Findings Citing § 200.302

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.”

Item 2025-007 - Cash Management - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00505-23-04, 6 H2ECS45602-02-04, 1 H8LCS50772-01-00 and 6 H8HCS46163-03-01 - (Significant Deficiency) Criteria: Non-federal 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 Health Center Program Cluster and the supporting records. Cause: LBUCC does not have a policy in place requiring the review and approval of drawdowns from the Health Center Program Cluster to be documented. Effect: Failure to document review and approval of drawdowns may result in unauthorized or incorrect drawdowns from the Health Center Program Cluster. Questioned Costs: None. Context: Although there is no evidence of review and approval of the drawdowns, the amounts of all 8 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 LBUCC implement a policy that requires all drawdowns and supporting documents to be reviewed and that such review and approval be documented. Management Response: Management agrees with the finding and will implement these steps to ensure compliance with the federal cost principles, strengthen internal controls, and reduce the risk of questioned costs.

CFDA Number: 93.224 Federal Program or Cluster: Health Center Program Cluster Grantor Agency: U.S. Department of Health and Human Services Federal Award Identification: H8FCS41177 Compliance Requirements: Cash Management Type of Finding: Noncompliance/Material Weakness in Internal Control over Compliance Questioned Costs: None Criteria: Per 2 CFR Part 200, Section 200.305, Federal payment, "payment methods must minimize the time elapsing between the transfer of funds from the Federal agency...and the disbursement of funds by the recipient… 2 CFR Part 200, Section 200.302(b)(6) also requires written procedures to implement the requirements of Section 200.305. Per HHS Grant Policy Statement: “In accordance with Dept of Treasury regulations, you must draw federal cash only for your immediate needs. At the time of draw down, you will certify you will not hold cash beyond three working days… Do not request cash to cover unliquidated encumbrances, obligation, or accrued expenditures until payment is pending”. Condition: On June 30, 2024, the Organization drew the remaining H8F funds of $1,253,464, and recorded this amount as a credit to a balance sheet account, indicating these were unspent or unearned grant funds. Throughout the year ended May 31, 2025, as expenditures were made, the Organization recorded debits to this balance sheet account, crediting a grant revenue account. The Organization's internal controls over compliance failed to prevent, or detect and correct, this noncompliance. Cause: Organization personnel were not aware of the cash management compliance requirement with respect to this federal award. The Organization's previous CEO retired approximately May 31, 2024. Per inquiry of the Organizaton's CFO, their understanding was that the deadline to obligate for this federal award was December 31, 2024, and the deadline to expend or liquidate was December 31, 2026, and they were spreading it out to what they thought was the deadline. Effect or Potential Effect: By drawing federal award funds prior to expenditure, the Organization did not comply with the requirements of 2 CFR Part 200, Section 200.305, Federal payment and of the HHS Grants Policy Statement. Context: Draws for this Federal award were taken in July, 2024 for $1,270,464. We requested supporting detail of the $1,270,464 expenditures made during the year for this Federal award as reported in the Schedule of Expenditures of Federal Awards. We received a spreadsheet that contained a list of 26 descriptions and amounts, but no transactional detail such as check numbers, check dates, payee, invoice number, invoice date, etc. After determining the check numbers and check dates for 9 of the 26 items in the spreadsheet, we noted that disburesments for 8 of those 9 occurred more than 3 days after the date the draw, with 2 disbursements made more than 5 months after the date of the draw. Repeat Finding? No Recommendation: We recommend that the Organization provide grants management training to all its financial staff and management covering the Uniform Guidance/OMB Guidance for Federal Financial Assistance. We also recommend that the Organization develop and implement policies and procedures that ensure grant funds are drawn at the time of, or following, expenditures for allowable costs by the Organization. These policies and procedures should include that, for each draw from a Federal award, 1) detailed documentation of the expenditures for which the grant funds are being drawn is prepared prior requesting the draw, including transactional details such as vendor, invoice number, invoice amount, check number, check date, payee, and check amount; 2) that the documentation supporting the draw is reviewed and approved by a member of management (other than the person who prepares the documentation) prior to requesting the draw, and 3) that the documentation supported each draw is maintained as part of the Organization's accounting records. Views of Responsible Officials: We agree with the finding. We have never received proper training. See Corrective Action Plan for Reference 2025-005.

CFDA Number: 93.224 Federal Program or Cluster: Health Center Program Cluster Grantor Agency: U.S. Department of Health and Human Services Federal Award Identification: H8FCS41177 Compliance Requirements: Reporting Type of Finding: Noncompliance/Material Weakness in Internal Control over Compliance Quiestioned Costs: None Criteria: 2 CFR Part 200, Section 200.302 Financial management requires that the Organization'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..; and 2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in Sections 200.328 and 200.329. Section 200.328 Financial reporting states that the required financial reporting consists of the Federal Financial Report (SF-425). Condition: The SF-425 Federal Financial Report filed by the Organization for the H8FCS41177 Federal award reported that cash disbursements of $2,675,250, the total amount of the Federal award, had been made. However, $1,248,456 of those cash disbursements were determined during our audit to not be allowable due to not being obligated and/or liquidated by the period of performance deadlines. The cash disbursements reported on the SF-425 were not readily determinable from the Organization's general ledger accounts. Cause: Organization personnel were not aware of the period of performance with respect to this federal award. The Organization's previous CEO retired approximately May 31, 2024. Per inquiry of the Organizaton's CFO, their understanding was that the deadline to obligate for this federal award was December 31, 2024, and the deadline to expend or liquidate was December 31, 2026. The Organizaton's chart of accounts and general ledger do not include separate and distinct accounts or classes to which federal award expenditures are recorded. Effect or Potential Effect: The SF-425 Federal Financial Report filed by the Organization included cash disbursements of $1,248,456 that were not chargeable to the Federal award because they were not obligated before the period of performance end date and/or the payment was not made before the deadline to liquidate obligations. Context: We requested detail of expenditures for the Federal award and were provided with manual spreadsheets lacking all the transactional details needed. Information from the general ledger did not agree with cash disbursements reported on the SF-425. The general ledger information indicated $1,185,164 of the Federal award had not yet been disbursed at the time the SF-425 was filed. Repeat Finding: No Recommendation: We recommend that the Organization provide grants management training to all its financial staff and management covering the Uniform Guidance/OMB Guidance for Federal Financial Assistance. We also recommend that the Organization develop and implement policies and procedures for financial and performance report preparation to ensure information is supported by proper documentation and agrees with the general ledger. These policies and procedures should also include a requirement that all reports are reviewed by a member of management who is not involved in the preparation of the reports. Views of Responsible Officials: We agree with the finding. We have never received proper training. See Corrective Action Plan for Reference 2025-007.

2025-001: U.S. Department of Health and Human Services, National Institutes for Health Research and Development Cluster, Cancer Control, Assistance Listing #93.399; Lack of Required Written Policies Condition Montana Cancer Consortium (the Consortium) does not have written policies and procedures in place as required by 2 CFR § 200.302 and § 200.313. Specifically, the Consortium lacks documented policies for: • The timing of federal cash draws; • The allowability of costs charged to federal awards; and • Documentation of time-and-effort for personal services. Criteria 2 CFR § 200.302(b)(6)–(7) requires nonfederal entities to have written procedures for: (a) cash drawdowns and (b) determining cost allowability. § 200.305 requires written cash-management procedures that minimize the time between draw and disbursement. § 200.430 requires a written policy that is consistently applied to both federal and nonfederal activities for documentation of compensation for personal services. Context At the time of completion of the audit for the year ended May 31, 2025, the written policies were not in place. We noted that the policies were implemented on December 1, 2025, which was after the fiscal year under audit had ended. Cause The Consortium has not yet developed or adopted the required written policies due to limited administrative capacity and reliance on informal practices. Effect The absence of written policies increases the risk of noncompliance with federal requirements, mismanagement of federal funds, and audit findings in future periods. It may also impair the Consortium’s ability to consistently apply federal cost principles and properly safeguard assets. Recommendation We recommend that the Consortium develop and implement written policies and procedures that comply with the requirements of Uniform Guidance. Management Response See Corrective Action Plan.

2025-001: Reconciliations and Material Adjustments Questioned Costs: None How the questioned costs were computed: N/A Grant Funding Source Grant Period Head Start U.S. Department of Health 06/01/2024 05/31/2025 10CH012611 01 and Human Services Head Start U.S. Department of Health 06/01/2024 04/30/2025 10CH010945 05 and Human Services Head Start U.S. Department of Health 07/01/2022 06/30/2025 10HP000422 03 and Human Services Condition: At the time of audit fieldwork, Umatilla Morrow Head Start, Inc. had not reconciled and closed its grant and contract revenue and accrued payroll. Umatilla Morrow Head Start, Inc.'s cash reconciliation also included a deposit in transit that was never deposited. As a result, Wipfli, LLP proposed and management posted adjusting journal entries to grants receivable, refundable advance, accrued liabilities, and grant revenue. A passed adjustment was reported for the misstatement on the cash reconciliation. As Umatilla Morrow Head Start, Inc.’s internal controls did not discover these adjustments prior to our audit, a material weakness exists in Umatilla Morrow Head Start, Inc.’s internal controls over financial reporting. Criteria: Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets. Cause: During the audit year, Umatilla Morrow Head Start, Inc. experienced turnover in its business office while preparing for the audit which contributed to the lack of adequate and timely closing procedures, account reconciliations, and review processes. Repeat: Yes - Years as repeat finding: Six Effect: As a result of the lack of segregation of duties surrounding bank reconciliations and not reconciling all account balances resulting in subsequent adjustments to accounts, a material weakness exists in internal controls over financial reporting. Recommendation: Accounts should be reconciled monthly with the adjustments posted timely so that management is relying on accurate financial information to make decisions. We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled, reviewed, and adjusted in a timely manner. View of Responsible Officials: Management agrees with the assessment and subsequent to year end, steps were taken to correct the matter.

Criteria: Federal regulations require non-federal entities to maintain records that adequately support allowable costs and program activities. Specifically, 2 CFR 200.302 requires financial management systems to provide accurate, current, and complete disclosure of financial results, and 2 CFR 200.403 requires that costs charged to federal awards be allowable, reasonable, and adequately documented. HRSA program requirements further require health centers to maintain patient-level documentation to support reported encounters and costs. Condition: During audit testing of patient eligibility and sliding fee scale application, supporting documentation of income was not available for 25 of 40 patients sampled. As a result, the health center was unable to demonstrate that the sliding fee discounts were appropriately determined in accordance with program requirements. Cause: Per HRSA and UDS requirements, FQHC’s must determine patient eligibility for the sliding fee discount based on income and family size, and retain documentation to support income verification for each patient applying for the discount. Effect: As a result, the health center is in noncompliance with HRSA sliding fee discount program requirements, which represents a material weakness in internal control over compliance and results in an increased risk that patients received sliding fee discounts for which they were not eligible or that eligible patients were improperly classified, and that Uniform Data System (UDS) data related to patient income levels and sliding fee discount utilization may be materially misstated. Questioned Costs: Questioned costs could not be determined due to the lack of supporting documentation for the affected patients. Recommendation: We recommend that management reinforce policies requiring documentation of income and family size before applying sliding fee discounts, implement periodic review of patient files to ensure compliance, provide staff training, and accountability measures for intake procedures, and consider adding monitoring on a quarterly basis to ensure ongoing adherence.

Criteria: Federal regulations require non-federal entities to maintain records that adequately support federal program reporting. Specifically, 2 CFR 200.302 requires recipients to maintain financial and programmatic records that provide accurate, current, and complete disclosure of program results, and 2 CFR 200.333 requires records to be retained and available for audit. HRSA Health Center Program requirements further require health centers to maintain documentation supporting data reported in the Uniform Data System (UDS), including patient-level records supporting Table 4 – Selected Patient Characteristics. Condition: The health center did not provide a report or reconciliation that ties source data to the totals reported in UDS Table 4 – Selected Patient Characteristics. Management provided a report based on billable visits and patients only, which excluded visits and patients for which no charge was associated. Management stated that UDS data are pulled directly from the electronic health record system (eClinicalWorks) by the compliance department using system mapping that differs from billing reports, and that the mapping will not change. As a result, the auditors were unable to verify that all patients required to be included in Table 4 were captured and accurately reported. Cause: The health center did not have documentation available to validate the accuracy and completeness of the UDS Table 4 data. Effect: Because a reconciliation or alternative audit trail was not available, the auditors were unable to determine whether UDS Table 4 data were complete and accurate, including whether non-billable patients were appropriately included. This condition increases the risk that the UDS report contains incomplete or inaccurate patient characteristic data, which may affect HRSA’s oversight, monitoring, and funding determinations. Questioned Costs: No questioned costs are reported for this finding, as the UDS report represents programmatic reporting and does not directly result in identifiable questioned costs. Recommendation: We recommend that management establish and document controls over UDS reporting, including developing reconciliations or alternative audit trails that demonstrate completeness of patient populations reported in Table 4, documenting system mapping and logic used to generate UDS data, and implementing management review procedures prior to UDS submission.

2025-002 - Lack of Written Federal Program Policies. Type: Material Weakness. Condition: The Village does not have documented policies and procedures specific to the administration of the Coronavirus State and Local Fiscal Recovery Funds program. This includes the absence of written guidance on key compliance areas such as payments, procurement, allowability of costs charged to federal programs, compensation, and travel costs under Uniform Guidance. Criteria: Per 2 CFR 200.303 and 200.331 of the Uniform Guidance, non-federal entities are required to establish and maintain effective internal controls and written policies to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. These policies should be tailored to the specific requirements of each federal program. Cause: The entity has not developed formal written policies and procedures for the Coronavirus State and Local Fiscal Recovery Funds program, possibly due to reliance on informal practices or general administrative policies that do not address federal-specific requirements. Effect: Without documented policies, there is an increased risk of noncompliance with federal requirements, inconsistent program administration, and lack of accountability. This may result in questioned costs, audit findings, or potential repayment of federal funds. Recommendation: We recommend that the Village develop and implement written policies and procedures specific to the Coronavirus State and Local Fiscal Recovery Funds program. These should include: - Payments in accordance with §200.302 (6), - Procurement in accordance with §200.318, - Allowability of costs charged to federal programs in accordance with §200.302 (7), - Compensation in accordance with §200.430 and §200.431, - Travel costs in accordance with §200.474. Training should also be provided to staff responsible for administering the program to ensure consistent application of these policies. Views of Responsible Officials: Management acknowledges the auditor’s finding regarding the absence of formally documented federal program policies. We recognize the importance of maintaining written procedures to ensure consistent compliance with Uniform Guidance requirements and to strengthen internal controls over federal awards. While informal practices have historically guided our federal program administration, we agree that formalizing these policies will enhance transparency, accountability, and operational efficiency. Management is currently in the process of developing written policies covering key areas such as procurement, allowable costs, subrecipient monitoring, and cash management. We anticipate completing this documentation and implementing the policies by February 28, 2026. We are committed to continuous improvement and appreciate the auditor’s recommendations as part of our efforts to maintain strong compliance and stewardship of federal funds.

Finding: 2025-001 Incomplete Tenant Records – Section 8 HCV Program (ALN 14.871) Condition: During our review of forty (40) tenant files under the Section 8 Housing Choice Voucher (HCV) Program, we identified multiple instances of missing documentation and compliance lapses: 1. For one (1) tenant, income verification was not performed for the current year, and prior year income was rolled forward. The HUD-50058 (Family Report) form was reviewed in the PIC system but was not present in the tenant file. 2. For one (1) tenant, the Approved Lease, HUD-52517 (Request for Tenancy Approval), and HUD- 52641 (HAP Contract) forms were not present in the tenant file. Criteria: Under 2 CFR § 200.303, non-Federal entities are required to “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.” Additionally, 2 CFR § 200.302(b)(3) mandates that entities “maintain records which adequately identify the source and application of funds provided for federally-assisted activities.” HUD regulations governing the Section 8 Housing Choice Voucher Program (ALN 14.871) further require that tenant files include complete and timely documentation of income verification, lease approvals, and execution of required HUD forms such as HUD-50058 (Family Report), HUD-52517 (Request for Tenancy Approval), and HUD-52641 (Housing Assistance Payments Contract). These documents are essential to support eligibility determinations and ensure accurate Housing Assistance Payments. Cause: The deficiencies appear to result from inconsistent implementation of file maintenance procedures and inadequate internal controls over documentation and compliance tracking. There may also be a lack of staff training or oversight regarding HUD documentation requirements. Effect: Incomplete tenant records compromise the Housing Authority’s ability to demonstrate compliance with HUD regulations and the proper use of Federal funds. Missing documentation such as income verification and executed lease agreements may result in eligibility determinations that cannot be substantiated, increasing the risk of noncompliance. These issues could lead to program findings, reputational harm, or future funding restrictions if not addressed. Questioned Costs: There were no determinable questioned costs identified during the review. While documentation gaps were noted, the absence of supporting records did not allow for a reliable calculation of financial impact. Recommendation: We recommend that the Housing Authority strengthen internal controls over tenant file documentation by implementing a standardized checklist to ensure all required forms and records are consistently retained. Staff should receive periodic training on HUD documentation and compliance requirements to reinforce expectations and reduce errors. Management should also conduct routine internal reviews to verify that income verification and lease documentation are properly completed and maintained. These measures will help ensure that tenant eligibility and payment determinations are adequately supported and compliant with federal regulations. Reply and Corrective Action: To address these findings, the Housing Authority will implement a standardized checklist for all tenant file changes, ensuring that all required forms and records are consistently retained. The Program Administrator and staff will conduct monthly reviews of completed reexaminations to verify that all necessary documentation is present and properly filed. All paperwork related to annual reexaminations, transfers, move-ins, and interims will be scanned into the Lindsey software system within five working days of receipt, prior to physical filing. The Program Administrator will organize monthly training sessions on HCV/S8 program requirements, with participation tracked to ensure all staff attend. Weekly spot checks will be performed to confirm that the checklist is being used appropriately. These actions will be supported by updated training materials, access to the Lindsey software, and dedicated staff time for audits and training. To mitigate risks such as incomplete documentation, missed scanning deadlines, or low training attendance, the Housing Authority will implement pre-audit checklists, set automated reminders for staff, and make training mandatory. Management will monitor the implementation of these corrective actions and conduct follow-up reviews to ensure sustained compliance with HUD regulations.

U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

Identification of a Repeat Finding: This is a repeat finding from the immediate previous audit, 2023-002. Criteria: Uniform Guidance requires written procedures for cash management and determining the allowability of costs in accordance with Subpart E – Cost Principals. Condition: Boone County Senior Citizen Services Corporation DBA The Bluffs did not have written procedures for cash management (2 CFR 200.302(b)(6)) and allowable costs determination (2 CFR 200.302(b)(7)) in accordance with Uniform Guidance requirements. Questioned Costs: $0 Cause: Boone County Senior Citizen Services Corporation DBA The Bluffs’ written policies and procedures were not updated to include required Uniform Guidance policies. Effect: Boone County Senior Citizen Services Corporation DBA The Bluffs could enter into a transaction that is not in compliance with Uniform Guidance requirements. Recommendation: We recommend Boone County Senior Citizen Services Corporation DBA The Bluffs draft and adopt written procedures in accordance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and is in process of developing and implementing the appropriate policies and procedures. The board anticipates approving written policies and procedures for cash management in May 2025.

Finding 2024-004 Internal Controls Over Compliance for Cash Management, Allowable Costs, Procurement, and Conflicts of Interest Federal Program: 66.468 Capitalization Grants for Drinking Water State Revolving Fund Condition: The City does not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), regarding the determination of allowable costs, procurement procedures, conflicts of interest, and cash management. Criteria: 2 CFR § 200.302(b) requires the City to have written procedures related to managing cash from federal award, including determining the allowability of costs in accordance with 2 CFR 200 Subpart E – Cost Principles. Additionally, 2 CFR § 318(a) and (c), requires the City to formally document procedures used for procurements made within federal programs, to demonstrate compliance with Uniform Guidance, which includes written standards of conduct that cover conflicts of interest and govern the performance of individuals engaged in procurement. Cause: The City’s policies and procedures have not been formally drafted and updated in written form. Effect: The failure to have written policies and procedures resulted in the City’s noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to most federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.

Finding 2024-001 Internal Controls Over Compliance for Cash Management, Allowable Costs, Procurement, and Conflicts of Interest Federal Program: 14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Condition: The City did not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), in regard to determining allowable costs, procurement procedures, conflicts of interest, and cash management. Criteria: 2 CFR § 200.302(b) requires the City to have written procedures related to managing cash from federal awards, including determining the allowability of costs in accordance with 2 CFR 200 Subpart E – Cost Principles. Additionally, 2 CFR § 318(a) and (c), requires the City to formally document procedures used for procurements made within federal programs, to demonstrate compliance with Uniform Guidance, which includes written standards of conduct that cover conflicts of interest and govern the performance of individuals engaged in procurement. Cause: The City’s policies and procedures were not formally drafted and updated in written form. Effect: The failure to have written policies and procedures during the grant period resulted in the City’s temporary noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to most federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Since the discovery of this issue, the City has adopted written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation, and this matter has already been resolved subsequent to year-end. See corresponding Corrective Action Plan.

FINDING 2024-004 Subject: Water and Waste Disposal Systems for Rural Communities - Reporting Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The Town was required to submit the following reporting to the Department of Agriculture annually: • Statement of Budget, Income, and Equity (Form RD 442-2) • Balance Sheet (Form RD 442-3) INDIANA STATE BOARD OF ACCOUNTS 21 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Form RD 442-2 covers financial operations relating to the Town's wastewater utility and the Form RD 442-3 presents the financial status of the wastewater utility. In both instances, a borrower may submit the financial data on other forms, provided the forms are in a similar format and signed and dated by the organization's official to certify the correctness of the information. Alternatively, an annual audit may be submitted in lieu of the forms. The Town did not submit the Form RD 442-2 during the audit period as required. The Town submitted the Form RD 442-3 reporting 2023 data in 2024 as required. However, this report is intended to be a comparative balance sheet as described in the USDA Rural Utilities Service Borrower's Guide. The Town did not include comparative data for 2022 in the report. There was also no documentation or other evidence of an oversight, review, or approval process for the report that was filed. 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. . . ." 7 CFR 1780.47 states in part: "(a) Borrowers are required to provide RUS an annual audit or financial statements. . . . (e) Borrowers exempt from audits. All borrowers who are exempt from audits, will, within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used. INDIANA STATE BOARD OF ACCOUNTS 22 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (f) Management reports. These reports will furnish management with a means of evaluating prior decisions and serve as a basis for planning future operations and financial strategies. In those cases where revenues from multiple sources are pledged as security for an RUS loan, two reports will be required; one for the project being financed by RUS and one combining the entire operation of the borrower. In those cases where RUS loans are secured by general obligation bonds or assessments and the borrower combines revenues from all sources, one management report combining all such revenues is acceptable. The following management data will be submitted by the borrower to the processing office. These reports at a minimum will include a balance sheet and income and expense statement. . . . (2) Annual management reports. Prior to the beginning of each fiscal year the following will be submitted to the processing office. (If Form RD 442-2 is used as the annual management report, enter data in column three only of Schedule 1, and complete all of Schedule 2.) (i) Two copies of the management reports and proposed 'Annual Budget'. (ii) Financial information may be reported on Form RD 442-2 which includes Schedule 1, 'Statement of Budget, Income and Equity' and Schedule 2, 'Projected Cash Flow' or information in similar format. (iii) A copy of the rate schedule in effect at the time of submission. . . ." Cause The Clerk-Treasurer was only in her first year of her first term in office when these were due. As such, she was unfamiliar with the reporting requirements of the grant. Effect Without a proper system of internal controls in place that operated effectively, the Town did not file one of the two required reports, and the report that was filed was incomplete. As a result, material noncompliance occurred and remained undetected. By not reporting the comparative data, all information needed to determine the true financial status of the Town was not readily available. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls and develop and implement reporting policies and procedures to ensure that all required reports are filed timely, accurately, and contain all the required information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Criteria: Per 2 CFR § 200.303(a), the non-Federal entity must establish, document, 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 and conditions of the awards. Additionally, per 2 CFR §200.403 and §200.302, costs charged to federal awards must be allowable, allocable, and properly documented, and financial reporting must be accurate, complete, and supported by the accounting system. Condition: Although the Parish has implemented internal controls related to the allowability of costs and the preparation of required reports for the Coronavirus State and Local Fiscal Recovery funds, they were not operating effectively during fiscal year 2024. Tests of controls indicated that transactions were not tracked appropriately to ensure they were charged to the correct funding source. In addition, quarterly project and expenditure reports submitted to the U.S. Treasury included inaccurate or unsupported information due to a lack of tracking and reconciliation procedures. Cause: As discussed in item 2024-001, the Parish encountered several challenges during the transition of administration and key personnel. Parish administration and management were immediately tasked with enhancing operations related to procedural concerns from the prior administration and performing the accounting function without sufficient documentation on several balances and transactions. The documented controls were not in practice because of this. Effect: While no instances of noncompliance were noted, the lack of documented controls in practice increases the risk that future required reports could be incomplete, inaccurate, or untimely, as well as, federal costs being unallowed per the cost principles which could potentially result in program noncompliance. Recommendation: We recommend that the Parish enhance and document internal controls over financial reporting, as described in our recommendations described under item 2024-001, to prevent noncompliance of the Uniform Guidance as required.

Finding 2024-005 Internal Controls Over Compliance for Subrecipient Monitoring Federal Program: 14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Condition: The City does not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), in regard to determining subrecipient monitoring. Criteria: 2 CFR § 200.302(b) requires the City to have written procedures related to managing subrecipient monitoring in accordance with 2 CFR 200 Subpart D – Subrecipient Monitoring. Cause: The City’s policies and procedures have not been formally drafted and updated in written form. Effect: The failure to have written policies and procedures resulted in the City’s noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to many federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to subrecipient monitoring for all applicable federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.

Adjoin Schedule of Findings and Questioned Costs Year Ended December 31, 2024 Section II - Financial Statement Findings Section None noted. Section III - Federal Award Findings and Questioned Costs Section 1. Finding Number: Finding 2024-001 Program Name: Supportive Services for Veterans Families: CFDA 64.033 Pass Through Agency: N/A Type of Finding: Other matters, compliance a. Criteria: Failure to comply with the grant agreement’s terms and applicable regulations: The Organization did not comply with grant compliance requirements such as tracking administrative expenses charged to the program outside of the general ledger and in other matters noted in Supportive Services for Veterans Families (SSVF) reviews. b. Condition: During our audit, JGD reviewed the results of all reviews for the SSVF grant and noted seven compliance deficiencies were indicated in the reporting period. These deficiencies resulted in a failure of controls over compliance. Under the SSVF Program, a minimum of 90% of supportive services grant funds must be used to provide and coordinate the provision of supportive services to very lowincome Veteran families who are occupying permanent housing. A maximum of 10% of supportive services grant funds may be used for administrative costs. Per Section 62.70 of the 38 CFR Part 62, administrative costs are defined as all direct and indirect costs associated with the indirect, of subcontractors. SSVF requires grantees to provide support documentation (payroll records, invoices, receipts etc.) for all costs and expenses associated with the administration of the SSVF grant. Administrative costs should be placed in the Administrative section of an SSVF program budget. An approved Indirect Cost Rate is not considered adequate support or source documentation for costs listed in the Administrative section of the budget. Grantees are required to have a detailed breakout of these administrative costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide “records that identify adequately 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.” These citations are included for informational purposes:  Fiscal Administration – Administrative Expenses: Administrative expenses were not recorded in the general ledger, resulting in questioned costs.  Fiscal Administration – Unallowed Supplemental Pay: Five employees did not have evidence to support reasonableness and compliance with incentive compensation requirements, resulting in questioned costs. 25 Adjoin Schedule of Findings and Questioned Costs Year Ended December 31, 2024  Fiscal Administration – Inadequate TFA Identification: TFA expenses were not paid through credit card charges in the general ledger. This deficiency was cleared as corrective action was taken during the review.  Participant Eligibility – HMIS Release of Information Forms: Four case files were missing HMIS Release of Information Forms for household members over the age of 18.  Participant Eligibility – Missing Income Eligibility Documentation: Three case files missing income eligibility documents for Veterans and one case file missing income eligibility documents for Veteran and household members at certification of eligibility events.  Participant Eligibility – Missing Exit Checklist: Five case files did not include exit checklist documentation. This deficiency was cleared as corrective action was taken during the review.  Program Operations – Inadequate MOU: MOU for a legal subcontractor was missing required elements, including expectations and requirements for quarterly assessments and annual monitoring of performance, listing of only eligible/allowable legal services, highlighting of response time expectations and requirements to support payments, and account for Veterans that have been separated from the program and those in need of long-term legal services. c. Context: Recipients of Federal grants are required to comply with all terms and applicable regulations of grant agreements. d. Questioned Costs: Administrative expenses resulted in $937,794 and supplemental pay resulted in $1,500 in questioned costs. The Organization has disputed both findings noting the expenses are itemized within their internal tracking files and that the costs are allowable, allocable, and reasonable. The Organization has received no response from the agency. e. Cause: Internal accounting procedures, lack of compliance policies, and lack of training over verification and documentation processes, resulting in a failure of controls over compliance. f. Effect: Considered to be an other matter related to internal control over compliance. g. Recommendation: Management should take steps to ensure that all administrative expenses are properly recorded in the general ledger, supplemental pay is approved with proper evidence of approvals, and proper documentation and policies are in place to comply with all grant compliance requirements. We recommend that management closely monitor areas of non-compliance as noted in the licensing reviews. Section IV – Schedule of Prior Year Findings and Questioned Costs None noted.

Finding 2024-003 Insufficient Documentation of Other Direct Expenses Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition: During testing of direct costs charged to the federal program, the Organization did not maintain sufficient documentation to fully support all expenditures claimed. In one instance, a receipt supporting a claimed expense was missing. In three additional cases, although the expenditures were generally supported, the documentation did not clearly reflect how the amounts allocated to the major federal program were determined. While these issues were isolated and the known and likely questioned costs were immaterial, the lack of complete documentation represents noncompliance with federal requirements for allowable costs. Criteria: According to Uniform Guidance 2 CFR §200.302(b)(3), the Organization's financial management system must maintain records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. All records must be supported by source documentation. Additionally, 2 CFR §200.403(g) requires that all costs charged to federal awards must be adequately documented. Cause: These exceptions appear to result from informal documentation practices and a lack of consistent application of procedures. Management is heavily involved in the Organization’s financial processes, including allocation of costs, which can limit opportunities for independent oversight or review. The absence of a standardized and consistently enforced process for documenting cost allocations contributes to inconsistent recordkeeping. Possible of Known Effect: Although the overall financial impact of these exceptions was not material, the missing documentation prevents the Organization from fully demonstrating compliance with 2 CFR 200.403 and 200.302. Overreliance on a single individual for documentation and procedural execution without accompanying review or monitoring controls can increase the risk of errors, omissions, or audit findings, even when expenditures are reasonable and allowable. Questioned Costs: Known questioned costs of $2,742 were identified. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization implement a standardized procedure for documenting all direct and indirect cost allocations charged to federal programs, ensuring that each claim includes full supporting documentation such as receipts and annotated allocation details with consistent allocation methods. To strengthen internal controls, the Organization should consider establishing a review process for claims preparation that includes someone other than the individual preparing or allocating the expenditures. This will enhance accountability and help ensure compliance with federal documentation requirements. Views of Responsible Officials: The Organization will develop written guidelines specifying the required supporting documentation for each type of direct expense. Set up vendors in QuickBooks. We will hire and train Finance Manager to manage and track revenue and expenses, QuickBooks, grant reporting etc. All receipts and expenses will be scanned in and kept electronically. The Organization will provide training on documentation requirements, proper record submission, and compliance expectations.

2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.

2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.