Corrective Action Plans

Condition: The School District's controls did not prevent or detect and correct, in a timely manner, costs charged to the grant that were more than the related invoices. Planned Corrective Action: The Grant Accounting team will develop a standard operating procedure on review and approval of journal entries. The Grant Account Team will provide training to Grant Compliance staff members on the defined process. Grant Compliance Senior Director and Assistant Director will be responsible for ensuring journal requests are submitted following the outlined operating procedure. Grant Accounting staff members will review submitted materials to ensure no invoice is overcharged and then process journal request. Contact person responsible for corrective action: Jeremy Vidito, CFO Anticipated Completion Date: 3/1/2025

2024-002 Finding: Allowable Costs and Allowable Activities Federal Assistance Listing Number 84.425U - COVID-19 - Elementary and Secondary School Emergency Relief Fund (ESSER III) Passed-through Colorado Department of Education Award Number - 4414/4431/9414; Award Year 2021 Summary of Finding: The District did not have adequate internal controls in place over the ESSER grant which resulted in unallowable costs being applied to the grant and inconsistently applying indirect costs to the grant. Status: Corrective action in progress Client Planned Action: The District concurs with the recommendations and is currently developing and implementing internal controls to ensure compliance. The inadequate internal controls that caused the inconsistency in supporting payroll information involved the End-of-Year Closeout process. The District will ensure End-of-Year Closeout procedures are up to date and adhered to. These procedures will include a second review of calculations used to determine the expenditure amount in accruals, to ensure it recalculates. The District will also conduct a second review of the supporting detail used to determine Indirect Costs to ensure they are consistent with CDE recommendations and District policies and procedures. Client Responsible Party: Annette Bass, Director of Grants Completion Date: Review of department End-of Year Closeout process began in September 2024. Adjustments and revisions will be made to these processes as needed, prior to End-of-Year Closeout, June 30, 2025.

Federal Program Title: Postconviction Testing of DNA Evidence; Capital Case Litigation Initiative ALN: 16.820; 16.746 Recommendation: We recommend the University review its current procedures to ensure disallowable costs are not being charged allocated to federal programs. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action planned/taken in response to finding: Boise State University is reminding faculty and staff about lobbying and the basics of charging costs to a sponsored project with an emphasis on cost allocability. Name(s) of the contact person(s) responsible for corrective action: Jen Lutke Planned completion date for corrective action plan: December 31, 2024

Corrective Steps Taken – The District will implement the reinforcement of its internal controls. Expenditures will be verified against the MDE approved budget.

The Payroll Department has taken immediate action to develop additional safeguards to avoid duplicate pay. When Central Payroll adds to a payline, we will notify the requestor to inform them of this action and ask that they review their payline for accuracy. This should trigger a response from the requestor if they had also added the missing hours via a CU Special Pay. Additionally, as of 06/21/2024, the Late Timesheet option was turned off on CU Special Pay to strengthen controls. Individuals now contact payroll@clemson.edu for assistance. Once contacted the payroll/timekeeping team will update the timecard and ensure the missed pay is added to the next payroll cycle, assuming an emergency/off-cycle check is not needed. The College of Engineering and Applied Sciences (CECAS) will take action to strengthen internal controls to ensure accuracy and compliance. We will establish clear procedures to verify employee payroll data via paylines, as well as cross checking with CU Payroll to ensure changes are properly documented and authorized. We will provide ongoing training for departmental payroll staff on best practices and compliance requirements. Anticipated Completion Date: September 17, 2024 Person Responsible: Central Payroll – Ami Hood, Payroll Director; CECAS – Keri Cortese, Director of Procurement and Payroll Operations Contact/Responsible Party: Ami Hood, Payroll Director Contact Information: hooda@clemson.edu

2024-005 Period of Performance Corrective action planned: The Fiscal Supervisor and/or the Director of Fiscal Operations will review expenditures before payment to ensure that GAAP and the accrual basis of accounting are being followed. Month-end closing procedures will include a review of all prepaid expenses to assure that a separate schedule is maintained and reconciled to the general ledger. Anticipated completion date: 11-30-2024 Contact person responsible for corrective action: Cathy Liles, Director of Fiscal Operations

Allowable Costs/General Disbursements Recommendation: We recommend that management reinforce the consistent execution and documentation of existing disbursement approval and documentation procedures. This should include ensuring that all expenditure charged to federal awards are appropriately approved and supported by sufficient documentation prior to payment, and that management periodically monitors compliance with these procedures to confirm they are operating as designed. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Reoccurring bills such as utilities, loan payments, contract services and credit card payments do not require an expense request to be included for on going bills. We will review our procedures and update our financial policy. Our financial process includes at least two reviews prior to creating a bill in our accounting system, payments are reviewed by the director or the Deputy Director when signed. We do not use a auto signature all checks are reviewed. The Grantor billing is a P&L detailed report for that grant. This is sorted into grant line items designated billable and non-billable for compliance. Total program cost and billable to grant are tracked every month, by the grant finance manager for compliance prior to billing any grants. Timecards are reviewed, expense requests are reviewed and payments are reviewed. Prior to submission of the invoice to grantor. Name(s) of the contact person(s) responsible for corrective action: Cora Alyea Planned completion date for corrective action plan: Completed in 2023

Finding No.: 2023-041 AL Program: 93.489/93.575/93.596 – CCDF Cluster COVID-19 93.489/93.575/93.596 CCDF Cluster Area: Period of Performance Questioned Costs: $95,367 Contact Person(s): Roselle Teregeyo, CCDF Co-Administrator/Accountant Corrective Action Plan: Condition 1 & 3a: The CNMI CCDF Program agrees with this finding. To strengthen oversight and ensure adequate accountability over Federal awards, the CNMI CCDF Program has implemented a filing system Finding No.: 2023-041, continued AL Program: 93.489/93.575/93.596 – CCDF Cluster COVID-19 93.489/93.575/93.596 CCDF Cluster Area: Period of Performance Questioned Costs: $95,367 Contact Person(s): Roselle Teregeyo, CCDF Co-Administrator/Accountant Corrective Action Plan: where all documents relating to a federal award are properly maintained and labeled for accessibility. This system became effective on October 1, 2025. Proposed Completion Date: Completed Condition 2 & 3b: The CNMI CCDF Program agrees with this finding and acknowledges the need to strengthen internal controls to ensure that all expenditures are cleared by the bank before the end of the liquidation period. The CCDF Program will coordinate with the Department of Finance (DOF) Financial Services Division regarding the establishment of a monitoring log that tracks all checks issued and cleared by vendor and office. Once this log is implemented, the CCDF Program will request regular copies to allow responsible staff to verify whether payments have cleared and to follow up with vendors as needed to ensure timely bank reconciliation. To streamline payment processing and enhance compliance with federal cash management requirements, the CCDF Program is exploring a transition to a fully ACH based payment system. Moving to electronic payments will reduce delays associated with paper checks, improve tracking and reconciliation, and strengthen internal controls over disbursements. This corrective action is currently in progress. The CCDF Program anticipates full implementation of the monitoring process and/or ACH transition by October 1, 2026. Proposed Completion Date: October 1, 2026

Finding No.: 2023-039 AL Program: 93.489/93.575/93.596 – CCDF Cluster COVID-19 93.489/93.575/93.596 CCDF Cluster Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $71,972 Contact Person(s): Roselle Teregeyo, CCDF Co-Administrator/Accountant Corrective Action Plan: The CNMI CCDF Program agrees with this finding. For seven (or 18%) out of the forty samples tested, CNMI did not provide the purchase order, contract, and/or invoice(s) supporting the allowability of the costs. To strengthen internal controls and ensure adequate accountability over Federal awards, the CNMI CCDF Program has implemented a filing system where all documents relating to a federal award are properly maintained and labeled for accessibility. This implementation became effective on October 1, 2025. Proposed Completion Date: Completed

Finding No.: 2023-021 AL Program: COVID-19 17.225 – Unemployment Insurance (UI) Area: Activities Allowed or Unallowed / Allowable Costs/Cost Principles Questioned Costs: $224,846 Contact Person(s): Zachary Taitano, PUA Program Manager, DOL Corrective Action Plan: Condition 1: The CNMI Department of Labor agrees with this finding, as the supporting documents extracted from Munis were insufficient to support the referenced line items based on the documentation requested. The corresponding payment registers were uploaded on June 8, 2026, to support the entries. Finding No.: 2023-021, continued AL Program: COVID-19 17.225 – Unemployment Insurance (UI) Area: Activities Allowed or Unallowed / Allowable Costs/Cost Principles Questioned Costs: $224,846 Contact Person(s): Zachary Taitano, PUA Program Manager, DOL Corrective Action Plan: Additionally, in response to the need for stronger internal controls, the CNMI Department of Finance developed and implemented the "CNMI Journal Entry (FS-Ops) Procedures" Standard Operating Procedure, effective October 1, 2025. The procedure establishes requirements for the timely uploading of supporting documentation to ensure that adequate records are maintained and readily available for future audit and reviews. Proposed Completion Date: Completed Condition 2: The CNMI partially agrees with this finding. The payroll records for Employee Numbers 4381 and 5600 did not reflect the adjusted hourly rates during the weeks selected for testing because the Requests for Personnel Action (RFPAs) associated with the funding awards could not be finalized until the funding was officially awarded. The funding awards tied to the employee contracts during that time were provided through funding opportunities made available under UIPL 16-20, Change 7. The initial application was due to the Employment and Training Administration (ETA) on January 6, 2023. Following submission, communication between the CNMI and ETA regarding revisions and clarifications continued through March 26, 2023. The Notices of Award (NOAs) were subsequently issued on May 19 and May 22, 2023. The budget narrative submitted to ETA included position modifications and salary adjustments intended to be effective April 1, 2023. However, because the NOAs and associated funding were received after that effective date, retroactive RFPAs were initiated beginning June 13, 2023, and were not fully completed until mid-July 2023. As a result, the updated hourly rates were not reflected in the payroll registers for the periods selected for testing. With respect to employee no. 2293, the employee was a regular Department of Labor employee whose employment contract was scheduled to expire on September 30, 2022 and was subsequently renewed to include a salary adjustment. The RFPA for this employee was initiated in September 22, 2022 but did not complete the routing process until late October 2022. As a result, the adjusted hourly rate was not reflected in the payroll registers for the period selected for testing. Finding No.: 2023-021, continued AL Program: COVID-19 17.225 – Unemployment Insurance (UI) Area: Activities Allowed or Unallowed / Allowable Costs/Cost Principles Questioned Costs: $224,846 Contact Person(s): Zachary Taitano, PUA Program Manager, DOL Corrective Action Plan: All employees received the difference between their adjusted salary and initial salary at a later date in the form of a retroactive lump-sum payment. Proposed Completion Date: Completed

Finding No.: 2023-020 AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Contact Person(s): Angelina Phillips, Financial Analyst, Office of Management and Budget (OMB), Nerissa B. Karakaya, CIP COTR Corrective Action Plan: Condition 1a (A. Phillips): For Grant Award Nos. D23AF00036 and D22AF00299, the Office of Management and Budget (OMB) agrees with the finding and the need for a formally written policy and procedures for subrecipient monitoring. We have adopted the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 8/4/2025 establishing a formal monitoring suspension and debarment status of each subrecipient prior to granting any subaward. The guidance is reflective of the provisions set by 2 CFR 180.300. Proposed Completion Date: Ongoing Condition 1a and 1c (N. Karakaya): For Grant Award No. D23AP00068, the Capital Improvement Program (CIP) disagrees with this finding because the required verification was performed. Although documentation was not retained, CIP verifies that all subrecipients comply with OPA requirements before federal funds are awarded. Finding No.: 2023-020, continued AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Contact Person(s): Angelina Phillips, Financial Analyst, Office of Management and Budget (OMB), Nerissa B. Karakaya, CIP COTR Corrective Action Plan: To prevent recurrence, CIP will implement the following: 1. CIP will implement the revised Subrecipient Monitoring Standard Operating Procedures (SOP) issued by the CNMI Department of Finance, made effective October 28, 2025. Under these procedures, CIP will conduct a risk assessment to evaluate the subrecipient’s potential for noncompliance. The assessment will consider: a. Financial stability b. Audit history, including findings or questioned costs c. Internal controls, such as documented policies and procedures d. Programmatic capacity, including staffing and experience with similar awards The results of the risk assessment will help determine the level of monitoring required during the award period (e.g., low, moderate, or high risk). In addition, CIP will verify that subrecipients are not suspended or debarred from receiving federal funds by: a. Checking the System for Award Management (SAM.gov) and retaining a screenshot or record of the verification b. Alternatively, obtaining a signed certification from the subrecipient or including a suspension/debarment clause in the subaward agreement 2. No subaward agreement will be approved or executed until the required verification has been completed and reviewed by the CIP Administrator. 3. CIP staff will receive training on federal suspension and debarment requirements, including compliance with 2 CFR 180.300 and the CNMI Department of Finance Subrecipient Monitoring SOP. 4. CIP will conduct quarterly reviews of subaward files to ensure verification documentation is maintained and procedures are consistently followed. Proposed Completion Date: December 31, 2026 Finding No.: 2023-020, continued AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Contact Person(s): Angelina Phillips, Financial Analyst, Office of Management and Budget (OMB), Nerissa B. Karakaya, CIP COTR Corrective Action Plan: Condition 1b (A. Phillips): The Office of Management and Budget (OMB) agrees with the finding. OMB fully executed a Subrecipient Agreement with the subrecipient on 1/27/2023, prior to any grant administration taking place. The adoption of the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 8/4/2025 also further formalizes the process. Proposed Completion Date: Completed Condition 1c (A. Phillips): For Grant Award Nos. D23AF00036 and D22AF00299, the Office of Management and Budget (OMB) agrees with the finding and agree with the need for a formally written policy and procedures for subrecipient monitoring. We have adopted the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 8/4/2025 establishing a formal subrecipient risk assessment prior to entering into the subaward agreement and identifying the type of monitoring procedures to be performed for the subrecipient. Proposed Completion Date: Completed Condition 2 (A. Phillips): For Grant Award No. D23AF00036, the Office of Management and Budget (OMB) agrees with the finding and agree with the need for a formally written policy and procedures for subrecipient monitoring. We have adopted the Department of Finance’s Subrecipient Monitoring Policy and Procedures effective 8/4/2025 to perform proper monitoring to ensure that subrecipients are in compliance with single audits. Proposed Completion Date: Completed Condition 2 (N. Karakaya): For Grant Award No. D17AP00132, D21AP10043, D19AP00081, and D21AP10044, the Capital Improvement Program (CIP) agrees with the finding that a subrecipient with expenditures Finding No.: 2023-020, continued AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Subrecipient Monitoring Questioned Costs: $2,399,988 Contact Person(s): Angelina Phillips, Financial Analyst, Office of Management and Budget (OMB), Nerissa B. Karakaya, CIP COTR Corrective Action Plan: exceeding $750,000 during the year was not verified for compliance with single audit requirements, including whether corrective actions were taken to address prior audit findings. To address this issue, the Capital Improvement Program (CIP) will strengthen its subrecipient monitoring procedures to ensure compliance with single audit requirements by: 1. Developing and implementing a subrecipient monitoring checklist to identify subrecipients that expend $750,000 or more in federal awards during their fiscal year. 2. Obtaining and reviewing applicable Single Audit reports annually to verify compliance with federal requirements. 3. Documenting the review of audit reports and assessing whether any findings related to federal awards affect CIP-funded activities. 4. Requiring subrecipients with audit finding to submit corrective action plans and evidence of implementation. 5. Maintaining a tracking system to monitor the status and resolution of audit findings and corrective actions. 6. Providing training to CIP staff responsible for subrecipient monitoring on federal compliance and the CNMI Department of Finance Subrecipient Monitoring SOP. Proposed Completion Date: December 31, 2026

Finding No.: 2023-015 AL Program: 15.875 – Economic, Social, and Political Development of the Territories Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $4,203 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC Corrective Action Plan: Condition 1: The Office of Grants Management (OGM) disagrees with this finding and questioned costs of $1,400.00. The ATP document is vested with the Division of Energy (DOE) and not OGM. The award is from OIA; however, not all awards are under the possession of OGM. In this matter, CNMI Department of Energy is the recipient. However, we were able to obtain a copy of the document after several phone calls to their office. Document is available for review upon request. Proposed Completion Date: Completed Finding No.: 2023-015, continued AL Program: 15.875 – Economic, Social, and Political Development of the Territories Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $4,203 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC Corrective Action Plan: Condition 2: The Office of Grants Management (OGM) disagrees with this finding and questioned cost of $2,803.00. The documents were obtained for both employees and are available for review upon request. Proposed Completion Date: Completed

Finding No.: 2023-013 AL Programs: 11.307 – Economic Adjustment Assistance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: Condition 1: The CNMI Department of Finance respectfully disagrees with this finding related to project number FG17010001 (Economic Resiliency Center). The Department acknowledges that although supporting documentation – such as journal entries, approvals of expense transfers, sole-source justification memo, and grantor approval - was submitted, copies of the related invoices and/or contract agreement were not included. This omission was an oversight and resulted in a documentation-timing deficiency. The Department maintains copies of all required documents, and they are available for review upon request. To prevent recurrence, the department will reinforce our internal review procedures to ensure that all required supporting documentation is consistently compiled, retained within the Tyler MUNIS system, and submitted as part of future audit requests. Proposed Completion Date: Ongoing Condition 2: The CNMI Department of Finance respectfully disagrees with this finding related to PA Journals 478, 360, 2137, and 335. These transactions pertain to the Department’s Economic Resiliency Center (ERC) project. Due to internal scheduling constraints and the compressed 2-day turnaround to provide supporting documentation to the auditors, the requested documents were not submitted by the specified deadline. This timing issue resulted in the finding; however, it does not reflect a Finding No.: 2023-013, continued AL Programs: 11.307 – Economic Adjustment Assistance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: lack of documentation or inadequate recordkeeping. The Department maintains all relevant supporting documentation for these transactions and such documentation is available for review upon request from the Grantor. The Office of Planning and Development (OPD) partially agrees with the finding. OPD reviewed the questioned transactions and supporting documentation available under its custody. Payment documentation has been identified for PA Journals 186, 142, 141, 2670, 270, 4200, 556, 4180, and 913 and is maintained by OPD for review. For PA Journals 191 and 144, OPD verified that the invoice amounts are consistent with Contract No. 32200454; however, the PA Journal effective dates and journal numbers provided in the audit schedule do not correspond with the records reflected in the Munis system. For PA Journals 1585, 1862, 2219, 1138, 197, 593, and 219, additional information is required to complete verification because the PA Journal effective dates and journal numbers differ from the Munis records available to OPD. The referenced invoice amounts alone are insufficient to identify the transactions, as they may represent portions of cost shared expenditures or partial payments associated with larger transactions. Identification of the vendor would significantly assist in locating and reconciling the transactions. OPD further notes that the compilation of requested documentation occurred under significant time constraints. During the audit process, agencies were at one point provided approximately two business days to submit requested samples and supporting documentation. Given the volume of transactions and the age of some records, the limited response timeframe may have affected the ability to fully research, reconcile, and compile all supporting documentation prior to submission. Additional time for both agency response and auditor review may have facilitated a more comprehensive reconciliation and verification of the questioned items. OPD will continue coordinating with the Department of Finance and the auditors to reconcile discrepancies between the audit schedules and Munis records, provide available supporting documentation, and strengthen record-retention and transaction-tracking procedures to ensure supporting documentation is readily identifiable and accessible for future audits. Proposed Completion Date: Ongoing

2023-014 –TITLE I – INADEQUATE SUPPORTING DOCUMENTATION – ALN 84.010 – MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Condition: Williston Basin Public School District No. 7 was unable to provide supporting documentation for expenses charged to the Title I program. 47 of the 60 expenditures we sampled did not have any support, leaving them with known questioned costs of $318,881. Management’s Response: We agree. WBSD#7 created a new Grants Coordinator position in July 2023 with one of the specific responsibilities for that position being oversight of all Federal programs. This oversight responsibility includes monitoring expenditures to ensure all expenditures are allowable within the parameters of each program and also that proper documentation for those expenditures has been maintained. It has taken the district some time to get this area cleaned up. The district is adding another position to this department to assist in maintaining documentation. Anticipated Completion Date: FY 2025

2023-013 – EDUCATION STABILIZATION FUND - LACK OF SUPPORT OVER ESSER FUNDS – ALN 84.425 - MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Condition: Williston Basin Public School District No. 7 was unable to provide supporting documentation for journal entries that were done to reallocate payroll. There were 3 journal entries totaling $6,391,442 that were completed at year end to move salaries into the Education Stabilization Fund program that did not have documentation to support the salary expenditures. Management’s Response: We agree. WBSD#7 created a new Grants Coordinator position in July 2023 with one of the specific responsibilities for that position being oversight of all Federal programs. This oversight responsibility includes monitoring expenditures to ensure all expenditures are allowable within the parameters of each program and also that proper documentation for those expenditures has been maintained. It has taken the district some time to get this area cleaned up. Anticipated Completion Date: FY 2025

Finding No.: 2023-006 AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $5,130 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings and the associated questioned costs. 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. Corrective Action Plan: To prevent future occurrences and ensure full compliance with federal cost principles, PSS will implement the following: I. Review of Travel Authorization Requirements: PSS will conduct a review of its travel policy to require a written statement of alignment with program goals or objectives for every travel request. This statement must explicitly document how the travel is necessary and reasonable for the performance of the specific federal award. II. Centralized Digital Documentation Protocol: To resolve the inadequate systematic filing issue, PSS implemented a protocol to improve its digital filing procedures. All supporting documents, including invoices, boarding passes, approved timesheets, and pay rate authorizations, must be uploaded and verified before the final liquidation of any federal drawdowns. III. Strengthening Review Process: Finalize expanded SOPs and policies to include more detail on time and effort reporting (including differential pay) and travel justifications specific to allowability determinations 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. Refresher training on cost principles will be required annually for staff making allowability determinations. Proposed Completion Date: PSS is currently in the process of implementing these corrective actions with full implementation by August 2026. Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org

Activities Allowed or Unallowed/ Allowable Costs/Cost Principles The College acknowledges the finding and recognizes earlier corrective measures were not sufficient to fully address the concern. To improve monitoring of allowable expenditures and compliance with federal cost principles, the College will incorporate routine budget-to-expenditure reviews into its recurring grant management meetings. Additional oversight and review responsibilities will also be assigned to the Grants Office to strengthen compliance monitoring, improve accountability, and ensure expenditures are properly evaluated and documented prior to approval.

Activities Allowed or Unallowed & Allowable Costs/Cost Principles College of the Marshall Islands acknowledges the finding and agrees that certain payroll and non-payroll expenditures charged to federal programs were not adequately supported with sufficient documentation to clearly demonstrate allowability, proper allocation, and alignment with objectives. The deficiencies resulted from weaknesses in internal control procedures, incomplete supporting documentation, and prior filing and record retention practices. To address this, the College has upgraded and institutionalized a cloud-based filing system to ensure complete, accessible, and properly organized documentation for all grant-funded positions and expenditures. Internal controls have been strengthened to require signed employment and overload contracts, proper funding source verification, and supervisory review before any grant-related payroll costs are charged. With the upgraded systems and the support of newly hired skilled staff, the College is now better equipped to maintain compliance and oversight. Staff will continue to be trained twice a year on federal allowability and cost principles to prevent recurrence of similar issues in future audits.

Recommendation We recommend that management: ▪ Implement procedures requiring complete supporting documentation for all costs charged to federal awards ▪ Ensure costs are reviewed for allowability, reasonableness, and allocability prior to recording ▪ Establish and document formal cost allocation methodologies ▪ Require approval and documentation of all journal entries affecting federal programs ▪ Provide training to staff on Uniform Guidance cost principles (2 CFR 200 Subpart E) ▪ Conduct periodic internal reviews to ensure compliance

The Crenulated will request a quarterly in-kind contribution report from DOE and will ensure the in-kind contributions are recorded in the financial statements. The Crenulated plans to hire an in-house Controller with expertise in accounting for grants and review its existing contract with current third-party accounting provider. Anticipated completion date This corrective action plan will begin immediately.

CONDITION: During the calendar year 2023, the City did not record the necessary adjustments to the various ‘Fund’ general ledgers of the City to properly reconcile certain balance sheet accounts, such as interfund receivables and payables, and payroll-related liabilities to the underlying supporting documentation available at the City. This included the City’s Community Development Block Grant (CDBG) Program. As a result, the financial position and results of operations as shown throughout the calendar year were inaccurately stated. CRITERIA: Prudent internal control procedures in the areas of general ledger management and financial reporting include the reconciliation of all general ledger account balances to underlying supporting documentation monthly with independent oversight and approval as part of the process. In specific as it relates to federal programs, Section 2 CFR 200.403(g) of the Uniform Guidance requires that federal costs must be adequately documented which would include the City’s Federal Programs general ledger which accounts for the financial activity of the City’s Community Development Block Grant Program.MANAGEMENT’S CORRECTIVE ACTION PLAN: Management of the City is reviewing the options as presented by the Audit Firm’s recommendation for feasibility considering current manpower, expertise, and budgetary constraints. In addition, the City plans to ensure that written procedures for all accounting functions are implemented, reviewed and updated as necessary with the objective of ensuring that all applicable balance sheet account balances are accurate and supported by the underlying documentation available at the City. The City is currently in continuous communication with the Audit Firm for specific recommendations regarding the handling of interfund receivables and payables, and payroll-related liabilities, so as to ensure the accuracy of the City’s financial reporting. The timeframe for completion of this review will occur during the first six months of calendar year 2026 with the intention of having the City be in full compliance with Section 2 CFR 200.403(g) of the Uniform Guidance which requires federal costs to be adequately documented which would include the applicable general ledgers of the City.

Corrective Action Plan: Addressing Lack of Controls Due to Staffing Shortages Organization: Safe Harbor Crisis Center Date: December 3, 2025 Audit Finding: 2023-001 Non-Material Non-Compliance – Allowable Costs and Activities Corrective Actions: This plan outlines the steps to address the staffing shortage and implement necessary controls to ensure financial statement accuracy and compliance. Phase 1: Immediate Actions Prioritize Key Hires: The immediate priority is to recruit and hire a Controller with significant non-profit accounting experience. This individual will be crucial in designing and implementing the necessary internal controls. 1. Interim Support (If Needed): While searching for permanent staff, explore options for interim accounting support through a consulting firm or temporary staffing agency specializing in non-profit organizations. This can provide immediate assistance with critical tasks and help bridge the gap until permanent staff are in place and sufficiently trained. 2. Documented Job Descriptions: Develop detailed job descriptions for the Controller, Senior Accountant, and Staff Accountant positions. These descriptions should clearly outline the required qualifications, responsibilities, and reporting lines. Emphasis should be placed on experience with non-profit accounting principles (GAAP), fund accounting, and relevant regulations. 3. Recruitment Strategy: Implement a robust recruitment strategy that includes: ○ Posting job openings on relevant job boards (e.g., Idealist, LinkedIn, specialized non-profit job sites). ○ Networking with professional organizations (e.g., state non-profit associations, accounting professional groups). ○ Partnering with recruitment agencies specializing in non-profit finance. Phase 2: Staffing and Implementation 1. Hire Controller: Complete the recruitment process and hire a qualified Controller with proven non-profit accounting experience. 2. Hire Senior Accountant: Once the Controller is in place, begin the recruitment process for a Senior Accountant to support the Controller and manage day-to-day accounting operations. Experience with fund accounting and grant management is highly desirable. 3. Hire Staff Accountants: Recruit and hire the necessary number of Staff Accountants to handle transaction processing, reconciliations, and other accounting tasks. 4. Control Design and Implementation: The Controller, in collaboration with the Senior Accountant, will be responsible for designing and implementing the necessary internal controls. This includes: ○ Segregation of duties (e.g., authorization, custody, recording). ○ Approval processes for expenditures and journal entries. ○ Regular reconciliations of bank accounts and other key accounts. ○ Documentation of accounting policies and procedures. Phase 3: Review and Monitoring (Ongoing) 1. Training: Provide comprehensive training to all finance staff on non-profit accounting principles, internal controls, and the organization's specific policies and procedures. 2. External Review (Optional): Consider engaging an external accounting firm to review the implemented controls and provide recommendations for improvement. This can provide an independent assessment of the effectiveness of the controls. 3. Regular Monitoring: The Controller will be responsible for regularly monitoring the effectiveness of the internal controls and reporting any deficiencies to the Executive Director and the Board of Directors. 4. Policy Updates: The Controller will ensure that accounting policies and procedures are reviewed and updated regularly to reflect changes in regulations and best practices. Responsible Parties: ● Executive Director (Todd Hixson) : Overall responsibility for implementation of the plan. ● Board of Directors: Oversight and approval of the plan and budget. ● Controller: Responsible for designing, implementing, and monitoring internal controls. Timeline: Phases 1 and 2 were completed as of January 2025. As noted above, phase 3 is an ongoing process. Regular progress updates have been and will continue to be provided to the Executive Director, Finance Steering Committee, and the Board of Directors as appropriate. This Corrective Action Plan demonstrates Safe Harbor Crisis Center’s commitment to addressing the identified control deficiencies and strengthening its financial management practices. By implementing this plan, the agency will be better positioned to ensure financial accountability, transparency, and compliance in service of the mission.

CORRECTIVE ACTION PLAN FISCAL YEAR OF FINDING: June 30, 2023 AUDITOR FINDING: 2023-005 According to 2 CFR Part 200.403 factors affecting allowability of costs - costs must meet the following general criteria in order to be allowable under Federal awards: (a) be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity, (d) be accorded consistent treatment, (e) be determined in accordance with generally accepted accounting principles, (f) to be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period and (g) be adequately documented. In addition, according to 2 CFR Part 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Organization did not maintain documentation to support that costs and reimbursement invoices had been approved in accordance with their internal control design. CLIENT PLANNED ACTION: To address the audit finding, we affirm that all reimbursement invoices and cost-related documentation are submitted to a Director-level staff member for review and approval prior to sending. All approved invoices and associated documentation are now stored in a centralized shared drive and onsite file cabinets accessible to relevant finance staff to ensure consistent retention and accessibility for audit and review purposes. These documents will also be accessible within the accounting information system, when organization switches to Sage, which is accessible to all parties that have approval responsibilities. CLIENT RESPONSIBLE PARTY: Cassie Kenney, Director of Accounting COMPLETION DATE: This process started as of June 30, 2024. Documents will be stored within Sage as soon as the switch to this software is effective (tentative July 1st, 2025).

2023-007 Cash Disbursements and Payroll Allocations and Disbursements Recommendation: Auditors recommend that CIES modifies its internal control policies for general review and approval of the reporting requirements set forth by the criteria listed. Criteria: 2 CFR 200.403(a) – Except where otherwise authorized by statute, costs must meet the following general criteria to be allowed under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action planned in response to finding: CIES will implement a review and approval process for cash disbursements and payroll allocations and disbursements. Payroll allocations and disbursements will be reviewed and approved by either the Chief Operations Officer or Executive Director. Documentation of review and approval process will be maintained within CIES electronic files. Name(s) of the contact person(s) responsible for corrective action: Michael Parker, Executive Director Planned completion date for corrective action plan: March 2026

2023-005 Indirect Cost Rate Agreement (NICRA) Recommendation: Auditors recommend that CIES modifies its internal control policies for general review and approval of the reporting requirements set forth by the criteria listed. Specifically, auditors recommend that CIES modify internal controls to include a review and approval process for submission of all invoices submitted to grantors, including showing the indirect cost rate calculations. Criteria: 2 CFR 200.414(c) – Federal award recipients must negotiate an indirect cost rate with the cognizant agency for indirect costs, which is typically the federal agency that provides the most funding to the recipient. 2 CFR 200.403(d) – The negotiated rate must be applied consistently across all federal awards to ensure uniformity in cost allocation. 2 CFR 200.302(b)(3) – Recipients must maintain adequate documentation to support indirect costs charged to federal awards, ensuring compliance with the cost principles outlined in the regulation. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action planned in response to finding: Project invoices will be prepared by a member of the CIES administrative staff with enough details to show direct and indirect cost rate calculations. Invoices will be reviewed and approved by either the Chief Operations Officer or the Executive Director. Review and Signature approvals will be added to all invoices to meet the criteria identified in this finding. Name(s) of the contact person(s) responsible for corrective action: Michael Parker, Executive Director Planned completion date for corrective action plan: April 2026