Corrective Action Plans

Management has updated its policies and procedures to require a formal annual review and update of the cost allocation plan. This review will occur in conjunction with the finalization and Board approval of the organization’s annual operating budget, ensuring that the CAP aligns with the most current program structure, funding sources, and cost allocation methodologies. As part of this process, management will: • Evaluate the reasonableness and appropriateness of allocation methodologies; • Ensure consistency in application across all programs and funding streams; and • Document and approve any necessary revisions to the cost allocation plan prior to implementation. Management believes this corrective action will ensure that the CAP remains current, appropriately reflects organizational activities, and complies with applicable Federal requirements. Ongoing adherence to this process will strengthen internal controls over cost allocation and financial reporting.

Finding Number 2024-075 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management and Enterprise Services – Grants Management Office Response: OMES-GMO respectfully disagrees with several conclusions contained in this finding. The finding concludes that the transfer of CSLFRF funds to the twenty-two (22) state agencies does not create a subrecipient relationship because OMES and the agencies are part of the same State of Oklahoma Single Audit. OMESGMO respectfully disagrees with this conclusion. Pursuant to 62 O.S. § 255.1, “The Legislature authorizes the Office of Management and Enterprise Services to manage federal APRA funds by requiring all receiving entities known as subrecipients to sign a grant agreement. Any entity, without exception, including state agencies receiving an appropriation from the Statewide Recovery Fund or a similar fund with federal requirement attached to its use shall have a fully executed grant agreement in place within sixty (60) days after enactment of any legislation that appropriates funding from the Statewide Recovery Fund of the State Treasury created in Section 1, Chapter 319, O.S.L. 2022, and be in compliance with such agreement before a disbursement can be made.” Under this statutory framework, each agency enters into a Grant Agreement with OMES and is subject to grant-specific terms and conditions, reporting requirements, monitoring, and ongoing oversight. Accordingly, OMES has administered the CSLFRF grant in accordance with state law and consistent with its responsibilities as the State's designated pass-through entity since the inception of the program. The authorization from the Oklahoma State Legislature has provided for a much more extensive oversight of the state entity subrecipients than would exist if OMES followed the model suggested by SAI, as OMES would not be subject to the subrecipient monitoring Federal regulation under 2 CFR § 200.332, for these state entities. By following the state law passed by the Legislature, OMES monitors each state entity subrecipient, and in turn, has signed a grant agreement with these state entity subrecipients that requires them to do the same for any of their subrecipients that are administering projects set out specifically by the State Legislature through appropriation bills. OMES requests SAI to revisit the position that these state entities are not OMES’ subrecipients and consider the implications that if OMES were to treat the state entities as non-subrecipients, OMES would be in direct defiance of state law. OMES-GMO also disagrees with the conclusion that sufficient supporting documentation was unavailable for several of the transactions identified in this finding. OMESGMO is committed to strong documentation standards, reimbursement review procedures, and project oversight to ensure continued compliance with applicable federal and state requirements. Despite OMES-GMO’s request to be included in audit communication with the state entities, SAI’s documentation requests for the sampled expenditures were directed primarily to the individual agencies. Several agencies experienced staffing changes during the audit period, resulting in inconsistencies in responding to documentation requests and, in some instances, uncertainty regarding the specific information being requested by the auditors. In multiple cases, the supporting documentation ultimately existed and was available but was either maintained by OMES-GMO or inadvertently omitted from the agency's initial submission. If OMES-GMO was afforded the opportunity to submit or explain documentation maintained by its office before the finding was finalized, both the administering agency and OMES-GMO would have been able to provide a more complete record for evaluation and may have altered the conclusions reached for certain transactions. OMES-GMO has had recent conversations with SAI regarding this issue, and are encouraged by the willingness of SAI to be open to working with OMES-GMO to facilitate a different process for future audits that involves a coordinated with both the administering agency and OMES-GMO so that auditors have access to the complete record before audit conclusions are finalized. Agency Responses: Agency 025 – Oklahoma Military Department (OMD) OMD partially concurs with the finding regarding the level of supporting documentation submitted with the vendor's invoices for payment. However, the construction contracts in question were executed using Guaranteed Maximum Price (GMP) contract structures. Under these contracts, the contractor is responsible for maintaining all subcontractor invoices, material invoices, and supporting financial records associated with each progress payment. The contracts require these records to be retained for the applicable record retention period and made available for review by the agency, State, or federal government upon request. Agency 085 – Oklahoma Broadband Office (OBO) Broadband Mapping / Cross-Grant Expenditures The Oklahoma Broadband Office (OBO) requests the transactional detail associated with these findings to allow the agency to fully evaluate the questioned transactions. While OBO agrees that expenditures must be charged to the appropriate federal funding source and class fund, the office respectfully disagrees that the questioned expenditures represented unallowable supplementation of other federal awards. The contracts included shared deliverables necessary to complete the CSLFRF Broadband Mapping project. During contract administration, OBO identified billing discrepancies involving work performed under multiple grant programs. Following approximately eleven months of negotiations, OBO entered into a settlement agreement with the contractor that limited payment to services actually received and excluded services that were not performed. The resulting payments represented services provided under multiple funding sources and were processed together to accurately reflect work completed during FY2024. Procurement Finding – Lee Consulting Contract OBO concurs with the finding that services began prior to the execution of a purchase order for the April 2023 services. Upon identifying the issue, OBO completed the required ABS Form 009 Ratification Agreement to formally document the procurement exception and properly authorize payment. To prevent future occurrences, OBO has: • Hired a full-time General Counsel to oversee contract administration and procurement compliance. • Implemented a policy prohibiting execution of contracts or commencement of work until a purchase order has been fully approved and funds have been encumbered. • Provided procurement training to management and staff regarding Oklahoma encumbrance requirements. Agency 400 – Office of Juvenile Affairs (OJA) OJA partially concurs with the finding. The agency believes the purchase of a Keurig coffee maker and heater towers by Western Plains falls within the approved project scope for the purchase and installation of furniture, fixtures, and equipment. However, OJA acknowledges that decorative wall art purchased by Youth and Family Services of Hughes and Seminole Counties does not appear to fall within the approved project scope. Agency 452 – Oklahoma Department of Mental Health and Substance Abuse Services (ODMHSAS) ODMHSAS acknowledges the documentation and procurement concerns identified in the finding. Specifically, the agency recognizes that certain invoices lacked sufficient detail describing services performed and that one expenditure required ratification because services were obligated prior to encumbering funds. ODMHSAS agrees that federally funded expenditures should be supported by documentation demonstrating the services performed, the project purpose, and the relationship to the approved scope of work. ODMHSAS also agrees that obligations should not be incurred before a valid purchase order and encumbrance have been established. Agency 619 – Oklahoma Health Care Workers Training Commission (HWTC) During the period associated with the questioned expenditure, the Care Providers program submitted a significant volume of supporting documentation with each reimbursement request, often consisting of 500 to 1,000 pages transmitted through multiple emails over several days. In some instances, the documentation was not organized sequentially, making it difficult to efficiently compile and review the complete reimbursement package. As staff assembled documentation received through multiple transmissions, a portion of the supporting documentation was inadvertently omitted from the reimbursement file maintained by the agency. Consequently, the complete documentation package was not included in the materials submitted to OMES-GMO with the reimbursement request. To address this issue, management revised its documentation review procedures. Rather than requiring agency staff to reorganize incomplete or disorganized submissions, staff are now instructed to return reimbursement packages that are incomplete or not properly organized and require the submitting entity to provide a revised, complete documentation package. This change places responsibility for maintaining complete supporting documentation with the originating entity and has resulted in more organized reimbursement submissions while reducing the risk of incomplete supporting records. Agency 830 – Oklahoma Department of Human Services (DHS) DHS disagrees that the questioned incentive gift cards were outside the approved project scope. The PCCT Fatherhood Today program is designed to strengthen father-parent-child relationships by engaging fathers through education, support services, and community resources. The program targets fathers residing in underserved communities who often face barriers to participation, including transportation, childcare, financial hardship, and food insecurity. The $100 gift cards are provided only after participants successfully complete the twelve-week 24/7 Dad curriculum. The gift cards serve as an incentive to recruit and retain participants and support the program's objective of increasing father engagement. DHS believes the incentives directly support successful program participation and allow participants to obtain essential household items for their families. DHS further noted that participant outcomes are measured through pre- and post-program assessments demonstrating increased knowledge and engagement among participating fathers. Gift cards are purchased using agency purchasing procedures, maintained in secured storage, and distributed only upon successful completion of all program requirements with appropriate documentation maintained for each recipient Anticipated Completion Date OMES: December 31, 2026 025: Completed 085: Completed 400: Completed 452: December 31, 2026 619: December 31, 2026 830: Completed Responsible Contact Person OMES: Elizabeth Base 025: Angela Tackett 085: Beverlee Harbuck 400: Kevin Haddock 452: Chad Carden 619: Kami Fullingim 830: Lindsey Kanaly

Finding Number 2024-074 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management and Enterprise Services – Grants Management Office Response: OMES-GMO respectfully disagrees with the conclusion that adequate supporting documentation was unavailable and that OMES-GMO's procedures do not ensure that key documentation elements are provided prior to reimbursement. The State Auditor and Inspector's Office requested documentation directly from the Department of Human Services (DHS) but did not contact OMES-GMO to determine whether additional supporting documentation or clarification was available before concluding that the documentation was insufficient. Throughout the administration of the CSLFRF program, OMES-GMO requested to be included in audit documentation requests involving agency expenditures to ensure that all available supporting documentation could be provided and that any questions regarding reimbursement requests, contract administration, or project documentation could be addressed before conclusions were reached. Had OMES-GMO been afforded the opportunity to supplement the agency's submission, additional documentation supporting the reimbursement requests and contract administration could have been provided for consideration. OMES-GMO recognizes that the contractor invoices could have contained greater detail. While OMES-GMO believes sufficient supporting documentation existed to demonstrate the allowability and allocability of the costs, it agrees that enhanced invoice detail would improve transparency, strengthen the audit trail, and facilitate the audit process. Prior to this audit, OMES-GMO had already strengthened its reimbursement review procedures to help ensure that key documentation elements are obtained before reimbursement. Beginning in SFY 2025, all CSLFRF payment requests from state entities have been processed through the newly implemented OMES Grants Management System (OGX), which provides an additional layer of internal control. The system requires a two-tier review and approval process by the requesting state entity before reimbursement requests are submitted to OMES-GMO. Once received, each request undergoes a three-tier review by separate OMES-GMO team members using the approved CSLFRF award, supporting documentation submitted by the state entity, and applicable program eligibility requirements before payment is authorized. This process provides multiple levels of review designed to help ensure that reimbursement requests are adequately supported and consistent with applicable ARPASLFRF requirements. OMES-GMO respectfully requests that future audit documentation requests involving CSLFRF reimbursements be coordinated with both the administering agency and OMES-GMO. This collaborative approach would help ensure auditors have access to the complete documentation maintained by all parties and allow for a more comprehensive evaluation of compliance before deficiencies are concluded. 830 – Oklahoma Department of Human Services The Oklahoma Department of Human Services (OKDHS) does not concur that the full $67,998 identified in the finding should be classified as questioned costs. OKDHS acknowledges that the original JGC invoices did not contain the level of project- and staff-specific detail recommended in the finding. However, the absence of all supporting detail on the face of an invoice does not, by itself, establish that the underlying costs were unallowable or unsupported. The applicable Federal cost principles require costs to be adequately documented, but do not require all supporting documentation to be contained within the vendor invoice itself. Following the identification of SAI's specific concerns, OKDHS provided additional underlying documentation, including detailed timekeeping records identifying staff, hours worked, projects associated with the work, and descriptions of the activities performed. SAI subsequently indicated that the total hours reflected on the invoices materially agreed to the total hours reflected in the underlying timekeeping records. Accordingly, the additional documentation substantiates that the underlying labor hours were incurred and provides support regarding the nature of the services performed. For the $13,320 associated with SB 1186, the finding acknowledges that SB 1186 funded only one project. Therefore, there is no allocation of the invoiced costs among multiple SB 1186 projects at issue. To the extent the subsequently provided timekeeping and supporting records substantiate that the services were performed in support of the authorized project, OKDHS does not believe the full amount should remain classified as questioned costs solely because the original invoice summarized the services performed. For the $54,678 associated with HB 2884, OKDHS acknowledges that the distribution of costs among individual projects reflected on the invoice does not directly correspond to the project designations reflected in the detailed timekeeping records. However, the detailed records substantiate the total hours worked and the nature of the administrative and program management services performed. HB 2884 expressly authorized OKDHS to retain up to two percent of the funds appropriated by the act to reimburse costs incurred by OKDHS, or costs incurred on the agency's behalf, associated with administration of the appropriated funds and programming required under the act. JGC provided program management and administrative services supporting OKDHS's implementation and administration of the ARPA-funded projects. Additionally, 2 CFR § 200.405(d), as cited in the finding, recognizes that when a cost benefits two or more projects or activities and the proportional benefit cannot be readily determined because of the interrelationship of the work involved, the cost may be allocated to benefited projects on a reasonable documented basis. Accordingly, a difference between the project designation reflected in an employee's detailed time record and the allocation of shared administrative costs among benefited projects does not, by itself, establish that the underlying cost was unallowable. OKDHS recognizes that the documentation maintained with the reimbursement requests did not clearly demonstrate the relationship between the detailed timekeeping records and the methodology used to allocate shared administrative costs among the HB 2884 projects. OKDHS will review the allocation methodology and supporting records to confirm that the costs were allocated among benefited projects on a reasonable basis and will correct any actual unsupported or ineligible costs identified through that review. OKDHS has also strengthened its documentation expectations for administrative cost reimbursements. Going forward, supporting documentation will provide a clearer audit trail between the underlying services performed, applicable projects or activities, and the amounts invoiced or allocated. Where administrative services benefit multiple projects and cannot reasonably be assigned based solely on direct project hours, the allocation methodology and basis will be documented and retained with the supporting records. Accordingly, OKDHS agrees that documentation supporting the allocation methodology should be strengthened but does not concur that the documentation deficiency, in itself, supports questioning the full $67,998 where underlying records substantiate the labor incurred and services performed Anticipated Completion Date Completed Responsible Contact Person OMES: Elizabeth Base DHS: Lindsey Kanaly

Finding Number 2024-069 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management Enterprise Services – Grant Management Office Response: OMES-GMO acknowledges that $80,370 in Pathfinder employer contributions were charged to the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program and that these costs are not allowable federal grant expenditures. OMES Finance and OBO had previously identified this issue and had discussed the necessary corrective actions prior to the audit finding. Implementation of the corrections was contingent upon OBO receiving a state appropriation to fund these costs. Following discussions between OMES Finance and OBO, OBO has received a state appropriation specifically to fund Pathfinder costs that are not allowable under federal awards. Because the CSLFRF period of performance remains open, the State is able to make the necessary accounting corrections and reallocate the recovered CSLFRF funds to eligible and approved program expenditures. The remaining Pathfinder employer contributions identified in this finding will be reclassified from CSLFRF to the appropriate state funding source through journal voucher (JV) entries. Corrective Action Plan OBO will complete all remaining journal voucher entries to transfer the identified Pathfinder costs from Class Fund 497 to the applicable state appropriation. Oklahoam Broadband Office Response: The Oklahoma Broadband Office (OBO) concurs with this finding. The OBO agrees that the employer's supplemental contribution to the Oklahoma’s Pathfinder Defined Contribution retirement plan (account 513300) is unallowable under federal grant awards and must be paid using state funds. Further, it is not possible using the Workday system to bifurcate the account code to be withheld from the payroll payment. Payroll must be paid in total under one account, according to our understanding. The OBO emphasizes that these Pathfinder expenditures were never reported to the federal government as part of our State and Local Fiscal Recovery Funds (SLFRF) compliance reporting, as our office was aware they were unallowable and so could not be charged to the account. These expenditures could not be separated and so had to be paid and thus remain outstanding within the 497-account balance and require reimbursement from non-federal sources. Reason for the Shortage in State Funding: The OBO proactively sought a state appropriation to resolve these Pathfinder expenses since 2023. To present the OBO has not received one. However, the Office of Management and Enterprise Services (OMES) Grants Management Office (GMO) did secure an annual state appropriation for Pathfinder expenses starting in FY25. The allocation of those funds given to the OBO is structurally insufficient to absorb the legacy pathfinder amounts owed for the unallowable Pathfinder expenditures incurred during the OBO's start-up years in FY23 and FY24. Corrective Action Plan & Remedy: To resolve the remaining $80,370 in questioned costs, the OBO has actively coordinated with the State’s Office of Management and Enterprise Services (OMES) to bridge this funding gap. State-Directed Solution: Following formal consultation with the State Chief Financial Officer (CFO), the OBO has been officially instructed to utilize a portion of our upcoming FY27 annual state Pathfinder appropriation to fully reimburse class fund 497 for the outstanding FY23 and FY24 unallowable expenditures. Anticipated Completion Date December 31, 2026. Responsible Contact Person OMES: Elizabeth Base 085: Beverlee Harbuck

Finding Number 2024-043 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management Enterprise Services – Grant Management Office Response: The Oklahoma Office of Management and Enterprise Services (OMES) agrees that strong project planning and feasibility evaluations for large-scale capital projects are important processes for each individual agency to implement. OMES also recognizes that certain factors can impact the original evaluation, and if those factors occur, reevaluation of a project’s feasibility is a prudent measure to determine the future direction of a project. The Federal regulation 2 CFR § 200.317, directs that “a State must follow the same policies and procedures it uses for procurements from its non-Federal funds.” Oklahoma has laws in place for state agencies for the purchase of tangible and intangible property, which ensure obligations are properly encumbered by a contract or purchase order. Therefore, OMES agrees that in order to be in compliance with federal and state laws and regulations, each individual agency should have strong internal controls in place to ensure obligations of federal funds are properly encumbered before commitments are made. ODMHSAS Response to Finding No. 2024-043 ODMHSAS partially concurs with Finding No. 2024-043. ODMHSAS agrees that controls should be strengthened for large-scale federally funded capital projects and acknowledges the separate encumbrance issue identified in the finding. ODMHSAS does not concede that the full $6,218,295 questioned amount was wasted, unallowable, or subject to repayment based solely on the later cancellation of the original Donahue new-build project. ODMHSAS acknowledges that the original Donahue Behavioral Health Campus new-build project did not proceed to construction and that the Department later pursued a different facility solution through acquisition and renovation of an existing facility. The Donahue project, however, was an active, legislatively funded capital project intended to replace Griffin Memorial Hospital at the time the expenditures were incurred. Based on the available expenditure detail, the questioned-cost population includes architectural services, site or lease-related payments, consulting services, surveying or mapping services, and other planning and development costs associated with the project. ODMHSAS recognizes that the original project did not result in a completed capital asset. ODMHSAS also recognizes that federal allowability requires more than the existence of an approved project. Costs must be necessary, reasonable, allocable, and adequately documented. For that reason, ODMHSAS will conduct a reasonable transaction-level review using available records to determine what documentation exists for the expenditures identified in this finding, what work was performed, whether any deliverable or work product was received, whether the expenditure provided planning, feasibility, decision-making, or other project value, and whether further coordination with OMESGMO is needed regarding accounting treatment or other resolution. ODMHSAS further notes that the decision to discontinue the original Donahue new-build project should not, by itself, determine whether every planning or development cost incurred before cancellation was wasted or unallowable. ODMHSAS did not pay for a completed building at that stage of the project; it paid for planning, design, cost-estimating, site-evaluation, and feasibility-related services for an authorized replacement hospital project. The SLFRF capitalexpenditure framework recognizes that recipients may evaluate the need addressed, the appropriateness of a capital expenditure, and alternative capital approaches before determining the best path forward. Available information indicates the original concept contemplated moving both Griffin Memorial Hospital and CRC functions to the Donahue site, and the project scope, bed count, and estimated cost were later reevaluated as construction costs increased significantly, including post-COVID construction-cost escalation. Those services produced project information, design materials, cost information, and feasibility analysis that provided decision-making value, including information that helped ODMHSAS determine that the original newbuild approach was not financially feasible and that an alternative facility solution was necessary before substantially greater construction costs were incurred. ODMHSAS will therefore review the expenditures by category and transaction rather than treating the later cancellation of the project as dispositive of the allowability or value of each prior cost. ODMHSAS also notes the timing of the legislative and project changes. On October 5, 2022, the Legislature appropriated $87 million through HB 1013 for construction of a replacement facility for Griffin Memorial Hospital. During SFY 2024, ODMHSAS incurred planning, design, and initial development expenditures for the Donahue Behavioral Health Campus. The original new-build approach later became financially infeasible due to escalating construction costs and budget shortfalls, and by May 2025 ODMHSAS had moved away from the original construction plan and pursued acquisition and renovation of the former SSM Health facility as the successor facility solution. SB 1178 then reappropriated and redesignated $66.5 million of the original $87 million appropriation from construction of a replacement facility for Griffin Memorial Hospital to purchase and renovation of a replacement facility for Griffin Memorial Hospital, within the same thirty (30) mile geographic limitation. SB 1178 also recognized that the original appropriation could be reduced by prior expenditures, encumbrances, and transfers. ODMHSAS does not contend that SB 1178 alone resolves the allowability of prior costs, but it is relevant context showing that the remaining project funding was redirected by legislative action for the same public-health purpose of replacing Griffin Memorial Hospital. ODMHSAS further notes that the successor SSM acquisition and renovation project continued the same underlying public health purpose as the original Donahue project: replacing Griffin Memorial Hospital and expanding behavioral health treatment capacity. Available SSM transaction documents reflect that ODMHSAS pursued the purchase of the property at 2129 S.W. 59th Street for use in addressing the ongoing demand for mental health services, and related lease documentation reflects that ARPA-SLFRF funds used for the lease were designated for behavioral health services expansion. After the original Donahue new-build approach was no longer financially viable, ODMHSAS pursued the SSM acquisition and renovation approach as a feasible alternative to continue the Griffin replacement purpose. ODMHSAS will also review whether any amounts included in the federal questioned-cost population were recovered, refunded, offset, corrected, or otherwise resolved after the original expenditure. Separately, ODMHSAS has identified Donahue-related refund activity associated with private donations and grants, including an Oklahoma State University refund of $4,822,671.93, donor refunds totaling $1,820,000, and a remaining balance of $3,002,671.93 as of March 26, 2026. Based on current information, ODMHSAS understands this activity to relate to private donations and grants, not CSLFRF/ARPA funds. ODMHSAS will review the underlying accounting records to confirm the funding source, deposit, refund, and remaining balance treatment, and to ensure that this private donation and grant activity is treated separately from the federal questioned-cost population. ODMHSAS has also identified local contribution activity within the questioned-cost population that requires further review. Based on initial internal review, approximately $2.5 million of the questioned-cost population appears to relate to Oklahoma County and City of Oklahoma City contributions associated with the Donahue project, including $1.5 million from Oklahoma County and $1 million from the City of Oklahoma City. ODMHSAS understands that the Oklahoma County amount was repaid in December 2025 and that the City of Oklahoma City amount remains associated with the successor OKCBHC/SSM project or related project accounting. ODMHSAS will review the underlying accounting records, funding-source documentation, refund records, and project accounting treatment to determine whether these local contribution amounts should remain in the federal questioned-cost population, should be treated separately, or should otherwise affect the questioned-cost amount. ODMHSAS acknowledges the separate encumbrance issue related to claim 629685. Based on available records, the claim involved an obligation for services that was incurred before the applicable purchase order and encumbrance process was completed, requiring a subsequent ratification. The Department recognizes that obligations should not be incurred before a valid purchase order and encumbrance are in place. As reflected in the finding, the $50,000 claim was corrected by payment with state funds and was not questioned. ODMHSAS will address that issue through strengthened pre-obligation controls, procurement review, and targeted guidance or training for staff responsible for initiating purchases or contracts. Nothing in this response should be construed as an admission that the full questioned-cost amount is unallowable or subject to repayment. ODMHSAS will coordinate with OMESGMO as needed after review of the available records, including any refund, recovery, offset, correction, or other accounting issue relevant to the questioned-cost population. Corrective Action Planned ODMHSAS will take reasonable steps to strengthen controls over planning, documentation, procurement, and encumbrance review for significant federally funded capital projects. ODMHSAS will develop or update internal review procedures for significant federally funded capital-project expenditures. The procedures will address project scope, available funding, estimated project cost, material changes in feasibility, and approval authority before substantial planning, design, development, or construction-related costs are incurred. The review process will be scaled to the size, complexity, and funding source of the project. ODMHSAS will also strengthen documentation expectations for federally funded capital project invoices. For future expenditures, invoices or supporting materials should identify the services performed, billing period, project phase, and connection to the approved project scope. Where invoices contain only general descriptions, such as “progress billing” or “work completed,” ODMHSAS will seek additional support from the vendor, project manager, or available project file before approving the cost for federal reimbursement. ODMHSAS will require program or project-level confirmation that services were received and were related to the approved project before payment or reimbursement is processed. Finance and Procurement will review federally funded capital-project expenditures for appropriate coding, available support, and compliance with applicable funding and encumbrance requirements. ODMHSAS will conduct a risk-based review of the Donahue expenditures identified in Finding No. 2024-043 using available records. The review will focus on identifying the vendor, amount, funding source, available support, and whether any cost was refunded, recovered, offset, corrected, or requires additional accounting review or coordination with OMES-GMO. Because many of the underlying project decisions and records predate current leadership and staff, ODMHSAS will conduct this review based on the documentation reasonably available to the Department. As part of that review, ODMHSAS will review available accounting and reporting records for the Donahue and SSM projects to determine how ARPA-SLFRF funds associated with the replacement-facility work were obligated, reported, redirected, or applied to the successor Griffin replacement facility project, and whether that treatment affects the federal questioned-cost population. ODMHSAS will separately review the Donahue-related private donation and grant refund activity, including the OSU-OKC settlement documentation, to confirm the funding source, deposit, refund, and remaining balance treatment, and to ensure that non-federal donation and grant activity is not included in, or confused with, the federal questioned-cost population. ODMHSAS will also review the Oklahoma County and City of Oklahoma City contribution amounts identified within the questioned-cost population, including documentation of the reported Oklahoma County repayment and the accounting treatment of the City of Oklahoma City contribution, to determine whether those amounts should remain in the federal questioned-cost population, should be treated separately, or otherwise affect the questioned-cost amount. To address the encumbrance concern, ODMHSAS will implement or reinforce a pre-obligation verification process for future procurements. Staff responsible for initiating purchases, contracts, task orders, or service authorizations will be directed to confirm that a valid purchase order and encumbrance are in place before authorizing work. Any transaction requiring ratification will be reviewed to determine the cause and whether additional corrective action is needed. ODMHSAS will provide targeted written guidance and, as needed, training to appropriate staff regarding federal documentation requirements, invoice review, project-scope review, funding-source verification, and state encumbrance requirements. Anticipated Completion Date ODMHSAS anticipates completing updated procedures, review checklists, and targeted written guidance by June 30, 2027. Because the Donahue review requires analysis of historical project expenditures, related accounting and reporting records, multiple funding sources, and coordination with OMESGMO, ODMHSAS anticipates completing the risk-based transaction review and related followup by December 31, 2027. Responsible Contact Person OMES: Elizabeth Base 452: Chad Carden

As of the 24-25 fiscal year, the agency has created a sustainable cost allocation process that will be in place moving forward. New policies were created, including a system for analysis of allocations throughout the year.

UCM will develop and implement comprehensive written policies and procedures addressing cost eligibility, documentation standards, and the requirement that only actual costs are charged to federal awards. The procedures will require costs to be supported by appropriate source documentation, such as invoices, receipts, payroll records, allocation schedules, contracts, approvals, proof of payment, and other relevant records. UCM will implement a review process to ensure costs charged to federal awards are based on actual expenditures recorded in the accounting system, properly supported, charged to the correct funding source, and consistent with Uniform Guidance requirements. Budgeted, estimated, or unsupported amounts will not be charged to federal awards unless specifically permitted by the award terms and adjusted to actual costs within the required reporting period. UCM will also strengthen controls over electronic signatures used in grant, payroll, expenditure, or approval documentation. Electronic signature procedures will require appropriate IT controls so that only the individual providing approval can select or apply their own name. UCM will review user access, system permissions, and approval workflows to ensure signatures are tied to the appropriate user and that evidence of approval is retained. Staff responsible for grant accounting, payroll allocation, accounts payable, electronic approval workflows, and federal award compliance will receive Uniform Guidance training and training on the updated documentation, actual cost, and electronic signature procedures. Responsible for Corrective Action: Cristina Schoendorf, Chief Program Officer Shruti Jha, Senior Director of Finance Deborah Ewell, Director of Human Resources Laura D’Ambrogi, Grants Manager IT Partner Anticipated Completion Date: December 31, 2026

1. Document formal allocation methodologies for shared non-personnel costs using rational and supportable bases such as square footage, FTEs, usage, or other proportional benefit measures depending on the cost. 2. Review and approve methodologies by management and update them when operational realities change. 3. Maintain allocation schedules and supporting documentation for audit and grant compliance purposes. 4. Incorporate the methodology into policy and periodic review procedures.

Finding Number: 2024-006 Finding Title: Financial Policies and Procedures Federal Program Information: • Federal Agency: Department of Housing and Urban Development; Department of the Treasury • Assistance Listing Numbers (ALN): 14.251 and 21.027 • Federal Program Names: Economic Development Initiatives—Special Project, Neighborhood Initiative and Neighborhood Stabilization Program; Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Financial Management and Standards of Financial Management Systems (2 CFR §200.302(b)); Allowable Costs (2 CFR §200.403-405); Procurement (2 CFR §200.317-327); Cash Management (2 CFR §200.305); Travel Costs (2 CFR §200.475) Note: Organization has existing Conflict of Interest policy in compliance with 2 CFR §200.318(c)(1). Questioned Costs: $0 Repeat Finding: No Management's Response: The Board of Directors of Restoration Christian Ministries agrees with the finding. The Organization will establish formalized accounting policies and procedures that adhere to the requirements of the Uniform Guidance. Corrective Action Plan: Corrective Action #1: Comprehensive Policy Manual Development • Action: Engage consultant or work with Contract Accountant to develop comprehensive written financial policies and procedures manual addressing all Uniform Guidance requirements, including: (a) Allowable costs (2 CFR §200.403-405); (b) Procurement (2 CFR §200.317-327); (c) Cash management (2 CFR §200.305); (d) Travel costs (2 CFR §200.475); (e) Time and effort documentation; (f) Equipment management; (g) Subrecipient monitoring; (h) Financial reporting; and (i) Record retention. Ensure policies address financial management system requirements under 2 CFR §200.302. Tailor policies to Organization's all-volunteer structure. [Note: Organization already has Conflict of Interest policy complying with 2 CFR §200.318(c)(1).] • Responsible Person/Title: Board Treasurer with Contract Accountant • Anticipated Completion Date: April 30, 2026 Corrective Action #2: Board Approval and Adoption • Action: Present draft policies to full Board of Directors for review and input. Board will formally adopt policies by resolution. Document approval in Board meeting minutes. • Responsible Person/Title: Board President • Anticipated Completion Date: May 31, 2026 Corrective Action #3: Dissemination and Training • Action: Distribute approved policies to all Board members and Contract Accountant. Conduct training session for Board members and Contract Accountant on new policies and procedures. Board members and Contract Accountant will sign acknowledgment of receipt and understanding. Make policies readily accessible (e.g., shared drive, Board portal). • Responsible Person/Title: Board President • Anticipated Completion Date: June 30, 2026 Corrective Action #4: Implementation Tools and Support • Action: Develop templates, forms, and tools to support policy implementation. Create workflow diagrams and checklists for common transactions. Establish Board Treasurer as primary resource for policy implementation questions. • Responsible Person/Title: Board Treasurer and Contract Accountant • Anticipated Completion Date: July 31, 2026 Corrective Action #5: Annual Policy Review Process • Action: Schedule annual review of policies to ensure continued Uniform Guidance compliance. Update policies as needed for regulatory or organizational changes. Submit material policy changes to full Board for approval. • Responsible Person/Title: Board Treasurer • Anticipated Completion Date: Annually, beginning June 2027 Corrective Action #6: Governance Structure Assessment • Action: Board will evaluate establishing Audit Committee or combined Finance/Audit Committee to provide enhanced oversight of financial management, internal controls, and federal compliance. If Board size prohibits separate committee, designate at least two Board members with specific oversight responsibilities. • Responsible Person/Title: Board President • Anticipated Completion Date: June 30, 2026

Finding reference: 2024-004 - Inappropriate Allocation of Expenses The following steps were taken to bring the Borough into compliance. 1. Both the accounting specialist and the Borough Manger have implemented a tracking system to cross reference and monitor compliance of both payments and receipts of all grant funds. 2. Implemented June 2025.

Finding Number: 2024-041 Audit Type: Single Audit Finding Title: Unsupported FEMA Reimbursements Related Finding: 2024-031 (Yellow Book) 1. Contact Person Responsible for Corrective Action Name: Shannah Weaver Title: City Clerk Department: Finance Department 2. Planned Corrective Action The City will implement a documentation checklist and assign a grants compliance officer to ensure all FEMA reimbursement requests are fully supported. 3. Anticipated Completion Date September 30, 2026 4. Management's Response Management concurs and will ensure all FEMA-related expenditures are properly documented and retained. 5. Status of Prior Year Finding This is a new finding.

Finding Number: 2024-042 Audit Type: Single Audit Finding Title: Misallocation of Expenditures Across Federal Awards Related Finding: 2024-028 (Yellow Book) 1. Contact Person Responsible for Corrective Action Name: Shannah Weaver Title: City Clerk Department: Finance Department 2. Planned Corrective Action The City will revise its grant accounting procedures to ensure expenditures are properly allocated to the correct federal awards. 3. Anticipated Completion Date September 30, 2026 4. Management's Response Management concurs and will implement additional review steps during the grant reimbursement process. 5. Status of Prior Year Finding This is a new finding.

Finding 2024-001 (A/B – Activities Allowed or Unallowed and Allowable Costs / Cost Principles) US Department of Homeland Security Federal Emergency Management Agency (FEMA), Assistance Listing 97.036 COVID-19 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) Name of contact person: Warren Pate, Vice President Finance Corrective action: The Vice President Finance will oversee repayment to FEMA a total of $79,118.82, representing invoices that were submitted for reimbursement more than once ($77,521.50), and an invoice for which reimbursement was requested greater than the invoice amount ($1,597.32). Additionally, a review of all project amounts planned to be submitted for future FEMA reimbursement will be conducted at the direction of the Vice President Finance, to ensure the completeness and accuracy of all project details. Proposed completion date: March 31, 2025

Views of Responsible Officials and Planned Corrective Actions: Management agrees and recognizes the importance of consistent allocation methodologies. Corrective Action: Increase the Cost Allocation Plan defining allocation bases for shared expenses, supported by documentation and reviewed annually.

VIEWS OF RESPONSIBLE OFFICIALS The PRDE does not agree with the Recommendation to establish an allocation method for TPFA invoices because TPFA services are overhead costs paid from administrative funds and are not tied to any specific federal grant. In addition, the PRDE does not agree that contract terms should be revised before the contract expiration to require a reconciliation of total hours and rates because again, payments to the TPFA are overhead costs not directly tied to any specific program. Finally, the PRDE does not agree with the recommendation that the TPFA submit supporting evidence for the reimbursement of expenses because (i) the TPFA contract is a fixed fee that is inclusive of all professional service fees and expenses and (ii) the TPFA provides an explanation of major expenses incurred within each monthly invoice. Auditor Comment on Management Response for Finding No. 2024-004 As stated in CONDITION 2., “…on invoice 830311-2023-32 the amount of $1,978,791 (85% of total invoice amount) was charged to several programs of ALN 84.425, although the services described in the invoice were not related only to these programs; therefore, the cost objective is not chargeable in accordance with the relative benefit received.” Further, the 2 CFR 200.1, establishes that: “Indirect [facilities & administrative (F&A)] costs mean those costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be necessary to establish a number of pools of indirect (F&A) costs. Indirect (F&A) cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived.” This information was not provided for our evaluation. Also, we made reference to the Program Determination Email for ALNs. 84.938 and 84.425 dated September 18, 2024 (Audit Control Number 02-21-39634), received from Ms. Catherine Miers of the Office of Elementary and Secondary Education of the US Department of Education (USDE), in which they required that the PRDE provide documentation for the following corrective actions: “revised the contract terms to include a reconciliation of total hours and rates to adjust the payments made to the vendor before the contract expiration; requested that adequate supporting evidence from the vendors be presented for any expenses to be reimbursed by the PRDE; and develop an adequate review of the vendors invoice to properly identify the actual hours of services that benefited the Federal programs so a correct allocation of the costs incurred can be made within Federal programs and state funds”. IMPLEMENTATION DATE None RESPONSIBLE PERSON Jullymar Octtaviani Vega Sub-Secretary of Administration María de los Angeles Lizardi Valdés Office of Federal Affairs Director

Management disagrees with the following A) Management determined the expenditures charged to the 2021-#3 project MSOC Security Sustainment Costs, for camera, installation and project management were clearly related to the Investment justification which requested sustainment and upgrade to the existing MSOC the IJ states : “Investment provides maintenance and upgrades of software/hardware (I.e. servers/workstations), video surveillance management systems, operating systems, cameras systems, access control and communication systems for Plaquemines Port Harbor and Terminal District B) Management determined the questioned cost charged to the 2023-#3 project GIS for the cameras and the conference room were supported with the investment justification however management agrees the invoices for Survey totaling $95,900 should not have been changed to the grant. C) Management determined the expenditures charged to the 2023-#4 project Cybersecurity Network and IT: For Datto Backup, which is the name of the program, and cyber security training are valid expenses and align with the investment justification Management will ensure the following processes are added to the financial management policies and procedures over federal and state funds • The District will establish formal procedures requiring that all PSGP expenditures be cross-checked against the approved Investment Justification (IJ) and verified for compliance with the grant’s period of performance prior to payment. No disbursement of federal funds will occur unless documentation demonstrates that the expenditure directly aligns with the approved grant scope and timing. • This documentation will be required within the system in order to process payments to the vendor. • The District will consult with FEMA to assess the allowability of identified questioned costs. Management will follow FEMA’s guidance to resolve any discrepancies and ensure that all expenditures meet federal standards. • Mandatory training sessions are being scheduled for staff involved in grant administration and financial management. These sessions will cover Uniform Guidance requirements, documentation standards, and procedures for verifying expenditure eligibility under PSGP. These actions reflect the District’s commitment to regulatory compliance, fiscal responsibility, and continuous improvement in federal grant management practices.

WWBIC plans to develop and adopt a written Cost Allocation Plan that complies with 2 CFR 200. Ml P's Cost Allocation Module will be implemented for efficiency and automation. WWBIC plans to use a direct method of recording staff time, by requiring staff to allocate time on time sheets by funding source. Once payroll postings align with funding sources, direct wages will be used as the allocation base. The 3rd party payroll integration with Paylocity will be implemented to use this method. This project is currently under development with our payroll system, Paylocity and the accounting team.

Corrective Action Plan: Management is in the process of working with HHS to renew the Provisional Rate agreements. The anticipation is that the agreement will be completed by the end of 2025. Anticipated Completion Date: December 31, 2025

An error was identified in the Excel spreadsheet (Model) used to allocate technology costs to projects where Coleridge is obligated to provide Administrative Data Research Facility (ADRF) services. The effect of this error was costs were under-allocated to projects. Corrective Action Plan: 1. The error in the Model has been corrected. 2. Control checks will be built into the Model to highlight when calculations are not working, or outputs fall outside expected ranges. 3. On a monthly basis, the Controller will review the Model and sign off in writing that the allocations are correct. No invoices will be released until the review and sign-off has been completed. 4. On an annual basis, an internal audit will be performed on the Model to validate that calculations are working as intended. The audit will be conducted by a member of the Finance department who is not a user of the Model. Any issues identified during the audit will be documented. The Controller will take action to remediate all issues and certify in writing when this work has been completed. No invoices will be released until the certification has been completed.

Belmont County Department of Job and Family Services reviews employee’s job duties routinely to determine the most appropriate and accurate cost pool they should be assigned. The essential job duties and how they align with the program area determine cost pool assignment based on the agency’s interpretation. As a result of this finding, BCDJFS will reassign the FCFC Coordinator to the shared cost pool and reimburse the shared cost pool from the applicable FCFC allocations through a MOU signed between the council and BCDJFS

All grant expenditures are reviewed by the Director of Grants and Compliance so that no grant expenditures are paid prior to services being received. The current Director of Grants and Compliance took over this position and procedure in November 2024. The material weakness occurred during a time of significant turnover among leadership staff at First Step, prior to the new DIrector of Grants and Compliance taking over this position and procedure. The Director of Grants and Compliance will have the responsibility to ensure the corrective action plan is in place.

Generally, 4th Quarter cross charges are processed in January. ACED will process cross-charges monthly and accrue any remaining costs incurred (payroll and non-payroll), should there be any, at the end of the 4th Quarter. This procedure is written in our policies and procedures manual. (p. 38) D. Timetable of dates for performance of planned corrective action steps, including completion date: This process was written into our policy and procedures manual (attached) which was awaiting HUD’s review and will be implemented in the 3rd quarter of 2025 to align with the CDBG 2025 program year. Accruals for the end of 2025 will be submitted before January 2026.

ACED has developed a procedure to ensure that cross charges are done timely. The process is outlined in the attached policy and procedure manual. (p. 38). Since the error occurred due to staff turnover, current ACED staff have been trained and others cross-trained to process cross charges and properly record them in JDE. ACED will re-examine all cross-charges to identify charges that were not properly recorded in JDE.

We agree with the findings and recommendations. This was an isolated incident whereas the payment amount was mistakenly pulled from the wrong line on a contractor’s pay application. This overpayment was missed in the subject fiscal year as the program was still active. Once the overpayment was identified, the county sought reimbursement from the vendor for the overpayment and has since received the funds. The reimbursement will be included as program revenues in the next audit report. The County will reconcile contract values as each pay application is processed in lieu of awaiting program/project closeout in the future.

FINDING 2024-003 Finding Subject: COVID 19 Coronavirus State and Local Fiscal Recovery - Subrecipient Monitoring Contact Person Responsible for Corrective Action: Gretchen Parker Contact Phone Number and Email Address: 765-648-6113 gparker@cityofanderson.com Views of Responsible Officials: "We concur with the finding." Description of Corrective Action Plan: The city has several individuals involved in the monitoring of activities related to the COVID 19 Coronavirus State and Local Fiscal Recovery federal award. The city has implemented procedures to ensure oversight and review of subrecipient reports is properly documented. Anticipated Completion Date: September 1, 2025