Findings Citing § 200.302

Finding 2024-01: Considered a significant deficiency. Criteria: Uniform Guidance (2 CFR §§200.302–303 and 200.318–320) requires non-federal entities to establish and maintain effective internal controls and written policies and procedures to ensure compliance with federal award requirements. These policies must be sufficiently detailed to provide consistent and proper administration of federal programs Condition: As part of our audit of compliance with the requirements of the Uniform Guidance for the year ended December 31, 2024, we noted that West Michigan Food Processing Association does not have formal, written policies and procedures in place related to the administration of its federal awards. Specifically, we noted the absence of written procedures addressing: ➢ Financial management systems (including allowable costs and cash management) ➢ Procurement standards ➢ Subrecipient monitoring ➢ Internal controls over compliance ➢ Conflicts of interest Effect: Without formal written policies and procedures, there is an increased risk that federal program requirements may not be followed consistently. This could result in noncompliance with federal regulations, mismanagement of federal funds, or potential questioned costs. Additionally, the absence of documentation limits the ability to demonstrate compliance during audit or grantor review processes. Cause: The absence of written policies appears to result from the entity historically depending on established practices and staff knowledge, rather than formally documenting procedures as required under Uniform Guidance. Recommendation: We recommend that West Michigan Food Processing Association develop and implement comprehensive written policies and procedures to address the requirements of the Uniform Guidance. These should be tailored to the Association’s structure and operations and cover all applicable federal compliance areas. Management should also establish a process to periodically review and update these documents to ensure continued compliance. Response: West Michigan Food Processing Association concurs with the facts of the finding and is implementing procedures to prevent this in the future.

Assistance Listing Number: 93.193 Name of Federal Program: COVID-19 Urban Indian Health Services Name of Federal Agency: Department of Health and Human Services Award Period: January 1, 2024 – December 31, 2024 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal awards must establish and maintain written policies and procedures addressing areas including, but not limited to: procurement (§200.317–§200.327); travel costs (§200.475); methods for avoiding duplication of costs (§200.403); subrecipient monitoring (§200.332); cash management and allowable costs (§200.302, §200.305). Condition: The organization has not implemented all policies and procedures required under the Uniform Guidance. Specifically, certain written policies and procedures required by 2 CFR Part 200, such as cash management, allowability of costs, equipment management, conflict of interest, procurement, travel, compensation, and fringe benefits, were either incomplete, not formally documented, or not in place during the audit period. Cause: The Council has not detailed its policies to conform with the requirements of the Uniform Guidance. Effect or Potential Effect: Without documented and implemented policies and procedures, the organization increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs or sanctions from funding agencies. Repeat Finding: No Recommendation: Management should develop, formally adopt, and implement all required Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and revise its policies and procedures to meet the criteria of the Uniform Guidance.

Assistance Listing Number: 93.193 Name of Federal Program: COVID-19 Urban Indian Health Services Name of Federal Agency: Department of Health and Human Services Award Period: January 1, 2024 – December 31, 2024 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal awards must establish and maintain written policies and procedures addressing areas including, but not limited to: procurement (§200.317–§200.327); travel costs (§200.475); methods for avoiding duplication of costs (§200.403); subrecipient monitoring (§200.332); cash management and allowable costs (§200.302, §200.305). Condition: The organization has not implemented all policies and procedures required under the Uniform Guidance. Specifically, certain written policies and procedures required by 2 CFR Part 200, such as cash management, allowability of costs, equipment management, conflict of interest, procurement, travel, compensation, and fringe benefits, were either incomplete, not formally documented, or not in place during the audit period. Cause: The Council has not detailed its policies to conform with the requirements of the Uniform Guidance. Effect or Potential Effect: Without documented and implemented policies and procedures, the organization increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs or sanctions from funding agencies. Repeat Finding: No Recommendation: Management should develop, formally adopt, and implement all required Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and revise its policies and procedures to meet the criteria of the Uniform Guidance.

FINDING 2024-002 Subject: Economic Development Cluster - Reporting Federal Agency: Department of Commerce Federal Program: Economic Adjustment Assistance Assistance Listings Number: 11.307 Federal Award Number and Year (or Other Identifying Number): 06-79-06420 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the City in order to ensure compliance with the grant agreement and the reporting compliance requirement. The grant agreement for the City's construction project states that the City is to submit a Federal Financial Report (SF-425) on a semi-annual basis. The SF-425 report includes, among other line items: cash receipts, cash disbursements, cash on hand, total federal funds authorized, and total recipient share required. Both of the submitted SF-425 reports were tested. Additionally, the City was required to submit progress reports on a quarterly basis. Two of the quarterly reports were selected for testing. Both the SF-425 reports and the quarterly progress reports were prepared and submitted by one employee of the City. Evidence of an established internal control over the reports tested was not available for audit. The data submitted in the SF-425 report submitted by the City for the reporting period ending on September 30, 2024, contained the following errors:  Cash receipts were understated by $1,037,155. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF KOKOMO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)  Cash disbursements were understated by $1,037,155. The lack of internal controls and noncompliance was isolated to the award 06-79-06420, EDA-Davis Road construction project. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . ." Cause Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The errors were due to federal reimbursements not being included as cash receipts and cash disbursements in the SF-425 reports. INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF KOKOMO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the City could not ensure that the reports submitted were accurate. In addition, not meeting the Economic Development Cluster reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls, including policies and procedures, to ensure that the City provides the Department of Commerce with complete and accurate information for the SF-425 and quarterly reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2024 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/ Cost Principles, Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City 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. Prior to the receipt of direct COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), all eligible entities were required to execute a Financial Assistance Agreement (Agreement), which included the Award Terms and Conditions that recipients must comply with in carrying out the objectives of their award. Per the Agreement, the City was responsible for the effective administration of the federal award, as well as the application of sound management practices and administration of federal funds in a manner consistent with program objectives and terms and conditions of the award. Recipients may use SLFRF funds for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act, as added by section 9901 of the American Rescue Plan Act of 2021. The SLFRF program provides substantial flexibility for each recipient to meet local needs within four separate eligible use categories. Recipients may use SLFRF funds to: • Respond to the COVID-19 public health emergency and its negative economic impacts; • Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of eligible employers that have eligible workers who are performing essential work; • Provide government services, to the extent COVID-19 caused a reduction in revenues collected in the most recent full fiscal year of the recipient; and • Make necessary investments in water, sewer, or broadband infrastructure. The City elected to receive the standard revenue loss allowance, allowing it to claim its total SLFRF allocation of $3,821,386 as revenue loss to use for government services. The allocated funds may only be used to cover costs incurred from the period beginning on March 3, 2021, and ending on December 31, 2024. Obligations for costs incurred are required to be liquidated no later than December 31, 2026. INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the City completed one transfer of SLFRF funds from the Coronavirus State and Local Fi fund to the Grant Stipends fund in the amount of $30,000. The transfer was described as a reimbursement for stipends paid to essential workers. There was no documentation provided for audit to determine if the transfer was for allowable activities, met the cost objectives of the award, or that the associated expenditures were within the period of performance. The Grant Stipends fund was established in 2022, with total expenditures from the fund from 2022, 2023, and 2024 of only $28,009. Additionally, the transfer of SLFRF funds was commingled with other receipts into the Grant Stipends fund. Because the $30,000 transfer of SLFRF funds exceeded the total disbursements out of the Grant Stipends fund and because the City did not have an appropriate system in place to account for the federal expenditures separately from other grant and operating expenditures, we were unable to determine what, if any, expenditures from the Grant Stipends fund should be included in the population of federal expenditures under the award. Without a complete population of expenditures, we were unable to determine the City's compliance with the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Period of Performance compliance requirements. As such, the $30,000 transferred from the Coronavirus State and Local Fi fund is considered questioned costs. The City also did not have written procedures for determining the allowability of costs in accordance with subpart E of 2 CFR 200. The lack of effective internal controls and noncompliance were isolated to the situations described above. 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 200.300(b) states in part: "The non-Federal entity is responsible for complying with all requirements of the Federal award. . . ." 2 CFR 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . . (g) be adequately documented. . . ." Cause A proper system of internal controls over the SLFRF expenditures was not designed by management of the City to ensure the SLFRF funds were being used appropriately. The City did not have policies and procedures in place to ensure that expenditures of federal awards were allowable and occurred within the period of performance. The City initiated a transfer of SLFRF funds from the grant fund to another fund without proper supporting documentation. The City was unable to differentiate expenditures made from federal and nonfederal funds within its ledger for the Grant Stipends fund. Effect Without the proper implementation of an effectively designed system of internal controls, a population of expenditures associated with the Grant Stipends fund could not be determined. As such, the City cannot ensure nor can we determine that expenditures of the grant were not unallowable, within the proper period, and adhered to established practices and policies. As a result, noncompliance in the form of questioned costs occurred and remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs Questioned costs in the amount of $30,000 were identified as noted in the Condition and Context. Recommendation We recommended the City's management establish a proper system of internal controls and develop policies and procedures to ensure that expenditures of federal awards are allowable and occur within the period of performance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City 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. Recipients are required to submit an initial interim report and quarterly or annually submit Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a city with a population below 250,000 residents that was allocated less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, an annual P&E report, covering one calendar year from April 1, 2023 to March 31, 2024, was prepared and submitted by the Clerk-Treasurer to the Treasury by April 30, 2024. The P&E report data to be submitted included, but was not limited to, current period and total cumulative obligations and current period and total cumulative expenditures. We were unable to trace the annual P&E report to the City's records. The errors identified were as follows:  Total cumulative obligations were overstated by $1,732,149.  Current period obligations were understated by $2,089,238.  Current period expenditures and total cumulative expenditures were both overstated by $38,398. In addition, the P&E report required obligations and expenditures to be reported by project. The City completed the report utilizing total amounts for all projects. There were 11 projects appropriated using the SLFRF award. 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: INDIANA STATE BOARD OF ACCOUNTS 23 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (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. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." Cause The City officials appropriated the entire SLFRF award in May 2022 and reported the entire award amount as obligated in the P&E reports completed in 2023 and 2024. City officials were not aware that appropriating the funds alone does not constitute obligations of the award. Additionally, correcting adjustments made after the report was submitted partially contributed to the differences noted in expenditures. City officials were also not aware that obligations and expenditures could not be reported in total but should be reported by project. Effect Without a proper system of internal controls in place that operated effectively, the City did not file an accurate annual P&E report as required under the federal award. As such, the City did not accurately report current period obligations, cumulative obligations, current period expenditures, and cumulative expenditures when filing the P&E report for the period April 1, 2023 to March 31, 2024. As a result, material noncompliance occurred and remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. INDIANA STATE BOARD OF ACCOUNTS 24 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls and develop and implement reporting policies and procedures to ensure that all required reports are complete and accurate when submitted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2 CFR 1000.10 gives regulatory effect to the Department of Treasury for 2 CFR part 200. 2 CFR 200.302 states, in part, the non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.302 further states, in part, the financial management system of each non-Federal entity must provide for accurate, current, and complete disclosures of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. Additionally, the Ohio Department of Development (ODOD) Water and Wastewater Infrastructure Program Grant Agreement provides in Exhibit II that "Program reports must be submitted on a quarterly basis. Program reports must be submitted by close of business, on the second Friday at the end of each quarter". Due to deficiencies in the Village’s internal controls over reporting, the Village did not submit quarterly program reports for any quarter in 2024. Failure to submit required quarterly program reports could result in the Village not receiving the reimbursements that it is entitled to. The Village should implement internal controls to ensure that reports are submitted by the required deadlines per reporting requirements.

CONDITION: During our testing of federal expenditures, we selected a sample of 25 transactions. For twelve of these transactions, totaling $3,003, the PALM could not provide the original or reconstructed vendor receipts. The payments were supported only by credit card statements, which did not include a detailed description of the goods or services purchased. CRITERIA: The PALM is required by federal grant guidelines, specifically 2 CFR 200.302, to maintain records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. CAUSE: The primary cause is a breakdown in the PALM’s internal controls over procurement and record-keeping. The lack of a consistent process to ensure all staff members who make purchases submit timely and complete receipts has created a weakness that could lead to unallowable costs being charged to the federal award. EFFECT: The lack of supporting documentation prevents the auditor from determining if the costs were necessary, reasonable, and for the exclusive purpose of the federal award. This also increases the risk of fraud, waste, and abuse. The grantee is at risk of having these costs disallowed and potentially required to repay the federal agency for the undocumented expenditures. RECOMMENDATION: We recommend that management implement a more robust internal control system to ensure all federal expenditures are supported by proper documentation. This includes: • Mandating that all employees submit itemized receipts for purchases made on federal awards. • Creating a "Missing Receipt" form that requires a detailed explanation and supervisory approval when an original receipt cannot be located. • Providing mandatory training for staff on proper procurement and documentation procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION: The PALM believes the expenses referred to were indeed for allowable costs for the federal program. They will start to maintain all proper source documentation regardless of dollar amount. QUESTIONED COSTS: A total of $3,003 is being questioned for twelve transactions lacking adequate documentation.

Criteria or Specific Requirement: Per 2 CFR §200.302, nonfederal entities must establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance with applicable federal statutes, regulations, and the terms and conditions of the award. • Cash Management requirements under 2 CFR §200.305 require that drawdowns be based on allowable costs incurred, supported by documentation, and reviewed for accuracy prior to submission. • Matching requirements under 2 CFR §200.306 require that cost sharing or matching contributions be verifiable from the entity’s records and documented in accordance with the cost principles. Entities must retain written documentation of the review and approval process before submission of reimbursement requests to ensure accuracy and compliance. Condition: The Organization maintained a written cash management policy; however, the policy did not specify that documentation of review and approval of reimbursement requests must be retained. As a result, the Organization was unable to provide written evidence of review and approval prior to submission of certain reimbursement requests. In addition, the Organization did not have a formal written policy addressing the review, approval, and documentation of matching contributions to ensure they are allowable, verifiable, and in compliance with federal requirements. While management indicated that a review process occurs, the lack of documented approval reduces the audit trail and does not provide adequate evidence that costs included in the requests were reviewed for accuracy, allowability, and compliance with both cash management and matching requirements. Cause: The lack of specificity in the cash management policy regarding retention of documented approvals, combined with the absence of a written matching policy, resulted in a lack of written documentation of the review and approval process that could be verified. Effect or Potential Effect: Without documented approval for reimbursement requests or a formal policy over matching, there is an increased risk that unallowable or unsupported costs could be included in reimbursement requests or that matching contributions could be inaccurately reported, potentially resulting in noncompliance with federal requirements. Questioned Costs: Not applicable as there were no questioned costs related to noncompliance. Recommendation: We recommend the Organization strengthen its internal controls over cash management and matching by implementing the following: 1. Update the cash management policy to require documented review and approval of reimbursement requests, with such documentation retained as part of the grant record. 2. Develop and implement a formal written matching policy that includes procedures for review, approval, and documentation of matching contributions to ensure compliance with 2 CFR §200.306. Repeat finding from prior year: No – this is the Organization’s first single audit. Views of Responsible Officials: Management agrees with the finding. See attached corrective action plan.

2024-002 Procedures for Match Requirements – Significant Deficiency Criteria: In accordance with 2 CFR 200.306, recipients must provide required cost sharing or matching as stipulated in the award. Additionally, 2 CFR 200.302(b)(7) requires nonfederal entities to have written procedures to ensure compliance with the terms and conditions of federal awards, including matching requirements. Condition: During our audit, we noted that Mountain Home does not have written policies and procedures in place to ensure compliance with the federal grant’s matching requirement. While management tracks matching expenditures, there is no documented process describing how matching costs are identified, recorded, reviewed, or monitored for compliance. Cause: Undetermined. Effect: Without documented policies and procedures, there is an increased risk that matching requirements may not be met, that ineligible costs could be charged as match, or that insufficient documentation may exist to support amounts reported to the granting agency. This could lead to questioned costs, disallowance of claimed matching contributions, or potential noncompliance with federal grant requirements. Recommendation: We recommend that management develop and implement written policies and procedures that describe the process for identifying, tracking, and reviewing matching expenditures.

Finding 2024-002 Material Weakness in Controls over Compliance and Material Noncompliance – Allowable Costs Federal Program: 93.137 Community Programs to Improve Minority Health Year: 2024 Federal Agency: Department of Health and Human Services Criteria – In accordance with 2 CFR 200.403 and 2 CFR 200.302 (b)(3) costs charged to the federal program should be adequately supported by source documentation. Condition – Payroll expenses for one employee were inadvertently recorded twice for the fiscal year, resulting in an overstatement of personnel costs charged to the federal award. Further, indirect costs were charged in excess of the budgeted and approved amount under the grant agreement. Cause – The capturing of payroll expenses to the federal grant was not set up appropriately in the general ledger system which led management to record the above entries manually to the grant program. The manual process led to the duplication of the payroll journal entry and the overcharging of the indirect cost. Perspective – There are six key personnel who charged payroll to the federal program. Out of the six personnel one individual’s payroll was incorrectly duplicated. This resulted in a $30,291 over charge to the grant. Further, from an indirect cost perspective, the grant budget limited indirect costs to $18,296, however a total of $70,965 was charged to the grant, resulting in a $52,669 overcharge. Questioned Cost - $82,960 Effect – Overcharging expenses may result in the granting agency withholding future funding for this grant. Recommendation – Ensure the grant is appropriately set up in the system to capture the relevant expenses. Management also needs to have a more precise control to ensure no expense items are duplicated and are within budget. View of Responsible Officials – See Corrective Action Plan

Material Weakness/Noncompliance – Allowable Costs/Cost Principles 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; During testing we noted that the County Commissioner’s department did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.

2 CFR 200 outlines the following policies required for a County spending for Foster Care Title IV-E funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; During testing we noted that the County Children Services department did not have sufficient written policies addressing the above requirement. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.

Federal Program: Coronavirus State and Local Fiscal Recovery Funds- Assistance Listing Number 21.027 Federal Agency: U.S. Department of Treasury Pass-through Entity: Illinois Department of Human Services Condition: The Organization has not established written procedures to identify, assess risk of, monitor, or accurately track amounts provided to subrecipients of ARPA funding. No subrecipient notification letters were issued to entities receiving subawards, and the Organization could not provide complete and accurate records of the amounts passed through to subrecipients during the audit period. Criteria: 2 CFR §200.331 requires pass-through entities to evaluate subrecipient risk, ensure each subaward is properly identified, issue required subaward notifications, verify suspension/debarment status, monitor subrecipient activities, and ensure subrecipients meet audit requirements. 2 CFR §200.302 further requires non-federal entities to identify, in their accounts, all federal awards received and expended, including amounts provided to subrecipients, to ensure accurate financial reporting and SEFA disclosure. Cause: Lack of formal policies and training regarding pass-through responsibilities under Uniform Guidance. Effect: The Organization cannot demonstrate compliance with federal pass-through requirements. This increases the risk of unallowable costs, subrecipient noncompliance, and misstated SEFA reporting due to the inability to determine and disclose amounts passed through to subrecipients . Questioned Costs: None noted during audit testing. Auditor’s Recommendation: The Organization should adopt written subrecipient monitoring and tracking policies, perform risk assessments, issue subaward notifications with all required elements, and implement procedures to accurately record and disclose the amounts provided to subrecipients in the general ledger and SEFA.

Federal Program: Coronavirus State and Local Fiscal Recovery Funds- Assistance Listing Number 21.027 Federal Agency: U.S. Department of Treasury Pass-through Entity: Illinois Department of Human Services Condition: The Organization does not track federal award expenditures separately in its general ledger. ARPA expenditures are commingled with other organizational expenses, making it difficult to directly reconcile federal activity to the SEFA or supporting records. Criteria: 2 CFR §200.302 requires non-federal entities to identify, in their accounts, all federal awards received and expended, and the federal programs under which they were received. The financial management system must provide for accurate, current, and complete disclosure of the financial results of each federal award. Entities must be able to identify federal awards separately by Assistance Listing number. Cause: The Organization has not implemented an accounting system or chart of accounts structure that captures federal awards separately by Assistance Listing number. Effect: Without separate identification of federal award expenditures, the Organization cannot readily demonstrate allowability of costs, reconcile SEFA expenditures to its accounting system, or ensure compliance with federal cost principles. This increases the risk of misstated SEFA reporting, unsupported expenditures, or disallowed costs. Questioned Costs: None specifically identified during audit testing; however, the lack of a tracking mechanism impairs the Organization’s ability to fully support ARPA expenditures. Auditor’s Recommendation: The Organization should establish accounting procedures to ensure federal award expenditures are tracked separately in the general ledger by Assistance Listing number and by grant. The Organization should reconcile grant expenditures recorded in the general ledger to reimbursement requests and the SEFA on a regular basis.

2024-003 Financial Management Fiscal year finding initially occurred: 2021 CONDITION: While performing our audit procedures for FY 24, there were numerous instances of revenue and expense transactions being miscoded between federal grant program funds and expenditures being misclassified on the balance sheet. In addition, reconciliations of grant revenues to grant expenditures were not being performed which could lead to over drawing of federal funds. CRITERIA: 2 CFR 1.200.302(b) Financial Management requires that the financial management system of a non-Federal entity must 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, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. CAUSE: Reconciliation and review of detailed general ledger account balances were not performed in a timely manner during FY 24. EFFECT: Inaccurate and incomplete financial statement reports may be submitted to users of the financial statements, as well as grantor agencies. RECOMMENDATION: All detailed general ledger account balances should be reviewed and reconciled on a monthly basis to ensure complete and accurate financial information is provided to all users of the financial information. VIEW OF RESPONSIBLE OFFICIAL: Management have contracted a CPA to work with Financial staff to ensure the accuracy of revenue and expense transactions. CPA will review revenue and expense statements monthly and make any necessary corrections.

Finding 2024-002 – Earmarking Federal Program Information: • Workforce Innovation and Opportunity Act (WIOA) – A.L.N.# 17.258/259/278 Criteria: • 2 CFR 200.302(b)(3): Recipients must maintain records that adequately identify the source and application of Federal funds. • 2 CFR 200.327–328: Financial and performance reports must be accurate, current, and complete. • OMB Compliance Supplement (Part 4, earmarking section): Requires that a specified portion of expenditures be used for certain categories, which must be verifiable through the accounting system. Condition: During our testing of earmarking requirements for the WIOA, we were unable to perform the required calculations because the financial data reported to the awarding agency did not reconcile to the County’s underlying accounting records. Due to these identified discrepancies, we were unable to verify earmarking requirements. Context: We selected twelve monthly reports for the WIOA program, and we noted for the reports selected, amounts reported did not agree to the underlying accounting records and thus we could not verify compliance with earmarking requirements. Cause: The County has not implemented effective reconciliation procedures to ensure that reports submitted to the awarding agency agree to the underlying accounting records. Additionally, there is no validation of the accuracy of expenditures reported for earmarking purposes. Effect: Because the submitted reports did not reconcile to the accounting records, we were unable to determine whether the County complied with the earmarking requirements of the program. Questioned Costs: None. Recommendation: We recommend the County identify all eligible expenses and revisions prior to reporting submissions so that accurate information is available to ensure compliance with earmarking requirements.

Assistance Listing, Federal Agency, and Program Name 21.027 U.S Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year HB 33 336648 ARPA 2024 Pass through Entity The Ohio Department of Mental Health and Addiction Services Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per 2 CFR 200.302(a)(2)(ii), Uniform Guidance establishes that the recipient is responsible for determining and documenting in procurement procedures an appropriate Simplified Acquisition Threshold, based on internal controls and evaluation of risk, which may be lower than, but must not exceed, the threshold established in the FAR. Additionally, per 2 CFR 200.320(a)(2), if simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Condition Controls in place were not adequate to ensure the policy included a well defined Simplified Acquisition Threshold and related procurement method. Additionally, controls were not adequate to ensure price or rate quotations were obtained from an adequate number of qualified sources for contracts above the Simplified Acquisition Threshold. Questioned Costs $136,910 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed Questioned costs represent all costs reported on the SEFA for the contracts in question. Context During testing of contracts procured above the micro purchase threshold, but below the Simplified Acquisition Threshold, we noted management did not obtain price or rate quotations from an adequate number of qualified sources, as required by Uniform Guidance. Cause and Effect Not defining the Simplified Acquisition Threshold within the System's written policies and procedures, nor establishing the minimum number of required prcie and rate quotations needed could lead to noncompliance with Uniform Guidance and questioned costs. Recommendation Management should implement controls to ensure all procurement policies include specific thresholds for procurement methods in line with Uniform Guidance and that appropriate procurement methods are used for each contract entered into. Views of Responsible Officials and Corrective Action Plan Management understands the importance of adhering to procurement thresholds and methods. Procurement policies and grant policies will be updated to include federal thresholds and methods to reflect federal Uniform Guidance. Additionally, the procurement procedures will be amended to include additional review and sign-off from Grant and Purchasing leadership prior to purchases being made with federal funds to ensure price and rate quotations were obtained for contracts above the Simplified Acquisition Threshold.

2024 – 001 Federal Agency U.S. Department of the Treasury U.S. Department of Housing and Urban Development Federal Program Title Coronavirus State and Local Fiscal Recovery Funds Community Development Block Grants/Entitlement Grants Assistance Listing Number 21.027 14.218 Award Period January 1, 2024, through December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 2 CFR part 200.303 require that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Internal Control-Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission, provides a framework for organizations to design, implement, and evaluate control that will facilitate compliance with the requirements of Federal laws, regulations, and program compliance requirements. 2 CFR Subpart D 200.302 (1) and 200.303 (a) stipulates that the auditee must identify, in its accounts, all Federal awards received and expended and the Federal programs under which they were received. Federal programs and award identification shall include, as applicable, the CFDA title and number, Federal award identification number and year, name of Federal agency, and name of the pass-through entity; establish and maintain effective internal control over Federal award that provides reasonable assurance that the auditee is managing Federal awards in compliance with Federal statutes, regulation, 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 Controller General of the United State and the "Internal Control Integrated Framework", issued by the Committee on Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Authority’s schedule of expenditures of federal awards (SEFA) did not include the expenditures related to the Coronavirus State and Local Fiscal Recovery Funds and the expenditures related to the Community Development Block Grants on the SEFA as required by Uniform Guidance for federal program 14.218. . Questioned costs: None Context: During the review of revenue for these federal grants, it was discovered and determined that they were not reported on the SEFA. Cause: The Agency was not aware of the requirements to include these expenditures on the SEFA. Effect: The Authority was not in compliance with 2 CFR Subpart D 200.302 (1), 200.303 (a). The Agencies’ programs’ expenditures may be disallowed if the expenditures are not reported correctly on the SEFA. Repeat Finding: No Recommendation: We recommend that the Agency review current procedures for creating the SEFA to ensure that it is accurately reporting loan balances and expenditures during the year under audit for all federal programs to ensure compliance with the Uniform Guidance. Views of responsible officials: There is no disagreement with the audit finding.

Criteria: Uniform Guidance requires written procedures for cash management and determining the allowability of costs in accordance with Subpart E – Cost Principles. Condition: The Organization 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: The Organization’s written policies and procedures were not updated to include required Uniform Guidance policies. Effect: Employees of the Organization could enter into a transaction that is not in compliance with Uniform Guidance requirements. Recommendation: We recommend the Organization 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 has developed and will implement the appropriate policies and procedures by December 31, 2025.

2024-001—Preparation of the Schedule of Expenditures of Federal Awards and Federal Grants Monitoring Type of Finding (E) Material Weakness in Internal Control Over Compliance of Federal Awards (H) Instance of Material Non-compliance related to Federal Awards Funding Agency U.S. Department of Agriculture (“USDA”) Major Programs Affected Beginning Farmer and Rancher Development Program; Award: BFRDP-2023-49400-40894 (AL 10.311); Period: 09/15/2023-09/14/2026 Partnerships for Climate-Smart Commodities; Award: USDA/NR243A750004G005 (AL 10.937); Period: 11/02/2023 -11/01/2028 Questioned Costs The Questioned Cost are undetermined. Management has estimated the amount for Beginning Farmer and Rancher Development Program; Award: BFRDP-2023-49400-40894 (AL 10.311) to be $42,027 and for Partnerships for Climate-Smart Commodities; USDA/NR243A750004G005 (AL 10.937) to be $33,453. Statement of Condition Quivira implemented a software system (Harvest) to track personnel time spent and expenses for federal programs for the year ended December 31, 2024, but time tracking was not at a level of detail considered sufficient for a properly functioning system of financial reporting. The billing system is not reconciled to the accounting system (QuickBooks) to ensure that all allowable costs are properly tracked, invoiced and reported. This finding appears to be a systemic issue. Also, the Schedule of Federal Awards (“SEFA”) was prepared initially by the Auditor based on revenue rather than expenses due to inconsistencies in recording in the accounting system, which appeared to be a reasonable methodology. Criteria An auditee must prepare a SEFA from its books, including required elements (Assistance Listing, award number, period, pass-through, subrecipient amounts) and maintain financial management systems that allow accurate, timely, and supported reporting (2 CFR 200.510(b); 200.302). Award financial reports (SF-425) must reconcile to the general ledger per award terms. Each grant should have its own general ledger in the accounting system, and the grants billing system should be reconciled regularly with the accounting system. Policies and procedures should be updated to ensure proper reconciliations is done. Cause Quivira has not implemented an effective monthly reconciliation of allowable costs control activity between Harvest and QuickBooks. Effect Quivira was unable to provide a SEFA and a reconciliation to the general ledger. During the audit the billing system was reconciled to the accounting system and multiple errors were discovered. A risk exists that improper tracking and documentation over federal grant awards can lead to instances of noncompliance with grant requirements and inaccurate financial information, which would be used by management, Board of Directors and grantors. Recommendation Quivira should develop and implement a consistent federal grant monitoring process and monthly reconciliation between Harvest and QuickBooks for each federal award. Also, Quivira should improve their policies and procedures by including monthly reconciliations, clearly define the allowable cost under federal rules. Revise budget, if necessary, to reallocate cost, if necessary. Quivira staff should be kept informed about all rules updates under Uniform Guidance. Views of responsible officials and planned corrective actions Quivira Coalition has made efforts to fully comply with federal allowable cost rules, including implementing a compliant time and expense system, implementing a compliant accounting system, consulting with federal program officers, and requesting budget revisions when necessary. However, management agrees that despite its efforts it did not correctly attribute allowable non-personnel and personnel costs to the grants, resulting in errors on the Schedule of Expenditures of Federal Awards (SEFA). Management has analyzed the errors and determined the root causes. Management agrees that the root cause of finding 2024-001 is the discrepancy between the accounting system and time and expenses software system, and that this is material to grant management. After reconciling these discrepancies, as discussed below, management believes the estimated amount for Beginning Farmer and Rancher Development Program; Award: BFRDP - 2023 - 49400 - 40894 (AL 10.311) to be $7,002 and for Partnerships for Climate-Smart Commodities; Award: USDA/NR243A750004G005 (AL 10.937) to be $10,169. Non-Personnel Costs Discrepancies in non-personnel costs were primarily caused by human errors. Management conducted a post-audit reconciliation between the expense tracking system (Harvest) and the general ledger (QuickBooks) which identified the 2024 discrepancies, and Quivira has corrected them. Personnel Costs Discrepancies in labor costs were due to three factors: 1) Quivira Coalition personnel are paid for holidays and paid time off (PTO) and therefore personnel costs include PTO and holiday costs in QuickBooks. However, Quivira’s timekeeping system (Harvest) does not burden federal award personnel costs with PTO and holiday costs making it difficult to reconcile. 2) To allocate personnel costs to a grant, Quivira used the Harvest system. This system calculates a fixed cost rate for each person based on their total annual compensation and expected work capacity and then multiplies this fixed cost rate by the number of hours worked on each grant (as recorded in the Harvest System). However, using fixed cost rates can result in misallocation in situations where personnel work over capacity (e.g. overtime) or under capacity. The appropriate cost allocation approach for salaried employees is to allocate actual personnel costs for a task based on the percentage of total hours worked. 3) Quivira calculated personnel fringe costs based on an estimated hourly fringe rate rather than identifying and allocating actual fringe expenses from QuickBooks. To correct for this material weakness, Quivira Coalition will: Action Step Detail Date Responsible Party Develop a new, compliant method to allocate personnel costs for federal billing and reporting. Stop using the timekeeping system (Harvest) for allocation. The new method must properly reflect actual paid salaries, paid fringe, and actual time spent. 12/31/2025 Accounting Firm Update reporting process to reconcile all costs reported on the SF-425 to the general ledger (instead of the timekeeping system) using the new federal grants billing process. Keep detailed records of the reconciliation. 12/31/2025 Accounting Firm Implement a monthly reconciliation process between the time and expense system (Harvest) and the QuickBooks general ledger to reconcile all non-personnel expenses. 1/31/2026 Operations Director Document the grant management process, including new reporting processes, required reconciliations, monitoring policies, and allowable cost management to ensure consistency across the organization. 2/28/2026 Operations Director Update policies and procedures to require that expenses reported on the SEFA form come directly from the accounting system to ensure this continues. 1/31/2026 Operations Director Update policies and procedures to require an annual reconciliation between the SF-425 and SEFA reports to ensure this continues. This occurs before submitting the SEFA report. 1/31/2026 Operations Director Reconcile all grant programs active in 2024 and 2025 using updated processes and resolve any discrepancies with federal reports or billing. 2/28/2026 Initial Review - Operations Director & Grants Manager Secondary Review & Corrections (if needed) - Accounting Firm Develop a plan to ensure regular and sufficient training on Uniform Guidance tracking regulatory changes, and how to implement changes. Update policies and procedures. 11/30/2025 Operations Director & Executive Director Update policies and procedures to require an additional level of review and approval for SF-425 and SEFA reports and reconciliations for accuracy and completeness before they are submitted. 12/31/2025 Operations Director with final approval from the Executive Director

Repeat finding: There was a simialr finding in the prior year, but it related to a different program and was assessed to be a significant deficiency. Condition: During our testing of payments charged to the federal major program, we noted that employee timesheets lacked evidence of review and approval. Certain employees charged to the grant did not prepare timesheets and a separate tracking system was used. Federal regulations require that expenditures charged to Federal awards be properly reviewed, approved, and documented to ensure allowability and compliance with grant terms. Criteria: Under the Uniform Guidance, specifically 2 CFR 200.430, charges to Federal awards for compensation must be supported by a system of internal control which provides reasonable assurance that costs are allocated appropriately and accurately. Per 2 CFR §200.403, allowable costs must be "necessary, reasonable, and adequately documented." Additionally, 2 CFR §200.302(b)(3) requires non- Federal entities to maintain records that sufficiently detail financial transactions to support Federal expenditures. Cause: The Federal program was new to the organization and controls over the program had not been fully established. Turnover in the accounting department contributed to the lack of resources for tracking these costs. Effect: Management provided documentation on personnel costs allocated to the program, but was unable to provide evidence of review. Lack of review increases the risk of unauthorized or unallowable costs being charged to the Federal award, potentially leading to questioned costs and noncompliance with Federal grant requirements. Context: This issue applied to approximately 50% of the compensation costs charged to the grant expenditures. Management performed time studies on some of the employees whose costs were shared among programs, and the local granting organization did not cite this as a finding in their review of their subrecipient’s activities. Recommendation: Management should review the requirements of CFR 200.430 and ensure that current processes, whether digital or hard-copy driven, are consistent with the requirements of the Uniform Guidance. In addition, management should consider adding additional staff to its accounting and/or grants management team. Views or reponsible officials: Management will evaluate systems and processes to ensure time tracking procedures meet the standards outlined in the Uniform Guidance.

Significant Deficiency 2024-002 Pandemic Relief Activities: Local Food Purchase Agreements with States, Tribes, and Local Governments – Allowable Cost and Cost Principles Information on Federal Program: U.S. Department of Agriculture (Federal Assistance Listing Number 10.182). Criteria: CFR Section 200.302 stipulates that a non-Federal entity must use its own written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. Statement of Condition: During our discussions with management, we noted that the Organization does not have evidence of review of expenses charged to the grant. Statement of Cause: The Organization did not review compliance requirements related to allowable cost and cost principles outlined in 2 CFR Section 200.302. Statement of Effect: The Organization is not in compliance with 2 CFR Section 200.302. The Organization does not have evidence of review and is therefore not performing required procedures that would be standard for all purchases charged to the program. Questioned Costs: None. Perspective Information: As part of the required allowable cost testing, inquiries are made of the Organization’s management as to any internal control policies that the Organization has. Recommendation: We recommend that the Organization review the requirements of 2 CFR Section 200.302 to follow their internal control policies. Views of responsible officials and planned corrective actions: Think Regeneration, NFP will develop and implement a written procurement policy in accordance with CFR Section 200.302. We will have this in place as soon as possible.

2024-001 PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AL Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: United States Department of the Treasury Pass Through Entity: Washington State Department of Commerce Criteria: Uniform Guidance, 2 CFR 200.302 - Financial Management, requires a federal award recipient to maintain a financial management system that provides for the 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. Condition: CCAP did not prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) for the year ending December 31, 2024. Cause: CCAP did not design and implement effective internal controls to ensure the accurate identification of all Federal awards received and expended and the Federal programs under which they were received. Effect: CCAP did not maintain a financial management system to allow for the accurate identification of all federal awards received and expended and the Federal program under which they were received. Significant adjustments totaling $1,352,645 were required to correct the Schedule of Expenditures of Federal Awards for the year ended December 31, 2024. Failure to accurately identify all Federal awards received and expended increases the risk that errors or noncompliance with Federal award requirements could occur and not be detected and corrected in a timely manner. Auditor’s Recommendation: CCAP should design and implement internal controls to ensure the identification of all Federal awards received and expended and the Federal programs under which they were received. This includes creating formally documented policies and procedures that detail the process for identifying federal funding sources and maintaining source documentation such as grant award agreements, budgets, and other relevant financial management documents that help ensure compliance with Federal requirements. Questioned Costs for Finding 2024-001: No questioned costs were noted for this finding.

Significant Deficiency Coronovirus State and Local Funds – Allowable Cost/Activity/Period of Performance 2024-002 Information on Federal Program: U.S. Department of Treasury (Federal Assistance Listing Number 21.027). Criteria: CFR Section 200.302 stipulates that a non-Federal entity must use its own written procedures for determining the allowability of costs in accordance with Supart E-Cost Principles of this part and the terms and conditions of the Federal award. Statement of Condition: During our discussions with management, we noted that the Organization does not have documented internal procedures in place. Statement of Cause: The Organization did not review compliance requirements related to allowable cost outlined in 2 CFR Section 200.302. Statement of Effect: The Organization is not in compliance with 2 CFR Section 200.302. The Organization does not have documented procedures and is therefore not performing required procedures that would be standard for all purchases charged to the program. Questioned Costs: None. Perspective Information: As part of the required allowable cost testing, inquiries are made of the Organization’s management as to any internal control policies that the Organization has. Recommendation: We recommend that the Organization review the requirements of 2 CFR Section 200.302 to develop internal control policies to be followed. Views of responsible officials and planned corrective actions: City of Aledo will develop and implement a internal control policy in accordance with CFR Section 200.302. We will have this in place as soon as possible.

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 Numbers and Years (or Other Identifying Numbers): 92-02, 92-03, 92-04, 92-05 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City 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 City was required to submit two annual data reports to the Department of Agriculture. The Statement of Budget, Income and Equity (Form RD 442-2) report data to be submitted included, but was not limited to, current income and expenditures and budgeted amounts. The Balance Sheet (Form RD 442-3) report data to be submitted included, but was not limited to, current year assets and liabilities. Per the USDA Rural Utilities Service Borrower's Guide, both reports also required inclusion of comparative information for the prior year. Both reports were selected for testing. We were unable to trace either report to the City's records, nor could we verify the accuracy and completeness of either report. The following errors were identified: • The Form RD 442-2, which covered calendar year 2023, reported total income and expenses of $3,792,018 and $1,615,582, respectively. However, the City's ledger for the same period had total income and expenses of $3,985,851 and $3,740,788, respectively. This resulted in net income being overstated by $2,319,039. Additionally, only one amount was reported as comparative data for prior year activity. We were unable to determine what this amount represented and were unable to verify it to the prior period report or to the City's records. • The Form RD 442-3, which covered calendar year 2023, reported total assets and liabilities of $18,229,653 and $10,503,419, respectively. However, the City's records for the same period had total assets and liabilities of $39,216,648 and $12,758498, respectively. Additionally, no comparative amounts from the prior year were reported. 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. (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.) • The Form RD 442-3, which covered calendar year 2023, reported total assets and liabilities of $18,229,653 and $10,503,419, respectively. However, the City's records for the same period had total assets and liabilities of $39,216,648 and $12,758498, respectively. Additionally, no comparative amounts from the prior year were reported. 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. (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.)• The Form RD 442-3, which covered calendar year 2023, reported total assets and liabilities of $18,229,653 and $10,503,419, respectively. However, the City's records for the same period had total assets and liabilities of $39,216,648 and $12,758498, respectively. Additionally, no comparative amounts from the prior year were reported. 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. (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 had served in the position for less than two years when the reports for 2024 were due and was inexperienced with the reporting requirements of the award. As a result, the Clerk-Treasurer did not properly prepare the reports. Additionally, the Clerk-Treasurer was solely responsible for preparing and submitting the reports with no oversight, review, or approval process that would have allowed for prevention, or detection and correction, of the noncompliance. Effect Without a proper system of internal controls in place that operated effectively, the City did not file an accurate and complete report for either annual report required under the federal award. As a result, material noncompliance occurred and remained undetected. By not reporting the comparative data, all information needed to determine the financial status of the City was not readily available. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City'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.

FINDING 2024-006 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City 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 City was required to submit an annual Project and Expenditure (P&E) report to the U.S. Department of the Treasury. The P&E report data to be submitted included, but was not limited to, current period and total cumulative obligations and current period and total cumulative expenditures. We were unable to trace the annual P&E report to the City's records. The errors identified were as follows: • Total cumulative obligations were overstated by $23,337. • Total cumulative expenditures were understated by $171,136. • Current period expenditures were understated by $163,789. 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. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." Cause The Clerk-Treasurer had served in the position for two years when the report for 2024 was due and was inexperienced with the reporting requirements of the award. As a result, the Clerk-Treasurer did not properly prepare the report. Additionally, the Clerk-Treasurer was solely responsible for preparing and submitting the report with no oversight, review, or approval process that would have allowed for prevention, or detection and correction, of the noncompliance. Effect Without a proper system of internal controls in place that operated effectively, the City did not file an accurate annual P&E report as required under the federal award. As a result, material noncompliance occurred and remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls and develop and implement reporting policies and procedures to ensure that all required reports are complete and accurate when submitted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding 2025-001: Cash Management (Material Weakness) Federal Program: Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease (Ryan White Part C). [93.918] Federal Agency: U.S. Department of Health and Human Services (HHS) Criteria: Effective internal controls require an entity to have a financial management system that provides accurate, current, and complete disclosure of the financial results of a federally assisted project (2 CFR § 200.302). Drawdown requests must be based on actual incurred expenditures and be properly reviewed for accuracy before submission to minimize the time between draw and disbursement (2 CFR § 200.305). Additionally, the entity must maintain records that adequately identify the source and application of funds for all federally assisted activities (2 CFR § 200.333). Condition: During our audit of the financial management system and cash management practices for the Ryan White Federal Program, we identified the following deficiencies: Transposed Drawdown Amount: A drawdown request submitted to the PMS system for the Ryan White Program had the requested amount transposed with the amount of another federal program. This resulted in an over-request of a material amount on the Ryan White Program. Duplicate Invoice Reimbursement: An invoice was requested and received for reimbursement on a prior drawdown and was subsequently included again in a draw after year-end, resulting in a duplicate reimbursement. Incomplete Expenditure Tracking: The entity did not have a complete system for tracking all expenditures eligible for reimbursement. The drawdown process was limited to cash disbursement and payroll transactions and excluded expenditures incurred and recorded by journal entries. This resulted in the entity having unreimbursed expenditures that could have offset the over-requests noted above. Questioned Costs: $252,567 The questioned costs consist of the material amount over-requested in the transposed drawdown and the duplicate reimbursement of the previously paid invoice. A detailed breakdown is as follows: Over-requested amount due to transposed data: $150,516 Duplicate reimbursement for invoice submitted twice: $102,051 Cause: The organization's internal controls over the cash management and drawdown request process were inadequate. Specifically, there was a lack of a formal review and approval process to verify the accuracy and completeness of drawdown requests before they were submitted. Effect: The deficiencies in internal control led to material noncompliance with federal regulations related to financial management and cash management. This resulted in the entity holding federal funds in excess of immediate needs, which is a violation of the terms and conditions of the federal award. The inadequate financial management system also prevented the entity from accurately tracking and requesting all eligible expenditures, which could have helped offset the over-draws. Context: This is a systemic finding. Repeat Finding: No. This is the first time this specific finding has been identified. Recommendation: The entity should implement robust internal controls to ensure all drawdown requests are reviewed and approved by a second person with authority. A reconciliation of expenditures to the general ledger should be performed before each drawdown to ensure all eligible costs are included and that no duplicate requests are made. The entity’s cash management policies and procedures should be updated to address these deficiencies and ensure compliance with federal requirements. Management Response: The organization acknowledges and we are committed to remediation. To correct the deficiency, we are implementing a plan focused on establishing a review and approval process for all drawdown requests and revising our policies to ensure that all eligible incurred expenditures are properly captured and reconciled, thereby assuring strict compliance with federal cash management regulations and preventing federal funds from exceeding our immediate needs.

Finding 2024-002 Lack of Supporting Documentation for Disbursements (Including Credit Card Transactions) Condition: During our testing of disbursements, including credit card transactions, we identified several instances where supporting invoices or receipts were missing or incomplete. In these cases, the organization was unable to provide sufficient documentation to substantiate the nature, purpose, or business justification of the expenditures charged to federal programs. Criteria: The Uniform Guidance requires that costs charged to federal awards be necessary, reasonable, allocable, and adequately documented. Specifically, §200.403(g) states that a cost is allowable only if it is adequately documented, and §200.302(b)(3) requires recipients to maintain records that identify the source and application of funds for federally funded activities.Questioned Costs: The total questioned costs cannot be determined due to lack of adequate supporting documentation.Cause: This issue occurred due to inadequate internal controls over the documentation and retention of support for disbursements. Management has not fully implemented procedures to ensure all expenditures are properly supported before being approved or charged to a federal program.Effect: Without proper supporting documentation, there is an increased risk that unallowable or unsupported costs were charged to the federal award. This condition could result in repayment of disallowed costs, noncompliance with the Uniform Guidance, and potential impact on future federal funding.Recommendation: We recommend that management: 1. Implement a formal written policy requiring original invoices or receipts to be obtained and reviewed for every disbursement, including credit card purchases, prior to payment or cost allocation to a federal award. 2. Ensure that documentation is reviewed and approved by an individual independent of the preparer or cardholder. 3. Maintain supporting documentation in accordance with the record retention requirements of 2 CFR §200.334. 4. Provide staff training on the documentation requirements for allowable costs under the Uniform Guidance.Views of Responsible Officials: We concur with this finding. The organization acknowledges that complete documentation is essential to substantiate the nature, purpose, and justification of all expenditures, particularly those funded by federal awards.

Finding Type: Significant deficiency in internal controls over compliance and compliance Federal Agency and Passed-through Entity: U.S. Department of Treasury, passed through Kitsap County Federal Program Title and AL Number: Coronavirus State and Local Fiscal Recovery Funds (21.027) Criteria: Retaining proper documentation of the execution of internal controls is critical to allow management and those charged with governance conduct their monitoring activities. Along with all other business transactions, there should be thorough accounting and proper tracking of all credit card reimbursements and payments. 2 CFR 200.302 (b)(3) requires recipients and subrecipients to maintain "records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation." Condition: Management could not provide supporting evidence for 1 non-payroll item from our sample selection. Also, management did not retain evidence of the Organization’s review and/or authorization of the reimbursement of credit card purchases to ensure that the credit card charges were allowable. We could not obtain documented evidence of such review/authorization for a total of 40 items selected in our sample. Cause: Not all processes and controls adopted by the Organization were found to be fully documented. Effect: When internal controls are not documented, the ability of management and those charged with governance to conduct monitoring activities gets compromised. Management and those charged with governance cannot ascertain that the controls are operating timely and effectively throughout the year when the execution of the internal controls is not documented. Unallowed costs could go undetected by management. Questioned Costs: None Repeated finding: No Recommendation: Management should document the review and/or authorization of credit card charges and reimbursement. Views of Responsible Officials: Management concurs with the finding and the recommendation. Please refer to the corrective action plan attached

Finding 2024-001: U.S. Department of Housing and Urban Development, Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 223(f)/207) Statement of Condition: Internal control processes over financial reporting did not ensure that all transactions were properly recorded. Criteria: The HUD Handbook 4370.2, Chapter 2 requires the books and accounts to be complete and accurate. Additionally, 2 CFR Part 200 Section 200.302 Financial Management 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 in accordance with the reporting requirements. Additionally, 2 CFR Part 200 Section 200.303(a), Internal Controls, requires that non-federal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the award in compliance with federal statutes, regulations and the terms and conditions. Effect: Noncompliance with HUD and Uniform Guidance regulations. Cause: Management oversight. Context: A review of journal entries made during the year revealed journal entries made in the incorrect period and erroneous journal entries. Additionally, the review process of the Corporation's financial information did not discover these errors. Recommendation: We recommend management review/enhance its accounting and internal control procedures to ensure that all key accounts are reconciled and reviewed with supporting evidence of such review. Questioned Costs: N/A Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding and will review the accounting and financial procedures, system of internal controls and policies.

Assistance Listing Number: 10.728 Name of Federal Program: Inflation Reduction Act Hazardous Fuels Transportation Assistance Name of Federal Agency: Department of Agriculture Award Period: January 1, 2024 – December 31, 2024 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal award must establish and maintain written policies and procedures addressing areas including, but not limited to, cash management (§200.302(b)(6)), allowability of costs (§200.302(b)(7)), procurement (§200.318-.326), compensation (§200.430(a)(1)), and fringe benefits (§200.431). Condition: ALC has not implemented all policies and procedures required by 2CFR Part 200, such as cash management, allowability of costs, procurement, compensation, and fringe benefits. Cause: ALC has not detailed its policies to conform with the requirements of the Uniform Guidance. Procurement policies and procedures have not been designed and implemented that adhere to Uniform Guidance requirements. Effect or Potential Effect: Without documented and implemented policies and procedures, ALC increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs Context: Policies and procedures were inspected for compliance with the requirements of the Uniform Guidance. Repeat Finding: No Recommendation: ALC should develop, formally adopt, and implement all Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and will implement procurement policies and procedures.

Section III – Major Federal Awards Programs – Findings and Questioned Costs Finding 2024-006: Activities Allowed or Unallowed / Allowable Costs - Inadequate Chart of Accounts Segregation for Unallowable Costs (Material Weakness) Federal Program : Grants for Transportation of Veterans in Highly Rural Areas Assistance Listing Number : 64.035 Criteria: Under 2 CFR 200.302(b)(3), non-Federal entities must maintain records that adequately identify the source and application of funds and must segregate unallowable costs to ensure compliance with cost principles. Condition: The chart of accounts does not sufficiently segregate unallowable costs from allowable program expenditures. Certain unallowable expenditures were coded to general operating accounts without clear differentiation. Cause: The Center lacks a detailed coding structure and written policies requiring explicit identification and segregation of unallowable costs. Effect: There is increased risk that unallowable costs could be charged to Federal awards, leading to potential noncompliance, questioned costs, or improper reimbursement requests. Recommendation: Management should implement a revised chart of accounts that clearly differentiates allowable vs. unallowable costs, supported by updated written policies and staff training. Repeat Finding: This is not a repeat finding.

Section III – Major Federal Awards Programs – Findings and Questioned Costs (Cont.) Finding 2024-007: Activities Allowed or Unallowed / Allowable Costs - Insufficient Budget-to-Actual Reviews (Material Weakness) Federal Program : Grants for Transportation of Veterans in Highly Rural Areas Assistance Listing Number : 64.035 Criteria: Under 2 CFR 200.302(b)(5) and established internal control frameworks such as COSO, entities must compare actual expenditures to budgeted amounts to ensure proper financial management and compliance with award terms. Condition: Budget-to-actual analyses were not consistently performed or documented for certain Federal programs. Cause: The Center lacks a formalized review schedule and adequate documentation procedures. Effect: Failure to identify variances may result in overspending, underspending, or misclassification of Federal program costs. Recommendation: Management should implement formal, periodic budget-to-actual reviews supported by standardized documentation requirements. Repeat Finding: This is not a repeat finding.

Section III – Major Federal Awards Programs – Findings and Questioned Costs (Cont.) Finding 2024-011: Reporting - Insufficient Policies to Ensure Completeness and Accuracy of Reports (Material Weakness) Federal Program : Grants for Transportation of Veterans in Highly Rural Areas Assistance Listing Number : 64.035 Criteria: Under 2 CFR 200.328 and 200.302(b)(2), entities must maintain internal controls to ensure that financial and performance reports are accurate, complete, and supported by appropriate documentation. Condition: Reports submitted for Federal awards were not consistently reviewed for accuracy, and review procedures were not documented. Cause: The Center lacks a formal reporting policy and does not have a documented review process in place. Effect: There is an increased risk of inaccurate reporting to Federal awarding agencies, which may impact funding decisions and compliance status. Recommendation: Management should establish a formal reporting policy requiring documented supervisory reviews prior to the submission of financial and performance reports. Repeat Finding: This is not a repeat finding.

2 CFR § 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.320(b)(2) requires non-federal entities to have a written method for conducting technical evaluations of the competitive proposals receive and for selecting contract recipients. 2 CFR 200.319(d) requires non-federal entities to have written procedures for procurement transactions to ensure all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured and identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals. The Village was awarded grant monies under the Uniform Guidance (UG); however, the Village did not establish formal written policies required by the UG for the sections listed above. To help ensure compliance with the Uniform Guidance requirements, the Village should establish and maintain timely updated policies and, more importantly, implement procedure as specified by UG requirements for all grant monies received. Any changes to the Village's policies should also be formally approved by Council and documented within the minutes.

Finding 2024-003: 93.591 - U.S. Department of Health and Human Services - Family Violence Prevention and Services/State Domestic Violence Coalitions Allowable Costs/Cost Principles, Significant Deficiency in Internal Control and Noncompliance Criteria: According to 2 CFR § 200.302(b)(5), non-federal entities must have written procedures to ensure that expenditures are in accordance with the terms and conditions of the federal award. Furthermore, entities are expected to compare actual expenditures with budgeted amounts for each federal award. Condition: During our audit, we noted that the Organization does not maintain or regularly review a budget-to-actual comparison for expenditures charged to the federal grant. As a result, management is unable to assess whether spending is aligned with the approved grant budget. Effect: Failure to monitor expenditures against the approved grant budget increases the risk of unallowable costs, budget overruns, and noncompliance with grant terms, which may result in questioned costs or potential repayment of funds. Questioned Costs: None. Cause: The Organization has not established internal procedures or systems to monitor grant expenditures against the approved budget. _x000C_Recommendation: We recommend that the Organization implement a process to compare actual expenditures to the approved grant budget on a regular basis. This may include monthly or quarterly reviews by program and finance staff to ensure expenditures remain within approved categories and thresholds. Documentation of such reviews should be maintained to demonstrate compliance.

Finding 2024-004: 93.591 - U.S. Department of Health and Human Services - Family Violence Prevention and Services/State Domestic Violence Coalitions Allowable Costs/Cost Principles, Material Weakness in Internal Control and Noncompliance Criteria: In accordance with 2 CFR §200.403(g), costs must be adequately documented in order to be allowable under a federal award. Additionally, per 2 CFR §200.302(b)(3), recipients must maintain records that identify the source and application of funds for federally funded activities. Furthermore, effective internal controls per 2 CFR §200.303 require that transactions be properly authorized and reviewed to ensure compliance with applicable requirements. Condition: During our testing of expenses charged to the federal award, we reviewed a sample of 10 transactions totaling $9,284. Of those, 7 transactions (representing $8,980) were found to be noncompliant due to one or both of the following: • Missing supporting documentation, such as receipts or invoices • Missing approval documentation, such as required supervisor sign-offs These issues impaired our ability to determine whether the expenses were allowed, reasonable, and allocable under the terms of the award. Due to the high rate of errors, we performed extrapolation procedures over the population of similar expenses totaling $107,782. Based on the sample error rate and our extrapolation methodology, we estimate that $36,846 of the total expenses charged to the federal award may be unallowable and are thus considered extrapolated questioned costs. Effect: As a result of insufficient supporting and approval documentation, the allowability of a significant portion of expenses charged to the federal award could not be determined. This has led to an extrapolated questioned cost of $36,846. Questioned Costs: $36,846 (extrapolated) Cause: The deficiencies noted appear to be the result of weak internal controls related to documentation and approval workflows for federal expenditures. Specifically, the Organization does not appear to have a consistent process to: • Ensure documentation is retained for all expenses • Verify and record supervisory or grant-related approvals Recommendation: We recommend the Organization take immediate steps to improve internal controls related to documentation and record retention for federal program expenditures. The Organization should ensure that all expenses charged to the federal award are supported with adequate documentation. Additionally, the Organization should also ensure approvals are properly documented regardless if the expense is paid by check or electronic payment.

2024-005 – Insufficient Financial Management Condition: The Organization drew down more revenues than expenditures incurred. Criteria: The VA Staff Sergeant Parker Gordon Fox Suicide Prevention Grant Program regulations (38 CFR Part 78) and the Uniform Guidance (2 CFR 200.302) require grantees to maintain a financial management system that provides accurate, current, and complete financial information, effective control over federal funds, and adequate documentation supporting all costs charged to the program. Financial management is considered insufficient when accounting practices do not ensure timely, accurate, and supported reporting of expenditures and drawdowns. Effect: Failure to maintain accurate financial data will result in discrepancies between expenditures and draw-downs. It also increases the risk of inaccurate financial results provided at closeout or unauthorized or ineligible expenses charged to the award, which may result in funding shortages for other qualified expenses. Cause: Homeward Bound Adirondack, Inc. failed to provide adequate oversight and internal controls to ensure the maintenance of accurate financial records. Specifically, credit card charges were recorded in the general ledger based on the day the charges cleared rather than the date the costs were incurred. This practice resulted in delays in recording expenditures, causing them to be recorded in the incorrect period. Recommendation: We recommend that Homeward Bound Adirondack, Inc. establish oversight practices to ensure that all revenues and expenses are recorded appropriately and reconciled to the proper drawdown requests. Response: Homeward Bound Adirondack, Inc. agrees with the finding and will implement procedures to address the recommendation in 2025.

Finding 2024-005 – Period of Performance Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds AL Number: 21.027 Pass-through: Community Shelter Board Award Number: YMCA-24-CSB and YMCA-25-CSB Award Year: 7/1/2023 – 6/30/2024 and 7/1/2024 – 6/30/2025 Type of Finding: Material Weakness and Noncompliance Criteria: 2 CFR 200.403(h): Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. 2 CFR 200.302: The recipient's and subrecipient's financial management system must provide for the following: Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Condition: The Association was unable to verify whether costs recorded in the financial accounting system were included in invoices submitted for cost reimbursement. As such, auditors could not verify whether these costs were included in the appropriate period of performance. Context: Out of a sample of 40 transactions tested for compliance with period of performance requirements, 27 of them could not be traced to a reimbursement invoice. Most of these transactions were transfers of payroll costs from one program to another. Cause: The Association did not have a strong process to track program expenses with the financial accounting system and did not effectively reconcile expenditures between the general ledger and the Schedule of Expenditures of Federal Awards. In addition, the Association did not maintain support for expenditures charged to federal grants to be able to support whether they were within the allowable period of performance. Effect: The Association could not provide evidence of whether the transactions tested were within the period of performance. Questioned costs: $602,142 Identification of how questioned costs were computed: Known questioned costs were computed by summing the dollar amount of selections that were identified as errors which totaled $6,829. An error rate was calculated by taking the number of errors divided by the total sample size as described in the Context section. This error rate was then applied to the untested population to calculate projected questioned costs of $595,313. Repeat finding: Not applicable. Recommendation: The Association should review its policies and procedures to ensure costs recorded in the financial accounting system are able to be reconciled to invoices submitted for cost reimbursement as well as the Schedule of Expenditures of Federal Awards. Views of responsible officials: See Corrective Action Plan.

2 CFR § 300 codified in 45 CFR part 75 gives regulatory effect to the Department of Health and Human Services. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 Payment. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B) 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. The General Health District did not have written policies as required by Uniform Guidance. The failure to implement written policies as required by Uniform Guidance could result in noncompliance with the District’s federal programs. The General Health District should adopt written policies in accordance with the Uniform Guidance.

Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards (SEFA)) ALN: 10.904, Milk River Project ALN: 10.923, Stream Restoration and Bridge Replacement for St. Mary Siphon Failure ALN: 15.U01, Replacement of St. Mary and Hallls Coulee Siphons on St. Mary Canal CRITERIA: The Code of Federal Regulations (CFR) Section §200.510(b) states in part: "The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended." The schedule must provide total Federal awards expended for each individual Federal program. CFR 200.302(b)(1) requires that the nonfederal entity must identify in its accounts and on the schedule of expenditures of federal awards all federal awards received and expended, as well as the federal programs under which they were received. Federal program and award identification must include, as applicable, the Assistance Listing program title and number, the federal award identification number and year, the name of the federal agency, and the name of the pass-through entity, if any. CONDITION: The ALN 10.923, Stream Restoration and Bridge Replacement for St. Mary Siphon Failure, was left off the prepared SEFA. Amounts reported for ALN 10.904 and ALN 15.U01 did not agree to the accounting records. CONTEXT: The SEFA was misstated as follows: • Understated for ALN 10.904 by $196,980; • Understated for ALN 10.923 by $105,977; and • Overstated for ALN 15.U01 by $1,978,224. The net effect was an overstatement of $1,675,267 for total federal expenditures. EFFECT: The SEFA provided was not complete and accurate. QUESTIONED COSTS: None CAUSE: The internal controls for the preparation of the SEFA and review of the SEFA were not present to ensure the SEFA was complete and accurate. RECOMMENDATION: We recommend the MRJBOC prepare written procedures on how to put together the SEFA and strengthen internal controls to ensure all federal awards are included on the SEFA. We also recommend that the SEFA be reviewed by someone other than the preparer for completeness and accuracy prior to providing to the auditor. MRJBOC RESPONSE: MRJBOC acknowledges the deficiencies identified in the preparation and review of the Schedule of Expenditures of Federal Awards (SEFA). During 2024, the organization experienced a significant increase in federal funding activity related to emergency response and infrastructure replacement projects. The rapid expansion of federal programs, addition of funds and reporting requirements exceeded existing internal documentation and review processes. To strengthen compliance controls and ensure SEFA accuracy in future reporting periods, MRJBOC will implement the following corrective actions: • Develop and formalize written SEFA preparation procedures, including grant identification, ALN verification, and reconciliation to general ledger balances. • Establish a dual-review process in which the SEFA is reviewed and approved by a party independent from the preparer prior to submission to auditors. • Maintain a centralized federal grant tracking log that includes award numbers, funding sources, drawdowns, and cumulative expenditures. These measures will improve internal control over federal reporting, enhance accuracy, and ensure compliance with federal audit requirements.

Criteria: 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Awards Requirements, Standards for Financial and Program Management, and §200.302 (b), Financial Management. The recipients financial management system must provide for identification, in its accounts, of all federal awards received and expended and the federal program under which they were received. Federal program and federal award identification must include, as applicable, the federal assistance listing title and number, federal award identification number, name of the federal agency, and name of the pass-through entity, if any. Additional Criteria: 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F – Audit Requirements, §200.510, Financial Statements. Schedule of Expenditures of Federal Awards – The auditee also must prepare a schedule of expenditures of federal awards for the period covered by the auditee’s financial statements, which must include the total federal awards expended, as determined in accordance with §200.502, Basis for Determining Federal Awards Expended. At a minimum, the schedule must provide total federal awards expended for each individual federal program and the federal assistance listing number or other identifying number when the federal assistance listing information is not available. For a cluster of programs, also provide the total for the cluster. Condition: PCRI did not maintain a complete schedule of expenditures of federal awards. Cause: PCRI did not adequately track which government grants were federally-funded, resulting in an incomplete schedule of expenditures of federal awards. Effect: Failure to prepare an accurate and complete schedule of expenditures of federal awards results in noncompliance with 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Awards Requirements, Standards for Financial and Program Management, §200.302, Financial Management, and Subpart F – Audit Requirements, §200.510, Financial Statements. Recommendation: We recommend that PCRI document and implement policies and procedures to ensure the schedule of expenditures of federal awards is accurate and complete in accordance with 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Awards Requirements, Standards for Financial and Program Management, §200.302, Financial Management, and Subpart F – Audit Requirements, §200.510, Financial Statements, in order to obtain accurate calculations of major federal programs for the Single Audit and to ensure that PCRI is in compliance with all of the reporting requirements as to identify the source and application of funds for federally-funded activities.

2024-005 Internal Controls over Grant Management (Significant Deficiency and Noncompliance) (repeat finding 2023-005) Criteria: 2 CFR 200.302 establishes the requirements of a financial management system adequate to ensure compliance with federal regulations. This system must include written procedures to implement requirements for payment methods and determine the allowability of costs in accordance with subpart E. Statement of Condition: The City has written fiscal policies but they do not meet the financial management system requirements established in the regulations. Cause: The City has processes and procedures in place to administer grant funds but written policies do not contain compliance requirements. Effect: The City is not in compliance with financial management system requirements. Recommendation: The City should develop a grants manual or additional written policies to incorporate all the requirements of 2 CFR 200 and ensure compliance. Views of Management and Planned Corrective Action: See Corrective Action Plan included at the end of the report.

Finding 2024-005 Allowable Costs–Payroll Costs (Significant Deficiency and Noncompliance) (Repeat Finding) Information on the Federal Program: U.S. Department of Health and Human Services, Assistance Listing #93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure records adequately identify the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Condition: We tested 32 payroll disbursements across five pay periods. Of those 32, 5 exceptions were noted. One exception was that the amount of time and corresponding amounts allocated to the grant did not agree to the percentage documented on the employee’s timesheet. For the other 4 exceptions, the supporting time sheets could not be provided for a pay period tested. Cause: Employee timesheets are turned in after payroll is processed and allocations made, the timesheet in this exception did not agree to the amount allocated. Four supporting time sheets for a January payroll processed could not be located. Effect: The Council did not retain proper documentation to support payroll costs charged to the grant. Questioned Costs: $729 Recommendation: We recommend the Council strengthen procedures surrounding payroll so that the source documentation agrees to and is retained to support the amounts being allocated to the grant based on actual employee time. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.

Finding 2024-005 Allowable Costs–Payroll Costs (Significant Deficiency and Noncompliance) (Repeat Finding) Information on the Federal Program: U.S. Department of Health and Human Services, Assistance Listing #93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure records adequately identify the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Condition: We tested 32 payroll disbursements across five pay periods. Of those 32, 5 exceptions were noted. One exception was that the amount of time and corresponding amounts allocated to the grant did not agree to the percentage documented on the employee’s timesheet. For the other 4 exceptions, the supporting time sheets could not be provided for a pay period tested. Cause: Employee timesheets are turned in after payroll is processed and allocations made, the timesheet in this exception did not agree to the amount allocated. Four supporting time sheets for a January payroll processed could not be located. Effect: The Council did not retain proper documentation to support payroll costs charged to the grant. Questioned Costs: $729 Recommendation: We recommend the Council strengthen procedures surrounding payroll so that the source documentation agrees to and is retained to support the amounts being allocated to the grant based on actual employee time. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.

Finding 2024-005 Allowable Costs–Payroll Costs (Significant Deficiency and Noncompliance) (Repeat Finding) Information on the Federal Program: U.S. Department of Health and Human Services, Assistance Listing #93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure records adequately identify the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Condition: We tested 32 payroll disbursements across five pay periods. Of those 32, 5 exceptions were noted. One exception was that the amount of time and corresponding amounts allocated to the grant did not agree to the percentage documented on the employee’s timesheet. For the other 4 exceptions, the supporting time sheets could not be provided for a pay period tested. Cause: Employee timesheets are turned in after payroll is processed and allocations made, the timesheet in this exception did not agree to the amount allocated. Four supporting time sheets for a January payroll processed could not be located. Effect: The Council did not retain proper documentation to support payroll costs charged to the grant. Questioned Costs: $729 Recommendation: We recommend the Council strengthen procedures surrounding payroll so that the source documentation agrees to and is retained to support the amounts being allocated to the grant based on actual employee time. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.

Finding 2024-005 Allowable Costs–Payroll Costs (Significant Deficiency and Noncompliance) (Repeat Finding) Information on the Federal Program: U.S. Department of Health and Human Services, Assistance Listing #93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure records adequately identify the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Condition: We tested 32 payroll disbursements across five pay periods. Of those 32, 5 exceptions were noted. One exception was that the amount of time and corresponding amounts allocated to the grant did not agree to the percentage documented on the employee’s timesheet. For the other 4 exceptions, the supporting time sheets could not be provided for a pay period tested. Cause: Employee timesheets are turned in after payroll is processed and allocations made, the timesheet in this exception did not agree to the amount allocated. Four supporting time sheets for a January payroll processed could not be located. Effect: The Council did not retain proper documentation to support payroll costs charged to the grant. Questioned Costs: $729 Recommendation: We recommend the Council strengthen procedures surrounding payroll so that the source documentation agrees to and is retained to support the amounts being allocated to the grant based on actual employee time. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.

Finding 2024-005 Allowable Costs–Payroll Costs (Significant Deficiency and Noncompliance) (Repeat Finding) Information on the Federal Program: U.S. Department of Health and Human Services, Assistance Listing #93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure records adequately identify the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Condition: We tested 32 payroll disbursements across five pay periods. Of those 32, 5 exceptions were noted. One exception was that the amount of time and corresponding amounts allocated to the grant did not agree to the percentage documented on the employee’s timesheet. For the other 4 exceptions, the supporting time sheets could not be provided for a pay period tested. Cause: Employee timesheets are turned in after payroll is processed and allocations made, the timesheet in this exception did not agree to the amount allocated. Four supporting time sheets for a January payroll processed could not be located. Effect: The Council did not retain proper documentation to support payroll costs charged to the grant. Questioned Costs: $729 Recommendation: We recommend the Council strengthen procedures surrounding payroll so that the source documentation agrees to and is retained to support the amounts being allocated to the grant based on actual employee time. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.

Finding 2024-006 – Activities Allowed (Significant Deficiency and Noncompliance)(Repeat Finding) Information on the Federal Program: U.S. Department of Veterans Affairs, Assistance Listing #64.055 Staff Sergeant Parker Gordon Fox Suicide Prevention Grant Program. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure funds have been used in accordance with Federal statues, regulations, and terms and conditions of the Federal award. These requirements include that the nonfederal entity compare expenditures with the approved award budget. Condition: We tested 22 nonpayroll disbursements; one of those expenses did not fit into an expense category in the approved award budget. Cause: The Council began allocating non-reimbursable expenses to their grant codes to track the true costs of running a program. This grant allowed for indirect costs; however, these costs were charged directly to the grant and were included in the amount requested for reimbursement and also in the cost base used for the indirect cost calculation. These costs were not in line with the categories of expenses in the award budget. Effect: The Council allocated costs that were not allowable activities per the grant budget. Questioned Costs: $255 Recommendation: We recommend the Council strengthen procedures over costs invoiced for reimbursement to ensure those costs are compared to the grant budget for allowability. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.