Corrective Action Plans

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.

WHRSD has recently redesigned its Chart of Accounts and deployed a current ERP software program to assist in controls of expenditures of all accounts including grants. WHRSD will be completing a comprehensive review of all Business Office Procedures in the fall of 2025, and plans to update/implement updated standard operating procedures to ensure compliance with Local, State, and Federal laws.

WHRSD has recently redesigned its Chart of Accounts and deployed a current ERP software program to assist in controls of expenditures of all accounts including grants. WHRSD will be completing a comprehensive review of all Business Office Procedures in the fall of 2025, and plans to update/implement updated standard operating procedures to ensure compliance with Local, State, and Federal laws.

The Board of County Commissioners will work with all elected officials, the third-party administrator, and federal, state and local partners to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. To assist in this process, the Board of County Commissioners engaged a third-party administrator to oversee the grant process, including application, eligibility, review, requirements, contracting, recipient tracking and oversight, and documentation and reporting. The Board of County Commissioners will work with the third-party administrator to ensure proper grant administration.

The Organization agrees with the finding and acknowledges the need for strengthened internal controls and documentation related to time and effort reporting, as well as the allocation of expenditures to federally funded grant programs. To address the deficiencies noted, the Organization is developing and implementing formal time and effort reporting procedures to ensure that personnel costs charged to federal grants are supported by actual activity records and certified by employees on a regular basis. This will include the adoption of time distribution systems that comply with 2 CFR Part 200 Subpart E and the requirement for supervisory approval of time reports. Additionally, the Organization will revise its expenditure review and approval processes to require that all costs charged to federal programs are supported by appropriate documentation, including vendor invoices and receipts. Staff involved in grant management and accounting will receive training on federal cost principles, documentation requirements, and period of performance compliance. A document retention policy in accordance with 2 CFR 200.334 will also be established to ensure that all supporting documentation is maintained and readily available for audit and program oversight. Organization Contact Person Responsible for Corrective Action: Joseph Koehler, Director of Finance Anticipated Completion Date: June 30, 2025

The HS program has established an internal process of requester/approver in place to review the transaction requested. Documents then get reviewed again by HR or Finance staff based on the transaction type before getting processed. Responsible party: Bonnie Foroudi, Finance Director Estimated completion date: December 31, 2025

Finding 2022-008 – Allowable Cost Determination and Subaward Monitoring In response to the finding, GEM enhances subaward monitoring by instituting the following. GEM updated its sub awardee procedures to require supporting documentation of actual costs to ensure appropriate recording of grant expenses in GEM’s records. Anticipated date of completion: This was implemented September 30, 2023. Responsible party: Dr. Marcus Huggans Principal Investigator

Finding 2022-007 – Allowable Cost Documentation In response to the finding, GEM addressed allowable cost documentation by instituting the following: GEM established a formal credit card policy in the employee handbook that explains the policy and procedures for turning in receipts monthly. Anticipated date of completion: This policy has been in effect since September 30, 2023. Responsible party: Jamie Hicks, Senior Accounting Manager

Views of Responsible Officials and Planned Corrective Action: East End’s accountant added another accounting procedure for the agency and started to upload copies of expense receipts to the Microsoft One Drive Cloud for files in September 2022. It was found that East End was not filing the expense receipts, invoices and reports. All East End’s receipts, etc. that the accountant received are now uploaded and saved to the Microsoft One Drive Cloud to keep East End in compliance with the Federal government and other grantors for audit purposes. Anticipated Date of Completion: Ongoing analysis; expected to be completed by September 1, 2025.

Management agrees with the finding and is implementing the accompanying corrective action plan. Views of Responsible Officials: Jacy Hyde, Executive Director Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Contact Person: Jessica Martinez, Deputy Director Joel Rusco, Chief Financial and Administrative Officer Corrective Action Plan: In response to FY21 Corrective Action Plan, CFSC implemented an updated Reporting Policy in June 2024 to strengthen internal controls prior to review and submission of invoices and drawdown/payment requests to funders. To ensure further compliance with 2 CFR 200.414(c), 2 CFR 200.403(d), and 2 CFR 200.302(b)(3), CFSC will implement the following corrective actions: 1.Verification of Indirect Cost Rate Before Submission: a.CFSC will require that all invoices, including indirect costs, be reviewed by the CFAO to confirm that the rate used is in accordance with an approved provisional or final NICRA agreement. b.Any invoice for federal funding lacking an approved indirect cost rate will be flagged and returned for correction before submission. 2.Pre-Submission Approval Process for Invoicing Indirect Costs: a.All invoice requests containing indirect costs must be reviewed and approved by the CFAO prior to submission. b.The Finance Department will verify and document that the rate applied is consistent across all federal awards and matches the NICRA. 3.Indirect Cost Rate Agreement Tracking & Documentation: a.CFSC Finance will establish an Indirect Cost Rate Agreement tracker to ensure that: i.All provisional and final indirect cost rate agreements are maintained on file. ii.Indirect cost rates used on invoices are consistently aligned with approved agreements. 4.Quarterly Internal Audits of Indirect Cost Rate Compliance: CFSC Finance Department will conduct quarterly reviews of a sample of drawdown/payment request invoices to confirm: a.The correct indirect cost rate was applied b.The rate was consistently applied across all federal awards Anticipated Completion Date: These corrective actions will be fully implemented by the end of Quarter 2 of FY25

Management agrees with the finding and is implementing the accompanying corrective action plan. Views of Responsible Officials: Jacy Hyde, Executive Director Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Contact Person: Jessica Martinez, Deputy Director Corrective Action Plan: The corrective actions for this finding are identical to those outlined in finding 2022-005. Please refer to the correction action plan for finding 2022-005, which includes specific measures to address this finding. Anticipated Completion Date: These corrective actions will be fully implemented by the end of Quarter 2 of FY25.

Management agrees with the finding and is implementing the accompanying corrective action plan. Views of Responsible Officials: Jacy Hyde, Executive Director Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Contact Person: Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Corrective Action Plan: The corrective actions for this finding are identical to those outlined in finding 2022-004. Please refer to the correction action plan for finding 2022-004, which includes specific measures to address this finding. Anticipated Completion Date: These corrective actions will be fully implemented by the end of Quarter 2 of FY25.

Management agrees with the finding and is implementing the accompanying corrective action plan. Views of Responsible Officials: Jacy Hyde, Executive Director Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Contact Person: Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Corrective Action Plan: In response to the FY21 Corrective Action Plan, CFSC implemented a Subrecipient Monitoring Policy in June 2024 to ensure compliance with the Uniform Guidance for monitoring subrecipients of federal funding, including audit requirements and the verification of suspension and debarment status. To further strengthen compliance and ensure timely verification, CFSC will implement the following actions: 1.Mandatory Pre-Award Verification Timing & Documentation: a.Suspension and debarment status must be verified on SAM.gov by the assigned Grant Specialist before the execution of any subaward agreements. b.The verification data and results will be documented by the assigned Grant Specialist and included in the Risk Assessment process prior to award issuance. c.Any subrecipients flagged as high risk due to past audit findings will undergo enhanced pre-award due diligence before subaward execution to be carried out by the assigned Grant Specialist. 2.Grant Compliance Oversight & Approval: a.The Grants Manager (or designee) will review and approve all subrecipient compliance checks before final award execution. b.Any exceptions or delays in verification must be documented and approved by the CFAO & Deputy Director before proceeding. 3.Quarterly Compliance Audits: a.The Grants Manager (or designee) will conduct quarterly internal audits of subrecipient monitoring files to confirm that suspension & debarment verification was completed timely before subaward execution. b. The Grants Manager will be responsible for reporting any identified deficiencies to senior management and ensuring timely correction for policy reinforcement. Anticipated Completion Date: These corrective actions will be fully implemented by the end of Quarter 2 of FY25, with ongoing monitoring and enforcement thereafter.

Management agrees with the finding and is implementing the accompanying corrective action plan. Views of Responsible Officials: Jacy Hyde, Executive Director Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Contact Person: Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Corrective Action Plan: To mitigate the risk of error in payroll allocation and ensure compliance with allowable cost provisions, CFSC will enhance its payroll review process with the following corrective actions: 1. Enhanced Payroll Verification Process: a. CFSC will implement an additional cross-checking step in the payroll entry process by requiring finance staff to a run a “Program Summary by Projects Lists” report in the timekeeping system (i.e., Clicktime) before submitting for payroll. b. This report will allow finance staff to verify that total hours worked per project per employee align with the grant allocation and employee timesheets before payroll is processed. 2. Regular Internal Audits & Compliance Checks: a. Finance will conduct quarterly internal payroll audits to identify any discrepancies in time tracking and grant allocations. Anticipated Completion Date: These corrective actions will be fully implemented by the end of Quarter 2 of FY25.