Corrective Action Plans

Finding 1160573 (2024-002)

Material Weakness 2024

KY

Recommendation: The Center for Women and Families, Inc. should have future audits completed timely and filed timely with the Federal Audit Clearinghouse. Action Taken: The Center for Women and Families, Inc. has hired a new Vice President of Finance to ensure all financial functions are completed pr...

Recommendation: The Center for Women and Families, Inc. should have future audits completed timely and filed timely with the Federal Audit Clearinghouse. Action Taken: The Center for Women and Families, Inc. has hired a new Vice President of Finance to ensure all financial functions are completed promptly and accurately and to simplify workflows, thereby enhancing efficiency and enabling the audit to be on schedule.

View Audit 370879

Finding 1160564 (2024-005)

Material Weakness 2024

City of Haverhill

MA

Questioned Costs Allowable Costs / Cost Principles Reporting

CORRECTIVE ACTION PLANS Oversight Agency for Audit: U.S. Department of the Treasury The City of Haverhill, Massachusetts respectfully submits the following corrective action plans for the year ended June 30, 2024. Name and address of the independent public accounting firm: CBIZ CPAs P.C. 9 Executive...

CORRECTIVE ACTION PLANS Oversight Agency for Audit: U.S. Department of the Treasury The City of Haverhill, Massachusetts respectfully submits the following corrective action plans for the year ended June 30, 2024. Name and address of the independent public accounting firm: CBIZ CPAs P.C. 9 Executive Park Drive, Suite 100 Merrimack, NH 03054 Audit Period: July 1, 2023, through June 30, 2024 The findings from the June 30, 2024, schedule of findings and responses are discussed below. The findings are numbered consistently with the number assigned in the schedule. Finding 2024-005: Improve Controls and Documentation Over Allowability of Costs Federal Agency: U.S. Department of Education Award Name(s): Twenty-First Century Community Learning Centers Assistance Listing Number(s): 84.287, 84.287C Award Year: 2023, 2024 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement: Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Management of the City is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context: A sample of payroll expenditures were tested in order to determine if costs were allowable and adequately approved. As a result of our testing, it was determined that one payroll transaction had no timesheet approval, and one payroll transaction was self-approved. Payroll expenditures charged to the programs are required to be supported with documentation substantiating that the employees are eligible to be charged to the grant and that the payroll charged relates to time spent accomplishing grant objectives. This supporting documentation should be standardized and should include all required elements in accordance with applicable cost principles. Cause: The City did not have adequate controls in place to provide sufficient documentation to demonstrate compliance with federal and state time and effort reporting requirements. Effect or Potential Effect: Due to the weakness in internal controls and compliance noted above, there is a risk that amounts charged to federal awards may not be allowable or in accordance with applicable cost principles. Questioned Costs: Due to the condition noted above, we were unable to determine if the costs charged to the applicable grants are allowable. AL Number(s) Name of Federal Program or Cluster Questioned Costs 84.287, 84.287C Twenty-First Century Community Learning Centers $5,450 Recommendation: Management should enhance procedures and controls in place over the time and effort reporting and documentation requirements that department heads must adhere with to ensure compliance with federal and state time and effort reporting requirements. Views of Responsible Official: The School Department recognizes the weaknesses identified in grants management, as well as in the approval and allocation of allowable costs. To address these issues, the School Department has recently hired a new Business Manager/Chief Financial Officer (CFO). This individual is responsible for implementing appropriate internal controls that align with Best Practices, particularly in key areas such as invoice approval, payroll approval, grants management, and procurement compliance. To ensure ongoing improvement, training will be provided continuously for all staff members responsible for managing federal grants. This training will include; • Procedures to reconcile internal records with federal and state reports. • Maintain a process to ensure that costs charged to grants are allowable, necessary and reasonable, and properly allocated, and that these determinations are made in a consistent manner. • Determine whether indirect costs will be allocated to grant programs, and if so, maintain an appropriate process to make the allocation. • Maintain a process to track information about local matching funds, including identification of the source of such funds. • Identify and segregate costs as necessary for the grant (e.g., separate allowable and unallowable costs, separate direct costs from indirect costs, and separate administrative costs. • Account for and track grant-funded capital items. • Document grant procedures. • Maintain a comprehensive list of reporting requirements and a reminder system for meeting the reporting deadlines. • Identify who is responsible for the various reporting requirements. • Establish methodologies for the preparation of specialized reports. • Establish processes for obtaining all of the information needed for the Schedule of Expenditures of Federal Awards (SEFA). • Develop and document an understanding of audit requirements specific to grants, including those in Generally Accepted Government Auditing Standards (GAGAS), Generally Accepted Auditing Standards (GAAS), and Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). • Develop and document an understanding of audit requirements for grant close-outs. • Report if any process or internal control issues identified were resolved.

View Audit 370875 Questioned Costs: $1

Finding 1160556 (2024-004)

Material Weakness 2024

City of Haverhill

MA

Questioned Costs Allowable Costs / Cost Principles Significant Deficiency

CORRECTIVE ACTION PLANS Oversight Agency for Audit: U.S. Department of the Treasury The City of Haverhill, Massachusetts respectfully submits the following corrective action plans for the year ended June 30, 2024. Name and address of the independent public accounting firm: CBIZ CPAs P.C. 9 Executive...

CORRECTIVE ACTION PLANS Oversight Agency for Audit: U.S. Department of the Treasury The City of Haverhill, Massachusetts respectfully submits the following corrective action plans for the year ended June 30, 2024. Name and address of the independent public accounting firm: CBIZ CPAs P.C. 9 Executive Park Drive, Suite 100 Merrimack, NH 03054 Audit Period: July 1, 2023, through June 30, 2024 The findings from the June 30, 2024, schedule of findings and responses are discussed below. The findings are numbered consistently with the number assigned in the schedule. Finding 2024-004: Improve Controls and Documentation Over Allowability of Costs Federal Program Information Federal Agency: U.S. Department of Education Award Name(s): Title I Grants to Local Educational Agencies Assistance Listing Number(s): 84.010 Award Year: 2023, 2024 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Award Name(s): COVID-19 – Education Stabilization Fund Assistance Listing Number(s): 84.425 Award Year: 2022 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Award Name(s): Twenty-First Century Community Learning Centers Assistance Listing Number(s): 84.287, 84.287C Award Year: 2023, 2024 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Award Name(s): Special Education Cluster Assistance Listing Number(s): 84.027, 84.173 Award Year: 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement: Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Management of the City is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context: A sample of invoices were tested in order to determine if costs were allowable and adequately approved. As a result of our testing, it was determined that invoices were not approved for two transactions in the Title I Grants to Local Educational Agencies program and three invoices in the COVID-19 Education Stabilization Fund program. In addition, invoices were not able to be provided for three invoices in the COVID-19 Education Stabilization Fund program, one invoice in the Twenty-First Century Community Learning Centers program, and one invoice in the Special Education Cluster. Cause: The City did not have adequate controls in place to ensure invoices were properly approved and retained. Effect or Potential Effect: Due to the weakness in internal controls and compliance noted above, there is a risk that amounts charged to federal awards may not be allowable or in accordance with applicable cost principles. Questioned Costs: Due to the condition noted above, we were unable to determine if the costs charged to the applicable grants are allowable. AL Number(s) Name of Federal Program or Cluster Questioned Costs 84.010 Title I Grants to Local Educational Agencies $82,488 84.425 COVID-19 Education Stabilization Fund $136,876 84.287, 84.287C Twenty-First Century Community Learning Centers $1,305 84.027/84.173 Special Education Cluster $1,945 Recommendation: The City should enhance internal controls over the invoice approval and retention process in order to provide reasonable assurance that federal award transactions are allowable and in accordance with the applicable cost principles. Views of Responsible Official: The School Department recognizes the weaknesses identified in grants management, as well as in the approval and allocation of allowable costs. To address these issues, the School Department has recently hired a new Business Manager/Chief Financial Officer (CFO). This individual is responsible for implementing appropriate internal controls that align with Best Practices, particularly in key areas such as invoice approval, payroll approval, grants management, and procurement compliance. To ensure ongoing improvement, training will be provided continuously for all staff members responsible for managing federal grants. This training will include; • Procedures to reconcile internal records with federal and state reports. • Maintain a process to ensure that costs charged to grants are allowable, necessary and reasonable, and properly allocated, and that these determinations are made in a consistent manner. • Determine whether indirect costs will be allocated to grant programs, and if so, maintain an appropriate process to make the allocation. • Maintain a process to track information about local matching funds, including identification of the source of such funds. • Identify and segregate costs as necessary for the grant (e.g., separate allowable and unallowable costs, separate direct costs from indirect costs, and separate administrative costs. • Account for and track grant-funded capital items. • Document grant procedures. • Maintain a comprehensive list of reporting requirements and a reminder system for meeting the reporting deadlines. • Identify who is responsible for the various reporting requirements. • Establish methodologies for the preparation of specialized reports. • Establish processes for obtaining all of the information needed for the Schedule of Expenditures of Federal Awards (SEFA). • Develop and document an understanding of audit requirements specific to grants, including those in Generally Accepted Government Auditing Standards (GAGAS), Generally Accepted Auditing Standards (GAAS), and Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). • Develop and document an understanding of audit requirements for grant close-outs. • Report if any process or internal control issues identified were resolved.

View Audit 370875 Questioned Costs: $1

Finding 1160536 (2024-003)

Material Weakness 2024

City of Haverhill

MA

Reporting Significant Deficiency Internal Control / Segregation of Duties § 200.303

CORRECTIVE ACTION PLANS Oversight Agency for Audit: U.S. Department of the Treasury The City of Haverhill, Massachusetts respectfully submits the following corrective action plans for the year ended June 30, 2024. Name and address of the independent public accounting firm: CBIZ CPAs P.C. 9 Executive...

CORRECTIVE ACTION PLANS Oversight Agency for Audit: U.S. Department of the Treasury The City of Haverhill, Massachusetts respectfully submits the following corrective action plans for the year ended June 30, 2024. Name and address of the independent public accounting firm: CBIZ CPAs P.C. 9 Executive Park Drive, Suite 100 Merrimack, NH 03054 Audit Period: July 1, 2023, through June 30, 2024 The findings from the June 30, 2024, schedule of findings and responses are discussed below. The findings are numbered consistently with the number assigned in the schedule. Finding 2024-003: Improve Controls and Documentation Over Reporting Federal Program Information Federal Agency: U.S. Department of the Treasury Award Name(s): Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number(s): 21.027 Award Year: 2024 Compliance Requirement: Reporting Type of Finding: Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement: Per 2 CFR 200.303, the City is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the award. SLFRF program guidance requires project and expenditure reports to be submitted by the required deadlines, and reported expenditures must be supported by underlying accounting records. Since the City is a Metropolitan City with a population below 250,000 residents that was allocated more than $10.0 million in funding, the City is required to submit a project and expenditure report 30 days after the end of each quarter. Condition and Context: During our audit, we tested a sample of two quarterly reports to determine that they were submitted timely and were supported by underlying documentation. As a result of our testing, it was identified that the City did not submit the quarterly SLFRF project and expenditure report for the quarter ended 3/31/2024 by the required deadline of 4/30/2024. Furthermore, current period and cumulative expenditures reported for the quarters ended 9/30/2023 and 3/31/2024 did not agree to the amounts recorded in the City’s general ledger. The City did not provide the auditor with documentation to support the discrepancies. Cause: The City did not have adequate controls in place to ensure timely submission of required reports or reconciliation of current period and cumulative reported expenditures to the general ledger prior to submission. Effect or Potential Effect: Due to the weakness in internal controls and compliance finding noted above, the City did not comply with the requirements of the Uniform Guidance and SLFRF program regarding timely and accurate reporting of quarterly project and expenditure reports. No questioned costs are reported as expenditures were tested for allowability during the audit, however, reporting inaccuracies were noted. Recommendation: The City should enhance internal controls over the reporting process for SLFRF funds, including timely preparation and submission of the reports and reconciliation of reported expenditures to the general ledger prior to report submission. Views of Responsible Official: the report was submitted at 11:13 AM Eastern Standard Time on May 1, 2024. The reason for the 11-hour delay was that the city was collaborating with its ARPA consultants to resolve a reporting discrepancy prior to submitting the report to Treasury. The finding further states that, “current period and cumulative expenditures reported for the quarters ended 9/30/23 and 3/31/24 did not agree with the amounts recorded in the City’s general ledger. The city did not provide the auditor with documentation to support the discrepancies.” The City acknowledges the discrepancies in reporting found in these two reports. It has been determined that the City’s ARPA Project Manager inadvertently submitted invoices to the City’s ARPA consultants that were either outside the reporting period or included costs that were split between ARPA projects and other capital project funds. The ARPA Project Manager was terminated for performance-related issues in April 2025. Moving forward, the city’s auditing office, rather than the ARPA Project Manager, will reconcile the general ledger with ARPA consultants before submitting the quarterly report. Contrary to the audit finding, these discrepancies were communicated to the auditor in multiple emails in June 2025.

View Audit 370875

Finding 1160524 (2024-006)

Material Weakness 2024

City of Haverhill

MA

Questioned Costs Procurement, Suspension & Debarment

CORRECTIVE ACTION PLANS Oversight Agency for Audit: U.S. Department of the Treasury The City of Haverhill, Massachusetts respectfully submits the following corrective action plans for the year ended June 30, 2024. Name and address of the independent public accounting firm: CBIZ CPAs P.C. 9 Executive...

CORRECTIVE ACTION PLANS Oversight Agency for Audit: U.S. Department of the Treasury The City of Haverhill, Massachusetts respectfully submits the following corrective action plans for the year ended June 30, 2024. Name and address of the independent public accounting firm: CBIZ CPAs P.C. 9 Executive Park Drive, Suite 100 Merrimack, NH 03054 Audit Period: July 1, 2023, through June 30, 2024 The findings from the June 30, 2024, schedule of findings and responses are discussed below. The findings are numbered consistently with the number assigned in the schedule. Finding 2024-006: Improving Controls over Procurement Requirements Federal Agency: U.S. Department of Education Award Name(s): Special Education Cluster Assistance Listing Number(s): 84.027, 84.173 Award Year: 2024 Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement: Per Uniform Guidance, all non-federal entities must follow documented procurement procedures which ensure that purchases are made in compliance with applicable federal, state, and local laws and regulations. Uniform Guidance does not provide an exemption for special education services from these requirements. Condition and Context: During the audit of federal expenditures, we noted that the City did not properly procure special education services provided by The Academy in accordance with the procurement standards set forth in 2 CFR Part 200 (Uniform Guidance). The City used a “blanket” purchase order for these services but did not formally conduct a competitive procurement process. Cause: The City was not aware that special education costs incurred under federal awards are not exempt from Uniform Guidance procurement requirements. As a result, the City did not initiate a formal procurement process for The Academy and relied on a blanket purchase order. Effect or Potential Effect: Failure to follow the required procurement procedures increases the risk of noncompliance with federal regulations and results in potential questioned costs. Questioned Costs: $101,963. Recommendation: The City should strengthen its controls and staff training regarding federal procurement requirements. Specifically, the City should ensure all purchases of professional services, including special education services, are subject to the appropriate procurement procedures under Uniform Guidance, and that documentation of competitive selection or other required steps is maintained. Views of Responsible Official: The audit revealed deficiencies in the procurement process, including an instance where a service that should have been competitively bid was not. There appeared to be confusion regarding proper practices, especially in areas such as special education and grant-funded purchases. In May 2025, the School Department hired a new Business Manager/CFO. This individual has acknowledged that the previous approach prioritized expediency over compliance. He stated, “This is not a strategy that will be employed under my leadership.” To enhance oversight, the Business Manager/CFO is currently pursuing procurement certification to ensure that all purchases undergo proper review and compliance checks before reaching the City Procurement Officer. At the beginning of the new fiscal year, he centralized the authority to approve or edit purchase orders, eliminating this ability for multiple staff members, including the Grants Manager, Assistant Business Manager, Assistant Superintendent of Operations (a position that no longer exists but was present during the period in question), and Budget Analyst. As a result, purchase orders can no longer be modified without proper authorization, and blanket purchase orders have been nearly eliminated. Now, any expenditure exceeding the applicable threshold must include three quotes prior to approval, along with any additional requirements based on the value. Furthermore, all payments must go through the accounting purchase order system or be physically signed and approved by the Business Manager/CFO with assigned account coding. This marks a significant change from past practices, where invoices were sometimes paid without proper approval. Finally, the Business Manager/CFO is now reviewing all existing contracts to ensure they comply with procurement requirements.

View Audit 370875 Questioned Costs: $1

Finding 1160513 (2024-002)

Material Weakness 2024

Guam Memorial Hospital Authority

GU

Questioned Costs Procurement, Suspension & Debarment § 200.1 § 200.317 § 200.318 § 200.320 § 200.321

Finding No.: 2024-002 For procurements using federal funds, GMHA is permitted to use a Simplified Acquisition Threshold up to the federal limit, which is currently set at $250,000 or $7.5 million for commercial goods. The Code of Federal Regulations (CFR) permits a non-federal entity to use a SAT up...

Finding No.: 2024-002 For procurements using federal funds, GMHA is permitted to use a Simplified Acquisition Threshold up to the federal limit, which is currently set at $250,000 or $7.5 million for commercial goods. The Code of Federal Regulations (CFR) permits a non-federal entity to use a SAT up to the federal limits, without having to follow threshold limitations imposed by state or local law. The set of criteria employed by the Ernst & Young is incomplete, and fails to give proper deference to the legal opinions of licensed attorneys. In determining to follow the federal SAT, GMHA considered the guidance of a memorandum from the Office of the Attorney General indicating substantively the same legal analysis as follows. See Memorandum from Deputy Attorney General, Solicitor Division to Chief Deputy Attorney General, Federal Simplified Acquisition Threshold and Micro-purchase Threshold, Ref: AG 22-0410 (Sept. 14, 2022). When presented with this memorandum, the auditors refused to accept its instructions stating: “We were unable to follow why the Attorney General considered the definition of a non-Federal entity in applying the requirements of §§ 200.318 through 200.327. In reviewing the aforementioned sections, there was no reference to non-Federal entities.” This statement evidences the auditors’ fundamental misunderstanding of the law. The auditors based their analysis on an amended version of the CFR, which became effective only January 2025. According the definitions in the Code of Federal Regulations in effect during the relevant 2023-2024 audit period, Guam is both a “State” and a “Non-Federal entity.” Guam Memorial Hospital Authority also falls within the definition of “Hospital” and “subrecipient.” As relevant here, 2 CFR 200.1 states: State means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and any agency or instrumentality thereof exclusive of local governments. Non-Federal entity (NFE) means a State, local government, Indian Tribe, Institution of Higher Education (IHE), or nonprofit organization that carries out a Federal award as a recipient or subrecipient. Hospital means a facility licensed as a hospital under the law of any State or a facility operated as a hospital by the United States, a State, or a subdivision of a State. Subrecipient means an entity, usually but not limited to non-Federal entities, that receives a subaward from a pass-through entity to carry out part of a Federal award; but does not include an individual that is a beneficiary of such award. A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency. As a Non-Federal entity, GMHA also is required to abide by the definition of “simplified acquisition threshold.” According to 2 CFR 200.1: Simplified acquisition threshold means the dollar amount below which a non-Federal entity may purchase property or services using small purchase methods (see § 200.320). Non-Federal entities adopt small purchase procedures in order to expedite the purchase of items at or below the simplified acquisition threshold. The simplified acquisition threshold for procurement activities administered under Federal awards is set by the FAR at 48 CFR part 2, subpart 2.1. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk, and its documented procurement procedures. However, in no circumstances can this threshold exceed the dollar value established in the FAR (48 CFR part 2, subpart 2.1) for the simplified acquisition threshold. Recipients should determine if local government laws on purchasing apply. (emphasis added). This definition applies to purchasing by all non-federal entities—including GMHA. Title 2 CFR 200.317 provides: When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will comply with §§ 200.321, 200.322, and 200.323 and ensure that every purchase order or other contract includes any clauses required by § 200.327. All other non-Federal entities, including subrecipients of a State, must follow the procurement standards in §§ 200.318 through 200.327. (emphasis added). As a subrecipient of Guam, GMHA would also be required to follow 2 CFR 200.320(a)(2)(ii), which reiterates that: “The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its documented procurement procedures which must not exceed the threshold established in the FAR.” The CFR treats the requirement that a state or local entity follow (1) its own “policies and procedures” and (2) its own small purchase “threshold” as separate requirements. The CFR applicable to most federal funds—including ARPA—only requires the hospital to follow the local “policies and procedures.” 2 CFR 200.317. The CFR requires GMHA—as a non-federal entity—to separately make a determination of an appropriate small purchase threshold based on a number of factors specific to GMHA, provided it does not exceed the federal SAT. 2 CFR 200.1; 2 CFR 200.320(a)(2)(ii). Procurement method selection is essentially a two-step process: (1) Make a substantive determination about the monetary cost of a proposed procurement and determine whether it is below or above an applicable threshold. Which side of a threshold a procurement falls on (and some other factors) will determine the method—sole source, RFQ, RFP, IFB—that will be used. (2) After the method is determined, an entity is then pointed to specific policies and procedures applicable to that type of procurement. The relevant factors for determining a recipient-specific SAT include an entity’s “internal controls, an evaluation of risk, and its documented procurement procedures.” 2 CFR 200.1; 2 CFR 200.320(a)(2)(ii). For a portion of the relevant procurement period, the CFR also stated: “When applicable, a lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal laws or regulations.” This section was amended effective approximately October 1, 2024. Now, it no longer requires the recipient or sub-recipient to ascertain whether this entity-specific threshold is “authorized or not prohibited under State, local, or tribal laws or regulations.” But even under the prior version, the entity only needed to consider the authorization or lack of prohibition under state or local law if it was adopting a “lower simplified acquisition threshold” than the federal SAT. 2 CFR 200.320(a)(2)(ii) (effective until Sept. 30, 2024) (emphasis added). GMHA determined that the federal SAT levels were appropriate, and—in any event—local law does not prohibit GMHA from adopting the federal SAT when using federal funds. GMHA’s use of the federal SAT for procurements using federal funds has been a decades long practice of our materials management, so a suggestion that it is unauthorized would be a finding quite inconsistent with GMHA’s internal controls. Highlighting the distinctness or difference between the “policies and procedures” and “threshold” requirements, is the fact that “simplified acquisition procedures” and “simplified acquisition threshold” are defined separately. See 48 CFR 2.101. And the two requirements are discussed separately in the section of the CFR discussing “informal procurement methods.” 2 CFR 200.320. Additionally, the small purchase “procedures” applicable to federal agencies, FAR Part 13, are contemplated in an entire section that is separate from the rules about the controlling SAT or other threshold. Finally, in other portions of the CFR—such as federal highway funds—the government has specifically instructed state entities to follow both the state or local “procedures” and the state or local “threshold. 23 CFR 172.7(a)(2). When the CFR wants the state government to follow state SATs, it will specifically do so. It has not put that instruction in 2 CFR 200.320. Guam law also specifically directs all persons within the Government of Guam to comply with the applicable federal law and regulations that are in conflict with or are not reflected in the Procurement Code. 5 GCA § 5501. In other words: Guam law requires GMHA to follow the federal rules. Specifically, here, the federal requirement that GMHA determine an appropriate SAT is not reflected in the local laws. GMHA, thus, must comply with the federal requirement that GMHA make a recipient-specific determination of an appropriate SAT. Even the Guam Legislature understands that the law operates in the same manner as the Attorney General’s memorandum. During a legislative hearing on June 25, 2024, Senator Sabina Perez recited the same analysis, recognizing that Guam agencies can use the federal simplified acquisition threshold when expending federal funds. See Guam Legislature, Public Hearing Bill No. 134-39 (COR) at *1:46:00-1:46:31 (June 25, 2025), available at https://www.youtube.com/live/ciXo1EEXJZI. In deciding the federal SAT applies, GMHA was also guided by precedent and guidance issued to other government entities. In 2015, when the Guam Department of Education was under a federal third-party fiduciary, it was still employing the lower local small purchase threshold. GDOE was instructed that this was inappropriate because federal law supersedes Guam law on the SAT. The federal fiduciary—consistent with USDOE instructions—required GDOE to follow the federal SAT. See Letter from John E. Hampford, Alvarez & Marsal, to Jon J.P. Fernandez, Superintendent of Guam Department of Education (Dec. 30, 2015); see also Letter from Jon J.P. Fernandez, Superintendent of Guam Department of Education to Attorney General Leevin T. Camacho and Public Auditor Benjamin J.F. Cruz (July 20, 2020). Thus, other Guam agencies have been instructed by the federal government to use the federal SAT. This is also bolstered by the case law. The Guam Supreme Court has ruled that the CARES Act funding was a federal appropriation for a specific purpose, “outside the control of the Guam Legislature.” See Story-Bernardo v. Gov’t of Guam, 2023 Guam 27 ¶ 46. ARPA funding is substantively similar to CARES Act funds, simply with additional permitted uses. Local law cannot dictate how these federal funds are spent. GMHA also considered case law from Texas federal court where a self-styled “whistleblower” sued the City of Burleson, Texas for allegedly spending in excess of their own SAT. Under Burleson’s own regulations, the local SAT was $10,000, see Rule 5.1, City Council Policy 36, City of Burleson Purchasing Policy (adopted July 2, 2018, revised Oct. 16, 2023). However, the lawsuit alleged that the city was spending in excess of this $10,000 SAT. The federal judge in that court stated: “In addition, the regulations show that “formal purchasing methods are not required” for purchases that are less than the “simplified acquisition threshold.” 2 C.F.R. § 200.1(2021). The simplified acquisition threshold is set at $250,000. 48 C.F.R. § 2.101(2021). However, Mr. Eder's complaint incorrectly alleges “upon information and belief” that the simplified acquisition threshold is $10,000. Doc. No. 37 at 12, ¶27(b). Mr. Eder's apparent misreading of the threshold for formal purchasing is central to his claim under the FCA, and it appears this concern may have arisen from simply misreading the rules, rather than any reasonable dispute under the law.” Eder v. City of Burleson, Civil No. 3:23-CV-00948-K, 2024 WL 4771408 at *5 (N.D. Tex., Nov. 13, 2024). Thus, the federal court recognized that the lower local SAT did not control. The only relevant SAT was the federal one. GMHA’s determination to use the maximum SAT allowed by the federal CFR is thus appropriate. The federal CFR rule requiring a recipient-specific SAT determination supersedes the local thresholds. If the procurement is under the federally-allowed $250,000 SAT, GMHA must still follow the local small purchase procedures. See in part 5 GCA § 5213. The auditors’ view of Guam law appears to be a clear outlier, inconsistent with a plain reading of both federal and Guam law, the opinions of both federal and local courts, the memorandum from the Attorney General’s Office, the understanding of the Guam Legislature, and the reasoned opinion of Hospital Legal Counsel. The auditors’ finding is also inconsistent with decades of GMHA procurement practice. The questioned costs based on this finding should be removed. The auditors’ (1) inability to even reference the relevant definitions from the CFR in effect at the time of the relevant audit period and (2) unwillingness to accept the legal opinions from licensed attorneys, should be a finding on the auditors’ peer review.

View Audit 370873 Questioned Costs: $1

Finding 1160512 (2024-001)

Material Weakness 2024

Guam Memorial Hospital Authority

GU

Questioned Costs Procurement, Suspension & Debarment Subrecipient Monitoring

Views of Auditee and Planned Corrective Actions: Starting in April 2024, GMHA incorporated the Certificate Regarding Debarment, Suspension, Ineligibility, and Voluntary Exclusion for Covered Contracts and Grants in all of its Invitation for Bids and Request for Proposals. Proposed Completion Date: C...

Views of Auditee and Planned Corrective Actions: Starting in April 2024, GMHA incorporated the Certificate Regarding Debarment, Suspension, Ineligibility, and Voluntary Exclusion for Covered Contracts and Grants in all of its Invitation for Bids and Request for Proposals. Proposed Completion Date: Completed. Name of Contact Person: Yukari Hechanova, Chief Financial Officer

View Audit 370873 Questioned Costs: $1

Finding 1160511 (2024-001)

Material Weakness 2024

New Opportunities, Inc. and Affiliates

CT

Reporting Significant Deficiency

The issue was attributed to limited staffing resources. To strengthen capacity, management has added a second accounting manager. With this enhancement, management will meet the timeliness standards in subsequent fiscal years.

View Audit 370866

Finding 1160447 (2024-003)

Material Weakness 2024

Madonna Center, Inc.

TX

Questioned Costs Internal Control / Segregation of Duties

Management agrees and will reimburse the employee for the amounts due for hours worked more than 40 hours in a work week during the fiscal year. Management will develop review procedures to respond to this finding.

View Audit 370864 Questioned Costs: $1

Finding 1160446 (2024-002)

Material Weakness 2024

Madonna Center, Inc.

TX

Questioned Costs Allowable Costs / Cost Principles Cash Management

Management agrees and will develop review procedures to respond to the findings.

View Audit 370864 Questioned Costs: $1

Finding 1160445 (2024-001)

Material Weakness 2024

Madonna Center, Inc.

TX

Questioned Costs Allowable Costs / Cost Principles Cash Management § 200.430

Management agrees with the finding and will work with the City of San Antonio to correct the issue, and develop review procedures to respond to the finding.

View Audit 370864 Questioned Costs: $1

Finding 1160444 (2024-004)

Material Weakness 2024

Madonna Center, Inc.

TX

Questioned Costs Allowable Costs / Cost Principles

Management agrees and will develop review procedures to respond to the findings.

View Audit 370864 Questioned Costs: $1

Finding 1160431 (2024-003)

Material Weakness 2024

Mary's Center for Maternal and Child Care, Inc.

DC

Internal Control / Segregation of Duties

Finding Number: 2024-003 Planned Corrective Action: Management acknowledged the sliding fee adjustment errors resulted from incorrect calculation of sliding fee discount. Management will add an additional layer of review over the application of the sliding fee scale. Further, the Organization will i...

Finding Number: 2024-003 Planned Corrective Action: Management acknowledged the sliding fee adjustment errors resulted from incorrect calculation of sliding fee discount. Management will add an additional layer of review over the application of the sliding fee scale. Further, the Organization will implement a process to periodically review sliding fee adjustments throughout the year for accuracy. Anticipated Completion Date: 12/31/2025 Responsible Contact Person: Tony Ricciardella, Interim Chief Financial Officer and Alison Roca, Controller

View Audit 370851

Finding 1160428 (2024-002)

Material Weakness 2024

Mary's Center for Maternal and Child Care, Inc.

DC

Reporting Internal Control / Segregation of Duties

Finding Number: 2024-002 Planned Corrective Action: Management acknowledged several amendments were made to the UDS tables that support the calculation that was filed. A lack of document retention resulted in the final amended calculation not being saved in a central, shared site that would support ...

Finding Number: 2024-002 Planned Corrective Action: Management acknowledged several amendments were made to the UDS tables that support the calculation that was filed. A lack of document retention resulted in the final amended calculation not being saved in a central, shared site that would support the amount filed. In future periods, management will have processes and procedures in place to require proper retention of reconciliation and tie-out of supporting documentation to final filings which will alleviate this finding. Anticipated Completion Date: 12/31/2025 Responsible Contact Person: Tony Ricciardella, Interim Chief Financial Officer and Alison Roca, Controller

View Audit 370851

Finding 1160425 (2024-002)

Material Weakness 2024

Riordan School Addition Housing Development Fund Company, Inc.

NY

Subrecipient Monitoring Reporting § 200.512

Finding #2024-002 Prior Year Reporting Package and Data Collection Not Filed Timely: Recommendation: We recommend that management implement procedures to ensure that reporting packages and data collection forms are filed timely in the future. Action taken: Bessie Riordan Addition Apartments agrees w...

Finding #2024-002 Prior Year Reporting Package and Data Collection Not Filed Timely: Recommendation: We recommend that management implement procedures to ensure that reporting packages and data collection forms are filed timely in the future. Action taken: Bessie Riordan Addition Apartments agrees with the auditor’s recommendations and will implement procedures to ensure timely filing in the future. For questions regarding this corrective action plan, please contact Kyle Lyskawa, Chief Financial Officer, at (315) 424-1821.

View Audit 370837

Finding 1160424 (2024-001)

Material Weakness 2024

Riordan School Addition Housing Development Fund Company, Inc.

NY

Subrecipient Monitoring Reporting § 200.512

Finding #2024-001 Current Year Reporting Package and Data Collection Not Filed Timely: Recommendation: We recommend that management implement procedures to ensure that reporting packages and data collection forms are filed timely in the future. Action taken: Bessie Riordan Addition Apartments agrees...

Finding #2024-001 Current Year Reporting Package and Data Collection Not Filed Timely: Recommendation: We recommend that management implement procedures to ensure that reporting packages and data collection forms are filed timely in the future. Action taken: Bessie Riordan Addition Apartments agrees with the auditor’s recommendations and will implement procedures to ensure timely filing in the future. For questions regarding this corrective action plan, please contact Kyle Lyskawa, Chief Financial Officer, at (315) 424-1821.

View Audit 370837

Finding 1160422 (2024-001)

Material Weakness 2024

Eastern Connecticut Housing Organization

CT

Reporting

Finding Reference Number: 2024-001 Single Audit Report Filing Description of Finding: The Project must file a federal single audit the earlier of thirty calendar days after receiving the auditors' report or nine months after the end of the audit period. The Project did not file its federal single au...

Finding Reference Number: 2024-001 Single Audit Report Filing Description of Finding: The Project must file a federal single audit the earlier of thirty calendar days after receiving the auditors' report or nine months after the end of the audit period. The Project did not file its federal single audit for the year ended December 31, 2023, by the due date of September 30, 2024. Statement of Concurrence or Nonconcurrence: The Project agrees with the audit finding. Corrective Action: We have transitioned to a new CPA firm and have been working with them closely with the board to ensure that all required signatures are obtained in a timely manner for the 2024 reporting fiscal year. Name of Contact Person: Paula Tracy, President, 860-398-5425 ext.511#, paulat@wildwoodmgt.com Projected Completion Date: Has been completed, we started talking to the new firm in January 2024.

View Audit 370832

Finding 1160418 (2024-003)

Material Weakness 2024

Suwannee Valley Electric Cooperative

FL

Reporting

Criteria or specific requirement: Procedures should be established to insure a proper recording of accounts payable. Condition: Accounts payable as of the reporting date included duplicate invoices. Effect: Accounts payable and construction in process were overstated by a material amount. Cause: The...

Criteria or specific requirement: Procedures should be established to insure a proper recording of accounts payable. Condition: Accounts payable as of the reporting date included duplicate invoices. Effect: Accounts payable and construction in process were overstated by a material amount. Cause: The accounts payable subsidiary was not adequately reviewed. Recommendation: This situation dictates that management establish procedures to ensure an adequate review of the accounts payable subsidiary. Views of responsible officials and planned corrective action: Management agrees with this finding. Management will implement procedures to ensure an adequate review of the accounts payable subsidiary. Management’s response: CFO will review the accounts payable subsidiary each month to ensure no duplicated invoices are recorded. Anticipated completion date: Will take effect immediately. Contact person(s): Michael S. McWaters, Executive Vice President & CEO.

View Audit 370829

Finding 1160399 (2024-003)

Material Weakness 2024

Department of Public Safety

PR

Reporting § 200.512

Expedite the audit contracting process to ensure compliance with established deadlines, in accordance with applicable regulations. IMPLEMENTATION DATE Immediately RESPONSIBLE PERSON Maritza Torres López

View Audit 370818

Finding 1160398 (2024-002)

Material Weakness 2024

Department of Public Safety

PR

Subrecipient Monitoring Reporting § 200.510

Validate that future federal allocations received in fund 245 are properly classified as federal funds in the SEFA (Schedule of Expenditures of Federal Awards). To ensure compliance with reporting requirements and fiscal transparency, guidance will be provided to the responsible team regarding the a...

Validate that future federal allocations received in fund 245 are properly classified as federal funds in the SEFA (Schedule of Expenditures of Federal Awards). To ensure compliance with reporting requirements and fiscal transparency, guidance will be provided to the responsible team regarding the appropriate procedures for identifying, documenting, and accurately reflecting each federal received in the SEFA. This measure is intended to strengthen internal controls, ensure the traceability of federal resources, and facilitate compliance with external audits and applicable regulations. IMPLEMENTATION DATE Immediately RESPONSIBLE PERSON Lumary Ojeda Ocasio

View Audit 370818

Finding 1160391 (2024-004)

Material Weakness 2024

The Housing and Redevelopment Commission of the City of Aberdeen, Sd

SD

HUD Housing Programs

Federal Agency Name – Department of Housing and Urban Development Assistance Listing Number – 14.871 & 14.879 Program Name – Housing Voucher Cluster Finding Summary: The Commission’s control in place for review of the tenant’s rent payment used for tenant files on annual reviews was not operating ef...

Federal Agency Name – Department of Housing and Urban Development Assistance Listing Number – 14.871 & 14.879 Program Name – Housing Voucher Cluster Finding Summary: The Commission’s control in place for review of the tenant’s rent payment used for tenant files on annual reviews was not operating effectively. In two of the 60 tenant files tested, the tenant’s payment amounts were calculated incorrectly. Responsible Individuals: Brett Bill, Executive Director Corrective Action Plan: The Commission has had recent turnover in the Section 8 Program. Additional training will be provided to new staff to ensure that they are aware of program requirements. Anticipated Completion Date: 5/1/2025

View Audit 370806

Finding 1160390 (2024-003)

Material Weakness 2024

The Housing and Redevelopment Commission of the City of Aberdeen, Sd

SD

HUD Housing Programs Reporting Significant Deficiency

Federal Agency Name – Department of Housing and Urban Development Assistance Listing Number – 14.871 & 14.879 Program Name – Housing Voucher Cluster Finding Summary: The Commission does not have a review process in place to ensure that a person other than the person who prepares the reports for subm...

Federal Agency Name – Department of Housing and Urban Development Assistance Listing Number – 14.871 & 14.879 Program Name – Housing Voucher Cluster Finding Summary: The Commission does not have a review process in place to ensure that a person other than the person who prepares the reports for submission review the reports for accuracy for the monthly VMS submission and yearly unaudited REAC submission. Responsible Individuals: Brett Bill, Executive Director Corrective Action Plan: Review is occurring on the items throughout the year but is not consistently documented. We have developed the process to ensure a review will be documented going forward. Anticipated Completion Date: 5/1/2025

View Audit 370806

Finding 1160383 (2024-003)

Material Weakness 2024

Trumbull County

OH

Subrecipient Monitoring Material Weakness Reporting

The County will enhance its internal controls over reporting and review federal guidance for reporting under the Coronavirus State and Local Fiscal Recovery Funds.

View Audit 370780

Finding 1160380 (2024-003)

Material Weakness 2024

Thomas Ridley's 1 Like Me Inc.

IN

Internal Control / Segregation of Duties Allowable Costs / Cost Principles Eligibility

Finding 2024-03 Insufficient Documentation Supporting Payroll Activity Condition: During testing of payroll claims, we noted that the Organization did not consistently maintain documentation of approved pay rates. Some employees had offer letters on file, while others did not. In certain cases, the ...

Finding 2024-03 Insufficient Documentation Supporting Payroll Activity Condition: During testing of payroll claims, we noted that the Organization did not consistently maintain documentation of approved pay rates. Some employees had offer letters on file, while others did not. In certain cases, the offer letters on file contained pay rates that did not match the actual pay rates being paid. Although our procedures and inquiries confirmed that employees were paid the correct amounts in accordance with approved procedures, the approved documentation was not consistently retained. In addition, we noted that the Organization did not maintain properly completed and approved I-9 forms for all employees during the year. Corrective Actions Taken or Planned: The organization recognizes the importance of maintaining complete and accurate payroll documentation and acknowledges the deficiencies identified during the audit. While payroll payments were made accurately, we recognize that inconsistent retention of supporting documentation created a compliance risk. Certain documentation had been maintained in digital form by a former staff member. Due to staff turnover, these records were not readily accessible or able to be located during the audit period. Management has since initiated a process to update all employee files with current, complete, and properly executed documentation to ensure compliance and improve recordkeeping practices. Management and leadership remain committed to strengthening personnel file management, maintaining all required documentation in accordance with applicable regulations, and reinforcing oversight to prevent recurrence in future audit periods. The Organization plans to execute the following: 1. Standardization of Employee Files - The Organization has implemented a standardized checklist for all employee personnel files to ensure the presence of: + Signed offer letters with approved pay rates + Completed and verified I-9 forms + Any subsequent pay rate change approvals - Co-Executive Directors will be required to complete and sign the checklist for each employee file upon hire, and again during annual compliance reviews. 2. Offer Letter and Pay Rate Documentation - Effective immediately, all employees (existing and new) will have a signed offer letter or addendum on file reflecting their current pay rate. - For employees where discrepancies exist between historical offer letters and current pay, updated pay rate addendums will be drafted, signed by both employee and management, and placed in their personnel files. 3. I-9 Form Compliance - The organization will perform a full review of all current employee I-9 documentation to identify and correct any missing or incomplete forms. - Going forward, I-9 forms will be completed and verified on or before the employee’s first day of work, in accordance with federal requirements. - An annual HR compliance audit will be conducted to ensure all I-9’s are up to date and retained properly. 4. Training & Accountability - Administrative staff will receive refresher training on employment documentation requirements, including I-9 compliance and payroll authorization documentation. - The Co-Executive Directors will review a sample of personnel files quarterly to verify compliance and hold Co-Executive Directors accountable for maintaining accurate documentation. To ensure continued compliance, the Organization will maintain a centralized file tracking system, updated quarterly, and report results to the Board. Corrective actions will be taken immediately if gaps are identified.

View Audit 370779

Finding 1160379 (2024-001)

Material Weakness 2024

Thomas Ridley's 1 Like Me Inc.

IN

Internal Control / Segregation of Duties Material Weakness Reporting

Finding 2024-01 Financial Close Process Condition: During the audit, it was noted that the Organization lacked a robust financial close and review process. This deficiency resulted in material audit adjustments across key financial statement accounts, including revenue, accounts payable, accrued exp...

Finding 2024-01 Financial Close Process Condition: During the audit, it was noted that the Organization lacked a robust financial close and review process. This deficiency resulted in material audit adjustments across key financial statement accounts, including revenue, accounts payable, accrued expenses, deferred revenue, nets assets, and related activity accounts. These adjustments were proposed by the auditors and subsequently recorded by management in order to fairly present the financial statements in accordance with generally accepted accounting principles. The extent and materiality of the adjustments indicate that the Organization's existing closing procedures were insufficient to identify and correct errors prior to the audit. Corrective Actions Taken or Planned: The Organization acknowledges this finding and agrees with the auditor’s assessment regarding the need for a more robust financial close and review process. We recognize that the absence of such a process contributed to the material audit adjustments noted during the engagement. Management and the Board are committed to strengthening internal controls and financial oversight to ensure that future financial statements are materially accurate and compliant with GAAP prior to audit. We are confident that the measures underway will address the deficiency and prevent recurrence. To address this finding, the Organization will implement a comprehensive monthly and quarterly financial close and review process to ensure accuracy, timeliness, and compliance with GAAP prior to the annual audit. Specific actions include: 1. Monthly Close Procedures - Develop and document a formal month-end closing checklist. - Reconcile all key accounts monthly (cash, accounts payable, receivables, accrued expenses, deferred revenue, and net assets). - Require dual review and sign-off from the Accountant (FTM) and Co-Executive Director. 2. Quarterly Financial Review - Conduct quarterly reviews of financial statements and reconciliations with the Treasurer of the Board. - Compare actual results against budget and prior-year trends to identify anomalies early. - Engage an external accountant (FTM) quarterly (if feasible) for review and guidance. 3. Training & Capacity Building - Provide finance staff with training in GAAP reporting and nonprofit accounting best practices. - Implement cross-training to ensure continuity if staffing changes occur. 4. Documentation & Controls - Maintain detailed documentation of all reconciliations and adjusting entries. - Establish a clear approval hierarchy for journal entries, ensuring all significant entries are reviewed by leadership prior to posting. 5. Audit Readiness - By implementing these processes, management will be positioned to present materially accurate financial statements prior to auditor review. - The goal is to minimize, if not eliminate, material audit adjustments in future years. Progress will be tracked by requiring the Finance Committee to review and approve quarterly financial packages. Any discrepancies or deficiencies will be documented and corrective steps taken promptly.

View Audit 370779

Corrective Action Plans

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