Corrective Action Plans

Finding 2024-001 - 2023--001 - Allowable Costs/Cost Principles Contact Person Responsible for Corrective Action: David Dionne, Town Manager and Trish Clark, Superintendent of Schools Corrective Action: The finance department of Town and school has gone through turnover through Fiscal year 24. All Finance Department staff will continue to receive additional training in the reconciliation of the accounts and warrant process system. In addtion, the focus will be on having all proper documentation for payments made from the Town and School Treasury. Anticipated Completion Date: June 30, 2025

The district agrees that our PARS forms needed improvement and have since implemented a better system to document the after-the-fact distribution of the employees' actual activities.

Finding 2024-053 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Payroll Documentation) Auditor's Summary of the Finding The auditors concluded that the Nevada Division of Emergency Management (DEM) did not maintain sufficient documentation to support the allocation of employee salaries and wages charged to the Homeland Security Grant Program. Specifically, documentation supporting payroll distributions was not available for all sampled payroll transactions, resulting in questioned payroll costs. The auditors recommended that DEM strengthen internal controls to ensure documentation supporting the distribution of employee salaries and wages is maintained. OEM Response The Nevada Office of Emergency Management (OEM), formerly the Nevada Division of Emergency Management (DEM) during the FY 2024 audit period, agrees that documentation supporting payroll distributions should be consistently maintained and readily available to demonstrate compliance with applicable federal requirements. During the audit period, DEM maintained internal controls over payroll administration that included supervisory approval of employee payroll, salary certifications validating payroll distributions, and fiscal review of personnel costs charged to Homeland Security Grant Program awards. Salary certifications were used to verify that payroll distributions accurately reflected work performed and supported the allocation of personnel costs to applicable federal awards. The audit identified that salary certifications and supporting documentation for certain sampled payroll transactions were not available during the audit. While OEM believes these documentation deficiencies did not indicate that payroll costs were improperly charged to the grant, the absence of complete documentation for the sampled transactions limited DEM's ability to demonstrate compliance with the documentation requirements of 2 C.F.R. § 200.430. Corrective Action Planned OEM has revised its Internal Control Manual to strengthen documentation and retention requirements for personnel costs charged to federal awards. The revised Personnel and Payroll section formally requires salary certifications, payroll documentation, maintenance of personnel records, and grant-specific payroll documentation. The Grant Management section incorporates these documentation requirements into the administration of federal awards to ensure supporting records are retained as part of the official grant file. OEM will continue to use salary certifications to validate payroll distributions and will implement additional management oversight to ensure certifications and supporting payroll documentation are consistently completed, retained, and readily available for monitoring and audit purposes. These enhancements reinforce existing payroll controls while improving documentation retention and demonstrating compliance with 2 C.F.R. § 200.430. Responsible Official(s) • Jared Franco, Chief Fiscal Officer • Judith Lyman, Budget Officer Anticipated Completion Date Implemented through the 2026 Internal Control Manual. Revised documentation and record retention procedures are currently in effect and will be applied to all active and future Homeland Security Grant Program awards.

Planned Corrective Action: Valley Health Associates will implement a consistent review process per pay period to ensure payroll is allocated accurately to each program to the best ability possible and take quick action to fix any errors or adjustments.

PLC transitioned to a new HRIS software in mid-2024, which disrupted our usual process for documenting approval of employee salary/pay rates. PLC’s HR department has incorporated a new procedure for documenting personnel actions that is compatible with our HRIS software.

Twin Oaks employs most of their 700 or so employees in residential programs where they work for one program on a set schedule. Twin Oaks is working with Paylocity to create the best solution for those employees that work for different programs or that have multiple programs at their location. The programs specifically identified with this finding have been eliminated except for the TOCS programs and that is where we are specifically working on the best solution with Paylocity. Benjie Read and Candy Gregory will be responsible for correcting this with Paylocity by October 31, 2026.

During fiscal year 2026, the Coalition engaged an outsourced accounting firm to assist with grant compliance and financial reporting. The Coalition has implemented procedures requiring employees whose activities benefit multiple funding sources to document actual time and effort by program or activity. Payroll allocations will be reviewed periodically and adjusted as necessary to reflect actual work performed. Management and the outsourced accounting team will maintain supporting documentation for payroll allocations and monitor compliance with Uniform Guidance requirements.

IIW acknowledges the finding regarding the allocation of payroll expenses to federal awards during the period July 2023 through October 2023. FY2024 was a significant transition period for IIW. New payroll and financial systems were implemented during the transition period from June 2023 through January 2024, and management implemented significant corrective actions related to payroll allocation beginning in November 2023. These corrective actions included transitioning away from the prior budget-based payroll allocation methodology, strengthening timekeeping and payroll processes, implementing procedures designed to document actual employee activities, and enhancing supervisory review of payroll allocations. Although aspects of the prior-year condition affected the July through October 2023 period of FY2024, significant corrective measures were implemented during FY2024 beginning in November 2023. IIW continued strengthening these processes throughout FY2024. Corrective Actions Implemented and Ongoing • Implement and maintain written payroll allocation policies and procedures. • Utilize systematic timekeeping practices designed to document actual employee activities. • Allocate payroll costs based on actual work performed and appropriate supporting documentation. • Maintain supervisory review and approval procedures over employee time reporting and payroll allocations. • Maintain appropriate levels of management review and oversight to provide checks and balances over payroll reporting and allocation. • Periodically review payroll allocations for consistency with actual employee activity and make adjustments when necessary. Contact Persons Responsible for Corrective Action Paul F. Trebian, President & CEO Estela Vazquez-Ornelas, Vice President Anticipated Completion Date Significant corrective actions were implemented beginning in November 2023 and continue to be monitored and enhanced as necessary to ensure compliance with federal award requirements.

Management agrees with the finding that payroll costs charged to HUD-funded programs were based on estimated allocations and did not consistently reflect actual time and effort in accordance with 2 CFR §200.430 (Compensation—Personal Services) and applicable HUD program requirements. Management acknowledges the requirement that personnel costs charged to HUD awards (e.g., CDBG, HOME, CoC) must be supported by records that accurately reflect work performed on eligible program activities. Corrective Actions Implemented: The Organization has strengthened internal controls over payroll allocation for HUD-funded programs by implementing a formal monthly review and reconciliation process based on after-the-fact determinations of actual activity. Under this enhanced process: • Payroll costs charged to HUD awards are reviewed monthly and supported by documentation that reflects actual time and effort by eligible activity and funding source. • Payroll distribution reports are evaluated for accuracy, allowability, and alignment with HUD-eligible program activities. • Allocated payroll costs are compared to actual program delivery (e.g., beneficiary services, project activities, administrative vs. program caps, where applicable). • Timely cost adjustments are recorded, as necessary, to ensure payroll charges are properly aligned with work performed and eligible cost objectives. • All adjustments are documented, reviewed, and approved by appropriate supervisory and finance personnel. Expected Outcome: Management believes these corrective actions will ensure that payroll costs charged to HUD-funded programs are accurate, allowable, properly documented, and aligned with eligible program activities, and fully compliant with Uniform Guidance and HUD requirements. These enhancements will strengthen internal controls, improve reporting reliability (including IDIS/financial reporting where applicable), and reduce the risk of noncompliance in future monitoring or audit reviews.

Finding Number 2024-024 Subject Heading (Financial) or AL no. and program name (Federal) EMERGENCY RENTAL ASSISTANCE PROGRAM (ERA) AL #21.019 Planned Corrective Action Oklahoma Office of Management and Enterprise Services (OMES) acknowledges subrecipient monitoring process lacked the strength and consistency to ensure subrecipients established and maintained effective internal control. OMES acknowledges that OMES did not implement the proper internal controls and oversight of the ERA Program during FY2024. However, OMES has taken steps to correct these findings and follow the recommendations set forth by SAI in these findings. Beginning with FY2025, OMES has taken the following measures: • OMES disagrees that they had sufficient and timely notice to make full corrective actions prior to this FY2024 audit for the following reasons: the FY2021 State auditor & Inspector (SAI) audit was released four days prior to the beginning of FY2024, the FY2022 SAI audit was released near the end of FY2025, and the FY2023 audit was released in FY2026; therefore, OMES could not take corrective action prior to the FY2024 audit began. At the beginning of FY2025, OMES began corrective measures as noted in SAI’s Condition and Context in this finding. • OMES acknowledges OMES subrecipient monitoring process lacked the strength and consistency to ensure subrecipients established and maintained effective internal control. However, OMES has taken steps to correct these findings and follow the recommendations set forth by SAI as noted in SAI’s Condition and Context in this finding. Beginning with FY2025, OMES has taken the following measures:  Oversight and management of the ERA program has been transferred to the OMES Grant Management Office (OMES-GMO) which has staff with several years of grant experience. OMES-GMO has recently hired additional staff, and the two staff members dedicated to the management of the ERA program have 20+ years of combined federal grant specific experience.  OMES ensured that the subrecipient agreement included all the required terms under the ERA Program and that the agreement does not expire, OMES-GMO and the Communities of Foundation of Oklahoma (CFO) executed an updated Subrecipient Grant Agreement Amendment that details the responsibilities of OMES to monitor CFO and the duties and processes that CFO must follow in regard to ERA Program, including detailed cash management policies.  OMES-GMO required the return of the remaining ERA2 Program funds from CFO to ensure proper oversight and review of ERA expenditures is performed.  OMES-GMO has in place a multi-level system of internal controls for grant management and oversight that includes routine monitoring, desk review, and site visits for all projects and associated project/administrative expenditures to ensure allowability, accuracy, and assist in the detection of fraud. For example, OMES-GMO’s process for disbursing funds to a subrecipient requires a written request from the subrecipient with supporting documentation, then OMES-GMO assigns a staff lead and secondary grant analyst to perform a primary and secondary review for compliance and to require additional supporting documentation if needed to approve the request. Once those reviews are completed and approved by the OMES-GMO staff, the Director of the OMES-GMO must approve the request before it is sent to the OMES Finance Division, who will then verify the calculated amount(s) before completing the disbursement to the subrecipient. These internal controls and policies have been implemented for the management and oversight of the ERA Program and provide a multilayer review that will prevent fraud and risk factors applicable to the ERA program. Additionally, the OMES-GMO staff assigned to the ERA program have the training and knowledge to ensure compliance with the Federal grant requirements.  Depending on the level of risk, OMES-GMO conducts monthly, bi-weekly or weekly meetings with each subrecipient to monitor the progress of projects and address any issues or changes that might impact the project. For the ERA Program, OMESGMO conducted bi-weekly monitoring meetings with CFO and reviewed documentation provided by CFO to ensure all ERA projects were eligible under the ERA guidelines and that CFO exercised the proper oversight over their subrecipients and spending. Anticipated Completion Date Completed Responsible Contact Person Brandy Manek

Finding Number 2024-028 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.425U) Planned Corrective Action Since January 2025, the Office of Title Services (OTS) has maintained time and effort records per internal guidelines. OSDE is drafting policies to ensure all employees meet the requirements of 2 CFR §200.430. After implementation, OTS will train staff on these procedures. Anticipated Completion Date Jan-2025 Responsible Contact Person Tammy Smith

Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.

Management’s Response and Corrective Action Plan Management was unaware that certain City of Philadelphia contracts contained federal pass-through funding until confirmation was received from the City during the audit. Upon becoming aware of the federal funding, management developed an allocation methodology for shared personnel costs and has begun implementing procedures to identify federal funding at award inception and to document payroll allocations contemporaneously for future reporting periods.

We agree with the recommendations offered, and as of the date of this report, have already established and implemented a written incentive compensation policy that contains all the elements required by the Uniform Guidance.

As noted above, we are working with consultants and our government partners to determine and define the requirements for each relevant program. We understand the recommendations offered and will review, and possibly revise, our policies and procedures, including supervisory review of documentation to support the allowability of costs charged to federal agreements. We will also review existing policies and procedures for preventing or detecting and correcting unallowable costs charged to federal agreements to ensure consistent application of those policies and procedures for all costs charged to federal agreements. The anticipated completion date is October 2026.

Recommendation We recommend that UVNR strengthen its payroll review and approval procedures by requiring that: - The final timesheet used to process payroll be reviewed and approved by the appropriate supervisor before payroll is submitted; - Approved timesheets be reconciled to the payroll register and retained with the payroll documentation; - Timesheet calculations and total hours be independently reviewed for math accuracy; - Version controls be implemented to clearly identify the final approved timesheet when corrected or revised timesheets are submitted; and - Payroll errors and discrepancies be documented and corrected promptly through a subsequent payroll. Management Response Corrective Action: The identified exceptions resulted from isolated administrative errors in the payroll review process and did not reflect intentional noncompliance. Specifically, one exception occurred because an updated Excel timesheet was used for payroll processing without obtaining the required supervisory approval or retaining documentation demonstrating approval of the final version. The second exception resulted from a clerical error in totaling hours on a timesheet. Management acknowledges that these errors indicate opportunities to strengthen payroll review, documentation, and reconciliation procedures. To address the finding, UVNR has implemented enhanced payroll controls designed to improve the accuracy, completeness, and documentation of payroll transactions charged to federal awards: • All payroll timesheets must receive documented supervisory approval before payroll is processed. Only the final approved version of the timesheet may be submitted for payroll processing. • Payroll staff will reconcile approved timesheets to the payroll register prior to payroll submission and retain the approved timesheets with the supporting payroll documentation. • An independent review of timesheet calculations and total hours will be performed before payroll is finalized to verify mathematical accuracy. • Version control procedures have been established to ensure that revised or corrected timesheets are clearly identified as the final approved version, with prior versions retained as appropriate for audit purposes. • Any payroll discrepancies identified after processing will be documented and corrected through the next available payroll cycle, with supporting documentation maintained for the adjustment. • In addition, management will provide refresher training to supervisors and payroll personnel regarding timesheet approval requirements, documentation retention, and payroll review procedures to promote consistent compliance with internal controls and federal grant requirements. Management expects these corrective actions to strengthen internal controls over payroll processing and prevent similar exceptions in the future. Due Date of Completion July 21, 2026 Responsible Party(ies) Co-Executive Directors

The Government concurs with the auditor’s findings and recommendations and finalizing a comprehensive corrective action plan to strengthen grant management and compliance through the Public Finance Management initiative including the development of a three-tier overarching Financial and Compliance policy and procedures framework. The Government’s Audit Committee is leading the development of a structured, three-tier policy and procedures framework under the Public Finance Management project. This framework includes Tier 1, which establishes the overarching Financial and Compliance Policy; Tier 2, which defines Standard Operating Procedures (SOPs) to promote cross-agency consistency; and Tier 3, which outlines detailed, step-by-step procedures that clearly define roles and responsibilities and accountability measures to ensure compliance with all federal regulations including fiscal and administrative requirements for expending and accounting for payroll expenditures. Regular training sessions will be provided to staff involved in grant management to ensure they understand and adhere to compliance requirements with monitoring and evaluation occurring by the OMB Compliance Unit supported by the Government’s Audit Committee, to assess and improve the effectiveness of controls.

VIDE will strengthen payroll and personnel action controls by requiring the Budget Team and Deputy Commissioner to review and approve all personnel actions before NOPA execution to validate pay rates. Furthermore, Payroll will establish a final review step to reconcile approved hours against both the payroll processing register and the final reimbursement invoice. Approved timesheets, Notices of Per Diem, and related payroll support will be centrally retained in SharePoint by pay period and attached to applicable invoices or general ledger journal entries. Program staff and supervisors will receive mandatory training on updated timesheet procedures and federal time and effort requirements. The Office of Fiscal and Administrative Services will also conduct monthly spot checks of SharePoint repositories and ERP logs to document compliance, identify control gaps, and ensure timely corrective action. Finalization of the formal SOPs and supporting controls is a top priority to achieve the necessary level of control precision and prevent repeat findings.

VIDE will strengthen payroll and personnel action controls by requiring the Budget Team and Deputy Commissioner to review and approve all personnel actions before NOPA execution to validate pay rates. Furthermore, Payroll will establish a final review step to reconcile approved hours against both the payroll processing register and the final reimbursement invoice. Approved timesheets, Notices of Per Diem, and related payroll support will be centrally retained in SharePoint by pay period and attached to applicable invoices or general ledger journal entries. Program staff and supervisors will receive mandatory training on updated timesheet procedures and federal time and effort requirements. The Office of Fiscal and Administrative Services will also conduct monthly spot checks of SharePoint repositories and ERP logs to document compliance, identify control gaps, and ensure timely corrective action. Finalization of the formal SOPs and supporting controls is a top priority to achieve the necessary level of control precision and prevent repeat findings.

VIDE will strengthen payroll and personnel action controls by requiring the Budget Team and Deputy Commissioner to review and approve all personnel actions before NOPA execution to validate pay rates. Furthermore, Payroll will establish a final review step to reconcile approved hours against both the payroll processing register and the final reimbursement invoice. Approved timesheets, Notices of Per Diem, and related payroll support will be centrally retained in SharePoint by pay period and attached to applicable invoices or general ledger journal entries. Program staff and supervisors will receive mandatory training on updated timesheet procedures and federal time and effort requirements. The Office of Fiscal and Administrative Services will also conduct monthly spot checks of SharePoint repositories and ERP logs to document compliance, identify control gaps, and ensure timely corrective action. Finalization of the formal SOPs and supporting controls is a top priority to achieve the necessary level of control precision and prevent repeat findings.

DPNR recognizes the discrepancies identified between the employee pay rates reflected in the payroll registers and the Notices of Personnel Action (NOPAs) that were provided during the audit. Preliminary review indicates that the payroll system calculates employee compensation based on approved personnel actions maintained within the payroll system; however, it is possible that the NOPAs provided for audit testing did not reflect the most current approved personnel actions or subsequent amendments affecting employee compensation. Additionally, DPNR's procedures for maintaining and readily retrieving complete personnel and payroll support documentation were not sufficiently centralized to ensure that the most current supporting records were consistently available for audit review. DPNR will conduct a comprehensive internal review of the payroll transactions identified in the audit sample to determine the cause of the discrepancies between the payroll registers and the NOPAs provided during the audit. The review will include: • Verification of the official personnel actions maintained in the payroll system; • Review of any amended or revised NOPAs affecting employee compensation; • Reconciliation of payroll registers to approved personnel actions; • Verification that salaries and wages charged to Federal awards are properly supported and accurately reflected in official records; and • Identification and correction of any deficiencies in document retention or record management procedures.

OMB acknowledges the findings and notes that OMB does not calculate or determine fringe benefit amounts charged to payroll expenditures. However, OMB will coordinate with the Department of Finance to communicate the identified discrepancy and will work collaboratively to strengthen review procedures over payroll cost allocations charged to federal programs. In addition, OMB will reevaluate its existing oversight controls to ensure that payroll expenditures charged to federal awards are supported by appropriate documentation and reviewed for compliance with applicable federal requirements.

The Government will implement enhanced internal control procedures to ensure that payroll expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are complete, accurate, and fully supported by transaction-level detail in accordance with 2 CFR 200.303, 2 CFR 200.403(g), and 2 CFR 200.430(i). Corrective actions will include the following: 1. Implementation of Monthly Payroll Reconciliations: The Government will establish a formal reconciliation process requiring monthly reconciliation of payroll expenditures recorded in the accounting system to detailed payroll records generated from the payroll system. o All variances will be identified, investigated, resolved, and documented. o Supporting documentation (e.g., payroll registers, timesheets, and cost allocation reports) will be retained and readily available for audit review. This aligns with enterprise expectations that reconciliation exceptions must be logged, investigated, and resolved with supporting evidence retained. 2. Development and Formalization of Standard Operating Procedures (SOPs): The Government will develop and/or enhance SOPs governing: o Payroll cost charging to federal awards o Documentation standards required to support payroll expenditures o Reconciliation procedures between payroll system and general ledger o SEFA preparation and validation procedures These SOPs will ensure consistency, completeness, and compliance with Uniform Guidance requirements. 3. Strengthening Documentation Controls: Payroll costs charged to federal awards will be supported by documentation that: o Accurately reflects the work performed o Reconciles to total compensation (100% effort) o Is incorporated into official records and retained in accordance with record retention policies Documentation reviews will be incorporated into routine processing and supervisory review controls. 4. Independent Review and Oversight: Reconciliations and payroll allocations to federal programs will be subject to supervisory or independent review to verify: o Accuracy and completeness o Proper allocation across funding sources o Consistency with grant terms and conditions Evidence of review and approval will be maintained. 5. SEFA Validation and Pre-Submission Review: Prior to finalizing the SEFA, the Government will implement a mandatory validation step requiring: o Reconciliation of SEFA totals to the general ledger o Verification that all amounts reported are supported by transaction-level payroll detail o Confirmation that all adjustments are documented and approved This aligns with established CAP practices requiring documented reconciliation outputs that demonstrate control effectiveness. 6. Training and Capacity Building: Relevant personnel will receive training on: o Federal cost principles under 2 CFR 200 o Payroll documentation and certification requirements o SEFA preparation and reconciliation expectations Training will ensure consistent application of policies and improve compliance. 7. Ongoing Monitoring and Compliance Reviews: The Government will implement periodic (quarterly) compliance reviews to: o Assess the effectiveness of payroll reconciliation controls o Ensure documentation requirements are consistently met o Identify and remediate any recurring issues timely These monitoring activities are consistent with prior CAP approaches that require periodic review of payroll documentation and reconciliation practices.

DPNR will: • Conduct a review of payroll transactions to identify any additional discrepancies between timesheets and payroll registers. • Implement a requirement for supervisory review and certification of employee timesheets prior to payroll processing. • Establish a reconciliation process requiring payroll staff to compare approved timesheets to payroll registers before final payroll approval. Grant Charge Authorization • Review personnel funding assignments to verify that salary charges are consistent with approved Notices of Personnel Action (NOPAs), grant budgets, and personnel authorizations. • Correct the employee's funding allocation to reflect the authorized grant funding source. • Establish a secondary review process to verify funding sources before payroll is posted to grant accounts. Payroll Adjustments • Review outstanding payroll adjustments and correction entries. • Process the identified correction and updated procedures to ensure adjustments are completed promptly upon discovery. • Establish tracking procedures to monitor payroll corrections through completion.

DHS adopted the electronic Timeforce (STATS) system for payroll, replacing manual processes. Time and attendance are approved through management levels, with payroll based on Notice of Personnel Action (NOPA) cost centers. Financial Analysts reconcile payroll, and a workflow ensures accurate NOPA listings for payroll purposes. Additionally, in order to ensure that Notices of Personnel Actions are updated on a timely basis, ensuring that salaries are charged to the respective account, DHS has implemented the following process: Provisional Payroll Codes are requested prior to the close of the Fiscal Year by the Department of Finance through the Office of Management and Budget through the established process. Once the codes are received, the Division of Human Resources will update the most current Personnel Distribution Sheets to reflect active employees. The sheets will be submitted to Fiscal for certification by the CFO.NOPA’s are updated with the provisional codes. Lastly, once payroll is processed by the Department of Finance (DOF), a Flex Earnings Report is generated by the Analyst on each payday. A reconciliation is then performed to ensure that all employees, along with their respective fringe benefits, are accurately captured and drawn. Following this process, DOF posts the payroll to the accounting system. The Federal Grants Financial Analyst, once onboarded, will also play a key role in ensuring that transactions are recorded in the appropriate accounting period and that costs are properly allocated. DHS has added an additional layer of monitoring with the onboarding of a Director of Federal Grants. The newly created unit of Audit and Compliance, once staffed will play a crucial role with periodic monitoring.