Corrective Action Plans

Finding Number 2023-002 • Significant deficiency in internal controls over compliance related to allowable costs and period of performance. Criteria • 2 U.S. CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards require that costs must be necessary and reasonable for the performance of the Federal Award, that costs be determined in accordance with GAAP, and that costs be adequately documented including the allocation of those costs. Condition/Context for Evaluation • IPHC’s internal controls over non-payroll charges to the Federal Award did not include review for allowability, accrual in the proper period, or that adequate documentation existed to support the amounts charged or allocated. Three out of 25 nonpayroll disbursements tested did not include evidence supporting one or more of these controls. Questioned Costs • $2,674 Cause • IPHC’s operation of internal controls were not sufficient to ensure allowable costs were charged in accordance with 2 U.S. CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Effect or Potential Effect • As a result, charges were made to Federal awards that were not allowable. Repeat Finding • Not applicable. Recommendation • We recommend that IPHC ensure internal controls include reviewing costs charged to the Federal Award for conformity with 2 U.S. CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards for allowability, allocability, and reasonableness. o Allowability 200.403, 200.404, 200.405 o Allowable budget period – 200.403 (h) Contact Person(s): • Executive Director: David Wilson (david.wilson@iphc.int); • Assistant Director: Andrea Keikkala (andrea.keikkala@iphc.int) Explanation and specific reasons for disagreement with the audit finding or that corrective action is not required (if applicable): Not applicable. Corrective action planned: We acknowledge that the deficiencies identified, while minor in dollar value to the grant, represent areas for improvement. The specific issues identified were: 1. Field office rental: A field office rental statement was partially charged to the incorrect fiscal year. Reason: The landlord submitted the invoice for payment after the year-end close (FY2022) and was subsequently fully charged to FY2023, instead of being split across fiscal years. 2. Postage (2 elements): The IPHC loads postage stamps on a stamps.com account to process missing logbook notices to vessel owners, a function that pertains to a grant. Clear delineation of the cost of the stamps allocated to the grant and the stamps allocated to activities that do not qualify under the grant were not enumerated. The employee that requested the stamps in the procurement software did so because the lead team member was not available. When procuring the stamps the face-value of a stamp was used at $0.60 instead of $0.57, a discount the organization receives due to bulk purchase and stamp.com membership. The cost of this error was $9.96. At the start of FY2023, we used a single operating Fund (Fund 30 – Statistics) to record income and expenses for data related activities that included some grant funds. During the course of the year, we commenced the development of the new 5-year grant application with NOAA Fisheries to cover IPHC’s Directed Commercial Catch Sampling of Pacific halibut in Alaska (IPHC Grant 802) (Grant Number: NOAA-NMFS-AK-2023-2007663) from FY2022-FY2026. During this grant renewal/development process, a decision was taken to split Fund 30 – Statistics into two, with Fund 35 AK Cost-Recovery being created. This new Fund 35 was developed to contain only those expenses and income that were deemed as eligible under the grant rules. Over the course of the year, the Secretariat categorized income and expenses between the two Funds, which involved recoding some transactions coded to Fund 30 at the start of the fiscal year, to Fund 35 later in the year. For FY2024, we will continue to undertake monthly reconciliation and month-end close processes to ensure charges are appropriately coded and attributed. In addition, the year-end reconciliation and close processes will support the attestation of funds spent under the grant within one month of the fiscal year ending. This proactive approach aims to ensure timely completion for the single audit, allowing for comprehensive scrutiny of costs assigned to the grant before incorporating financial statements for review during the single audit process. Further, we will ensure preliminary scrutiny and month-end close of financial reports pertaining to grant funds before loading them to the auditors for review. Finally, our procedures have already been improved to ensure that costs charged to the federal awards are charged to the appropriate activity code and are allowable under federal cost principles. Anticipated completion date: Completed - 1 December 2023, and annually by year-end closeout.

Finding Number: FS-2023-003 Contact Person: Richard Edwards, Director and Veryl Begay, Business Manager Anticipated Completion Date: March 31, 2024 Planned Corrective Action: When the Business manager left without turning over access or authority, KRCI struggled to perform even the smallest of tasks. In Addition to the obstruction and difficulty finding records, the former Business Manager with the approval of a Board Member, removed numerous records from the campus when clearing their office. A police report was made regarding the potential theft and a folder containing credit card information was returned by the former employee, but KRCI is not confident that all records belonging to the Campus were returned. No central system was established for archiving and security of procurement records. There were no backup systems or redundancy, and separation of duties did not exist due to the extremely limited staff.

Management will ensure an effective review of reimbursement requests prior to submission to ensure all costs requested are legitimate and allowable. Contact Person: Mayor Leroy Sullivan and Sandra Williams. Anticipated Completion Date: Annual basis/as needed

The finding is correct in the fact that money was charged to the wrong grant award. However, as a whole with the grant awards from all of the American Rescue Plan Act, Vantage Career Center gave more money to students then the grants required. Moving forward the Treasurer will be more involved with the requirements of administering the grants from the beginning.

Management agrees with this finding and will implement a more detailed review process of FEMA grant reimbursement requests for future disasters to ensure equipment hour costs reported are accurate. Anticipated Completion Date: June 30, 2024. Responsible Contact Person: David Yellott.

Finding: 2023-002: Questioned Cost – Material Weakness Costs for US Department of Transportation, Mobility Management Grant 20.507 Section 5307 included a $30,000 charge for use of the Data Management System (DMS). The charge is based on a contract rate charged to outside entities that varies depending on the number of users. Management stated the charge was to recoup costs for use of the DMS. Costs for the DMS consist of historical costs to get the system functioning, along with current personnel costs to operate the system and provide the contracted training. The historical costs occurred outside the period of performance and are thus unallowable. Personnel costs are already being charged to the grant through the allocated payroll and benefits of trainers and other personnel, and thus should not also be charged through the contract rate. In addition, if the contract rate includes a profit component this would also be unallowable to charge to the grant. Auditor Recommendation: We recommend that costs charged to federal grants be reviewed by an individual familiar with the Cost Principles for Nonprofit Organizations contained in 2 CFR, Section 200 as part of the SEFA review process. Contact Person Responsible for the Corrective Action: Lisa Cappellari, Chief Financial Officer, LisaC@paratransit.org Management Response and Corrective Action Plan: After the end of Fiscal Year 23-24 on 6/30/2024, Jody Wadley, Finance and Grants Manager, and Lisa Cappellari, Chief Financial Officer, will compile all expense to be charged to any federal grants. Tiffani Scott, Chief Executive Officer, will review the expense against the Cost Principles for Nonprofit Organizations contained in 2 CFR, Section 200 to make sure all expense is eligible.

Condition: A sample of 118 payroll-related expenditures were randomly selected for testing using a random sampling approach, of which included a total of 37 district employees paid & claimed under this grant. These payroll-related expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Upon completing this testing, we noted the following discrepancies: -There were 4 employee salary & benefits claimed that were not included in the 22-4998-E3 grant budget detail. The budget specified teachers & paraprofessionals, and support staff were not included, resulting in known questioned costs of $4,857.50. -There were 11 employees where a portion of the claimed payroll & benefits were deemed allowable per the budget but $8,947.88 was deemed not allowable, resulting in known questioned costs of $8,947.88. -Additionally, there were $6,686.25 of the employee salary & benefits that was not deemed allowable per the budget as the pay period dates did not align with “loss of learning” related pay dates or other approved activities. Plan: The District will review its policies and procedures to ensure that potential expenditures are approved are deemed to be allowable before spending federal funds. In addition, the District will consider implementing a monitoring process to ensure that control procedures are being followed. Anticipated Date of Completion: 6/30/2024 Name of Contact Person: Dr. Dwayne E. Evans, Superintendent of Schools Management Response: The District is currently strengthening internal control procedures over grant reporting and monitoring.

Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023

The District acknowledges the finding regarding the unallowed costs associated with the 21st CCLC Grant. During the audit process, we found that salary costs within this grant were included in error and should not have been. We have contacted both the fiscal department for 21st CCLC and NYSED Grants Finance, in hopes to correct this issue. We adjusted the FS10F report for final expenses and copies are being sent out to the appropriate departments for correction. This issue should be resolved by January 2024 and will be implemented by the Business Manager, Christopher Karwiel.

In order to ensure proper compliance with federal award distribution, the CFO or Controller will review for proper support and documentation before any federal funds are released. Furthermore, the CFO and Controller will review the sample of 60 expenditures the auditors reviewed for the fiscal year 2023 audit, and immediately develop procedures to strengthen internal controls surrounding the disbursement of federal funds.

The School District of the City of Harper Woods submits the following corrective action plans concerning findings on the schedule of findings and questioned costs: 2023-001-Audit Adjustments-Material Weakness Corrective Action The District's Chief Financial Team in coordination with the financial consultants will ensure that accounting records are completed timely and review and correct the 147c payment accruals for proper reporting in the following fiscal years. This correction will be completed by 6/30/24. 2023-002 -Material Weakness & Material Noncompliance-Allowable Costs/Cost Principles related to Title 1, Part A -Grants to Local Education Agencies, Assistance Listing Number 84-010A, Award Number 231530 and the Education Stabilization Fund, Assistance Listing Number 84.426D, Award Number 213712 Corrective Action The District's Chief Financial Team in coordination with the financial consultants and grant consultants to simplify the grant budgets so that it is easier to stay within each grant function. Also, a review will be made to ensure that the district is within budget in each grant function. This correction will be completed by 6/30/24.

Condition: Costs charged to ALN 97.036 – Disaster Grants: Public Assistance were also charged to ALN 93.498, U.S. Department of Health and Human Services, Provider Relief Fund in a prior fiscal year, as reported in the Period 1 submission to the Provider Relief Fund portal. Planned Corrective Action: Management agrees and has revised existing internal control processes and policies to implement review and approval procedures to ensure expenditures submitted were not already reimbursed under a separate grant. Contact person responsible for corrective action: Kevin Riley Anticipated Completion Date: 12/31/2025

Chairman of the Board of County Commissioners: These disbursement issues originated during the prior County Clerk’s administration, but the current leadership is focused on corrective measures. Together, we are: • developing a SOP to ensure compliance with grant requirements, • establishing written standards of conduct to address and set clear guidelines over grant requirements, • and enhancing oversight and review to ensure all processes are fully compliant with federal regulations. Our goal is to build a consistent, transparent procurement framework that safeguards both compliance and public trust. County Clerk: I was not the County Clerk in office at this time. To correct this issue. the County plans to develop a SOP to timely and accurately track and report on federal funds. The SOP will be reviewed, adopted, and monitored by the Board of County Commissioners.

Management acknowledges this finding and agrees that during the period under audit-while the organization was experiencing rapid growth and increased program activity-our documentation and approval processes did not consistently keep pace with operational demands. Since that time, we have taken significant steps to strengthen accounting procedures and internal controls, reinforce our invoice approval policies, and ensure all expenditures charged to Federal awards are properly reviewed and authorized prior to processing. We have enhanced our Accounts Payable workflow by implementing standardized process approval requirements, added additional leadership staffing and oversight within the Finance and Accounting team and provided targeted training to all personnel involved in invoice processing to ensure understanding of Federal cost principles and documentation standards. These corrective actions have improved our control environment since the audit period, and management is committed to continuing to develop and maintain strong financial controls and to prevent recurrence of this issue.

Finding No.: 2022-035 AL Program: 93.767 - Children’s Health Insurance Program Area: Period of Performance Questioned Costs: $38,556 Contact Person(s): Geroge J. Cruz, Medicaid Director Corrective Action Plan: The CNMI Medicaid Office respectfully disagrees with this finding. Due to internal scheduling constraints and the compressed timeline required to complete the FY22 audit, the requested documents were not submitted by the specified deadline, resulting in this finding. However, the office maintains all relevant supporting documentation and is prepared to provide it upon request from the Grantor. Proposed Completion Date: Ongoing

Finding No.: 2022-024 AL Program: 21.023 - Emergency Rental Assistance Program Area: Period of Performance Questioned Costs: $26,329 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC Corrective Action Plan: Condition 1: The Office of Grant Management (OGM) respectfully disagrees with this finding. OGM recollects prior guidance and program discussions indicating that U.S. Territories administering ERA were afforded greater flexibility in the period of performance, in recognition of their geographic remoteness and the additional time required to receive technical assistance and implement compliant systems. This understanding informed OGM’s administration of ERA funds. Additionally, several disbursed checks were returned, which created reconciliation delays and made it difficult to ascertain the true unobligated balance of the grant until sufficient time had passed for all transactions to clear. To address compliance concerns, CNMI officials traveled to Washington, D.C. in February 2025 to meet with U.S. Treasury representatives and resolve outstanding ERA1 documentation issues. Following those meetings, OGM submitted the necessary reports and initiated the closeout process for ERA1 in accordance with federal requirements. The questioned cost of $26,329 reflects expenditures that were directed toward eligible households impacted by COVID-19. These expenditures were necessary, reasonable, and allocable under 2 CFR 200.403, and fully aligned with the statutory purpose of ERA to prevent housing instability. Disallowing these costs would effectively negate assistance that was properly delivered to beneficiaries and undermine the program’s objective. For these reasons, OGM respectfully requests that the questioned cost be removed. Proposed Completion Date: Ongoing Condition 2: The Office of Grant Management (OGM) respectfully disagrees with this finding. Due to internal scheduling constraints and the compressed timeline required to complete the FY22 audit, the requested documents were not submitted by the specified deadline, resulting in this finding. However, OGM maintain all relevant supporting documentation and is prepared to provide it upon request from the Grantor. Proposed Completion Date: Ongoing

Finding No.: 2022-016 AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Period of Performance Questioned Costs: $494,836 Contact Person(s): Epiphanio Cabrera, Jr., Grants Administrator, OGM-SC / Nerissa B. Karakaya, CIP COTR Corrective Action Plan: Condition 1 (E. Cabrera): The Office of Grant Management (OGM) respectfully disagrees with this finding. Due to internal scheduling constraints and the compressed timeline required to complete the FY22 audit, the requested documents were not submitted by the specified deadline, resulting in this finding. However, OGM maintain all relevant supporting documentation and is prepared to provide it upon request from the Grantor. Based on our records, grant award D20AP00005 remains active with a period of performance extending through September 30, 2025, while grant award D20AP00037 was closed on September 30, 2024. Both grants remained operational well beyond the originally prescribed September 30, 2022 deadline. Given the extended period of performance authorized by the awarding agency, all associated questioned costs ($494,660.00) are supported by active grant activity and should be deemed allowable. Accordingly, OGM respectfully requests that these questioned costs be removed, as they reflect legitimate expenditures incurred within the approved grant periods. Proposed Completion Date: Ongoing Condition 2 (N. Karakaya): CIP agrees with the finding. To address the finding and prevent recurrence, CIP will: - Revise and strengthen written financial management policies to clearly define documentation requirements to substantiate expenditures and ensure costs are within the award’s period of performance. - Incorporate federal regulation references, including 2 CFR 200.303 (Internal Controls) and 2 CFR 200.344 (Closeout). - Implement a standardized checklist for technical analyst and program managers to confirm that all expenditure documentation includes dates verifying that costs were incurred within the period of performance. - Require a secondary review and sign-off by the CIP Administrator prior to submission of documentation to auditors. - Conduct mandatory annual training for program on federal period of performance requirements and required supporting documentation standards. - Provide refresher sessions before each audit cycle. - Establish a quarterly self-audit of grant files to verify that documentation is complete and properly supports expenditures. - Document results of each review and address deficiencies immediately. The responsible official will report progress on corrective actions to the CNMI leadership and maintain documentation of all implemented changes. Evidence of compliance (updated policies, training records, and self-audit reports) will be provided to the auditors upon request. Proposed Completion Date: December 31, 2025

The Government concurs with the auditor's findings and recommendations. Isolated occurrence while the MAP program was being transitioned from one building to another. As the equipment could not be used at the new location, it was stored for future use. The Director of Asset Management has oversight of the storage of inventory to avert future occurrences.

The Government concurs with the auditor's findings and recommendations. The Division of Human Resources is now adjusting the Notice of Personnel Actions to reflect the requisite Project code at the beginning of each Fiscal year.

The Government concurs with the auditor's findings and recommendations. DOH fully acknowledge and accept the auditor’s finding regarding DOH’s inability to reconcile the payroll expenses listed in the SEFA with those documented in the payroll register. This discrepancy arose because payroll adjustments were not completed in time to reflect accurately in the FY2022 SEFA. To address this, DOH team has received thorough training, and staff members now have the necessary access to make payroll adjustments in the Government Financial Management System as of FY2024. Moving forward, DOH will strengthen our SOPs by conducting monthly reconciliation meetings with all relevant program teams to ensure timely adjustments and continuous monitoring. Additionally, DOH will update procedures to guarantee that all new fiscal staff are granted complete financial system access and are trained on reconciliation and adjustment processes within two weeks of starting.

The Government concurs with the auditor's findings and recommendations. DHS transitioned from a manual payroll process to the Government electronic Timeforce (STATS) system. All time and attendance are now vetted and approved through the various levels of applicable management, ultimately being approved by the Agency Head or designee. Payroll is generated based on the cost centers listed on the Notice of Personnel Action. Payroll is now reconciled by the Financial Analyst once it is posted by the Department of Finance to ensure that cost is applied appropriately. Additionally, a workflow is now established in the NOPA approval process to ensure the current org, objects and projects are listed on the Notice of Personnel Actions (NOPA) which is utilized for payroll purposes.

The Government concurs with the auditor's findings and recommendations. VIDE acknowledges the audit findings regarding Child Nutrition Cluster payroll and is committed to strengthening internal controls for federal compliance. VIDE will enhance timesheet management by developing clear policies for completion, submission, approval, and secure retention, ensuring accurate effort documentation. Federal Grants and Payroll staff will collaboratively verify employee authorization, accurate project coding, and consistent pay rates (NOPA vs. payroll register); this reconciliation will occur periodically and before key reporting deadlines. We will also improve payroll register completeness by adjusting reporting configurations to consistently include all mandatory employer-paid benefits (e.g., retirement, health insurance) and resolve individual instances where hours worked were inaccurate. Finally, mandatory training will be conducted for relevant staff and supervisors on new timesheet procedures, federal time and effort requirements, NOPA reconciliation, and accurate payroll documentation. This comprehensive approach, supported by ongoing monitoring from the Office of Fiscal and Administrative Services, will ensure sustained compliance and robust financial management for the Child Nutrition Cluster.

2022‐009 Cash Disbursements (Material Weakness) Recommendation: We recommend policies and procedures over the segregation of duties between the accounting and banking functions be strengthened. In addition, policies and procedures should be implemented to ensure support for expenditures is retained and includes evidence of approval. Additional oversight should be provided by those charged with governance. Action Taken (Unaudited): Management has updated its control procedures to include proper written policies for the internal control over financial reporting to ensure conformity with U.S. GAAP. Dan Watkins is responsible for this corrective action. Implementation of updated policies was completed November 2024. Accounting and banking functions are segregated.

We agree with the recommendations offered and will establish and implement a comprehensive indirect cost allocation policy that aligns with Uniform Guidance requirements.

View of Responsible Officials and Corrective Action Plan 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. Corrective Action Plan Timeline 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. Corrective Action Plan Timeline • 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.