Corrective Action Plans

Finding 1222914 (2023-015)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Matching / Level of Effort / Earmarking § 200.303

Finding No.: 2023-015 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Matching, Level of Effort, Earmarking Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management does not agree with the finding. PSS has allocated a...

Finding No.: 2023-015 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Matching, Level of Effort, Earmarking Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management does not agree with the finding. PSS has allocated and expended more than 20% on evidence-based interventions to address learning loss. Specifically, projects listed under the ARP expense report are mapped directly to learning loss categories (e.g. expenses for summer school, extended learning opportunities, high dosage tutors, etc.). Based on this documentation, we request that the audit finding be revised to reflect compliance. Proposed Completion Date: Resolution in progress and on track for completion by August 2026. Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org

View Audit 406425

Finding 1222912 (2023-014)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Equipment & Real Property Management § 200.313

Finding No.: 2023-014 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings and recognizes the ...

Finding No.: 2023-014 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings and recognizes the systemic nature of the deficiencies in equipment management. We acknowledge that the current decentralized approach to safeguarding and maintenance is insufficient to meet the standards of 2 CFR §200.313. PSS is committed to implementing a district-wide, standardized asset management framework to protect federally funded property. Financial and Grants Management policies procedures were promulgated in a SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Payment procedures are being addressed in a separate SOP. Corrective Action Plan: To remediate these findings and ensure consistent compliance across all 27+ locations, PSS will implement the following: I. Capital Asset Listing Enhancement: PSS will immediately update the master inventory database to include all data fields required by 2 CFR 200.313(d)(1). A system-wide data validation will be conducted semi-annually or greater to ensure these fields are populated for all existing federal assets. II. Uniform Safeguarding and Maintenance Guidance: PSS will develop and issue a mandatory guidance on Uniform Safeguarding and Maintenance. This will provide standardized maintenance schedules and safeguarding protocols (e.g., specific tagging requirements and secure storage standards) that must be adopted by every school and office. This eliminates the "lack of standardized controls" across different locations. III. Standardized Maintenance Logs: PSS will require all locations to utilize a standard "Equipment Maintenance Log." This log will serve as the primary documented evidence that maintenance procedures are being performed. IV. Standard Operating Procedures and Policies: PSS will finalize SOPs and policies internal controls and specifically allowability determinations and vendor payments that are currently in draft including an analysis rubric and checklist for review. Where necessary, program specific supplemental guidance for allowability determinations will be provided. PSS central office staff participated in live training in October 2025 regarding allowability of costs. Refresher training on cost principles will be required annually for staff making allowability determinations. Payment processes will be added to this training. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

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Finding 1222910 (2023-013)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Allowable Costs / Cost Principles Subrecipient Monitoring Matching / Level of Effort / Earmarking § 200.303

Finding No.: 2023-013 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial a...

Finding No.: 2023-013 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures were promulgated in SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: I. Finalization of Allowability and Disbursement SOPs: PSS will finalize comprehensive Standard Operating Procedures (SOPs) and policies specifically governing allowability determinations and vendor payments. II. Enhanced Disbursement Controls: PSS is implementing a documented review and approval controls over the payment process. Before any check or ACH disbursement is finalized, a reviewer must verify that the payment amount agrees exactly with the approved invoice. This verification will be physically or digitally documented on the payment voucher to provide a clear audit trail of the pre-payment review. Proposed Completion Date: In progress for FY 2024 with full implementation and documentation processes expected to be completed in 2026. As part of this improvement, we are designing a standardized, documented review process to ensure all disbursements are verified against approved invoices prior to payment. Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org

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Finding 1222908 (2023-012)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Procurement, Suspension & Debarment § 200.317

Finding No.: 2023-012 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Procurement and Suspension and Debarment Questioned Costs: $1,019,874 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings. We recognize that the pro...

Finding No.: 2023-012 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Procurement and Suspension and Debarment Questioned Costs: $1,019,874 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings. We recognize that the procurement files for the identified contracts lacked the necessary documentation, specifically bid evaluation forms, public notices, and suspension and debarment verifications, required to substantiate compliance with PSS Procurement Rules and 2 CFR §200.317. Procurement processes were promulgated in a SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to improve documentation of the vendor selection process, both competitive and sole source exception. (See also 2023-004, 2023-0009) Corrective Action Plan: To address the systematic filing issues and ensure robust monitoring of procurement requirements, PSS will implement the following: I. Mandatory Bid Opening and Evaluation Packet: PSS is implementing a standardized "Bid Evaluation Checklist" that must be completed for every Invitation for Bid (IFB). This checklist will require the Procurement Officer to verify that the file contains: (1) the Bid Opening Summary Sheet, (2) evaluation forms for all bidders (successful and unsuccessful), and (3) the original signed bids. II. Proof of Publication Certification: To ensure compliance with the four-week public notice requirement, PSS will now require a "Publication Certification Form" for every competitive procurement. This form will include dated evidence (such as website timestamps or newspaper affidavits) to provide a verifiable audit trail of the continuous advertisement period. III. Standardized SAM.gov Verification Protocol: For all covered transactions equal to or exceeding $25,000, PSS has made it a mandatory requirement to perform a SAM.gov exclusion search prior to contract execution. A dated PDF copy of the search result must be printed and physically or digitally attached to the contract file as evidence of compliance with 2 CFR §180.300. IV. Updated Procurement Standard Operating Procedures: Procurement SOPs will be updated with more specific guidance and selection checklist for each method (e.g., sealed bid, sole source) including documentation requirements to support vendor eligibility as verified at a minimum by review of SAM.gov and certification by the proposer. CNMI PSS legal counsel will be consulted regarding the addition of an appropriate contract clause to add to new contracts. All vendors with active contracts in 2023 and subsequent years will be reviewed in SAM.gov for eligibility. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

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Finding 1222907 (2023-011)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Equipment & Real Property Management § 200.313

Finding No.: 2023-011 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding and recommendations regarding E...

Finding No.: 2023-011 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding and recommendations regarding Equipment and Real Property Management. We acknowledge that current decentralized practices have led to inconsistencies in asset record-keeping and maintenance. PSS is committed to fully aligning its internal policies with 2 CFR §200.313 to ensure the integrity and protection of all federally funded assets. Property management and inventory control processes were promulgated in the Procurement and Supplies SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to expand property management and inventory control into a separate SOP. PSS central office has contacted the State Infrastructure Technology Department for additional information about an existing inventory tracking system and its potential for implementation and integration with the new financial management system, Tyler Munis. (See 2023-0007) Corrective Action Plan: To remediate these deficiencies and ensure consistent compliance across all locations, PSS will execute the following: I. Comprehensive Asset Data Update: PSS will redesign the Master Capital Asset Listing to include all federally mandated fields and the specific physical condition of each asset. A one-time district-wide data validation check will be conducted to populate these missing fields. II. Standardized Maintenance and Safeguarding Framework: PSS will develop a Unified Asset Protection Guidance that establishes mandatory safeguarding protocols and maintenance schedules for all equipment types. This framework will serve as the minimum standard for all schools and offices, requiring them to maintain localized logs that prove equipment is being serviced and secured. III. Standard Operating Procedures and Policies finalized: PSS will include more detail on property management and inventory control. Identify and evaluate the use of a digital inventory management system with the intent, if feasible, to implement within the next year. PSS staff at each school and in the central office will be identified as property custodians held accountable for annual inventory and property management of assigned assets. Training to be required annually for these personnel. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

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Finding 1222906 (2023-010)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Allowable Costs / Cost Principles Subrecipient Monitoring Matching / Level of Effort / Earmarking § 200.303

Finding No.: 2023-010 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies proce...

Finding No.: 2023-010 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures were promulgated in SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: I. Finalization of Allowability and Disbursement SOPs: PSS will finalize comprehensive Standard Operating Procedures (SOPs) and policies specifically governing allowability determinations and vendor payments. II. Enhanced Disbursement Controls: PSS is implementing a documented review and approval controls over the payment process. Before any check or ACH disbursement is finalized, a reviewer must verify that the payment amount agrees exactly with the approved invoice. This verification will be physically or digitally documented on the payment voucher to provide a clear audit trail of the pre-payment review. Proposed Completion Date: In progress for FY 2024 with full implementation and documentation processes expected to be completed in 2026. As part of this improvement, we are designing a standardized, documented review process to ensure all disbursements are verified against approved invoices prior to payment. Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org

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Finding 1222905 (2023-009)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Procurement, Suspension & Debarment § 200.317

Finding No.: 2023-009 AL Program: COVID-19 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Procurement and Suspension and Debarment Questioned Costs: $102,862 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit finding. W...

Finding No.: 2023-009 AL Program: COVID-19 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Procurement and Suspension and Debarment Questioned Costs: $102,862 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit finding. While there are internal practices to monitor for compliance, we acknowledge that there are inconsistencies of completeness. Furthermore, we recognize the necessity of performing and documenting SAM.gov exclusion checks for all covered transactions over $25,000. Procurement processes were promulgated in a SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to improve documentation of the vendor selection process, both competitive and sole source exception. (See also 2023-004) Corrective Action Plan: To address these deficiencies and ensure compliance with PSS Procurement Rules and 2 CFR §200.317, PSS will implement the following: I. Small Purchase Compliance Enforcement: The Procurement Office will strictly enforce the procurement policies through the implementation of a compliance checklist. This checklist is to be aligned with procurement regulations and completed by requesters with procurement personnel reviewing for compliance. II. Competitive Sealed Proposal (RFP) Workflow: PSS implemented a mandatory RFP Authorization document as a result of FY22 findings. FY22 findings where issued and completed at the beginning of FY24. This packet must include the written determination from the Commissioner of Education, citing legal counsel's advice, regarding the impracticality of sealed bidding. No RFP will be advertised until this signed determination and the corresponding evaluation rubric are uploaded to the permanent contract file. III. Strengthening SOP’s: Update Procurement SOP with more specific guidance and selection checklist for each method (e.g., sealed bid, sole source) including documentation requirements to support vendor eligibility as verified at a minimum by review of SAM.gov and certification by the proposer. CNMI PSS legal counsel will be consulted regarding the addition of an appropriate contract clause to add to new contracts. All vendors with active contracts in 2023 and subsequent years will be reviewed in SAM.gov for eligibility. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

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Finding 1222903 (2023-008)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Matching / Level of Effort / Earmarking

Finding No.: 2023-008 AL Program: COVID-19 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Matching, Level of Effort, and Earmarking Questioned Costs: $345,823 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding regardi...

Finding No.: 2023-008 AL Program: COVID-19 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Matching, Level of Effort, and Earmarking Questioned Costs: $345,823 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding regarding the Maintenance of Financial Support (MFS) for IDEA Part B. We recognize that the inclusion of unverified encumbrances in the MFS calculation led to an inadvertent shortfall in actual expenditures compared to the required support levels. Corrective Action Plan: To ensure future compliance with IDEA §612(a)(18) and 34 CFR §300.163(a), PSS is implementing the following measures: I. Establishment of an MFS Monitoring Framework: The Finance Department, in coordination with the Special Education Program, will develop a formal MFS Tracking Ledger. This tool will track actual expenditures on a quarterly basis to ensure spending is on pace to meet or exceed the preceding fiscal year’s support levels. II. Verification of Encumbrances: PSS policy has been clarified to ensure that only "liquidated expenditures" (actual costs incurred) are used for MFS compliance reporting. Any encumbrances included in preliminary projections must be supported by valid contracts or purchase orders and must be reconciled against actual payments prior to final federal reporting. III. Enhanced Supervisory Review: PSS will develop an "MFS Certification" process. The Director of Finance will review and sign off on the expenditure reports at mid-year and year-end. This review will include a side-by-side comparison of current-year spending against the Part B Application requirements to identify potential shortfalls early. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org

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Finding 1222901 (2023-007)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Equipment & Real Property Management § 200.313

Finding No.: 2023-007 AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. We recogniz...

Finding No.: 2023-007 AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. We recognize that our current capital asset records and decentralized maintenance practices do not fully meet the rigorous data and oversight standards of 2 CFR §200.313. Property management and inventory control processes were promulgated in the Procurement and Supplies SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to expand property management and inventory control into a separate SOP. PSS central office has contacted the State Infrastructure Technology Department for additional information about an existing inventory tracking system and its potential for implementation and integration with the new financial management system, Tyler Munis. PSS is committed to a comprehensive overhaul of our inventory management system to ensure full compliance and better protection of federal property. Corrective Action Plan: To address the deficiencies in recordkeeping, safeguarding, and physical verification, PSS will implement the following: I. Asset Listing Remediation: PSS will update the Master Capital Asset Listing to include information such as asset condition. II. Standardized Safeguarding & Maintenance Guidance: PSS will finalize SOPs and policies to include more detail on property management and inventory control. PSS will develop and distribute a district-wide equipment maintenance & safeguarding guidance. This will establish the minimum required procedures for all schools and offices, including standardized logs for routine maintenance and specific security protocols (e.g., tagging, restricted access, and secure storage) to prevent loss or theft. III. Formal Inventory Certification: To resolve the issue of missing count sheets, PSS will implement a standardized annual inventory process. This will require each location custodian to submit a signed and dated "Physical Inventory Certification" along with the count sheets to be verified by Procurement personnel. No inventory will be considered complete until the Central Office verifies that the custodian list matches the asset records. PSS staff at each school and in the central office will be identified as property custodians held accountable for annual inventory and property management of assigned assets. Training to be required annually for these personnel. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

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Finding 1222899 (2023-006)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Allowable Costs / Cost Principles § 200.403

Finding No.: 2023-006 AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $5,130 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit ...

Finding No.: 2023-006 AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $5,130 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings and the associated questioned costs. Financial and Grants Management policies procedures were promulgated in a SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: To prevent future occurrences and ensure full compliance with federal cost principles, PSS will implement the following: I. Review of Travel Authorization Requirements: PSS will conduct a review of its travel policy to require a written statement of alignment with program goals or objectives for every travel request. This statement must explicitly document how the travel is necessary and reasonable for the performance of the specific federal award. II. Centralized Digital Documentation Protocol: To resolve the inadequate systematic filing issue, PSS implemented a protocol to improve its digital filing procedures. All supporting documents, including invoices, boarding passes, approved timesheets, and pay rate authorizations, must be uploaded and verified before the final liquidation of any federal drawdowns. III. Strengthening Review Process: Finalize expanded SOPs and policies to include more detail on time and effort reporting (including differential pay) and travel justifications specific to allowability determinations that are currently in draft including an analysis rubric and checklist for review. Where necessary, program specific supplemental guidance for allowability determinations will be provided. PSS central office staff participated in live training in October 2025. Refresher training on cost principles will be required annually for staff making allowability determinations. Proposed Completion Date: PSS is currently in the process of implementing these corrective actions with full implementation by August 2026. Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org

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Finding 1222897 (2023-005)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Reporting Subrecipient Monitoring Allowable Costs / Cost Principles

Finding No.: 2023-005 AL Program: 10.555 National School Lunch Program (NSLP) Area: Reporting Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management procedures were promulgated in a SOP on S...

Finding No.: 2023-005 AL Program: 10.555 National School Lunch Program (NSLP) Area: Reporting Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management procedures were promulgated in a SOP on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve coding of grant details and expenditures, increased frequency of reconciliations, and a specific SOP for report preparation. Corrective Action Plan: I. Implementation of a Comprehensive Grant Tracker: PSS will develop and implement a centralized Grant Lifecycle Tracker for all active federal awards. This tool will serve as the primary monitoring mechanism for compliance by recording all financial and programmatic reporting due dates, assigning specific preparers for each report, and establishing automated milestones to ensure sufficient lead time for both the preparation phase and the subsequent supervisory review. II. Deployment of Enhanced Data Analysis Tools: To ensure that quarterly program reporting is both consistent and timely, PSS will develop and implement specialized data analysis tools. these tools will streamline the aggregation of program data, reducing manual entry errors and allowing for more efficient evaluation of program performance against federal benchmarks. Proposed Completion Date: In progress for FY 2024 with completion by August 2026. Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org

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Finding 1222896 (2023-004)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Procurement, Suspension & Debarment § 200.317

Finding No.: 2023-004 AL Program: 10.555 National School Lunch Program (NSLP) Area: Procurement and Suspension and Debarment Questioned Costs: $725,425 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings regarding procurement and suspension an...

Finding No.: 2023-004 AL Program: 10.555 National School Lunch Program (NSLP) Area: Procurement and Suspension and Debarment Questioned Costs: $725,425 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings regarding procurement and suspension and debarment procedures. We recognize that maintaining the integrity of the competitive bidding process requires strict adherence to public notice timelines, documented justifications for vendor selection, and mandatory debarment verifications. Procurement processes were promulgated in a SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to improve documentation of the vendor selection process, both competitive and sole source exception. Corrective Action Plan: To remediate these deficiencies and ensure compliance with 2 CFR §200.317 and PSS Procurement Rules, management will implement the following: I. Procurement Selection Justification Requirement: PSS will implement a formal "Basis for Award" memorandum template. In any instance where the lowest bidder is not selected, the Procurement Officer must provide a detailed written justification—reviewed and approved by legal counsel—explaining why the selected offeror is the most advantageous to PSS based on the criteria in the solicitation. This is covered by § 60-40-205 Competitive Sealed Bidding (i) Notice of Intent to Award. After bid evaluation, a notice of intent to award the contract to the lowest responsive bid by a responsible bidder whose bid fully meets the requirements of the invitation for bids and this chapter shall be issued to all bidders. The notice of intent to award is not a promise or guarantee of award, and the intended bidder should not incur any costs based on either the notice of intent to award or reliance of a contract. Bid rejections are issued as well detailing where the bids did not qualify under § 60-40-205(g). II. Mandatory SAM.gov Verification Protocol: PSS has updated its contracting checklist to include a mandatory "Suspension and Debarment Verification" step. For all contracts exceeding $25,000, a SAM.gov exclusion search must be performed, and a dated PDF of the search results must be physically or digitally attached to the contract file prior to execution. The Procurement SOP will be updated with more specific guidance and selection checklist for each method (e.g., sealed bid, sole source) including documentation requirements to support vendor eligibility as verified at a minimum by review of SAM.gov and certification by the proposer. CNMI PSS legal counsel will be consulted regarding the addition of an appropriate contract clause to add to new contracts. All vendors with active contracts in 2023 and subsequent years will be reviewed in SAM.gov for eligibility. III. Centralized Procurement Filing System: PSS is implementing a digitization protocol of all procurement documents. A review will be conducted prior to upload to ensure it contains the public notice evidence, all received bids, the evaluation rubric, and the debarment verification. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org

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Finding 1222895 (2023-003)

Material Weakness 2023

Commonwealth of the Northern Mariana Islands Public School System

MP

Allowable Costs / Cost Principles Subrecipient Monitoring School Nutrition Programs § 200.303

Finding No.: 2023-003 AL Program: 10.555 National School Lunch Program (NSLP) Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures...

Finding No.: 2023-003 AL Program: 10.555 National School Lunch Program (NSLP) Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures were promulgated in SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: I. Finalization of Allowability and Disbursement SOPs: PSS will finalize comprehensive Standard Operating Procedures (SOPs) and policies specifically governing allowability determinations and vendor payments. II. Enhanced Disbursement Controls: PSS is implementing a documented review and approval controls over the payment process. Before any check or ACH disbursement is finalized, a reviewer must verify that the payment amount agrees exactly with the approved invoice. This verification will be physically or digitally documented on the payment voucher to provide a clear audit trail of the pre-payment review. Proposed Completion Date: In progress for FY 2024 with full implementation and documentation processes expected to be completed in 2026. As part of this improvement, we are designing a standardized, documented review process to ensure all disbursements are verified against approved invoices prior to payment. Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org

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Finding 1222797 (2023-002)

Material Weakness 2023

Sustainable Molokai

HI

Management will implement recommendation and consistently retain documentation evidencing review and approval of expenditures before disbursement.

View Audit 406396

Finding 1222796 (2023-001)

Material Weakness 2023

Sustainable Molokai

HI

Management will work to complete annual audits within the prescribed due dates.

View Audit 406396

Finding 1222750 (2023-002)

Material Weakness 2023

Village of Summit

IL

Subrecipient Monitoring

Finding 2023 – 002: Grant Policy Condition: Previously and during our current year-end audit procedures, we noted that the Village does not have a formalized Grant Policy that documents their grant procedures. Any department within the Village may apply for, and be awarded, grant funding from a vari...

Finding 2023 – 002: Grant Policy Condition: Previously and during our current year-end audit procedures, we noted that the Village does not have a formalized Grant Policy that documents their grant procedures. Any department within the Village may apply for, and be awarded, grant funding from a variety of State and Federal sources. Plan: The Village will develop specific policy and procedures for tracking and monitoring grant activities and to clearly delineate responsibility for monitoring compliance with applicable requirements. Anticipated Date of Completion: Fiscal Year 2024 Name of Contact Person: Colleen Lambert, Village Clerk Management Response: Management acknowledges this finding and will work to correct it in the coming year.

View Audit 406333

Finding 1222749 (2023-001)

Material Weakness 2023

Village of Summit

IL

Internal Control / Segregation of Duties

Finding 2023 – 001: Audit Journal Entries Condition: During audit fieldwork, our testing resulted in significant audit adjustments in order to present materially accurate financial statements. Plan: The Village Clerk, along with staff, will review year-end adjustments as part of the audit preparatio...

Finding 2023 – 001: Audit Journal Entries Condition: During audit fieldwork, our testing resulted in significant audit adjustments in order to present materially accurate financial statements. Plan: The Village Clerk, along with staff, will review year-end adjustments as part of the audit preparation process and work to reduce the number of entries proposed by the auditors and prepare fully adjusted financial statements prior to audit fieldwork. Anticipated Date of Completion: Fiscal Year 2024 Name of Contact Person: Colleen Lambert, Village Clerk Management Response: The Village Clerk, along with staff, will review year-end adjustments as part of the audit preparation process and work to reduce the number of entries proposed by the auditors and prepare fully adjusted financial statements prior to audit fieldwork.

View Audit 406333

Finding 1222690 (2023-006)

Material Weakness 2023

Municipality of Guanica

PR

Equipment & Real Property Management § 200.313

We will give the instructions to the Property Division of the Municipality to update the inventory related to equipment, furniture and vehicles. However, we recognize that the construction in progress and several real properties and infrastructure assets are not recorded in our capital assets record...

We will give the instructions to the Property Division of the Municipality to update the inventory related to equipment, furniture and vehicles. However, we recognize that the construction in progress and several real properties and infrastructure assets are not recorded in our capital assets records. To correct this situation, we will give instructions to the Property Division of the Municipality to start identifying all the real property and infrastructure owned by the Municipality and start a process of gathering the necessary information related to the cost, completeness, and ownership of its real property and infrastructure assets, to comply with the requirements. Implementation Date: During fiscal year 2025-2026 and during the next fiscal years.

View Audit 406287

Finding 1221632 (2023-006)

Material Weakness 2023

City of Cedartown, Georgia

GA

Procurement, Suspension & Debarment § 200.214

Procurement Name of the Contact Person Responsible for the Corrective Action Plan: Amy Orebaugh, Finance Director. Corrective Action Plan: The City of Cedartown will update our procurement policies and internal control procedures to enforce documentation requirements. Anticipated Completion Date: De...

Procurement Name of the Contact Person Responsible for the Corrective Action Plan: Amy Orebaugh, Finance Director. Corrective Action Plan: The City of Cedartown will update our procurement policies and internal control procedures to enforce documentation requirements. Anticipated Completion Date: December 31, 2026 2023-004 Year-End Financial Close and Reporting Controls 85

View Audit 405887

Finding 1221491 (2023-004)

Material Weakness 2023

Baltimore Medical System, Inc.

MD

Reporting § 200.328 § 200.329

Management agrees with the recommendation to ensure the required reports are prepared using accurate information and supporting documentation for federal grant reports are maintained. • All system generated reports will be maintained in the preparation of the UDS and FFR reports. • A report will be ...

Management agrees with the recommendation to ensure the required reports are prepared using accurate information and supporting documentation for federal grant reports are maintained. • All system generated reports will be maintained in the preparation of the UDS and FFR reports. • A report will be run out of the practice management system identifying qualified sliding fee discounts to be included in the UDS report. Anticipated date of completion: December 31, 2026 Contact person responsible – Margaret Boemmel, CFO

View Audit 405779

Finding 1221488 (2023-003)

Material Weakness 2023

Baltimore Medical System, Inc.

MD

Procurement, Suspension & Debarment § 200.320

Management agrees with the recommendation to maintain support for all bids obtained and the conclusions reached as part of the procurement process. The procurement audit sample contained expenses incurred by a Provider Staffing Agency. We were unable to provide support that we obtained multiple bids...

Management agrees with the recommendation to maintain support for all bids obtained and the conclusions reached as part of the procurement process. The procurement audit sample contained expenses incurred by a Provider Staffing Agency. We were unable to provide support that we obtained multiple bids from staffing agencies. Going forward we will confirm rates via email and maintain the documentation supporting the fact that we are obtaining quotations from an adequate number of qualified sources. In addition, the following actions are being taken: • The Procurement Policy is being sent out to all relevant personnel to remind them of the procedures that must be followed before making purchases greater than $25,000. • Personnel will be required to send in the quotes from the qualified sources at the time the purchase order is submitted. Anticipated date of completion: December 31, 2026

View Audit 405779

Finding 1221470 (2023-003)

Material Weakness 2023

Granite State Independent Living

NH

Allowable Costs / Cost Principles

Planned Corrective Action: GSIL will continue to strive to maintain adequate staffing levels within the Finance Department to ensure work is completed timely and to maintain documented separation of duties. A Controller position was added and filled recently to add depth to the department and help w...

Planned Corrective Action: GSIL will continue to strive to maintain adequate staffing levels within the Finance Department to ensure work is completed timely and to maintain documented separation of duties. A Controller position was added and filled recently to add depth to the department and help with these efforts. Additionally, vacant positions have included extensive internal and external recruiting efforts and have also recently been filled. Planned Implementation Date of Corrective Action: July 2026 Person Responsible for Corrective Action: Jill Bille, CFO

View Audit 405741

Finding 1221469 (2023-002)

Material Weakness 2023

Granite State Independent Living

NH

Significant Deficiency Internal Control / Segregation of Duties § 200.512

Planned Corrective Action: GSIL will continue to strive to maintain adequate staffing levels within the Finance Department to ensure work is completed timely and to maintain documented separation of duties. A Controller position was added and filled recently to add depth to the department and help w...

Planned Corrective Action: GSIL will continue to strive to maintain adequate staffing levels within the Finance Department to ensure work is completed timely and to maintain documented separation of duties. A Controller position was added and filled recently to add depth to the department and help with these efforts. Additionally, vacant positions have included extensive internal and external recruiting efforts and have also recently been filled. Planned Implementation Date of Corrective Action: July 2026 Person Responsible for Corrective Action: Jill Bille, CFO

View Audit 405741

Finding 1221450 (2023-001)

Material Weakness 2023

Lawrence County School District

MS

Subrecipient Monitoring Material Weakness Reporting § 200.512

Corrective Action Plan Details: A. Contact person responsible for corrective action: Name: Alicia Smith Title: Chief Financial Officer B. Description of corrective action planned: The district will strengthen its internal control systems over reporting to ensure single audit reporting package and da...

Corrective Action Plan Details: A. Contact person responsible for corrective action: Name: Alicia Smith Title: Chief Financial Officer B. Description of corrective action planned: The district will strengthen its internal control systems over reporting to ensure single audit reporting package and data collection form are submitted to the Federal Audit Clearinghouse within established timeframe and financial statements are prepared timely. C. Anticipated completion date of corrective action: Immediately

View Audit 405738

Finding 1220593 (2023-005)

Material Weakness 2023

Redwood Community Services, Inc.

CA

Internal Control / Segregation of Duties Subrecipient Monitoring Reporting

Action planned in response to finding: 1. Assigned program director and contract specialist to be responsible for the completion of contract terms, with executive oversight. 2. Active USDA portal access always maintained. Name(s) of the contact person(s) responsible for corrective action: Anna Kelle...

Action planned in response to finding: 1. Assigned program director and contract specialist to be responsible for the completion of contract terms, with executive oversight. 2. Active USDA portal access always maintained. Name(s) of the contact person(s) responsible for corrective action: Anna Keller, Finance Manager and Brittany Lucas, Chief Financial Officer Planned completion date for corrective action plan: January 2024

View Audit 405434

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