Corrective Action Plans

Clean Water State Revolving Fund – ALN: 66.458 Finding: Schedule of Expenditures of Federal Awards Preparation Recommendation: Procedures should be implemented to ensure completion of an entry to the Schedule of Federal Expenditures of Federal Awards to achieve a reliable reporting of total expenditures for an audit period. Action Taken: The City of Hartwell recognizes its responsibility to prepare and present an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with Uniform Guidance. To address this finding, the City will implement formal written procedures for the preparation and review of the SEFA.

Finding 2023-006 – Reporting Assistance Listing 21.027, Coronavirus State and Local Fiscal Recovery Fund The management has taken corrective action to ensure accurate SEFA reporting. These actions include clarifying reporting timelines, improving coordination between finance and the grants management team, and implementing new policy and procedures for SEFA reporting. Finance and grants management staff will jointly review all grant activity at year-end to ensure proper inclusion in SEFA. Management acknowledges the importance of accurate SEFA reporting and is committed to strengthening internal controls to prevent similar issues in future reporting periods. Responsible Official: Annaliza Villamin, System Director of Accounting, Endeavor Health

Finding 2023-001 – Reporting Assistance Listing Multiple In the immediate term, management will work with the grant consultant to modify the existing report to capture all the costs in the general ledger related to grants. Management will start a quarterly review process of the report with reconciliation to the grant detail. In addition, prior to the UG audit, management will start a year-end review process to ensure accurate and timely reporting. Responsible Official: Annaliza Villamin, System Director of Accounting, Endeavor Health

Management’s Response and Corrective Action Plan: Grant review is included within the month-end close procedure referenced in the response to 2023-001. The procedure includes defined roles and responsibilities by position.

As stated in the finding (2023-005) the Village was unaware of the monies being Federal Monies as they were received from a State of Ohio distribution, and after a discussion with the auditors the Village prepared the required reports. The village, being a small municipality, does not receive federal funds routinely and I believe the Coronavirus funds will not be something the village anticipates receiving in the future. – Mayor M. Shane Patrone

The Board of County Commissioners, with the cooperation of all elected officials and officers responsible for the receipt or expenditure of federal funds, will evaluate the processes and procedures currently in place to ensure the accuracy of SEFA reporting and detect potential inaccuracies and/or misstatements.

The School District will review the Uniform Guidance requirements and ensure all expenditures are accurately reported on the School District’s Schedule of Expenditures of Federal Awards.

2023-02 Expenditures of Federal Awards Corrective Action Plan: Develop and implement procedures to maintain adequate accounting records that accurately track expenditures by individual Federal programs, ensuring compliance with reporting requirements and transparency in fund utilization. 1. Immediate Assessment: Conduct a comprehensive assessment of current accounting practices and records to identify deficiencies in tracking expenditures by Federal programs. Determine the scope and extent of inaccuracies or gaps in documentation. 2. Engage Accounting Expertise: Engage a third-party CPA firm experienced in governmental accounting and Federal grant compliance to assist in resolving the issue. 3. Review Federal Program Requirements: Review the requirements of each Federal program under which funds are received. Identify specific reporting and expenditure tracking requirements mandated by each program. 4. Develop Chart of Accounts: Develop or revise a detailed chart of accounts that clearly distinguishes expenditures by each Federal program. Assign unique codes or identifiers to transactions associated with each program. 5. Implement Segregation of Expenditures: Implement procedures to segregate expenditures by Federal program at the time of recording. Ensure all transactions are allocated accurately to the appropriate program based on the chart of accounts. 6. Document Expenditure Allocation: Document the allocation of expenditures to specific Federal programs clearly and comprehensively. Maintain supporting documentation such as invoices, receipts, and payroll records that substantiate the allocation. 7. Training and Capacity Building: Conduct training sessions for accounting staff involved in recording and reporting expenditures. Train them on the new procedures, chart of accounts, and the importance of accurately tracking expenditures by Federal program. 8. Regular Reconciliation and Reporting: Implement a process for regular reconciliation of expenditures with Federal program requirements. Ensure reconciliation is performed monthly or quarterly to identify discrepancies promptly. 9. Internal Controls and Monitoring: Strengthen internal controls to prevent future inaccuracies in expenditure tracking. Assign responsibility for oversight and monitoring of compliance with the new procedures. Timeline for Implementation: Ongoing: Maintain vigilance over compliance and adjust as needed. Conclusion: By implementing this corrective action plan, we aim to establish robust accounting practices that accurately track expenditures by individual Federal programs. This will ensure compliance with reporting requirements, enhance transparency in fund utilization, and mitigate risks associated with inaccurate financial reporting. This plan outlines our commitment to addressing the current deficiencies and establishing a sustainable framework for future operations. Responsible Party: Kimberley Chaffin, Executive Director Date of Implementation: October 1, 2023

VIEWS OF RESPONSIBLE OFFICIALS Regarding this finding as it relates to SEFA preparation, we similarly note that grant-level accounting and internal control procedures are supported by PRIFAS. Moreover, the grant-level accounting and internal control are being strengthened through initiatives set forth in the 2024 Certified Fiscal Plan, certified by FOMB. Section 3.1.2.4 (“Improve federal funds management”) calls for the consolidation of grant management under a centralized financial framework. This will improve transparency and visibility of federal and non-federal funds, enable accurate budgeting aligned with strategic priorities, and ensure compliance requirements are clearly understood by both individual agencies and the Puerto Rico Treasury Department. In conjunction with the ERP rollout, the Plan calls for establishing a central Grants Management Office tasked with enhancing oversight and compliance, supporting corrective-action follow-up on single audit findings, building local capacity to maximize federal funding, and codifying best practices. IMPLEMENTATION DATE During Fiscal Year 2025-2026. RESPONSIBLE PERSON Office of the Secretariat and Administrations

Finding 2023-003 - Material Weakness in Internal Control over Compliance and Material Noncompliance (Qualified Opinion) - Inadequate Tracking of Expenditures and Retention of Documentation: Activities Allowed or Unallowed: Allowable Costs/Cost Principles and Reporting (A/B/L) for Assistance Listing Number 19.510 and 93.567 Criteria: The Code of Federal Regulations (CFR) Section 200.510(b) states in part, “The auditee must also prepare a schedule of federal expenditures for the period covered by the auditee’s consolidated financial statements which must include the total Federal awards expended as determined in accordance with 200.502.” Also, in accordance with CFR Section 200.302(b) - Financial Management, the auditees financial management system must provide 1) identification of all federal awards received and expended; 2) accurate, current, and complete disclosure of the financial results of each federal award or program; 3) records that identify adequately the source and application of funds for federally‐funded activities; 4) effective control over, and accountability for, all funds, property, and other assets; 5) comparison of expenditures with budget amounts for each Federal award; 6) written procedures to implement the requirements of section 200.305 and; 7) written procedures for determining the allowability of costs in accordance with Subpart E and the terms and conditions of the Federal award. Recipients of federal awards must submit accurate, complete and timely financial and performance reports. The Organization should have internal controls designed to ensure compliance with those provisions. The Organization should retain sufficient documentation such as invoice and allocation support for expenditures to retain documentation for audit purposes. Condition: During detail testing of expenditures, it was noted that the Organization did not maintain adequate documentation to support how certain costs were allocated to the federal program. Several transactions lacked sufficient detail, such as invoice or expense reimbursement form. Several expenditures selected for testing did not obtain sufficient approval by an individual at the Organization. It was noted that quarterly reports provided to the federal program were not reviewed by an individual at the Organization prior to submission to ensure accurate report of expenditures. Cause: The Organization does not have an adequate system in place to ensure quarterly reports have sufficient supporting documentation, proper approval/review, and accurate reporting prior to submission. Responsibilities for expenditure tracking were not clearly assigned, and there was no formal review process in place. The Organization is not following their Document Retention Policy. Effect: The effect of this condition increases the possibility that quarterly financial reports are misstated or inaccurate and increase the risk of noncompliance with federal requirements. The effect of this condition also increases the risk that expenditures are unallowable per the grant, federal regulations, or cost principles due to the insufficient support of proper approval retained. Questioned costs: None Repeat Finding: Yes - 2022-004 Recommendation: Policies and procedures should be in place to ensure quarterly financial reports are properly supported, accurately reported, and adequately approved and reviewed. A formal review process should be established to ensure compliance. The Organization should following the Document Retention Policy that was put in place and required by law. Management Response: There is no disagreement with the audit finding. Management has taken steps to address these deficiencies in fiscal year 2025 including but not limited to: the implementation of a new accounting system that includes document retention and review/sign off logs, the engagement of a third-party CPA firm to provide client advisory and accounting services and the review and updating of accounting policies and procedures for best practices. Responsible Person for Corrective Action Plan: Marc Hall, Director of Operations Implementation Date for Corrective Action Plan: Fiscal year 2025

2023 – 004 Material Weakness in Internal Control Over Preparation, Reconciliation, and Retention of the Schedule of Expenditures of Federal Awards (SEFA) Recommendation: 4. Develop a Standardized SEFA Reconciliation Process – Implement formal policies and procedures requiring that SEFA expenditures be reconciled to the general ledger on a monthly basis, with documentation maintained for audit purposes. 5. Enhance System Controls for Grant Expenditures – Modify the financial system to allow for the proper segregation of state and federal expenditures from non-grant funds, ensuring that expenditures are properly classified at the time of entry. 6. Require Monthly Documentation Reviews – Establish a control requiring management to review and approve SEFA reconciliation schedules on a monthly or quarterly basis to ensure accuracy and completeness. 7. Implement a Centralized Documentation Retention Policy – Require that all SEFA-related reconciliation records, including general ledger tie-outs and manual adjustments, be retained in a centralized, accessible location. 8. Provide Grants Management Training – Conduct training for grants management and accounting personnel on SEFA preparation requirements, including Uniform Guidance compliance and best practices for documentation and reconciliation. Management View: Management partially agrees with the finding. While we acknowledge that documentation supporting SEFA reconciliation was incomplete, we believe that federal expenditures were properly accounted for. We would like to address some of the auditors’ points individually: • “The SEFA is prepared based on amounts requested for reimbursement instead of directly based on expenditures incurred.” Most grant awards do not fully fund the programs they support, most grant awards do not run concurrently with Prism Health North Texas’ fiscal year (i.e., with the Calendar Year), and most grant awards are not spent in equal monthly amounts. It is correct that the 2023 SEFA was based on grant-appropriate expenditures that occurred during Calendar Year 2023 and were submitted to those grant sponsors for reimbursement. This will not necessarily reach the full cost to Prism for each grant-supported program, nor is it likely to exactly match any annual grant award amount. • “Expenses recorded in the general ledger represent expenses incurred to operate the program in addition to direct grant expenditures; the Organization only requests reimbursement for direct program expenditures allowable under the program.” As we confirmed verbally with the audit partner on April 25, 2025, this statement is intended to provide information and context and is not a criticism or intended to point out any problem. As stated above, most grant awards do not fully fund the programs they support; therefore, the general ledger necessarily includes both expenses the sponsor will reimburse and expenses the sponsor will not reimburse. Nonetheless, we are enhancing our reconciliation procedures and documentation practices to fully meet audit requirements. Finding 2023-004 refers to the auditors’ assessment of the SEFA preparation and reconciliation processes that occurred in Calendar Year 2023. As of this writing, Prism Health North Texas has already changed its SEFA preparation and reconciliation processes and meets many of the recommendations above. Action Taken: 4. Documentation Retention – On April 25, 2025, management created a structured and easily accessible system for storing all relevant information for all grants management personnel. a. A logical naming system for files identifying the SEFA period, the funding agency and identified general ledger expenditures claimed on the SEFA. b. We are now documenting the difference between all GL transactions and those submitted for sponsor reimbursement (i.e., SEFA components) in a single document per fund code, arranged by fiscal year. Previously this documentation was kept by invoice and arranged by grant year. c. Management will continue to ensure all expenditure-related support, such as invoices and purchase orders, is saved electronically to all financial transactions. 5. SEFA Reconciliation – Management has decided to move from an annual to quarterly SEFA reconciliation process to enhance the frequency of management oversight in SEFA draft preparation. VP of Finance will prepare the SEFA for independent review by the CFO. This will be put into a written policy/procedure. 6. System Enhancements – Prism’s current accounting system does not accommodate this. However, Prism is already in the later stages of selecting a new Enterprise Resource Planning (ERP) solution, with this as one of our key selection criteria. Our new ERP should allow for expenditures within the same cost center to be identified as grant-reimbursable or non-grant-reimbursable at the time of entry. We have identified opportunities in new financial management software solutions that we are scheduled to demo May 12th and the 16th of 2025. Opportunities such as: a. The ability to tag grant-reimbursable transactions, to segment our award cost center into two important categories. i. The full cost to manage a specific program ii. Identified cost claimed on the SEFA b. Dedicated grant modules that will allow us to establish business rules and workflows to streamline and digitize critical aspects of grant management. 7. Staff Engagement – Cross department coordination meetings occur monthly between the Finance organization and the Grants Management team to continue to foster alignment and collaboration in our grant cycles. A general overview of SEFA, including how to prepare and organize the monthly reconciliations, has already occurred with some of the grants accountants. Anticipated Completion Date: We expect all but system enhancements to be in place by July 31st, 2025, to contribute significantly to the strength of our internal controls and stakeholder confidence in our SEFA reporting. Responsible Contact Person(s): • Name: General Laffitte • Title: Vice President of Finance and Accounting • Phone: 214-623-6896 • Address: 3900 Junius St. Ste. 300, Dallas, Texas 75246 • Name: Jana Voege • Title: Chief Financial Officer • Address: 3900 Junius St. Ste. 300, Dallas, Texas 75246

CORRECTIVE ACTION PLAN Name of auditee: Friends of the Mission Finding: 2023-003 Name of audit firm: Propp Christensen Caniglia LLP Period covered by the audit: January 1, 2023 through December 31, 2023 CAP prepared by: Scott Thurmond, Executive Director Telephone: (916) 416-0901 Comments: Management agrees with the finding. Actions: Management has taken steps to ensure the SEFA is prepared accurately and timely.

Views of responsible officials and planned corrective actions: Management acknowledges the omission of the federally contract from the auditee’s prepared SEFA. Management is committed to properly preparing the SEFA, and to address this oversight, management will identify trainings for accounting personnel related to SEFA reporting and for those reviewing the schedule, to ensure its accuracy.

Finding Number: 2023-007 Condition: Controls in place were not adequate to ensure the schedule of federal expenditures was complete and accurate. Planned Corrective Action: Reports in Workday along with new reconciliation workpapers will be utilized to ensure a complete and accurate SEFA in FY2025. Contact person responsible for corrective action: Laura Randall Anticipated Completion Date: 06/30/2025

Finding Number 2023-005 Condition: The FEMA expenditures on the schedule of expenditures of federal awards (SEFA) initially presented for audit were not complete and accurate. Planned Corrective Action: Seek training from our auditors on the proper recording of obligated expenditures. Contact person responsible for corrective action: Laura Randall Anticipated Completion Date: 06/14/2024

Corrective Action Plan: The Authority will develop a new procedure to ensure compliance with these reporting requirements. All personnel involved in the administration of these programs for which federal funds are expended should receive adequate training about federal compliance and reporting requirements related to such programs. In addition, an individual should be assigned with the responsibility to monitor compliance with all related federal requirements. These procedures will also include a quarterly reconciliation of amounts reported between the Schedule of Federal Awards with the trial balance. Responsible: Mr. Angel M. Felix Cruz, Finance Office Auxiliary Director Ms. Maria Del R. Ramos Ocasio, Accounting and Finance Manager Status: In process. Expected to be completed on or before December 31, 2024.

ALN Number and Name: Not applicable Significant deficiency Management’s Planned Corrective Action: Disagree: We have established a cost center or “Department” for each federal program that clearly identifies federal expenditures. Our funders request monthly copies of receipts and payment issued to verify expenses. Responsible Party: Beaulieu Accountancy Corporation, Accountant Completion Date: 9/25/2024

2023-009- Reporting Federal Agency: U.S. Department of the Treasury Federal Program Name: American Rescue Plan Act / Coronavirus State Fiscal Recovery Fund (ARPA) Assistance Listing Number: 23.027 Federal Award Identification Number and Year: Various Pass-Through Agency: Pennsylvania Department of Health and Human Services Pass-Through Number(s): Not Available Award Period: 1/1/2023 – 12/31/23 Type of Finding: Significant Deficiency in Internal Control Over Compliance Condition: Policies and controls in place regarding the completeness of the SEFA were not properly functioning. Within the supporting listing of expenses relating to ARPA expenditures, multiple transactions were identified as 2022 fiscal year expenditures that were included in the 2023 expenditure total. The County revised the 2023 SEFA to exclude the 2022 expenditures. Recommendation: We recommend management should review the process of recording federal expenditures to determine expenditures are being included in the appropriate fiscal year. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action planned and taken in response to finding: The reason for the finding’s recurrence is in part a result of the timing of when the finding was issued. For example, the 2022 Single Audit was issued in August 2024. At this point, the 2023 fiscal year was already complete. Additionally, the implementation of corrective actions are in progress, including providing training, oversight and guidance to departments administering the grants, but these efforts take time to complete and/or are ongoing. A Deputy Controller of Grant Accounting was hired in February 2023, and a Manager-Grant Accounting was hired in July 2024, after working in this capacity as a temporary staff member since mid-2023. The County approved an additional full-time grant accounting position in May 2025 and will begin recruiting for this position in June 2025. These positions are responsible for establishing accounting policies based on best practices for grant-related activities, developing and providing training and resources to grant- funded departments, reviewing grant-related accounting in the Infor system, preparation of the annual SEFA, and assisting in the facilitation and preparation of documents needed for the Single Audit. The work performed by these positions had been vacant since the departure of Internal Audit Staff who helped General Accounting prior to the 2021 audit as well as the SEFA. Several changes have been made since the grant accounting team was created including the following: The grant accounting team is developing streamlined and standardized SEFA templates for each department for SEFA preparation. The expenditures reported on each SEFA are being compared to the financial information in the GL where possible to ensure all appropriate expenditures are included. Additionally, we are incorporating tracking of lifetime grant expenditures into the SEFA process to ensure no expenditures are missed due to cut off or timing issues. In 2023, the grant accounting team created a Montgomery County Grant Repository. This repository is used to store all grant agreements awarded to the County. Departments submit grant information to the repository upon notification of grant award. The grant accounting team reviews the Grant Repository when preparing the SEFA to ensure no grant programs are inadvertently left off of the SEFA. Additionally, the availability of the Grant Repository enables members of the accounting, finance and grant departments to quickly access grant award information when needed for audits, reporting, or other requirements. The grant accounting team is continuing to review and update the County’s Grant Accounting policies and is working closely with departments to understand their utilization of Infor to account for grant- related activities. As these policies are formalized, we will continue to provide training and resources; in late 2023, the County hired an outside trainer to provide an in-depth training on the accrual method of accounting, grant accruals, and the treatment of grant revenue. The Grant Accountant provided training in April 2024 to explain and outline the SEFA and Single Audit processes. Grant-funded departments received a two-day training on utilization of the Grant Management components of Infor in February 2024. We are also providing guidance and education to departments on the differences in timing of various grant fiscal years and how these impact the financial audit, SEFA and Single Audit. For example, departments must understand how to report expenditures and receipts in the correct period regardless of the fiscal year associated to the contract (State: July-June; Federal: October-September; County: January-December) and understand how these amounts reconcile to the amounts reported to the funding agencies. The accounting department continues to work with departments to emphasize the importance of submitting financial documentation timely and reviewing what is in the General Ledger promptly at the end of each month. The Finance department is performing quarterly reviews with departments to go over financial status, including grant financials. Departments are continuing to utilize Project Codes and other components of Infor’s Grant Management System to ensure the proper accounting of grant-related expenses, receipts, and revenues in the GL. Name(s) of the contact person(s) responsible for corrective action: Thomas Landauer and Fonta Reilly Planned completion date for corrective action plan: September 2025

2023-008 – Reporting Federal Agency: U.S. Department of the Treasury Federal Program Name: Emergency Rental Assistance Program (ERAP) Assistance Listing Number: 23.023 Federal Award Identification Number and Year: Various Pass-Through Agency: Pennsylvania Department of Health and Human Services Pass-Through Number(s): Not Available Award Period: 1/1/2023 – 12/31/23 Type of Finding: Significant Deficiency in Internal Control Over Compliance Condition: Policies and controls in place regarding the completeness of the SEFA were not properly functioning. Within the supporting listing of expenses relating to ERAP expenditures, six transactions were identified as prior fiscal-year expenditures that were included in the unadjusted 2023 expenditure total. The County revised the 2023 SEFA to exclude the 2022 expenditures. Recommendation: We recommend management should review the process of recording federal expenditures to determine expenditures are being included in the appropriate fiscal year. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action planned and taken in response to finding: The reason for the finding’s recurrence is in part a result of the timing of when the finding was issued. For example, the 2022 Single Audit was issued in August 2024. At this point, the 2023 fiscal year was already complete. Additionally, the implementation of corrective actions are in progress, including providing training, oversight and guidance to departments administering the grants, but these efforts take time to complete and/or are ongoing. A Deputy Controller of Grant Accounting was hired in February 2023, and a Manager-Grant Accounting was hired in July 2024, after working in this capacity as a temporary staff member since mid-2023. The County approved an additional full-time grant accounting position in May 2025 and will begin recruiting for this position in June 2025. These positions are responsible for establishing accounting policies based on best practices for grant-related activities, developing and providing training and resources to grant- funded departments, reviewing grant-related accounting in the Infor system, preparation of the annual SEFA, and assisting in the facilitation and preparation of documents needed for the Single Audit. The work performed by these positions had been vacant since the departure of Internal Audit Staff who helped General Accounting prior to the 2021 audit as well as the SEFA. Several changes have been made since the grant accounting team was created including the following: The grant accounting team is developing streamlined and standardized SEFA templates for each department for SEFA preparation. The expenditures reported on each SEFA are being compared to the financial information in the GL where possible to ensure all appropriate expenditures are included. Additionally, we are incorporating tracking of lifetime grant expenditures into the SEFA process to ensure no expenditures are missed due to cut off or timing issues. In 2023, the grant accounting team created a Montgomery County Grant Repository. This repository is used to store all grant agreements awarded to the County. Departments submit grant information to the repository upon notification of grant award. The grant accounting team reviews the Grant Repository when preparing the SEFA to ensure no grant programs are inadvertently left off of the SEFA. Additionally, the availability of the Grant Repository enables members of the accounting, finance and grant departments to quickly access grant award information when needed for audits, reporting, or other requirements. The grant accounting team is continuing to review and update the County’s Grant Accounting policies and is working closely with departments to understand their utilization of Infor to account for grant- related activities. As these policies are formalized, we will continue to provide training and resources; in late 2023, the County hired an outside trainer to provide an in-depth training on the accrual method of accounting, grant accruals, and the treatment of grant revenue. The Grant Accountant provided training in April 2024 to explain and outline the SEFA and Single Audit processes. Grant-funded departments received a two-day training on utilization of the Grant Management components of Infor in February 2024. We are also providing guidance and education to departments on the differences in timing of various grant fiscal years and how these impact the financial audit, SEFA and Single Audit. For example, departments must understand how to report expenditures and receipts in the correct period regardless of the fiscal year associated to the contract (State: July-June; Federal: October-September; County: January-December) and understand how these amounts reconcile to the amounts reported to the funding agencies. The accounting department continues to work with departments to emphasize the importance of submitting financial documentation timely and reviewing what is in the General Ledger promptly at the end of each month. The Finance department is performing quarterly reviews with departments to go over financial status, including grant financials. Departments are continuing to utilize Project Codes and other components of Infor’s Grant Management System to ensure the proper accounting of grant-related expenses, receipts, and revenues in the GL. Name(s) of the contact person(s) responsible for corrective action: Thomas Landauer and Fonta Reilly Planned completion date for corrective action plan: September 2025

COVID-1 9 Coronavirus State and Local Fiscal Recovery Funds — Assistance Listing No. 21 .027 Recommendation: We recommend the District design controls to ensure an adequate review process over the invoices recorded and presented on the schedule of expenditures of federal awards to determine compliance with the Uniform Guidance. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The District’s policies will be updated and approved if needed to conform to federal guidance. Name(s) of the contact person(s) responsible for corrective action: Ron McEachern, General Manager or Delia Stoor, Accounting Manger Planned completion date for corrective action plan: September 30, 2024

While PCRI does have systems in place to adequately track federal expenditures, the preparation of the schedule of federal expenditures was delayed in large part due to the deficiencies outlined in Finding 2023-001, which led to delays in accurately compiling the information required for the schedule of federal expenditures, and that the transition of relevant accounting processes to the outsourced accounting firm will resolve this deficiency going forward. The timeline for full transition of relevant accounting processes to the outsourced accounting firm which started in January of 2025 is approximately seven months due to the complexities of PCRI’s operations. PCRI anticipates this transition being complete in July of 2025.

The University will review and enhance its procedures and internal controls to ensure the SEFA is complete and accurate.

Sites Authority staff did not understand the requirements that expenditures included in the Schedule of Expenditures of Federal Awards (SEFA) be provided on an accrual basis. As such, the first SEFA submittal was based on actuals. Staff was informed by the auditor that the SEFA submittal should be based on an accrual basis. The team submitted a SEFA based on an accrual basis. Staff made a mistake of not including in the SEFA 25% of a $180,000 ($45,000) payment. This $45,000 omission was less than 0.4% of the total expenditures of $10,697,736 included in the SEFA. There were 634 invoices processed with thousands of expense items used to prepare the SEFA. Staff will document in its internal SEFA procedure the appropriate federal CFR sections for SEFAs to ensure such sections and requirements are met. The recommended training will occur before end of FY24 to avoid this recurring in the Dec 31, 2024 audit report.

Views of Responsible Officials: SAMU has identified the following actions point: 1. Implement a thorough review process for all funding streams to determine if they are federal, state, or private. 2. Establish clear guidelines for identifying and tracking federal awards. 3. Provide training to accounting staff on the proper application of ASC 958, particularly regarding the recognition of conditional awards. 4. Develop a checklist for SEFA preparation to ensure all required elements are included and properly reported. 5. Consider seeking expert advice or additional training on federal award accounting and reporting. By implementing these measures, SAMU can improve the accuracy of its SEFA, ensure compliance with federal regulations, and provide a more reliable basis for audit procedures.

2023-001 Program: Highway Planning and Construction Federal Financial Assistance Listing No.: 20.205 Federal Agency: U.S. Department of Transportation Pass-through: Metropolitan Transportation Commission Award Year: 2023 Grant Award Number: MTC/STP Agreement Compliance Requirements: Other - Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b)- Schedule of expenditures of Federal awards Recommendation: VTA should establish policies and implement internal controls to ensure all federal expenditures are accurately identified on the Schedule of Expenditures of Federal Awards (SEFA). Corrective Action: VTA will reinforce its system of internal control in communicating timely the Catalog of Federal Domestic Assistance (CFDA) number to the department preparing the SEFA. CFDA of direct and pass-through grants will be obtained from the Federal Transit Administration (FTA) and related grantors, respectively. If the CFDA number of a grant is not available at the time of preparation of SEFA, this will be identified accordingly. Responsible Party: The Fiscal Resources Manager and the Transportation Planners, Grants Implementation Date: March 31, 2025