Findings Citing § 200.302

Finding 2024-002 – Untimely and Inaccurate Preparation of the Schedule of Federal Awards (SEFA) (Sig-nificant Deficiency) Financial Reporting / Internal Control Over Compliance CFDA Title and Number: 97.036 Public Assistance Program – Disaster Grants Name of Federal Agency: Federal Emergency Management Agency (FEMA Internal Control over Compliance: Skills Knowledge and Education (SK&E) CFDA Title and Number: 66.202 Wastewater Treatment Plant Name of Federal Agency: U. S. Environmental Protection Agency Internal Control over Compliance: Skills Knowledge and Education (SK&E) Criteria: The Uniform Guidance (2 CFR §200.510(b)), requires the auditee to prepare a Schedule of Federal Ex-penditures of Federal Awards (SEFA) that accurately reports federal expenditures for each federal award, including the Assistance Listing number, federal agency, pass-through entity (if any), and amount expended for the fiscal year. In addition, (2 CFR §200.302(b)), requires financial management systems that provide for accurate, current, and complete disclosure of federal award expenditures and support reliable financial reporting and reconciled to the general ledger. Condition: The auditee did not timely or accurately prepare the Schedule of Expenditures of Federal Awards. Specifically: • The initial SEFA provided to auditors was significantly later than the requested date, and required signifi-cant auditor inquiry and assistance to complete. • Management did not demonstrate an understanding of the dates and amounts of federal expenditures to be reported on the SEFA. • The SEFA provided to auditors did not include all federal awards. • Required Assistance Listing numbers were not included for federal programs. • The format of the SEFA was not easily reconcilable to the general ledger, and required auditor-identified corrections and adjustments in order to fairly present federal expenditures in accordance with federal re-quirements. Cause: The condition resulted from: • An insufficient understanding of SEFA preparation requirements, including which expenditures to report and how federal awards should be presented; and • Inadequate internal controls over the preparation, review, and reconciliation of the SEFA to the accounting records. Effect or Potential Effect: As a result of these conditions: • There was an increased risk that federal expenditures were incomplete, inaccurate, or improperly reported. • Management’s ability to determine total federal expenditures, for the fiscal year, including evaluation of Single Audit applicability, was impaired. • The entity relied on auditor assistance to identify omitted awards, reconcile amounts and bring the SEFA into compliance with federal reporting requirements, indicating a lack of effective internal controls over federal financial reporting. Questioned Cost: None noted here. Repeat of a Prior-Year Finding: No Recommendation: We recommend the entity strengthen its internal controls over federal financial reporting by: • Developing and documenting procedures for the timely preparation of the SEFA, including identification of all federal awards, correct Assistance Listing numbers, and determination of reportable expenditures. • Establish a process to reconcile the SEFA to the general ledger and to supporting records to ensure com-pleteness and accuracy. • Providing training to appropriate personnel regarding Uniform Guidance SEFA requirements and the de-termination of federal expenditures for reporting and audit threshold purposes. • Establish cutoff procedures to capture year-end accruals/deferred items and ensure completeness of ex-penditures for the SEFA. Views of Responsible Officials: Port of Brookings Harbor acknowledges this finding. Management recognizes that it did not fully understand SEFA reporting requirements. Management is committed to enhancing its under-standing of federal reporting requirements and strengthening internal controls to ensure future SEFA’s are prepared accurately, completely, and in a timely manner. Corrective Action Plan: _________________________ (To be developed by Port of Brookings Harbor and sub-mitted for final report) Planned Implementation Date: ________________ Responsible Persons: District Financial Management, Port of Brookings Harbor

2024-015 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Pass-through Agency: New Hampshire Department of Education Cluster/Program: All Assistance Listing Numbers: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Noncompliance could not be determined due to the scope limitation Criteria or Specific Requirement: In accordance with 2 CFR 200.302(b)(3), Financial Management, recipients of federal funds must maintain records that adequately identify the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest, and must be supported by source documentation. In addition, per 2 CFR 200.303, Internal Controls, recipients must establish and maintain effective internal control over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. Lastly, per 2 CFR 200.334, Record Retention Requirements, recipients of federal funds must retain financial and programmatic records, supporting documents, statistical records, and all other records pertinent to a federal award for a period of three years from the date of submission of the final expenditure report. Condition: The School District informed the audit engagement team that it was unable to locate all required documentation necessary to support expenditures and demonstrate compliance with federal program requirements. As a result, we were unable to test compliance with Federal program requirements, and expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be fully supported or reconciled to the School District’s financial records. This limitation prevented us from completing the required testing over major programs. In addition, while the audit engagement team was able to trace reported federal revenue amounts to records maintained by the New Hampshire Department of Education, the School District was unable to provide sufficient supporting documentation to verify expenditures at the individual grant level. Furthermore, the School District’s grants fund was adjusted, or “plugged,” in total so that aggregate revenues agreed to aggregate expenditures; however, detailed balances were not maintained or reconciled by individual federal award. As a result, the School District could not demonstrate that revenues and expenditures were accurately recorded and matched to the specific grants from which they originated. Cause: The School District lacks a consistent, centralized process for retaining and organizing documentation related to federal program expenditures and compliance requirements. In addition, accounting records were not maintained at a sufficient level of detail to track activity by individual grant award. High staff turnover and the absence of clear written procedures contributed to the unavailability of records and the use of unsupported year-end adjustments to reconcile grant activity. Effect: Because required supporting documentation was unavailable, we were unable to obtain sufficient appropriate audit evidence to support compliance with federal requirements for the affected programs. Consequently, we were unable to determine whether certain transactions were allowable, properly allocated, and in compliance with the applicable grant requirements. Additionally, the inability to reconcile grant revenues and expenditures at the individual award level increases the risk of inaccurate reporting, improper use of restricted funds, missed reimbursement opportunities, and noncompliance with grant terms and conditions. This represents material noncompliance and may result in questioned costs, repayment obligations, or other remedial actions by the granting agencies. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: As identified in Schedule III, Summary Schedule of Prior Audit Findings, this is a repeat of finding 2023-001. Recommendation: We recommend that the School District establish and enforce stronger internal controls over Federal grants management and document retention. This should include implementing a centralized digital storage system, maintaining separate accounting records for each individual grant award, performing periodic reconciliations of revenues and expenditures by grant, and eliminating unsupported balancing entries used to force aggregate funds into agreement. In addition, the School District should provide regular staff training on federal documentation requirements and adopt written policies and procedures that clearly assign responsibility for grant accounting, reconciliation, and record retention. These steps will help ensure that all required documentation is consistently maintained, grant activity is accurately reported, and records are readily accessible for audit and monitoring purposes. Views of Responsible Officials: Management’s views and corrective action plan are included at the end of this report.

Criteria: Uniform Guidance (2 CFR 200.302(b)(7) and 2 CFR 200.430) requires entities to establish and maintain effective internal control over federal awards, including ensuring that expenditures are properly authorized and supported by adequate documentation. Condition: During testing, the Organization was unable to provide documented evidence of disbursement approvals, as approvals are frequently communicated verbally or via text message and are not retained. In addition, the Organization was unable to provide employment agreements or other documentation supporting employee pay rates for individuals whose compensation was charged to the federal program. Cause: The condition appears to result from inadequate policies and procedures over documenting and retaining evidence of approval for expenditures, including both disbursement authorization and employee compensation arrangements, as well as a lack of formal controls requiring retention of such documentation. Effect: As a result, there is an increased risk that expenditures charged to federal programs may be unauthorized, improperly approved, unsupported, or not allowable under Uniform Guidance. The lack of documentation also limits the effectiveness of audit procedures and increases the likelihood that noncompliance could occur and not be detected. No questioned costs were identified as a result of this finding. Recommendation: We recommend that the Organization establish formal procedures requiring documented authorization for all disbursements and ensure that such approvals are retained in an organized and accessible manner. Additionally, the Organization should implement procedures requiring formal documentation of employee compensation arrangements, including established pay rates, and ensure that this documentation is consistently maintained and readily available for audit and compliance purposes. Management’s Response: Management agrees with the finding and indicates that it will implement formal approval procedures requiring documented authorization for all disbursements and will retain such documentation within its accounting records. Management also plans to implement standardized employment agreements and compensation authorization documentation for all employees and strengthen document retention practices to ensure compliance with federal requirements.

FINDING REFERENCE NUMBER 2024-022 (See Finding Reference Number 2024-003) FEDERAL PROGRAM (ALN – 10.542) PANDEMIC EBT FOOD BENEFITS (P-EBT) U.S. DEPARTMENT OF AGRICULTURE AWARD NUMBERS 2301PR456S9032 (Federal Award Years: 10/1/2022 through 3/31/2024) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ELIGIBILITY // REPORTING TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. In accordance with the approved State Plan, no summer 2023 P-EBT benefits may be issued to children who did not attend an NSLP-participating school at the end of the school year immediately preceding the summer. STATEMENT OF CONDITION As part of our internal control procedures for the financial management system regarding reporting requirements, we found the following deficiencies regarding the only report submitted during the fiscal year of September 30, 2023: • The amount reported as total Federal share of outlays (line 10.g.), was $35,356,789, and the amount of $879,121 (line 10.h) as total unliquidated obligations. The accounting system (PRIFA) reported total expenditures in the amount of $36,235,910, which is the sum of lines 10.g and 10.h. No unliquidated obligations are included in the database of PRIFA. • In addition, we noted an expenditure dated October 31, 2023, in the database for $92,157 that was not reported. This amount was not included as unliquidated obligation in the report of September and no other report was submitted that included this expenditure. • We have no administrative expenses recorded in the database; however, the reports provided listed $307,733 as administrative expenses. In relation to the allowable activities, we obtained a list of all participants that received the benefits. We noted that the information provided from SAIC system does not agree with the reports provided by Service EBT Provider. We noted that the lists of emissions from June 2023 through October 2023 totalized $36,181,839, in accordance with a list from SAIC. Emissions from the Service EBT Provider and accounting records presented expenditures in the amount of $36,328,067, a total difference of $146,228. This difference represents 1,052 participants that are not in the list provided from SAIC, but whose benefits were issued according to the reports from the Service EBT Provider. In relation to the evaluation of the eligibility requirements, we noted that 27 participants were duplicated in the lists from SAIC. In addition, we were unable to verify if the participant attended a private school that participated in the NSLP, because no evidence of the lists from the Puerto Rico Department of Education was provided. QUESTIONED COSTS $146,228. This amount is the total amount of benefits issued for 1,052 participants whose information was not provided. PERSPECTIVE INFORMATION These deficiencies are a systemic problem that is related to lack of proper training and segregation of duties when reporting (preparer and reviewer not being the same person). No proper internal controls are in place to ensure that all data used to issue the benefits is safeguarded and properly reconciled with accounting records. STATEMENT OF CAUSE ADSEF did not establish and implement adequate internal controls to ensure the accuracy, completeness, and supervisory review of financial information used in the preparation of Federal reports. In addition, financial data reported to the Federal agency was not consistently reconciled to the supporting accounting records and database prior to submission. Furthermore, no proper records are maintained of the data used to issue the benefits and how the reconciliation process from the SAIC system and benefits processed by the Service EBT Provider is made. POSSIBLE ASSERTED EFFECT The discrepancies between reported amounts and supporting records, along with lack of supervisory review, create a risk that Federal reports are inaccurate, incomplete, or unsupported, resulting in noncompliance with Federal reporting requirements. We were unable to verify the complete lists of beneficiaries of the P-EBT. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-001/2023-029. RECOMMENDATIONS We recommend that management establish an internal control process that includes having more than one person review the reports submitted to the Federal government. In addition, we recommend proper internal controls that require a structured process of compiling, reviewing and safeguarding all required data for benefits issued.

FINDING REFERENCE NUMBER 2024-023 (See Finding Reference Number 2024-004) FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 231PR426S7003/4; 241PR426S7003/4 (Federal Award Years: 10/1/2022 through 9/30/2024) 2022G996117; 2023996117 (Federal Award Years: 10/1/2021 through 9/30/2023) 2401PRTANF1 (Federal Award Years: 10/1/2023 through 9/30/2026) 2301PRTABD; 2401PRTABD (Federal Award Years: 10/1/2022 through 9/30/2026) 2201PRLIEA; 2301PRLIEA; 2401PRLIEA (Federal Award Years: 10/1/2021 through 9/30/2025) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process: i. There is no written procedure that outlines the process for applying this formula for distributing administrative expenses. ii. There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire. iii. Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2023-2024 fiscal year were observed, in which these three options represented between 25% and 18% for local offices and 38% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs. QUESTIONED COSTS None. PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program. STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs. POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-004/2023-032. RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.

FINDING REFERENCE NUMBER 2024-024 (See Finding Reference Number 2024-005) FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 231PR426S7003/4 (Federal Award Years: 10/01/2022 through 09/30/2023); 241PR426S7003/4 (Federal Award Years: 10/01/2023 through 09/30/2024) 2023996117 (Federal Award Years: 10/01/2022 through 09/30/2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. … (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we requested evidence of the indirect costs transactions. ADSEF is allowed to claim 16.80% of indirect costs. As part of our audit procedures over the Nutrition Assistance for Puerto Rico and TANF program, we selected some transactions to evaluate the compliance with the indirect cost’s claims. The TANF program reported three (3) transactions related to indirect costs in the amount of $569,998.55, and for the Nutrition Assistance for Puerto Rico three (3) transactions were reported in the amount of $4,815,418.41. We requested evidence of one (1) transaction for the TANF program and one (1) for the Nutrition Assistance for Puerto Rico, no evidence of class object was provided in order to ascertain that only allowable expenditure transactions were considered in the calculation and claim of indirect costs. QUESTIONED COSTS None. PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. ADSEF does not have an internal control process that allows for proper authorization and monitoring of the claims made for indirect costs. STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for claiming and documenting indirect costs claims. The process of recording indirect costs is based on an excel spreadsheet, no detail of costs indicating the class object and transactions considered are maintained. POSSIBLE ASSERTED EFFECT Indirect costs calculation may include unallowable costs and not be detected timely. ADSEF cannot provide proper audit evidence of the amounts claimed as indirect costs. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-005/2023-033. RECOMMENDATIONS We recommend that management establish internal control processes to reconcile PRIFAS and the various sources of information used for reporting. Additionally, maintain clear records of indirect costs claimed and awarded.

FINDING REFERENCE NUMBER 2024-025 FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES (ALN – 93.667) SOCIAL SERVICES BLOCK GRANT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2203PRFPSS; 2303PRFPSC; 2202PRFPCV; 2302PRFPCV; 2302PRPKIN (Federal Award Years: 10/1/2021 through 9/30/2023) 2211PRSOSR; 2311PRSOSR (Federal Award Years: 10/1/2022 through 9/30/2024) ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES // CASH MANAGEMENT TYPE OF FINDING INTERNAL CONTROL – SIGNIFICANT DEFICIENCY CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): … (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we verified the requirements for the written procedures policies, and we didn’t obtain by ADFAN the required documentation. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to written policies and procedures. STATEMENT OF CAUSE ADFAN has not established a work plan to maintain the written procedures policies required by the Uniform Guidance. POSSIBLE ASSERTED EFFECT The absence of written procedures may lead to inconsistent program implementation, unclear assignment of responsibilities, and inadequate oversight. This increases the risk of noncompliance with applicable regulations, inefficiencies in operations, and reduced effectiveness in achieving program objectives. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-006/2023-034. RECOMMENDATIONS We recommend that ADFAN develop, formalize, and implement comprehensive written procedures for the programs to comply with the Uniform Guidance. These procedures should clearly define roles and responsibilities, establish operational workflows, and include mechanisms for monitoring and compliance. Doing so will help ensure consistency in program execution, accountability, and alignment with regulatory and performance requirements.

FINDING REFERENCE NUMBER 2024-026 (See Finding Reference Number 2024-006) FEDERAL PROGRAM (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2201PRLIEA (Federal Award Year: 10/1/2021 – 9/30/2023) 2301PRLIEA (Federal Award Year: 10/1/2022 – 9/30/2024) 2401PRLIEA (Federal Award Year: 10/1/2023 – 9/30/2025) 2301PRLIEE (Federal Award Year: 10/1/2022 – 9/30/2024) 2301PRLIEI (Federal Award Year: 10/1/2022 – 9/30/2024) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT CASH MANAGEMENT TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR 200.302, requires recipient's and subrecipient's financial management system must provide for the following: (3) maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation; (4) effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303; and (6) written procedures to implement the requirements of § 200.305. 2 CFR 200.305, Federal Payments, establishes that: (a) payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 and Treasury Financial Manual (TFM) 4A-2000, “Overall Disbursing Rules for All Federal Agencies”; (b) for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. See § 200.302(b)(6). Except as noted in this part, the Federal agency must require recipients to use only OMB-approved, government-wide information collections to request payment. STATEMENT OF CONDITION As part of our understanding of internal controls and compliance regarding cash management, we obtained a procedures manual. We found the following deficiencies: 1. The effective date is April 2024. 2. In the section describing the LIHEAP process, the US Department of Agriculture is mentioned instead of the US Department of Health and Human Services. 3. It does not identify the personnel responsible for the processes to establish segregation of duties. 4. In our interviews it was noted that only one person is in charge of all drawdowns, and no proper supervision or review of the documentation is performed. In addition, a detail of the requests related to the program was obtained; however, this request information does not reconcile with the revenue recognized in PRIFAS. The following deficiencies were identified: 1. The document includes amounts identified as LIHEAP, which belongs to another Federal program, the Low-Income Household Water Assistance Program (ALN 93.499), in the amount of $295,354.51. 2. Three (3) deposits were included in the detail that were not recorded in PRIFA in the amount of $491,243.33. 3. Three (3) deposits were included in PRIFA that were not included in the detail in the amount of $502,901.10. From a population of fifty (50) revenue transactions, six (6) transactions were selected to ensure that the correct amounts were requested from the Federal program and that the documents indicated in the manual were included with each petition. The following deficiencies were observed: 1. The documents included do not contain signatures from the personnel who perform each process. 2. The documentation included in the manual does not match the documentation included in the documents submitted with each petition. 3. In two (2) requests, the form DF-155, “Request for Federal Funds” was not included as part of the documentation. 4. A form used, IF-8, does not have a sequence number. The document does not provide for signatures, in addition, it makes reference to the Governmental Development Bank, which closed in 2017. 5. In two (2) requests, no detail of the liquidation of benefits was included, only an Excel document. 6. We were unable to determine whether the drawdown was a reimbursement or an advance. 7. We noted that in one drawdown in the amount of $8,014,770, had a note in the documentation indicating that this request is made and pending of the final certification or closeout of the grant from the federal reporting area. 8. In another drawdown in the amount of $832,397.50, the document identified as DF-155 was completed requesting the amount of $1,515,694.80. Although, in handwriting is a comment indicating that this drawdown is partial in order to comply with Puerto Rico Treasury Department, therefore, only the amount of $1,036,663.43 is requested. This amount is also adjusted by $204,265.93, ending with a balance of $832,397.50. No evidence of the adjustment was included. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systemic deficiency. The lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up affects this requirement. The sampling was a statistical valid sample. STATEMENT OF CAUSE ADSEF does not have a procedures manual that clearly establishes a segregation of duties, demonstrating compliance with the required internal control components. No standardized process is in place requiring documentation to be included, reviews and approvals of all requests for federal funds. POSSIBLE ASSERTED EFFECT The program may be requesting funds in excess of cash needs, or a reimbursement for funds not previously expended. The lack of internal controls may result in the program to be on a reimbursement basis. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-007/2023-035. RECOMMENDATIONS We recommend that management establish a written internal controls process that demonstrates compliance with cash management requirements and appropriate segregation of duties, and training to all areas regarding this compliance.

FINDING REFERENCE NUMBER 2024-037 (See Finding Reference Number 2024-015) FEDERAL PROGRAM (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE AWARD NUMBERS 231PR426S7003/4 (Federal Award Year: 10/1/2022 through – 9/30/2023); 241PR426S7003/4 (Federal Award Year: 10/1/2023 through – 9/30/2024) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR § 200.302, Financial Management, establishes that (a) each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In section (b), the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): … (6) written procedures to implement the requirements of § 200.305 and (7) written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected two reports that closed during our fiscal year audit. With respect with the Grant Award 231PR426S7003/4 and 241PR426S7003/4 we noted the following deficiencies: 1) The PRDF was unable to provide supporting documentation for the administrative expenditures that reconcile the figures reported with the PRIFAS accounting system. 2) In addition, for all the Federal awards mentioned above, based on internal control interviews, we found that there is no designated individual responsible for independently reviewing the reports prior to submission to ensure accuracy and consistency with source data. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the required reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers is 2023-020/2023-049. RECOMMENDATIONS We recommend ADSEF establish written internal controls and specific procedures to ensure that all reported amounts are fully supported and reconciled with the PRIFAS accounting system and to assign responsibility to a designated official to review and approve all reports prior to submission to the Federal agency. Implement internal controls to maintain adequate documentation supporting all financial data reported.

FINDING REFERENCE NUMBER 2024-040 FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2022G996117 (Federal Award Year: 10/1/2021 – 9/30/2022) 2023G996117 (Federal Award Year: 10/1/2022 – 9/30/2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – SPECIAL REPORTING TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA In accordance with 45 CFR, Subtitle B, Chapter II, Part 265.7, each State's quarterly reports (the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), the SSP-MOE Data Report, and the Work Outcomes of TANF Exciters Report) must be complete and accurate and filed by the due date. (d) For the TANF Financial Report (or, as applicable, the Territorial Financial Report), “a complete and accurate report” means that: (1) The reported data accurately reflects information available to the State in case records, financial records, and automated data systems; (2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so); (3) The State reports data on all applicable elements; and (4) All expenditures have been made in accordance with 2 CFR 200.302(a). (f) We will review the data filed in the quarterly reports to determine if they meet these standards. In addition, we will use audits and reviews to verify the accuracy of the data filed by the States. In addition, 2 CFR § 200.302(a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. Financial management systems must be sufficient to permit the preparation of required reports and ensure tracking of expenditures so that funds can be properly reconciled and reported in accordance with Federal statutes, regulations, and award terms. STATEMENT OF CONDITION As part of our procedures for understanding the preparation and reconciliation of TANF financial and programmatic reports, we compared the Maintenance-of-Effort (MOE) expenditures reported in the ACF-204 Annual Report with the amounts reported in the ACF-196TR TANF Financial Report for the same fiscal year. Our review identified that the MOE expenditures reported in the ACF-204 do not reconcile with the corresponding amounts reported in the ACF-196TR. Specifically, the totals reported in both reports contained differences that were not supported by documented reconciliation procedures. In addition, ADSEF did not provide evidence of a formal reconciliation process or supporting documentation demonstrating that the differences between both reports were identified, analyzed, and resolved prior to submission. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systemic internal control deficiency over the reconciliation and validation of Maintenance-of-Effort (MOE) expenditures reported in Federal TANF reporting processes. The deficiency is considered systemic because ADSEF did not demonstrate that adequate controls were in place to ensure consistent reconciliation between the ACF-204 Annual Report and the ACF-196-TR Financial Report prior to submission. In addition, the lack of formalized procedures and effective oversight over the preparation and validation of Federal reports indicates a broader weakness in the internal control structure governing financial and programmatic reporting. STATEMENT OF CAUSE ADSEF did not establish and implement written policies and procedures governing the reconciliation, preparation, and validation of Maintenance-of-Effort (MOE) expenditures reported in the ACF-204 Annual Report and the ACF-196TR TANF Financial Report. In addition, management did not implement adequate internal controls to ensure that reported amounts between both reports were reviewed, reconciled, and verified for consistency prior to submission. Furthermore, there was insufficient monitoring to ensure that financial and programmatic reporting data were properly compared and validated against supporting financial records, resulting in discrepancies between the reports not being identified or corrected opportunely. POSSIBLE ASSERTED EFFECT As a result of the condition, the Maintenance-of-Effort (MOE) expenditures reported in the ACF-204 Annual Report and the ACF-196TR TANF Financial Report are not reliable or fully reconcilable, which may affect the accuracy and integrity of federal reporting. This condition increases the risk that reported financial information may be misstated and that inconsistencies between required federal reports may not be detected in a timely manner. In addition, the lack of reconciliation between reports may result in noncompliance with federal reporting requirements and could lead to questions regarding the accuracy and allowability of reported MOE expenditures. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend should establish formal procedures to ensure the reconciliation, review, and validation of Maintenance-of-Effort (MOE) expenditures reported in the ACF-204 and ACF-196-TR prior to submission. These procedures should ensure that reported amounts are consistent with supporting financial records. In addition, ADSEF should strengthen internal controls to ensure proper supervisory review and monitoring of Federal reporting to prevent and detect discrepancies between required reports.

FINDING REFERENCE NUMBER 2024-041 FEDERAL PROGRAM (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2301PRLIEA (Federal Award Year: 10/1/2022 – 9/30/2024) 2401PRLIEA (Federal Award Year: 10/1/2023 – 9/30/2025) 2301PRLIEE (Federal Award Year: 10/1/2022 – 9/30/2024) 2301PRLIEI (Federal Award Year: 10/1/2022 – 9/30/2024) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – PERFORMANCE TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR § 200.302, Financial Management, establishes that: (a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450.) (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. … (6) Written procedures to implement the requirements of § 200.305 and (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. LlHEAP Performance Data Form (OMB No 0970-0449) – State grant recipients must submit this report by January 3lst regarding the prior Federal fiscal year. The first section of the report is the Grant recipient Survey that collects and reports data on sources and uses of LIHEAP funds. The Grant recipient Survey includes Section III: Estimated Sources of Funds and Section IV: Estimated Use of LIHEAP Funds. Note: that these are referencing obligated not expended funding. The rest of the report is regarding performance metrics, mostly related to home energy burden targeting and reduction, as well as the continuity of home energy service. The Grantee Survey obligation amounts should be compared with the Carryover and Reallotment and FFR-425 reports. This reconciliation is needed to make sure the obligated balances for the program year being tested are accurate. Annual Report on Households Assisted by LIHEAP (OMB No. 0970-0060) https://omb.report/icr/202211-0970-005 – As part of the application for block grant funds each year, a report is required for the preceding fiscal year of (1) the number and income levels of the households assisted for each component and any type of LHEAP assistance (heating, cooling, crisis, and weatherization); and (2) the number of households served that contained young children, elderly, or persons with disabilities, or any vulnerable household for each component. Quarterly Performance and Management Report (OMB No. 0970-0589) https://omb.report/icr/202205-0970-017/doc/121847100 – Grant recipients must submit data and information about LIHEAP during the current FY, including success, challenges, needs and innovations. The quarterly reports focus on assisted households, performance management, obligation of funding, changes made due to anticipated increase in energy bills, collaboration with other utility programs, training and technical assistance needs. STATEMENT OF CONDITION As part of our audit procedures over the financial reporting requirements for LIHEAP program, we selected three reports submitted during our fiscal year. We noted that the administrative expenditures do not reconcile with the accounting information from PRIFAS. In addition, there are no written procedures describing internal controls over this requirement. We requested the LIHEAP Performance Data (OMB No 0970-0449), but no evidence of the report was provided. We obtained a copy of the Annual Report on Households Assisted by LlHEAP (OMB No. 0970-0060), but no supporting documentation regarding the information reported was provided. We requested two quarterly reports for the Quarterly Performance and Management Report (OMB No. 0970-0589) for the 2301LIEA grant, but no documentation was provided. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency. In relation to Special and Performance Reports, there are no proper controls over the data reported and the supporting information. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the SF– 425 reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual. In relation to the Special and Performance Reports, the lack of written procedures and proper safeguarding of documentation does not allow for demonstrating compliance with the requirements of these reports. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. We were unable to evaluate internal controls and compliance over the Special and Performance Reports. ADSEF might not comply with the requirements of the program and not report it on time to the regulatory agencies. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-021/2023-051. RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. In addition, in relation to the Special and Performance Reports create internal controls that provide for obtaining information, preparing reports, and filing evidence of reports.

FINDING REFERENCE NUMBER 2024-042 FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2022G996117 (Federal Award Year: 10/1/2021 – 9/30/2022) 2023G996117 (Federal Award Year: 10/1/2022 – 9/30/2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – PERFORMANCE TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA In accordance with 45 CFR, Subtitle B, Chapter II, Part 265.7, states that: (a) Each State's quarterly reports [the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), the SSP-MOE Data Report, and the Work Outcomes of TANF Exciters Report] must be complete and accurate and filed by the due date. (b) For a disaggregated data report, “a complete and accurate report” means that: (1) The reported data accurately reflects information available to the State in case records, financial records, and automated data systems, and includes correction of the quarterly data by the end of the fiscal year reporting period; (2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so); (3) The State reports data for all required elements (i.e., no data is missing); (4) (i) The State provides data on all families; or (ii) If the State opts to use sampling, the State reports data on all families selected in a sample that meets the specification and procedures in the TANF Sampling Manual (except for families listed in error); and (5) Where estimates are necessary (e.g., some types of assistance may require cost estimates), the State uses reasonable methods to develop these estimates. (c) For an aggregated data report, “a complete and accurate report” means that: (1) The reported data accurately reflects information available to the State in case records, financial records, and automated data systems; (2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so); (3) The State reports data on all applicable elements; and (4) Monthly totals are unduplicated counts for all families (e.g., the number of families and the number of out-of-wedlock births are unduplicated counts). In addition, 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In section (b) the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (6) written procedures to implement the requirements of § 200.305 and (7) written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. STATEMENT OF CONDITION As part of our procedures for understanding internal controls for the preparation of ACF-199 reports, we request a procedures manual on how these reports are processed and the personnel responsible for each process. ADSEF did not provide us with a manual describing the data collection process, how the information provided by the regions is validated, and the individuals responsible for submitting the reports. Also, they should have completed the ACF-209 report for the quarters of December 2023 and June 2024 and no evidence was provided. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systemic deficiency. Following the sample selection, ADSEF failed to demonstrate a control structure, as it was unable to provide a formal procedures manual for the reporting process. The sampling was a statistically valid sample. STATEMENT OF CAUSE ADSEF did not establish and implement written policies and procedures governing the preparation, review, validation, and submission of TANF reports. In addition, management did not implement adequate monitoring controls to ensure that required reports were prepared, reviewed, and submitted timely in accordance with Federal requirements. POSSIBLE ASSERTED EFFECT As a result, ADSEF was unable to demonstrate that adequate controls existed to ensure the completeness, accuracy, and timeliness of TANF reporting. This condition resulted in the failure to submit the required ACF-209 reports for the quarters ended December 31, 2023, and June 30, 2024, and increases the risk that Federal reports may contain incomplete or inaccurate information, thereby affecting Federal oversight and decision-making. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Number is 2023-052. RECOMMENDATIONS We recommend that management establish internal control procedures manuals that clearly outline the processes to be followed for data collection, recording, and reporting. Additionally, standardize the way documents related to participant files are filed.

FINDING REFERENCE NUMBER 2024-044 (See Finding Reference Number 2024-016) FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES (ALN – 93.667) SOCIAL SERVICES BLOCK GRANT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBER 2203PRFPSS (Federal Award Years: 10/1/2021 through 9/30/2023); 2202PRFPCV (Federal Award Years: 10/1/2021 through 9/30/2023) 2211PRSOSR (Federal Award Years: 10/1/2021 through 9/30/2023) ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In addition, the SF-425 Federal Financial Report requires the reporting of financial activities related to Federal awards. The accounting basis used for reporting expenditures (whether cash or accrual) must align with the accounting system employed by the recipient organization. The 2 CFR § 200.302 (b), establish that the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): … (6) written procedures to implement the requirements of § 200.305 and (7) written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. The 2 CFR section 200.328(c) establishes that the recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected the Grant Awards 2203PRFPSS and 2202PRFPCV, which closes in the audit period from July 2023 to June 2024, to validate the recorded amounts. Upon evaluating the report for the Grant Award 2203PRFPSS, we found the following deficiencies: 1) The accounting basis should be Cash Basis instead of Accrual Basis, according to the accounting system used. Additionally, they provided a Procedures Manual for the Finance and Budget Divisions, approved in 2009 and delivered in Word format, which states that the accounting basis is “accrual”, even though their current system operates on a cash basis and no conversion to accrual basis was made. 2) The total Federal expenditure reported on line (e) does not match the database provided by the PRDF. 3) The matching expenditure on line (j) does not match the database provided by the PRDF. 4) The report was not submitted within the established deadline, December 31, 2023 and they submitted the report on July 8, 2024. 5) During the internal control’s interviews, we found that there is no designated person responsible for reviewing the information entered by the preparer. As part of our audit procedures over internal controls and compliance for reporting requirements, we selected the Grant Award 2211PRSOSR, which closes in the audit period from July 1, 2023 to June 30, 2024, to validate the recorded amounts. Upon evaluating the report, we found the following deficiencies: 1) The accounting basis should be Cash Basis instead of Accrual Basis, according to the accounting system used. Additionally, they provided a Procedures Manual for the Finance and Budget Divisions, approved in 2009 and delivered in Word format, which states that the accounting basis is “accrual”, even though their current system operates on a cash basis and no conversion to accrual basis was made. 2) The total Federal expenditure reported on line (e) does not match the database provided by the PRDF. 3) The report was not submitted within the established deadline, December 31, 2023 and they submitted the report on June 10, 2024. 4) During the internal control’s interviews, we found that there is no designated person responsible for reviewing the information entered by the preparer. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, training, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA. STATEMENT OF CAUSE ADFAN does not have internal controls to effectively review the process and comply with the reporting requirements. The absence of effective internal controls at ADFAN to review processes and ensure compliance with reporting requirements can be attributed to inadequate organizational structure and insufficiently defined roles and responsibilities. There is no designated individual or team responsible for overseeing the accuracy and completeness of financial data entered reports. As mentioned above in the condition, this responsibility falls under one person and does not have segregation of duties. This gap in accountability stems from a lack of internal review and insufficient oversight mechanisms, which restrains the organization's ability to ensure that reports are fully aligned with the required compliance standards. Additionally, there is a lack of training or resources dedicated to maintaining and monitoring compliance which contributes to the failure in reporting requirements. POSSIBLE ASSERTED EFFECT ADFAN does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports for the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers is 2023-023/2023-054. RECOMMENDATIONS We recommend that ADFAN ensures the SF-425 is completed using the appropriate accounting basis consistent with the organization’s financial system. Additionally, ADFAN should establish and implement internal control procedures that include formal review process to verify the accuracy and completeness of the reported information and designate responsible personnel for the review and approval of reports prior to submission to ensure compliance with Federal reporting requirements.

FINDING REFERENCE NUMBER 2024-045 (See Finding Reference Number 2024-017) FEDERAL PROGRAM (ALN – 96.001) SOCIAL SECURITY – DISABILITY INSURANCE U.S. SOCIAL SECURITY ADMINISTRATION AWARD NUMBERS 1804RQD100 (Federal Award Year: 10/1/2017 – 9/30/2018) 1904RQD100 (Federal Award Year: 10/1/2018 – 9/30/2019) 2004RQD100 (Federal Award Year: 10/1/2019 – 9/30/2020) 2104RQD100 (Federal Award Year: 10/1/2020 – 9/30/2021) 2204RQD100 (Federal Award Year: 10/1/2021 – 9/30/2022) 2304RQD100 (Federal Award Year: 10/1/2022 – 9/30/2023) 2404RQD100 (Federal Award Year: 10/1/2023 – 9/30/2024) ADMINISTRATION OFFICE OF THE SECRETARIAT COMPLIANCE REQUIREMENT REPORTING – FINANCIAL TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA According to the Program Operations Manual (POMS) DI 39506.203-Updating and Reconciling Unliquidated Obligations published by the Social Security Administration (SSA), legitimate unliquidated obligations must be backed up by records or papers that explain the nature of the obligations and provide evidence for the amounts reported. It is also crucial that the agency's reported unliquidated obligations reflect any modifications or cancellations of Consultative Examinations (CE) and Medical Evidence of Record (MER) authorizations. State authorities should check CE authorizations to see if the unliquidated obligation is an authorization that is still in existence and evaluate unliquidated obligations at least once a month to cancel those that are no longer valid. POMS 39506.210 Preparations Instructions for Form SSA-4513 instructs the State Agency to check the appropriate box in the report to indicate the attachment of Form-871. Uniform Guidance at 2 CFR §200.302 Financial Management Section (a) establish the administrative requirements for the program, which include the requirement that state and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. STATEMENT OF CONDITION The State Agency Report of Obligations for SSA Disability Programs, Form Report SSA-4513, was incomplete and inaccurate. During the audit procedures the following deficiencies were noted by us: 1) It was not specified in the Puerto Rico Disability Determination Services (PR-DDS) Accounting Department's Form SSA-4513 for September 2023 and June 2024 if Form SSA-871, State Agency Schedule for Equipment Purchases for SSA Disability Programs, had to be included with Form SSA-4513 for FYs 2024, 2023, 2022, 2021, 2020, 2019, and 2018. Whether this was necessary or not is unknown. 2) For the September 2023 Forms SSA-4513, the support for unliquidated obligations for FYs 2023, 2022, 2021 and 2020 were absent, incomplete or had differences. For FY 2023, there was a difference of $560,158 between the amount included in the report and the support provided for review. For FY 2022, there was a difference of $7,795 between the amount included in the report and the support provided for review. For FY 2021, there was a difference of $580,750 between the amount included in the report and the support provided for review. For FY 2020, there was a difference of $518,630 between the amount included in the report and the support provided for review and no support was provided for unliquidated obligations. 3) For the June 2024 Forms SSA-4513, the support for unliquidated obligations for FYs 2024, 2023 and 2022 were absent, incomplete or had differences. For FY 2024, there was a difference of $1,402,319 between the amount included in the report and the support provided for review. For FY 2023, there was a difference of $236,152 between the amount included in the report and the support provided for review. For FY 2012, there was a difference of $199,043 between the amount included in the report and the support provided for review. 4) There were discrepancies between the accounting system and the total amount of disbursements on Form SSA-4513 for June 2024 and September 2023, and no observations were submitted in the report remarks section and personnel were unable to provide explanations during the audit process. Following are the discrepancies: (1) September 2023 Form SSA-4513: a. $925 discrepancy in FY 2022 b. $24,806 discrepancy in FY 2021 c. $9,251 discrepancy in FY 2020 d. $8,682 discrepancy in FY 2019 e. $49 discrepancy in FY 2018 (2) June 2024 Form SSA-4513: a. ($156,693) discrepancy in FY 2024 b. $101,737 discrepancy in FY 2023 c. $925 discrepancy in FY 2022 d. $39,656 discrepancy in FY 2021 e. $63,275 discrepancy in FY 2020 5) The PR-DDS paid back $539,771 to the grantor for indirect costs charged in excess according to the Form 4513 for FY 2020. Because an expense is reported at the time a request is registered by the PR-DDS Accounting Department Special Payer, this resulted in an overstatement in previous Schedule of Expenditures of Federal Awards and in quarterly reports. 6) The PR-DDS Accounting Department submitted Form SSA-4513 for FY 2020 on July 16, 2024. This form was revised on July 19, 2024. We reviewed the revised form, but the report does not identify the updated form as revised. 7) The database submitted to support financial statements amounts, presents a difference of $192,759 between the accounting system (PRIFAS) and the database for FY 2024. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systematic deficiency. Information needed to effectively generate financial reports should be available through the financial management system. STATEMENT OF CAUSE Internal controls is not in place in the PR-DDS Accounting Department to ensure that vendor payments are processed on schedule. Furthermore, as mandated by DI 39506.203, the PR-DDS Accounting Department has not put monitoring measures in place to routinely assess unliquidated commitments. Furthermore, the PR-DDS Accounting Department lacks internal procedures for recording discrepancies between financial reporting and accounting systems. POSSIBLE ASSERTED EFFECT The PR-DDS raises the possibility of incurred costs without the option to obtain reimbursement from the Federal grant if appropriate procedures are not in place to pay suppliers on time and liquidate obligations on time. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers is 2023-024/2023-055. RECOMMENDATIONS We recommend the Accounting Department of PR-DDS establish procedures to make sure Form SSA-4513 is properly examined, recorded, and compliant with POMS DI 39506.203. To cancel commitments that are no longer valid, we advise the PR-DDS Accounting Department to check unliquidated obligations at least once a month. Furthermore, we recommend a formal reconciliation between the quarterly reports and the accounting system-documented disbursements, with an explanation of any discrepancies included in remarks of the Form SSA-4513.

FINDING REFERENCE NUMBER 2024-046 (See Finding Reference Number 2024-018) FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2022G996117 (Federal Award Year: 10/1/2021 – 9/30/2022) 2023G996117 (Federal Award Year: 10/1/2022 – 9/30/2023) 2022G9922PT (Federal Award Years: 10/1/2022 through 9/30/2025) 2301PRTABD (Federal Award Years: 10/1/2023 through 9/30/2026) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – FINANCIAL REPORTING TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA The 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. … (6) Written procedures to implement the requirements of § 200.305 and (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. STATEMENT OF CONDITION As part of our audit procedures over the reporting requirements for the Temporary Assistance for Needy Families (TANF) and Payment to Territories – Adult (PTTA) programs, we reviewed two ACF-196TR reports submitted during the fiscal year under audit. Our review disclosed deficiencies related to the accuracy, support, reconciliation, and timeliness of reported expenditures. Specifically, we noted the following: • Administrative expenditures for both TANF and PTTA are recorded under the same accounting account number and Assistance Listing Number associated with TANF. As a result, the PRIFA accounting system does not segregate administrative expenditures by federal award or Assistance Listing Number, limiting the ability to identify and track expenditures attributable to each program. • Amounts reported in the ACF-196TR reports could not be reconciled to the PRIFA accounting records, particularly for administrative expenditures. Upon request, management was unable to provide supporting schedules, reconciliations, or documentation demonstrating how the reported amounts were derived. Supporting information was prepared only after it was requested during the audit. • For grant award 2023G996117, reported expenditures in the quarterly report of September 30, 2023, that did not agree with the underlying accounting records. We identified differences of $7,266.40 in Line 6A (Work-Related Activities and Expenses), $1,745,668.00 in Line 5A (Basic Assistance), $1,645,366.55 in Line 6J (Administration), $2,007,611.62 in Line 3 (Transfer to SSBG), and $103,052.41 in Line 10 (Total Expenditures). In addition, the report was submitted after the applicable due date. • For grant award 2401PRTANF, reported expenditures in the June 30, 2024 quarterly report that also differed from the accounting records. We identified differences of $12,312.07 in Line 6A (Work-Related Activities and Expenses), $1,898,639.95 in Line 6J (Administration), $3,786,696.14 in Line 3 (Transfer to SSBG), and $1,902,297.08 in Line 10 (Total Expenditures). Furthermore, the report maintained by ADSEF did not contain evidence of the submission date; therefore, we were unable to determine whether the report was submitted within the required timeframe. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statements and SEFA. In addition, the financial management system should provide to account separately the administrative expenditures incurred among all Federal programs administered. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the ACF-196TR reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. PRIFAS accounting data base as configured, does not provide for the administrative expenditures incurred from the TANF and Payment to Territories – Adult programs to be segregated. ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers is 2023-025/2023-056. RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. Additionally, work with the Puerto Rico Department of the Treasury to provide accounting records to segregate the administrative expenditures of both programs.

Assistance Listing Number: 93.558 Name of Federal Program or Cluster: Temporary Assistance for Needy Families (TANF) Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entity: Virginia Department of Social Services Pass-Through Entity Identifying Number: BEN-21-029 Award Period: July 1, 2023 through June 30, 2024 Criteria or Specific Requirement: Title 2 CFR §200.302(b) requires non-federal entities to maintain effective control and accountability over all funds and to provide accurate, current, and complete disclosure of the financial results of each federally sponsored project or program. In addition, 2 CFR §200.328 requires financial reports to be supported by the entity’s accounting records and to be accurate and complete. Condition: The organization prepared various required financial reporting line items using budgeted amounts rather than actual expenditures recorded in the underlying accounting records. As a result, reported amounts did not agree to the general ledger and supporting accounting documentation. The variances were identified across multiple reporting line items and were not supported by reconciliations to actual expenditures. Cause: The condition occurred due to deficiencies in internal controls over financial reporting. Specifically, UCM relied on budgeted amounts rather than actual expenditures recorded in the accounting system when preparing required financial reports. In addition, formal written procedures do not clearly require that reported amounts be reconciled to the underlying accounting records prior to submission, and there was insufficient review and oversight to ensure that financial reports were prepared using actual data from the general ledger. Effect or Potential Effect: Because financial reports were not prepared using actual expenditures recorded in the accounting records, reported amounts may be inaccurate or incomplete. The use of budgeted amounts rather than actual financial data increases the risk that expenditures reported to the federal awarding agency or pass-through entity are misstated and not supported by the organization’s accounting records. As a result, UCM may be out of compliance with federal reporting requirements and federal agencies may rely on inaccurate financial information for monitoring and funding decisions. Recommendation: UCM should strengthen its internal controls over federal financial reporting by establishing and documenting procedures requiring that all reports submitted to federal awarding agencies or pass-through entities be prepared using actual expenditures recorded in the accounting system. These procedures should include a reconciliation of reported amounts to the general ledger and supporting documentation prior to submission, as well as an independent review process to ensure reported information is accurate, complete, and compliant with Uniform Guidance requirements. Views of Responsible Officials: Management acknowledges the finding and will work to implement appropriate corrective actions to address the deficiency and improve compliance going forward.

FINDING 2024-006 Subject: Title I Grants to Local Educational Agencies Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A210014, S010A220014, S010A230014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children; Special Tests and Provisions - Annual Report Card, High School Graduation Rate; Special Tests and Provisions - Assessment Testing Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 39 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report for control activities - activities allowed or unallowed; allowable costs/cost principles; cash management; reporting; matching, level of effort, earmarking; and special tests and provisions - participation in private school children. The prior audit finding numbers were 2022-005, 2022-006, 2022-008, and 2022-009. Condition and Context Internal control is generally defined as a process affected by an entity's oversight body, management, and other personnel that provides reasonable assurance that the entity will achieve its objectives. For federal awards, nonfederal entities, such as the School Corporation, are required to establish and maintain internal control over federal awards to provide reasonable assurance that the entity will comply with applicable federal statutes, regulations, and the terms and conditions of its awards. Internal control is not a single event but an ongoing process that operates through five integrated components: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. Each component must function effectively, and the components must operate together in an integrated manner, for an internal control system to be effective. Deficiencies in the internal control system were identified across the five components and are described below. Control Environment - Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children; Special Tests and Provisions - Annual Report Card, High School Graduation Rate; Special Tests and Provisions - Assessment Testing The School Corporation had not established a strong foundation for an effective internal control system. There was no demonstrated emphasis on the importance of internal controls or on compliance with federal program requirements. Risk Assessment - Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children; Special Tests and Provisions - Annual Report Card, High School Graduation Rate; Special Tests and Provisions - Assessment Testing The School Corporation had not defined objectives necessary to identify risks or determine risk tolerances. Management did not identify, analyze, or respond to risks that could affect the achievement of objectives, including risks arising from significant changes to operations or the potential for fraud. Control Activities The School Corporation did not maintain sufficient financial records for its Title I programs. Although separate funds were established, expenditures were not accurately recorded, preventing the auditors from properly testing compliance with the federal requirements for the Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children compliance requirements. Notable errors included payroll mapping errors, as well as unsupported reimbursement requests. INDIANA STATE BOARD OF ACCOUNTS 40 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Expenditures as reported on the Schedule of Expenditures of Federal Awards are based on reimbursements received during the audit period. To determine the specific expenditures associated with each reimbursement request the corresponding ledger activity or other applicable supporting documentation was requested. Based on the documentation provided, or lack thereof, it was determined that reimbursement requests were not prepared using expenditures recorded in the Title I funds. Instead, other undocumented or inconsistently retained records were used, and the amounts in those records did not align with the reimbursement requests submitted or the related fund activity. Of the 13 reimbursement claims submitted:  There were 5 reimbursement requests totaling $854,889 filed in fiscal year 2022-2023 that had no supporting documentation, and the amounts requested did not agree with the disbursement activity recorded in the grant program funds.  There were 8 reimbursement requests totaling $496,155 and received in 2023-2024 that had supporting documentation; however, the documentation agreed with reimbursement request amount in only 4 instances. For the other 4 reimbursement requests where documentation was provided, discrepancies totaling $15,982 were identified between the documentation and the amounts requested. Additionally, the documentation used to support 2023-2024 reimbursement requests did not correspond to the ledger activity recorded in the Title I program funds; instead, the School Corporation relied on separate individual payroll reports that were not tied to the program's financial records. Due to the lack of adequate documentation, we were unable to determine the validity of expenditures claimed for reimbursement, and, therefore, could not determine a population of expenditures to verify for compliance testing. This resulted in questioned costs totaling $1,351,044. Additional issues included:  The former Chief Financial Officer did not direct the payroll clerk to allocate salaries and benefits for Title I personnel to the appropriate funds. As a result, salary and benefit costs were charged to the Title I funds for employees who did not work on the program, while costs for employees who did work on the program were charged to non-Title I funds.  Receipt activity recorded in the Title I program funds did not always reflect actual Title I grant receipts. For example, receipts totaling $63,901 for the Supportive Effective Instruction State Grants program (formerly Improving Teacher Quality State Grants), Assistance Listings Number 84.367, were incorrectly recorded in the Title I fund.  A separate fund was not created for the 2022-2023 grant project year as required by the pass-through entity; instead, an existing project year fund was used.  Transfers totaling $993,763 in 2022-2023 and $73,107 in 2023-2024 were made into the Title I program funds from other funds or between Title I project years without adequate supporting documentation explaining the composition of the transfer amounts.  Transfers totaling $650,150 in 2022-2023 were made out of the Title I program funds to other funds or other Title I project years, without sufficient supporting documentation identifying the nature of the transferred amounts. INDIANA STATE BOARD OF ACCOUNTS 41 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Information and Communication - Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children; Special Tests and Provisions - Annual Report Card, High School Graduation Rate; Special Tests and Provisions - Assessment Testing The School Corporation had not established adequate communication methods or practices to ensure that reliable information was identified, captured, and communicated to the appropriate internal and external parties. Monitoring - Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children; Special Tests and Provisions - Annual Report Card, High School Graduation Rate; Special Tests and Provisions - Assessment Testing The School Corporation did not perform ongoing or periodic evaluations to determine whether internal controls were operating effectively or to identify needed improvement. In addition, the School Corporation did not have a process in place to track or to follow-up on corrective actions written in response to audit findings. Due to the number and severity of the issues identified with the program's financial records and supporting documentation, we were unable to perform the procedures necessary to test the program for compliance. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following (see also §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . INDIANA STATE BOARD OF ACCOUNTS 42 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. See § 200.303. . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause The School Corporation had not implemented an effective system of internal controls. Changes in key financial personnel, along with insufficient employee training, contributed to processes and procedures not being properly developed or consistently followed. Additionally, employees' salaries and benefits associated with the Title I programs were not mapped to the proper funds in the accounting software. Finally, reimbursement requests were completed based upon documentation, other than the ledger, that was not always retained or when retained did not agree with the amounts requested. Transfers in and out of Title I program funds did not contain sufficient supporting documentation to determine the specific purposes of the transfers Effect Because the five components of internal control were not properly designed or implemented, the School Corporation's internal control system could not be effective. As a result, general and fraud-related risks, as well as risks arising from significant operational changes, could negatively impact the School Corporation. Existing internal control deficiencies may continue undetected, and additional weaknesses may exist without being identified. Additionally, because the School Corporation did not establish an effective system of internal controls to ensure that the required documentation was obtained and retained, we were unable to obtain sufficient appropriate audit evidence to determine whether the School Corporation complied with the applicable federal program compliance requirements. This lack of documentation created a scope limitation for the audit and increased the risk that noncompliance, if present, may not have been detected. The inability to demonstrate compliance with federal requirements may affect the School Corporation's ability to support current program expenditures and may place eligibility for future federal funding at risk. Finally, salary and benefit expenditures were recorded to the Title I grant program funds for employees who were not involved with the program and expenditures for those involved with the program were recorded to non-Title I funds. Reimbursement requests could not be reconciled to the detailed ledger of expenditures. As such, a complete and accurate population of expenditures, that reconciled to the Schedule of Expenditures of Federal Awards or the financial statement could not be determined. INDIANA STATE BOARD OF ACCOUNTS 43 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs Questioned costs in the amount of $1,351,044 were identified as detailed in the Condition and Context. Recommendation We recommended the School Corporation design and implement a system of internal controls, which would include policies and procedures related to the five components of internal control. Management should define clear objectives, identify and assess risks, and develop policies and procedures to address those risks. Regular monitoring should be conducted to ensure internal controls are operating effectively and deficiencies are addressed promptly. We also recommended that the School Corporation ensure employees' salaries and benefits are properly mapped within the accounting system. Additionally, we recommended that all documentation to support a reimbursement request be attached to the reimbursement request and reconciled to the ledger at the time of request. We also recommended that any necessary transfers contain sufficient supporting documentation. Finally, we recommended that the School Corporation maintain complete and accurate records for all grant funds and project years. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-008 Subject: Special Education Cluster (IDEA) Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-138-PN01, 23611-138-PN01, 24611-138-PN01, 22611-138-ARP, 22619-138-PN01, 23619-138-PN01, 24619-138-PN01, 22619-138-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Period of Performance; Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding numbers were 2022-010, 2022-011, and 2022-012. Condition and Context Internal control is generally defined as a process affected by an entity's oversight body, management, and other personnel that provides reasonable assurance that the entity will achieve its objectives. For federal awards, nonfederal entities, such as the School Corporation, are required to establish and maintain internal control over federal awards to provide reasonable assurance that the entity will comply with applicable federal statutes, regulations, and the terms and conditions of its awards. INDIANA STATE BOARD OF ACCOUNTS 47 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Internal control is not a single event but an ongoing process that operates through five integrated components: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. Each component must function effectively, and the components must operate together in an integrated manner, for an internal control system to be effective. Deficiencies in the internal control system were identified across the five components and are described below. Control Environment The School Corporation had not established a strong foundation for an effective internal control system. There was no demonstrated emphasis on the importance of internal controls or on compliance with federal program requirements. Risk Assessment The School Corporation had not defined objectives necessary to identify risks or determine risk tolerances. Management did not identify, analyze, or respond to risks that could affect the achievement of objectives, including risks arising from significant changes to operations or the potential for fraud. Control Activities The School Corporation receives federal funding through the Special Education Cluster (IDEA), including the Special Education Grants to States and Special Education Preschool Grants programs, administered by the Indiana Department of Education. These funds are subject to federal requirements regarding activities allowed or unallowed; allowable costs/cost principles; cash management; matching, level of effort, earmarking; period of performance; reporting; and financial documentation. The School Corporation did not maintain sufficient financial records for its special education programs. Although separate funds were established expenditures were not accurately recorded, preventing the auditors from properly testing compliance with the federal requirements for the Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Period of Performance; and Reporting compliance requirements. Notable errors included payroll and fund mapping errors, as well as unsupported reimbursement requests. Salaries and benefits for special education staff were incorrectly mapped, resulting in expenditures being charged to the wrong funds. Additionally, program reimbursement requests were not based upon ledger expenditures and relied on documentation that was either missing or inconsistent with the amounts claimed. Due to insufficient documentation, most expenditures claimed for reimbursement could not be verified, resulting in questioned costs totaling $1,694,906. Of the 23 claims for reimbursement filed:  There were 11 reimbursements totaling $1,289,892 that lacked supporting documentation and the amount claimed did not agree with the ledger disbursement activity.  There were 11 reimbursements totaling $404,904 that either agreed with the grant fund ledger activity or documentation was retained to support the amount claimed for reimbursement. INDIANA STATE BOARD OF ACCOUNTS 48 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)  There was 1 reimbursement totaling $110 that differed from the amount claimed by $1,837, with the amount claimed being less than the supporting documentation. Additional issues included:  Receipt activity within the funds was not always reflective of the program grant money received. Special education program receipts totaling $47,913 were receipted to nonspecial education grant funds.  A separate fund was not created to identify and record financial activity for each grant project year as required by the pass-through entity. Specifically, separate funds were not created for the Special Education Preschool grant for project years 2022 and 2023.  Transfers between funds were made to address deficit fund balances, either due to financial activity being misallocated or errors discovered in transaction recording. However, supporting documentation for these corrections was not kept. In fiscal year 2022-2023, a total of $222,602 was moved into program funds from other sources or between various special education grant project year funds, while $6,653 was transferred in during 2023-2024. Conversely, funds totaling $699,655 in 2022-2023 and $722,283 in 2023-2024 were transferred out of program grant funds to other accounts or between special education grant project year funds. Information and Communication The School Corporation had not established adequate communication methods or practices to ensure that reliable information was identified, captured, and communicated to the appropriate internal and external parties. Monitoring The School Corporation did not perform ongoing or periodic evaluations to determine whether internal controls were operating effectively or to identify needed improvement. In addition, the School Corporation did not have a process in place to track or to follow-up on corrective actions written in response to audit findings. Due to the number and severity of the issues identified with the program's financial records and supporting documentation, we were unable to perform the procedures necessary to test the program for compliance. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 49 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following (see also §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. See § 200.303. . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause The School Corporation had not implemented an effective system of internal controls. Changes in key financial personnel, along with insufficient employee training, contributed to processes and procedures not being properly developed or consistently followed. Additionally, employees' salaries and benefits associated with the special education programs were not mapped to the proper funds in the accounting software. Finally, reimbursement requests were completed based on documentation, other than the ledger, that was not always retained or when retained did not agree with the amounts being requested. Effect Because the five components of internal control were not properly designed or implemented, the School Corporation's internal control system could not be effective. As a result, general and fraud-related risks, as well as risks arising from significant operational changes, could negatively impact the School Corporation. Existing internal control deficiencies may continue undetected, and additional weaknesses may exist without being identified. INDIANA STATE BOARD OF ACCOUNTS 50 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, because the School Corporation did not establish an effective system of internal controls to ensure that the required documentation was obtained and retained, we were unable to obtain sufficient appropriate audit evidence to determine whether the School Corporation complied with the applicable federal program compliance requirements. This lack of documentation created a scope limitation for the audit and increased the risk that noncompliance, if present, may not have been detected. The inability to demonstrate compliance with federal requirements may affect the School Corporation's ability to support current program expenditures and may place eligibility for future federal funding at risk. Finally, salary and benefit expenditures were recorded to the special education grant program funds for employees who were not involved with the program and expenditures for those involved with the program were recorded to nonspecial education funds. Reimbursement requests could not be reconciled to the detailed ledger of expenditures. As such, a complete and accurate population of expenditures, that reconciled to the Schedule of Expenditures of Federal Awards or the financial statement could not be determined. Questioned Costs Questioned costs in the amount of $1,694,906 were identified as detailed in the Condition and Context. Recommendation We recommended the School Corporation design and implement a system of internal controls, which would include policies and procedures related to the five components of internal control. Management should define clear objectives, identify and assess risks, and develop policies and procedures to address those risks. Regular monitoring should be conducted to ensure internal controls are operating effectively and deficiencies are addressed promptly. We also recommended that the School Corporation ensure employees' salaries and benefits are properly mapped within the accounting system. Additionally, we recommended that all documentation to support a reimbursement request be attached to the reimbursement request and reconciled to the ledger at the time of request. We also recommended that any necessary transfers contain sufficient supporting documentation. Finally, we recommended that the School Corporation maintain complete and accurate records for all grant funds and project years. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-009 Subject: COVID-19 - Education Stabilization Fund Federal Agency: Department of Education Federal Programs: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Equipment and Real Property Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Wage Rate Requirements; Special Tests and Provisions - Participation of Private School Children Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report for activities allowed or unallowed, allowable costs/cost principles, cash management, equipment and real property management, and reporting. The prior audit finding numbers were 2022-013, 2022-014, 2022-015, and 2022-016. Condition and Context Internal control is generally defined as a process affected by an entity's oversight body, management, and other personnel that provides reasonable assurance that the entity will achieve its objectives. For federal awards, nonfederal entities, such as the School Corporation, are required to establish and maintain internal control over federal awards to provide reasonable assurance that the entity will comply with applicable federal statutes, regulations, and the terms and conditions of its awards. Internal control is not a single event but an ongoing process that operates through five integrated components: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. Each component must function effectively, and the components must operate together in an integrated manner, for an internal control system to be effective. Deficiencies in the internal control system were identified across the five components and are described below. Control Environment The School Corporation had not established a strong foundation for an effective internal control system. There was no demonstrated emphasis on the importance of internal controls or on compliance with federal program requirements. Risk Assessment The School Corporation had not defined objectives necessary to identify risks or determine risk tolerances. Management did not identify, analyze, or respond to risks that could affect the achievement of objectives, including risks arising from significant changes to operations or the potential for fraud. INDIANA STATE BOARD OF ACCOUNTS 52 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Control Activities The School Corporation did not maintain sufficient financial records for its COVID-19 - Education Stabilization Fund program. Although separate funds were established, expenditures were not accurately recorded, preventing the auditors from properly testing compliance with the federal requirements for Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Equipment and Real Property Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Wage Rate Requirements; and Special Tests and Provision - Participation of Private School Children compliance requirements. Notable errors included expenditures recorded to the grant funds in the amount of $1,623,704 more than the grant amount awarded, as well as unsupported reimbursement requests. The School Corporation attempted to identify expenditures that they no longer wanted to be considered costs under the grant program to correct the overspending. However, instead of reclassifying the expenditures to the proper funds, monies were transferred into the grant funds from other School Corporation funds. The documentation to support the expenditures to be reallocated was not complete as $296,202 of the transfer amount could not be associated with specific expenditure transactions. Additionally, $839,096 in transactions identified to be reclassified were associated with the prior fiscal year 2021-2022 financial activity. After considering transactions recorded in the fund during 2022-2023 and 2023-2024 that were reallocated to other funds the remaining expenditures in the grant program funds were $138,134 less than the total grant funds claimed for reimbursement during the audit period. Due to insufficient documentation, expenditures claimed for reimbursement could not be verified, resulting in questioned costs totaling $1,654,481. Information and Communication The School Corporation had not established adequate communication methods or practices to ensure that reliable information was identified, captured, and communicated to the appropriate internal and external parties. Monitoring The School Corporation did not perform ongoing or periodic evaluations to determine whether internal controls were operating effectively or to identify needed improvement. In addition, the School Corporation did not have a process in place to track or to follow-up on corrective actions written in response to audit findings. Due to the number and severity of the issues identified with the program's financial records and supporting documentation, we were unable to perform the procedures necessary to test the program for compliance. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 53 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following (see also §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. See § 200.303. . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause The School Corporation had not implemented an effective system of internal controls. Changes in key financial personnel, along with insufficient employee training, contributed to processes and procedures not being properly developed or consistently followed. Additionally, expenditures were not properly reviewed to determine if costs were properly recorded to grant funds. Finally, reimbursement requests were completed based on documentation, other than the ledger, that was not always retained or when retained did not agree with the amounts being requested. INDIANA STATE BOARD OF ACCOUNTS 54 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Because the five components of internal control were not properly designed or implemented, the School Corporation's internal control system could not be effective. As a result, general and fraud-related risks, as well as risks arising from significant operational changes, could negatively impact the School Corporation. Existing internal control deficiencies may continue undetected, and additional weaknesses may exist without being identified. Additionally, because the School Corporation did not establish an effective system of internal controls to ensure that the required documentation was obtained and retained, we were unable to obtain sufficient appropriate audit evidence to determine whether the School Corporation complied with the applicable federal program compliance requirements. This lack of documentation created a scope limitation for the audit and increased the risk that noncompliance, if present, may not have been detected. The inability to demonstrate compliance with federal requirements may affect the School Corporation's ability to support current program expenditures and may place eligibility for future federal funding at risk. Finally, reimbursement requests could not be reconciled to the detailed ledger of expenditures. As such, a complete and accurate population of expenditures, that reconciled to the Schedule of Expenditures of Federal Awards or the financial statement could not be determined. Questioned Costs Questioned costs in the amount of $1,654,481 were identified as detailed in the Condition and Context. Recommendation We recommended the School Corporation design and implement a system of internal controls, which would include policies and procedures related to the five components of internal control. Management should define clear objectives, identify and assess risks, and develop policies and procedures to address those risks. Regular monitoring should be conducted to ensure internal controls are operating effectively and deficiencies are addressed promptly. We also recommended that the School Corporation review expenditures and financial ledger reports to ensure activity is recorded to the correct fund. Additionally, we recommended that all documentation to support a reimbursement request be attached to the reimbursement request and reconciled to the ledger at the time of request. Finally, we recommended that the School Corporation maintain complete and accurate records for all grant funds and project years. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding: 2024-006 Voided Rental Payments. Federal Programs - Continuum of Care. Federal Financial Assistance Listing - 14.267. Federal Award Numbers - OK0024L6I021111, OK0024L6I022113, OK0024L6I022212, OK0024L6I022213, OK0024L6I022214, OK0024L6I022215, OK0024L6I022316. Federal Agency - Department of Housing and Urban Development. Pass-through Entities - City of Oklahoma City and the City of Norman. Allowable Activities or Unallowed, Allowable Costs/Cost Principles. Significant deficiency in Internal Control over Compliance. Criteria: Uniform Guidance (2 CFR 200.302(b) ) requires recipients and subrecipients to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. In addition, 2 CFR 200.403 requires costs charged to federal awards to be allowable and adequately supported. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Hope received reimbursement for rental expenditures that were later voided due to tenants no longer being current residents. Cause: Management did not maintain controls to ensure that expenditures claimed for reimbursement were supported by actual costs incurred. Backdated and adjusting entries were recorded without reconciliation to underlying expense documentation or budget tracking schedules and ultimately claimed to the granting pass-through agency. Effect or Potential Effect: Expenditures claimed for reimbursement exceed actual expenditures incurred. As a result, a portion of grant expenditures recorded is unsupported and may be unallowable. Questioned Costs: 1,305 questioned and 9,675 of likely questioned costs. Context: A nonstatistical sampling of 54 out of over 3,000 transactions were selected for testing of Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Two transactions totaling 1,305 were selected for testing that were voided after invoicing. The expenditure detail included 9,675 of other expenditures with the description "voided." Repeat Finding from Prior Year: No. Recommendation: Management may consider a subsequent review or an additional review when adjusting and removing costs after drawdowns to ensure any claimed expenses that subsequently become voided are adjusted in future drawdowns. Views of Responsible Officials: Management's response is included in the corrective action plan.

Finding: 2024-007 Late Fees. Federal Programs - Continuum of Care. Federal Financial Assistance Listing - 14.267. Federal Award Number - OK0024L6I021111, OK0024L6I022113, OK0024L6I022212, OK0024L6I022213, OK0024L6I022214, OK0024L6I022215, OK0024L6I022316. Federal Agency - Department of Housing and Urban Development. Pass-through Entity - City of Oklahoma City and the City of Norman. Allowable Activities or Unallowed, Allowable Costs/Cost Principles. Significant deficiency in Internal Control over Compliance. Criteria: Uniform Guidance (2 CFR 200.302(b) ) requires recipients and subrecipients to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. In addition, 2 CFR 200.403 requires costs charged to federal awards to be allowable and adequately supported. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Hope incurred rental late fees related to housing units of participants in the program. These late fees resulted from rent payments remitted after the contractual due date and were claimed as part of rental costs. Late fees represent penalties and are not an allowable cost under the program. The tenant-caused damage exception permitted under 24 CFR Part 578 does not extend to late fees. Cause: Hope did not establish internal controls to identify and exclude unallowable late fees from rent charged to the program. Additionally, reimbursement requests were not reviewed to ensure penalties were segregated from allowable rental costs. Effect or Potential Effect: Hope incurred unallowable costs. Questioned Costs: 500. Context: A nonstatistical sampling of 54 out of over 3,000 transactions were selected for testing of Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Four transactions included rental late fees in the rent expense claimed. Repeat Finding from Prior Year: No. Recommendation: Management may consider reviewing both the approval of rental expenses prior to issuing rental assistance checks as well as reimbursement processing of rental costs to ensure late fees are not included. Views of Responsible Officials: Management's response is included in the corrective action plan.

Finding No: 2024-110 SF-425 Strengthen Preparation and Document Retention Controls over SF-425 State Agency: Oklahoma Department of Health Federal Agency: United States Department of Health and Human Services Assistance Listing Number: 93.268 Federal Program Name: Immunizations Cooperative Agreement Federal Award Number: NH23IP922575-01-02, NH23IP922575-02-00, NH23IP922575-02-06, NH23IP922575- 03-00, NH23IP922575-04-00, NH23IP922575-05-06, NH23IP922575-05-13 Federal Award Year: 2020, 2021, 2022, 2023, 2024 Compliance Category: Reporting Questioned Costs: None Criteria: The Department is required to prepare and submit complete, accurate, and supportable Federal Financial Reports (FFRs, SF425) for Assistance Listing 93.268 in accordance with the grant award terms, the HHS Grants Policy Statement, and 2 CFR 200.302 and 200.333, including maintaining adequate supporting documentation and subsidiary schedules to substantiate amounts reported and to demonstrate proper cutoff of reporting periods. Internal policies and procedures should ensure that all amounts reported on the SF425 are reconciled to the underlying accounting records and retained in accordance with federal record retention requirements. Condition: Supporting schedules to substantiate the reported amounts for Assistance Listing Number (ALN) 93.268 were not available for two of the six (33%) SF‑425 FFRs selected for testing. Known cutoff issues related to financial reporting were also reported in SA‑01 [finding #2024-102], which further affects the accuracy and completeness of the reporting for this program. Additionally, the Department did not retain adequate documentation to support its FFRs for ALN 93.268, resulting in an incomplete audit trail for the amounts reported. Cause and Effect: The Department’s existing procedures for preparing and retaining supporting schedules for SF425 reports under ALN 93.268 were not consistently followed to ensure all supporting documentation was retained. In addition, controls over period end cutoff for reported expenditures and program income, as noted in SA01 [finding #2024-102], were not operating effectively for this program. As a result, two of six SF425 reports tested for ALN 93.268 not fully supported by underlying schedules, and known cutoff issues increase the risk that amounts reported on the FFRs may be incomplete, inaccurate, or misstated. These weaknesses diminish the reliability of the audit trail, impair management’s ability to demonstrate compliance with federal reporting requirements, and increases the likelihood of questioned costs or future compliance findings. Recommendation: The Department should strengthen its internal controls over the preparation and retention of SF‑425 reports for ALN 93.268 by establishing and documenting standardized procedures that require the preparation of reconciled supporting schedules for each FFR, including clear cutoff procedures that reconcile reported amounts to the general ledger and grant sub‑ledgers for the applicable reporting period; requiring an independent review of each SF‑425 and its supporting schedules prior to submission to verify mathematical accuracy, proper cutoff, and agreement to the accounting records; implementing a centralized document‑retention process to ensure that all supporting schedules and related documentation for submitted FFRs are retained in accordance with federal and Department record‑retention requirements; and providing periodic training to staff responsible for grants accounting and reporting on the revised procedures and retention requirements. Views of Responsible Official(s) Contact Person: Kimberly Courtney, Director of Accounting Anticipated Completion Date: 6/30/26 Management Response: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.

Finding No: 2024-111 Strengthen Preparation and Document Retention Controls over SF-425 State Agency: Oklahoma Department of Health Federal Agency: United States Department of Health and Human Services Assistance Listing Number: 93.323 Federal Program Name: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Numbers: NU50CK000535-01-11, NU50CK000535-02-03, NU50CK000535-02-06, NU50CK000535-03-00, NU50CK000535-03-01, NU50CK000535-03-02, NU50CK000535-04-00, NU50CK000535-05-00, NU50CK000535-05-07, NU50CK000535-05-08, NU50CK000535-05-12 Federal Award Year: 2023, 2024 Compliance Category: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Questioned Costs: None Criteria: The Department is required to prepare and submit complete, accurate, and supportable Federal Financial Reports (FFRs, SF425) for Assistance Listing 93.323 in accordance with the grant award terms, the HHS Grants Policy Statement, and 2 CFR 200.302 and 200.333, including maintaining adequate supporting documentation and subsidiary schedules to substantiate amounts reported and to demonstrate proper cutoff of reporting periods. Internal policies and procedures should ensure that all amounts reported on the SF425 are reconciled to the underlying accounting records and retained in accordance with federal record retention requirements. Condition: Supporting schedules to substantiate the reported amounts for Assistance Listing Number (ALN) 93.323 were not available for two of the six (33%) SF‑425 FFRs selected for testing. Known cutoff issues related to financial reporting were also reported in SA‑01 [finding #2024-103], which further affects the accuracy and completeness of the reporting for this program. Additionally, the Department did not retain adequate documentation to support its FFRs for ALN 93.323, resulting in an incomplete audit trail for the amounts reported. Cause and Effect: The Department’s existing procedures for preparing and retaining supporting schedules for SF425 reports under ALN 93.323 were not consistently followed to ensure all supporting documentation was retained. In addition, controls over period end cutoff for reported expenditures and program income, as noted in SA01 [finding #2024-102], were not operating effectively for this program. As a result, two of six SF425 reports tested for ALN 93.323 not fully supported by underlying schedules, and known cutoff issues increase the risk that amounts reported on the FFRs may be incomplete, inaccurate, or misstated. These weaknesses diminish the reliability of the audit trail, impair management’s ability to demonstrate compliance with federal reporting requirements, and increases the likelihood of questioned costs or future compliance findings. Recommendation: The Department should strengthen its internal controls over the preparation and retention of SF‑425 reports for ALN 93.323 by establishing and documenting standardized procedures that require the preparation of reconciled supporting schedules for each FFR, including clear cutoff procedures that reconcile reported amounts to the general ledger and grant sub‑ledgers for the applicable reporting period; requiring an independent review of each SF‑425 and its supporting schedules prior to submission to verify mathematical accuracy, proper cutoff, and agreement to the accounting records; implementing a centralized document‑retention process to ensure that all supporting schedules and related documentation for submitted FFRs are retained in accordance with federal and Department record‑retention requirements; and providing periodic training to staff responsible for grants accounting and reporting on the revised procedures and retention requirements. Views of Responsible Official(s) Contact Person: Kimberly Courtney, Director of Accounting Anticipated Completion Date: 6/30/26 Management Response: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.

Reference Number: 2024-005 Federal Program Title: Medicaid Cluster / Medical Assistance Program Federal Assistance Listing Number: 93.778 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: California Department of Health Care Services Federal Award Number and Year: N/A Name of County Department: Health and Human Services Category of Finding: Reporting Instance of Noncompliance and Material Weakness Criteria 2 CFR §200.302 Financial Management (a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award 2 CFR § 200.303 states that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The California Department of Health Care Services (State) requires that quarterly administrative expense claims (invoices) be submitted within 60 days of the quarter end and any supplemental claims and revision within six months of the fiscal year end and use the appropriate invoice template provided to the Counties by the State. Condition We selected 10 quarterly administrative expense claims submitted during fiscal year 2024 and noted the following: FY Quarter Program* Due Date Date Submitted Days Late 2024 1 HCPCFC (PMMO) 11/30/2023 12/20/2023 20 2024 1 CHDP 11/30/2023 12/19/2023 19 2024 1 CCS 11/30/2023 1/8/2024 39 2024 1 CCS 11/30/2023 5/24/2024 176 2024 2 CCS 2/28/2024 5/24/2024 86 * CHDP - Child Health and Disability Prevention HCPCFC - Health Care Program for Children in Foster Care HCPCFC (PMMO) - Health Care Program for Children in Foster Care - (Psychotropic Medication Monitoring and Oversight) CCS - California Children Services Program We also noted that two of the reports reviewed had clerical errors in the claim templates in the period dates, creating confusion regarding the reporting period to which the claims related. There were instances in which the period dates were incorrect throughout the claims and instances in which the dates were not consistent across all pages of the claims. Cause The County’s Health and Human Services Department does not have a formal process to monitor and track reporting deadlines or maintain documentation if communications were made with the grantor regarding the need for an extension. The department has experienced staffing constraints leading to delays in preparing, reviewing, and filing reports for the CHDP and HCPCFC programs. Effect Untimely submission of reports may result in funding delays and potential denial of funding by the grantor if the fiscal year’s six-month deadline is exceeded. In addition, insufficient review of report content, such as covered periods and accuracy of the invoice template may create confusion, further delay the receipt of funding, result in inaccurate amounts being claimed and extend the time necessary to resolve discrepancies during subsequent audits. Questioned Costs None identified. Context We identified 20 administrative expense claims filed in fiscal year 2024. This included eight claims related to the prior fiscal year that were filed significantly after the applicable deadlines. We selected 10 of the 20 claims for review. Identification as a Report Finding Previously reported as Finding 2023-004. The sample was not a statistically valid sample. Recommendation We recommend the County consider the following: 1. Establish a tracking system to identify all reports and their respective due dates. 2. Communicate with the grantor if required reports are expected to be submitted late and maintain correspondence. 3. Review employee responsibilities and workloads to properly allocate resources to support compliance needs.

CASH MANAGEMENT – CASH DRAWS Repeat of finding 2022-003, 2023-006 Finding Type: Material Weakness in Internal Controls over Compliance, Material Noncompliance ALN Program Title: 93.676 – Unaccompanied Alien Children Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Liberty Wilderness Crossroads Camp Contract Number: 90ZU0501 Criteria: Under 2 CFR 200.305(b) of the Uniform Guidance, non-federal entities “must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means.” Under 2 CFR 200.305(b)(5) of the Uniform Guidance, “To the extent available, the non-federal entity must disburse funds available from program income (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting additional cash payments.” Under 2 CFR 200.302(b)(6) of the Uniform Guidance, the Organization’s financial management system must provide for “written procedures to implement the requirements of 2 CFR 200.305.” Additionally, 2 CFR 200.303(a) of the Uniform Guidance requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: While the Organization did not draw cash in excess of program disbursements for the grant that was in effect during the current year, the Organization had previously drawn cash in excess of program disbursements under a grant that ended in the prior year so the Organization started and ended the year with a material balance of unspent grant funds for the program. Additionally, the Organization did not have written cash management policies and there was no process established for reviewing the pay requests prepared prior to submission. Cause: Policies and procedures were not in place to ensure that the time elapsing between the transfer of federal funds to the Organization and the disbursement of such funds for program purposes was minimized. In addition, policies and procedures were not in place to ensure that additional cash draws were not requested prior to disbursing all available funds for program related purposes. Effect: Overall program funds were drawn in excess of disbursements. The Organization could be required to return the excess funds to the grantor along with any associated earned interest. Questioned Costs: None Recommendation: We recommend that written policies and procedures be established to implement the requirements of 2 CFR 200.305, and recommend procedures be established for review of the cash draw requests prior to submission and that the review be documented. Views of Responsible Officials and Planned Corrective Actions: See management’s response and Corrective Action Plan on page 55.

Reference Number 2024-007: Reimbursable Expenditures Assistance Listing Number/Program: 20.205 Highway Planning and Construction Agency / Pass-Through: U.S. Department of Transportation, passed through the California Department of Transportation Compliance Requirement: Allowable Costs and Activities Evaluation of Finding: Material Weakness in Internal Control over Compliance and Questioned Cost Repeat Finding: No Condition During our audit of the Highway Planning and Construction program, Assistance Listing Number 20.205, we selected reimbursable grant expenditures for testing. One expenditure charged to the program in the amount of $29,789 was not supported by adequate documentation, such as invoices, receipts, contracts, payroll records, or other records demonstrating that the cost was allowable, allocable, and incurred for the federal program. Because the Council was unable to provide documentation supporting the expenditure, the amount is considered a questioned cost. Criteria Federal awards may be charged only for costs that are necessary, reasonable, allocable, and adequately documented in accordance with 2 CFR 200.403 and 2 CFR 200.405. In addition, 2 CFR 200.302 requires nonfederal entities to maintain financial management systems and records that identify the source and application of federal funds and support the allowability of costs charged to federal awards. Management is responsible for maintaining internal controls over compliance sufficient to ensure expenditures claimed for reimbursement are properly supported and comply with applicable grant requirements. Cause The Council did not maintain adequate grant expenditure documentation or perform a sufficiently detailed review to ensure that costs submitted for reimbursement were supported by records demonstrating allowability, allocability, and compliance with federal program requirements before reimbursement was requested or the expenditure was reported. Effect or Potential Effect Unsupported expenditures increase the risk that costs charged to the federal program may not be allowable or properly allocable to the award. The unsupported reimbursable expenditure of $29,789 is considered a questioned cost. Recommendation We recommend that the Council strengthen its grant expenditure review process to require complete supporting documentation before costs are charged to federal awards or submitted for reimbursement. Documentation should be retained in a manner that clearly supports the nature, amount, timing, allowability, and allocability of each expenditure. The Council should also review the questioned cost and consult with the grantor, as appropriate, regarding resolution. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Management Response and Corrective Action: Management concurs with the finding and acknowledges that improvements are necessary to strengthen StanCOG's internal controls over grant expenditure documentation, review, and reimbursement processes. The condition identified resulted from deficiencies in historical grant expenditure documentation and review procedures. During the period under audit, StanCOG did not have sufficiently documented processes in place to ensure that all costs charged to federal awards were supported by adequate documentation demonstrating the nature, amount, timing, allowability, and allocability of the expenditure prior to reimbursement submission. The unsupported expenditure identified during testing relates to a reimbursement claimed under the Highway Planning and Construction program. Management recognizes the importance of maintaining complete supporting documentation for all federal award expenditures and will work with the appropriate parties, including the grantor as necessary, to evaluate and resolve the questioned cost in accordance with applicable federal requirements. Since the period under audit, StanCOG has undergone significant changes within its Finance Department and has recently hired new management focused on strengthening financial controls, improving grant compliance practices, and rebuilding sustainable financial processes. Management is currently reviewing existing grant accounting and reimbursement procedures and is implementing enhanced controls to ensure federal expenditures are properly supported and reviewed prior to reimbursement requests. Management is implementing, or plans to implement, the following corrective actions: • Establish standardized grant expenditure review procedures requiring supporting documentation before costs are charged to federal awards or submitted for reimbursement. • Develop documentation requirements for grant-related expenditures, including invoices, contracts, payroll documentation, time records, and other supporting records necessary to demonstrate allowability and allocability. • Implement documented supervisory review procedures to verify that expenditures charged to federal programs are appropriate, supported, and comply with applicable federal requirements. • Improve coordination between Finance and program/project staff to ensure required supporting documentation is collected and retained timely. • Establish consistent grant file organization and retention procedures to ensure documentation supporting federal expenditures is readily available for monitoring and audit purposes. • Provide guidance and training to staff involved in grant administration, project management, and expenditure processing regarding federal cost principles and documentation requirements. • Review the questioned cost identified in the audit and coordinate with the appropriate grantor representatives regarding resolution, as necessary. Management recognizes the importance of strong grant management practices and maintaining adequate documentation to support the use of federal funds. StanCOG is committed to strengthening its internal control environment, improving grant expenditure review procedures, and ensuring that future reimbursement requests are supported by complete and appropriate documentation in accordance with federal requirements.

Interfund Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster and Public Housing Operating Fund Assistance Listing Number: 14.871;14.879 and 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: The Authority must ensure that all financial transactions, including interfund activity, are recorded accurately, supported by documentation, and compliant with federal financial management requirements. Under 2 CFR section 200.302, the Authority is required to maintain financial management systems that provide for accurate, current, and complete disclosure of financial results for all federally assisted programs. In addition, 2 CFR section 200.303 requires the Authority to implement internal controls to safeguard federal funds and ensure that transactions are properly authorized and recorded. Interfund loans, transfers, and reimbursements must be supported by adequate documentation, consistent with the Authority’s cost allocation plan, and compliant with the cost principles in 2 CFR part 200, subpart E. Costs charged to the Housing Choice Voucher (HCV) Program or Public Housing Program must be allowable, reasonable, necessary, and allocable under 2 CFR section 200.405. Any temporary use of HCV or Public Housing funds for non HCV purposes, or vice versa, must be fully documented and promptly reimbursed to the benefiting program. PHAs must also maintain complete and accurate accounts and records for all program transactions in accordance with 24 CFR section 982.158(a). The PHA must ensure that all interfund transactions are timely reconciled, supported by appropriate documentation, and accurately reflected in the PHA’s financial statements and HUD reporting systems, including the Financial Data Schedule (FDS) submitted under 24 CFR part 5, subpart H. Condition: During the audit, interfund transactions between program funds were identified, which lacked adequate documentation and approval. The Authority could not provide support for the interfund balance transfers and reimbursements between the programs. Questioned costs: $5,660,183 (ALN 14.850); $1,714,685 (ALN 14.871); $82,702 (ALN 14.879); $67,870 (ALN 14.EHV) Context: The Authority is not in compliance with federal regulations regarding transfers of operating funds and maintaining adequate documents per the compliance requirements. Cause: The Authority does not have adequate internal controls designed to ensure that requirements were being met. Effect: The Authority does not have proper controls over the reporting process. Repeat Finding: Yes 2024 – 004 – Interfund Recommendation: We recommend management should create processes to track interfunds and transfers as well as designate an individual to review and approve these transactions. Additionally, the Authority should begin the process of reimbursing the respective programs. Views of responsible officials: There is no disagreement with the audit finding.

2024 – 010 – Allowable Cost - HCVP Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871 and 14.879 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Under 2 CFR part 200, subpart E (Cost Principles), PHAs must ensure that all program expenditures charged to the Housing Choice Voucher (HCV) Program are allowable, reasonable, necessary, and properly supported. Specifically, 2 CFR sections 200.302 and 200.303 require the PHA to maintain effective financial management systems and internal controls to ensure that costs are accurately recorded, supported by documentation, and compliant with federal requirements. Payroll costs must be supported by appropriate time and effort documentation in accordance with 2 CFR section 200.430, and all cash disbursements must be supported by invoices, approvals, and evidence that the expenditures benefit the HCV Program. The PHA must ensure that all payroll charges, vendor payments, and other cash disbursements allocated to the HCV Program are supported by adequate documentation, properly approved, and consistent with the PHA’s cost allocation plan, financial policies, and federal cost principles. All expenditures must be recorded accurately and retained in accordance with 24 CFR section 982.158(a), which requires PHAs to maintain complete and accurate accounts and records for all program transactions. Condition: During the testing of the Housing Voucher Cluster we noted the following errors Cash Disbursements • Of the 40 invoices that we reviewed, we noted a total of 40 invoices did not have a documented approval Payroll Disbursement Testing • 7 timecards were noted as not having been approved • 8 timecards could not be provided • Information for 3 employees could not be provided Questioned costs: N/A Context: Cash Disbursements Out of the 40 invoices that we reviewed, we noted a total of 40 invoices without written approval on the invoices. Payroll Disbursements Out of the 40 timecards files that we reviewed, we noted 10 timecard files that contained errors as noted. Cause: The Authority failed to follow the internal controls process that was designed to ensure that requirements were being met. 2024 – 010 – Allowable Cost - HCVP Effect: The Authority does not have proper controls over the payroll and cash disbursement approval process. Repeat Finding: No Recommendation: We recommend that the Authority designate an individual to review both cash disbursements and payroll disbursements for all program expenditures. Views of responsible officials: There is no disagreement with the audit finding.

2024 – 013 - Depository Agreement Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster and Public Housing Operating Fund Assistance Listing Number: 14.871;14.879 and 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Public Housing Agencies (PHAs) are required to deposit and hold all program funds in accordance with HUD requirements. Under 24 CFR section 982.156 (Housing Choice Voucher Program) and 24 CFR section 990.200 and the Annual Contributions Contract (ACC) for the Low Rent Public Housing Program, the PHA must enter into a General Depository Agreement (HUD-51999) with each financial institution holding HCV and Public Housing program funds. The depository agreement must be executed in the form prescribed by HUD and must require the financial institution to pledge collateral for any program funds on deposit in excess of the amount insured by the Federal Deposit Insurance Corporation (FDIC), in accordance with 24 CFR sections 982.156(b) and the ACC. 2024 – 013 - Depository Agreement Criteria or specific requirement: In addition, 2 CFR sections 200.302 and 200.303 require the PHA to maintain effective financial management systems and internal controls to safeguard federal funds and ensure that cash is properly managed in accordance with federal requirements. The PHA must maintain complete and accurate accounts and records for all program transactions in accordance with 24 CFR section 982.158(a). Condition: During the testing of special tests for the Housing Choice Voucher Program and the Low Rent Public Housing Program, we requested executed General Depository Agreements (HUD-51999) for each financial institution holding federal program funds. The Authority was unable to provide an executed General Depository Agreement for the HCVP or Public Housing program funds on deposit. As a result, federal program funds are being held at financial institutions without the HUD-required depository agreement and without evidence that collateral has been pledged for amounts on deposit in excess of FDIC insurance limits. Questioned costs: N/A Context: The Authority did not have an executed General Depository Agreement (HUD-51999) on file for any of the financial institutions holding HCVP or Public Housing program funds during the audit period. Cause: The Authority does not have adequate internal controls designed to ensure that a HUD-required General Depository Agreement is executed and maintained for each financial institution holding federal program funds, and that collateral is pledged for amounts in excess of FDIC insurance limits. Effect: The Authority is not in compliance with federal regulations regarding special tests and the safeguarding of federal program funds. Without an executed General Depository Agreement, federal funds on deposit in excess of FDIC insurance limits are not protected by pledged collateral, exposing the HCVP and Public Housing programs to potential loss. Repeat Finding: N/A Recommendation: We recommend that the Authority designate an individual to obtain and execute a General Depository Agreement (HUD-51999) with each financial institution holding HCVP and Public Housing program funds, ensure that collateral is pledged for amounts on deposit in excess of FDIC insurance limits, and maintain the executed agreements in a centralized file for ongoing monitoring. Views of responsible officials: There is no disagreement with the audit finding.

Criteria: Federal awarding agencies and pass-through entities require recipients to submit periodic financial and performance reports, including but not limited to cash reconciliation reports, quarterly reports, and final expenditure reports, within specified deadlines. These reports must be accurate, complete, and supported by underlying accounting records. Additionally, recipients are required to establish and maintain effective internal controls to ensure the accurate preparation, reconciliation, and timely submission of all required federal reports in accordance with 2 CFR 200.302 and 2 CFR 200.303. While testing ESSER as a major program, we noticed similar trends across Title Programs as well, which had no further testing and was not a major program. Condition: The District did not consistently file required federal reports within established deadlines. Specifically, certain required quarterly cash reconciliation reports were submitted after the required due dates, and in some instances, required reports were not submitted. Additionally, the District was unable to provide adequate supporting documentation to reconcile reported expenditures to the general ledger for certain federal reports. Furthermore, required final expenditure reports were not always submitted after funds were fully expended. These issues were noted across multiple federal programs, indicating deficiencies in the District’s overall internal controls over federal reporting. Cause: The District's internal controls and review process over federal reporting were not operating effectively. There was a lack of adequate supervisory review and monitoring to ensure that all federal reports were prepared accurately, reconciled to the general ledger, and submitted in a timely manner. Effect: The District is not in compliance with federal reporting requirements. Failure to submit accurate and timely reports could result in delayed reimbursements, increased scrutiny by federal and pass-through agencies, or potential withholding or loss of federal funding. Questioned Costs: None Recommendation: We recommend that the District strengthen internal controls over federal reporting for all federal programs. The District should implement formal procedures to ensure that all required federal reports are prepared accurately and completely, reconciled to the general ledger, reviewed by appropriate supervisory personnel, and submitted timely in accordance with federal and pass-through agency requirements. Additionally, the District should provide training to personnel responsible for federal reporting and implement a monitoring process to ensure ongoing compliance with federal requirements. Views of Responsible Officials: Management is in agreement with the finding. Prior Year Finding: 2023-002

2024-005 - Inadequate Controls Over Federal Grant Reporting and Record Retention Finding Type: Material weakness in internal control over compliance. Repeat Finding: Yes; prior year finding 2023-004. Status: Repeated; corrective action was not fully implemented during the current audit period. Federal Award: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Criteria: The Uniform Guidance (2 CFR 200.302) requires a non-Federal entity’s financial management system and supporting records to be sufficient to permit the preparation of required federal reports, provide accurate, current, and complete financial information, and trace federal funds to a level sufficient to demonstrate compliance with applicable requirements. Additionally, 2 CFR 200.303 requires non-Federal entities to establish and maintain effective internal control over federal awards. The applicable SLFRF Award Terms and Conditions require recipients to comply with Treasury’s reporting requirements and maintain financial records and supporting documentation sufficient to demonstrate compliance. Such records are required to be retained for five years after all award funds have been expended or returned to Treasury, whichever is later. Treasury’s reporting guidance also requires recipients to submit applicable project, expenditure, capital expenditure, contractor, subaward, and other programmatic information. Condition/Finding: During the audit, we noted that the Organization had not established and implemented sufficient controls over the preparation, review, submission, and retention of required SLFRF reports. Specifically, the Organization could not provide sufficient documentation demonstrating that: • Financial and programmatic information included in required reports was reconciled to the underlying accounting and project records; • All applicable reporting elements, including capital expenditures and contractor or subaward information, were evaluated for completeness; • Reports were reviewed and approved by appropriate personnel before certification and submission; • Reports were submitted by the applicable deadlines and evidence of submission was retained; and • Corrections or resubmissions were appropriately documented and supported. Additionally, records necessary to substantiate reported financial and programmatic information were not consistently maintained and retained. Cause: The Organization had not established written policies or a standardized reporting process identifying the responsibilities, documentation, review, submission, and record-retention requirements applicable to federal grant reporting. Consequently, the required reporting controls were not consistently performed and documented. Effect: The absence of appropriately designed and implemented controls creates a reasonable possibility that materially inaccurate, incomplete, or untimely federal reports could be submitted and not be prevented, or detected and corrected, on a timely basis. Inadequate supporting records may also prevent the Organization from substantiating reported information and demonstrating compliance during an audit, monitoring review, or other grantor examination. Questioned Costs: None. Recommendation: We recommend that management establish written federal grant reporting and record-retention procedures and implement a standardized reporting calendar and checklist. The procedures should assign responsibility for preparing, reconciling, reviewing, approving, and submitting each required report. Management should retain the underlying accounting and programmatic records, documented reconciliations and approvals, submission confirmations, and support for any corrections or resubmissions for the required retention period. View of Responsible Officials (Corrective Action): See corrective action plan.

2024-001: Reconciliations and Material Adjustments Questioned Costs: None How the questioned costs were computed: N/A Grant Funding Source Grant Period Head Start U.S. Department of Health 06/01/2023 - 05/31/2024 10CH010945-05 and Human Services Early Head Start U.S. Department of Health 07/01/2023 - 06/30/2024 Child Care Partnerships and Human Services 10HP000422-04 Condition: At the time of audit fieldwork, Umatilla-Morrow Head Start, Inc. had not reconciled all account balances. As a result, Wipfli, LLP proposed and management posted adjusting journal entries to contributions receivable, grants receivable, refundable advance, accrued liabilities, operating right of use assets and lease obligations, property and equipment, grant revenue, in-kind, and net assets with donor restrictions. As Umatilla-Morrow Head Start, Inc.’s internal controls did not discover these adjustments prior to our audit, a material weakness exists in Umatilla-Morrow Head Start, Inc.’s internal controls over financial reporting. Criteria: Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets. Cause: During the audit year, Umatilla-Morrow Head Start, Inc. experienced turnover in its business office which contributed to the lack of timely reconciliations, review of reconciliations performed, and subsequent adjustments to account balances. Repeat: Yes - Years as repeat finding: Five 2023-001 Effect: As a result of the lack of segregation of duties surrounding bank reconciliations and not reconciling all account balances resulting in subsequent adjustments to accounts, a material weakness exists in internal controls over financial reporting. Recommendation: Accounts should be reconciled monthly with the adjustments posted timely so that management is relying on accurate financial information to make decisions. We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled, reviewed, and adjusted in a timely manner. View of Responsible Officials: Management agrees with the assessment and subsequent to year end, steps were taken to correct the matter.

2024-001: Reconciliations and Material Adjustments Questioned Costs: None How the questioned costs were computed: N/A Grant Funding Source Grant Period Head Start U.S. Department of Health 06/01/2023 - 05/31/2024 10CH010945-05 and Human Services Early Head Start U.S. Department of Health 07/01/2023 - 06/30/2024 Child Care Partnerships and Human Services 10HP000422-04 Condition: At the time of audit fieldwork, Umatilla-Morrow Head Start, Inc. had not reconciled all account balances. As a result, Wipfli, LLP proposed and management posted adjusting journal entries to contributions receivable, grants receivable, refundable advance, accrued liabilities, operating right of use assets and lease obligations, property and equipment, grant revenue, in-kind, and net assets with donor restrictions. As Umatilla-Morrow Head Start, Inc.’s internal controls did not discover these adjustments prior to our audit, a material weakness exists in Umatilla-Morrow Head Start, Inc.’s internal controls over financial reporting. Criteria: Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets. Cause: During the audit year, Umatilla-Morrow Head Start, Inc. experienced turnover in its business office which contributed to the lack of timely reconciliations, review of reconciliations performed, and subsequent adjustments to account balances. Repeat: Yes - Years as repeat finding: Five 2023-001 Effect: As a result of the lack of segregation of duties surrounding bank reconciliations and not reconciling all account balances resulting in subsequent adjustments to accounts, a material weakness exists in internal controls over financial reporting. Recommendation: Accounts should be reconciled monthly with the adjustments posted timely so that management is relying on accurate financial information to make decisions. We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled, reviewed, and adjusted in a timely manner. View of Responsible Officials: Management agrees with the assessment and subsequent to year end, steps were taken to correct the matter.

#2024-001: Grant Program: Department of Health and Human Services – National Institutes for Health Research and Development Cluster – Cancer Control – Assistance Listing #93.399 – Lack of Required Written Policies Condition: The Consortium does not have written policies and procedures in place as required by 2 CFR § 200.302 and § 200.313. Specifically, the Consortium lacks documented policies for: • The timing of federal cash draws; • The allowability of costs charged to federal awards; and • Documentation of time-and-effort for personal services. Criteria: 2 CFR § 200.302(b)(6)–(7) requires nonfederal entities to have written procedures for (a) cash drawdowns and (b) determining cost allowability. § 200.305 requires written cash-management procedures that minimize the time between draw and disbursement. § 200.430 requires a written policy that is consistently applied to both federal and nonfederal activities for documentation of compensation for personal services. Context: At the time of completion of the audit for the year ended May 31, 2024, the written policies were not in place. Cause: The Consortium has not yet developed or adopted the required written policies due to limited administrative capacity and reliance on informal practices. Effect: The absence of written policies increases the risk of noncompliance with federal requirements, mismanagement of federal funds, and audit findings in future periods. It may also impair the Consortium’s ability to consistently apply federal cost principles and properly safeguard assets. Recommendation: We recommend that the Consortium develop and implement written policies and procedures that comply with the requirements of Uniform Guidance. Management Response: See Corrective Action Plan.

Item 2024-004 Financial Reporting (Significant Deficiency in Internal Control) Assistance Listing Number 93.600 Head Start Cluster U.S. Department of Health and Human Services Grant No. 04CH010931-05-01 Condition – The Club did not maintain proper documentation in support of financial reporting requirements for the two SF-425 reports that were tested. Criteria – 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 2 CFR section 200.302(b))3) requires that nonfederal entities keep records that include information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Cause – Supporting records used to populate the required financial reporting were not retained by the Club. Effect – The Club could submit incorrect information. Questioned Costs – Not determinable. Recommendation – Documentation should be prepared, reviewed, and retained to support the required reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.

Material Weakness in Internal Control over Federal Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Reporting Review and Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A WI DHS Contract Number: 435100-G24-226233-490 Profile ID #: 155043 Name of State Program: WI Primary Care 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. The State Award is passed through from the Federal government and is required to follow the Uniform Guidance as well. Management’s grant tracking for Federal Awards were not properly updated or reviewed and approved during the year. Due to staff turnover during the year, Management was unable to provide the general ledger information that reconciles to the grant cost reimbursement requests submitted to the funding sources. In addition, Management was unable to provide supporting documentation that information submitted to the funding sources was reviewed and approved. There is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.

Material Weakness in Internal Control over Federal Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Reporting Review and Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A WI DHS Contract Number: 435100-G24-226233-490 Profile ID #: 155043 Name of State Program: WI Primary Care 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. The State Award is passed through from the Federal government and is required to follow the Uniform Guidance as well. Management’s grant tracking for Federal Awards were not properly updated or reviewed and approved during the year. Due to staff turnover during the year, Management was unable to provide the general ledger information that reconciles to the grant cost reimbursement requests submitted to the funding sources. In addition, Management was unable to provide supporting documentation that information submitted to the funding sources was reviewed and approved. There is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.

Material Weakness in Internal Control over Federal and State Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Expenditure Documentation & Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Management was unable to provide supporting documentation such as invoices or receipts for 4 out of 25 transactions for the Technical and Non-Financial Assistance to Health Centers program (ALN # 93.129). In addition, Management was unable to provide supporting documentation of the related reviews and approvals of those expenditures. The extrapolated error is not material to the major programs, and is below the questioned costs threshold. However, there is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.

Material Weakness in Internal Control over Federal and State Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Expenditure Documentation & Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Management was unable to provide supporting documentation such as invoices or receipts for 4 out of 25 transactions for the Technical and Non-Financial Assistance to Health Centers program (ALN # 93.129). In addition, Management was unable to provide supporting documentation of the related reviews and approvals of those expenditures. The extrapolated error is not material to the major programs, and is below the questioned costs threshold. However, there is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.

Condition: Out of the 36 grant drawdowns during the year, of the 15 drawdowns that were tested, 3 of the drawdowns were made in advance of the supporting invoices being paid and subsequently the invoices were not paid within the 72-hours, as required. Context: The auditor haphazardly selected 15 grant drawdowns from the population, which we consider to be a statistically valid sample size. The auditor reviewed the drawdowns and supporting documentation to ensure proper procedures are being followed and that the Authority is in compliance with HUD requirements. Criteria: The U.S. Treasury per 2 CFR section 200.305 (2 CFR section 200.302(b)(6)) requires grant funds received by the Authority to be properly spent within 72 hours of receipt. HUD regulations require that proper documentation be maintained for all Capital Fund Program per 24 CFR 905.326. Cause: The Authority experienced staff turnover in the finance department as well as difficulty replacing personnel knowledgeable with HUD and grant reporting requirements. Effect: The Authority did not disburse the capital funds in a timely manner for some of the draws made during the year. Questioned Costs: $379,570 Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over grant management to coordinate capital fund draws with the timing of invoice payments. View of Responsible Officials: See Corrective Action Plan

Material Weakness in Internal Control over Federal Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Reporting Review and Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A WI DHS Contract Number: 435100-G24-226233-490 Profile ID #: 155043 Name of State Program: WI Primary Care 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. The State Award is passed through from the Federal government and is required to follow the Uniform Guidance as well. Management’s grant tracking for Federal Awards were not properly updated or reviewed and approved during the year. Due to staff turnover during the year, Management was unable to provide the general ledger information that reconciles to the grant cost reimbursement requests submitted to the funding sources. In addition, Management was unable to provide supporting documentation that information submitted to the funding sources was reviewed and approved. There is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.

Material Weakness in Internal Control over Federal Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Reporting Review and Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A WI DHS Contract Number: 435100-G24-226233-490 Profile ID #: 155043 Name of State Program: WI Primary Care 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. The State Award is passed through from the Federal government and is required to follow the Uniform Guidance as well. Management’s grant tracking for Federal Awards were not properly updated or reviewed and approved during the year. Due to staff turnover during the year, Management was unable to provide the general ledger information that reconciles to the grant cost reimbursement requests submitted to the funding sources. In addition, Management was unable to provide supporting documentation that information submitted to the funding sources was reviewed and approved. There is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.

Material Weakness in Internal Control over Federal and State Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Expenditure Documentation & Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Management was unable to provide supporting documentation such as invoices or receipts for 4 out of 25 transactions for the Technical and Non-Financial Assistance to Health Centers program (ALN # 93.129). In addition, Management was unable to provide supporting documentation of the related reviews and approvals of those expenditures. The extrapolated error is not material to the major programs, and is below the questioned costs threshold. However, there is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.

Material Weakness in Internal Control over Federal and State Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Expenditure Documentation & Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Management was unable to provide supporting documentation such as invoices or receipts for 4 out of 25 transactions for the Technical and Non-Financial Assistance to Health Centers program (ALN # 93.129). In addition, Management was unable to provide supporting documentation of the related reviews and approvals of those expenditures. The extrapolated error is not material to the major programs, and is below the questioned costs threshold. However, there is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.

Condition: Out of the 36 grant drawdowns during the year, of the 15 drawdowns that were tested, 3 of the drawdowns were made in advance of the supporting invoices being paid and subsequently the invoices were not paid within the 72-hours, as required. Context: The auditor haphazardly selected 15 grant drawdowns from the population, which we consider to be a statistically valid sample size. The auditor reviewed the drawdowns and supporting documentation to ensure proper procedures are being followed and that the Authority is in compliance with HUD requirements. Criteria: The U.S. Treasury per 2 CFR section 200.305 (2 CFR section 200.302(b)(6)) requires grant funds received by the Authority to be properly spent within 72 hours of receipt. HUD regulations require that proper documentation be maintained for all Capital Fund Program per 24 CFR 905.326. Cause: The Authority experienced staff turnover in the finance department as well as difficulty replacing personnel knowledgeable with HUD and grant reporting requirements. Effect: The Authority did not disburse the capital funds in a timely manner for some of the draws made during the year. Questioned Costs: $379,570 Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over grant management to coordinate capital fund draws with the timing of invoice payments. View of Responsible Officials: See Corrective Action Plan

2024-012 Financial Statement Reconciliations/Tie-In Procedures Material Weakness This is a repeat finding. The prior-year’s auditing finding number is 2023-012. Condition: A weakness existed in the overall reconciliation/tie-in procedures performed over the Housing Authority’s financial statement accounts for the fiscal year ended March 31, 2024. Financial accounts were not reconciled on a timely, monthly basis. The major areas where reconciliation procedures were weak included: A) Bank Reconciliations B) Grant Receivables C) Account Receivables and associated allowance for doubtful accounts D) Capital Assets E) Accounts Payable F) Payroll and Other Current Liabilities Criteria: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. Cause: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. Effect: In the course of performing the audit, the auditor recommended 4 adjusting journal entries be made to the financial statements for fiscal year ending March 31, 2024. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature. Recommendation: The Housing Authority should adopt written reconciliation and tie-in procedures into its financial policies and procedures manual. These policies should require timely reconciliations to take place as defined under policy. Views of Responsible Officials: See Corrective Action Plan.

2023-003 U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there were two instances in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2023 no funds have been returned to U.S. DOT. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2023 Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding This is not a repeat finding. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

2023-003 U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there were two instances in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2023 no funds have been returned to U.S. DOT. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2023 Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding This is not a repeat finding. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

Criteria or specific requirement: According to §200.302 Financial management of 2 CFR Part 200, MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))). Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Condition: During the testing of 40 HCV files selected, we noted 1 of the 40 tenant files did not have an inspection completed on the unit within the established timeline of the Authority’s policy. Questioned costs: $30,000 Context: Out of 40 files, 1 contained errors as noted above. Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Cause: There was an issue with Yardi and the notice letters that outlined deficiencies were printing out incorrect mailing information. This resulted in the housing provider not being properly notified of the deficiencies, so as a result the Authority could not abate until the housing provider received proper notice. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls over HQS inspections to ensure compliance with HUD requirements and their administrative plan. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Views of responsible officials: There is no disagreement with the audit finding.

Criteria or specific requirement: According to §200.302 Financial management of 2 CFR Part 200, MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))). Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Condition: During the testing of 40 HCV files selected, we noted 1 of the 40 tenant files did not have an inspection completed on the unit within the established timeline of the Authority’s policy. Questioned costs: $30,000 Context: Out of 40 files, 1 contained errors as noted above. Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Cause: There was an issue with Yardi and the notice letters that outlined deficiencies were printing out incorrect mailing information. This resulted in the housing provider not being properly notified of the deficiencies, so as a result the Authority could not abate until the housing provider received proper notice. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls over HQS inspections to ensure compliance with HUD requirements and their administrative plan. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Views of responsible officials: There is no disagreement with the audit finding.