Corrective Action Plans

Program: AL 20.509 – Formula Grants for Rural Areas – Allowability & Subrecipient Monitoring Corrective Action Plan: • NDOT will continue to enhance its financial review procedures to ensure that all subrecipients provide adequate supporting documentation for expenditures, including personnel charges and cost allocations. • Training sessions will continue to be conducted for subrecipients to reinforce compliance requirements related to allowable costs, proper documentation, and cost allocation methods. • Revised internal procedures will clarify expectations for travel costs, fuel charges, personnel reimbursements, and revenue reporting to prevent improper charges to the grant. • Assigning audit staff to conduct periodic sampling throughout the year enhances our ability to ensure costs are properly supported, adapt to necessary changes, and effectively communicate updates to our subrecipients. Contact: Jodi Gibson Anticipated Completion Date: NDOT appreciates the audit’s recommendations and remains committed to ensuring compliance with Federal requirements through strengthened internal controls and enhanced subrecipient oversight. This will be an ongoing and continual effort to address anticipated compliance requirements and evolving state and federal regulations.

Program: AL 17.225 – Unemployment Insurance (UI) – Admin – Allowability Corrective Action Plan: NDOL has reviewed the current cost allocation plan with the Federal authority and received conditional approval for changes beginning in state fiscal year 2025. Contact: Rea Easton Anticipated Completion Date: Completed

Program: Various, including AL 93.778 – Medical Assistance Program (Medicaid) – Allowable Costs/Cost Principles Corrective Action Plan: OCIO - To resolve the identified overcharge and reduce the Internal Service Fund Balance, OCIO conducted an 8 month no-bill period from December 2023 through June 2024. During this time OCIO customer agencies would have seen a significant reduction in charges and OCIO’s fund balance significantly decreased. In addition, a full and thorough review of all OCIO rates was conducted. This review resulted in the decrease in any mainframe related rates by 30% from the previous years (State FY2021 and FY2022). DAS Materiel – The Print Shop will have the new rates developed and effective July 1, 2025, the beginning of the new biennium. Contact: OCIO - Noah Finlan; Materiel, Print Shop, Internal Service – Ann Martinez. Anticipated Completion Date: OCIO - Corrective action has already been taken and the fund balance is currently below the allowable threshold permitted. As of September 30, 2024, the fund balance was approximately $10 million dollars. Rates have been adjusted to be more in line with actual expenditures for FY2025. Print Shop – July 1, 2025.

Program: AL 93.778 - Medical Assistance Program; AL 93.959 - Block Grants for Prevention and Treatment of Substance Abuse; AL 93.767 - Children’s Health Insurance Program; AL 93.575 – Child Care and Development Block Grant; AL 10.561 – State Administrative Matching Grants for the Supplemental Nutrition Assistance Program – Allowable Costs/Cost Principles Corrective Action Plan: The entire payroll process is being reviewed and changes will be made. Contact: Heather Arnold Anticipated Completion Date: 12/30/2025

Program: AL 93.558 – Temporary Assistance for Needy Families; AL 93.563 – Child Support Services; AL 93.566 – Refugee and Entrant Assistance; AL 93.568 – Low Income Home Energy Assistance (LIHEAP); AL 93.575 – Child Care and Development Block Grant; AL 93.658 – Foster Care Title IV-E; AL 93.659 – Adoption Assistance; AL 93.667 – Social Services Block Grant; AL 93.767 – Children’s Health Insurance Program; AL 93.778 – Medical Assistance Program; AL 10.561 – State Administrative Matching Grants for the Supplemental Nutrition Assistance Program – Allowable Costs/Cost Principles Corrective Action Plan: Time and Effort: Agency has submitted retroactive PACAP amendment (complete). For the IST Fiscal Projects Admin cost center, a time study will no longer be utilized, and the hours will be treated as General IST Administration without direct grant allocations. RMTS Allocations: Agency has clarified with staff what the “Non-DHHS Activities” selection pertains to (complete). Labor Hours Statistics: This was the first audit cycle of the new Cost Allocation system. DHHS will create a checklist of items for the new system that will be reviewed prior to completion of the quarterly cost allocation compilation. This checklist will address specific issues presented during this audit cycle. Recipient Counts: This was the first audit cycle of the new Cost Allocation system. DHHS will create a checklist of items for the new system that will be reviewed prior to completion of the quarterly cost allocation compilation. This checklist will address specific issues presented during this audit cycle. Contact: Patrick Werner Anticipated Completion Date: 6/30/2025

Program: AL 93.558 – Temporary Assistance for Needy Families; AL 93.566 – Refugee and Entrant Assistance; AL 93.568 – Low Income Home Energy Assistance (LIHEAP); AL 93.575 – Child Care and Development Block Grant; AL 93.658 – Foster Care Title IV-E; AL 93.659 – Adoption Assistance; AL 93.667 – Social Services Block Grant; AL 93.778 – Medical Assistance Program; AL 10.561 – State Administrative Matching Grants for the Supplemental Nutrition Assistance Program – Allowable Costs/Cost Principles Corrective Action Plan: This was the first audit cycle of the new Cost Allocation system. DHHS will create a checklist of items for the new system that will be reviewed prior to completion of the quarterly cost allocation compilation. This checklist will address specific issues presented during this audit cycle. Contact: Patrick Werner Anticipated Completion Date: 6/30/2025

State Treasurer’s Office Response/Corrective Action Plan: The Office of State Treasurer does agree with finding that our grant award template did not make subrecipients aware of all required grant award information for the Mineral Leasing Act as required. The Office of State Treasurer will review and update its grant award templates to ensure that subrecipients are made aware of all required grant award information. Contact Person: Nicole Krivoruchka, Director of Finance Anticipated Completion Date: December 31, 2025

1. All offices will ensure timely and effective communication. The WIC Finance staff will meet with Budget Office (BO) Analysts monthly to review SAP forms, expenditure adjustments, Grant Status Reports and other fiscal items for accuracy and action. Program, budget and comptroller staff will meet at least quarterly to review expenditures, processes and needed actions for federal grants. BO and program office staff have agreed to the following verbally: Program staff will submit a final federal report three months after the end of the grant period. Program staff will monitor all active federal grant internal orders paying careful attention to expenditures that post after the close of federal grant budget period. If there is a late expenditure, program staff will revise the final report and submit it to the DOH BO for review using the BO workflow. The DOH BO will also monitor all active internal order numbers and alert the program office of any unusual transactions. The DOH BO will inform the program office of unusual transactions and add them to regular meeting agendas for further discussion and planning. DOH will create a bulletin to outline federal grant management policies and procedures and disseminate to all DOH program offices. 2. BO staff that made the error were notified and counseled on ways to minimize errors. BO shall update the workflow and expenditure adjustment instructions in coordination with the program office. 3. The credit was largely due to overcharges of costs for a Software License Agreement that was not allowed to be charged to the grant. The IT staff that initiated the overcharge and directed the program office to make the adjustment has been counseled on policy and procedures for charging expenditures to a federal source. All fiscal transactions for IT expenditures are reviewed by program staff as well as BO staff via the BO workflow. Policies and procedures specific to IT expenditures charged to a federal fund will be reviewed and updated to ensure information and instructions are robust and clear. Updated policies and procedures will be disseminated to all DOH staff with a responsibility in the process. Anticipated Completion Date: 05/31/2025 Contact Names: Steven Marsden, Audit Resolution Manager; Andrea Race, Chief Financial Officer

Corrective Action Plan 2024-006 – Unallowable Expenditures National School Lunch Program (Significant Deficiency) Federal Program Information: Funding Agency: U.S. Department of Agriculture Title: National School Lunch Program FAL Number: 10.555 & 10.553 Passthrough: N/A Award Year: 2024 Responsible Official’s Plan: Due to the timing of the finding, the District is performing a permanent cash transfer in March to be compliant with the National School Lunch Program. Additionally, the specific corrective action plan provides details for how we have ensured the unallowable expenses for the National School Lunch Program will not occur again. Specific corrective action plan for finding: This was the result of an error in changing an employee's position from one department to another. Moving forward, the Human Resources Department will notify Payroll of any changes in position and will require TWO SIGNATURES prior to making any changes in pay coding. The two signatures are from the Director of Human Resources and the Director of Finance. Timeline for completion of corrective action plan: The permanent cash transfer process has begun and will be completed by March 31, 2025. The form to ensure two signatures are captured prior to making changes in pay coding is already created and being utilized. Employee positions responsible for meeting the timeline: Director of Finance – Cooper Jones Director of Human Resources – Lisa Salazar

2024-002 No indirect cost allocation methodology Criteria: According to CFR Part 200.405(d), if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. However, when these proportions cannot be determined because of the interrelationship of the work involved, then, notwithstanding paragraph (c), the costs may be allocated or transferred to benefited projects on any reasonable documented basis. Client Response: The agency will use FTE as an allocation method for such expenses calculated as such: (FTE hours for program/Total FTE hours x Total Expense of Line Item). Proposed Implementation Date – December 1, 2024 Name of Contact Person – John Edwards, Sr. Email:jledwards@umadaop.org Phone: 419-255-4444

Finding - Activities Allowed or Unallowed & Allowable Costs/Cost Principles: Payroll, Assistance Listing Number 93.243; June 30, 2024, award year; U.S. Department of Health and Human Services Criteria or Specific Requirement In accordance with 2 CFR 200.405, A cost is allocable to a Federal award if the cost is assignable to that Federal award with the relative benefits received. These costs must be incurred specifically for the Federal award. Condition Found Of the Seventeen payroll charges selected for testing, the allocation of payroll charged to the Federal grant did not align with the percentage of time incurred specifically for the Federal grant in four instances. Views of Responsible Officials and Planned Corrective Actions It was determined that the allocation percentage assigned in our payroll system did not match the calculated payroll expensed to the grant. Corrective measures: 1) contacted our payroll administrator and determined the cause to be that an allocation percentage was applied to the employee and the employee was also assigning their time via their time sheet effectively calculating twice, first on the total payroll and again on the allocated amount. The employee was instructed not to enter the allocation since it is already done in the payroll system. 2) A monthly review and calculation will be performed by program management and accounting to verify cost allocations are correct. Responsible Official: Korin Ihloff, CFO Expected Completion Date: The issue was addressed immediately.

Response: Management agrees with the finding and acknowledges that a significant deficiency was identified related to unallowable payroll costs. This issue occurred due to a timing delay in processing an Employment Transaction Report (ETR). The payroll transfer, originally intended to be effective in April 2024, was not processed until September 2024 of the following fiscal year. As a result, one grant was overcharged, while another grant was undercharged, leading to a misallocation of funds. To prevent similar issues, we will conduct monthly payroll reviews to ensure correct allocation of expenses and provide comprehensive staff training to reinforce the importance of timely and accurate payroll processing. Regular internal reviews and follow-ups will be conducted to monitor the effectiveness of these corrective actions, ensuring any further training or system improvements are implemented as needed. Contact person responsible for corrective action: Lynne Duong, Post Award & Compliance Manager Anticipated completion date: December 31, 2024

Management’s Response or Department’s Response The County agrees with the finding and recommendation. Views of Responsible Officials and Corrective Action Plan The County will implement a formalized monitoring program and agreement template to identify subrecipients based on criteria in § 200.332. The County will provide a comprehensive training to program managers to implement the monitoring program and subrecipient agreement template. In addition, the County will include direction to project managers to review current awards to identify existing subrecipients that were not provided a subrecipient agreement with all of the required elements from CFR § 200.332. Anticipated Completion Date/Completion Date June 30, 2026 Contact Information of Responsible Official Name: Donald McNair Title: County Clerk & Auditor-Controller Phone: 209-533-6593

As of the 2024-2025 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. Person(s) Responsible: Claire Versaw, CFO Timing for Implementation: Currently in place as of 7/1/2024

Item 2023-006 Activities Allowed or Unallowed/Allowable Costs/Cost Principles Head Start ALN# 93.600 US Department of Health & Human Services (Repeat 2022- 008) Federal Grant/Contract Number: 10CH011215-03-03; 10CH011215-03 C3; 10CH011215-04; 10HE000901-01-C6 Grant period – 2022 & 2023 The HS program has established an internal process of requester/approver in place to review transaction requested. Documents then get reviewed again by HR or Finance staff based on the transaction type before getting processed.

Reference Number: 2023-011 Finding: Improve Controls and Compliance with Approval of Allowable Costs Name of Contact Person: Lorina Esposito Corrective Active Plan: The City will implement a policy mandating documented approval for all invoices before they are paid or charged to federal programs. In addition, the City will conduct regular, scheduled reviews of invoice processing to verify compliance with allowable cost procedures and address any deviations promptly. Training will be provided to staff involved in invoice approval and payment processes to ensure understanding and adherence to these internal control requirements. Proposed Completion Date: 6/30/26

FINDING 2023-005 – Allowable Costs: Significant Deficiency over Internal Controls over Compliance Condition/context – In a sample of 25 payroll disbursements and 25 non-payroll disbursements, it was found that time and effort for 11 salaried employees were not supported by documentation for the allocation. The sample of non-payroll disbursements had 4 transactions without the documented methodology or support for the allocation between programs. Corrective Action Plan: • Implemented a formal time and effort reporting process (Allocation Method) for all employees whose salaries are charged to more than one funding source, in compliance with federal requirements. • Developing and enforcing a standardized cost allocation methodology for shared non-payroll expenses, ensuring documentation is retained for all allocation decisions. • Training program and finance staff on allowability and allocation requirements under 2 CFR Part 200. • Periodically reviewing cost allocations to ensure continued reasonableness and compliance with applicable grant terms. • Policy and Procedures updated/Staff Training on new Timesheet processes Name of Contact Person: Chris Flaherty, Chief Executive Officer 707.890.6491 Laura Williams, Chief Financial Officer 707.335.0010 Projected Completion Date: Corrected: September 2025

We will allocate shared costs appropriately among federal awards

Corrective Actions Taken or Planned Management concurs with the finding and has already initiated enhancements to its review process to ensure that expense reports are consistently reviewed and approved by both supervisors and finance personnel prior to being charged to federal awards. These steps are designed to further strengthen internal controls and support compliance with federal requirements. In addition, Finance staff are formalizing procedures to reconcile payroll charges on a regular basis to ensure compliance with federal requirements and to confirm that all charges to federal programs are supported by actual time and effort records. Responsible person: Jackie Ramirez, Operations & Finance Associate Director Expected Implementation date: October 31, 2025

VIEWS OF RESPONSIBLE OFFICIALS Develop and deliver a comprehensive training program for all relevant staff (finance staff, program staff interacting with subgrantees, procurement staff) on the requirements of 2 CFR 200, with a particular focus on subgrantee monitoring and procurement standards. IMPLEMENTATION DATE During Fiscal Year 2025-2026. RESPONSIBLE PERSON Doris Jiménez, Finance Director Administration for the Care and Comprehensive Development of Children (ACUDEN, by its Spanish Acronym)

2023-006 Management Response: Management respectfully disagrees with this Finding. • Under Condition, the finding states, “Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs.…” This is not accurate. Employees report their time worked each day, including the amount of time they worked on different projects if applicable. Employees report this in our commercial HRIS/Payroll system, where it is maintained and where it is reviewed and approved by the employee’s manager. The employees report the time they worked and which project(s) they worked on, their managers review and approve the time and the distribution, and the data is tracked and maintained in our HRIS/Payroll system (ExponentHR). • Also under Condition, the finding states, “The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in time and effort records, are determined by members of the finance staff.” It is correct that we would have to invoice sponsors for less than the total cost of an employee’s allocated time and effort if a sponsor’s budget is not sufficient to cover that full amount. This is the correct procedure to follow. Employees correctly continue documenting their hours worked on a specific project even if the budget is expended and the accounting staff can no longer bill the sponsor. If a particular grant does not have sufficient sponsor funds, then the Grants Accounting staff reduce the bill accordingly. • Also under Condition, the finding states, “The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in time and effort records, is not documented”. This is incorrect. Our monthly invoices to each sponsor accumulate, with each invoice clearly showing not only that month’s expense but also the year-to-date expense and remaining balance, which forces the sponsor invoice to stop at an amount less than the total cost of employees’ time and effort when the budget is exhausted. • Also under Condition, the finding states, “Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained.” Each employee records their hours worked, and the project(s) on which they worked those hours, in our HRIS/Payroll system. The employee’s manager reviews and approves both the hours worked and the projects on which the hours were worked. This review and approval is maintained in our HRIS/Payroll system. Financial staff calculate the amount to allocate to specific federal programs based on these HRIS/Payroll system records (or other records such as clinical units produced, based on the terms of each grant). Separate accounting staff review the sponsor invoice and post the Receivable once they deem the invoice correct. • Under Cause, the finding states, “…..the Organization has not implemented a structured process for documenting the extent to which allowable [emphasis added] compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement.” This means that we do not have a process for documenting how much of a payroll expense already deemed allowable on a particular grant will actually be invoiced there. We disagree and believe that the presence and documentation of a limited sponsor budget, along with cumulative tracking and documentation of compensation expenses against that budget, proves and documents why sometimes full compensation costs are not charged to a grant. • Under Possible Effect, the finding addresses possible effects of “the absence of documented allocation methodologies.” We don’t agree that our process could lead to improper allocation between federal programs (as the finding states) nor to misstating federal expenditures (as the finding states). When a sponsor’s budget is insufficient to cover its appropriately allocated compensation costs, those costs are paid from unrestricted, non-federal funds. As also noted in the finding, no questioned costs were identified.

STDC acknowledges the audit finding regarding the inclusion of sales tax on a utility invoice that was initially charged to multiple federal programs through the administrative cost pool. While the vendor issued credit for the sales tax in question, the original charge had already been distributed across multiple grants, and appropriate reallocations were not documented at the time of audit review. Documentation of the credit was made in the subsequent month’s billing cycle and applied to the listed programs. STDC takes seriously its obligation to ensure compliance with Uniform Guidance cost principles and recognizes the need to improve internal controls regarding invoice review and post-payment credit reconciliation. The Finance Department is taking immediate steps to make necessary reallocations to correct the grant charges and to implement control procedures that prevent future errors of this nature. Corrective Action Plan Finding Number: 2023-05 Planned Completion Date: July 31, 2025 Responsible Official: Director of Finance Corrective Actions to Be Implemented: 1. Immediate Reallocation of Sales Tax Credit The Finance Department will correct accounting entries to reallocate the $51.47 vendor credit back to the same federal grants charged. Journal entries will be completed and documented by July 31, 2025. 2. Invoice Review Protocol All vendor invoices will now be reviewed prior to payment for unallowable costs such as sales tax. Reviewers must initial a compliance checklist confirming allowability. 3. Credit Tracking and Reallocation Procedure Establish a formal mechanism for tracking vendor credits and documenting the reallocation of any prior charges to federal programs. Credits will be logged in STDC’s finance system (AccuFund) to the corresponding grants. 4. Staff Training Finance and grant staff will be trained on Uniform Guidance cost principles with specific attention to tax-exempt status and handling of credits. Training will be held annually and as part of onboarding. 5. Quarterly Reconciliation Review The Finance Department will implement quarterly reconciliation reviews to ensure that any sales tax mistakenly paid is credited back and accurately reallocated.   Policy Insert: Sales Tax Review and Vendor Credit Reallocation Procedure Purpose: To ensure that all costs charged to federal awards are allowable and that any vendor credits (e.g., for sales tax) are correctly applied and documented in accordance with 2 CFR §200.403 and §200.405. Procedure: 1. Invoice Review Prior to Payment Accounting Technicians must review all invoices for unallowable items, including sales tax. Any invoice that includes sales tax must be returned to the program department for correction or payment adjusted accordingly by their vendors. 2. Vendor Credit and Grant Reallocation Upon receipt of a credit from a vendor, the credit must be reviewed for its original allocation(s) to federal grants. The credit amount must be allocated proportionally back to each grant that was charged. A reallocation journal entry must be documented and approved by the Finance Director. 3. Documentation and Recordkeeping Copies of invoices, credits, allocation entries, and internal review checklists must be retained with supporting documentation as required by STDC’s Local Record Retention Schedule. 4. Oversight The Finance Director will review the implementation of this policy on a quarterly for completeness and compliance.

Auditor's Recommendation: The auditor recommends the Organization enhance the design of its control activities and procedures over the allocation percentage forms used throughout the year to ensure the staff know how to apply percentages and are using the correct approved allocation form for the period in the year. Management’s Response: A process was implemented in fiscal year 2024 to address this issued and included the following: • The allocation form was updated and is now clearly labeled with the period and type of expense for which it applies. • The Executive Director communicated the revision of all forms to staff involved in the allocation process, followed by a training session to ensure understanding and proper application of the form. • A monthly review of the process, whereby allocation forms were audited for current updates and application consistency. Due date of completion: August 31, 2024 Responsible Official: Executive Director, Michelle Crain

Plan: Contracts are reviewed and updated annually by the compliance officer. Anticipated Date of Completion: 4/28/2025 Name of Contact Persons: Michael Holmes Management Response: Due to the repeated extensions of certain government grants and contracts, there were delays in securing contract renewals with updated budget allocations. This issue has now been addressed with the completion and submission of revised budgets and grants.

Plan: BCPN confirms that indirect costs are calculated in accordance with government guidelines outlined in 2 CFR Part 200. Anticipated Date of Completion: 4/26/2025 Name of Contact Persons: Ieesha Jones Management Response: Due to adopting to use a calendar year instead of a fiscal year, BCPN's indirect costs for FY24 will be reflected in the financial statements for the period ending June 30, 2024, rather than December 31, 2023. We confirm that the indirect costs are being billed and spent in compliance with the guidelines outlined in the government contract and there is no need for funds to be returned.