increases does not consider the system’s transitionary design nor the planned monitoring that follows implementation. DHS was transparent in its guidance to providers and structured the increases to align with system reforms in development since before the ARP funding was issued. 4. Commingling of Funds: DHS did not require separate accounts for stabilization grants, consistent with federal practice and provider burden considerations. We do, however, acknowledge that clearer expectations and technical assistance on fund tracking would be beneficial. DHS will issue revised guidance encouraging, but not mandating, the separation of grant-related expenditures and will explore cost-effective technical supports for provider-level financial documentation. Anticipated Completion Date N/A Responsible Contact Person Kayla Urtz

Finding Number 2023-209 Subject Heading (Financial) or AL no. and program name (Federal) 93.323: Epidemiology and Laboratory Capacity for Infectious Diseases Planned Corrective Action The flagged contract and incorporated section were negotiated by OSDH's prior leadership at that time (May- June 2021). After a leadership change in October 2021, Commissioner Reed promptly terminated the contract - well before any such flagged services were engaged in or provided by the contractor. To OSDH's knowledge, it did not pay for any such services. Current OSDH leadership and Legal work diligently during the contract review process to ensure that unallowable activities are not included in vendor contracts. Anticipated Completion Date 6/30/24 Responsible Contact Person Stefan Von Dollen, Interim CFO

Finding Number 2023-208 Subject Heading (Financial) or AL no. and program name (Federal) 93.268: Immunizations Cooperative Agreements Planned Corrective Action The flagged contract and incorporated section were negotiated by OSDH's prior leadership at that time (May- June 2021). After a leadership change in October 2021, Commissioner Reed promptly terminated the contract - well before any such flagged services were engaged in or provided by the contractor. To OSDH's knowledge, it did not pay for any such services. Current OSDH leadership and Legal work diligently during the contract review process to ensure that unallowable activities are not included in vendor contracts. Anticipated Completion Date 6/30/24 Responsible Contact Person Stefan Von Dollen, Interim CFO