Corrective Action Plans

Finding #2023-003 – Significant Deficiency – Activities Allowed or Unallowed, Allowable Cost Principles 93.558 Temporary Assistance for Needy Families – Out of School Time Program 93.600 Head Start Lack of Supporting Documentation for Disbursements Condition During the audit, it was identified that supporting invoices could not be provided for three nonpayroll related disbursements. The population sampled was all nonpayroll related disbursements. Total number of selections tested was sixty-five, which comprised 2% of the total population. Recommendation We recommend that the Organization strengthen its internal control procedures to ensure that all disbursement transactions are properly supported by invoices or other appropriate documentation before they are recorded and paid. The client should implement a regular reconciliation process to ensure that recorded amounts agree with supporting documentation. Additionally, management should establish policies for the retention of documentation to ensure it is readily available for audit and compliance purposes. Management’s Corrective Action Plan The organization is in the process of updating its procedures to ensure that all disbursements are supported by invoices and that recorded amounts are regularly reconciled with supporting documentation. Additionally, the Organization will implement a formal policy for document retention to ensure audit readiness. Contact Person: Cynthia Benton, Chief Financial Officer Anticipated Completion Date: June 30, 2024

The Auditor’s Office will work with the Commissioner’s Office and Prosecutor’s Office to implement the required policies.

County management will implement a corrective plan within 45 days of this report.

Management Response #2023-005: The time keeping system and process does not currently allow tracking of time based on funded resources. The past practice had been for the finance department manually calculated salary allocations. Due to the influx of grants and staffing resources the Corporation was unable to maintain this process. Corrective Action Plan: The following action items have been or will be taken: • Finance Management, Human Resource and Payroll will work on integrating time-tracking functions with the current time-keeping system to specifically track time worked on grants in real time for fiscal year 2025. Responsible Party: Tamara Barnes, CFO

The following steps have been taken or will be taken to address Finding 2023-004: Shalom Health Care Center, Inc. has been working on updating federal grant draws within the timeframe of payroll and not monthly. Shalom Health Care Center, Inc. will also prepare semiannual attestation for management to review staff allocations. Contact Person: Michael A. Nino, Chief Financial Shalom Health Care Center, Inc. anino@shalomhealthcenter.org 317-269-7198

Finding: 2023-010 Environmental Finance Center Grants – Assistance Listing No. 66.203 U.S. Environmental Protection Agency Grant No. 539001D, Grant period July 1,2022 - September 30, 2023 Grant No. 5127620, Grant period October 1, 2022 – September 30,2023 Grant No. 5126607, Grant period July 1,2022 - September 30, 2023 Description of the Findings: For the period from October 2022 thru May 2023 U.S. Water Alliance did not have a timekeeping system in place. A timekeeping system was implemented in June of 2023, that provides for employees to record hours worked for specific cost objectives, including Federal grants. There are limitations to the timekeeping system’s capabilities. One is no availability to run timesheet reports for closed grants after the grant period ended. Second is the need to manually adjust hours transferred from the timekeeping system to payroll processing system due to semi-monthly payroll processing and the need to have total number of hours equal to 86.67 for salaried employees. For these three awards, budget estimates or relative level of effort by percent of full-time employees and active projects were used throughout the entire grant period, even after the timekeeping system was put in place. No reconciliation between the budget estimates or relative level of effort by percent of full-time employees and active projects and the hours recorded in the timekeeping system was completed even for the period in which the timekeeping system was in place. Views of Responsible Official(s) and Planned Corrective Actions: A new timekeeping system was implemented in June 2023 to allocate work hours specific to cost objectives, including Federal Grants. While there are limitations to the system, the allocations are transferred from the timekeeping system upon supervisor approval to the Prism (HRIS) Portal and used to prepare payment vouchers. From the HRIS system, we can produce labor allocation reports reflecting how the time was originally allocated in the timekeeping system. The US Water Alliance indeed operates on a semi-monthly payroll period. It has allowed the Alliance to have fixed pay dates though they may not fall on the same day of the week each month. If the pay date falls on a weekend or holiday, the pay date is typically the business day prior. Because all months are not the same length, the size of the paycheck could vary in that the first paycheck could cover 13-14 days and the second paycheck could cover 15-16 days. To eliminate the variation in the size of the paycheck, specifically for salaried employees, the total yearly salary is evenly divided between 24 payments resulting in the same paycheck amount each time. This division results in 86.67 hours paid in each paycheck and will at times require our payroll partner to adjust the hours allocated downward or upward to equal 86.67. In the rare case that work hours are adjusted upward, the work hours are allocated to the primary funding source for the position. The process has worked traditionally as the Alliance has no hourly employees. Specifically for the three awards referenced, reconciliation between the budget estimates, relative level of effort by percent of full-time employees and active projects, and the hours recorded in the timekeeping system were completed. Staff opted to continue reporting on relative level of effort by percent of full-time employees as opposed to shifting as the timekeeping system was very new and staff experienced a significant learning curve. Additionally, there were only two months left in the grant period. Relative level of effort was carefully documented internally via calendars, Monday.com project management software, and Excel spreadsheets. Since its implementation, staff have been better trained in the use of the timekeeping system. We are also transitioning to a new timekeeping system in December 2024 with enhanced reporting and ease of use. The Alliance will also shift to a bi-weekly payroll period effectively reducing the need to adjust work hour allocations upward or downward to equal 86.67 hours. Completion Date: June 2023 Responsible Official(s): ShaQuina Davis

The SAU Grant's Coordinator will be responsible for ensuring the annual grant certification form for salary employees is completed and maintained.

Finding: The Organization allowed payroll related costs to be submitted for reimbursement under the grant for time that did not match approved timesheets. This is not in compliance with program allowable cost requirements. The amount of payroll and related costs discovered to be incorrect was a net amount of $1,336, which when projected onto the remaining payroll and related costs that were not tested, amounted to $28,521. Corrective Action Taken or Planned: The Organization will review audit findings and ensure accurate future reimbursements, develop a comprehensive process for verifying time sheets against service delivery, and implement a paper timesheet system in which supervisors must enter time based on timesheets, ensuring 1:1 reimbursement. Name of Contact Person: Jacob Ducey, Grants Manager Phone Number of Contact Person: (540) 907-4555 Projected Completion Date: October 31, 2024

Audit Ref. #2023-001 Federal Awards: Special Test & Provisions – Use of Project Funds-Payroll Disbursements Name of Contact Person: Dasil Thomas-Williams, Director of Financial Affairs Corrective Action: New Employees responsible for sorting and filing timesheets will be monitored more closely. Proposed Completion Date: September 30, 2024 Contact Person: Dasil Thomas-Williams, Director of Financial Affairs Telephone Number: (340) 772-4099 ext. 45

CDFI ERP Program (COVID-19) – Assistance Listing No. 21.033 Recommendation: We recommend management develop procedures requiring employees to track their time and effort by grant. Another individual should periodically review and approve these time and effort records before the funding request is sent to the federal agency or charged to the federal award. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Each employee will track their time spent on the grant through Paychex. Timesheets will be approved by Arlo Washington, President, each payroll period. Name(s) of the contact person(s) responsible for corrective action: Arlo Washington Planned completion date for corrective action plan: January 1, 2025

Finding 2023-002: Noncompliance and Material Weakness in internal control over compliance with allowable costs/cost principles requirements. Management Response: 1. For 2024 and onwared a payroll personnel activity report has been created and will be used to validate project hours worked after the fact. Person(s) Responsible: Chief of Staff, Rita Green; Ops Admin, Cochise Moore.

Finding 2023-001 - 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 addition, the focus will be on having all proper documentation for payments made from the Town and School Treasury. Anticipated Completion Date: June 30, 2025

Condition: The Authority allocated wages and fringe benefits to the program based on the grant budget, with no adjustment made to actual time spent. Recommendation: Implement a review process to ensure the amount charged to a federal award is based on the time the employees spend on providing the services. Planned Corrective Action: This process has been corrected and only timesheet hours will be used to allocate cost going forward. Contact Person: Anthony Shaver, Chief Financial Officer Anticipated Completion Date: 9/30/2024

2023-003 Twenty-First Century Community Learning Centers - Assistance Listing No. 84.287 Material Weakness in Internal Control Over Compliance and Noncompliance - A. Activities Allowed or Unallowed and B. Allowable Costs/Cost Principles Recommendation: The Auditor recommends that the Organization establish a formal documentation process to ensure personnel costs are adequately reviewed and allocated to the federal award. Planned Corrective Action: We agree with the recommendation and plan to have the corrective action implemented by December 31, 2024. An updated timesheet policy with the correct wording will be created by the Finance Board Subcommittee at the October meeting, presented to the full Board of Directors at the November Board meeting and voted on at the December 2024 Board meeting.

As a response, the Center updated it procedures the ensure that any employee that is charged 100% to the federal grant will complete a time and effort certification at least semi-annually. Additionally, any employee that their time is charged to multiple grants or less than 100% will complete a time and effort attestation or similar effort reporting to track hours charged to the grants. This time and effort attestation will be reviewed and approved by a supervisor.

Item: 2023-003 Assistance Listing Number: 84.425U Programs: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Federal Agency: U.S. Department of Education Pass-Through Agencies: Arizona Department of Education Pass-Through Grantor Identifying Number: Unknown Award Year: April 19, 2022 to September 30, 2024 Criteria: In accordance with 2 CFR § 200.430 – Compensation – the entity’s system of internal controls should include a process to review after-the-fact interim charges made to federal awards based upon budget or allocation estimates. Condition: The entity’s system of internal controls did not include a process to review after-thefact interim payroll charges made to federal awards based upon budget or allocation estimates. Name of Contact Person: Doug Taylor, CFO Phone Number: (602) 230-1116 Anticipated Completion Date: December 31, 2024 Views of Responsible Officials and Corrective Actions: Special Olympics Arizona, Inc. revised its policies and procedures for the 4th quarter of 2023 to require that actual time be recorded on timesheets for the actual efforts spent on Federal awards. Management will utilize actual time and effort when charging expenditures to Federal awards going forward.

Item: 2023-002 Assistance Listing Number: 21.027 Programs: Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of the Treasury Pass-Through Agencies: Arizona State Office of the Governor; Maricopa County Pass-Through Grantor Identifying Number: Unknown Award Year: January 1, 2022 to December 31, 2024; January 28, 2022 to June 30, 2023 Criteria: In accordance with 2 CFR § 200.430 – Compensation – the entity’s system of internal controls should include a process to review after-the-fact interim charges made to federal awards based upon budget or allocation estimates. Condition: The entity’s system of internal controls did not include a process to review after-thefact interim payroll charges made to federal awards based upon budget or allocation estimates. Name of Contact Person: Doug Taylor, CFO Phone Number: (602) 230-1116 Anticipated Completion Date: December 31, 2024 Views of Responsible Officials and Corrective Actions: Special Olympics Arizona, Inc. revised its policies and procedures for the 4th quarter of 2023 to require that actual time be recorded on timesheets for the actual efforts spent on Federal awards. Management will utilize actual time and effort when charging expenditures to Federal awards going forward.

The Auditor found that an administrative error had been made when setting up the hourly billing rate of one employee for federal grant activities. We have audited this error, which amounted to a total of $307.44, which was charged to the Agency in error. We will reimburse the Agency for this amount. We have found no other errors of this nature. Pursuant to the recommendations of the Auditor, we will review and update our internal controls to ensure that proper procedures are in plan to review and approve the hourly rates of employees working on Agency grants.

Recommendation: We recommend procedures to maintain records that accurately reflect the work performed for payroll charges to the grant be implemented/strengthened. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Adult Education department will be collecting the Time and Effort certifications for staff on Federal grants. Name(s) of the contact person(s) responsible for corrective action: Dr. Kevin O’Connor, Claudia Castro Alves and Kate Fiore Planned completion date for corrective action plan: Effective as of 10/10/2024 so will have Time and Effort certifications for all FY25 staff on Federal grant #2340

Management Response/Corrective Action Plan: Going forward the School Nutrition staff will keep a spreadsheet documenting meals reimbursed previous fiscal years, and in each month to compare to the number of meals calculated for the current billing month.

Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The Organization has strengthened its internal controls over payroll transactions in order to comply with laws, regulations, and grant agreements. Additionally, the pass-through entity has increased its documentation requirements which helps the Organization ensure that it possesses compliant payroll documentation. Further, the Organization plans to review its personnel files to ensure that adequate documentation exists to support approved rates of pay. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Partially implemented. Personnel file review anticipated completion December 31, 2024.

Views of Responsible Officials and Planned Corrective Action - The County will create a documented process in the new policy and procedures manual for federal guidelines and charging of administrative costs for documented time spent on grants with supporting calculations will be documented for clarity and consistency. Responsible Official - Andrea Montoya, Deputy County Manager and Robert Placencio, Finance Director Timeline and Estimated Completion Date -November 2024.

The City has implemented the recommendation first contained in 2022-007. There is a process in place where supervisor review and approval of timesheets is completed and documented. That process continues and will be in place for the entirety of the fiscal year ending June 30, 2024. Responsible Person: Kevin Saycocie Expected Implementation Date: 07/01/2024

Management Response/Corrective Action Plan: Going forward the School Nutrition staff will keep a spreadsheet documenting meals reimbursed previous fiscal years, and in each month to compare to the number of meals calculated for the current billing month.

We appreciate the auditor's identification of the material weakness in our internal controls over the documentation of approved pay rates related to our federal award. We understand the importance of maintaining adequate internal controls to prevent, detect, and correct misstatements on a timely basis. 1. Documentation Process: We will implement a documentation process to ensure that all employee pay rates related to our federal award are documented and approved by management. Specifically, we will: a. Assign responsibility for documenting and approving employee pay rates related to our federal award to a specific staff member. b. Establish a process for documenting and approving employee pay rates related to our federal award, including the use of a standardized form. c. Ensure that all employee pay rates related to our federal award are documented and approved before payroll is processed. d. Investigate and resolve any discrepancies identified during the documentation and approval process related to our federal award. e. Document the documentation and approval process related to our federal award and ensure that all documentation is maintained. 2. Internal Controls: We will strengthen our internal controls over the documentation of approved pay rates to ensure that misstatements are prevented, detected, and corrected on a timely basis. Specifically, we will: a. Establish a process for reviewing all employee pay rates by management. b. Ensure that all staff members responsible for documenting and approving employee pay rates are trained on the new process and the importance of maintaining adequate internal controls. c. Document the new process and internal controls in a written policy and procedure manual. 3. Personnel: We will ensure that personnel changes do not impact our internal controls over the documentation of approved pay rates. Specifically, we will: a. Cross-train staff members to ensure that there is adequate coverage for all employee pay rates. b. Establish a process for documenting and communicating changes in personnel responsibilities related to the documentation and approval of employee pay rates. We believe that these corrective actions will effectively address the material weakness identified by the auditor and strengthen our internal controls over the documentation of approved pay rates. We are committed to ensuring the accuracy and integrity of our financial reporting and maintaining the trust of our stakeholders. Person Responsible: Anthony Jayesingha Date Corrected: 7/31/2023