Corrective Action Plans

The County Auditor will ensure all federal awards are accurately presented on the SEFA in the future.

Finding 2025-07 Allowable Costs/Cost Principles: Indirect Costs Charged in Excess of Approved Rate – Noncompliance and Significant Deficiency in Internal Control Over Compliance; Planned Corrective Action Plan: APU corrected the identified indirect cost overcharges. Going forward, grant setup documentation will identify the indirect cost rate authorized by each award, and Finance will review the applicable award terms before establishing or changing the rate used to calculate indirect costs. Periodic review of indirect cost calculations will be performed to verify that amounts charged agree with award requirements.; Anticipated Completion Date: July 1, 2027

2025-001: Cash Management: Federal Funds Drawn Down for Indirect Costs not yet Liquidated – Research and Development Cluster Condition During testing of cash management and indirect cost allocations, it was noted that approximately $900,000 in costs included in the Institute's indirect cost pool remained recorded in accounts payable and had not been disbursed (liquidated) as of December 31, 2025. Despite these costs not yet being paid, the related federal funds had already been drawn down from the awarding agency. Criteria 2 CFR 200.305(b) requires non-federal entities operating under the advance payment method to minimize the time elapsing between the drawdown of federal funds and the disbursement of those funds for program purposes, and to limit draws to amounts needed for immediate cash requirements. Costs recorded in accounts payable but not yet paid do not represent a disbursement and therefore do not constitute an immediate cash need sufficient to support a drawdown. Additionally, 2 CFR 200.1 and 2 CFR 200.413/200.414 contemplate that costs included in the indirect cost pool and allocated to federal awards should reflect costs that are allowable, allocable, and appropriately recognized in the period in which they are incurred and settled in accordance with the Institute's established accounting practices and cash management controls. Cause The Institute's process for requesting federal drawdowns is based on costs recorded on an accrual basis (i.e., invoices entered into accounts payable and included in the indirect cost pool) rather than on the actual disbursement date. As a result, drawdown requests were not reconciled to actual cash outlays, allowing draws to occur before the related liabilities were paid. Effect The Institute drew down federal cash in advance of its immediate cash needs, resulting in excess federal funds on hand for a period during which $900,000 in related costs remained unpaid. This condition represents a noncompliance with federal cash management requirements and may expose the Institute to: • Liability for interest owed to the federal government under the Cash Management Improvement Act (CMIA) for the period the funds were held prior to disbursement; • Questioned costs to the extent the $900,000 was allocated through the indirect cost rate prior to liquidation; and • A control deficiency in the reconciliation between the accounts payable subledger, indirect cost pool, and cash drawdown requests. Recommendation We recommend that the Institute: 1. Revise its drawdown procedures so that federal cash requests are tied to actual disbursement dates rather than accrual/invoice entry into accounts payable; 2. Implement a monthly reconciliation between drawdown requests, the accounts payable aging report, and amounts included in the indirect cost pool; 3. Evaluate whether the $900,000 should be removed from the indirect cost pool for the affected period until liquidated, and adjust the indirect cost rate calculation accordingly if required; 4. Calculate potential interest liability under CMIA for the period excess federal cash was held and remit if applicable; and 5. Document and implement written cash management policies and procedures addressing the timing of drawdowns relative to disbursement. Management Response Management acknowledges the finding and the management staff of the Institute take seriously the federal compliance requirements that apply to drawing funds from the DHHS Payment Management System. The Institute recognizes that it has drawn down excess funds. The Institute plans to improve policies and procedures for cash management in 2026 that will ensure the calculation for allowable cash draw for actual immediate cash needs is complete and accurate. Action Taken Scintillon plans to improve policies and procedures for cash management in 2026 that will ensure the calculation for allowable cash draw for actual immediate cash needs is complete and accurate.

Action taken in response to finding: The County will review the subrecipient monitoring requirements and work with the County Auditor to develop a formal policy that includes internal controls, monitoring procedures, and documentation requirements.

Funds will not be drawn down until an invoice or proper pay request is received, and purchase order or contract are in hand, and payment is made promptly within no more than three business days. The Schedule of Expenditures of Federal Awards will be reviewed by Management that all funding received and reported has be fully expensed by the Authority prior to submission on the Hinkle system for audit.

We have adjusted our indirect cost rate using the de minimis cost rate of 15% to the modified total direct costs under 2 CFR 200.414(f). We will adjust future reimbursement submissions to bring our indirect rate back in-line with this standard.

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 2026. Anticipated Completion Date: December 31, 2026

Subrecipient Monitoring California Department of Public Health The California Department of Public Health (CDPH) agrees with this finding. CDPH has not yet formalized procedures governing the issuance of Direct Allocation Letters. CDPH is currently developing a comprehensive process in collaboration with the Program Support Division and the Office of Legal Services to ensure compliance with federal audit requirements and state contracting guidelines. The revised procedures will require each Direct Allocation Letter to include the applicable Assistance Listing Number (ALN) and Federal Award Identification Number (FAIN). CDPH is prioritizing this effort and expects to publish written procedures that establish consistent practices and provide clear guidance to ensure compliance with all applicable requirements. Estimated Implementation Date: December 2026 Contact: - Louise Karsten, Emergency Funding Coordination Branch Manager, Center for Preparedness and Response

DJFS will begin to use project numbers to allow for an additional check of all amounts reported. DJFS is also going to provide federal grant information to the Auditor’s office as soon as they complete their final report in order to give the Auditor’s office adequate time to review the information with MUNIS and will afford the Auditor’s office more time to compile the SEFA and have a secondary review to avoid any computational or clerical errors.

Federal Agency: Various Federal Program: Research and Development Cluster Assistance Listing Number: Various Federal Award Numbers: Various Finding No.: 2025-002 Corrective Action Plan: To address the finding, the College will continue to implement a corrective action plan to strengthen internal controls over the application of indirect cost rates to federally funded awards. Although corrective actions were initiated following the prior year's finding, the College has identified opportunities to enhance the review and monitoring of indirect cost rate calculations to ensure consistent compliance with Uniform Guidance. Going forward, the accounting group, in collaboration with the Office of Sponsored Programs, will maintain the current federally negotiated indirect cost rates, apply approved rates to applicable awards, and perform periodic reviews to verify that the correct rates are consistently applied. Timeline for Implementation of Corrective Action Plan: The College will finalize written procedures governing the application and review of indirect cost rates, implement a documented review process for indirect cost calculations prior to posting, and provide guidance to employees responsible for grant accounting. These actions will be completed by September 30, 2026. Management will periodically monitor compliance to ensure indirect cost rates are applied accurately and in accordance with federal requirements.

Community Projects Funding / Congressionally Directed Funding – Assistance Listing No. 17.289. Recommendation: CLA recommends the Organization revise the indirect costs calculation process to review program-only costs, rather than entity-wide costs. Develop policies and procedures to incorporate appropriate internal controls over indirect cost calculations; ensure the performer of the internal control has the required knowledge & understanding of compliance requirements & accounting to catch errors during the review & approval process. There is no disagreement with this audit finding. Action taken in response to finding: In January 2026 we recevied an email from DOL outlining the correct way to allocate indirect costs. We made those adjustments to our indirect calculations and will adjust any previous overstated reimbursements. Name(s) of the contact person(s) responsible for corrective action: Tracey Hunter. Planned completion date for corrective action plan: May 2026

The City will implement a policy directing City staff that, if allowed, grant applications should include the option to charge indirect costs for the execution of the grant work. Upon grant application submissions, the department submitting the grant will coordinate with the Senior Finance Analyst to provide indirect cost rates and/or charges. As it relates to CDBG and HOME Program Grants, the Finance and Administration Department, in conjunction with the Community Development Director, will conduct a year-end review to ensure allowable indirect costs are appropriately charged. Personnel Responsible for Implementation: Meredith Elguira, Carol Molina, Ralston Turner Position of Responsible Personnel: Interim Community Development Director, Interim Finance and Administration Director, Senior Finance Analyst Expected Date of Implementation: April 30, 2026

Finding Number: 2025-002 Condition: DWIHN’s internal controls were not sufficiently designed and/or operating effectively to prevent the submission of unallowable costs for reimbursement under the federal award. Planned Corrective Action: Program and finance staff responsible for the approving and processing of FSR’s have been informed of the need to review FSR’s in greater detail before they are submitted, approved, and payment occurs. A more detailed review of the FSR’s and adherence to established policies and procedures will eliminate the risk of errors and omissions. Contact person responsible for corrective action: Vice President of Finance and Director of Grants and Community Engagement Anticipated Completion Date: August 7, 2025

We agree with the finding and will review and implement the recommendations accordingly. We are committed to ensuring proper application of indirect costs, avoiding duplication of costs across reporting periods, and maintaining compliance with allocability requirements under Uniform Guidance on a prospective basis. This corrective action plan will be implemented by June 30, 2026.

iLearn Schools, Inc. notes that the excess reimbursement of $85,425 was identified, properly recorded as a grant advance liability, and not recognized as revenue or expense in the current year. Going forward, all reimbursement requests will be based on actual allowable direct costs incurred. Management will establish written procedures for indirect cost recovery, implement a formal review and reconciliation process prior to submission, and provide staff training on Uniform Guidance requirements. These corrective actions will be in place for the fiscal year ending June 30, 2026. Responsible Official: Mr. Coban, Chief Financial Officer

Home Investment Partnerships Program Assistance Listing No. 14.239 Recommendation: The City should review and enhance its internal controls and procedures to ensure that all required information is included in subawards at the time of issuance and maintained in subsequent modifications. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The City will undertake additional training for departments in FY 2026, to include providing departments with a grants responsibility checklist. Name(s) of the contact person(s) responsible for corrective action: Kevin Greenlief, Director of Finance. Planned completion date for corrective action plan: Q2, 2026.

Findings and Questioned Costs Relating to Federal Awards: Insufficient Controls Related to the Application of Indirect Cost Rates The Department will strengthen its administrative and management control processes to ensure accurate preparation and calculation for the Indirect Cost. The following corrective actions will be implemented: 1. Establish Internal Review Process: The Department will implement an excel report that includes all Grants to ensure adequate calculation and review. 2. Assign Reporting Responsibility: A designated staff member will be responsible for monitoring federal reporting requirements according to NICRA limitations. 3. Review and Approval Process: Management will implement an internal review and approval process prior to report submission to ensure accuracy and completeness.

Research and Development – Assistance Listing No. 11.000 Research and Development – Assistance Listing No. 11.617 Research and Development – Assistance Listing No. 12.000 Research and Development – Assistance Listing No. 20.000 Research and Development – Assistance Listing No. 20.109 Research and Development – Assistance Listing No. 43.000 Research and Development – Assistance Listing No. 43.001 Research and Development – Assistance Listing No. 43.002 Research and Development – Assistance Listing No. 43.008 Research and Development – Assistance Listing No. 43.012 Research and Development – Assistance Listing No. 47.083 Research and Development – Assistance Listing No. 81.000 Economic Development Cluster - Assistance Listing No. 11.307 Recommendation: We recommend OSU should notify the applicable sponsors and federal agencies regarding the calculated questioned costs and make any necessary repayments or adjustments. Further, OSU should develop and document a process to ensure the PES rates are developed and billed in accordance with OSU Policy, applicable federal regulations, and the requirements of OSU’s Federal Agreements. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: OSU will notify the applicable sponsors and federal agencies to resolve the questioned costs. OSU will also develop a process to ensure the correct PES rates are calculated and billed. Name(s) of the contact person(s) responsible for corrective action: Chris Kuwitzky, Senior Vice President for Administration & Finance and Chief Financial/Administrative Officer and Kenneth Sewell, Vice President for Research Planned completion date for corrective action plan: September 30, 2026

2025-004 Indirect Cost Rate Application on Federal Invoices We acknowledge BDO’s observation regarding the indirect cost rate applied to federal invoices during the period in which VOAWW transitioned from its approved NICRA rate to the de minimis rate. During this transition, VOAWW applied the NICRA rate of 17.2% while moving to the de minimis rate but did not complete the required true-up to 10% for a three-month period prior to the de minimis rate being increased to 15%. VOAWW has reviewed the circumstances that led to this error and determined that it occurred during an unusual and infrequent set of conditions. Transitions between indirect cost methodologies are rare and increases to the federal de minimis rate are also uncommon. As a result, this specific scenario is unlikely to recur. Nonetheless, VOAWW recognizes the importance of strengthening controls around indirect rate changes to ensure accurate application during any future transitions. To address this finding and strengthen controls over indirect cost rate application, VOAWW will implement the following corrective actions: • Formal Rate Transition Procedures – Before the end of FY26, the Finance Department will develop and document a standardized procedure for transitioning between indirect cost rates, including effective dates, interim rate requirements, required true-ups, and approval checkpoints to ensure accurate application during any future rate changes. • Centralized Indirect Rate Tracking – Before the end of FY26, the Finance Department will maintain a centralized indirect rate schedule that includes approval documentation, effective dates, and any required adjustments. This schedule will be referenced during invoice preparation and review to ensure consistent and accurate rate application across all federal awards. • Contract Kick-Off Meetings and Cross-Department Alignment – Before the end of FY26, Finance, Grants, and Contract Compliance will implement contract kick-off meetings for new awards and significant contract amendments to align on billing requirements, approved indirect cost rates, effective dates, and other critical compliance information and ensure consistent communication across departments. • Documentation of Important Communications – Before the end of FY26, VOAWW will implement guidance for documentation of important communications with funders that have a single audit impact. Responsible Individual: Claire Danielson, VIP of Finance Estimated Completion Date: June 30, 2026

Finding No. 2025-008 ALN No. 11.419 Program Title: Hawaii Coastal Zone Management Program Grant Award No.: NA22NOS4190022 NA23NOS4190139 NA24NOSX419C0023 NA22NOS4190065 Condition Accuity noted that State did not communicate the following award information required under 2 CFR 200.332: • Subrecipient’s unique entity identifier; • Federal Award Date; • Identification of whether the Federal award is for research and development; and • Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with 200.414). Corrective Action Plan DBEDT OPSD will strengthen internal controls over subaward identification and monitoring subrecipients to ensure that subrecipient monitoring requirements are met. The Program will communicate with the subrecipient to record their UEI. Program will supply the subrecipient with the date of the federal award, the indirect cost rate for the Federal award per CFR 200.414, and information on whether the award is for research and development. The Program will continue to supply subrecipient with Period of Performance Start and End Date, Budget Period Start and End Date, and the Assistance Listing number. Person Responsible Mary Alice Evans, Director of Office of Planning and Sustainable Development Anticipated Date of Completion April 1, 2026

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE U.S. Department of Justice 2025-001 Department of Justice Second Chance Act Community-based Reentry Program – Assistance Listing No. 16.812 Recommendation: We recommend that TASC follow its established procedures for segregation of duties over the calculation of indirect cost allocations. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Management will follow established procedure to make sure that segregation of duties over the calculation of indirect cost allocations is properly documented. Management will review the procedure with all accounting staff. Name(s) of the contact person(s) responsible for corrective action: Roy Fesmire, CFO Planned completion date for corrective action plan: June 30, 2026

Starting in May 2024, the Alliance adapted its monthly Time and Effort Report that is reviewed by Kim Atkins, Executive Director, to be used for allocation of expenses other than payroll. This ensures a consistent, reviewed and authorized report is being used for expense allocation. This report is shared monthly with the Alliance’s funding agencies along with the submission of monthly vouchers for processing. During the year ended June 30, 2025, the Alliance has ensured that allocations were signed off on by Kim and has significantly reduced the amount of finance staff time required to process the allocation of administrative costs. The data from this monthly report is entered into NetSuite for allocation of administrative costs but subsequent review of the allocation program in NetSuite determined that the proper adjustment for adding new grants had not been built into the program. The Accounting Manager, Sarah Burgess, is currently working with NetSuite to fix this problem going forward. As of July 1, 2025 the Alliance is modifying all of its grants to adopt the 15% de minimis cost rate for all expenses other than personnel, direct program, and space costs.

Notice of Intent to Adopt the DeMinimis Cost Rate For Fiscal Year 2026-2027. The purpose of this document is to formally announce that the Bamberg County Office on Aging is taking the necessary administrative steps to adjust its indirect cost recovery method. Effective July 1, 2026 (Fiscal Year 2026-2027), the agency will elect to charge a de minimis rate (15%) for indirect costs. Please be advised that we are unable to adjust the current indirect cost rate within the Grant Management System (GMS) at this time (FY 25-26), as any modification would disrupt the financial reporting and accounting structures of the active fiscal year. The South Carolina Department of Transportation (SCDOT) has been formally notified that this change is technically non-viable for the current period; therefore, the implementation of the new rate will be deferred until the commencement of Fiscal Year 2026-2027 to ensure fiscal consistency and audit compliance.

Since the prior audit period, management has taken steps to establish procedures and internal controls to ensure consistent application, billing, and reporting of indirect cost rates across all federal awards. Such steps include defining and documenting roles and responsibilities for applicable staff members during each phase of the grants management lifecycle, as well as implementing procedures and tools to ensure compliance with subrecipient monitoring requirements. These steps involve multiple levels of review for accurate and consistent application of indirect cost rates. Finance will continue implementing the corrective actions necessary to achieve effective controls over compliance with indirect cost rate requirements. Policy and procedures on allowable and allocable costs will be drafted to clearly document how direct and indirect costs will be billed to federal awards. Training will be provided to relevant staff members to ensure accurate implementation and ongoing compliance. These actions will improve our ability to manage indirect costs effectively and ensure compliance with federal requirements. The anticipated completion date remains June 30, 2026.

IDC Error, Reference 2025-003 Audit Finding: For both programs, 50 expenditure transactions were selected for testing. Of these transactions, three that were unallowed under the MTDC definition for the program as stated in the Grant Award Notification were inappropriately charged indirect cost. These transactions totaled $364.32 (TRIO Program Cluster) and $242.87 (GEAR UP) and were charged indirect cost at a rate of 8% for a total indirect cost of $29.15 and $17.57, respectively. Our sample was not, and was not intended to be, statistically valid. Cause of the Finding: The University’s system for tracking costs requires manual review and adjustment, and this review was not completed on a timely basis. This resulted in the charging of inappropriate indirect costs not being corrected during the fiscal year. Effect of the Finding: Unallowable indirect costs were charged to the program and, as such, ED provided excess funding to the University. Corrective Action Plan: To address the errors identified in the IDC funds, the following corrective actions will be taken: 1. Immediate Review and Correction of Existing Data o The IDC errors had already been identified through the University’s monthly reconciliation process, and all corrections were completed by the end of each grant’s period of performance. o The University will continue to review existing processes and work with appropriate internal stakeholders to identify systematic improvements that reduce the need for manual review and adjustment. 2. System and Process Improvements o The University will evaluate its current approach for identifying and correcting unallowable IDC charges to ensure controls operate effectively throughout the year. As part of this review, procedures will be updated to clarify when IDC corrections under $50 per award will be completed, shifting required adjustments from the grant period of performance end date to the fiscal year end to promote consistency and timely resolution. 3. Training for Staff o Grants staff will receive refresher training on the allowability of costs under the Modified Total Direct Cost (MTDC) base, including proper identification of expenditures subject to indirect cost. o Training materials will be documented for reference and future onboarding. 4. Ongoing Monitoring o The University will continue its monthly grant award reconciliation procedures, including a review of MTDC IDC charges, to ensure any unallowable expenditures are identified and corrected promptly. 5. Timeline for Implementation o Updated procedures will be updated by Grant Office staff by February 28, 2026. o Staff training sessions: First session scheduled by February 28, 2026, with periodic refreshers as available. o Ongoing monitoring procedures will continue on a monthly basis. 6. Responsible Parties The Vice President for Finance & Operations and Assistant Vice President of Financial Operations will oversee the implementation of the corrective action plan. Responsible party contact information is located at uco.edu.