Corrective Action Plans

View of Responsible Officials and Corrective Actions: The Authority has recognized the deficiencies related to payroll and will implement internal control procedures that will ensure compliance with the Authority's internal control policies and personnel policy. Julio Marenco, Interim Executive Director, will be responsible to implement this corrective action by June 30, 2025.

Views of responsible officials and planned corrective action: The Authority accepts the recommendation of the auditor. The Authority will increase oversight in the Public and Indian Housing Program to ensure that established internal control policies are being followed on a timely basis. Bart Cook, Executive Director, is responsible for implementing this corrective action by September 30, 2024.

PHA establish policies and procedures to ensure that all funds are only spent on allowable costs.

Type of Finding: • Significant Deficiency in Internal Control over Compliance – Allowable Costs/Cost Principles • Other Matter – Non-Compliance with Allowable Costs/Cost Principles Compliance Requirements Federal Agency: Department of Transportation Federal Program Name: Enhanced Mobility of Seniors and Individuals with Disabilities Assistance Listing Number: 20.513 Federal Award Identification Number and Year: PTD0287-2022 Pass-Through Agency: WADOT Pass-Through Number(s): PTD0287 Award Period: July 1, 2021 through June 30, 2023 Criteria or specific requirement: 2 CFR 200.423 specifically identifies alcoholic beverages as unallowable costs. Condition: CLA noted one sample in which federal funds were expended on unallowable costs. Questioned costs: $85 known, $910 likely Context: A sample of 25 was made from a population of 942 nonpayroll-related general disbursement costs charged to the major program. Of the 25 sampled costs, one was found to be out of compliance with the requirements of Allowable Costs / Cost Principles, totaling $85. Sampled nonpayroll-related general disbursement costs totaled $24,560. General disbursements totaled $263,090 of the $1,706,762 tracked to the major program. Extrapolating the error to the actual costs reported on the SEFA results in a likely questioned cost amount of $910. Cause: The individual in charge of entering the purchase into Microix did not code the alcoholic beverages to a separate general ledger account that was established to track unallowable costs so that they are not charged to the federal programs. Effect: Without adequate controls in place to ensure costs are allowable, Sound Generations runs the risk of being out of compliance with not only the major program but all federal programs. Repeat Finding: No. Recommendation: CLA recommends that emphasis be placed (via an employee training or organization-wide email) on specifically disallowed costs and the importance of tracking these costs separately so that they are not charged to federal programs. Views of responsible officials and planned corrective actions: Sound Generations agrees with the finding. Sound Generations has implemented the following additional practices and policies: 1) Allowable costs and expenditures in Federal Grants and Contracts training to all Authorized Purchasers. - to be completed in the first quarter of 2024 and annually thereafter. 2) Additional General Ledger Codes to record unallowable costs: implemented in July 2023 3) Automating unallowable expenses to be excluded in grant and contract reporting and expense reimbursements. - implemented in July 2023 Responsible Official: Chief Financial Officer; Christina Hannan, Controller Anticipated Completion Date: March 31, 2024

MANAGEMENT'S CORRECTIVE ACTION PLAN - FISCAL YEAR 2022 Finding 2022-001: (21.027) Unallowable Activities/Allowance Costs and Cost Principals August 9, 2023 In July 2022, Arrowmont School of Arts and Crafts submitted a request for funds reimbursement under the Arts Recovery Program Grant (federal award #SLFRP5534) through the Tennessee Arts Commission. In the documentation justifying the request, an unallowable expense of $329.25 was included. The staff member who completed the request and the supporting documentation was knowledgeable about the federal regulation excluding alcohol purchases as eligible for reimbursement, however in reviewing and submitting the request, she did not notice that alcohol was included. The line item in error was a VISA bill that contained a purchase that included alcohol. There are a number of reasons this oversight occurred. The primary reason is human error. At the time the error occurred, Arrowmont had insufficient staff support for the function. There was only one staff member available to complete the request and supporting documentation. In addition to the volume of entries (approximately 1,000), the staff member who had COVID was working from home without access to the full database and on a very short timeline and therefor simply did not see the purchase which was at a restaurant as including alcohol. Corrective Action. Corrective action has been accomplished, effective April 2023. The need for grants management support staff has been identified and the position is in process to effectively manage all Arrowmont grants reporting. This position will work closely with the accounting staff to ensure the accuracy of reports and supporting documentation. Working with the accounting staff to review and double check the accuracy of each entry should preclude this error from re-occurring. Protocols include double checking any invoice that contains multiple entries to ensure compliance with financial/accounting and programmatic reporting. The Chief Officer for Institutional Advancement is responsible for ensuring that future requests and documentation are accurate, that staff are adequately trained, and that reports are checked carefully before submission. The Chief Finance Officer will also participate in grants management oversight to ensure all financial reports are accurate and correct. The Chief Executive Officer has additional oversight responsibility as necessary for all grants management reporting for Arrowmont. Upon notification from the auditors that an unallowable expense has been identified, the Chief Officer for Institutional Advancement called the Tennessee Arts Commission and notified them that an error had occurred and requested their guidance on how to proceed. The guidance was to provide the Director of Grants with Tennessee Arts Commission with this memo when corrective action was completed. This memo is being shared with PYA (Arrowmont auditors for 2022) and with Tennessee Arts Commission. In addition, to correct the $329.25 expense, Arrowmont will prepare and mail a refund check in this amount to Tennessee Arts Commission and will amend the 2022 budget reimbursement and the 2024 available budget reimbursement amounts. The contact person relative to this corrective action is: Trudy M. Hughes, Chief Executive Officer thughes@arrowmont.org (865) 368-8886 Thank you for the opportunity to submit this information. I welcome your response and direction regarding any further communication as is necessary. Sincerely, Trudy M. Hughes Trudy M. Hughes Chief Executive Officer

Views of responsible officials and planned corrective action: The Authority accepts the recommendation of the auditor. The Authority will increase oversight in the Public and Indian Housing Program to ensure that established internal control policies are being followed on a timely basis. Bart Cook, Executive Director, is responsible for implementing this corrective action by September 30, 2023.