Findings Citing § 200.302

Federal Agency: Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: 1505-0271 - 2021 Award Period: March 3, 2021 – December 31, 2024, liquidated by December 31, 2026 Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-Compliance (Modified Opinion) Criteria or Specific Requirement: Under 2 CFR 200.302 and 2 CFR 200.328, recipients of federal funds must maintain accurate financial records and ensure that all reports submitted to federal agencies are complete, accurate, and supported by the accounting system. In addition, Treasury guidance requires that expenditures reported in the Project and Expenditure (P&E) Report be accurate and properly classified. Condition: During the audit, it was noted that certain expenditures reported in the Treasury Project and Expenditure (P&E) Report were inaccurate. Specifically, expenditures included in the P&E Report had been reimbursed under another federal or pass-through grant and therefore should not have been reported as expenditures under the Coronavirus State and Local Fiscal Recovery Funds program. The Schedule of Expenditures of Federal Awards (SEFA) was reviewed and found to be accurately stated in all material respects and properly reconciled to the general ledger. The inaccuracy was limited to the P&E Report submitted to the U.S. Department of the Treasury and did not impact the SEFA. Questioned Cost: None. Context: $520,252 of expenditures reported in the P&E Report submitted to the U.S. Department of the Treasury were reimbursed by another grant. Cause: The Town did not have adequate review procedures in place to ensure that amounts reported in the Project and Expenditure Report were reconciled to the accounting system prior to submission and not reported elsewhere. Effect: As a result, expenditures reported in the Treasury P&E Report were overstated. While this did not affect the accuracy of the SEFA or the basic financial statements, inaccurate reporting to the federal awarding agency increases the risk of noncompliance and may result in the need for corrections, repayments, or increased federal oversight. Repeat Finding: No Recommendation: We recommend that the Town implement stronger internal controls over federal reporting, including establishing a formal reconciliation process between the general ledger and the Project and Expenditure Report, requiring Town Administrator’s review and approval of all federal reports prior to submission, and providing additional training to staff on Federal reporting requirements. View of Responsible Officials: Management concurs with this finding.

FINDING 2025-004 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not designed or implemented a system of internal controls, which would have included appropriate segregation of duties, that would have likely been effective in preventing, or detecting and correcting, noncompliance. The School Corporation transferred $313,369 from the School Lunch fund into the Operations fund. This transfer was labeled as an indirect cost transfer; however, indirect costs were not approved to be charged to the program. This transfer was also not approved by the School Board. The issue was identified and corrected by the current Treasurer prior to June 30, 2025. The lack of internal controls and noncompliance over allowable activities was an isolated instance. Criteria 2 CFR 200.302 states in part: "(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 own funds. In addition, the state's 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. . . . (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, 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 and year, name of the Federal agency, and name of the pass-through entity, if any. (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. INDIANA STATE BOARD OF ACCOUNTS 23 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (4) Effective control over, and accountability for, all funds, property, and other assets. . . ." 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 200.400 states in part: "The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: . . . (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." INDIANA STATE BOARD OF ACCOUNTS 24 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.508 states in part: "The auditee must: . . . (d) Provide the auditor with access to personnel, accounts, books, records, supporting documentation, and any other information as needed for the auditor to perform the audit required by this part." Federal Register, Vol. 87, No. 18 states in part: "Treasury has divided the Restriction on Use section into . . . (B) other restrictions on use, which include (1) debt service and replenishing reserves, (2) settlements and judgements, and (3) general restrictions. These restrictions apply to all eligible use categories. . . ." Cause The School Corporation had not developed a system of internal controls that would have ensured that all activities and costs were in compliance with the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system was not capable of effectively preventing, or detecting and correcting, noncompliance as identified in the Condition and Context. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all activities are allowable. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-005 Subject: Child Nutrition Cluster - Special Tests and Provisions - School Food Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - School Food Accounts Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 25 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not designed or implemented a system of internal controls, which would have included appropriate segregation of duties, that would have likely been effective in preventing, or detecting and correcting, noncompliance. One of the three monthly reimbursement claims tested was receipted into the School Lunch fund twice. The issue was identified and corrected by the current Treasurer prior to June 30, 2025. The lack of internal controls and noncompliance over special tests and provisions - school food accounts is an isolated instance. 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: . . . (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. . . ." Cause The School Corporation had not developed a system of internal controls that would have ensured that monthly reimbursements were properly credited to the School Food Account. Effect The lack of internal controls prevented the School Corporation's compliance with the Special Tests and Provisions - School Food Accounts compliance requirement and inaccurate crediting of the School Lunch fund as detailed in the Condition and Context. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 26 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all reimbursements are properly credited to the School Lunch fund. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-006 Subject: Title I Grants to Local Educational Agencies - Activities Allowed or Unallowed, Allowable Costs/Cost Principles 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): S010A220014, S010A230014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation did not have effective internal controls in place to ensure all costs paid from Title I funds and submitted for reimbursement were for allowable activities or allowable costs. As a result, the following compliance issues were noted:  On May 26, 2023, a check for $886 was issued for which supporting documentation could not be provided. As a result, it could not be determined if the expense was for an allowable activity or an allowable cost.  On August 16, 2024, seven stipends were paid to non-Title I administrative staff from Title I grant funds. Two employees received $5,000 each and five employees received $3,000 each.  On December 20, 2024, three stipends for $918 each were paid from Title I grant funds to employees who had previously received a stipend payment on August 16, 2024. These stipends were determined to not be an allowable activity or an allowable cost. The current Treasurer identified the stipend errors. The School Corporation requested and received reimbursement from the seven employees who received these stipends. INDIANA STATE BOARD OF ACCOUNTS 27 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.302 states in part: "(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 own funds. In addition, the state's 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. . . . (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, 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 and year, name of the Federal agency, and name of the pass-through entity, if any. (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. . . ." 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 200.400 states in part: "The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. INDIANA STATE BOARD OF ACCOUNTS 28 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: . . . (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." 2 CFR 200.508 states in part: "The auditee must: . . . (d) Provide the auditor access to personnel, accounts, books, records, supporting documentation, and any other information as needed for the auditor to perform the audit required by this part." Federal Register, Vol. 87, No. 18 states in part: "Treasury has divided the Restriction on Use section into . . . (B) other restrictions on use, which include (1) debt service and replenishing reserves, (2) settlements and judgements, and (3) general restrictions. These restrictions apply to all eligible use categories. . . ." Cause The School Corporation did not design and implement an effective internal control system to review all payroll expenditures from the Title I funds, ensuring they were for allowable activities. Effect The failure to design and implement an effective internal control system over payroll expenditures caused noncompliance with the compliance requirements as detailed in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 29 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a system of internal controls to ensure that grant award fund compliance requirements are appropriately researched prior to spending. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-005 Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Department of Education based upon the number of meals served for the month. The Claims were prepared by the School Corporation's Food Service Director and a food service management company (FSMC) employee. The School Corporation maintained manual meal count records. A point-of-sale system (POS) was used to summarize the manual counts. For all four Claims tested, there were differences between the Claims submitted and the School Corporation's detail meal count reports, resulting in over and under reporting and reimbursement. The Claims tested contained the following errors:  The October 2023 claim reported 27 less meals served (11 breakfast and 16 lunch) than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $100. The School Corporation also overclaimed snacks by 5, which resulted in over reimbursement of $6.  The November 2023 claim reported 2 less lunch meals served than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $9.  The June 2024 claim reported 666 more breakfast meals served than the eligible meals per the School Corporation's detail meal count reports, which resulted in an overclaimed reimbursement totaling $1,946. The claim also reported 527 less lunch meals served than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $2,704. The net of the errors was $758 underclaimed. INDIANA STATE BOARD OF ACCOUNTS 28 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)  The May 2025 claim reported 10 less meals served (5 breakfast and 5 lunch) than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $37. The School Corporation also overclaimed snacks by 10, which resulted in over reimbursement of $12. The lack of internal controls and noncompliance were systemic issues throughout the audit period. 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 . . . (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. . . ." Cause The School Corporation did not have effective internal control procedures in place over the Claims submitted. The Claims contained evidence of an oversight or review process in place; however, they did not prevent, or detect and correct, errors. The Claims were prepared based upon summary sheets prepared by the FSMC employees and were not verified back to the source records. Effect The lack of effective internal controls caused a total of $894 not to be claimed for reimbursement, which projected to a loss of funding of $6,272. Noncompliance with the grant agreement and the compliance requirement could result in the loss or repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure compliance with requirements related to reporting. INDIANA STATE BOARD OF ACCOUNTS 29 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-008 Subject: COVID-19 - Education Stabilization Fund - Condition of Records Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U, 84.425W Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Equipment and Real Property Management; Matching, Level of Effort, Earmarking; Special Tests and Provisions - Wage Rate Requirements 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 2023-007 and 2023-009 over the compliance requirements Equipment and Real Property Management and Special Tests and Provisions - Wage Rate Requirements, respectively. Condition and Context The School Corporation received reimbursements totaling $30,316,384 from the COVID-19 - Education Stabilization Fund (ESF) federal awards during the audit period. The reimbursements were associated with three separate federal awards, each of which was required to be accounted for in a separate fund within the School Corporation's financial management system. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the Indiana Department of Education (IDOE). The School Corporation was responsible for maintaining detailed disbursement ledgers for each grant fund to support the amounts claimed for reimbursement. As is typical with reimbursement-based grants, the ending cash and investment balances of each grant fund were expected to reflect overdrawn balances until the subsequent reimbursements were received from the IDOE. The $30,316,384 received in ESF funds during the audit period was based on 28 reimbursement requests for expenditures incurred between June 1, 2023 through December 13, 2024. Based on our review of grant fund records and inquiry with management, we identified the following deficiencies:  The detailed disbursement ledger for the period of June 1, 2023 through December 13, 2024, excluding June 2024 for Grant #S425U210013 as no reimbursement request was submitted, reflected total expenditures of $23,051,334. This resulted in $7,265,050 in reimbursements that were not adequately supported by detailed records. INDIANA STATE BOARD OF ACCOUNTS 33 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)  A review of the submitted reimbursement requests indicated that $1,069,865 was reimbursed for indirect costs; however, a disbursement from the grant funds to other operating funds was not recorded within the School Corporations records.  Of the 28 reimbursement requests submitted, only 5 were supported by detailed disbursement ledgers that agreed with the dates and amounts claimed. The remaining 23 reimbursement requests could not be directly reconciled to the supporting documentation provided. Upon further inquiry with management, additional records were provided; however, these records lacked sufficient detail, such as fund number, fund name, check numbers, dates, and vendor names to be useable.  Reimbursements received were not posted to each grant fund properly. This resulted in the ARP EESER III fund receipts to be understated by $4,297,935 and the ESSER II and GEER PD funds receipts to be overstated by $4,174,376 and $123,560, respectively.  Since this is a reimbursement-based grant, the ending cash and investment balances of each grant fund should either be zero or overdrawn while awaiting reimbursement. However, as of June 30, 2025, the ESSER II and Geer PD funds reported positive cash and investment balances of $5,047,932 and $404,653, respectively. Due to the deficiencies noted above, the School Corporation was unable to provide sufficient appropriate evidence for us to determine populations, and, therefore, audit and base an opinion on the compliance requirements subject to audit that were determined to have a direct and material effect on the program. As a result, the $30,316,384 in reimbursements received during the audit period were considered questioned costs. The lack of internal controls and noncompliance were material and systemic throughout the audit period. 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 states in part: "(a) . . . 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. See also § 200.450. INDIANA STATE BOARD OF ACCOUNTS 34 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The financial management system of each non-Federal entity must provide for the following (see §§ 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. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (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. . . . (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 assets. The non- Federal entity must adequately safeguard all assets and ensure that 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 of this part and the terms and conditions of the Federal award." 2 CFR 200.1 states in part: ". . . Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 35 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages— (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls— (ii) Certified payroll requirements— INDIANA STATE BOARD OF ACCOUNTS 36 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II to Part 200 states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation experienced turnover in key personnel over the federal program, which contributed to the lack of appropriate supporting records. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs We identified $30,316,384 in known questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change and that all reimbursement requests are properly supported by detail records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025 – 038. Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: Department of the Treasury Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing: 21.027 Federal Grant ID Number: None Provided Pass-Through Entity: Not applicable Award Period: March 3, 2021, through December 31, 2026 Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 45 CFR § 75.403 (a) costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. 2 CFR § 200.302 (b)(3) states each recipient’s and subrecipient’s financial management system must provide 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. 2 CFR § 200.303 requires that the recipient and subrecipient 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. Condition: Amounts charged to the program did not agree to the supporting invoices. Cause: The Department’s review process and internal controls did not detect discrepancies between the invoiced amounts and the amounts recorded and charged to the grant. Effect: Program expenditures were not accurately recorded in the Department’s financial records. Questioned Costs: None, as this finding relates to an underpayment. Context: One out of four transactions tested, the amount charged to the Federal program did not agree to the amount reflected on the supporting invoice. The Department recorded and reimbursed an amount that was less than the invoiced amount, resulting in an underpayment totaling $313. This is a repeat finding from the fiscal year 2024 Single Audit. The Office stated on its Summary Schedule of Prior Year Audit Findings that this issue was “Fully Corrected with Previously Reported Corrective Action Implemented”. Due to this issue repeating for fiscal year 2024, this issue has not been fully corrected. Prior Year Single Audit Report Finding Number: 2024-026 Recommendation: We recommend that the Department strengthen controls to ensure the review process includes verification that amounts charged to the grant agree to the supporting invoices prior to reimbursement. Views of responsible officials and planned corrective actions: See management’s response on page 206.

Grants to States for Medicaid—Medical Status Code Errors Background: The U.S. Department of Health and Human Services provides funding to DHS for Grants to States for Medicaid (MA Program). Funding under this program provides financial assistance to states in maintaining and expanding healthcare coverage to residents meeting eligibility criteria. DHS partners with local agency caseworkers who are responsible for verifying that MA participants meet program eligibility requirements. Caseworkers perform eligibility determination functions, such as obtaining information from MA applicants that is then recorded into the CARES system. Information from CARES related to eligible participants is then used by the Medicaid Management Information System (MMIS) to process payments to providers and managed care organizations. Criteria: Under 2 CFR 200.302, DHS is responsible for maintaining financial management systems that are sufficient to permit the preparation of required reports and to track expenditures to establish that funds have been used in accordance with federal statutes, regulations, and the terms and conditions of the award. DHS uses CARES to determine eligibility for the MA Program and has programmed CARES to assign a medical status code, which is a two-digit code indicating the eligibility and program status of the participant. For example, a medical status code can indicate that an eligible participant is an adult participating in the State’s BadgerCare program, which provides services to participants through managed care organizations. The medical status code assigned by CARES to a participant is used along with other information by MMIS to determine the fund code for each provider claim payment. In turn, these fund codes determine the coding for the expenditure in the State’s accounting system and the reporting line for the expenditures on required federal reports. Condition: We found 3 of the 40 provider claims we reviewed had an incorrect medical status code assigned to the participant on the claim. In each instance, the incorrect medical status code assigned indicated that the participant was a parent or caretaker in the BadgerCare program who had no income. However, the correct medical status code should have indicated that the participant was a parent or caretaker in the BadgerCare program that had income greater than zero but less than 100.0 percent of the federal poverty level. Although both medical status codes related to BadgerCare, each case represented a different eligibility condition. Based upon our request, DHS performed an additional review and reported that the error affected approximately 171,000 MA participants. Context: MA provides healthcare coverage to approximately 1.3 million eligible participants. During FY 2024-25, DHS expended $8.3 billion in federal funds under the MA Program, which included $7.9 billion in benefit payments processed through MMIS. We selected a sample of 40 provider claim payments processed by MMIS for testing and assessed the accuracy of the participant’s medical status code on these claims through a review of eligibility information included in CARES. We discussed with DHS the process used by CARES to assign a medical status code and the errors in the assigned medical status code for the three participants we identified in our testing. Questioned Costs: None. Effect: Errors in the medical status code for MA Program participants could result in inaccurate coding of the expenditure in the State’s accounting system or incorrect reporting of expenditures in required federal reports. Cause: The medical status code is assigned by CARES based upon the eligibility information entered into it. DHS reported that in March 2023, an update to CARES resulted in the errors we identified in the assigned medical status code for the three participants we reviewed. DHS did not have sufficient procedures to identify errors in the assignment of the medical status codes when the updates occurred. DHS indicated that CARES will be updated in February 2026 to correct the errors. DHS should consider the effect of these errors and make any necessary corrections. Further, DHS should implement sufficient procedures to test the accurate assignment of medical status codes by CARES when future CARES changes are made. Recommendation: We recommend the Wisconsin Department of Health Services ensure the accuracy of the medical status code by: -implementing and testing the needed updates to CARES to correct the errors in the assigned medical status code; -completing an assessment of the effect of the identified errors in the medical status code on accounting entries, required federal reporting, and making any necessary corrections; and -implementing procedures to test the accuracy of the medical status code when making future changes in CARES. Finding 2025-304: Grants to States for Medicaid—Medical Status Code Errors Grants to States for Medicaid (Assistance Listing number 93.778) Award Numbers Award Years 2405WI5MAP 2024 2505WI5MAP 2025 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Health Services: The Wisconsin Department of Health Services agrees with the audit finding and recommendations.

(2025-028) Title: Internal control over National Guard cash management and the related financial reporting needs improvement Prior Year Findings: None State Department: Defense, Veterans and Emergency Management State Bureau: Military Federal Agency: U.S. Department of Defense Assistance Listing Title: National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing Number: 12.401 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Cash management Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 32 CFR 33.20 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Financial records must adequately identify the source and application of funds and provide accountability for all funds, property, and assets related to the Federally-funded activities. Fiscal control and accounting procedures of the State must be sufficient to permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes and must permit preparation of required reports. Condition: The National Guard Military Operations and Maintenance Projects (National Guard O&M Projects) program supports the Army and Air National Guard in minor construction, maintenance, repair, or operation of facilities, and provides mission operational support to be performed by the State. The Department submits a Request for Advance or Reimbursement Form (SF-270) to the Federal government to process the National Guard O&M Projects program’s reimbursement request. The program is funded utilizing estimated revenue; estimated revenue represents the estimated amount of funds needed to process expenditures, where the Department utilizes State funds prior to receiving Federal reimbursement, and is limited to the amount requested and approved by the Office of the State Controller. As a result, the program carries a negative cash balance while waiting for the reimbursement requests to be approved by the Federal National Guard Bureau. Delays in receiving Federal approval have led to larger negative cash balances for the program. The negative cash balances should be comprised of all submitted but unapproved SF-270 requests and total expenditures that have not been submitted for reimbursement. The Department tracks outstanding SF-270 requests utilizing a spreadsheet; however, the spreadsheet is not periodically reconciled to the State’s accounting system to ensure all expenditures are included. Additionally, the Department does not have documented policies and procedures to follow up on outstanding reimbursement requests to facilitate more timely reimbursements from the Federal government. Context: In fiscal year 2025, the National Guard O&M Projects program expenditures totaled approximately $30.1 million. The June 30th negative cash balances for the previous 4 fiscal years were as follows: • $(6.7) million for fiscal year 2022 • $(12.4) million for fiscal year 2023 • $(13.3) million for fiscal year 2024 • $(12.4) million for fiscal year 2025 Cause: • Lack of adequate policies and procedures, including reconciling reimbursement activity to the State’s accounting system • Lack of supervisory oversight Effect: • Due to a lack of monitoring cash balances, the Department cannot readily determine if specific Federal expenditures are reimbursed timely. • Sustained negative cash balances limit the program’s ability to continue operations without additional State funding. Recommendation: We recommend that the Department develop and implement policies and procedures and enhance oversight to adequately monitor the National Guard O&M Projects program’s cash balances, including requesting the status of delayed reimbursement requests with the Federal National Guard Bureau to ensure that Federal funds are received as timely as possible. Corrective Action Plan: See F-117 Management’s Response: The Department partially agrees with this finding and will implement the “Corrective Action Plan.” The Auditor states the cause of the findings is a ‘lack’ of adequate policies and procedures and a ‘lack’ of supervisory oversight. We agree that the procedures are not adequate but there are established procedures and oversight. Contact: Diane Dunn, Commissioner, DVEM, 207- 430-5158 Auditor’s Concluding Remarks: The Office of the State Auditor acknowledges that the Department has established procedures and oversight; however, they were not adequate to prevent, or detect and correct, on a timely basis the exception noted in the Condition. The finding remains as stated. (State Number: 25-1503-01)

(2025-048) Title: Internal control over Child Support Services expenditures needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services Judicial Branch State Bureau: Office for Family Independence Health and Human Services Service Center Administrative Office of the Courts Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Child Support Services Assistance Listing Number: 93.563 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302 and .403; Cooperative Agreement between the State of Maine Department of Health and Human Services (DHHS) and Maine State Judicial Branch for State Fiscal Years 2024 and 2025, Article V, Section B.3 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs must be adequately documented. The State’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 determine that such funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Administrative Office of the Courts (AOC) must provide a report to the DHHS Division of Support Enforcement and Recovery (DSER) for all Judicial Branch estimated expenditures. This report must detail costs that are eligible for Federal financial participation and must be provided within 60 calendar days after the close of the quarters ending in March, June, September, and December. These estimated expenditures are calculated using the per minute rate that was in effect for the prior fiscal year. By November 30th, the Judicial Branch will update the per minute rate and provide DSER a report with actual expenditures for the State fiscal year. Condition: The Child Support Services (CSS) program is administered by DSER. DHHS has a cooperative agreement with AOC that defines roles, relationships, and responsibilities of the parties, and sets forth a basis for financial reimbursement for court services provided to DHHS by AOC. These services include conducting paternity hearings; hearings to establish, modify, or enforce support orders; civil and criminal complaint hearings related to CSS; providing mediation services; and conducting proceedings related to income withholding responsibilities. AOC sends monthly invoices to the DHHS Service Center (DHHS SC) with estimated costs for work performed for the CSS program. DHHS SC is responsible for transferring funds from the CSS program to AOC on the following schedule: • On a quarterly basis, AOC provides DHHS SC with a reconciliation of estimated costs based on assigned caseload. This quarterly reconciliation utilizes the per minute rate that was in effect for the prior fiscal year and is due 60 days after the close of the quarter. • Annually, the per minute rate is updated and AOC provides DHHS SC with a final report of actual costs with the updated per minute rate. This final report is due by November 30th each year. Upon receipt of the final report, a final payment/reimbursement will be issued to reconcile to actual costs. The Office of the State Auditor (OSA) tested 7 transfers from DHHS SC to AOC and found that costs incurred for court services were not adequately supported, as follows: • DHHS SC did not receive 1 quarterly report from AOC; therefore, court expenditures were based on estimated costs rather than actual costs. • The annual report and reconciliation of estimated costs to actual costs was not complete; AOC updated minutes charged but the actual cost per minute rate was not updated. Therefore, expenditure amounts reported by the CSS program are not based on actual costs and the submitted final report used the estimated cost per minute rate. OSA selected a non-statistical random sample. Context: The CSS program expended $17.7 million in Federal funds during fiscal year 2025, of which $2.7 million was used for court services. Cause: • Lack of supervisory oversight • Lack of adequate policies and procedures Effect: Since DSER is utilizing the estimated cost per minute instead of the actual cost per minute: • CSS program expenditures could be misstated; and • the State may not be in compliance with State matching requirements of 34 percent of actual costs. Recommendation: We recommend that the Departments strengthen policies and procedures and increase oversight to ensure that the CSS program is in compliance with Federal regulations. Corrective Action Plan: See F-26 Management’s Response: The Departments agree with this finding. The Office of the Courts will strengthen policies, procedures, and oversight to ensure that the Child Support Servies program remains in full compliance with Federal regulations by March 31, 2026. Contact: Jerry Joy, Director, Division of Support Enforcement and Recovery, DHHS, 207-624-6985 (State Number: 25-1128-01)

(2025-058) Title: Internal control over Foster Care and Adoption Assistance cash management needs improvement Prior Year Findings: None State Department: Health and Human Services Administrative and Financial Services State Bureau: Office of Child and Family Services Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Foster Care – Title IV-E Adoption Assistance – Title IV-E Assistance Listing Number: 93.658; 93.659 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Cash management Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302; 31 CFR 205.33; State Administrative and Accounting Manual (SAAM) Section 50.40.80 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Financial records must adequately identify the source and application of funds and provide accountability for all funds, property, and other assets related to the Federally-funded activities. The Department must minimize the time between the drawdown of Federal funds and the disbursement of these funds for Federal program purposes. The timing and amount of fund transfers must be as close as administratively feasible to the Department’s actual cash outlay for program costs. Section 50.40.80 of the SAAM has defined administratively feasible as no more than 7 business days. Condition: The Office of Child and Family Services administers the Foster Care – Title IV-E (Foster Care) and Adoption Assistance – Title IV-E (Adoption Assistance) programs for the State. The programs are designed to help states provide safe and stable out-of-home care for children under its jurisdiction until the children are returned home safely, placed with adoptive families, or placed in other planned arrangements for permanency. The Department of Health and Human Services’ Service Center (DHHS SC) is responsible for the drawdown of Federal funds and grant accounting and reporting for the Foster Care and Adoption Assistance programs. Though DHHS SC monitors compliance with Federal cash management requirements by utilizing a cash on hand analysis, the analysis combines the following Title IV-E programs: • Foster Care • Adoption Assistance • Title IV-E Prevention Program • Guardianship Assistance As a result, Department procedures do not ensure that each individual program is in compliance with Federal cash management requirements. The Office of the State Auditor performed individual analyses for the Foster Care and Adoption Assistance programs and determined that both programs complied with cash management requirements for fiscal year 2025. Context: In fiscal year 2025, there were: • 52 Federal grant drawdowns totaling $21.5 million for the Foster Care program. • 50 Federal grant drawdowns totaling approximately $35 million for the Adoption Assistance program. Cause: • Lack of adequate procedures to ensure that the cash balance for each Title IV-E program is considered separately before requesting Federal funds • Lack of supervisory oversight Effect: Department policies and procedures would not identify noncompliance with cash management requirements, which could result in: • the Federal government imposing more stringent program-specific cash management requirements based on noncompliance. • the State incurring an interest liability on excess Federal cash balances. • noncompliance with Federal regulations. Recommendation: We recommend that the Department enhance existing procedures and increase oversight to ensure that Federal program cash balances are tracked by program in accordance with Federal requirements. Corrective Action Plan: See F-29 Management’s Response: The Departments agree with this finding. The DHHS Financial Service Center will update existing procedures and increase oversight to ensure that Federal program cash balances are tracked by program in accordance with Federal requirements by 3/31/2026. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 25-1109-01)

(2025-070) Title: Internal control over DG – PA program financial reporting needs improvement Prior Year Findings: See Schedule of Findings and Questioned Costs for chart/table State Department: Defense, Veterans and Emergency Management State Bureau: Maine Emergency Management Agency Federal Agency: U.S. Department of Homeland Security Assistance Listing Title: Disaster Grants – Public Assistance (Presidentially Declared Disasters) (COVID-19) Assistance Listing Number: 97.036 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.302 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with reporting requirements. Condition: The Maine Emergency Management Agency (MEMA) administers the Disaster Grants – Public Assistance (DG – PA) program for the State. MEMA is required to submit quarterly DG – PA program Federal Financial Reports (FFRs) to the Federal Emergency Management Agency (FEMA) Regional Office. FFRs provide FEMA with the status of funds for the award, Federal expenditures, and cost-sharing requirements. The Office of the State Auditor (OSA) tested 7 FFRs due in fiscal year 2025 and found deficiencies in 6, as follows: • 1 FFR inaccurately reported total Federal funds authorized as $442,026,321 when the correct total was $442,015,638, and the recipient share of expenditures as $19,499,834 when the correct share was $7,338,371; • 1 FFR inaccurately reported total Federal funds authorized as $16,582,190 when the correct total was $16,560,302, and the recipient share of expenditures as $13,249,493 when the correct share was $5,367,072; • 1 FFR inaccurately reported total Federal funds authorized as $17,805,320 when the correct total was $17,142,335; • 1 FFR inaccurately reported the recipient share of expenditures as $13,077,332 when the correct share was $13,081,295; • 1 FFR inaccurately reported the recipient share of expenditures as $4,698,599 when the correct share was $3,893,046; and • 1 FFR inaccurately reported the recipient share of expenditures as $778,776 when the correct share was $199,157. OSA selected a non-statistical random sample. Context: During fiscal year 2025, 45 FFRs were required to be filed by MEMA for the DG – PA program. Cause: • Lack of adequate policies and procedures to ensure data used for financial reporting is complete and accurate • Lack of supervisory oversight Effect: • Noncompliance with Federal reporting requirements • Inaccurate tracking of subawards may result in noncompliance with Federal matching requirements. Recommendation: We recommend that MEMA enhance policies and procedures to ensure that FFRs are accurate and include all required information for compliance with Federal reporting requirements. Corrective Action Plan: See F-34 Management’s Response: The Department agrees with this finding. The Department will publish and implement a revised Federal Financial Reporting procedure to fully preserve reporting/validation source material and clearly document the justification for any variances from the source material. Contact: Sunny Cyr, MEMA Business Office Director, DVEM, 207-707-2507 (State Number: 25-1502-04)

FEDERAL PROGRAM (ALN 93.356) HEAD START DISASTER RECOVERY FROM HURRICANES HARVEY, IRMA, AND MARIA U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBER 02td000223 (Federal Award Year June 1, 2021 – December 31, 2025) COMPLIANCE REQUIREMENT REPORTING TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY CRITERIA 2 CFR Section 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. In addition, 2 CFR §200.303 (a) 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 for evaluating internal controls and compliance with reporting requirements, we selected three (3) reports that were submitted during our fiscal year audit. During our review of the data related to Grant Award 02TD000223, we noted the following deficiency: the total Federal expenditure reported on line (e) of the report does not match the data provided by the client in the database, with a difference of $250,000. QUESTIONED COSTS None PERSPECTIVE INFORMATION This deficiency represents a systemic issue attributable to inadequate review procedures, which has resulted in the inaccurate reporting of Federal expenditures. STATEMENT OF CAUSE The discrepancy may be due to an error in the data collection process or a failure to properly transfer data between the database and the Federal expenditure report, or a lack of proper reconciliation between the two. POSSIBLE ASSERTED EFFECT This discrepancy could affect the accuracy of the financial reports, compromising transparency and the Municipality's compliance with Federal reporting requirements. It could also lead to misunderstandings regarding the proper use of the Federal funds awarded. IDENTIFICATION OF REPEAT FINDING This is not a repeat finding. RECOMMENDATIONS We recommend that the Municipality reviews their processes for reporting and recording Federal expenditure to ensure that the data reported on the system matches the database used during the audit. Additionally, we suggest implementing a regular reconciliation process between the reporting system and the database to prevent future errors and ensure compliance with Federal reporting requirements.

Section III – Major Federal Award Program Findings and Questioned Costs Finding Reference 2025-005 Federal Agency: U.S. Department of Homeland Security Pass-through Agency: P.R. Central Office for Recovery, Reconstruction and Resiliency (COR3) Program: Disaster Grants - Public Assistance (Presidentially Declared Disasters (Assistance Listing No. 97.036) Compliance Requirement: Reporting (L) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of seven (7) projects for two quarters of fiscal year 2024-2025. During our audit procedures, we identified that the reports did not agree with the accounting records. During our audit procedures, we identified that the reports noted that the reports did not agree with the accounting records. Criteria 2 CFR 200.302 (a) states that the states’ and other non-Federal entities’ 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. Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide 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. Cause of Condition The Municipality’s accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities. Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records. Recommendation We recommend the Program Administrators reconcile the differences between the quarterly report and the accounting records before the following submissions to the pass-through entity. Questioned Cost None. Prior Year Finding No. Views of Responsible Officials and Planned Corrective Action We concur with the finding. Adopted Measures • Expense Synchronization: A protocol will be implemented requiring contracted consultants to record and report incurred expenses only when a validated disbursement voucher is available, thereby ensuring the integrity of the financial flow. • Reconciliation: The office will conduct a detailed comparison between the draft quarterly report and the general ledger to identify and correct any discrepancies prior to final submission. • Compliance Timeline: An internal deadline will be established for the submission of the report, ensuring attainment of the minimum percentage required under the Quality Activities category through accurate financial data. Expected Outcome To ensure that all financial information submitted is complete, accurate, and fully aligned with the Municipality’s accounting records, thereby eliminating the risk of audit findings. Implementation Date: March 2026. Responsible persons: • Person responsible for the implementation: Mr. Carlos Flores, Federal Program’s Subdirector • Person responsible for the supervision: Mrs. Yolanda Maldonado, Federal Program’s Director

2025-001 U.S. Department of Housing and Urban Development Community Development Block Grant Cluster Entitlement/Special Purpose Grants – ALN 14.218 HOME Investment Partnership Program – ALN 14.239 Significant Deficiency in Internal Controls Over Compliance Criteria: Per 2 CFR section 200.302(b)(2), the City’s financial management system must provide for the accurate, current and complete disclosure of the financial results of each Federal award or program. Condition: The subsidiary ledger for loans funded by the Federal award programs maintained by the Department did not agree to the City’s general ledger. Cause: The subsidiary loans receivable ledger has not been fully reconciled to the City’s general ledger, although substantial progress was made during the year to complete these reconciliations. Effect: The general ledger was potentially understated by $571,995 and $346,68 for Community Development Block Grant Cluster Entitlement/Special Purpose Grants loans and HOME Investment Partnership Program loans, respectively. Questioned Costs: None Repeat Finding from Prior Year: No. Recommendation: The City should fully reconcile its subsidiary loan ledger to the City’s general ledger. The City should also consider implementing software specifically designed for the maintenance of loans. Views of Responsible Official: Management agrees with the finding.

2025-001 Unallowable Costs CFDA No: 93.434 Program Name: Preschool Development Grants Award Number: 25FPDGCN-510841-01A Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-Through Grantor: Arizona Department of Education Compliance Requirement: A. Activities Allowed or Unallowed, B. Allowable Costs/Cost Principles Questioned Costs: $1,034.75 Summary of Finding: Material weakness in internal controls over compliance and compliance Repeat Finding? No Condition During testing of expenses charged to the Preschool Development Grants program (PDG), Assistance Listing Number 93.434, we identified two of 33 expenses tested totaling $1,467.53 that were determined to be unallowable under the Federal award. A nonstatistical sample of 33 expenditures was selected for testing from the PDG program. The total sample amount tested was $164,654. Criteria Uniform Guidance 2 CFR §200.403 – Factors Affecting Allowability of Costs establishes that costs charged to a Federal award must meet the following criteria to be allowable:  Be necessary and reasonable for the performance of the Federal award and be allocable to the award.  Be adequately documented and consistent with the terms and conditions of the Federal award. Additionally, non-Federal entities must maintain financial management systems that ensure Federal award expenditures comply with Federal statutes, regulations, and the terms and conditions of the Federal award. (2 CFR §200.302 – Financial Management) The PDG was authorized under Section 9212 of the Every Student Succeeds Act (ESSA), Public Law 114-95, and funds must be used only for allowable program activities consistent with the grant’s objectives and federal cost principles. Cause Controls over the review and approval of expenditures charged to the Federal program were not sufficient to ensure that all costs incurred complied with Federal cost principles and program requirements prior to being charged to the grant. Effect As a result of the control deficiency, the District charged costs to the PDG program that did not meet Federal allowability requirements. This resulted in questioned costs totaling $1,467.53 and increases the risk that additional unallowable expenditures could be charged to the program without proper review. Recommendation We recommend that the District strengthen controls over the review and approval of expenditures charged to Federal programs by:  Implementing procedures to ensure expenditures charged to the PDG B-5 program are reviewed for allowability prior to being charged to the grant.  Providing training to personnel responsible for grant administration regarding Federal cost principles and allowable expenditures.  Reviewing current-year expenditures charged to the program to determine whether additional unallowable costs were incurred

Criteria or Specific Requirement: Per 2 CFR 200.302(b)(3) a grant recipient must maintain adequate financial records that identify the source and application of funds for federally funded activities. These records must contain information pertaining to federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Condition: Federally funded expenditures were comingled with expenditures paid for with non federally funded sources in the accounting records. Questioned Costs: None. Context: Non federally funded expenditures were recorded in the accounts specifically designated for a federal grant. Effect: The District may be unable to accurately determine the federally funded expenditures for a specific period. Cause: The District did not accurately maintain separate accounts for federal grant expenditures. Recommendation: The District should accurately maintain separate accounts for federal grant expenditures in accordance with 2 CFR 200.302(b)(3). Management's Response: The District agrees with the finding and will review their accounting records and implement a corrective action plan.

Section III – Major Federal Award Program Findings and Questioned Costs Finding Reference 2025-003 Federal Agency: U.S. Department of Homeland Security Pass-through Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3) Federal Emergency Management Agency (FEMA) Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster) (ALN 97.036) Compliance Requirement: Reporting (L) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) Statement of Condition: In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of four (4) projects for two quarters of fiscal year 2024-2025. During our audit procedures, we noted that the reports did not agree with the accounting and project records. Criteria: 2 CFR 200.302 (a) states that the states’ and other non-Federal entities’ 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. Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide 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. Cause of Condition: The Municipality’s accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities. Effect of Condition: The expenses reported in the Quarterly Progress Reports do not agree with the accounting records. Recommendation: We recommend the Program Administrators reconcile the differences between the quarterly report and the accounting records before the submission to the pass-through entity. Questioned Costs: None. Prior Year Findings: Yes. This finding is similar to prior-year finding 2024-003 and 2023-003. Views of Responsible Officials and Planned Corrective Actions: We concur with the findings. During the past year, the Corrective Action Plan (PAC) has been implemented and expense reconciliation efforts have been ongoing. Currently, we are in the process of collecting all supporting documentation related to work performed for projects funded by FEMA. It is expected that the reconciliation of expenses will be completed over the next few quarters, and that expense reporting will continue during the quarters in which payments are made. Implementation Date: Fiscal Year 2025-2026. Responsible Person: José A. Torres Otero Program Accountant

Written Policies and Procedures Related to Federal Awards - Condition: The Town does not have written policies and procedures to ensure compliance with federal award requirements. Specifically, written procedures are missing for: Allowability of Costs (2 CFR 200 Subpart E), Procurement Standards (2 CFR 200.318), Financial Management (2 CFR 200.302). Criteria: 2 CFR §200.303(a) requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms of the award. Cause of Condition: The organization lacked dedicated administrative staff or training to develop these documents, relying on informal processes.Effect: Without written policies, the Town cannot ensure that costs are consistently treated as allowable, reasonable, and allocable in accordance with federal requirements, potentially leading to questioned costs or disallowance. Recommendation: The Town should develop and formally adopt comprehensive, written, and up-to-date policies and procedures that explicitly address 2 CFR 200 requirements for procurement, allowable costs, and financial reporting. Views of Responsible Officials and Planned Corrective Actions: We will reach out to MTAS to help the Town write and implement a policy for the Federal Award Program.

Condition: The Organization did not have written procedures regarding federal cash management, allowability of costs pertaining to federal funds, procurement procedures, or written standards of conduct covering conflicts of interest and governing the performance of its employees engaged in the selection, award and administration of federal contracts. Neither did the Organization have evidence of verication that the providers of covered transactions were not suspended, debarred or otherwise excluded. Criteria: In accordance with 2 CFR Section 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, the Organization must have written procedures regarding federal cash management (Section 200.302(b)(6)), allowability of costs pertaining to federal funds (Section 200.302(b)(7)), procurement procedures (Section 200.318(a)), and written standards of conduct covering conflicts of interest and governing the performance of its employees engaged in the selection, award and administration of federal contracts (Section 200.318(c)(1)). In accordance with 2 CFR Section 180, OMB Guidelines to Agencies on Government-Wide Debarment and Suspension (Nonprocurement), the Organization must have verified that the provider of covered transactions is not suspended, debarred or otherwise excluded (Section 180.300). Effect: The Organization was not in compliance with procurement provisions in 2 CFR Section 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and 2 CFR Section 180, OMB Guidelines to Agencies on Government-Wide Debarment and Suspension (Nonprocurement). Cause: The Organization had no internal control structure in place to implement the procurement provisions of 2 CFR Section 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and 2 CFR Section 180, OMB Guidelines to Agencies on Government-Wide Debarment and Suspension (Nonprocurement). Recommendation: The Organization should create an internal control structure in place to implement the procurement provisions 2 CFR Section 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and 2 CFR Section 180, OMB Guidelines to Agencies on Government-Wide Debarment and Suspension (Nonprocurement), create required written procedures and adhere to them. Repeat Finding: No Views of Responsible Officials: Management of Challenger Learning Center of Northwest Indiana, Inc. acknowledges the findings identified in the audit and is in agreement with the condition as stated. We recognize that certain deficiencies were identified related to donor-restricted grants, and federal grant compliance requirements. As this was the Organization’s first experience managing federal funding, some compliance requirements were not fully understood at the time; however, all actions taken were in good faith and with the intent to appropriately steward funds. Management is committed to strengthening internal controls and ensuring full compliance moving forward. Corrective actions have already been initiated, including the liquidation of remaining federal funds in accordance with grant requirements and the development of formalized policies and procedures to address procurement, financial tracking, and documentation practices.

Federal agency: U.S. Small Business Administration Federal program name: Congressional Grants Inclusive Ventures Small Business Program Assistance listing number: 59.059 Pass-through agency: Anne Arundel County, Maryland Pass-through number: SBAHQ23I0140 Award Period: September 1,2023 through August 31, 2028 Compliance Requirement: Cash Management/Program Income Type of Findings: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: Compliance: 2 CFR 200.305(b)(8) requires that non-Federal entities must maintain advance payments in interest-bearing accounts and must remit interest earned on Federal advances in excess of $500 annually to the Federal agency. 2 CFR 200.80 defines program income as gross income earned that is directly generated by a supported activity or earned as a result of the Federal award. 2 CFR 200.307(e) requires program income to be properly accounted for, used, and reported in accordance with the terms and conditions of the Federal award. 2 CFR 200.302(b)(3) requires entities to maintain records that identify the source and application of funds, including program income. Condition The Corporation did not track, record, or report program income generated from interest earned on Federal funds received in advance. Interest accumulated in the bank account holding Federal advances was not segregated, monitored, or reported to the Federal awarding agency. As a result, the Corporation could not determine whether interest exceeded the $500 annual threshold requiring remittance. Questioned Costs Total program income identified during the audit was $61,226. Context The Corporation received Federal funds in advance for program activities but did not implement procedures to track interest earned on those funds. Cause The Corporation has not historically received federal funding so tracking program income earned from funds received in advance was not deemed necessary. Effect The Corporation may have retained Federal interest income that should have been remitted to the awarding agency. The Federal awarding agency was not informed of program income generated. Repeat Finding No Recommendation We recommend that management develop and implement written procedures to track, record, and report program income, including interest earned on Federal advances. Views of Responsible Officials Management agrees with finding. See corrective action plan for additional information.

REPORTING Reference Number: 2025-004 (2024-006) Category of Finding: Reporting Type of Finding: Material Noncompliance and Material Weakness State Administering Department: Homeland Security and Emergency Management Assistance Listing Number: 93.036 Federal Program Title: Disaster Grants – Public Assistance Federal Award Numbers and Years: 5184DRNMP5SNM500 4529DRNMP5SNM500 4625DRNMP5SNM500 5281DRNMP5SNM500 5430DRNMP5SNM500 4795DRNMP5SNM500 4843DRNMP5SNM500 5461DRNMP5SNM500 Assistance Listing Number: 93.039 Federal Program Title: Hazard Mitigation Grant Program Federal Award Numbers and Years: 5184FMNMP5SNM500 4529FMNMP5SNM500 4625FMNMP5SNM500 5281FMNMP5SNM500 5430FMNMP5SNM500 4795FMNMP5SNM500 4843FMNMP5SNM500 5461FMNMP5SNM500 Assistance Listing Number: 93.042 Federal Program Title: Emergency Management Performance Grant Federal Award Numbers and Years: EMT2023EP00002; 2023 EMT2024EP05014; 2024 Assistance Listing Number: 93.067 Federal Program Title: Homeland Security Grant Program Federal Award Numbers and Years: EMW2023SS00015; 2023 EMW2024SS05231; 2024 Criteria Title 2 - Grants and Agreements, Subtitle A - Office of Management and Budget Guidance for Grants and Agreements, Chapter II - Office of Management and Budget Guidance, Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D - Post Federal Award Requirements, Standards for Financial and Program Management, §200.328 Financial Reporting (2 CFR 200.328):(c) 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 semi-annually must be due no later than 30 calendar days after the reporting period. Title 2 - Grants and Agreements, Subtitle A - Office of Management and Budget Guidance for Grants and Agreements, Chapter II - Office of Management and Budget Guidance, Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D - Post Federal Award Requirements, Standards for Financial and Program Management, §200.302 Financial Management (2 CFR 200.302): (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 Condition The Department did not submit the required SF-425 financial status reports by the required submission date, 30 calendar days from the end of the reporting period as follows: • 97.036 Disaster Grants Public Assistance, 4 of 8 reports sampled were not submitted timely. • 97.039 Hazard Mitigation Grant Program, 2 of 8 reports sampled were not submitted timely. • 97.042 Emergency Management Performance Grants, 2 of 4 reports sampled were not submitted timely. • 97.067 Homeland Security Grant Program, 3 of 5 reports sampled were not submitted timely. Management made some progress. Identification as a Repeat Finding Finding 2024-006 is repeated and modified. Cause The Department experienced a high level of turnover in financial division personnel, during which time the processes in place did not allow for the timely preparation and submission of required quarterly SF-425 Financial reports. Effect Untimely report submissions can result in ineffective oversight by the federal oversight agency. Questioned Costs Questioned costs were not identified. Context The Department is required to submit financial status reports quarterly for all federal grant programs. The turnover in staffing resulted in delayed submissions for approximately half of the fiscal year, primarily impacting reporting periods ended March 31, 2025 and June 30, 2025. Recommendation The Department should ensure that as part of the revisions to policies and procedures over the financial reporting of the Department’s federal grants, there are practices in place that provide for alternate personnel that can compile, review and submit financial status reports in the event of unexpected vacancies or absences from the positions designated primary reporting responsibilities.

Criteria: Health centers receiving federal funding under the Health Center Program (93.224) and Ryan White Part C (93.918) are required to maintain and consistently apply a sliding fee discount program in accordance with federal regulations and program guidance. Specifically, 42 CFR §51c.303(f) requires health centers to have a schedule of fees and discounts based on patients’ ability to pay and to apply the schedule consistently. The HRSA Health Center Program Compliance Manual, Chapter 9, mandates documented eligibility determinations, defined timeframes for eligibility reassessment, proper application of the sliding fee scale, and retention of documentation. Similarly, the Ryan White HIV/AIDS Program Part C Manual requires eligibility determinations and fee assessments consistent with approved policies and program requirements. Additionally, federal standards under 2 CFR §200.303 require non-federal entities to establish and maintain effective internal controls over federal awards, 2 CFR §200.302(b) requires financial management systems to adequately identify and document eligibility determinations, and 2 CFR §200.328 requires accurate programmatic reporting and monitoring. Condition: During testing of the sliding fee discount program for the fiscal year ended June 30, 2025, we identified multiple instances of noncompliance with established policies and federal program requirements. Specifically, patient financial information was updated over prior evaluations, which eliminated historical tracking and resulted in files not being properly closed in accordance with the health center’s policies. Effect: As a result of these deficiencies, NeoMed Center Inc. is at increased risk of improper fee discounts being applied to patients who may not meet eligibility requirements, noncompliance with federal and program-specific requirements, inaccurate financial reporting related to patient service revenue, lack of proper and accurate collection of services provided and potential loss of federal funds awards. Cause: The noncompliance is caused by inadequate implementation of internal controls policies and procedures designed over the sliding fee program. Also, it caused by lack of appropriate staff training and missing standardized monitoring policies and procedures, as well as inadequate supervisory review of eligibility determinations and documentation. Recommendations: We recommend that the Institution implement the following corrective actions: 1. Review current policies and procedures to improve and establish robust internal controls to ensure that patient financial information is updated without overwriting prior evaluations, preserving historical tracking and maintaining properly closed files. 2. Provide training to staff responsible for eligibility determinations and fee assessments to ensure consistent application of the sliding fee scale and compliance with federal program requirements. 3. Implement standardized monitoring and supervisory review procedures to verify that eligibility determinations, fee assessments, and documentation are accurate, complete, and retained in accordance with program requirements. 4. Implement and perform, on a recurrent basis, audit and/or review of patient files to ensure ongoing compliance, timely reassessment, and proper application of the sliding fee discount program. 5. Maintain clear records and documentation to support all eligibility determinations and fee discounts, ensuring the entity can demonstrate compliance during internal reviews or external audit

Federal Agency: 11 – Department of Commerce, 12 – Department of Defense, 15 – Department of the Interior, 16 – Department of Justice, 43 – National Aeronautics and Space Administration, 47 – National Science Foundation, 81 – Department of Energy, 84 – Department of Education, 93 – Department of Health and Human Services Federal Program Title: R&D Cluster and TRIO Cluster Assistance Listing Number: R&D and 84.TRIO Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: In accordance with 2 CFR §200.403(a), costs charged to Federal awards must be necessary, reasonable, and allocable to the Federal award. Additionally, 2 CFR §200.309 requires costs to be incurred during the approved period of performance of the Federal award. Further, 2 CFR §200.302(a) requires non‑Federal entities to maintain financial management systems that provide for accurate, current, and complete disclosure of the financial results of each Federal award, and 2 CFR §200.303 requires non‑Federal entities to establish and maintain effective internal control over Federal awards. Condition/Context: The population sizes below are presented only for programs in which exceptions were identified for the applicable compliance test. Cash Disbursement Testing – TRIO Cluster (Control Finding Only): • For 2 of the 40 TRIO samples tested, the related expenses were allowable and incurred within the awards’ approved periods of performance; however, the expenses were improperly recorded in fiscal year 2025. Specifically, 1 expense related to fiscal year 2024, and 1 expense represented a prepayment for a fiscal year 2026 cost. The resulting misstatement to the Schedule of Expenditures of Federal Awards (SEFA) totaled $5,260, which is less than program materiality. Payroll Testing – R&D Cluster (Control Finding Only): • For 10 of the 40 R&D samples tested, timesheets were not submitted timely, resulting in variances between the payroll register and the recalculated gross wages for the applicable pay periods. No unallowable payroll costs were identified; however, controls over timely payroll documentation and reconciliation did not operate effectively. • For 1 of the 40 R&D samples tested, the timesheet was not signed by the supervisor, indicating that payroll review controls were not consistently applied. Questioned Costs: None. Effect: Although the costs tested were allowable and incurred within the approved periods of performance, improper period recognition and untimely or incomplete payroll documentation increase the risk that Federal expenditures are not recorded in the proper fiscal period and that Federal financial reporting is not accurate. Cause: The UEC’s internal controls were not designed or implemented to consistently ensure that expenditures are recorded in the proper fiscal period and that payroll documentation is submitted, reviewed, and approved timely. Repeat Finding: No. Recommendation: We recommend the UEC strengthen its controls over expenditure recognition to ensure costs are recorded in the appropriate fiscal period and enhance payroll review procedures to ensure timesheets are submitted and reviewed timely to support accurate payroll reporting. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: 11 – Department of Commerce, 12 – Department of Defense, 15 – Department of the Interior, 16 – Department of Justice, 43 – National Aeronautics and Space Administration, 47 – National Science Foundation, 81 – Department of Energy, 84 – Department of Education, 93 – Department of Health and Human Services Federal Program Title: R&D Cluster, Child Care Access Means Parents in School, TRIO Cluster, and Higher Education Institutional Aid Assistance Listing Number: R&D, 84.335, 84.TRIO, and 84.031 Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: In accordance with 2 CFR §200.305(b), when using the reimbursement method, Federal drawdowns must be limited to allowable costs that have been incurred and supported. Additionally, 2 CFR §200.302(a) requires non Federal entities to maintain financial management systems that provide for accurate, current, and complete disclosure of the financial results of each Federal award. Condition/Context: During our testing of Cash Management, we selected a sample of 85 reimbursement requests, consisting of 40 R&D Cluster samples, 12 Child Care Access Means Parents in School samples, 23 TRIO Cluster samples, and 10 Higher Education Institutional Aid. The following exceptions were noted: R&D Cluster, TRIO Cluster, and Higher Education Institutional Aid: For 4 of the 40 R&D samples tested, 9 of the 23 TRIO samples tested, and 1 of the 10 Higher Education Institutional Aid samples tested, instances of noncompliance were identified. • For 4 of the 4 R&D samples, 8 of the 9 TRIO samples, and 1 of the 1 Higher Education Institutional Aid samples with instances of noncompliance noted, a portion of the reimbursement drawn down during fiscal year 2025 related to expenses incurred outside to the current fiscal year. Additionally, 1 of the 4 R&D samples included expenses incurred as far back as October 2020. • For 1 of the 9 TRIO samples with instances of noncompliance noted, supporting documentation (such as invoice support, indirect cost recalculations, or payroll registers) was not provided for a portion of the expenses included in the reimbursement requests. As a result, we were unable to determine the period to which the funds drawn down related. Child Care Access Means Parents in School (Control Finding Only): • For 1 of the 12 samples tested, the UEC was ultimately in compliance with cash management requirements; however, internal controls did not operate effectively. Specifically, there was an approximate six‑month delay between the incurrence of program costs and the submission of the reimbursement request. Questioned Costs: $68,759 Effect: Reimbursement requests that include costs incurred outside the applicable fiscal period or costs that are not supported increase the risk that Federal expenditures are not recorded in the proper accounting period and that Federal financial reporting is not accurate. Additionally, delays in submitting reimbursement requests increase the risk that expenditures are not timely reported in accordance with Federal requirements. Cause: The UEC’s internal controls were not designed or implemented to consistently ensure that costs included in reimbursement requests are recorded in the appropriate fiscal period, supported by adequate documentation, and submitted timely in accordance with Federal cash management and financial reporting requirements. Repeat Finding: No. Recommendation: We recommend the UEC strengthen its cash management and financial reporting procedures to ensure reimbursement requests include only costs incurred in the appropriate fiscal period, are supported by adequate documentation, and are submitted timely. The UEC should also enhance review controls to verify proper period recognition of costs prior to submission of reimbursement requests. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding. Further, 2 CFR §200.303 requires non Federal entities to establish and maintain effective internal control over Federal awards to ensure transactions are recorded in the proper accounting period and in accordance with applicable Federal requirements.

U.S. Department of Agriculture (“USDA”) Passed through Colorado Department of Education National School Lunch Program (Child Nutrition Cluster) / ALN 10.555 Compliance Requirement: Reporting Significant Deficiency in Internal Control over Compliance and Other Non- Compliance Criteria: Federal regulations require that recipients of federal awards maintain adequate records to support amounts claimed for reimbursement. Under 2 CFR 200.403 and 2 CFR 200.302, costs must be adequately documented and supported, and financial management systems must provide accurate, current, and complete disclosure of the financial results of each federally funded program. Additionally, USDA program guidance requires entities to retain documentation supporting daily meal counts and reimbursement claims. Condition: During testing of National School Lunch Program reimbursements, the District was unable to provide adequate supporting documentation for a sample of meal reimbursement claims relating to sack lunches/field meals during the District’s football season. As a result, we were unable to verify that the reimbursement amounts claimed were fully supported and allowable under program requirements. Questioned Costs: Estimated questioned costs for which there is projected to be no support for totals $53,772, which is an extrapolation of the $6,140 that did not have support in the $48,798 we tested for a sample month, multiplied by the total National School Lunch Program expenditures of $427,357 in 2025. Context: A non-statistical sample of 1 month of reimbursements from the fiscal year were selected for testing. Effect: Because sufficient documentation was not available, the allowability and accuracy of certain National School Lunch Program reimbursements could not be fully substantiated. This resulted in questioned costs related to unsupported reimbursements. Cause: The District did not have a formalized process to ensure that all required supporting documentation for meal counts and reimbursement calculations was retained and centrally maintained. In addition, staff turnover and reliance on manual processes contributed to missing or incomplete records. Identification as a repeat finding: Not applicable. Recommendation: We recommend that the Entity strengthen internal controls over the National School Lunch Program by implementing formal procedures to ensure that daily meal counts, edit checks, and reimbursement calculations are properly documented, reviewed, and retained in accordance with federal requirements. Management should also ensure that reimbursement claims are reconciled to supporting records prior to submission. Views of Responsible Officials and Planned Corrective Action: The District agrees with the finding. See separate corrective action plan at page for planned corrective action.

Finding No: 2025-003– Internal control deficiencies over accounting and identification of federal funds received from the Federal Emergency Management Agency (FEMA) that should be included on SEFA Federal Programs ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) Name of Federal Agency U.S. Department of Homeland Security (Pass-through program from The Central Office of Recovery, Reconstruction and Resiliency) Category Internal Control; Compliance. Compliance Requirement Activities Allowed/Unallowed, Allowable Costs/Cost Principles, Period of Performance, Project Accounting. Criteria 2 CFR Part 200 Subpart D Subsection 200.302 states the following: The recipient's and subrecipient's financial management system must provide for the following: 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. Condition During our procedures concerning the Administration’s funds received from FEMA we noticed that the reimbursement funds received from FEMA were not recognized as income during the year ended June 30, 2025. Cause The Administration recognized the reimbursement as an accrual and not as income during the year ended June 30, 2025. They have recognized only the amount that they disbursed during the year at their discretion. This accounting is correct when the funds received are capital advances. Effect This can result in amounts not to be included in the Schedule of Expenditures and Federal Awards in the correct period and understate SEFA. Also, the Administration could be subject to penalties or sanctions from the Federal Grantor. Context The Administration identified $6,543 as federal expenditures from prior years capital advances of FEMA awards but did not identify as expended the amount of $11,063 from advances. In addition, the Administration received reimbursements of $1,413,451 in the fiscal year, however management did not identify this amount as federal expenditures until the audit procedures was performed. Identification of repeat finding None. Questioned costs None, as adjustments were made during the audit to correct the misstatement. Recommendation We recommend validating, with the staff in charge of Engineering, the type of funds received from FEMA, if they are reimbursements or capital advances. When the funds received are reimbursements they should be recognized as income in the year received. If the funds are capital advances they should be recognized as unearned revenue and as income in the year in which they are disbursed. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan.

Finding Number - 2025-003 Cash Management; Allowable Costs Federal Agency Department of Health & Human Services Federal Program Epidemiology and Laboratory Capacity for Infectious Diseases ALN 93.323 Grant Number Various Compliance Requirement Cash Management / Unallowable Costs Type of Findings Internal Control over Compliance / Compliance Category Significant Deficiency Criteria 2 CFR 200.302 states 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 own funds. In accordance with 2 CFR §200.303, non-federal entities are required to establish and maintain effective internal control over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. Such controls should include procedures to ensure expenditures are timely identified and included in reimbursement requests. Section III- Findings and Questioned Costs Relating to Federal Awards – (continued) Finding Number - 2025-003 Cash Management; Allowable Costs – (continued) Condition During our testing of expenditures charged to the Epidemiology and Laboratory Capacity (ELC) program, we identified instances in which expenditures incurred and paid during fiscal year 2022 were included in reimbursement requests submitted during 2025. Although the expenditures appear to relate to allowable program activities, the significant lapse of time between the payment date and the reimbursement request indicates weaknesses in the monitoring and tracking of expenditures pending reimbursement. Also, because the expenditures were originally incurred and paid in 2022, and supporting documentation for prior reimbursement requests was not readily available for the period under audit, we were unable to determine whether these costs had been previously requested for reimbursement. Drawdown No. Type Receipt Date Document No. Check Issuance Date Amount 1525250884 Reimbursement 11-Apr-25 426878 7/21/2022 $ 491,400 428005 8/25/2022 249,960 428049 8/25/2022 558,600 433231 10/11/2022 525,000 440140 11/7/2022 211,803 440145 11/7/2022 248,660 440156 11/7/2022 204,941 429703 6/24/2022 767,102 435438 8/12/2022 745,039 447617 12/8/2022 211,312 $ 4,213,817 Cause Management explained that, in prior periods, drawdown requests were processed manually and on an advanced basis. Subsequently, the Department implemented an electronic system to submit drawdown requests and transitioned the process to a reimbursement method. As part of this transition, certain advance requests that had been processed manually were not properly cleared in the new system and remained recorded as if they had not been requested. Because these requests appeared as pending in the system, they were later submitted again through the new reimbursement process, resulting in duplicate requests in the system records. Section III- Findings and Questioned Costs Relating to Federal Awards – (continued) Finding Number - 2025-003 Cash Management; Allowable Costs – (continued) Effect As a result, these requests appeared as outstanding in the electronic system and were later submitted again through the reimbursement process. This situation created duplicate drawdown requests in the system records and increased the risk of misstated drawdown activity and potential over-requesting of federal funds if not properly identified and reconciled. Questioned Costs None Perspective Information During our procedures, management explained that prior to the implementation of the current electronic drawdown system, requests for federal funds were submitted manually on an advanced basis. Subsequently, the Department implemented an electronic system to process drawdown requests and transitioned the funding methodology from advances to a reimbursement basis. As part of this transition, certain drawdown requests that had already been submitted manually were not properly cleared or recorded in the new system and remained reflected as pending. Prior Year Audit Finding This is not a repeat finding. Recommendation We recommend that management implement procedures to reconcile manual drawdown requests processed prior to the implementation of the electronic system with the transactions recorded in the system. In addition, management should conduct a comprehensive and detailed review of all legacy transactions that originated before the system transition to ensure that any requests previously processed manually are properly identified, cleared, and supported by adequate documentation. This review should be performed with heightened scrutiny to detect any duplicate or unreconciled drawdown requests. Furthermore, management should establish ongoing controls to periodically review outstanding balances in the system and ensure that all drawdown records are accurate, complete, and appropriately supported. Section III- Findings and Questioned Costs Relating to Federal Awards – (continued) Finding Number - 2025-003 Cash Management; Allowable Costs – (continued) Views of Responsible Officials and Planned Corrective Actions The PRDH’s management agrees with this finding. Please refer to the corrective action on pages 57-60.

Finding Number - 2025-005 Rebates Agency Department of Health & Human Services Federal Program Medicaid Cluster ALN 93.778 Compliance Requirement Allowable Costs / Activities Cash Management Reporting Type of Finding Internal Control over Compliance / Compliance Category Significant Deficiency Criteria Pursuant to Section 1927 of the Social Security Act (42 U.S.C. § 1396r-8) and implementing regulations at 42 C.F.R. Part 447, Subpart I, states must: ✓ Report quarterly drug utilization data to manufacturers within 60 days after the end of each quarter; and ✓ Ensure that manufacturers remit rebate payments within 30 days after receipt of utilization data; and ✓ Properly identify, record, and credit rebate collections to the Medicaid program in a timely manner. Department of Health of the Commonwealth of Puerto Rico Schedule of Findings and Questioned Costs – (Continued) For the Fiscal Year Ended June 30, 2025 - 47 - Section III- Findings and Questioned Costs Relating to Federal Awards– (continued) Finding Number - 2025-005 Rebates – (continued) Criteria – (continued) In addition, 2 C.F.R. § 200.302 (Financial Management) requires non-federal entities to maintain effective financial management systems that provide accurate, current, and complete disclosure of financial results and ensure proper accounting for program income and federal funds. Further, 2 C.F.R. § 200.305 (Payment) requires that federal funds be minimized between drawdown and disbursement and that program income and recoveries be properly accounted for and applied. Condition During our audit, we identified that the Medicaid Cluster Program (the Program) returned Medicaid drug rebates outside of the federally required timeframes established under the Medicaid Drug Rebate Program. Specifically, rebates received from pharmaceutical manufacturers were not identified, recorded, and returned to the Medicaid program in accordance with the regulatory deadlines prescribed by federal law and regulation. As a result, federal Medicaid funds were not reconciled and credited in a timely manner, and program expenditures were overstated for the applicable reporting periods. Quarter End period Due date Remmitance date Late Q1 FFY2024 3/31/2024 6/29/2024 9/20/2024 83 Q1 FFY2024 3/31/2024 6/29/2024 12/5/2024 159 Q1 FFY2024 3/31/2024 6/29/2024 4/25/2025 300 Q2 FFY2023 6/30/2023 9/28/2023 9/20/2024 358 Q2 FFY2023 6/30/2023 9/28/2023 12/5/2024 434 Q2 FFY2023 6/30/2023 9/28/2023 4/25/2025 575 Q2 FFY2024 6/30/2024 9/28/2024 12/5/2024 68 Q2 FFY2024 6/30/2024 9/28/2024 4/25/2025 209 Q3 FFY2023 9/30/2023 12/29/2023 9/20/2024 266 Q3 FFY2023 9/30/2023 12/29/2023 12/5/2024 342 Q3 FFY2023 9/30/2023 12/29/2023 4/25/2025 483 Q3 FFY2024 9/30/2024 12/29/2024 4/25/2025 117 Q4 FFY2023 12/31/2023 3/30/2024 9/20/2024 174 Q4 FFY2023 12/31/2023 3/30/2024 12/5/2024 250 Q4 FFY2023 12/31/2023 3/30/2024 4/25/2025 391 Cause The Program relies on information provided by the actuaries of Puerto Rico Health Insurance Administration (PRHIA) to identify and calculate Medicaid drug rebates. PRHIA is responsible for compiling and providing the necessary rebate data to the Program. Based on the information received from PRHIA, management processes the corresponding reimbursements once the data is received. However, the Program does not maintain independent monitoring procedures to verify the completeness and timeliness of the information provided by PRHIA, nor does it perform periodic reconciliations between rebate information received and program expenditures to ensure that all applicable rebates are properly identified and credited to the Medicaid program in accordance with federal requirements. Effect As a result of this condition: ✓ The Program was not in compliance with federal Medicaid Drug Rebate Program requirements and Uniform Guidance financial management standards; and ✓ There is an increased risk of questioned costs and federal disallowances. Questioned Costs Indeterminable Perspective Information Under the program, state Medicaid agencies are required to submit quarterly drug utilization data to participating manufacturers. Based on this data, manufacturers calculate and remit rebate payments to the state. These rebate revenues constitute program income and must be applied to reduce Medicaid expenditures in accordance with federal law and Uniform Guidance. Prior Year Audit Finding This is not a repeat finding. Recommendation We recommend that management establish formal monitoring and reconciliation procedures to ensure that all Medicaid drug rebate information received from PRHIA is complete and accurately recorded. This should include periodic reconciliations between rebate data provided by PRHIA, rebate receipts, and related Medicaid program expenditures. Also, management should implement a formal follow-up process with PRHIA to periodically confirm that all applicable rebate information has been provided and processed in a timely manner. We also recommend that management: ✓ Implement written policies and procedures governing the identification, recording, reconciliation, and return of Medicaid drug rebates; ✓ Establish periodic reconciliation controls to ensure rebate receipts are timely credited to the Medicaid program; ✓ Strengthen oversight and monitoring of rebate activity to ensure compliance with Section 1927 of the Social Security Act and 42 C.F.R. Part 447; and ✓ Provide training to financial and program staff regarding federal rebate compliance requirements. Views of Responsible Officials and Planned Corrective Actions The PRDH’s management agrees with this finding. Please refer to the corrective action on pages 57-60.

Finding Number: 2025-018 State/Educational Agency(s): Arkansas Department of Education Pass-Through Entity: Not Applicable AL Number(s) and Program Title(s): 93.575 – Child Care and Development Block Grant 93.575 – COVID19: Child Care and Development Block Grant 93.596 – Child Care Mandatory and Matching Funds of the Child Care and Development Fund (CCDF Cluster) Federal Awarding Agency: U.S. Department of Health and Human Services Federal Award Number(s): 2101ARCDC6; 2402ARCCDF; 2502ARCCDF Federal Award Year(s): 2021, 2024, 2025 Compliance Requirement(s) Affected: Reporting Type of Finding: Material Noncompliance Repeat Finding: Not applicable Criteria: In accordance with 45 CFR § 98.65(g), and as part of the and conditions of the grant award, states are required to complete and submit quarterly financial status reports (ACF-696) in a manner specified by Administration for Children and Families (ACF) for each fiscal year until funds are expended. In addition, in accordance with 2 CFR § 200.302, the auditee must provide an accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements. Condition and Context: Multiple state agencies administer the CCDF Cluster. The Arkansas Department of Education (ADE) is responsible for more than 99% of cluster activities. ALA staff compared total expenditures reported for SFY 2025 by ADE on the ACF-696 reports with the total expenditures reported by ADE on its portion of the Schedule of Expenditures of Federal Awards (SEFA). The total expenditures reported by ADE on its ACF-696 reports for SFY 2025 was $14,561,147 less than the amount reported by ADE on its portion of the SEFA. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: None Cause: The Agency did not ensure that staffing was adequate to meet the reporting requirements for this grant. Effect: Failure to accurately report grant expenditures could result in undetected noncompliance with program requirements and potential penalties being assessed by the awarding agency. Recommendation: ALA staff recommend the Agency ensure there is adequate staff to achieve full compliance with program reporting requirements. Views of Responsible Officials and Planned Corrective Action: DESE concurs with this finding. Staff turnover resulted in missed reporting on the ACF-696 reports. New procedures have been put into place for cross-training and quarterly reconciliations to prevent future expenditure reporting on the ACF-696 report from being missed. Anticipated Completion Date: Completed. Contact Person: Greg Rogers Chief Fiscal Officer DESE 4 Capitol Mall, Room 204-A Little Rock, AR 72201 (501) 682-4475 Greg.Rogers@ade.arkansas.gov

Finding 2025-002: Monitoring and Management of Grant Budgets Should be Improved Federal Program: Assistance Listing Number (“ALN”) 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Name of Federal Agency: U.S. Department of Health and Human Services Award Identification Number and Year: 6 NH75OT000023-01-02 Name of pass-through entity: N/A COVID Identification: Yes Amount of Questioned Costs: $0 Compliance Requirement: Reporting Criteria: Title 2 of the Code of Federal Regulations (“CFR”) Section 200.302(b) states, “The 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, unobligations balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.” Metro Government’s written grant administration procedures state that they “will abide by the processes for identification, recording, reporting and monitoring program expense” in accordance with 2 CFR 200. Condition: Metro Government did not closely monitor a number of its grant budgets in its Workday software during the course of the year. As a result, we noted a number of journal vouchers had to be used to move grant expenditures out of one grant program to another. Many of these journal vouchers occurred during the year end closing process. As a result, at any given point in time throughout the year, grant expenditures and the related amounts requested from the federal government might not match. We did find; however, that all of the grant expenditure amounts appeared to be accurate by the time we received the final SEFA. Cause: Project level budget to actual reports were not reviewed timely, resulting in reactive reallocations. Effect: Risk of noncompliance with the Uniform Guidance. Recommendation: We recommend Metro Government improve monitoring of grant budgets to ensure expenditures are posted correctly initially and to prevent unnecessary corrective journal vouchers.

Finding 2025-006: FEMA expenditures need to be accurately reported on SEFA and reconciled to Workday Federal Program: ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Name of Federal Agency: U.S. Department of Homeland Security Award Identification Number and Year: SC 095 2500001335 1 and SC 095 2600000514 1 Name of pass-through entity: Kentucky Division of Emergency Management COVID Identification: No Amount of Questioned Costs: N/A Compliance Requirement: Reporting Criteria: The 2025 OMB Compliance Supplement Part 3 under suggested audit procedures states, “Trace the amounts reported to accounting records that support the audited financial statements and the Schedule of Expenditures of Federal Awards and verify agreement.” 2 CFR 200.302(b) states, “The recipient’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, income, and interest. All records must be supported by source documentation.” Condition: Louisville Metro calculated the amount reported on the SEFA using FEMA project worksheets. However, Louisville Metro did not perform a reconciliation between the FEMA project worksheets and Workday. A reconciliation is necessary to identify the FEMA related expenditures that were not tagged to the disasters in Workday. The Workday reflects $307,073 less in expenditures than the amounts shown on the FEMA project worksheets used to determine the amount reported on the SEFA. Effect: Increases the risk of noncompliance with Uniform Guidance requirements. Cause: Grant expenditures are required to be properly “tagged” in Workday to ensure accurate reporting on the SEFA. However, not all FEMA related grant expenditures have been tagged in Workday. Recommendation: We recommend Louisville Metro enhance its procedures to ensure that FEMA expenditures are accurately captured in the SEFA and fully reconciled to the expenditure detail recorded in Workday.

Item 2025-004 - Cash Management - U.S. Department of Health and Human Services, Unaccompanied Alien Children Program (Assistance Listing Number 93.676), FAIN # 90ZU0603, 90ZU0567, and 90ZU0536, for FY 2025 - Significant Deficiency Criteria Nonfederal entities other than states are required to have internal controls in place to ensure compliance with the requirements of cash management that are contained in 2 CFR sections 200.302(b)(6) and 200,305, 31 CFR Part 205, 48 CFR sections 52.216-7(b) and 52.232-12. Statement of Condition During our audit, we noted that there is no evidence of review and approval of drawdowns from the Unaccompanied Alien Children Program and the supporting records. In addition, there was an excess drawdown identified by the Agency which had to be returned to the funder. Cause Insufficient internal controls over the cash drawdown process, including the absence of documented review and procedures to ensure that drawdowns are based on immediate cash needs. Effect Failure to document review and approval of drawdowns may result in unauthorized or incorrect drawdowns from the Unaccompanied Alien Children Program. Furthermore, drawing funds in advance of immediate cash needs increases the risk that federal funds are held for longer than permitted, which could result in federal agencies requiring repayment of interest or other corrective actions. Questioned Costs None Context Although there is no evidence of review and approval of the drawdowns, the amounts of the 2 sample drawdowns tested agreed to the underlying records and supporting documents. Identification as a Repeat Finding This is not a repeat finding. Recommendation We recommend that management of the Agency implement formal controls over the drawdown process that includes establishing procedures requiring documented supervisory review and approval of all drawdown requests and ensuring drawdowns are based on immediate cash needs so that federal funds are expended within a reasonable amount of time. Management Response Management of the Agency is in agreement with this finding.The lack of documented evidence for drawdown approvals resulted from the transition from the internal fiscal department to the outsourced model managed by BTQ Financial. Due to significant turnover, the Agency was unable to produce historical documentation of reviews for the audit period. BTQ has a formalized process where the duties are segregated, and approvals are documented. The Agency, in collaboration with BTQ Financial, has implemented a formalized "Drawdown Authorization Protocol." This new workflow improves upon the existing, and adds a standardized approach to every drawdown request, documented supporting schedules (showing immediate cash needs), and a formal approval from BTQ’s Project Manager, Senior Vice President of Finance, Vice President of Finance, or Assistant Vice President of Finance. This ensures a clear audit trail and prevents the accumulation of excess federal cash on hand.

FINDING 2025-004 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Participation of Private School Children 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): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Test and Provisions - Participation of Private School Children Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not provide supporting documentation for the amounts disbursed for Participation of Private School Children. No time sheets or logs were provided to support the hours paid to employees for working with the private school children. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. 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 . . . INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . ." Cause The School Corporation had not developed a system of internal controls that would have ensured that records were maintained and made available for audit related to the Special Tests and Provisions - Participation of Private School Children compliance requirement. Effect The lack of appropriate documentation prevented the determination of the School Corporation's compliance with the Special Tests and Provisions - Participation of Private School Children compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the Special Test and Provisions - Participation of Private School Children compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2 CFR section 200.302(b)(3-4) states “The financial management system of each non-Federal entity must provide for the following… (3) Records that identify adequately 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 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.”

Finding Type: Significant Deficiency (control); Noncompliance (program) Criteria: Under 2 CFR § 200.302(b)(3), non-federal entities must maintain records that adequately identify the source and application of federal funds. Additionally, program costs must be based on actual, allowable expenditures and must be supported by proper documentation. For the Child Nutrition Cluster, districts are required to maintain accurate records of food service expenditures and reconcile these records to vendor invoices and food service provider statements to ensure correct reporting for reimbursement claims. Monthly claims should be supported by reconciled meal counts and free/reduced eligibility rosters. Condition: For three of ten months tested (September, November, and March), the District’s submitted claims to the pass-through agency did not reflect all eligible reimbursable meals served. Specifically, the District relied on their food service vendor meal counts that were not fully reconciled to daily edit checks and eligibility rosters before claim submission. As a result, allowable food service costs reported on monthly reimbursement claims were understated. Audit procedures identified underclaimed expenditures of approximately $17,087, which resulted in the District receiving less federal reimbursement than it was entitled to under the Child Nutrition Cluster. Cause: The District did not have adequate procedures to verify the completeness and accuracy of food service expenditures submitted for reimbursement. The reconciliation process relied solely on reporting from the food service provider and did not include review and comparison of food service vendor summaries with daily edit checks and eligibility files. Effect: The District did not request all federal reimbursement to which it was entitled, resulting in a loss of program revenue and reduced resources available to support child nutrition operations. Although no overpayments were identified, the absence of an effective reconciliation and review control increases the risk of future inaccurate claims (over- or under-claims) and noncompliance with federal reporting requirements. Recommendation: We recommend the District design and implement a formal month-end reconciliation and claim certification process that includes: (1) Matching food service vendor meal counts to daily edit checks and eligibility rosters prior to claim submission. (2) Dual Review and Approval: Require an independent reviewer to verify the reconciliation and sign/date a claim certification checklist before submission. (3) Timely Corrections: Submit adjusted/corrected claims to the pass-through agency within allowable timeframes to recover underpaid amounts. (4) Training and Cross-Training: Provide annual training for Food Service and Business Office staff on claim preparation, reconciliation steps, and record retention. (5) Monitoring: Implement a quarterly supervisory review of a sample of claim packets to ensure procedures are operating effectively. Views of Responsible Officials and Planned Corrective Action: The District agrees with the finding and the recommendations of the auditors. Management notes that the transition to a new Food Service Vendor contributed to missed reconciliation steps. The District will implement the corrective actions listed within the Corrective Action Plan (CAP).

8. Criteria or specific requirement (including statutory, regulatory, or other citation) Federal awards claimed on a reimbursement basis must be limited to allowable costs incurred during the period of performance. Recipients must maintain effective internal controls to ensure charges are accurate, supported, and compliant with federal requirements (2 CFR §200.303 – Internal controls; §200.302 – Financial management; §200.403 – Factors affecting allowability of costs; §200.405 – Allocable costs; §200.344 – Closeout). Under cash management principles, reimbursement must not exceed expenditures incurred. 9. Condition The District submitted an expenditure report for $19,165,569 for the quarter ending March 31, 2025, which included amounts that were properly obligated but not yet expended as of the report date. The District reported $14,638,097 in ESSER funds on the Schedule of Expenditures of Federal Awards (SEFA), resulting in an unsupported difference of $4,527,472. 10. Questioned Costs Questioned costs totaled $4,527,472. 11. Context The District claimed the remaining award amount in the March submission as the liquidation extension for the grant was no longer available. 12. Effect The submission of expenditure reports that include unexpended obligations may result in inaccurate financial reporting and misrepresentation of the District’s use of federal funds. This could impact cash management decisions and compliance monitoring by the pass-through entity. 13. Cause As the ESSER grant period approached expiration, management attempted to maximize remaining available funding by submitting reimbursement requests in advance of incurring related expenditures. The District did not have adequate controls in place to ensure that expenditures were incurred prior to requesting federal reimbursement, as required by program regulations. 14. Recommendation We recommend the District submit claims for reimbursement for expenditures that the District has incurred. 15. Management's response See Corrective Action Plan.

Criteria In accordance with 2 CFR 200.302 (b)(3), the recipient must maintain 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. Condition We selected 25 drawdowns across all agencies for testing. Of these 25, 1 drawdown selection was approved 1 day after the drawdown request was submitted, but prior to receiving the draw amount. However, this 1 drawdown selection was prior to the remediation period performed by management. As such, it is included as a repeat finding, but as there were no exceptions in the remediation period, the finding is considered remediated. Cause During the audit period, the University experienced a transition in leadership within the Office of Research Administration. As part of this transition, the Associate Vice President for Research Administration was responsible for reviewing and approving drawdown requests, which was overlooked in certain instances. Effect The University processed drawdowns prior to supervisory approval. Questioned Costs None. Repeat Finding Yes Recommendation We recommend management revisit existing internal control procedures to ensure requested reimbursements are approved prior to the request

Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Program: Section 8 Housing Assistance Payments Assistance Listing (ALN): 14.195 Award Period: July 1, 2024 - June 30, 2025 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other MattersCriteria: Uniform Guidance requires non-federal entities to establish and maintain effective internal control over federal awards and to maintain records that adequately support compliance with federal statutes, regulations, and award terms (2 CFR 200.303 and 2 CFR 200.302). In addition, the HUD Handbook 4350.3, Section 7-2, requires owners/agents to process interim certifications when tenant income changes and to adjust assistance accordingly. Statement of Condition: During the fiscal year ended June 30, 2025, we identified one tenant file where a change in income was not properly calculated, and the HUD Form 50059 was not adjusted and the necessary repayment agreement executed. We noted three other files that had missing required eligibility documents or were not retained in accordance with HUD recordkeeping requirements. Context: The population size is 465 units which are eligible for Section 8 Assistance Payments. A sample of forty tenant files totaling $320,352 of rental assistance were tested to determine if the tenant files were in accordance with eligibility compliance requirements. Of the forty tenant files, one tenant file tested contained an incorrect income calculation that was not corrected through a corrected HUD Form 50059 and related repayment agreement. By extrapolating our identified error rate on tenant files tested that were incorrectly calculated (0.95%) over the total population of HUD Section 8 rental assistance payments for the year ended June 30, 2025 of $2,719,677; $25,941 of rental assistance could be noncompliant based on the above error rate. Questioned Cost: $25,941 Cause: Personnel turnover resulted in the missed adjustment. Effect: An incorrect amount of rental assistance was requested from HUD Section 8 funds. Repeat Finding: No Recommendation: We recommend that management implement proper training and cross-training for staff to ensure accurate calculation of rental assistance and timely completion of interim certifications whenever required. Additionally, we recommend providing a refresher training to staff on HUD Section 8 documentation standards. Views of Responsible Officials: Management agrees with the finding.

Department of Health and Human Services and Department of Treasury 2025-001 Coronavirus State and Local Fiscal Recovery Funds (Allowable Costs, Period of Performance, and Procurement) and Congressional Directives (Procurement) Criteria: Under 2 CFR 200.302 and 200.403, non-federal entities must maintain records sufficient to demonstrate that costs charged to Federal Awards are allowable, properly allocated and adequately supported. Under 2 CFR 200.309 costs must provide documentation that costs were incurred within the approved period of performance. Additional 2 CFR 200.317-200.327 requires entities to maintain documentation sufficient to support the procurement process for the use of Federal Awards. Condition: The Center did not maintain adequate documentation to support compliance with Federal requirements related to allowable costs, period of performance, and procurement standards. Allowable Costs – The Center provided grant allocation worksheets that show individual employees hours charged to the federal awards; however, the grant allocation worksheets did not include any employee or supervisor signatures to attest the hour allocations were accurate. Additionally, certain invoices had a portion of the total costs allocated to the federal award, but the Center could not substantiate the basis for the allocation. Period of Performance – The Center had charged costs to the federal award for costs incurred outside the period of performance as defined by the grant agreement but could not provide documentation that supported the grantor allowed charges to be made for costs incurred outside that period. Procurement – The Center entered a contract with a Company under the Simple Acquisition threshold for procurement but was unable to provide documentation that quotes were obtained from multiple qualified vendors. Cause: The Center did not have effective controls in place to ensure proper documentation was obtained and retained to support compliance with the federal award. Effect: Without adequate supporting documentation the Organization is unable to demonstrate its compliance with all requirements of the federal award. Questioned Costs: $175,389 out of $2,453,443 of total expenditures tested. Auditor’s Recommendation: We recommend The Center review and revise its documentation policies and procedures to ensure that compliance is met with regards to federal awards. Management Response: Management agrees with the finding and has collaborated with grant personnel to implement standardized personnel activity reporting and cost allocation documentation for all federal grants. The Center will strengthen controls to ensure that only allowable costs incurred within the approved grant period are charged to federal awards. In addition, procurement procedures have been revised to ensure compliance with 2 CFR $$ 200.317-200.327. Corrective actions have been implemented or are in progress and apply to all federal awards moving forward beginning in FY2026.

Criteria: Federal regulations require that documentation to support student eligibility determinations are maintained by the entity. -7 CFR §245.6(b)(6) requires documentation to be retained for three years after the end of the fiscal year to which they pertain; and -2 CFR §200.302 and §200.333 (record‑keeping requirements) require entities to maintain sufficient records that support federal program compliance and allow for audit review. Condition: During our eligibility testing, SNP was unable to provide supporting eligibility documentation for six of our 40 eligibility samples. Missing items included applications or direct certification documentation. Questioned Costs: $2,085. Context: SNP was unable to provide documentation to support eligibility determinations for six students. Cause: Oversight by the SNP. Effect: We could not verify eligibility determinations for six students. Repeat Finding: No. Recommendation: We recommend the SNP reviews its internal controls and policies to ensure all students receiving benefits have an application, or other supporting documentation, on file to support their eligibility. Views of Responsible Officials: Management concurs with the finding.

Statement of Condition: During testing of disbursements, we identified three instances in which expenditures were recognized in full in FY 2025 despite portions of the costs relating to services to be received in FY 2026. These items included: one multi-year subscription membership, and two additional expenditures with smaller prepaid components. In each instance, the Organization did not record a prepaid expense or allocate the costs between fiscal periods based on the period benefited. As a result, costs benefiting a period outside the fiscal year and outside the reporting period for FY 2025 federal expenditures were included in FY 2025 grant costs. Criteria: Under 2 CFR §200.403 and 2 CFR §200.405, costs charged to a federal award must be allowable, allocable, reasonable, incurred during the applicable period of performance and be allocable to a federal award in proportion to the relative benefits received. Additionally, 2 CFR §200.302 requires nonfederal entities to maintain financial management systems that provide for accurate and complete disclosure of the financial results of each federal award. Costs that benefit multiple accounting periods must be allocated to the periods benefited, regardless of the timing of cash disbursement. Effect and Questioned Costs: Federal expenditures reported for FY 2025 were overstated by $15,253, representing the portion of costs applicable to FY 2026. This resulted in noncompliance with Uniform Guidance requirements related to cost allocability and accurate financial reporting. Cause: The Organization did not have a formal process in place to identify and allocate prepaid or multiperiod costs to the appropriate fiscal periods for federal grant reporting purposes. Expenditures were recorded and charged to the federal award based on payment date rather than the period in which the costs were incurred and benefited the program. The lack of procedures to identify and allocate multi-period costs represents a deficiency in internal control over compliance, as controls were not designed or operating effectively to ensure that costs were charged to the appropriate fiscal period in accordance with Uniform Guidance. This deficiency did not rise to the level of a significant deficiency or material weakness, as the costs were otherwise allowable, within the period of performance, and the issue was limited to timing. Recommendations: We recommend that the Organization implement procedures to identify costs that benefit multiple accounting periods and allocate such costs to the appropriate fiscal years for both financial reporting and federal grant reporting purposes. Additionally, we recommend that the Organization record prepaid expenses at year end, as applicable, and ensure that only costs incurred and allocable to the fiscal year are included in federal expenditures and reported on the Schedule of Expenditures of Federal Awards.

Type of finding: Federal Award Situation: Material weakness; compliance with federal regulations. Program: ALN: 97.036 Program: Disaster Grants – Public Assistance Disaster Grants – Public Assistance Compliance Requirements: Reporting Prior-Year(s) Audit Finding(s): 2024-005, 2023-004, 2022-006 Questioned Costs: Not determined. Condition: The Municipality’s staff was unable to provide officially prepared and certified reports supporting compliance with the filing and submission requirements for reports and financial information, as established by federal award and regulatory agreements. Similarly, reconciliations were not provided between the information used to prepare the required and submitted reports and the formal data recorded in the Municipality’s official accounting system. Due to these conditions, compliance with the reporting requirements established by the federal grantor and effectiveness of related internal controls could not be verified. Context: The Municipality is required to submit quarterly progress reports to the state for each individual approved project worksheet. These progress reports consist of 10 questions that among other things report on the total amount of expenses incurred up to the reporting period, the estimated final cost of the project, percentage of completion, scope of work completion date, period of performance and the name and user category of the person that completed the report. As of June 30, 2025, the Municipality had 154 projects that were required to submit quarterly progress reports. Although the Municipality submitted to us the summary of these submitted reports, in excel, as they were extracted from the reporting platform, the Municipality did not submit for our review the individual reports, nor the accounting records that reconcile to these reports. Criteria: The state is required to make an accounting of eligible costs. Similarly, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project in in compliance with the provisions of the State Agreement, all grants conditions were met, and the provisions for that project were made in accordance with the applicable payment provisions. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the 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. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause: There is a lack of adequate knowledge and training among personnel assigned to the management and preparation of reports required by this federal award. Additionally, the Municipality did not demonstrate, nor did it provide evidence, that it has designed and implemented an adequate system of procedures and internal controls to monitor the activity, filing, and custody of reports, as required by the federal award and the pass-through entity. These deficiencies limit the Municipality’s ability to document and support compliance with the reporting requirements. Effect: These conditions expose the program to noncompliance with the reporting requirements established in the grant agreement. Furthermore, the Municipality may be at risk of the grantor questioning the allowability and use of federal funds. Auditor’s recommendation: The personnel or Department responsible should identify, compile, and retain all reports required under the grant agreement, including reconciliation with the Municipality’s official accounting records and subsidiary ledgers. Additionally, it is essential for the Municipality to develop, document, and implement a comprehensive training program, along with written guidelines and procedures, for all personnel involved, directly or indirectly, in the management of these federal funds. Views of Responsible officials and Corrective Actions: In response to the Auditor’s recommendations and as corrective action, the staff responsible or department will locate and document all required reports that were filed in accordance with the grant agreement requirements, including reconciliations with the Municipality’s official accounting subsidiary ledgers. Furthermore, the Municipality will design, document, establish, and provide the necessary training, along with written guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds. In addition, the Municipality will implement periodic reviews and monitoring mechanisms to ensure ongoing compliance with reporting requirements and the accuracy of financial information related to federal funds. Audit Status: Unresolved

FINDING 2025-016 Federal Program Information: USAID Foreign Assistance for Programs Overseas (ALN 98.001) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): B. Allowable Costs/Cost Principles – Per 2 CFR Part 200.302, the recipient's and subrecipient's financial management system must provide for 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. Condition: Certain expenditures were not converted using an appropriate exchange rate. Cause: Administrative oversight and insufficient internal control. Effect or Potential Effect: Overpayment of federal funds. Questioned Costs: Below reportable threshold. Context: For 2 of 25 expenditures tested, the University used an inaccurate exchange rate in its reimbursement claims. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend that the University enhance review controls over reimbursement claims to ensure accurate exchange rates are consistently applied and supported by appropriate documentation. Views of Responsible Officials: Monthly Settlement Reports are used to reconcile actual expenses. An outdated spreadsheet was previously used to convert travel expenses, which resulted in incorrect exchange rate calculations. The team has implemented an updated conversion process. Going forward, the Sponsored Program Office Team will review and approve the exchange rates to ensure they are reasonable, accurate, and applied consistently.

SIGNIFICANT DEFICIENCY; CRITERIA: 2 CFR §200.302(b)(5) requires non‑Federal entities to have written procedures to implement effective control over and accountability for all funds, including budgeting and financial management practices that allow the entity to relate financial results to project performance.; CONDITION: For the fiscal year ended June 30, 2025 the Town did not prepare or maintain project-level budgets for emergency response and recovery activities. ; EFFECT: Without project budgets, The Town lacks assurance that FEMA funds are spent in accordance with approved scopes of work and allowable cost principles under 2 CFR §200.403 and is unable to demonstrate effective financial oversight or compare actual expenditures to planned costs. This increases the risk of cost overruns, questioned costs, or ineligible expenditures, which may lead to FEMA deobligating funds or requiring repayment.; CAUSE: The Town did not have established internal processes requiring the development of project‑specific budgets for emergency FEMA awards. During the emergency response period, Town staff focused on operational activities, and no designated personnel were assigned responsibility for creating or monitoring project budgets.; RECOMMENDATION: The Town should implement written procedures requiring project‑specific budgets for all Federal awards, including FEMA emergency funding. The Town should also provide staff training to ensure personnel understand Federal grant budgeting requirements and are capable of preparing and maintaining compliant documentation.; VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: The Town of Spruce Pine agrees with this finding. Finance procedures will be updated to include project-level budgeting and recommended training for staff.

Coronavirus State and Local Fiscal Recovery Funds (Federal Assistance Listing No. 21.027) Criteria: In accordance with 2 CFR §200.302(a) of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), non-federal entities must maintain financial management systems that provide for the identification, in their accounts, of all federal awards received and expended, and must ensure accurate, current, and complete disclosure of financial results. Additionally, according to Governmental Accounting Standards Board (GASB) Statement No. 54, special revenue funds are used to account for specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. Since funds received under Assistance Listing 21.027 are restricted for specific uses, they should be accounted for in a special revenue fund. Condition: During our audit for the fiscal year ended June 30, 2025, we noted that the District did not record $4,860,733 in transactions related to the Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing 21.027) in the appropriate fund. Instead of recording this activity in the Special Revenue Fund, the transactions were recorded in the General Fund. Based on grant receipts received by the District of $4,860,733 in the fiscal year ended June 30, 2025 it was determined that expenditures relating to the grant were incurred in the General Fund in the fiscal years ended June 30, 2025 and 2024 in the amounts of $1,017,513 and $3,843,220 respectively. The receipts in the amount of $1,017,513 related to expenditures incurred in the year ended June 30, 2025 were reclassified to the Special Revenue Fund. Questioned Costs: None Context: $4,860,733 in transactions related to the Coronavirus State and Local Fiscal Recovery Funds were recorded in the General Fund instead of the Special Revenue Fund. Effect: Recording of the $4,860,733 in federally restricted grant activity in the General Fund instead of the Special Revenue Fund reduces the transparency of the financial statements and may obscure the tracking of federal expenditures. This misclassification increases the risk of noncompliance with federal grant reporting requirements, and may result in inaccurate reporting on the Schedule of Expenditures of Federal Awards (SEFA), which could impact audit results or federal program oversight. The expenditures incurred in both years were subject to a single audit in the fiscal year ended June 30, 2025. Cause: Unknown. Recommendation: We recommend that management establish procedures to ensure that all federal grant activity is recorded in the appropriate fund, consistent with GASB and Uniform Guidance requirements. Specifically, all activity related to Assistance Listing 21.027 should be accounted for in the Special Revenue Fund to maintain proper accountability. View of Responsible Officials and Planned Corrective Action: Management has reviewed this finding and has indicated a corrective action plan will be developed to address this finding and recommendation.

Finding 2025-002 – Cash Management (Reimbursement Request Error) Federal Program: Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency in Internal Control Over Compliance and Noncompliance Criteria Per 2 CFR §200.305(b)(1) and the terms of the subaward, the pass-through entity required the non-Federal entity to use the reimbursement method. Under this method, payment may be requested only for actual, allowable, and properly supported expenditures. Additionally, per 2 CFR §§200.302 and 200.303, the non-Federal entity must maintain financial management systems and internal controls sufficient to ensure reimbursement requests are accurate and supported by appropriate documentation. Condition The Town of Wheatland requested reimbursement totaling $74,113.15 in excess of actual, allowable, and supported expenditures due to an error in compiling reimbursement request amounts. As a result, the request was not fully supported by underlying documentation at the time of submission. The error was later identified by the Town and corrected through a subsequent reimbursement adjustment. Cause The condition resulted from insufficient review procedures over reimbursement requests, including a lack of detailed reconciliation between requested amounts and supporting expense documentation prior to submission. Effect The Town temporarily requested federal funds in excess of allowable and supported expenditures, resulting in noncompliance with cash management requirements. Questioned Costs None. Repeat Finding No. Recommendation We recommend the Town strengthen internal controls over reimbursement requests by implementing a secondary review of reimbursement calculations prior to submission, establishing a formal reconciliation process between requested amounts and supporting documentation, and using a standardized checklist to verify the completeness and accuracy of reimbursement requests. Views of Responsible Officials Management agrees with the finding and has corrected the identified error. Additional review procedures and reconciliations will be implemented to ensure reimbursement requests are accurate and fully supported prior to submission.

2025-029 Improve Controls over Employer Tax Form and Payment Submissions Compliance Requirement: Special Tests and Provisions Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Number and Title: 17.225 – Unemployment Insurance Federal Award Numbers: UI356432155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI379762260A13 (Year: 2022), UI393172355A13 (Year: 2023), 23A60UB000032 (Year: 2023), 23A60UB000074 (Year: 2023), 23A60UB0000117 (Year: 2023), 23A60UD000001 (Year: 2023), 23A60UD000016 (Year: 2023), 23A60UR000037 (Year: 2023), 24A55UI000019 (Year: 2024), 24A55UT000008 (Year: 2024), 25A55UI000074 (Year: 2025), 25A60UD000068 (Year: 2025), 25A60UD000070 (Year: 2025) Questioned Costs: None Identified Description: The Georgia Department of Labor did not maintain adequate documentation of taxes due or taxes received. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. Employers meeting any of the following criteria are required to report UI taxes: • Private employers with a quarterly payroll of $1,500 or at least one worker in 20 different calendar weeks during a calendar year; • Agricultural employers with at least $20,000 in gross payroll for a calendar quarter or with 10 or more workers on any day during 20 different weeks in a calendar year; or • Domestic employers with a payroll of at least $1,000 in any calendar quarter. State Workforce Agencies, including the Georgia Department of Labor (DOL), are required to maintain employer accounts for UI taxes received or due from individual employers. Criteria: As a recipient of federal awards, the DOL is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.302(b) state, in part, that the DOL’s “financial management system must provide for… maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds… [and] records must be supported by source documentation.” Condition: Our audit of the UI program included a review of quarterly tax and wage forms and employer payments received. From a population of 906,391 transactions, a sample of 25 transactions related to the collection of taxes due from employers was randomly selected for testing using a nonstatistical sampling method. The following deficiencies were identified: • We found no evidence that internal controls had been established, documented, or maintained for the items tested. • Of the 25 transactions tested, 13 transactions could not be traced to bank statements, and no supporting documentation could be provided for the transactions. Cause: The DOL has an antiquated system for recording tax transactions that does not maintain an audit trail of electronic tax forms collected. While physical documentation and payments remitted through the mail are maintained on file, no records of electronic employer submissions are maintained for review by the DOL. Effect: The deficiencies in employer tax form and payment submissions resulted in noncompliance with federal regulations. Additionally, without properly designed controls in place, the DOL cannot adequately maintain employer accounts or support the transactions posted to employer accounts. Furthermore, grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DOL should implement internal controls over the documentation of taxes due and received by: • Ensuring that appropriate documentation is maintained for employer tax submissions, detailing the employer name, wages reported, calculation of taxes, penalties, interest, and FIFA costs due, payment remitted (if any) with time stamps. • Implementing a process in which the system generates a tax form for each employer submission to be maintained as reviewable evidence of taxes due. • Maintaining a receipt log by employer, including amount received, date received, and amount per bank statement or ACH transmission file, as documentation of taxes received. Views of Responsible Officials: We concur with this finding.

2025-002. Allowable Costs/Cost Principles – (Excess Reimbursement Due to Inaccurate Final Expenditure Reporting) United States of Department of Education, Passed Through New York State, Department of Education: COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D Pass-through Entity Number: 5891-21-1490 COVID-19: American Rescue Plan - Elementary and Secondary School Emergency Relief ALN: 84.425U Pass-through Entity Number: 5880-21-1490 COVID-19: American Rescue Plan - Elementary and Secondary School Emergency Relief ALN: 84.425U Pass-through Entity Number: 5884-21-1490 Criteria: Per 2 CFR Part 200, specifically §§200.302 and 200.403, financial management systems must ensure that expenditures reported for federal awards are accurate, allowable, and properly supported. Costs charged to federal awards must be incurred and supported by underlying accounting records. Reports and reimbursement requests must be reconciled to the recipient’s accounting records. Additionally, guidance from the pass-through entity, New York State Education Department, requires that the Final Expenditure Report (FS-10F) reflect actual expenditures incurred, not outstanding obligations or encumbrances that have not been fully liquidated (e.g., purchase orders), and that districts revise or adjust claims as necessary if amounts differ from final expenditures. Condition: The District submitted Form FS-10F final expenditure reports that included amounts for open encumbrances that were not fully expended after the final reports’ submission; the cumulative expenditures in the District’s accounting records for two of the Education Stabilization Fund (ESF) grants (CRRSA ESSER II, pass-through entity number 5891-21-1490, and ARP ESSER III, pass-through entity number 5880-21- 1490) were less than the amounts claimed by the District on the FS-10Fs. The FS-10F for a third ESF grant (ARP SLR Learning Loss, pass-through entity number 5884-21-1490) included a duplicated amount for purchased services that was the result of a duplicated journal entry in the District’s accounting records. As a result, the expenditures reported on the FS-10F final expenditure reports exceeded the actual expenditures incurred and recorded by the District, and the District received reimbursements from the pass-through entity, New York State Education Department (NYSED) for expenditures it did not incur. Cause: The District lacked adequate internal controls and review procedures to ensure that FS-10F reports were based solely on actual, incurred expenditures, and reported amounts are subsequently reconciled to final general ledger balances in its accounting records. The District’s procedures for reviewing and approving journal entries failed to identify two erroneous entries. Additionally, there was a failure to implement procedures to monitor outstanding encumbrances included in the FS-10F and to communicate adjustments to the NYSED when those encumbrances were not ultimately realized as expenditures. Effect: As a result of the overstatement of expenditures on the FS-10F, the District received reimbursement in excess of allowable amounts. The District may be required to repay the excess funds received. Questioned costs: $52,798 for CRRSA ESSER II grant, $119,095 for ARP ESSER III grant, and $25,667 for ARP SLR Learning Loss grant. Context: For the CRRSA ESSER II grant, a payment of $72,906 to a vendor was charged to the grant in a prior year and included on the FS-10F filed in October 2023, the District subsequently determined that expenditure was not an allowable cost and corrected its accounting records; however, the District did not notify the NYSED of the change and the FS-10F was not revised to reflect this correction. Furthermore, there were $20,107 of expenditures recorded in the District’s accounting records that were not included in the FS- 10F; collectively, these two items resulted in the District reporting expenditures on the FS-10F for the CRRSA ESSER II grant that exceeded actual, allowable expenditures incurred by a net amount of $52,799. For the ARP ESSER III grant, the District included $6,400 related to an open purchase order for architectural and engineering fees on the FS-10F filed in October 2024. The purchase order was originally encumbered for $10,400; however, only $4,000 in actual expenditures were incurred, the remaining $6,400 balance was never expended as the project was completed with no additional invoices received from the engineering firm. Additionally, unliquidated payroll-related encumbrances at June 30, 2025, totaling $112,695 were included in the FS-10F; however, there were no actual expenditures incurred. For the ARP ALR Learning Loss grant, the District recorded a journal entry to reclassify the expenditure for a payment made to a vendor, but duplicated that amount in another journal entry recording expenditure to the grant. The duplicated amount was included in the FS-10F filed in October 2024. Identification of a Repeat Finding: This is not a repeat finding from the immediately prior audit. Recommendation: The District should strengthen its internal controls over grant reporting and reimbursement processes to ensure that expenditures reported on the FS-10F final expenditure reports are accurate, allowable, and fully supported by the accounting records. Journal entries affecting federal grants expenditures The District should perform a comprehensive reconciliation of the FS-10F to the general ledger prior to submission, and again after the grant period ends to confirm all reported amounts were ultimately expended, and establish a formal process to review and clear outstanding encumbrances included in grant reports, ensuring any amounts not realized as expenditures are removed or adjusted. Additionally, the District should develop procedures to identify and track subsequent adjustments, including reclassifications of unallowable costs, and ensure that such changes are timely communicated and corrected with the New York State Education Department, and to require documented supervisory review and approval of all final expenditure reports and their subsequent reconciliations with supporting documentation and final accounting records. Views of Responsible Officials of Auditee: The District acknowledges the finding related to the reporting of expenditures on the FS-10F and agrees that certain encumbrances and subsequently adjusted items were not properly reflected in the final expenditure submissions to the New York State Education Department (SED). The District notes that several of the identified items, including open purchase orders and payroll encumbrances, were initially included in the FS-10F in accordance with prior internal practice and interpretation of reporting guidance at the time of submission. In addition, the District acknowledges that certain post-submission adjustments, including reclassifications of unallowable costs and the liquidation of encumbrances, were not subsequently reflected through amended FS-10F filings. The District further recognizes that these conditions resulted in reporting discrepancies between the FS-10F submissions and actual expenditures incurred, leading to an overstatement of expenditures and excess reimbursement. The District has calculated the net obligation of $52,798.77 and intend to reimburse the NYSED for this amount.

2025-001: Material Weakness in Internal Control over Compliance – Financial Management Federal Program: Community Development Block Grant (CDBG) Cluster – CFDA No. 14.218 Federal Agency: U.S. Department of Housing and Urban Development (HUD) Assistance Listing Number: 14.218 Compliance Requirement: Financial Management Type of Finding: Material Weakness in Internal Control over Compliance Criteria: In accordance with 2 CFR §200.302, non-federal entities must maintain financial management systems that provide accurate, current, and complete disclosure of financial results and include effective control over and accountability for all funds, including cash and grant-related balances. Condition: The Organization did not perform timely reconciliations of grant revenue, receivable, and cash accounts, resulting in material discrepancies at year-end. Audit procedures identified material adjustments to grant-related accounts across multiple federal programs, as well as several large adjustments to cash balances due to duplicate and erroneous entries that were not identified through the Organization’s internal control processes. These adjustments were subsequently identified and recorded with the assistance of an external CPA firm after year-end; however, the corrections were not made in a timely manner and were not part of the Organization’s established internal control procedures, contributing to delays in the completion of the audit. Although the CDBG program did not have current-year activity, this control deficiency is entity-wide and affects the Organization’s ability to accurately account for federal awards, including the CDBG program. Cause: The condition appears to be due to insufficient internal controls over financial reporting, including lack of timely reconciliations, inadequate review of transactions, and insufficient oversight of cash activity. A contributing factor to these control deficiencies was significant staffing changes during the year, including the loss of key personnel and the death of the Organization’s founder, which impacted the Organization’s ability to maintain consistent financial management processes over federal awards. Effect: A material weakness in internal control over compliance existed, as there is a reasonable possibility that material noncompliance with federal financial management requirements would not be prevented or detected and corrected on a timely basis. Questioned Costs: None identified. Context: Material discrepancies were identified in grant-related accounts across multiple federal programs and in cash accounts, requiring audit adjustments to properly state balances. Recommendation: We recommend implementation of formal reconciliation procedures for all significant accounts, including monthly reconciliations of cash and grant-related accounts, assignment of responsibility, and documented supervisory review. Management should also implement controls to identify and prevent duplicate or erroneous entries. Views of Responsible Officials: Management has acknowledged the condition and has taken corrective actions, including engaging an external CPA firm, hiring new key accounting personnel, and implementing enhanced reconciliation and review procedures to strengthen internal controls.