Findings Citing § 200.302

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

Finding 2025-002: Monitoring and Management of Grant Budgets Should be Improved Federal Program: Assistance Listing Number (“ALN”) 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Name of Federal Agency: U.S. Department of Health and Human Services Award Identification Number and Year: 6 NH75OT000023-01-02 Name of pass-through entity: N/A COVID Identification: Yes Amount of Questioned Costs: $0 Compliance Requirement: Reporting Criteria: Title 2 of the Code of Federal Regulations (“CFR”) Section 200.302(b) states, “The recipient’s and subrecipient's financial management system must provide for the following: (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligations balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.” Metro Government’s written grant administration procedures state that they “will abide by the processes for identification, recording, reporting and monitoring program expense” in accordance with 2 CFR 200. Condition: Metro Government did not closely monitor a number of its grant budgets in its Workday software during the course of the year. As a result, we noted a number of journal vouchers had to be used to move grant expenditures out of one grant program to another. Many of these journal vouchers occurred during the year end closing process. As a result, at any given point in time throughout the year, grant expenditures and the related amounts requested from the federal government might not match. We did find; however, that all of the grant expenditure amounts appeared to be accurate by the time we received the final SEFA. Cause: Project level budget to actual reports were not reviewed timely, resulting in reactive reallocations. Effect: Risk of noncompliance with the Uniform Guidance. Recommendation: We recommend Metro Government improve monitoring of grant budgets to ensure expenditures are posted correctly initially and to prevent unnecessary corrective journal vouchers.

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

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

FINDING 2025-004 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Participation of Private School Children Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Test and Provisions - Participation of Private School Children Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not provide supporting documentation for the amounts disbursed for Participation of Private School Children. No time sheets or logs were provided to support the hours paid to employees for working with the private school children. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause The School Corporation had not developed a system of internal controls that would have ensured that records were maintained and made available for audit related to the Special Tests and Provisions - Participation of Private School Children compliance requirement. Effect The lack of appropriate documentation prevented the determination of the School Corporation's compliance with the Special Tests and Provisions - Participation of Private School Children compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the Special Test and Provisions - Participation of Private School Children compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2 CFR section 200.302(b)(3-4) states “The financial management system of each non-Federal entity must provide for the following… (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2025-006 - Preparation of the Schedule of Expenditures of Federal Awards Finding Type: Material weakness in internal control over compliance. Criteria: The Uniform Guidance (2 CFR 200.302 and 2 CFR 200.510(b)) requires that non-Federal entities maintain records that adequately identify the source and application of Federal awards and prepare a Schedule of Expenditures of Federal Awards (SEFA) that is complete and accurate. Condition: The City did not prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year ended June 30, 2025. A complete and accurate SEFA was prepared by the external auditor during the audit process. Cause: This condition is the result of the City’s lack of procedures and internal controls to identify, track, and report Federal award activity necessary to prepare the SEFA. Effect: As a result of this condition, the City did not maintain adequate internal control over compliance related to Federal reporting requirements and was not able to ensure that all Federal expenditures were identified and reported in accordance with Uniform Guidance. Recommendation: The City should implement procedures to identify and track Federal awards and expenditures and prepare a complete and accurate SEFA in accordance with Uniform Guidance requirements. Management Response: See Corrective Action Plan.

Reconciliations and Material Adjustments Condition: At the time of audit fieldwork, Community Council of Idaho had not reconciled and closed its grant and contract revenue accounts. As a result, Wipfli LLP proposed and management posted adjusting journal entries to grants receivabl and grant revenue. There were also entries to during the audit to correct property and equipment, pharmaceutical inventory, notes payable, depreciation expense, and interest expense. As Community Council of Idaho’s internal controls did not discover these adjustments prior to the audit, a material weakness exists in Community Council of Idaho’s internal controls over financial reporting. Community Council of Idaho also experienced delays in issuing the June 30, 2025, audited financial statements which were due March 31, 2026. Criteria: An accounting system should provide timely and accurate information for management. The reconciliation of account balances is an integral internal control activity to determine that stated account balances are accurately and fairly reported. Management should reconcile general ledger accounts to subsidiary ledgers and other supporting documents in a timely and effective manner. Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets." Furthermore, Federal Regulation 2 CFR 200.512(a) requires audits be submitted nine months after the end of the audit period. Cause: During the audit year, Community Council of Idaho experienced turnover in its business office while preparing for the audit which contributed to the lack of adequate and timely closing procedures, account reconciliations, and review processes. Effect: A material weakness in internal control over financial reporting exists as a result of these matters. Auditor's Recommendations: Accounts should be reconciled monthly with the adjustments posted timely so that management is relying on accurate financial information to make decisions. We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled, reviewed, and adjusted in a timely manner. Clinic reporting systems and procedures should be evaluated and revised. View of Responsible Officials: Management agrees with the assessment and subsequent to year end, steps were taken to correct the matter.

Finding 2025-003 – Completeness of the Schedule of Expenditures of Federal Awards Criteria: Title 2 CFR 200.302(b)(2) of the Uniform Guidance requires nonfederal entities to maintain records that identify all federal awards received and expended and to ensure accurate, current, and complete reporting of expenditures for each federal program, including the SEFA. Condition: During our audit of the Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2025, we noted the SEFA was incomplete and required adjustment. Specifically, expenditures for the following program were understated:  ALN 14.228 – Community Development Block Grant/State Program and Non-Entitlement Grants in Hawaii: understated by $587,345 The SEFA was subsequently corrected by management. Effect: An incomplete or inaccurate SEFA may result in misstated federal expenditures, which could impact the identification of major programs and the scope of the Single Audit. As a result, noncompliance with federal requirements may not be identified or reported. Cause: Controls over the preparation and review of the SEFA were not operating effectively. The SEFA was not adequately reconciled to the general ledger, grant records, and supporting documentation prior to submission for audit. Recommendation: We recommend the Town strengthen SEFA preparation procedures by:  Performing a detailed reconciliation of the SEFA to the general ledger and grant records  Implementing a documented review process prior to submission for audit  Ensuring all federal expenditures are supported and accurately reported Management’s Response: See Corrective Action Plan.

Criteria: Per 2 CFR 200.302(a) and 2 CFR 200.303, non-Federal entities must maintain adequate records supporting Federal program transactions and implement internal controls to ensure compliance. The OMB Compliance Supplement (2025), Part 4 – HHS, for the CCDF program requires documentation supporting eligibility determinations, including documentation to support applicable health and safety standards, and maintain compliance to remain eligible for payment. Condition: During testing, the Organization was unable to provide required eligibility documentation for four children, representing two unique families. In addition, two providers were noted who were deficient in meeting the health and safety requirements of the Program and were subsequently terminated as participating providers. Despite the termination status, these providers later received additional program payments. The Organization was unable to provide documentation demonstrating that the providers corrected deficiencies or were re-approved prior to receiving subsequent payments. Because supporting documentation was not retained, we could not determine whether the providers met requirements to resume participation. The Organization explained that eligibility and health and safety documentation historically resided within a system of record that has been transferred entirely to the State following a transition of the program’s administration to the State. The Organization no longer retains access to that system or copies of all documentation contained therein. Cause: As part of the transition of program responsibilities back to the State, the Organization returned program records and no longer retained access to the State-managed system that housed eligibility information. The Organization did not maintain its own copies of all eligibility or health and safety documentation needed to support future audits. Effect: The Organization cannot demonstrate compliance with Federal eligibility documentation requirements for the affected participants. In addition, the Organization could not demonstrate that payments totaling $34,018 were made to providers who met health and safety requirements of the Program at the time services were delivered. These costs are considered questioned due to lack of supporting documentation. Questioned Costs: $34,018 Recommendations: The Organization should establish procedures to ensure eligibility documentation is retained by the Organization, even when a third-party system serves as the primary repository. Future programs should include a documented record-retention plan ensuring audit-ready records remain accessible.

Condition – At the time of audit fieldwork, Project NOW, Inc. had not reconciled significant accounts such as grants receivable, accounts receivable, investments in partnerships, property and equipment, accounts payable, accrual accounts, long term debt and the corresponding revenue and expense accounts. In addition, Project NOW, Inc. did not properly record an acquisition of a business that occurred during the audit year. As a result, Wipfli, LLP proposed and management posted adjusting journal entries to the aforementioned accounts. Lastly, due to the lack of audit preparedness, the audit extended past the required nine-month deadline for submission. Due to Project NOW, Inc.’s lack of audit preparedness that led to a delinquent audit submission as well as the breakdown in internal controls surrounding reconciliation of accounts which led to multiple adjusting journal entries, a material weakness exists in Project NOW, Inc.’s internal controls over financial reporting. Criteria – Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets. Cause – During the audit year, Project NOW, Inc. experienced turnover in its business office while preparing for the audit which contributed to the lack of adequate and timely closing procedures, account reconciliation's, and review processes. Effect – As a result of not reconciling and adjusting certain account balances, a material weakness exists in internal controls. Recommendation – We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled and adjusted appropriately which will lead to timely submission of the audited financial statements in the future. View of Responsible Officials – Management agrees with the assessment and has committed to a corrective action plan.

2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR § 200.302(b)(3) which provides that the financial management system of each non-Federal entity must provide for records that sufficiently identify the amount, source and expenditure of funds for federally-funded activities. These records must contain information necessary to identify federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and must be supported by source documentation. 2 CFR § 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish, document and maintain effective internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 7 CFR §§ 210.7(c), 210.8(c), and 225.9(d)) provide that at a minimum, a claim must include the number of reimbursable meals/snacks served by category and type during the period (generally a month) covered by the claim. All meals/snacks claimed for reimbursement must (a) be of types authorized by the school food authority’s, institution’s, or sponsor’s administering agency; (b) be served to eligible children; and (c) be supported by accurate meal/snack counts and records indicating the number of meals served by category and type. 100% percent of the site claim forms that were prepared by the Nutrition Group and provided to the Treasurer for submission during fiscal year 2025 were not reviewed for accuracy of information before submitting for reimbursement. During the first half of the fiscal year, the School District completed manual counts of snacks served. An over-reimbursement related to snacks in the amount of $179 in 1 month of the 2 months (50%) tested for compliance. This error occurred due to a weakness in internal controls which failed to ensure site claim forms for reimbursable meals and snacks served at each building and submitted to the Ohio Department of Education were entered correctly. The School District should implement policies and procedures to help ensure that monthly site claim forms prepared and provided by the Nutrition Group are reviewed prior to submission to reflect actual counts for reimbursable meals and snacks served.

Program Titles: Reentry Employment Opportunities; Social Services Block Grant Assistance Listing Numbers: 17.270 and 93.667 Funding Agency’s: U.S. Department of Labor; Illinois Department of Human Services; City of Chicago Department of Family & Support Services Award Year: Reentry Employment Opportunities : 7/01/2023 – 12/31/2026 Social Services Block Grant: 7/1/2024 – 06/30/2025 Criteria or Specific Requirement – The Foundation is required to follow Uniform Guidance, which requires non federal entities to maintain effective internal controls and financial management systems to ensure compliance with cost principles (2 CFR §200.302(b)). Payroll and other expense costs allocated across multiple programs using employee time as the basis for allocation must be supported by documentation to substantiate the allocation (2 CFR §200.430). Condition – During testing of allowable costs, we identified shared payroll and other costs charged to federal programs for which adequate support for the cost allocation methodology was not maintained. Specifically, allocation schedules and underlying documentation supporting how payroll allocation percentages were determined were incomplete or unavailable. As a result, we were unable to conclude that all sampled costs were allocated to the federal programs in proportion to the relative benefit received. Cause – The Foundation transitioned to a new payroll system and did not retain allocation schedules before losing access to the prior system. Effect or potential effect – Inadequate documentation supporting cost allocations increases the risk that costs charged to federal programs may not be allocable in accordance with Uniform Guidance, potentially resulting in questioned costs or required repayment. Questioned Costs – Unknown. Context – Of the transactions tested, 20 out of 25 payroll and 18 of 25 non-payroll expense transactions for the Reentry Employment Opportunities program, and 16 out of 25 payroll transactions for the Social Services Block Grant program, lacked sufficient documentation supporting the allocation percentages applied. The sampling was not a statistically valid sample. Identification as a repeat finding – Not a repeat finding. Recommendation – We recommend that management maintain appropriate documentation to support cost allocations when using employee time as the basis for allocation. Views of responsible officials and planned corrective actions – Management agrees with the finding. The issue resulted from a system conversion and transition between payroll providers. Moving forward, management will ensure that appropriate documentation is consistently maintained and retained to support all payroll-related transactions.

Finding 2025-003 - Internal Control Deficiencies Over Financial Reporting and Audit Readiness (Significant Deficiency) Information on Federal Programs – U.S. Department of Health and Human Services — Health Resources and Services Administration (HRSA), FALN 93.224 Health Center Program (and other HRSA programs, as applicable) Compliance Requirement Financial Management / Reporting (2 CFR 200.302; 2 CFR 200.303) Criteria – 1. Under 2 CFR 200.302 (Financial Management), non-Federal entities must maintain financial records that: • Accurately reflect financial transactions, and • Are supported by source documentation sufficient for audit purposes. 2. Under 2 CFR 200.303 (Internal Controls), non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance that: • Financial reporting is reliable, and • Federal awards are managed in compliance with applicable requirements. Federal awarding agencies, including HRSA, and auditing standards further expect timely preparation of financial statements and adequate documentation supporting material account balances. Condition – During the audit of the financial statements and the Single Audit for the year ended June 30, 2025, we identified deficiencies in the Organization’s internal controls related to financial reporting timeliness, documentation, and audit readiness. Specifically: • The year-end financial close process was significantly delayed, with the fiscal year ended June 30, 2025 not substantially completed until May 2026. • Turnover in key accounting and finance personnel during the audit period adversely affected continuity in financial reporting and audit preparation. • The Organization experienced difficulty reconciling and substantiating beginning balances carried forward from the predecessor auditor, including limited supporting documentation. • The Organization was unable to timely provide sufficient supporting documentation for: - Property and equipment balances, including historical cost, additions, and accumulated depreciation, and - Lease accounting balances, including lease amortization schedules and related calculations. • As a result, audit completion required multiple follow-up requests and alternative audit procedures to obtain sufficient audit evidence. Cause – The deficiencies appear to be the result of a combination of factors, including: • Turnover in key accounting personnel, resulting in loss of institutional knowledge. • Inadequate transition documentation during the change in audit firms, leading to insufficient support for opening balances. • Lack of fully documented policies and procedures governing: - Fixed asset accounting and reconciliation, - Lease accounting and amortization tracking, and - Period-end financial close processes. • Insufficient supervisory review controls to ensure timely reconciliation and documentation of significant balances. Effect – These deficiencies increase the risk that: • Financial information used to support federal awards may be incomplete, inaccurate, or unsupported. • Audit completion timelines may be significantly delayed, increasing administrative burden and audit costs. • Management’s ability to rely on timely financial information for compliance and decision-making may be impaired. Auditor’s Perspective – From the auditor’s perspective, these deficiencies affected audit efficiency and timeliness, but did not prevent the auditor from ultimately obtaining sufficient and appropriate audit evidence to support the financial statements and the Schedule of Expenditures of Federal and State Grant Awards. No material misstatements were identified in the financial statements or in federal award amounts reported, and no questioned costs were noted. Accordingly, the deficiencies relate primarily to audit readiness, documentation, and governance processes, rather than a systemic failure of controls over financial reporting or federal compliance. Based on the nature of the deficiencies and the audit evidence obtained, the finding is appropriately classified as a significant deficiency and does not rise to the level of a material weakness. Questioned Costs – None. Auditor’s Recommendations – From an internal control and audit-readiness perspective, we recommend that management strengthen controls over financial reporting and documentation by implementing the following actions: • Formal Financial Close Process - Implement a documented monthly and year-end financial close process that includes defined timelines, assigned responsibilities, and required supervisory review and approval. • Fixed Asset and Lease Accounting Support - Establish and maintain complete supporting schedules for material asset-related balances, including: - A fixed asset subsidiary ledger reconciled to the general ledger, and - Lease accounting and amortization schedules prepared and reviewed in accordance with applicable accounting standards. • Balance-Sheet Reconciliations - Perform and document timely reconciliations of all significant balance-sheet accounts, including explicit reconciliation of beginning balances following changes in auditors or accounting personnel. • Documentation Retention Practices - Enhance documentation retention procedures to ensure that all material balances are supported by verifiable source records that are readily available for audit and management review. • Personnel and Auditor Transition Procedures - Develop and implement formal transition procedures for changes in key accounting personnel or external auditors to promote continuity of financial records and institutional knowledge. • Supervisory Review Controls - Strengthen supervisory review controls by requiring documented evidence of review and approval of account reconciliations and key supporting schedules. • Training and Technical Expertise Provide targeted internal training and/or obtain external technical support, as needed, to ensure adequate expertise in complex accounting areas such as fixed assets and leases. Implementation of these actions is expected to improve the timeliness and reliability of financial reporting, reduce audit delays, and strengthen compliance with Uniform Guidance and HRSA financial-management expectations. Views of Responsible Officials – Management concurs with the finding. OIC experienced turnover in key finance positions, delayed year-end close activities, and documentation challenges during the auditor transition; management will strengthen close, documentation, and audit readiness controls.

Finding 2025-006 Revenue Recognition, Contractual Allowances, Accounts Receivable, and Billing System Reconciliations (Material Weakness) Information on Federal Programs – HHS–HRSA Section 330 Health Center Program, June 30, 2025; U.S. Department of Labor Workforce Development Awards, June 30, 2025 Criteria – Under 2 CFR § 200.302 and § 200.303, non-Federal entities must maintain financial management systems and internal controls that provide reasonable assurance that federal funds are properly managed, financial results are accurately reported, and assets are safeguarded. These controls must align with GAAP and recognized internal control frameworks (COSO). GAAP (ASC 606) requires patient service revenue to be recognized at net realizable value, reflecting contractual allowances, sliding-fee discounts, and implicit price concessions at the time revenue is recorded. Accounts receivable must be evaluated for collectability, supported by an allowance for doubtful accounts, and written off only through documented and approved processes. HRSA Section 330 financial management requirements further require health centers to maintain accurate billing, accounts receivable, and reconciliation processes to support fiscal integrity and compliance with federal award conditions. Condition – OIC’s revenue-cycle processes exhibit multiple, interrelated control deficiencies that collectively impair the accuracy and reliability of patient service revenue and accounts receivable reporting: 1. Revenue Recognition Methodology • Patient revenue recorded in the general ledger is based on an estimated flat per-encounter rate multiplied by total encounters, rather than at net realizable value. • Contractual allowances, payer-specific discounts, and implicit price concessions are not estimated or recognized at the time revenue is initially recorded. 2. Accounts Receivable Valuation and Write-Off Controls • Patient receivables are written off within the EPIC billing system without documented review of collectability, allowance analysis, or documented approval by Executive Management. • Write-offs processed in EPIC do not consistently result in corresponding adjustments to general ledger accounts receivable. 3. Billing System and General Ledger Reconciliations • EPIC and eClinicalWorks billing systems are not integrated with the Sage MIP general ledger. • Patient revenue and accounts receivable balances are recorded through manual journal entries. • Formal, consistent, and documented reconciliations between billing system activity (gross charges, contractual adjustments, collections) and the general ledger are not performed as part of the monthly close. 4. Revenue Cycle Oversight and Monitoring • Patient statements are generated only when a patient balance is due, limiting an independent verification mechanism over gross charges and third-party payment processing. • Given the absence of system integration and reliance on manual processes, compensating oversight controls are insufficient to mitigate the combined risks noted above. Cause – Management has not implemented a comprehensive, GAAP-aligned revenue-cycle control framework that integrates revenue recognition, contractual allowance estimation, accounts receivable management, billing system reconciliation, and write-off governance. System limitations, reliance on historical estimation practices, and incomplete documentation of review and approval controls have contributed to the deficiencies. Effect – The combined effect of these deficiencies is an increased risk that patient service revenue and accounts receivable are materially overstated and not reflective of amounts expected to be collected. This condition: • Impairs the reliability and auditability of financial statements • Weakens internal control over federal program financial reporting • Increases the likelihood that material misstatements could occur and not be prevented or detected timely • Creates elevated compliance risk under Uniform Guidance, HRSA Section 330 financial management standards, and Single Audit reporting requirements Given the materiality of patient service revenue and accounts receivable to the financial statements, this condition constitutes a material weakness in internal control over financial reporting. Perspective – This material weakness reflects pervasive deficiencies across OIC’s revenue cycle that affect the accuracy, integrity, and auditability of patient service revenue and accounts receivable, which represent significant components of the financial statements and federal program reporting. The absence of GAAP-aligned revenue recognition, effective accounts receivable oversight, and reliable reconciliation between billing systems and the general ledger limits management’s and the Board’s ability to rely on reported financial results for decision-making and program oversight. Given the reliance on federal funding, particularly under the HRSA Section 330 Health Center Program, these deficiencies elevate compliance risk under Uniform Guidance and increase exposure to adverse Single Audit outcomes if not timely remediated. The Board and Audit Committee should view this matter as a high-priority governance issue requiring active oversight of management’s remediation efforts, including clear timelines, accountability, and validation that revised controls are designed and operating effectively. Prompt and sustained corrective action is necessary to restore confidence in financial reporting, demonstrate stewardship of federal resources, and reduce the risk of recurring audit findings. Questioned Costs – None identified. Recommendation – Management should implement a coordinated remediation strategy to strengthen the revenue cycle and restore compliance with GAAP and Uniform Guidance requirements. At a minimum, management should: • Discontinue or substantially revise the flat per-encounter revenue estimation methodology. • Record patient revenue at net realizable value at initial recognition, including estimated contractual allowances and implicit price concessions. 1. Accounts Receivable and Write-Off Governance • Perform documented monthly reviews of accounts receivable aging and collectability. • Maintain and review an allowance for doubtful accounts prior to any write-off activity. • Require documented CFO or Executive Management approval for all write-offs impacting the general ledger. • Ensure all billing-system write-offs are fully reconciled to the general ledger. 2. Billing System and General Ledger Reconciliations • Evaluate the feasibility of implementing automated interfaces between EPIC, eClinicalWorks, and the general ledger. • Establish formal, timely, and documented reconciliations between billing system reports and general ledger balances, reviewed by personnel independent of preparation. 3. Oversight and Compensating Controls • Enhance revenue-cycle oversight through expanded management review reports, reconciliation procedures, or other compensating controls that provide visibility into gross charges, adjustments, collections, and zero-balance accounts. 4. Oversight and Compensating Controls • Enhance revenue-cycle oversight through expanded management review reports, reconciliation procedures, or other compensating controls that provide visibility into gross charges, adjustments, collections, and zero-balance accounts. Implementing these actions will improve financial reporting accuracy, strengthen internal control over federal programs, and reduce audit and compliance risk. View of Responsible Officials – Management concurs with the finding. OIC will strengthen revenue cycle controls to improve patient service revenue recognition, accounts receivable valuation, write-off governance, and billing system reconciliations.

Finding 2025-007 – Failure to Provide Schedule of Expenditures of Federal and State Grant Awards (Material Weakness) Information on the Federal Program – HRSA Health Center Programs, FALN 93.224, June 30, 2025; U.S. Department of Labor Workforce Development Adult Program, FALN 17.258; Department of Labor Workforce Development Youth Program, FALN 17.259 Criteria – Uniform Guidance 2 CFR §200.302(b) requires financial management systems to provide accurate, current, and complete disclosure of financial results of each federally funded program. Additionally, 2 CFR §200.510(b) requires auditees to prepare a Schedule of Expenditures of Federal and State Grant Awards (SEFA) that properly presents federal expenditures by program and assistance listing, supported by the general ledger and accounting records. Condition – During our review of restricted funding programs, restricted program expenditures could not be readily identified in the general ledger. Additionally, OIC was unable to provide a Schedule of Expenditures of Federal and State Grant Awards (SEFA) for audit review. Cause – OIC has not established formal processes to track federal expenditures by program within the general ledger, nor procedures to compile and reconcile a SEFA annually. Management oversight controls related to federal reporting requirements were not adequately implemented. Effect – The absence of a SEFA and lack of identifiable federal expenditures impair OIC’s ability to demonstrate compliance with Single Audit requirements and federal grant terms. This condition increases the risk of inaccurate federal reporting, audit findings, and potential noncompliance with Uniform Guidance. Questioned Costs – $0 Perspective – Although no questioned costs were identified, the lack of a SEFA represents a fundamental compliance deficiency. The inability to readily identify federal expenditures increases audit risk and limits transparency over federal award activity. This finding affects compliance reporting rather than individual transactions. Recommendation – We recommend that the Board of Directors and Audit Committee require management to develop and execute a comprehensive, time-bound remediation plan to address this material weakness and restore effective internal control over revenue recognition and accounts receivable. The remediation plan should be formally reviewed and approved by the Audit Committee and include clearly defined milestones, responsible owners, and reporting protocols. Additionally, we recommend that the Audit Committee: • Maintain active oversight of remediation progress, including periodic updates from management on the design and implementation status of corrective actions. • Require validation that revised controls are not only designed appropriately but are operating effectively for a sustained period, supported by documentation and management certification. • Ensure adequate resourcing and system capability are in place—whether through process redesign, system integration, or external support—to achieve GAAP-compliant revenue recognition and reliable billing system reconciliations. • Evaluate ongoing compliance implications for federal programs, particularly HRSA Section 330, to confirm that corrective actions sufficiently address Uniform Guidance and Single Audit requirements. Timely and effective remediation of this material weakness is critical to restoring confidence in OIC’s financial reporting, strengthening stewardship of federal funds, and reducing the risk of continued adverse audit and compliance outcomes. View of Responsible Officials – Management concurs with the finding. OIC will formalize federal award tracking and SEFA preparation procedures to ensure federal expenditures are complete, accurate, and readily identifiable by program.

Information on the federal program: Subject: Education Stabilization Fund – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425U, 84.425D Federal Award Numbers: S425U210013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness Criteria: 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 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Condition: The School Corporation did not have a review control in place to ensure the annual data report was reviewed by someone other than the preparer. In addition, original documents and related support were not maintained by the School Corporation. Cause: There were not sufficient internal controls in place to ensure the Annual Data Report agreed to the underlying fund ledger detail. Effect: The Annual Data Reports could be submitted with incorrect information. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have a formal review process in place to review the Annual Data Reports that were required to be submitted during the audit period. Original copies of the reports and submission receipts were not maintained and therefore, we were unable to verify the reports were submitted by the required due dates. The Annual Data Report for the period of July 1, 2022 through June 30, 2023 was overstated by $36,297. Management could not provide support for Cross Act total employees reported at 147. Also, management here was a variance of 16 positions for Cross Act positions paid by ESSER. The amount reported was 135 while management’s support detail was 151 positions. Identification as a repeat finding, if applicable: Yes, Finding 2023-005. Recommendation: We recommend management review internal controls around the preparation, review, and submission of the Annual Data Reports to verify accuracy and that support detail is maintained. We recommend someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted and that the School Corporation maintain records to validate the reports were submitted timely. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING REFERENCE NUMBER 2025-001 FEDERAL PROGRAMS (ALN – 84.027) SPECIAL EDUCATION – GRANTS TO STATES (IDEA, PART B) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.173) SPECIAL EDUCATION – PRESCHOOL GRANTS (IDEA PRESCHOOL) – SPECIAL EDUCATION CLUSTER (IDEA) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS H027A230003 (07/01/2023 – 09/30/2024); H027A240003 (07/01/2024 – 09/30/2025); H173A230002 (07/01/2023 – 09/30/2024); H173A240002 (07/01/2024 – 09/30/2025) COMPLIANCE REQUIREMENTS ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR Section 200.302 (a) establishes that each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state’s own funds. In addition, the state and the other non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403 (b) establishes that except where otherwise authorized by statute, costs must be adequately documented in order to be allowable under Federal awards. In addition, IDEA’s Special Education—Grants to States program (IDEA, Part B) provides grants to states, and through them to LEAs, to assist them in providing special education and related services to eligible children with disabilities ages 3 through 21 (20 USC 1411). STATEMENT OF CONDITION As part of our procedures over internal controls and compliance for the allowable activities’ requirement, we selected a sample of eighty-five (85) disbursement to suppliers made during fiscal year under audit. We noted the following deficiencies: 1. In three (3) disbursement vouchers, the Excel master sheet and the adjustment report presented different amounts. No justification was provided for the differences in the reports. 2. In one (1) disbursement we found that the therapy, monthly, and tuition costs per student did not match the contract, which already stipulated a cost for each service per student. We were not presented with any evidence that the contract had been amended; we were only provided with a letter from PRDE approving the cost increase across the board. 3. In forty-three (43) vouchers evaluated, it was found that the invoiced expenses corresponded to both cluster programs (ALNs 84.027 and 84.173), and the invoices established this. However, the expenses in the system were recognized in grant ALN 84.027, not according to the participants attending and invoiced, according to their age. 4. In five (5) disbursement vouchers related to educational services and therapies, we found in the master Excel spreadsheet of three (3) different entities, participants ranging in age from 22 to 31 years old were provided educational services. In total, seven (7) students over 21 years of age were identified among the three entities. The amount related to these students is $85,535. 5. In two (2) disbursement vouchers related to educational services in private institutions, three (3) participants were invoiced and paid, who, in accordance with the excel master of each institution, attend to another private institution. 6. In eight (8) disbursement vouchers related to therapies provided by private educational institutions, the costs for therapies are higher than the costs according to the contract fee schedule. 7. In eight (8) disbursement vouchers, no details were provided on how the monthly educational costs were determined. The proposals submitted are inconsistent with the invoices and do not describe the services included in each monthly payment. 8. Of the selected sample, there was one (1) disbursement voucher for which we were not provided with evidence of the master Excel spreadsheet, a document that details each participant, the service provided, the cost of the service, among other information necessary to evaluate the disbursement. The amount paid for this invoice was $568,968. 9. On a disbursement voucher, we noticed that the invoice included 38.5 hours of service. However, the invoice details only showed 36 hours of service rendered, with payment made for 2.5 hours for which no details of the services rendered were provided. The total overpayment to the supplier is $312.50. QUESTIONED COSTS We understand that the $312.50 described in the condition number 9 is not allowable. In addition, because the PRDE was not able to provide the Excel Master spreadsheet for a disbursement voucher, we were unable to audit this transaction. The amount of this voucher is $568,968. In relation to participants who are more than 21 years old, the amount included in the vouchers evaluated is $85,535; for a total estimated amount of $654,815.50. PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training and controls that require standard evaluation, approval, and reporting of expenditures incurred. In addition, standardized documentation in the educational services should be maintained which presents clear costs for services provided and reasons for modification of the legal contract, modifying amounts and services, should be available for inspection. The sample was statistically valid sample. STATEMENT OF CAUSE According to interviews carried out and documentation evaluated, some goods and services are received in the different Regional Offices (ORE), and each one carries out similar, but not standard, processes when certifying as received or pre-intervening invoices. No evidence regarding how the PRDE monitors the age of the participants when they reach 21 years of age and properly documents the reasons to continue providing the services after reaching 21 years of age. Regarding the distribution of expenses, according to interviews and evaluated documentation, it was found that at the time of binding a contract, an analysis of the assigned participants is not made, in order to be able to make a distribution between the two programs of the cluster according to the age of the participant. In addition, according to interviews, although the contract budget is validated, they only limit themselves to verifying the amount available in general and there is no distribution of the expense according to the service provider's invoice. There is no clear process in place for negotiations with private institutions, nor is there a clear way to determine whether the cost of educational services is reasonable. POSSIBLE ASSERTED EFFECT The PRDE is reporting expenses within the cluster that do not necessarily reflect the actual expenses incurred by each program in the cluster, this deficiency requires that when the period of availability of funds is ending, some adjustments be made to reclassify expenses, up to the amount of the award. In addition, the PRDE may have incurred payments for which the service or good were not provided as contracted. The PRDE was not able to present how they are monitoring that the services provided to the participants are reasonable and comply with the necessities of the child. Furthermore, no proper documentation is maintained when services are provided to participants who reach 21 years and are required to provide any service. IDENTIFICATION OF REPEAT FINDING This is a repeat finding (Finding Reference Number 2024-002). RECOMMENDATIONS We recommend that the PRDE establish standardized written guidelines and train the staff of the Regions to carry out and document the reviews and approvals of services and ascertain that this information is uploaded in the accounting system of SIFDE. In addition, the personnel must be instructed to account for the budget and expense of therapy and related services, according to the enrollment of students who will attend, in accordance with the program that applies within the cluster.

FINDING REFERENCE NUMBER 2025-002 FEDERAL PROGRAM (ALN – 84.938A) HURRICANE EDUCATION RECOVERY – INMMEDIATE AID TO RESTART SCHOOL OPERATIONS (RESTART) U.S. DEPARTMENT OF EDUCATION AWARD NUMBER S938A180002 (04/26/2018 – 09/30/2025) COMPLIANCE REQUIREMENTS ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES // EQUIPMENT AND REAL PROPERTY MANAGEMENT TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – SIGNIFICANT DEFICIENCY AND NONCOMPLIANCE CRITERIA 2 CFR §200.302(b)(3)(4) establishes that 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. Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. 2 CFR §200.403 establishes that costs must meet the following criteria to be allowable under Federal awards: (g) be adequately documented. The Fiscal Process Guide – Program Funds Restart designed by the PRDE establishes that all movable and immovable property with a unit cost of five hundred dollars ($500.00) or more and a useful life of more than two (2) years will be capitalized. Both conditions must exist. These will be classified in the E5000 expense accounts, as appropriate. Also, indicate that capitalizable equipment (E5000) and non-capitalizable equipment (E4414) purchased with program funds will be labeled with the number assigned by the Property Registry System, as established in Section X of the "Procedure for the Control and Accounting of the Property of the Department of Education”. Also as stated in the Section 102(h)(3) of the 2018 Hurricane Relief Act, states that public control of funds and property for services provided to non-public schools must remain with a public agency, which also administers the funds and resources or contracts for services with public or private entities. STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activity’s requirement, we selected a sample of forty (40) disbursements from a population of six hundred forty-two (842) disbursements to suppliers made during the fiscal year 2024-2025. During our testing, the following deficiencies were noted: 1. For five (5) reimbursement payments for purchase of equipment were incorrectly recorded in account E6170 (Donations and Contributions to Private Entities) rather than in one of the E5000-series accounts designated for equipment. Also, these equipment were not included in the property & equipment register of the PRDE. According to the Restart Fiscal Process Guide, all the equipment purchased or reimbursed to the private schools should be recorded as part of the property list that belongs to the PRDE. In other words, PRDE must maintain ownership over the property bought with the Restart funds. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systemic deficiency. The codifications of these transactions were not properly reviewed in order to avoid missed codification, considering that the PRDE has the Third-Party Fiduciary Agent that had reviewed them and did not detect the missing codification and the missing documentation for the proper accounting and authorization process. The sample was statistically valid sample. STATEMENT OF CAUSE The PRDE lack of training or oversight on proper accounting practices, which leads to equipment expenses being coded incorrectly in account E6170 rather than the proper E5000 series. POSSIBLE ASSERTED EFFECT The PRDE incorrect accounting of equipment expenses could result in inaccurate financial reporting and a potential noncompliance issue with Federal regulations that require proper codification of expenses. IDENTIFICATION OF REPEAT FINDING Yes, this finding is a repeat of a finding reported in the prior audit. The corresponding prior year Finding Number is 2024-003. RECOMMENDATIONS We recommend that the PRDE provides training to all relevant personnel on the importance of accurate accounting and documentation, particularly for equipment purchases, and ensures that such expenses are properly coded. Implement a review process to verify that equipment reimbursements are supported by the required receiving report, invoice and that disbursements are coded appropriately in the accounting system (SIFDE).

FINDING REFERENCE NUMBER 2025-006 FEDERAL PROGRAM (ALN – 84.027) SPECIAL EDUCATION – GRANTS TO STATES (IDEA, PART B) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.173) SPECIAL EDUCATION – PRESCHOOL GRANTS (IDEA PRESCHOOL) – SPECIAL EDUCATION CLUSTER (IDEA) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS H027A240003 (07/01/2024 – 09/30/2025); H173A240002 (07/01/2024 – 09/30/2025) COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 34 CFR section 300.163, states for the Maintenance of Effort requirement that a State must not reduce the amount of State financial support for special education and related services for children with disabilities, or otherwise made available because of the excess costs of educating those children, below the amount of that support for the preceding fiscal year. In addition, 2 CFR Section 200.302 (a) establishes that each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state’s 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. STATEMENT OF CONDITION As part of our audit procedures related to the Level of Effort – Maintenance of Effort requirement, we request the Annual State Application for FFY 2024 funds, and the documents that support the information included in the report. The PRDE was unable to provide evidence of the amount reported as State financial support made available for Special Education and related services, used in the computation. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper internal controls over financial documentation. The Annual State Application for FFY 2024, PRDE reported $349,659,000 as the amount of State Financial Support made available for Special Education and Related Services for FY2022, in relation to FY2023, the reported amount was $350,153,444, from this amount, $5,624,444 was not provided a detail or supporting documentation. The supported amount was $344,509,000 which is not in compliance with the requirements. STATEMENT OF CAUSE The PRDE does not have an established procedure to collect and archive the documents used to prepare these reports. POSSIBLE ASSERTED EFFECT The PRDE could not be in compliance with the Level of Effort requirement. In addition, the information submitted in the report could not be corroborated for accuracy validation purposes. IDENTIFICATION OF REPEAT FINDING Not previously reported. RECOMMENDATIONS We recommend that the PRDE establishes processes and uniformity in the filing of the documents that support the information reported to the US Department of Education.

2025-002 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Cash Management Repeat Finding: No Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200.305 requires non-Federal entities using the advance payment method to minimize the time between the transfer of federal funds and their disbursement. Advance payments must be limited to the minimum amounts needed and aligned with the entity’s actual, immediate cash requirements. To use the advance payment method, entities must maintain written cash management procedures and financial management systems that provide effective control and accountability over federal funds. In addition, 2 CFR 200.302(b)(3) and (b)(6) require entities to maintain financial management systems and written procedures sufficient to permit the tracing of federal funds to underlying expenditures and to implement the cash management requirements of 2 CFR 200.305. 2 CFR 200.303 further requires entities to establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance, including monitoring activities. For Title IV Student Financial Assistance programs, 34 CFR 668.162(b) requires institutions using the advance payment method to request funds only for amounts needed immediately for disbursements made or to be made to eligible students and to disburse those funds no later than three business days after receipt. Condition: The College did not have written procedures governing drawdowns, including draw calculations, timing, approvals, reconciliations, or the return of excess funds. Tested draws were not consistently supported by documentation evidencing the accuracy of the expenditures being reimbursed. In addition, the College did not perform or document reconciliations between underlying disbursement records and authorized draw requests and did not monitor cash balances to identify whether positive balances were carried forward from period to period. As a result, the College could not demonstrate that draw amounts consistently reflected only eligible expenditures incurred during the applicable period. Cause: Management had not established a formal, documented cash management control framework, and responsibilities for draw preparation, review, approval, reconciliation, and monitoring were not clearly defined. As a result, draw requests, supporting documentation, and reconciliations were prepared inconsistently or not retained, and controls were not in place to identify or prevent excess cash on hand. Effect: Because the College did not maintain written cash management procedures, retain consistent support for draw calculations, or perform and document reconciliations of draws to underlying student disbursements and cash balances, the College could not demonstrate that Title IV funds were drawn only for actual, immediate cash needs or that drawn funds were timely disbursed in accordance with advance payment requirements. This condition increases the risk that the College may draw excess cash or draw funds in advance of need, be unable to detect or prevent noncompliance due to inadequate internal controls, and be subject to the return of excess funds, administrative actions, or questioned costs if noncompliance could be quantified. Recommendation: The College should strengthen cash management controls over the SFA Cluster by implementing the following: 1. Adopting written cash management procedures addressing draw calculations, timing of draws, approvals and segregation of duties, required supporting documentation, reconciliation requirements, and the identification and return of excess cash. 2. Maintaining a standardized draw file for each draw that includes approval evidence, supporting disbursement detail, a reconciliation to student-level disbursements by award type, and documentation of cash balances before and after the draw. 3. Performing and retaining monthly reconciliations between student-level disbursement records and federal cash activity, including documented supervisory review. Auditor’s Note: The engagement team noted that the cash management control deficiencies described in this finding have a direct impact on the College’s ability to support other Title IV compliance requirements that rely on traceable federal cash activity, including Return of Title IV Funds (R2T4). Specifically, where the College does not retain draw or return support, does not perform reconciliations between underlying student transactions and authorized activity, and does not maintain a clear audit trail of federal cash balances, it may be unable to demonstrate that Title IV funds were returned to the Department when required and that such returns can be traced from student-level determinations through COD activity and ultimately to federal cash activity (e.g., G5). View of Responsible Officials: See Auditee’s Corrective Action Plan. Questioned Costs: $0, Unknown

Finding 2025-008 Assistance Listing Number(s): 93.558 Name of Federal Program or Cluster: Temporary Assistance for Needy Families Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entity: Virginia Department of Social Services Pass-through Entity Identifying Number: BEN-21-029 Award Period: July 1, 2024 through June 30, 2025 Criteria or Specific Requirement: Title 2 CFR §200.302(b) requires non-federal entities to maintain effective control and accountability over all funds and to provide accurate, current, and complete disclosure of the financial results of each federally sponsored project or program. In addition, 2 CFR §200.328 requires financial reports to be supported by the entity’s accounting records and to be accurate and complete. Condition: The organization prepared various required financial reporting line items using budgeted amounts rather than actual expenditures recorded in the underlying accounting records. As a result, reported amounts did not agree to the general ledger and supporting accounting documentation. The variances were identified across multiple reporting line items and were not supported by reconciliations to actual expenditures. Cause: The condition occurred due to deficiencies in internal controls over financial reporting. Specifically, the organization relied on budgeted amounts rather than actual expenditures recorded in the accounting system when preparing required financial reports. In addition, formal written procedures do not clearly require that reported amounts be reconciled to the underlying accounting records prior to submission, and there was insufficient review and oversight to ensure that financial reports were prepared using actual data from the general ledger. Effect or Potential Effect: Because financial reports were not prepared using actual expenditures recorded in the accounting records, reported amounts may be inaccurate or incomplete. The use of budgeted amounts rather than actual financial data increases the risk that expenditures reported to the federal awarding agency or pass-through entity are misstated and not supported by the organization’s accounting records. As a result, the organization may be out of compliance with federal reporting requirements and federal agencies may rely on inaccurate financial information for monitoring and funding decisions. Repeat Finding: This finding is a repeat of 2024-005. Recommendation: We recommend the organization strengthen its internal controls over federal financial reporting by establishing and documenting procedures requiring that all reports submitted to federal awarding agencies or pass-through entities be prepared using actual expenditures recorded in the accounting system. These procedures should include a reconciliation of reported amounts to the general ledger and supporting documentation prior to submission, as well as an independent review process to ensure reported information is accurate, complete, and compliant with Uniform Guidance requirements. Views of Responsible Officials: Management acknowledges the finding and will work to implement appropriate corrective actions to address the deficiency and improve compliance going forward.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: HIV Prevention Activities: Non-Governmental Organization Based Assistance Listing Number: 93.939 Federal Award Identification Number: NU65PS923746 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Material Weakness in Internal Control over Compliance and Compliance – Reporting Criteria or Specific Requirement: Per 2 CFR §200.302 and §200.328, recipients of federal awards must provide accurate, current, and complete disclosure of financial results of each federally-sponsored project or program in accordance with the reporting requirements of the federal awarding agency. Condition: It was noted that the expenditures reported on the FFR matched the cash receipts for the period rather than the actual expenditures incurred. Questioned Costs: $117,889 Context: During the testing of reporting compliance of the contract during the fiscal year ended 6/30/25, we identified errors in the interim FFR reporting during the period of 4/1/22-9/30/24 for the actual expenditures in the amount of $117,889.20. Cause: The Organization lacked effective internal controls to reconcile actual expenditures incurred within reporting periods. The process relied on estimates and did not include timely reconciliation of actual costs. Effect: This deficiency resulted in noncompliance with federal reporting requirements. It also indicates a reasonable possibility that material noncompliance with federal requirements may not be prevented or detected and corrected on a timely basis. Repeat finding: Yes Recommendation: We recommend that management implement procedures to ensure that expenditures reported on the Federal Financial Report reflect actual costs incurred during the reporting period and are supported by appropriate documentation. Staff responsible for preparing the Federal Financial Report should be trained in federal reporting requirements to ensure compliance. Views of Responsible Officials: There is no disagreement with the audit finding. See Corrective Action Plan.

2025-003 Internal Control over Payroll – (Significant Deficiency) - Repeated and Modified (Prior Year Finding 2024-003) Federal Program Information: Funding Agency Title Federal Assistance Listing Number(s) Award Year and Number U.S. Department of Interior Indian School Equalization Program 15.042 2024; A24AV00744 U.S. Department of Interior Indian Schools Student Transportation 15.044 2024; A24AV00744 U.S. Department of Interior Administrative Cost Grants for Indian Schools 15.046 2024; A24AV00744 U.S. Department of Interior Indian Education Facilities, Operations, and Maintenance 15.047 2024; A24AV00744 U.S. Department of Education Title I Grants to Local Educational Agencies 84.010 2024; A24AV00744 U.S. Department of Education Special Education Grants to States 84.027 2024; A24AV00744 U.S. Department of Education Education Stabilization Fund 84.425 2024; A24AV00744 Criteria or Specific Requirements: In accordance with 2 CFR § 200.302(b)(3) and § 200.430(i), recipients of federal funds must maintain documentation that supports the allowability and allocability of compensation costs. Personnel expenses must be supported by records that accurately reflect the work performed, and documentation must be maintained for each employee, including executed contracts, offer letters, pay rate approvals, timesheets, and separation documentation. Adequate support is necessary to demonstrate that federal funds were used in compliance with award conditions. Condition: During our review of internal controls over payroll processing, we selected 194 payroll transactions across seven major programs for testing. Exceptions were identified in 7 transactions. The School did not fully comply with its own adopted policies or applicable federal regulations concerning payroll documentation and processing. Cause: The deficiencies appear to be due to a lack of consistent personnel file maintenance and insufficient internal controls over payroll documentation, record retention, and post-hiring compliance reviews. Effect: The lack of complete personnel documentation increases the risk of charging unallowable or unsupported costs to federal awards. It also affects the ability to verify employee eligibility, compensation accuracy, and the proper use of federal funds, potentially resulting in questioned costs and potential repayment obligations to granting agencies. Auditor's Recommendation: We recommend that the School implement enhanced internal controls and standardized procedures to ensure complete and accurate personnel records are maintained. This should include routine documentation checks to ensure that all required items, such as offer letters, contracts, paystubs, pay rate verifications, timesheets, and termination letters, are present and properly filed. Management should also provide training to relevant staff on federal compliance requirements related to payroll and personnel documentation.

Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Federal Programs ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds Category U.S. Department of Treasury U.S. Department of Homeland Security Compliance Requirement Activities Allowed/Unallowed, Allowable Costs/Cost Principles, Period of Performance, Project Accounting. Criteria 2 CFR Part 200 Subpart D Subsection 200.302 states the following: The recipient's and subrecipient's financial management system must provide for the following: 1. Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. 2. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 102 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Criteria – (continued) 3. Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. 4. Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. 5. Comparison of expenditures with budget amounts for each Federal award. 6. Written procedures to implement the requirements of § 200.305. 7. Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. In addition, the 2 CFR Compliance Supplement states the following under Special Test and Provisions – Project Accounting: For large projects, the recipient is required to make an accounting to Federal Emergency Management Agency (FEMA) of eligible costs. Similarly, the subrecipient must make an accounting to the recipient. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, all grant conditions were met, and that payments for that project were made in accordance with the applicable payment provisions. For improved and alternate projects, if the total cost of the projects does not equal or exceed the approved eligible costs, then the auditor should expect to see an adjustment to reduce eligible costs (44 CFR section 206.205). For Small Projects, FEMA does not adjust estimated costs to the actual incurred amount. The Subrecipient must certify that they completed the approved SOW, and the Recipient must certify that they made all payments in accordance with the FEMA-State/Territory/Tribe agreement. This is typically completed on a Small Project Completion Certification. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 103 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Condition During our procedures over the Authority’s funds received from FEMA we noticed the following: 1. Return of interest earned on FEMA-related funds totaling approximately $211,853 was not timely recorded in the general ledger and was subsequently recorded through a post-closing entry dated January 26, 2026. 2. Management initially misclassified approximately $6 million received under the Coronavirus State and Local Fiscal Recovery Funds as state funds rather than federal awards. As a result, the amount was originally excluded from the Schedule of Expenditures of Federal Awards (the Schedule). Cause The condition was caused by the Authority's lack of personnel on the federal funds management office which has been present during prior audit periods, the early retirement program established under Act No. 80 of August 3, 2020 – “Law for Incentivized Retirement Program and Justice for Our Servants” (Act No. 80), and the resignation of some personnel from their occupied position and left the Authority willingly as stated in finding 2025-004 are the main causes for the condition. Effect Inadequate accounting and controls over federal funds can cause incorrect revenue recognition as capital advances are recognized as revenue when used appropriately and not when received. In addition, this can cause amounts to be included on the Schedule incorrectly as some of the activities received as capital advances have not actually occurred. It also creates risk of allocating funds in the incorrect federal awards as some of these have similar uses and assistance listing numbers. Also, the Authority could be subject to penalties or sanctions from the Federal Grantor. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 104 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Context The Authority recognized as federal award revenue of $6 million approximately, as contributions from the Commonwealth of Puerto Rico and therefore were originally not included in the Schedule. Also, $211,853 on the bank accounts where FEMA funds were deposited had to be returned since the funds cannot be deposited in an interest-bearing account. Journal entry recognizing this return was subsequently recorded through a post-closing entry dated January 26, 2026. Identification of repeat finding This is a repeat finding from the immediate previous audit, Finding 2025-006 Questioned costs None as adjustments were made during the audit to correct the misstatement. Recommendation We recommend the Authority’s Federal Funds Management Office (FFMO) and finance department coordinate with the external consultant who handles federal funds received from FEMA to better identify and classify funds received. In addition, we recommend the Authority to address the FFMO personnel limitations by hiring additional personnel for the Authority, re-shifting task between current personnel or by relaying on outsourced third party providers. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan provided on pages 108-114.

Finding No: 2025-007 – Lack of controls over minimizing the time elapsing between the transfer of funds from the pass-through entity and the disbursement of funds by the Authority . CFR Part 200 Subpart D Subsection 200.305 states the following: For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. See § 200.302(b)(6). Except as noted in this part, the Federal agency must require recipients to use only OMB-approved, government-wide information collections to request payment. The recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. Whenever possible, advance payment requests by the recipient or subrecipient must be consolidated to cover anticipated cash needs for all Federal awards received by the recipient from the awarding Federal agency or pass-through entity. During our audit procedures, we identified that most capital advances received during fiscal years 2025 and 2024 from FEMA were still unused on June 30, 2025, with no procedures to minimize the time elapsing between funds received and disbursed. In addition the Authority had to returned unused funds to the pass through entity since they remained unused for more than a year.

Classification: Instance of Noncompliance / Known Questioned Costs Federal Program: Community Programs to Improve Minority Health / OASH HEALS (CFDA 93.137) Award Numbers: 1 CPIMP221349-01-00; 5 CPIMP211321-02-00 Compliance Requirement: Budget Management — 2 CFR §200.302(b)(7) Questioned Costs: $8,158.59 (known) Criteria. Under 2 CFR §200.302(b)(7), recipients must compare actual expenditures to budgeted amounts and may not exceed the approved award budget without prior written approval from the federal awarding agency. Condition. AHC expended approximately $492,170.59 against a combined OASH HEALS award budget of $484,012.00 ($370,000 under Award No. 1 CPIMP221349-01-00 and $114,012 under Award No. 5 CPIMP211321-02-00), exceeding the approved budget by $8,158.59 without prior written agency approval. The overage originated entirely under Award No. 1 CPIMP221349-01-00, for which cumulative FY2025 costs incurred (per GL account 4280 — DHHS-OASH HEALS) totaled $378,158.59 against an approved ceiling of $370,000.00. Of the $378,158.59 in program costs incurred under Award No. 1 CPIMP221349-01-00, only $370,000 was charged to and drawn from federal funds; the $8,158.59 excess was absorbed by AHC using non-federal, unrestricted resources and was not billed to or reimbursed by the federal award, consistent with the amount reported on the Schedule of Expenditures of Federal Awards. Management identified this condition and is addressing it with OASH. The matter is also disclosed in Note 14 of the financial statements. Cause. AHC’s budget monitoring controls did not provide timely notification that cumulative expenditures were approaching the combined award ceiling. Effect. Expenditures of $8,158.59 in excess of the approved budget constitute known questioned costs under 2 CFR §200.516(a)(3). Although below the $25,000 reporting threshold for likely questioned costs, this amount is required to be reported as a known questioned cost for a major program compliance requirement. Recommendation. AHC should implement monthly budget-to-actual tracking for each federal award with alerts when expenditures approach award ceilings, and should obtain prior agency approval before exceeding approved budget limits. AHC should work with OASH to resolve the current over-award and document the agency’s allowability determination. Management’s Response. See accompanying Corrective Action Plan.

Finding Reference: 2025-004 (cross-referenced as 2025-001) Type of Finding: Material Weakness in Internal Control Over Compliance and Material Noncompliance • Federal Agency: U.S. Department of Housing and Urban Development / Department of Health and Human Services / Department of Treasury / Department of Homeland Security / Department of Agriculture / U.S. Federal Transportation Administration and U.S. Environmental Protection Agency • Federal Program Name: Housing Choice Voucher / Community Service Block Grant Program Recovery Grant / Housing Opportunities for People with Aids / State Block Grant Program / Community Service Block Grant Program / Title III, Part C, Nutrition Services / Coronavirus State and Local Recovery Funds / Coronavirus Relief Funds / Community Disaster Loan / Public Assistance Grant / Rural Housing Preservation Grant / Formula Grants for Rural Areas and Cleanup Cooperative Agreements. • Assistance Listing Number (ALN): 93.569 / 93.045 / 21.027 / 21.019 / 97.030 / 97.036 / 10.433 / 20.509 and 66.818 • Federal Award Number and Year: 21.019 – CRF-AFFAF Pass-Through Entity: 93.569 – Families and Children Administration and 20.509 – Department of Transportation and Public Works Criteria or Specific Requirement: Pursuant to Uniform Guidance (2 CFR 200.510(b)), the auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements which must be accurate and reconciled. Furthermore, 2 CFR 200.302 requires non-federal entities to establish financial management systems that provide accurate, current, and complete disclosure of the financial results of each federally- sponsored project or program, and to maintain effective control over and accountability for all funds, property, and other assets. Condition (Cross-Reference): The Municipality’s core accounting system lacked the technical and functional capacity to accurately aggregate transactions and produce reliable financial records or balanced reports due to an un-reconciled migration of historical opening balances. (Cross-Reference): The complete details regarding the operational failure of the financial software system, the database corruption, and the timeline are fully described in Finding 2025-001 under Section II – Financial Statement Findings of this schedule. Effect or Potential Effect: Because the core accounting database cannot output accurate balances, the Municipality is unable to verify the completeness or accuracy of its Trial Balances by Funds or Accounts. Questioned Costs: $0.00 (None). Although the accounting system failed to produce reports, no specific unallowable transactions or questioned costs were identified during our compliance testing. Cause: See Finding 2025-001 for the root cause regarding inadequate data-validation protocols and poor system-migration oversight by management. Recommendation: We recommend that management implement the exact corrective action plan detailed in Finding 2025- 001. In addition, management must establish an interim manual ledger or spreadsheet tracking matrix to ensure that all federal expenditures for this major program are manually reconciled with federal drawdowns and physical invoices until the core accounting system

2025-003 – Allowable Costs (Significant Deficiency) ______________________________________________________________________ Federal Program Information: Funding Agency: U.S. Department of Energy Title: Nuclear Energy Research, Development and Demonstration Assistance Listing Number: 81.121 Award Number: DE-NE0009334 and DE-NE0009328 Award Period: 09/29/2023-09/28/2025; 05/04/2023-05/03/2026 Criteria: In accordance with 2 CFR §200.403, except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards:  Be necessary and reasonable for the performance of the federal program.  Be adequately documented.  Conform to any limitations or exclusions set forth in the federal award. Further, 2 CFR §200.302(b)(3) the entity should 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. Additionally, 2 CFR §200.473 says that the cost of alcoholic beverages is unallowable. Condition: During our expenditure testwork we noted the following: 1. The Alliance could not provide supporting documentation, such as an invoice, purchase order or receipt, for $197 out of $14,881 expenses tested. 2. There were no itemized receipts for four purchases of $315. 3. One of the submitted receipts included an unallowable alcoholic beverage purchase totaling $39.Context: Four out of Five invoices sampled for reimbursed expenses tested. Questioned Costs: $552. Cause: The Alliance did not ensure that reimbursed expenses were supported by appropriate documentation and there was a lack of review to identify unallowable costs. Effect: The program was charged for costs that were not adequately supported and included unallowable costs. Recommendation: We recommend that the Alliance strengthen internal controls over the allowability and documentation of expenditures charged to federal awards by requiring original, itemized receipts for all purchases prior to reimbursement or payment. Additionally, the Alliance should implement a documented review and approval process to verify that each expenditure is allowable, reasonable, allocable, and adequately supported in accordance with Uniform Guidance. Management Response: ECA believes that the documentation existed at the time for the charges as we have all of the receipts prior to creating any bills. However, for the unallowable costs ($39), ECA is reversing the charge and has already implemented a process to ensure that such costs are not charged to the grants in the future

1. FINDING NUMBER:14 2025 - 003 2. THIS FINDING IS: New 3. Federal Program Name and Year: Special Education Cluster 4. Project No.: 24-4620-EI,25-4620-00,25-4620-EI,24-4625-00,25-4625-00,24-4600-00,25-4600-00 5. AL No.: 84.027,84.173 6. Passed Through: Illinois State Board of Education 7. Federal Agency: U.S. Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation): Per Uniform Guidance (2 CFR §200.302 and §200.303), non-Federal entities are required to maintain effective internal controls over Federal awards and maintain records that adequately identify the source and application of funds for federally funded activities. Financial management systems should provide accurate, current, and complete disclosure of financial results and adequately support expenditures charged to Federal programs. Expenditures submitted for reimbursement should be readily traceable to the accounting records and supported by appropriate documentation. 9. Condition: During our testing of expenditures submitted for reimbursement under the Special Education Grant, we noted that expenditures included in reimbursement requests were difficult to reconcile to supporting documentation and the District's accounting records. Specifically, amounts recorded within the general ledger for certain purchased services and supplies and materials expenditures were incomplete and could not independently support the amounts claimed for reimbursement. District personnel were required to provide additional grant tracking schedules and other supporting records to reconcile the expenditures reported for reimbursement. 10. Questioned Costs: None 11. Context: As part of our Uniform Guidance compliance testing, we reviewed expenditures charged to and reimbursed under the Special Education Grant. During testing, we noted instances in which expenditure amounts reported for reimbursement could not be directly traced to the general ledger and required reconciliation to separate grant tracking documentation maintained outside the accounting system. 12. Effect: The lack of a complete and accurate grant tracking process increases the risk that unsupported, inaccurate, duplicate, or unallowable expenditures could be included in reimbursement requests and charged to the Federal program. Inadequate documentation also impairs management's ability to effectively monitor grant activity and increases the risk of noncompliance with Federal grant requirements. 13. Cause: The District's procedures for tracking and recording grant expenditures were not sufficient to ensure that amounts reported for reimbursement were fully supported by and readily traceable to the general ledger. The District relied on supplemental grant tracking records to compile reimbursement requests because expenditures recorded in the accounting records were not maintained in a manner that allowed for complete and efficient reconciliation of grant activity. 14. Recommendation: We recommend the District strengthen its grant accounting and monitoring procedures by: 1. Ensuring all Special Education Grant expenditures are accurately and completely recorded within the general ledger, 2. Maintaining a clear audit trail between reimbursement requests, supporting invoices, payroll records (if applicable), grant tracking schedules, and the general ledger, 3. Performing periodic reconciliations between grant reimbursement requests and accounting records prior to submission, 4. Establishing documented review procedures to verify the completeness and accuracy of expenditures charged to Federal programs, and 5. Providing training to personnel responsible for grant accounting and reimbursement preparation to ensure compliance with Uniform Guidance documentation requirements. Implementation of these procedures will improve accountability over Federal funds, strengthen compliance with Uniform Guidance requirements, and reduce the risk of unsupported costs being charged to Federal programs. 15. Management's response: Management agrees with the finding and will strengthen grant tracking and reconciliation procedures to ensure expenditures submitted for reimbursement are fully supported, accurately recorded in the general ledger, and readily traceable to the underlying documentation.

Item 2025-007 - Cash Management - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00505-23-04, 6 H2ECS45602-02-04, 1 H8LCS50772-01-00 and 6 H8HCS46163-03-01 - (Significant Deficiency) Criteria: Non-federal entities other than states are required to have internal controls in place to ensure compliance with the requirements of cash management that are contained in 2 CFR sections 200.302(b)(6) and 200,305, 31 CFR Part 205, 48 CFR sections 52.216-7(b) and 52.232-12. Statement of Condition: During our audit, we noted that there is no evidence of review and approval of drawdowns from the Health Center Program Cluster and the supporting records. Cause: LBUCC does not have a policy in place requiring the review and approval of drawdowns from the Health Center Program Cluster to be documented. Effect: Failure to document review and approval of drawdowns may result in unauthorized or incorrect drawdowns from the Health Center Program Cluster. Questioned Costs: None. Context: Although there is no evidence of review and approval of the drawdowns, the amounts of all 8 sample drawdowns tested agreed to the underlying records and supporting documents. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that LBUCC implement a policy that requires all drawdowns and supporting documents to be reviewed and that such review and approval be documented. Management Response: Management agrees with the finding and will implement these steps to ensure compliance with the federal cost principles, strengthen internal controls, and reduce the risk of questioned costs.

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

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

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

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