Corrective Action Plans

Federal Agency: U.S. Department of Transportation Program/Cluster: Highway Planning and Construction Federal Assistance Listing Number: 20.205 Pass‐through: California Department of Transportation Award No. and Year: 5923, 2022/2023 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. All Public Works contracts receiving federal funding will be evaluated to determine if the vendor is a contractor or subrecipient going forward. This practice is already followed for the other divisions within the Department, and Public Works will now be included. Responsible Individual(s): James Bezek, Director of Resources Management Anticipated Completion Date: June 30, 2024

Federal Agency: U.S. Department of Housing and Urban Development Program/Cluster: Housing Voucher Cluster Federal Assistance Listing Number: 14.871, 14.879 Pass‐through: n/a – direct award Award No. and Year: CA131, 2022/2023 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Views of Responsible Officials and Corrective Action Plan: The subrecipient agreement was updated to include required federal award identification elements and was approved by the Board of Supervisors and executed on July 25, 2023. Discussion between the County and the City of Vacaville, including several meetings about the new contract took place throughout the audit period of July 1, 2022 and June 30, 2023. The risk assessment was completed in November 2022. The risk assessment will be updated on an annual basis going forward. A site visit was conducted in December 2022. Monitoring activities were occurring for this contract but were not formally documented. Documentation will be retained as support monitoring activities are occurring for this contract going forward. Responsible Individual(s): James Bezek, Director of Resources Management Anticipated Completion Date: June 30, 2024

Reference Number: 2023-002 Prior Year Finding: Yes, 2022-023 Federal Agency: U.S. Department of Labor Department Name: Mississippi Department of Employment Security Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: 7/1/22 – 6/30/23 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. 2 CFR section 200.332 also states that pass-through entities must: (d) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: 1) The subrecipient's prior experience with the same or similar subawards; 2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F - Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; 3) Whether the subrecipient has new personnel or new or substantially changed systems; 4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (e) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521 Management decision. (f) Verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements. Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Mississippi Department of Employment Security (MDES) was unable to provide documentation of subaward agreements and monitoring activities performed. Context: Six subrecipients were selected for testing and the following exceptions were noted:  1 of 6 subawards was not available for audit. Auditors were unable to verify if the subaward contained all required information nor if it was reviewed and approved by appropriate program staff prior to issuance.  For 3 of 6 subrecipients, MDES was unable to provide documentation that it performed monitoring activities nor that it ensured the subrecipients were audited as required by Subpart F. Questioned costs: Undetermined. Cause: Internal controls were not sufficient to ensure that copies of subaward agreements were maintained and available for audit, nor that it maintained documentation of subrecipient monitoring activities performed. Effect: Auditors were unable to verify that subawards were issued in accordance with Federal requirements nor that the subrecipients had been adequately monitored and were audited as required by Subpart F. Recommendation: MDES should review and enhance internal controls and procedures to ensure that it maintains copies of all subaward agreements, that proper subrecipient monitoring is conducted, and that evaluation of independent audits is performed for all subrecipients. Copies of subawards and documentation of subrecipient monitoring activities should be readily available for audit. Views of responsible officials: MDES Response MDES concurs with this finding. Corrective Action Plan: a. MDES Plan: MDES will establish a checklist to verify receipt of the documents responsive to this compliance requirement. Using the checklist, MDES will ensure that all documents indicated in this finding will be readily available for the auditors as early as possible in the audit process. Additionally, MDES will develop a timeline and plan for the submission of documentation to ensure timely review. b. Contact Person Responsible: Director of Grant Management. c. Anticipated Corrective Action Plan Completion Date: July 31, 2024.

Assistance listing numbers and program names: 84.010 Title I Grants to Local Educational Agencies 84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) Agency: Arizona Department of Education (ADE) Name of contact person and title: Dr. Sarka White, ADE Deputy Associate Superintendent Anticipated completion date: December 15, 2024 Agency’s response: Concur The Arizona Department of Education (ADE) has already begun implementing a program to ensure accurate and quality programmatic monitoring for all ESEA programs which specifically requires LEAs to meet 100% of the requirements of all statutorily required items to be monitored regardless of CMO affiliation. This development of programmatic monitoring will design a system of integrity to allow each LEA to have unique monitoring findings and ensure they are treated as all other LEAs regardless of management status. The Arizona Department of Education (ADE) is finalizing all program policies and procedures along with field training and staff training on how this program is implemented. ADE began providing an assurance document to charters in May 2024 which asks the charters to assure that if they do business with a CMO, the CMO does not have fiscal or operational authority for the LEA. The charter is asked to submit to ADE a copy of their organizational chart, along with the assurances document. Grants Management has created a new user role in the Grants Management Enterprise (GME) system, called the LEA Contracted Update role. This role allows a CMO person the access to perform fiscal tasks for which they have been contracted but does not hold the final submit or approve capacity, that must be reserved for authorized employees of the LEA. Grants Management has provided the placeholder for the assurance and organizational chart in the LEA Document Library, along with the communication to eligible entities (charters in this case). Individual program areas within ADE who review and approve funding applications will be responsible for verifying the assurances have been signed and uploaded and only authorized people at the LEA are actioning funding applications in GME prior to the program area giving director approval to the application.

Assistance listing numbers and program names: 84.010 Title I Grants to Local Educational Agencies 84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) Agency: Arizona Department of Education (ADE) Name of contact person and title: Nicole Von Prisk, ADE Deputy Associate Superintendent of Grants Management Matt McClary, ADE Compliance Officer Anticipated completion date: April 2025 Agency’s response: Concur • Tech team supervisor will have someone from that team put eyes on the initial generated report to compare results to prior year, looking at total number of LEAs, then greenlighting the initial report for the Tech Director and the Fiscal Director to review. • Once the Fiscal and Tech Directors receive the report, they will be responsible for sampling the data that populated into the report, by looking at overall numbers who Pass, Pass with Exception, or Fail and doing a comparison for analysis to prior year summary results. They will conduct a random sampling, comparing totals to latest AFR totals, to ensure amounts populated correctly. Once random sampling has been completed, it will be sent to Deputy Associate Superintendent for final checks. • Deputy Associate Superintendent will give final approval to move to public display of data, after confirmation of completeness and accuracy of data populated.

Assistance listing numbers and program names: 84.010 Title I Grants to Local Educational Agencies 84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) Agency: Arizona Department of Education (ADE) Name of contact person and title: Dr. Sarka White, ADE Deputy Associate Superintendent Chris Brown, Business Officer of Education Programs Anticipated completion date: February 2025 Agency’s response: Concur • The Arizona Department of Education (ADE) has already begun to document and execute practices addressing the recommendations issued by the auditor's office. • ADE has already drafted a comprehensive policies and procedures document outlining eligibility, duties, and responsibilities with individuals who oversee and double-check the work. This document was created and refined by reviewing other states’ procedures, federal technical assistance groups, communications with the Title federal program office at the United States Department of Education, and internal procedures in other units. • The Title I unit has been restructured to have an operations team with multiple staff members overseeing data quality and internal controls for allocations. This updated structure ensures that multiple individuals are involved in the allocation process. Staffing for this should be completed by February 2025. • The updated processes include entity management to determine when charter LEAs open and operate each year. Now, other systems validate this information instead of copying the information from the prior year. As such, this item has already been completed. • Finally, the department will follow up with the United States Department of Education (USED) regarding recalculating the fiscal year 2023 and the six ineligible LEAs for Title II funds to determine feasible processes and resolutions to each audit recommendation.

Assistance listing numbers and program names: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 84.425C COVID-19 Education Stabilization Fund –Governor’s Emergency Education Relief (GEER) Fund Agency: Arizona Governor’s Office of Strategic Planning and Budgeting (Office) Name of contact person and title: Sarah Brown, Director Anticipated completion date: July 31, 2025 Agency’s response: Concur During fiscal year 2024, the Office took significant corrective action to improve subrecipient monitoring by developing and implementing a comprehensive subrecipient monitoring plan. This plan includes the following: • Financial Report-Reimbursement Requests—The Office reviews the grantee's financial reports to ensure costs align with the approved budget, program objectives, and federal cost principles. • Performance Reports—The Office reviews the submission of programmatic reports. The timelines for submission and frequency of the programmatic activity reports are defined in the terms and conditions of each award. The program activity reports document that all program requirements are being satisfactorily fulfilled. Grantee outreach is conducted when performance activity is lagging. Grantee check-ins and/or additional milestones are set to ensure goals are met. The Office may amend or terminate the grant award if sufficient progress is lacking. • Single Audit Reports—The Office confirms any required Single Audits and reviews a copy of the most recent report. • A Single Audit Questionnaire is distributed to grantees annually to confirm if the entity is subject to this federal audit requirement. • The Office also reviews total payments issued to an entity by the Office in the prior year to confirm if disbursements met the audit threshold. • The Office requests grantees submit their Single Audit Reporting Package (SARP) with any findings and the required Corrective Action Plan. In addition, the Office collects SARPs from the federal clearinghouse. • The Office reviews SARPs for any findings and conducts follow-up monitoring of CAPs that impact any grant funding managed by the Office. Management decisions are issued to grantees as required for specific grant findings. • Risk Assessment (RA)—The Office conducts a Risk Assessment (RA) of grantees when applying for grants to inform the grant award decision and possible grantee oversight or restrictions. Additionally, the Office conducts an annual RA of any grantee currently awarded funding. • The RA contains a self-assessment for the grantee to complete and an internal review conducted by the Office. Scores from both are weighted and used to calculate the overall risk score for each grantee as high, medium, and low risk. • The Office utilizes the RA results to prioritize high-risk grantees, which are reviewed through a desk or on-site monitoring. Medium-risk grantees will receive additional support and be referred to our Compliance and Reporting team for further review if additional concerns arise. Office staff now attend ongoing internal and external training to improve their understanding of compliance requirements, identify noncompliance, and actively reduce the risks of waste, fraud, and abuse of federal dollars through our subrecipient monitoring process. The Office has developed and implemented processes for requirements such as single audit review and corrective action follow-up, risk assessment, and subrecipient monitoring to address the specific findings. During the time frame corresponding to this audit finding, the pace and volume of grants management administrative duties required to be executed exceeded staffing capacity, contributing to the findings noted. As of this date, the Office has achieved stability in both manager and staff positions. In addition, the Office has allocated sufficient resources to comply with the award terms and program requirements by establishing a Grants Compliance and Reporting Team dedicated to performing necessary subrecipient monitoring procedures. Furthermore, the Office has implemented all recommendations and would like to specifically highlight efforts to work with subrecipients to resolve the potential disallowed costs of $1,903,858 of program monies that may have been spent in violation of its federal award terms by conducting on-site monitoring visits, desk reviews, and facilitating subrecipient technical assistance. OSPB is committed to continuing these efforts.

Assistance listing numbers and program names: 21.023 COVID-19 - Emergency Rental Assistance Program 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Agency: Arizona Department of Economic Security (DES) Name of contact person and title: Molly Bright, DES CCSD Assistant Director Anticipated completion date: June 30, 2026 Agency’s Response: Concur The Department of Economic Security will address the audit recommendations as follows: 1. Ensure benefit payments are for allowable costs paid to or on behalf of eligible program applicants. The Department will review and confirm that benefits payments paid to or on the behalf of eligible program applicants are allowable expenditures of the federal funding being disbursed. 2. Follow existing policies and procedures to obtain required documentation to support requirements related to where the applicant lives and their income to ensure program applicants are eligible to receive benefit payments. The Department will abide by the existing adjudication policies and procedures that require the submission of substantiating documentation supporting the claims made by applicants regarding where they live and their household income to confirm that applicants are eligible to receive benefit payments under the program and to verify the amount of benefits they shall receive. 3. Allocate sufficient staffing resources to perform a thorough evaluation of program benefits applications and provide training on eligibility requirements and allowable benefit payments. The Department will attempt to obtain or allocate additional resources to staffing to support the program benefits application evaluation process and will provide additional training to staff on eligibility requirements and allowable benefit payment regulations. 4. Update the checklist Division personnel use to perform a post-review of eligibility determinations to include detailed guidance for verifying the determinations aligned with the Division’s written policies and procedures and supported by adequate documentation. The Department will update the checklist being used by staff to perform post-review of eligibility determinations to include detailed guidance on verifying the applicant benefits determinations in alignment with the divisional policies and procedures and evidenced by adequate substantiating documentation.

Assistance listing number and program name: 14.267 Continuum of Care Program Agency: Arizona Department of Housing (DOH) Name of contact person and title: Keon Montgomery, DOH Assistant Deputy Director of Programs Anticipated completion date: January 30, 2025 Agency’s Response: Concur The Department is in the process of developing written policies and procedures to address matching, level of effort, and earmarking. The policies and procedures will address communication with subrecipients and maintaining records and documentation of the amounts used to fulfill matching requirements.

Assistance listing number and program name: 14.267 Continuum of Care Program Agency: Arizona Department of Housing (DOH) Name of contact person and title: Keon Montgomery, DOH Assistant Deputy Director of Programs Anticipated completion date: January 30, 2025 Agency’s Response: Concur The Department resumed monitoring duties and developed a monitoring schedule to ensure subrecipients maintain program compliance. The Department also established a risk assessment tool that assess risk associated with each subrecipient. Records of subrecipient monitoring will be kept for a period of time to demonstrate monitoring activities were performed.

Assistance listing number and program name: 14.267 Continuum of Care Program Agency: Arizona Department of Housing (DOH) Name of contact person and title: Keon Montgomery, DOH Assistant Deputy Director of Programs Anticipated completion date: January 30, 2025 Agency’s Response: Concur The Department is no longer reimbursing the subrecipient for unsupported or ineligible costs and is pursuing repayment of funds from the subrecipient. Written policies for reviewing and approving subrecipient reimbursements, as well as, risk assessment were reviewed, updated and amended to ensure ongoing compliance. Staff has been trained and new policies were implemented in FY 2024 subsequent to the period reviewed in this audit. Contract Specialists in the Special Needs Division have received additional training through HUD TA support on CoC standards to ensure all request for reimbursement from subrecipients are eligible, reasonable and appropriately documented, including any allocations and purchasing requirements.

Assistance listing numbers and program names: 14.231 Emergency Solutions Grant Program 14.231 COVID-19 - Emergency Solutions Grant Program 93.558 Temporary Assistance for Needy Families 93.558 COVID-19-Temporary Assistance for Needy Families Agency: Arizona Department of Economic Security (DES) Name of contact person and title: Molly Bright, DES CCSD Assistant Director Anticipated completion date: June 30, 2025 Agency’s Response: Concur The Department will stop the reimbursement of costs to all nonprofit and contracted subrecipients for items that are disallowed and/or restricted by the regulations of the federal Emergency Solutions Grant (ESG) program and Temporary Assistance for Needy Families (TANF) grant, including payments to personnel that violate the conflict-of-interest disclosure requirements. The Department will revise its expenditure review procedures to ensure compliance with these regulations prior to disbursing any ESG and/or TANF funding to any subrecipient for any purpose. These revisions will include review and approval by applicable management personnel prior to disbursement of federal funding. The Department is also in the process of establishing a divisional Monitoring and Compliance Policy and Procedure Manual which will establish procedures specific to subrecipient monitoring. The Department will continue to assess the risk of noncompliance violations for each subrecipient and establish a plan of action to address noncompliance. The plan of action will include an array of training and educational processes to ensure applicable personnel are knowledgeable of programmatic compliance requirements and Department contracts. The Department will also monitor subrecipients per its updated policies and procedures and will ensure proper oversight of federal expenditures as required by federal regulations. The Department has amended its contracts with the applicable subrecipients to more clearly outline the regulatory requirements and expectations for expenditures under the ESG and TANF grants. The Department will also continue to resolve the unallowable costs reimbursed to subrecipients as deemed appropriate by the applicable federal agencies.

2023- 007 - Material Weakness in Internal Control and Material Noncompliance – Sub-recipient Monitoring and Management WPHW understands this finding and recognizes that correction that were planned for FY23 were not able to be fully implemented. One of the significant challenges WPHW had over the past couple of year, in addition to IT system challenges, is staffing. WPHW has hired three individuals to develop our contracting process and had performance issues with all three individuals. In addition to the difficulties with the NetSuite implementation, we have had to re-evaluate our sub-recipient monitoring and management business process. The following process will address this finding: 1) Director of Accounting and the Accounting Manager will review CFR 200.332 and develop a revised business process for the WPHW contract system a. Accounting Team will hire 2 Accounting Specialists who will each have specific sub-recipient monitoring responsibilities 2) Director of Accounting and the Accounting Manager will review all current contract to ensure the following: a. Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: i. Federal, State or other award identification. ii. Subrecipient name (which must match the name associated with its unique entity identifier); iii. Subrecipient's unique entity identifier; iv. Award Identification Number (FAIN/SAIN); v. Award Date of award to the recipient by the Federal agency; vi. Subaward Period of Performance Start and End Date; vii. Subaward Budget Period Start and End Date; viii. Amount of Federal Funds (if applicable) Obligated by this action by the pass-through entity to the subrecipient; ix. Total Amount of Federal Funds Obligated, if applicable, to the subrecipient by the pass-through entity including the current financial obligation; x. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; xi. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xii. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xiii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiv. Identification of whether the award is R&D; and xv. Indirect cost rate for the Federal, State, or other award (including if the de minimis rate is charged) per § 200.414. b. All requirements imposed by the pass-through entity on the subrecipient are in accordance with Federal, State, Local statutes, regulations and the terms and conditions of the award; c. Determines and ensure completion of required financial and performance reports; d. Has an approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government or utilizes the de minimus. e. States that subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part f. Details appropriate terms and conditions concerning closeout of the subaward. g. Subrecipient risk assessment that accesses: i. prior experience with the same or similar subawards; ii. previous audits iii. personnel or substantially changed systems iv. Prior monitoring results 1. Subaward conditions will be placed if issues arise 3) Implement sub-recipient monitoring process. a. Conduct invoice review monthly i. All invoices must include full back up and support for expenses ii. All invoices will be reviewed as they are received to ensure expenses are allowable iii. Any issues that arise will be addressed prior to invoice payment b. Conduct contract monitoring visit annually i. Hold a meeting with the sub-recipient to review the following: 1. Reviewing financial and performance reports 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the subaward. 3. Training and technical assistance on program-related matters 4. Determine corrective action for any deficiencies or findings and determine risk 5. Discussion of enforcement action against noncompliant subrecipient This process will be reviewed, and implementation will begin during Q4 FY24. All current FY24 contracts will be reviewed, and monitoring visits scheduled. For FY25, all contracts will be in compliance with requirements.

Condition: The Organization did not clearly communicate the required federal award information and applicable requirements to the subrecipients. The Organization did not evaluate the risk of non-compliance of the subrecipients in order to identify the appropriate monitoring procedures. Statistical sampling was not used in making sample selections. Response: The Organizations’ Board and Chief Executive OGicer (CEO) and key HCEDC StaG recognize the need to further refine subrecipient monitoring. Subrecipients within the identified project are all school districts already under single audit with associated levels of financial controls and reporting. Participating districts, via their appropriate elected boards, were informed the conditions of the grant and individually voted to accept obligations and requirements. Some subrecipients in Fall 2023 did attempt to submit unauthorized expenses, the controls were adequate for management to identify these discrepancies, which were in turn not submitted for reimbursement to the state, and appropriate amendments were made prior to any expense being reimbursed. HCEDC management, in alignment with outsourced controller services via CliftonLarsonAllen LLP, have now further increased controls and monitoring activity. Through the onboarding of a new Grants Management System (GMS) in Fall 2024, subrecipient monitoring activity and profiles are now created for each eligible award. In 2024, the HCEDC has also been much more active in communicating reporting and grants management requirements to subrecipients, including multiple amendments to the ESSER grant program. The new GMS system is built specifically to assist organizations with single audit compliance and has multiple features specific to subrecipient reporting and monitoring.

Condition and Context: ACT noted that it did not request and review audited financial statements for all subrecipients. Recommendation: ACT evaluates the policies and procedures to ensure appropriate monitoring is performed over all subrecipients and reviews audited financial statements for those subrecipients that are required to have an audit performed. Views of Responsible Officials and Planned Corrective Action: ACT accepts the auditors’ recommendation. We will review and update the monitoring policies and procedures to include requesting and reviewing the audited financial statements for those subrecipients that are required to have an audit performed.

Recommendation: We recommend the Society to establish an official written policy for subrecipient monitoring that is in line with the requirements of the Uniform Guidance. The policy should contain components for compliance with and references to Federal requirements, such as review of reports requested from the subrecipient regarding project status, reviewing invoices to ensure spending is limited to expenses involving approved projects, and proper approval procedures key personnel perform to ensure these invoices are valid. Management Response and Corrective Action Plan Management's Response: We appreciate the auditor's thorough review and recommendations regarding our subrecipient monitoring processes. Legal Aid Society of San Bernardino is committed to maintaining the highest standards of compliance with federal regulations and ensuring proper oversight of subawards. We acknowledge the importance of having a comprehensive written policy that aligns with the requirements set forth in 2 CFR part 200, Appendix XI, Compliance Supplement May 2023, sections 3-M-1 and 3-M-2. Corrective Action Plan: 1. Formalize written policy: We will document our existing subrecipient monitoring practices into a comprehensive written policy that fully aligns with 2 CFR part 200, Appendix XI, Compliance Supplement May 2023, sections 3-M-1 and 3-M-2. This policy will include: a. Detailed procedures for reviewing financial and programmatic reports from subrecipients b. Guidelines for following up on and addressing any identified deficiencies c. Clear references to relevant Federal requirements 2. Standardize subaward agreements: We will develop a standardized subaward agreement template that incorporates all required elements as specified in the Uniform Guidance. This will ensure consistency and compliance across all subawards. 3. Enhance approval protocols: We will fortify our existing two-party approval system and bill.com submission process for payments. This reinforced procedure will ensure rigorous oversight and thorough validation of all subrecipient expenses, maintaining a robust checks and balances system that aligns with federal compliance requirements. 4. Implement regular reporting: We will continue our practice of requesting 6-month and end-of-year reports from subrecipients. This will help us monitor processes, identify any budget or client service deviations, and ensure ongoing compliance with subrecipient monitoring requirements. 5. Establish policy review process: We will implement an annual review of our subrecipient monitoring policies to ensure they remain current with any changes in Federal regulations. Planned Implementation Date: November 30, 2024 Responsible Person: Pablo Ramirez, Executive Director

Finding 2023-003 Finding Subject: Covid-19 – Coronavirus State and Local Fiscal Recovery Funds – Subrecipient Monitoring Summary of Finding: The County did not include all required information in the subrecipient agreements during the audit period. Contact Person Responsible for Corrective Action: Debbie Morton-Crum, County Auditor Contact Phone Number: 765-482-2940 Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: The County Commissioners are responsible for the American Rescue Plan project list along with that responsibility is to have a sub-recipient agreement in place with those outside entities that received American Rescue Plan grant monies from the County. An Internal Control is now in place that requires a sub-recipient agreement in place before a warrant can be paid to those outside entities. We will put procedures in place to ensure that money disbursed to sub-recipient is monitored. Anticipated Completion Date: December 2024

The City will establish an official written policy for subrecipient monitoring that is in line with the requirements of the Uniform Guidance.

Finding 2023-001 – Subrecipient Monitoring Cluster: Research and Development Agency: Department of Health and Human Services Award Names: Safety and Health Risks in Energy Transition for the Commercial Fishing Industry Award Numbers: U01OH012502 Assistance Listing Title: Center for Disease Control and Prevention (CDC) Assistance Listing Number: 93.262 Award Year: FY 2023 To ensure compliance with 2 CFR 200.332 (d), ABS will extend its current policy to review agencies’ annual audited financial statements when Uniform Guidance reports are not available. ABS will appoint a finance team member to review the Uniform Guidance report or financial statements and will offer the project management team feedback toward ensuring necessary monitoring actions are taken. ABS understands the associated funding risks and will begin implementing these processes while we draft and submit our policy update into our Quality Management system. We expect this to be corrected and implemented by December 31, 2024.

In June 2023, following the completion of the 2022 Single Federal Audit, APS immediately implemented additional policies, procedures, and controls to ensure that all subrecipients submit programmatic and financial reports in a timely manner and that these reports are reviewed by the Principal Investigator/Program Manager and Grant Administrator through a new reporting form. This form logs electronic signatures from both the sub-awardee and APS staff. In addition, APS implemented a procedure to review the single federal audit of each sub-awardee annually. APS will review and monitor award amounts and for the required filings annually to ensure that the award amounts are accurate and updated timely to meet all reporting requirements set forth under the Transparency Act. APS implemented the corrective action plan on June 5, 2023. Management's contact responsible for the implementation of the Corrective Action Plan: Name: Jane Hopkins Gould Position: Chief Financial & Operating Officer Telephone number: 301-209-3276

HSEM concurs with the finding. Condition A: NH HSEM Mitigation and Recovery leadership has updated the award letter templates to ensure the necessary information is included as outlined in the condition. Conditions B – D: NH HSEM Mitigation and Recovery leadership updated the Risk Assessment Quick Reference Guide (QRG) and Subrecipient monitoring QRG. A two hour in-person training was conducted on January 31, 2024, to Mitigation and Recovery staff which focused on conducting risk assessments and subrecipient monitoring. This will be reviewed with staff again during an upcoming Section meeting in March 2024.

Condition A: DHHS partially concurs. The review of expenditure details is an integral part of DHHS’ Subrecipient Monitoring and standard language is included in the templates for legal agreements. These five subrecipients were deemed low or no risk, examination of expenditure detail is considered sufficient monitoring. All five of these subrecipients had the inclusion of the monthly detail requirement in the contracts and this was performed prior to the invoice being submitted to AP for payment. DHHS will re-evaluate current practices to ensure that the documentation is sufficient for the current subrecipient monitoring process. Regarding the two selections identified as having risk assessments which did not specify recommended monitoring procedures: The Risk Assessment Tool for one subrecipient was performed after the subaward award. However, as indicated on the Tool, programmatic monitoring activities were included in the contract. DHHS reviewed the monthly back-up documentation provided with the submitted invoices prior to sending them to AP for payment. The risk assessment tool for the second selection was performed after the subaward award. However, as indicated on the tool, programmatic monitoring activities were included in the contract. We reviewed the monthly back-up documentation provided with the submitted invoices prior to sending them to AP for payment. Condition B: DHHS partially concurs. The review of expenditure details is an integral part of DHHS’ Subrecipient Monitoring and standard language is included in the templates for legal agreements. The subrecipients were deemed low or no risk, therefore, examination of expenditure detail is considered sufficient fiscal monitoring. DHHS employs the review of expenditure details, as allowed under 200.332 (d)(1), as an integral part of the Departments Subrecipient Monitoring. A review of the expenditures provides monitoring for the following concerns: • The familiarity a subrecipient has utilizing Federal funds • The subrecipient management teams’ familiarity with Federal funding • Single Audit findings • Any prior return of funding due to non-compliance • The subrecipient’s compliance with the requirements of 200.300 and 302 • Whether the subrecipient has a new financial system DHHS will re-evaluate the risk response parameters to determine that the level of documentation is sufficient to ensure that the procedures performed would be able to identify noncompliance at the subrecipient level. Condition C: DHHS concurs. DHHS will be updating procedures to include contacting vendors to remind them of the deadline regarding the submission of their single audit in the Federal Audit Clearinghouse.

The Department Concurs with paragraph A – Since this same finding was reported in March of 2023 for FY22, items a, c, and d are now included on all federal subaward contracts and policies have been updated to reflect this. The Department will ensure b is also included going forward. The Department concurs with paragraph B - The finding was a result of personnel turnover and medical issues. The Department has hired and trained additional program staff and updated policies to ensure programmatic monitoring and subsequent reports are done in a timely manner. The Department partially concurs with paragraph C. Fiscal monitoring was done for all 3 subrecipients during the federal program year. However, 1 subrecipient monitoring fell outside the state fiscal year so was not covered during the audit period. The Department has changed the wording on its risk assessment procedures to ensure no misinterpretation of the timeframe each subrecipient will be monitored in accordance with its risk assessment. The Department has also changed the requirements of the frequency of fiscal monitoring in each of the risk assessment categories. The Department Concurs with paragraph D – The Department is reviewing policies and procedures and will update them to ensure compliance with 2 CFR section 200.332(a), 2 CFR section 200.332(b) and 2 CFR section 200.521. The Department also created a tracking mechanism to ensure we receive, review, and issue management decisions (if required) in a timely manner. The Department concurs with Paragraph E - The Department is reviewing policies and procedures for both reporting and subrecipient monitoring to ensure data is tested and verified. The Department has already gained increased access to data in current software and is in the process of selecting a vendor for new software that will provide more testing and enhanced internal controls.

Condition A: DHHS concurs. Pursuant to the Subrecipient Monitoring Policy, the risk assessment and determination of subrecipient monitoring activities is performed during the procurement process with the Grants Administrator and the Program Lead. It is the responsibility of Program to perform the requested subrecipient monitoring. The Department provides annual training on the Subrecipient Monitoring Policy. We will reinforce the requirements of the Policy and the ramifications for the Department for the non-compliance in this year’s annual training. Regarding the incomplete Risk Assessment Tool, we will update the Subrecipient Monitoring Policy to include a secondary review of the Tool prior to implementation, as part of our internal controls. Condition B: DHHS does not concur. The Department employs the review of expenditure details, as allowed under 200.332 (d)(1), as an integral part of the Departments Subrecipient Monitoring. The Department’s review of the expenditures provides monitoring for the following concerns: • The familiarity a subrecipient has utilizing Federal funds • The subrecipient management teams’ familiarity with Federal funding • Single Audit findings • Any prior return of funding due to non-compliance • The subrecipient’s compliance with the requirements of 200.300 and 302 • Whether the subrecipient has a new financial system Standard language for the submission of expenditure detail is included in all templates for legal agreements. These subrecipients were deemed low or no risk, therefore, examination of expenditure detail is considered sufficient monitoring. Subrecipient monitoring activities are memorialized in the legal agreements. The Risk Assessment Tool provides a space for the monitoring activities to be selected, however, the Subrecipient Monitoring Policy does require the memorialization of the activities on the Tool for compliance, only to be memorialized in the legal agreement. Condition C DHHS partially concurs. As the subrecipient’s audit report had no findings, we are not required to issue a management decision letter. However, we will be updating our procedures to include contacting the vendors to remind them of the deadline regarding the submission of their single audit in the Federal Audit Clearinghouse.

Corrective Action Planned (Condition A): The DAS analyzed the six items erroneously reported as subawards and noted the errors were isolated to two specific agencies, the Department of Health and Human Services and the Department of Environmental Services. In response to the prior year finding 2022-002, the DAS had strengthened internal controls related to the review and validation of amounts reported by individual state agencies as pass through expenditures. This included an additional control specifically verifying SLFRF pass through expenditures reported by each agency. The DAS will offer additional training relative to identification and reporting of subaward expenditures in its annual statewide Single Audit training and re-evaluate the precision of execution of controls over the validation of pass through reporting in assembling the SEFA for fiscal year 2024. Corrective Action Planned (Conditions B through E): The State largely concurs with the findings and recommendations and has implemented procedures to address the identified conditions already or will do so. With regards to condition B, The State will work with the individual agencies to ensure that individual agencies entering into such agreements clearly indicate the terms required by Uniform Guidance, including permitted indirect cost rates and whether the award is for R&D. The State has already begun this corrective action plan with the agencies. With regards to condition C, for a. and b. for payments by agencies, there are standard procedures for review and authorization of invoices and payments and those payments are documented. For c. The State has already implemented an agency wide framework for subrecipient monitoring. The State will provide re-training for those agencies that had not properly documented monitoring as outlined by the subrecipient risk assessments and ensure monitoring reports are documented. With regards to condition D, The State has already implemented an agency wide framework to help ensure policies and procedures are in place concerning Uniform Guidance Reports. We will work those agencies that had not documented the date received and the review of the Uniform Guidance Reports to ensure written documentation occurs. Where findings have been reported in the Uniform Guidance Report, ensure timely Management Letters are documented and provided with the summary review of Uniform Guidance Report.