Findings Citing § 200.303

Information of the Federal Program: Assistance Listing Number 10.565—Commodity Supplemental Food Program, U.S. Department of Agriculture Pass-Through Entity and Award Number: Minnesota Department of Health, award number 204642. Compliance Requirement: Eligibility Type of Finding: Significant deficiency in internal control over compliance Criteria: 2 CFR 200.303 of Subpart D, "Post Federal Award Requirements Standards for Financial and Program Management," of the Uniform Guidance requires a recipient to establish, document and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including eligibility. Condition: We requested eligibility forms for forty participants to review for the signature of site partner personnel indicating review of eligibility information on the form. One of the forty forms were unable to be located upon request. Eligibility information is input in ClientTrack software and the form should also be uploaded. Cause: Signed enrollment forms were not properly scanned into Sharepoint and had likely been disposed of. The signatures on these forms indicated the review by an agency partner that information included on the form is correct. Effect or Potential Effect: An ineligible individual could receive a CSFP box. Questioned Costs: None Context: Signed enrollment forms were not available for one of forty participants selected. Repeat Finding: yes, 2024-001 Recommendation: We recommend that Second Harvest Heartland digitalize their CSFP enrollment forms for convenient access and provide review of the electronically filed form prior to disposal of the paper form. Views of Responsible Officials: Agree.

Information on the Federal Program: Assistance Listing Number 10.565—Commodity Supplemental Food Program, U.S. Department of Agriculture Pass-Through Entities and Award Numbers: Minnesota Department of Health, award number 204642. Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs and Cost Principles Type of Finding: Significant deficiency in internal control over compliance Criteria: 2 CFR 200.303 of Subpart D, "Post Federal Award Requirements Standards for Financial and Program Management," of the Uniform Guidance requires a recipient to establish, document and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed and Allowable Costs and Cost Principles. Condition: Processes and procedures in place to review and submit administrative expenditures did not include a thorough enough review process to agree information to source data. Cause: Expenditures were reviewed before submission, however the review of this information was inadequate as it did not corroborate totals with the source data. Effect or Potential Effect: The Organization could have received reimbursement in excess of incurred expenses. Questioned Costs: None Context: One of the months selected for detail testing was found to have an erroneous submission using the wrong month’s expenditures. However, because the Organization incurred significantly more expenses than for which it was reimbursed during the year, the erroneously reported expenses had not been reimbursed by the funder. Repeat Finding: No Recommendation: We recommend that Second Harvest Heartland review the source data for all future expense reports. Views of Responsible Officials: Agree.

Finding: 2025-001 – Special Tests and Provisions – Student Awards Information of Federal Program: Student Financial Aid Cluster Federal Pell Grant Program – CFDA No. 84.063 Federal Family Education Loans – CFDA No. 84.032 Federal Supplemental Educational Opportunity Grant – CFDA No. 84.007 Federal Work-Study Program – CFDA No. 84.033 Criteria: In accordance with 2 CFR § 668.32 and the program regulations of the Federal Pell Grant Program, institutions must determine student eligibility and award amounts based on the student’s expected family contribution (EFC), enrollment status, and cost of attendance, as calculated using the U.S. Department of Education’s payment schedules. Under 2 CFR § 200.303 and § 200.62, the College must maintain effective internal controls to ensure accurate and complete award determinations for all Pell recipients. Condition: During testing of 40 Pell Grant recipients, we noted two students whose awards were not correctly calculated:  One student was over-awarded due to use of an incorrect enrollment status when determining the payment amount.  One student was under-awarded because the EFC used in the calculation did not agree to the value reported on the student’s Institutional Student Information Record (ISIR). These errors resulted in one Pell Grant being overstated and one being understated. Questioned Costs: The net questioned costs totaled $315.00 (consisting of an over-award of $428.00 and an under-award of $743.00). Because both occurred within the same program and offset in amount, the total questioned costs are not considered material to the program. Cause: The errors resulted from insufficient review controls over manual data entry of Pell calculations and failure to perform a secondary reconciliation between ISIR data and the financialaid management system prior to disbursement. Effect or Potential Effect: Improper Pell disbursements were made to two students, resulting in non-compliance with program regulations and the potential for repayment or future adjustment in federal funding. Context: We tested a nonstatistical sample of 40 Pell Grant recipients for compliance with federal eligibility and disbursement requirements. The two exceptions noted represent 5% of the sample and were isolated control errors rather than evidence of a systemic issue. No additional exceptions were identified in the remainder of the population tested. Repeat Finding: This is not a repeat finding from the prior year.Recommendation: We recommend that the College implement procedures to:  Require a secondary review and approval of all Pell award calculations prior to disbursement.  Periodically reconcile ISIR data to the financial aid management system.  Provide annual staff training on Pell Grant payment schedules and data entry accuracy. Views of responsible officials and planned corrective action: Management concurs with the finding, See the Corrective Action Plan (CAP) on pages 64 for detailed information regarding specific corrective steps and implementation timelines.

FINDING 2025-001 Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency, Other Matters Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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 200.430 states in part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $5,476 (Known questioned costs) Context: During testing of allowable activities and costs, it was observed that the School Corporation allocated payroll and benefit expenses to the school lunch fund for the employee overseeing the food service management company. Five payroll transactions totaling $5,476 were selected for testing. For each transaction tested, the School Corporation allocated 18% of the employee’s time to the school lunch fund. Although the employee completed an annual self-certification estimating time spent on food service duties, there was no detailed time and effort log to support actual hours worked. Additionally, no internal control existed to provide a documented secondary review of the self-certification for accuracy and completeness. Identification as a repeat finding: This is a repeat finding from the immediately prior audit. The prior finding number was 2024-003. Recommendation: We recommend management ensure that time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Finding 2025-001 – NSLDS Reporting Repeat Finding: Yes Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Pell Grant Program: 84.063 Federal Direct Student Loans: 84.268 Federal Work Study Program: 84.033 Federal Supplemental Educational Opportunity Grants 84.007 Federal Award Year 2024-2025 Award Numbers: P063P242988, P063P232988, P007A241227, P007A231227, P033A241227, P268K252988, P268K242988 Condition For eighteen out of sixty students tested (30%) who had enrollment changes at the College, the students' status effective dates at the campus level and program level were not reported to the National Student Loan Data System (NSLDS) timely. For three out of sixty students tested (5%) who had enrollment changes at the College, the students' status at the campus level and program level were not reported to the NSLDS accurately. Criteria CFR section 685.309 and 690.83(b)(2) requires the College to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure that enrollment status changes are reported timely. Questioned Costs There were no questioned costs related to testing of enrollment reporting. Cause During the reporting period, the processing of the spring subsequent term file was delayed due to program mismatches reported to National Student Clearinghouse (NSC), which resulted in a significant volume of ER1568 errors. The resolution required extensive troubleshooting and the implementation of corrective measures, which extended the time needed to complete processing. Reporting of the College’s spring graduates was also delayed due to a missing reporting date within NSC. An alternative date was provided, and the Grads Only file was submitted on September 2, 2025. Context Frequent. Twenty-one out of sixty students selected for testing. Effect Failure to report status changes accurately and timely is noncompliance with Federal regulation and could result in loss of future funding. Recommendation We recommend the College implement review procedures to ensure that the proper effective date is reported timely to the NSLDS when a student withdraws or has an enrollment status change. A system of review procedures and/or controls will ensure the College is reporting status changes accurately. Views of responsible officials We agree with this finding. See corrective action plan.

Finding 2025-002 – Direct Loan Disbursement Notification Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Award Year 2024-2025 Award Numbers: P268K252988 Condition For eight out of eight students tested, the student did not receive the required notification that a direct loan had been credited to their account for nine out of the eighteen disbursements. Criteria 34 CFR 668.165 requires institutions who credit a student's account with a direct loan disbursement must notify the student, or parent, in writing of the (1) the date and amount of the disbursement; (2) the student's right, or parent's right, to cancel all or a portion of that loan or loan disbursement and have the proceeds returned; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel the loan. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure that direct loan notifications are sent timely. Questioned Costs There were no questioned costs related to testing of direct loan disbursement notifications. Cause During the first disbursement of the fall semester, the College provided the IT department with an incorrect disbursement date, which prevented disbursement notifications from being sent to students. Similarly, during the spring semester, the College failed to send the disbursement files to the IT department on several occasions, resulting in students not receiving disbursement notifications. Context Frequent. Eight out of eight students selected for testing. Effect Failure to notify students of their direct loan disbursement can result in students missing the period in which they can cancel their award and is noncompliance with Federal regulation and could result in loss of future funding. Recommendation We recommend the College implement review procedures to ensure that direct loan disbursement notifications are being sent each time a direct loan is credited to a student’s account. A system of review procedures and/or controls will ensure the College is properly sending notifications. View of Responsible Officials We agree with this finding. See corrective action plan.

Assistance to Firefighters Grant – Assistance Listing No. 97-044 Material Weakness. The District does not have written policies and procedures over major federal award programs as required under 2 CFR 200.303.Recommendation: The District should develop formal written policies and procedures covering at a minimum allowable costs and cost principles, procurement standards, eligibility determinations and reporting and recordkeeping for federal awards. These policies should align with GAO Green Book and COSO Internal Control Framework. Staff should be trained to implement monitoring and ensure consistent application.Views of Responsible Officials and Planned Corrective Actions: The District agrees with the finding and will develop written policies and procedures over federal awards

Finding Number: 2025-001 Finding Type: Federal award finding Federal Assistance Listing No.: 14.267 Program Name: Continuum of Care Program Federal Agency: U.S. Department of Housing and Urban Development Grant Number: WA0361L0T082308 Federal Award Period: October 1, 2024 through September 30, 2025 Pass-Through Entity: Multnomah County Grant Number: JOHS-SVCSGEN-15516-2023 Federal Award Period: July 1, 2023 through June 30, 2025 Control Deficiency Type: Significant deficiency over compliance Compliance Requirement: Special Tests and Provisions Repeat Finding: Yes. Prior audit finding no. 2024-001 Criteria: The Uniform Guidance in 2 CFR 200.303 requires that non-Federal entities receiving federal awards establish and maintain internal controls that provide reasonable assurance that the subrecipient is managing the federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award. Per 24 CFR 578.51(g), “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or sub-recipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for a comparable unassisted unit, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: Some of the rent reasonableness determinations were incorrectly performed. Cause: Internal controls are insufficient to ensure the rent reasonableness test is consistently calculated accurately and that appropriate supporting documentation is properly maintained. Effect: The organization may accidently provide rental assistance that is not in compliance with HUD guidelines. Questioned costs: Known and likely questioned costs are under $25,000. Audit Recommendation: We recommend the organization review and strengthen its written policies and procedures for rent reasonableness determinations. This should include ensuring consistent application of the methodology and maintaining complete supporting documentation for all rental assistance provided, in compliance with federal program requirements. In addition, we recommend that someone independent of the preparer perform periodic reviews of the rent reasonableness tests. Management’s Response: When placing a new participant in a HUD funded housing program, or upon relocation of an existing participant, Program Management will conduct a review of the staff prepared Utility Allowance and Rent Reasonable documentation to confirm calculations have been completed accurately and all supporting documentation is present. Program Management will indicate by signature on the File Checklist that they have confirmed all Utility Allowance and Rent Reasonable documentation is present and accurate. The File Checklist is submitted to fiscal prior to first payment for a new participant and upon relocation of an existing participant. Program Management will conduct a retrospective review of all current files to ensure Utility Allowance and Rent Reasonable documentation is completed accurately and all supporting documentation is present.

8. Criteria or specific requirement :Per Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200) Subpart D, Post Federal Award Requirements Section 200.303, Internal controls, the recipient must establish, document and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Per 2 CFR Part 200, Subpart E, Cost Principles, the accounting practices of the recipient must be consistent with the cost principles and support the accumulation of costs as required by the cost principles, including maintaining adequate documentation to support costs charged to the Federal award. '9. Condition: The District's accounting records did not support reported program expenditures totaling $32,734 due to the following: 1. Expenditures of $15,589 incurred and claimed for reimbursement in the prior year were claimed again in the current year. 2. Current year expenditures of $12,854 were claimed twice. 3. Payroll expenditures were claimed based on budget rather than actual amounts, resulting in claimed expenditures of $4,291 which were not supported. 10. Cause :The District's internal controls over compliance were not functioning effectively to ensure reimbursements were claimed for only actual expenditures incurred and supported by adequate documentation. 11. Effect: The District was not in compliance with the allowable costs/cost principles compliance requirement. 12. Questioned Costs: The following questioned costs were computed based on differences between the amounts claimed for reimbursement by the District and its expenditure accounting records: $15,589 (Project No. 24-4300-00) $12,854 (Project No. 25-4300-00) $4,291 (Project No. 25-4300-00) 13. Context: The condition noted was identified upon reconciling reimbursements claimed by the District to the general ledger accounts in which related expenditures were recorded and investigation of differences identified. 14. Reconmmendation : We recommend that management review its policies and procedures and implement changes to strengthen internal control over compliance. 15. Management's response: The District agrees with the auditor's finding and recommendation.

National Endowment for the Arts Federal Financial Assistance Listing 45.025, Affects all grant awards included under Federal Financial Assistance Listing 45.025 on the Schedule Promotion of the Arts Partnership Agreements Procurement, Suspension, and Debarment Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform to procurement standards in sections 200.317 through 200.327. Condition: The Organization has documented procurement procedures that conform to applicable federal standards regarding testing vendors for suspension and debarment; however, the procedures were not followed for two vendors selected for testing. Cause: The Organization's internal control process did not identify the two vendors for whom the suspension and debarment verification was not performed. Effect: Payments could be made to recipients who were suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 transactions out of 14 total transactions were selected for testing. Two vendors did not have support showing the search for suspension and debarment was performed which accounted for $155,100 of $716,818 of federal awards. Repeat Finding from Prior Year(s): No Recommendation: We recommend the Organization enhance internal control procedures to ensure all suspension and debarment verification procedures are performed prior to entering into the transactions. Views of Responsible Officials: Management agrees with the finding. The Organization takes compliance with federal procurement requirements seriously and has already implemented additional internal controls to address this.

2025 – 001 Allowable Costs Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Housing Opportunities for Persons with AIDS (HOPWA) AL Number: 14.241 Award Period: 7/1/24 - 6/30/25 Type of Finding: Significant deficiency in Internal Control over Compliance and Compliance Criteria or Specific Requirement According to §200.303 Internal controls of 2 CFR Part 200, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition and Context During our testing, we noted four samples where the Organization was not maintaining accurate records to support the payroll costs allocated to the grant. Based on the actual payroll costs of the employees charged to the grant the Organization could have charged additional costs to the grant. Effect Noncompliance results in potential for incorrect payroll costs allocated to federal grants. Questioned Costs None identified. Cause The issuance was caused by management oversight resulting in wage allocations not being updated and reviewed. Recommendation We recommend the Organization update their grant allocation process to ensure accurate wage rates are used to calculate the allocations. Views of Responsible Officials Beginning with July 2025, the Organization will ensure that current month costs are a direct reflection of that month's costs of the allocated employees using a labor rate equal to ((total allowable salaries and wages + total allowable employee benefits and taxes) / total allowable hours worked) * applicable HOPWA-related hours worked.

8. Criteria or specific requirement: Per Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200) Subpart D, Post Federal Award Requirements Section 200.303, Internal controls, the recipient must establish, document and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Per 7 CFR Section 210.8(a), the school food authority shall establish internal controls which ensure the accuracy of meal counts prior to the submission of the monthly claim for reimbursement. 9. Condition: Two (2) monthly claims for reimbursement reported meal counts in excess of those supported by records of the District. 10. Cause: The District's internal controls over compliance were not functioning effectively to ensure claims for reimbursement were accurately prepared. 11. Effect: The District was not in compliance with the reporting compliance requirement. 12. Questioned Costs: The following questioned costs were computed based on the excess meals claimed for reimbursement times the applicable reimbursement rate: $6 (Project No. 25-4220-00) $91 (Project No. 25-4210-00) 13. Context: From the population of eleven (11) monthly claims for reimbursement, a sample of four (4) claims were selected for testing. We noted two (2) months in which the claims for reimbursement reported meal counts in excess of those supported by records of the District as follows: November 2024: Actual meals served: 14,145; Meals claimed for reimbursement: 14,165 April 2025: Actual meals served: 17,200; Meals claimed for reimbursement: 17,202 A statistically valid sample was not utilized. 14. Recommendation: We recommend that management review its policies and procedures and implement changes to strengthen internal control over compliance. 15. Management's response: The District agrees with the auditor's finding and recommendation.

2025-002: Academic Programs - Suspension and Debarment (Significant Deficiency) Assistance Listing Number/Title: #81.252, Academic Programs Federal Agency Name: U.S. Department of Energy Award Number: DE-LM0000497 Award Year: October 1, 2023 - March 31, 2025 Criteria: Per 2 CFR 200.303(a), a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Federal award is managed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per review of 2 CFR 200.213, non-Federal entities are prohibited from contracting with, or making sub-awards under covered transactions to, parties that are suspended or debarred or whose principals are suspended or debarred. Covered transactions include contracts for goods and services awarded under a non-procurement transaction that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR Section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., sub-awards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR Section 180.215. Condition/context: Of the two vendors selected and tested, we determined that: • One vendor did not have a suspension and debarment clause in the contract and the College did not perform other verification procedures to ensure that the contractor was not suspended or debarred. However, we independently verified that the contractor was not suspended or debarred per review of sam.gov. • One vendor did not have a suspension and debarment clause in the contract, and while the College provided documentation of its review of sam.gov to verify that the contractor was not suspended or debarred, that documentation did not contain evidence that the verification was performed timely (i.e., before entering into the contract with the vendor). Cause: The College’s preferred verification for suspension and debarment is checking sam.gov. The program’s backup method of verification is a standard suspension and debarment clause within the formal contract. However, the program’s control system did not function as designed. Effect: If the College is not verifying that vendors with which it contracts are neither suspended nor debarred or keeping record of such verification, it is possible that the College could contract with a vendor that is suspended or debarred, in which case the College may be required to return the funds expensed to that vendor to the Federal oversight agency. Questioned costs: None. Identification as a repeat finding: No. Recommendation: We recommend that the College review and revise its current control system to require that all contracts be initiated through a procurement process that includes the suspension and debarment certification process. If this is not feasible, we recommend that a secondary control system be established to ensure that all contracts entered into outside of the procurement process be reviewed to ensure compliance with all of the necessary Federal requirements, including suspension and debarment. This could include documenting and keeping records of the sam.gov checks being completed for each vendor and showing proof that each was reviewed by appropriate personnel in a timely manner. Views of responsible officials: Management concurs with the finding. See Exhibit I for corrective action plan.

CONDITION: During testing of disbursements charged to the Head Start program, two instances were identified where duplicate payments were made to the same vendor for the same invoice. The payments were charged to the Head Start program. CONTEXT: A sample of 40 disbursements totaling $124,950 was selected from a population of 1,385 disbursements totaling $811,622. The test found two disbursements that were not in compliance with questioned costs totaling $2,824. CRITERIA: 2 CFR § 200.303(a) requires that the School Board must “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes. Additionally 2 CFR§200.403(a) states that costs must “be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” CAUSE: The School Board relies on its accounting software’s automated controls to prevent the processing of duplicate invoices. However, the duplicate payments occurred because slightly different invoice numbers were entered into the system, allowing the software to recognize the transactions as unique and process both payments. EFFECT: The federal program may have been overcharged. RECOMMENDATION: The School Board should evaluate their internal controls and review expenses being charged to the Head Start program to ensure they are allowable.

Strengthening Institutions Program – Department of Education Federal Financial Assistance Listing #84.031 P031A080196 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. 2 CFR 200.328 and 2 CFR 200.329 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition: Section 3 of the Title III Endowment Report for the year ending June 30, 2024, was completed materially incorrect for Type of Savings Account Security line items and Total Invested line item. Cause: There was a lapse within the internal control process ensuring the report was completed materially correct. Effect: The annual report was completed materially incorrect and filed with the Department of Education. Questioned Costs: None. Context/Sampling: No sampling was utilized. The only report required to be filed in the fiscal year was tested. Repeat Finding from Prior Years: Yes. Recommendation: The University should review their current internal control process to ensure required reports are completed materially correct. Views of Responsible Officials: Management agrees with the finding.

Finding 2025-005 Lack of Internal Controls over Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: U.S. Department of Agriculture, passed through the State of Alaska, Department of Education and Early Development Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553 and 10.555 Award Year: 2025 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: Internal controls and financial policies must be adhered to, to ensure charges to grants are adequately supported. All cash and payroll disbursements must be accompanied by supporting documentation, including invoices, proper approval, and approved PAF’s. 2 CFR Section 200.303 requires entities establish and maintain internal controls over federal awards. Condition and Context: Multiple transactions tested lacked the necessary supporting documentation, including invoices and evidence of approval. During our testing of internal controls over the cash disbursement system, we tested a sample of twenty-five (25) transactions and noted the following errors: six (6) transactions did not have supporting documentation such as bills or invoices. Twenty-three (23) transactions did not have purchase orders or approval. During our testing of internal controls over payroll transactions, we tested a sample of eight (8) payroll transactions and noted that two (2) did not have approved personnel action forms. Cause: Lack of internal controls over cash and payroll disbursements and maintaining related supporting documentation. Effect: This could lead to a material misstatement for cash disbursement and payroll related items in the financial statements. Failure to follow compliance requirements could result in loss of federal funding. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding, therefore we believe it to be an isolated instance. Recommendation: Policies and procedures regarding internal controls over cash and payroll disbursements must be strengthened to ensure disbursements charged to grants are properly approved and accompanied by adequate supporting documentation.

2025-002 – Eligibility Determination Not in Place or Consistently Applied Across all Programs U.S. Department of Human Services Temporary Assistance for Needy Families – AL #93.558 TN Department of Human Services Compliance Requirement – Eligibility Condition: Controls over participant eligibility documentation were not in place or inconsistently applied. Required eligibility documentation was incomplete, missing, or inconsistent with program requirements. Additionally, some eligibility forms were signed by the applicant after year-end, indicating that eligibility was not properly established prior to the period of service. In some cases, limited or no documentation was provided. Criteria: Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal programs to provide reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the award. The OMB Compliance Supplement for TANF requires recipients to obtain, review, and retain sufficient documentation to verify participant eligibility at the time eligibility is determined. Cause: The Organization does not have formalized, consistently applied procedures in place to ensure that eligibility documentation is collected, verified, and reviewed prior to approving participants for TANF services. The Organization relied on informal practices rather than a formally defined process. Effect: Failure to properly document and verify eligibility increases risk that ineligible individuals may receive TANF-funded services, which could result in questioned costs or return of federal funds to the State. Context: A sample of twenty-five (25) participants were selected for eligibility testing. Exceptions included eight (8) eligibility forms were not signed by program personnel, eleven (11) eligibility forms that were signed by the applicant after year-end, no information was provided for two (2) participants selected, and limited information was provided for one (1) participant selected. Therefore, eligibility could not be determined due to insufficient documentation. Recommendation: We recommend the Organization establish and implement written eligibility determination procedures uniformly across all TANF programs to verify proof of residency, citizenship of the child or expectant mother within the home, income, resources, and, if applicable, work participation. This process should include eligibility documents to be completed, signed, and dated prior to services being provided. A level of review and approval should be performed to verify the above information and eligibility status. All supporting documentation required by Tennessee Department of Human Services should be maintained within the participant eligibility file. Management’s Response: See accompanying management’s corrective action plan.

2025-003 – Inaccurate Eligibility Classification and System Entry U.S. Department of Agriculture Child and Adult Care Food Program (CACFP) – AL #10.558 TN Department of Human Services Condition: We noted multiple instances in which eligibility determinations based on income levels, specifically related to rates at which student meals are reimbursed (paid, reduced, or free), lacked sufficient controls in place to categorize the student accurately. Criteria: Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal programs to provide reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the award. The OMB Compliance Supplement for CACFP requires recipients to obtain, review, and retain sufficient documentation to verify participant eligilbility at the time eligibility is determined. Cause: Due to the process being heavily manual in nature, the deficiencies ultimately resulted from human error. Despite multiple levels of documented approvals of the application, the control failed as the different levels of review did not catch the participant being classified incorrectly based on income levels. Additionally, there is a lack of defined procedures to ensure that the approved documentation is reconciled with the eligibility category entered into the system, as there were instances where the student was classified correctly on the application form but not within the system. The errors affected both manual documentation review and data-entry classification, indicating a disconnect between approval and system processing. Effect: Due to the eligibility classifications being incorrect, the Organization was reimbursed at lower rates than supported by the documentation. As a result, the errors did not lead to overcharging the federal program, but instead, caused the Organization to claim less reimbursement than that for which it was eligible. Although this reduces the risk of questioned costs for overbillings, the conditions represent a control failure. Such control failures could lead to future noncompliance or incorrect claims in either direction if not addressed. Context: A sample of forty (40) students were selected for eligibility testing. Three (3) CACFP application forms were classified incorrectly as free, reduced, or paid based on income levels. Two (2) participants were entered into the system under the incorrect eligibility category, resulting in a discrepancy between the supporting documentation and the recorded classification. Recommendation: We recommend that management strengthen internal controls over the eligibility process. Management should retain the multi-level review structure; however, each level of review should include a documented verification of income information and eligibility categorization. In addition, management should implement a formal reconciliation process that confirms the eligibility classification approved on the application form matches the classification entered into the system prior to finalization or claim submission. Management’s Response: See accompanying management’s corrective action plan.

2025-004 – Lack of Controls over Reporting Corporation for National and Community Service Americorps Seniors Foster Grandparent Program – AL #94.011 TN Commission of National & Community Service/Americorps State and National Condition: The Organization does not have adequate internal controls in place over the preparation and submission of required program reports. Program reporting is prepared and submitted solely by the grant accountant, with no supervisory review and approval process to ensure accuracy prior to submission. Criteria: Uniform Guidance 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal control over compliance, including controls that provide reasonable assurance that reporting is accurate, complete, and properly supported. Cause: Management has not implemented a control structure to ensure program reports are independently verified for accuracy and compliance. Effect: Although reports were ultimately submitted timely and included the necessary information, there is an increased risk that errors, omissions, or inconsistencies in program reporting may go undetected. The lack of a functioning review control increases the likelihood of future noncompliance or reporting inaccuracies. Context: During testing of reporting, it was noted that program reports were prepared and submitted by a single individual. Management confirmed that no secondary review and approval was performed prior to submitting required reports.

AL# 11.307: COVID-19 Economic Adjustment Assistance, Economic Development Cluster, U.S. Department of Commerce, Federal Award # 05-79-06082 - 2021 Condition: The required performance reports ED-916 and ED-917 were not completed or submitted during the fiscal year. Criteria: 2 CFR 200.303(a) states that the Center is required to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Questioned Costs: None noted. Context: The Center transitioned to the revolving stage of the program and there was a misunderstanding that the ED-916 and ED-917 had to be filed during the revolving stage. The sample size was determined based upon the guidelines provided by the AICPA which is not a statistically valid sample. Cause: The Center misunderstood that the performance reports were applicable during the revolving stage. Effect: Not reporting performance reports may impact the federal agency’s ability to assess the effectiveness of the federal program. Recommendation: We recommend that the Center work with the EDA to understand when reporting requirements will change during the revolving process and complete and submit the ED-916 and ED- 917 reports as soon as possible. Views of Responsible Officials (Unaudited): All EDA reporting will be completed and submitted to ensure the Center is up to date on required filings. In addition, the Center will work with the EDA to understand when reporting requirements will change during the revolving process.

Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants – Guaranteed Loan Special Test and Provisions Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The commitment letter for the term loan with the bank requires debt service coverage ratio and working capital to be calculated yearly using audited financial statements. Condition: As of June 30, 2025, management did not perform the proper calculations for the debt service coverage ratio in accordance with the commitment letter. Additionally, the required debt service coverage ratio and required working capital amount were not presented to the board to ensure compliance is obtained. Cause: The Health Center did not have the proper understanding of the calculation for the annual debt service coverage ratio as of year‐end. Additionally, the covenant requirements were not presented to the board to ensure compliance is obtained. The board may be unaware of the covenant requirements identified within the commitment letter. Effect: The Health Center had errors in the calculation and may be in violation of the debt service coverage ratio and working capital requirements if calculations are not performed properly and the covenant requirements are not presented alongside the calculations to ensure compliance. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: Yes, similar Finding 2024‐003 Recommendation: We recommend management use the formulas prescribed by the commitment letter to calculate the debt service coverage ratio and working capital amount and present these alongside the covenant requirements as a part of their year‐end close process to ensure all covenants of the loan are met. Views of Responsible Officials: Management agrees with the finding.

FINDING 2025-001 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-046-PN01, 22611-046-ARP, 22619-046-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 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 awards 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Porter County Education Services (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-046-PN01, 22611-046-ARP, and 22619- 046-ARP grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The non-public proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per each applicable member schools’ grant award was expended and properly reported to IDOE, as required. The lack of internal controls was isolated to the 22611-046-PN01, 22611-046-ARP, and 22619-046-ARP grant awards which were fully expended during fiscal year 2024. These three grant awards had minimum earmarking requirements for the Non-Public Proportionate Share of $39,016, $9,471, and $533, respectively. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Assistance Listing, Federal Agency, and Program Name - 84.424, U.S. Department of Education, Student Support and Academic Enrichment Program Federal Award Identification Number and Year - 250750; 2025 Pass through Entity - Michigan Department of Education Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR § 200.303(a), nonfederal entities must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition - The School District's controls did not prevent, or detect and correct in a timely manner, duplicative costs charged to the grant. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - Within a sample of 40 special pay home visit payroll transactions, there was one transaction identified that consisted of duplicative costs where the same payroll costs were charged to the grant twice. The School District determined that duplicative costs were submitted for pay during a time of staffing transition in the department that is responsible for tracking home visits. The costs were submitted to payroll by the former employee responsible for tracking the time, as well as submitted by the new employee within that role. Special pay for home visits does not follow the standard payroll procedures; instead, it is processed and approved manually. The costs submitted did go through a manual review process prior to being charged to the grant, but the review in place did not operate effectively to identify the duplicative costs. The School Districted identified a total of five transactions in total that amounted to $3,023 in duplicative costs. Cause and Effect - Controls in place did not prevent or detect and correct duplicative costs charged to the program. As a result, the School District received reimbursement in excess of the actual amount spent on the grant and the initial SEFA provided to the auditors was overstated by $3,023. The schedule of expenditures of federal awards for the year ended June, 30, 2025 was corrected. Recommendation - We recommend that the School District review the controls in place to ensure that the review control is at a sufficient level to address the risk of duplicative expenses being charged to the grant. Views of Responsible Officials and Planned Corrective Actions - The School District annually processes thousands of supplemental payments for home visits. The audit found only five individual payments were duplicated. The duplication was caused by human error during an internal staff transition within the Family and Community Engagement (FACE) department. This led the new manager to incorrectly report employee home visit logs twice. The FACE team will add internal controls during staff transitions to ensure documentation is not duplicated.

Finding 2025-001 Student Financial Aid Cluster Eligibility Federal Agency: U.S. Department of Education Program: Student Financial Assistance Cluster (ALN #’s - 84.063, 84.033, 84.007, 84.268) Criteria: Uniform Guidance (2 CFR 200.303) requires institutions administering federal programs to establish and maintain effective internal controls to provide reasonable assurance of compliance with federal statutes, regulations, and terms and conditions of awards. Additionally, Title IV regulations further require institutions to accurately calculate and disburse financial aid based on student eligibility These controls should include maintaining documentation on file of the calculations performed to determine eligibility and award amounts. Condition: Our financial aid sample of 40 items tested yielded 33 students who received Pell Grant Funding, 27 students who received Subsidized Direct Loans and 24 students who received Unsubsidized Direct Loans. Of the students tested, we noted five instances where students did not receive the correct amount of aid, per our independent calculations and those performed by WCCC. Please refer to page 80 of the June 30, 2025 audit report for details. Additionally, Of the 40 students selected for testing, the cost of attendance within the student financial aid module maintained within WCCC’s enterprise-wide software, did not agree with calculations done by the auditors and/or financial aid staff and could not be relied upon to reperform calculations to determine proper award amounts. Cause: As a result of calculation errors brought about by the issues with the student financial aid module, aid was not calculated and disbursed correctly. Documented controls were not in place to ensure students received the proper amount of Student Financial Assistance they were entitled to receive. Effect: WCCC is not in compliance with required calculations for student financial assistance funding. WCCC may be liable to return funds to the Department of Education related to overpayments to students or students may not have received the total amount of funding that they were eligible for. Repeat Finding: This is a repeat finding of 2024-002, 2023-003. Questioned costs: Known: $7,045, Likely : $378,420 Based on our testing of student financial aid disbursements, we identified five instances in which students did not receive the correct amount of aid. The differences associated with these items total $7,045 and are reported as known questioned costs. In addition, by projecting known questioned costs identified in the eligibility audit sample to the entire population from which the sample was drawn results in likely questioned costs of $378,420. Recommendation: We recommend that WCCC review policies and procedures to ensure that proper procedures are in place verifying the accuracy of student eligibility for grant funding and that the proper amount is paid to the student based on financial need. Additionally, the calculations prepared to determine award amounts should be maintained on file. Ideally, the enterprise-wide student financial aid module should contain the appropriate information and demonstrate the appropriate calculations. View of Responsible Officials and Planned Corrective Action: Management agrees. See separate Corrective Action Plan.

Finding 2025-001: Allowable Costs/Cost Principles – Improper expenditure recognition Federal Program Name: Title II, Part A, Teacher & Principal Training and Recruiting Assistance Listing Number: 84.367A Federal Agency Name: U.S. Department of Education Passed-Through Agency Name: Texas Department of Education Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement Per 2 CFR 200.302 and 200.303, management is responsible for ensuring the accuracy and completeness of all financial records and related information, as well as for establishing and maintaining effective internal controls over grant reporting and compliance. Condition During the current fiscal year, grant expenditures initially included $291,666 for services scheduled to be provided in the subsequent fiscal year. Cause In preparing its financial records for the year ended June 30, 2025, the District did not identify expenditures recorded in the incorrect fiscal year. The failure to detect these errors in a timely manner indicates that closing procedures— specifically the monitoring and review of financial information—were not performed effectively. Effect or Potential Effect The District’s internal control system did not prevent, or timely detect and correct, misstatements in its financial records. Ineffective monitoring and closing procedures increase the risk that errors or irregularities may occur and remain undetected. Questioned Costs None Context or Perspective Information Improper recognition of expenditures could result in misstatements reported to awarding agencies and inaccuracies in the Schedule of Expenditures of Federal Awards, potentially affecting the determination of major programs subject to single audit testing. The expenditures identified above were ultimately removed from current year activity and were excluded from the year-end reimbursement request. Recommendation We recommend that the District provide additional training to staff responsible for preparing year-end grant expenditure reports to strengthen accuracy. Views of Responsible Officials and Planned Corrective Actions See corrective action plan

Finding 2025-001: Child Nutrition Cluster Listing #10.553 & #10.555 Federal Agency: U.S. Department of Agriculture Grant Period: Year ended June 30, 2025 Condition/Criteria: The District bases its monthly meal counts submitted to NYSED on internally kept records. We noted instances in which the NYSED meal count submission did not match the internal reports as required by 2 CFR Section 200.303. Cause: The District did not submit complete meal counts to NYSED for all of the District’s buildings for breakfast and/or lunch. Context: Of the 3 months haphazardly selected (not a statistically valid sample), 1 month had differences between the meal counts that were submitted to NYSED and the internally kept meal count records. While not part of our sample, we did note another instance whereby the submitted meal counts were inaccurate. Proper review was not completed to confirm that the submission was complete and accurate. Effect and Questioned Costs: Based on the current NYSED reimbursement rates, $17,227 and $13,241 of federal reimbursable costs from the month selected and additional month identified, respectively, of federal reimbursable costs were not submitted due to this error. This is considered material to the Child Nutrition Cluster program. Additionally, $30,468 was accrued as part of an audit adjustment to record this federal revenue. Recommendation: We recommend the District implement a process to ensure that the meal count submission to NYSED matches the internally kept records. Management Response: The District agrees with this finding and will be implementing a new policy which includes a Finance Office verification of the meal counts submitted when the deposits come in through Child Nutrition to ensure that the reports match the deposit and the reports match the internal reports for meal counts The District was able to recoup the funds from the missing months by submitting corrected claims.

Finding Number: 2025‐001 Repeat Finding: No Program Name/Assistance Listing Title: Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 93.558 Federal Agency: U.S. Department of Health and Human Services Federal Award Number: CTR066206, CTR064289 Pass‐Through Agency: Arizona Department of Economic Security, Arizona Foundation for Legal Services Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Eligibility Criteria Under eligibility guidelines for the Temporary Assistance for Needy Families (TANF) program, only financially needy families that consist of a minor child living with a parent or a pregnant woman may receive TANF assistance. In accordance with 2 CFR 200.303, management is responsible for establishing and maintaining internal controls over federal programs, which includes developing a system to ensure documentation is maintained to support that program participants meet the TANF eligibility requirements. Condition The documentation Emerge maintained for participants reported as TANF eligible did not always include information on whether the participant was pregnant or had children or dependents under the age of 19. Cause Emerge’s internal controls over documenting client information in the client management software were not adequate. Effect Two participants were incorrectly designated as TANF eligible. Context During our review of files for TANF eligible participants, we noted that for two of 21 participants reviewed, Emerge did not maintain documentation that indicated whether the participant was pregnant or had children or dependents under the age of 19. The sample was not intended to be, and was not, a statistically valid sample. Recommendation Management should ensure that intake staff not only inquire whether participants meet TANF eligibility requirements, but also document such information prior to classifying the individual as TANF eligible. Views of Responsible Officials See Corrective Action Plan.

Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.268 Award Period: June 1, 2024 to May 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition: During our testing, we noted the College did not have a formal review of their monthly reconciliations of Common Origination and Disbursement (COD) data with student account records, federal aid packaging by financial aid staff, and monitoring of the G5 system to ensure timely return of undisbursed funds after 240 days. Questioned Costs: N/A Context: The College did not have proper internal controls in place during the 2024-25 academic year to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Cause: The lack of documentation appears to stem from limited administrative capacity, particularly in the wake of operational disruptions and regulatory changes such as FAFSA Simplification. Effect: The College is not following the compliance with federal statutes, regulations, and the terms and conditions of the federal award. Repeat Finding: No Recommendation: We recommend the College review its procedures to ensure controls are in place to ensure to catch any inconsistencies that occur during the year. Views of Responsible Officials: There is no disagreement with the audit finding.

Finding 2025-001 – Procurement (Material Weakness) Repeat Finding: No Federal Agency – National Science Foundation; National Institute of Health Research and Development Cluster Social, Behavioral, and Economic Sciences – Passed through New York University: 47.075, Mathematical and Physical Sciences – Passed through Loyola University of Chicago: 47.049, Biological Sciences: 47.074, Allergy and Infectious Disease Research: 93.855 Federal Award Years: Year Ended May 31, 2025 Condition The College's procurement policy does not reflect all applicable state and local laws and federal regulations. For two out of three (67%) small purchase procurements, there was not sufficient evidence to support that documentation of the noncompetitive procurement method selected was provided at the time of purchase. Criteria Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. In accordance with 2 CFR sections 200.319 and 200.320(f), price quotations should be obtained from an adequate number of qualified sources for procurements that meet the small purchase procurement threshold or require documentation in support of the rationale to limit competition in those cases where competition was limited. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure the College has a procurement policy that meets the all applicable state and local laws and regulations. Questioned Costs There were no questioned costs related to this finding. Cause The College does not have a procurement policy that follows the procurement standards set out at 2 CFR sections 200.318 through 200.327. Context Two out of three vendors tested. Expenditures totaled $100,553. Effect Lack of a documented procurement policy that meets applicable state and local laws and federal regulations can result in improper procurement of goods and services which can lead to loss of future funding. Recommendation We recommend the College implement a procurement policy that conforms to federal regulations. We also recommend that the College implement policies and procedures around documentation of noncompetitive bidding. Views of Responsible Officials We agree with this finding. See corrective action plan.

Finding 2025-002 – Suspension and Debarment (Material Weakness) Repeat Finding: No Federal Agency – National Science Foundation; National Institute of Health Research and Development Cluster Biological Sciences: 47.074, Allergy and Infectious Disease Research: 93.855 Federal Award Years: Year Ended May 31, 2025 Condition For two out two vendors (100%) tested, the College did not provide sufficient documentation that a suspension and debarment check was performed prior to entering into a contract with the vendor. Criteria Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220 Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure suspension and debarment checks are performed and documented. Questioned Costs There were no questioned costs related to this finding. Cause The College did not have controls in place to reasonably ensure compliance with suspension and debarment requirements of the Uniform Guidance. Context Two out of two vendors tested. A subsequent check was confirmed that these vendors were not suspended or debarred. Effect If the College does not obtain documentation confirming a vendor for a procurement transaction was not suspended or debarred, the College could enter into a transaction with a suspended or debarred vendor causing unallowable costs and as a result represent noncompliance and result in a loss of federal funding. Recommendation We recommend the College review current processes for suspension and debarment to ensure that documentation is included to support the suspension and debarment check prior to entering into a contract with a vendor. Views of Responsible Officials We agree with this finding. See corrective action plan.

Finding 2025-003 – Student Financial Aid - Excess Cash (Significant Deficiency) Repeat Finding: No Federal Agency – U.S. Department of Education (ED) Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Award Years: Year Ended May 31, 2025 Condition During our cash management testing, we identified that Lake Forest College had excess cash for the FDL program ranging from $24,903 to $3,683,698 during the period of January 30, 2025 through February 7, 2025. In this situation, the excess cash exceeded one percent of total prior year drawdowns, and the amount was not returned within a seven-day period. Criteria Uniform Grant Guidance (34 CFR 668.166) states the Secretary considers excess cash to be any amount of Title IV, HEA program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution (1) received those funds from the Secretary; or (2) deposited or transferred to its depository account previously disbursed Title IV, HEA program funds, such as those resulting from awards adjustments, recoveries, or cancellations. An institution may maintain for up to seven days an amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The institution must return immediately to the Secretary any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the seven-day tolerance period. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure excess cash is properly handled. Questioned Costs Questioned costs is the amount that exceeded one percent of total prior year drawdowns. Excess cash ranged from $24,903 to $3,683,698. Cause The College drew down funds in advance of the Spring semester which is allowed based on the College’s cash management method. However, due to timing differences, the funds were not ultimately disbursed to students until 8 days after the drawdown was made. Context One instance of excess cash during the fiscal year. Effect Excess cash is noncompliance with Federal regulation and could result in the loss of future funding. Untimely reconciliation of federal awards can result in over or under awarding of funding and result in heightened monitoring by the Department of Education. Recommendation We recommend the College review current processes for monitoring cash management and implement procedures that eliminate excess cash. Views of Responsible Officials We agree with this finding. See corrective action plan.

Finding 2025-004 – Enrollment Reporting (Significant Deficiency) Repeat Finding: No Federal Agency – U.S. Department of Education (ED) Student Financial Assistance Cluster Federal Pell Grant Program: 84.063 Federal Direct Student Loans: 84.268 Federal Work Study Program: 84.033 Federal Supplemental Educational Opportunity Grants 84.007 Federal Award Years: Year Ended May 31, 2025 Condition For three out of forty (7.5%) student enrollment reporting selections, the student's status change at the campus level and program was not properly reported to NSLDS with the required timeframe. Criteria CFR section 685.309 and 690.83(b)(2) requires the College to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure accurate and timely enrollment reporting Questioned Costs There were no questioned costs related to testing of enrollment reporting. Cause The student's status change was after the last scheduled reporting transmission file of the semester, therefore their status change was not captured in the NSLDS reporting submission. Context Three out of forty students selected for testing. Effect Failure to report status changes accurately is noncompliance with Federal regulation and could result in heightened monitoring by the Department of Education. Recommendation We recommend the College implement review procedures to ensure that the proper effective date is being reported to the NSLDS when a student withdraws or has an enrollment status change. A system of review procedures and/or controls will ensure the College is reporting status changes accurately. Views of responsible officials We agree with this finding. See corrective action plan.

Special Tests and Provisions – Enrollment Reporting U.S. Department of Education, Student Financial Assistance Cluster, Assistance Listing Number 84.268 Federal Direct Student Loans, Assistance Listing Number 84.063 Federal Pell Grant Program Program Year 2024–2025 Type of Finding: Other Instance of Noncompliance and Deficiency Criteria: Per 2 CFR §200.303, 34 CFR 685.309, OMB No. 1845-0035 and the Federal Student Aid Handbook, institutions are required to report accurate and timely enrollment status changes, including graduation, to the NSLDS via the National Student Clearinghouse or other reporting mechanisms. Accurate reporting ensures proper administration of Title IV funds and prevents inappropriate loan deferments or repayments. Condition: The University did not ensure that all graduation data was accurately transmitted and reflected in the National Student Loan Data System (NSLDS). Questioned Costs: $0 Context: Out of the population of 167 students subject to enrollment reporting, a sample of 17 students were selected for testing. For 1 of the 17 students tested, NSLDS did not reflect the student’s graduation status on campus or program students in which the University’s records reported graduated. Effect: Failure to report accurate enrollment status may result in incorrect deferment or repayment statuses for student borrowers, potentially impacting loan servicing and compliance with federal regulations. Cause: The errors appear to be the result of a lapse in control by the University to ensure all graduation data was accurately transmitted and reflected in the NSLDS. Recommendation: We recommend the University enhance its controls over the enrollment reporting process to ensure that all graduation data is accurately and timely reported to the NSLDS. This may include periodic reconciliations between internal records and NSLDS data and follow-up procedures for discrepancies. Views of Responsible Officials: Management concurs with the finding and recommendation. Further information on the corrective action plan will be provided by management.

Finding 2025-001: Excess Cash – Student Financial Aid Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster, Federal Direct Student Loans Assistance Listing Number: 84.268 Award Year: June 1, 2024 – May 31, 2025 Program Expenditures: $26,594,632 Questioned Costs: None Criteria: Uniform Grant Guidance (34 CFR 668.166) states the Secretary considers excess cash to be any amount of Title IV, Higher Education Act (HEA) program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution (1) received those funds from the Secretary; or (2) deposited or transferred to its depository account previously disbursed Title IV, HEA program funds, such as those resulting from awards adjustments, recoveries, or cancellations. An institution may maintain for up to seven days an amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The institution must return immediately to the Secretary any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the seven-day tolerance period. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure excess cash is properly handled. Condition: The Kansas Health Science University (KHSU) had one instance of excess cash for the Federal Direct Student Loan program. During our cash management testing, we identified KHSU had excess cash for the Direct Loan program ranging from $94,646 to $190,735 for the period from March 21, 2025 to April 3, 2025. For the period of March 21, 2025 to April 3, 2025, the excess cash exceeded one percent of total prior year drawdowns and amounts were not returned within the seven-day period. Cause: University officials stated the excess cash issues were due to time needed to reconcile refunds with the Common Origination and Disbursement system. Effect: Excess cash is noncompliance with Federal regulations and could result in heightened monitoring by the U.S. Department of Education. Questioned Costs: None Context: For the period of March 21, 2025 to April 3, 2025, KHSU had excess cash ranging from $94,646 to $190,735. KHSU held excess cash for a period of 9 business days and 14 calendar days, respectively. Repeat Finding: Yes. (Finding 2024-001) Recommendation: We recommend KHSU strengthen internal controls around the determination of amounts to be drawn and refunded to the Secretary during the fiscal year. Views of Responsible Officials: Management agrees with the finding. Please see corrective action plan attached.

Finding 2025-003 Identification of the Federal Program: U.S. Department of Housing and Urban Development: AL 14.267 – Continuum of Care Program Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Significant deficiency in internal controls over compliance. Criteria 2 CFR 200.303(a) of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The nonfederal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are met. As outlined in 2 CFR 180, recipients must not utilize any contractor which is suspended or debarred or is otherwise excluded from the central contractor registry. Statement of condition and cause The Organization’s procurement policy did not include all the required elements as outlined in the Uniform Guidance. Additionally, the Organization did not retain documentation to support the procedures performed to ensure compliance with suspension and debarment requirements. Effect Lack of complete procurement, suspension, and debarment policies and not retaining documentation to support compliance with suspension and debarment requirements could result in noncompliance with the Uniform Guidance. Questioned Costs N/A Repeat Finding No Recommendation We recommend that management develop a written procurement policy that conforms with the Uniform Guidance. In addition, we recommend that management implement procedures and control processes to retain documentation supporting compliance with major federal program compliance requirements regarding suspension and debarment. Management response See Corrective Action Plan

Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity in managing the Federal awards 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).” Condition: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: Management is not utilizing the Head Start financial information from the general ledger and accounting software when preparing Head Start draws. Information used for the draws is compiled separately and no reconciliation between draws and the financial system occurs. Effect: Expenditures charged to the Head Start programs could potentially not be included in the Head Start draws. Recommendation: Each Head Start draw should be compiled and reconciled back to the financial statement and then reviewed by a secondary fiscal department employee. Management’s Response: The Agency acknowledges this error and agrees with the recommendations. The Agency provides the additional context that it has been determined that where incorrect drawdowns were made - they were underdrawn, not overdrawn. No drawdowns were determined to include anything beyond known, justifiable, and allowable expenses. Previous T &TA support from the Office of Head Start and monitoring reviews from other fiscal agencies had not previously revealed this concern and recommendations were made to carry out drawdowns in this manner. The Finance department is actively working with the new recommendation from the auditors to use the accounting system (MIP) and to implement a new payroll and reconciliation procedure which will prevent future errors.

Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity in managing the Federal awards 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).” Condition: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: Management is not utilizing the Head Start financial information from the general ledger and accounting software when preparing Head Start draws. Information used for the draws is compiled separately and no reconciliation between draws and the financial system occurs. Effect: Expenditures charged to the Head Start programs could potentially not be included in the Head Start draws. Recommendation: Each Head Start draw should be compiled and reconciled back to the financial statement and then reviewed by a secondary fiscal department employee. Management’s Response: The Agency acknowledges this error and agrees with the recommendations. The Agency provides the additional context that it has been determined that where incorrect drawdowns were made - they were underdrawn, not overdrawn. No drawdowns were determined to include anything beyond known, justifiable, and allowable expenses. Previous T &TA support from the Office of Head Start and monitoring reviews from other fiscal agencies had not previously revealed this concern and recommendations were made to carry out drawdowns in this manner. The Finance department is actively working with the new recommendation from the auditors to use the accounting system (MIP) and to implement a new payroll and reconciliation procedure which will prevent future errors.

Finding 2025-003 Identification of the Federal Program: U.S. Department of Housing and Urban Development: AL 14.267 – Continuum of Care Program Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Significant deficiency in internal controls over compliance. Criteria 2 CFR 200.303(a) of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The nonfederal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are met. As outlined in 2 CFR 180, recipients must not utilize any contractor which is suspended or debarred or is otherwise excluded from the central contractor registry. Statement of condition and cause The Organization’s procurement policy did not include all the required elements as outlined in the Uniform Guidance. Additionally, the Organization did not retain documentation to support the procedures performed to ensure compliance with suspension and debarment requirements. Effect Lack of complete procurement, suspension, and debarment policies and not retaining documentation to support compliance with suspension and debarment requirements could result in noncompliance with the Uniform Guidance. Questioned Costs N/A Repeat Finding No Recommendation We recommend that management develop a written procurement policy that conforms with the Uniform Guidance. In addition, we recommend that management implement procedures and control processes to retain documentation supporting compliance with major federal program compliance requirements regarding suspension and debarment. Management response See Corrective Action Plan

Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity in managing the Federal awards 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).” Condition: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: Management is not utilizing the Head Start financial information from the general ledger and accounting software when preparing Head Start draws. Information used for the draws is compiled separately and no reconciliation between draws and the financial system occurs. Effect: Expenditures charged to the Head Start programs could potentially not be included in the Head Start draws. Recommendation: Each Head Start draw should be compiled and reconciled back to the financial statement and then reviewed by a secondary fiscal department employee. Management’s Response: The Agency acknowledges this error and agrees with the recommendations. The Agency provides the additional context that it has been determined that where incorrect drawdowns were made - they were underdrawn, not overdrawn. No drawdowns were determined to include anything beyond known, justifiable, and allowable expenses. Previous T &TA support from the Office of Head Start and monitoring reviews from other fiscal agencies had not previously revealed this concern and recommendations were made to carry out drawdowns in this manner. The Finance department is actively working with the new recommendation from the auditors to use the accounting system (MIP) and to implement a new payroll and reconciliation procedure which will prevent future errors.

Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity in managing the Federal awards 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).” Condition: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: Management is not utilizing the Head Start financial information from the general ledger and accounting software when preparing Head Start draws. Information used for the draws is compiled separately and no reconciliation between draws and the financial system occurs. Effect: Expenditures charged to the Head Start programs could potentially not be included in the Head Start draws. Recommendation: Each Head Start draw should be compiled and reconciled back to the financial statement and then reviewed by a secondary fiscal department employee. Management’s Response: The Agency acknowledges this error and agrees with the recommendations. The Agency provides the additional context that it has been determined that where incorrect drawdowns were made - they were underdrawn, not overdrawn. No drawdowns were determined to include anything beyond known, justifiable, and allowable expenses. Previous T &TA support from the Office of Head Start and monitoring reviews from other fiscal agencies had not previously revealed this concern and recommendations were made to carry out drawdowns in this manner. The Finance department is actively working with the new recommendation from the auditors to use the accounting system (MIP) and to implement a new payroll and reconciliation procedure which will prevent future errors.

Assistance Listing, Federal Agency, and Program Name - 97.044, U.S. Department of Homeland Security, Assistance to Firefighters Grant Federal Award Identification Number and Year - N /A Pass through Entity - N/A Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. These internal controls should be in compliance with the guidance in the "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 Organization of the Treadway Commission (COSO). Condition - The Township did not have the appropriate controls in place to ensure reports and reimbursement requests that were required to be submitted under the grant were complete and accurate as well as ensuring the matching requirement was properly reviewed. If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - During testing of required reporting, as well as reimbursement requests submitted, it was noted that there was no evidence of supervisory reviews prior to submission of these documents. It was also noted there was no review in place over the matching requirment. Cause and Effect - The Township did not have the proper controls in place that lead to lack of appropriate reviews of reporting and requests for reimbursement could have resulted in instances of noncompliance. Recommendation - The Township should review its processes and controls in these areas to ensure that all reporting and reimbursement requests are appropriately reviewed. Views of Responsible Officials and Planned Corrective Actions - The Township agrees with the finding and will work to put controls in place to ensure reviews are performed appropriately.

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

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Project-Based Rental Assistance Assistance Listing Number: 14.195 Federal Award Identification Number and Year: 121EH007 Pass-Through Agency: N/A Award Period: April 1, 2024, to March 31, 2025 Compliance Requirement Affected: Eligibility Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the non‐Federal entity must 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. Condition: Income thresholds, on HUD-50059 tenant recertification forms, were not properly updated to the applicable period, using available income limits published by HUD for the County of Santa Cruz. Questioned costs: None noted. Context: A nonstatistical sample of 12 out of 100 tenant files were selected for testing for the Section 8 Housing Assistance Payments Program. The discrepancy, in the maximum income limit, was identified during the auditor's testing of tenant eligibility to participate in the affordable housing program. Cause: Management oversight on properly updating the income limit thresholds. Effect: Noncompliance results in possible exclusion of eligible applicants as the income limits increased from the income limits used. Repeat Finding: Yes Recommendation: We recommend that the organization review the changes in income limits published by HUD during the tenant certification and recertification process in order to properly update income limits accordingly on form HUD-50059. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Project-Based Rental Assistance Assistance Listing Number: 14.195 Federal Award Identification Number and Year: 121EH007 Pass-Through Agency: N/A Award Period: April 1, 2024, to March 31, 2025 Compliance Requirement Affected: Eligibility Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or speciic requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the non‐Federal entity must 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. Condition: Initial certification and/or recertification HUD-50059 tenant eligibility forms lacked proper review by a management agent or an acting management agent. Questioned costs: None noted. Context: A nonstatistical sample of 12 out of 100 tenant files were selected for testing for the Section 8 Housing Assistance Payments Program. The lack of proper review of tenant certification and/or tenant recertification forms was identified during the auditor's testing of tenant eligibility. Cause: Lack of a management agent or acting management agent in place at the time of tenant certification or recertification. Effect: Noncompliance results in the potential for mathematical errors in accuracy of calculation of tenant rent portion or identification of proper income limit thresholds. Repeat Finding: Yes Recommendation: We recommend that the organization have a process in place for secondary review, of the HUD-50059 certification and recertification forms, by either a management agent or an acting management agent, in the absence of a management agent to check for mathematical accuracy of tenant rent calculation and for use of proper income thresholds. Views of responsible officials: There is no disagreement with the audit finding

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Project-Based Rental Assistance Assistance Listing Number: 14.195 Federal Award Identification Number and Year: 121EH007 Pass-Through Agency: N/A Award Period: April 1, 2024, to March 31, 2025 Compliance Requirement Affected: Cash Management Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the non‐Federal entity must 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. Condition: HUD Housing Assistance Payment forms lacked proper review by a management agent or an acting management agent. Questioned costs: None noted. Context: A nonstatistical sample of 3 out of 12 HUD Housing Assistance Payment forms were selected for testing for the Section 8 Housing Assistance Payments Program. The lack of proper review of HUD Housing Assistance Payment forms was identified during the auditor's testing of cash management. Cause: Lack of a management agent or acting management agent in place at the time of preparing HUD Housing Assistance Payment forms. Effect: Noncompliance results in the potential for mathematical errors in accuracy of calculation of request for payment on the HUD Housing Assistance Payment forms. Repeat Finding: Yes Recommendation: We recommend that the organization have a process in place for secondary review, of the HUD Housing Assistance Payment forms, by either a management agent or an acting management agent, in the absence of a management agent to check for mathematical accuracy of housing assistance payment request. Views of responsible officials: There is no disagreement with the audit finding.

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

Assistance Listing, Federal Agency, and Program Name - 14.905; U.S. Department of Housing and Urban Development; Lead Hazard Reduction Demonstration Program Federal Award Identification Number and Year - 252697 Pass through Entity - City of Chicago Department of Public Health Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.303(a) states each recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition - The Organization did not review period end reimbursement requests for costs that had been expended and requested in prior months. The lack of proper review resulted in the Organization charging duplicate costs of $95,294. Questioned Costs - $95,294 Identification of How Questioned Costs Were Computed - During the period under audit there were two period-end reimbursement requests. Such requests include expenditures from the entire grant period (January 1, 2024 December 31, 2024). Expenditures on the two reimbursement requests were compared in their entirety to expenditures on reimbursement requests earlier in the year. Management determined there were total duplicate costs of $95,294. Context - Of the 25 expenditures tested for allowable costs, two contractor samples were charged in the period-end reimbursement request and in a previous reimbursement request. Subsequently the Organization evaluated the costs charged to the grant and identified contractor invoices in the amount of $95,294 that were erroneously charged to the grant and reported on the schedule of expenditures of federal awards. Cause and Effect - Timely and accurate review over period-end reimbursement requests was not performed and duplicate costs were requested for reimbursement. Recommendation - The Organization should establish formalized review processes and controls to ensure proper identification of expenditures that have been submitted for reimbursement. Views of Responsible Officials and Corrective Action Plan - The Organization agrees with recommendation. Beginning May 1, 2025, the CFO maintains a payout tracker which is updated every time a vendor payout is made and tracks that payment to the reimbursement request and the final payment by the pass-through agency. This process ensures that a payout is not included in a payout request multiple times. The Staff Accountant also maintains a tracker of all reimbursement requests to track with the program budgets and for inclusion in the MIP accounting system. In addition, new personnel are involved in the process with a more formal approval and authorization process implemented. The Organization’s staff has communicated these duplicate requests to the appropriate personnel at the granting agency and are coordinating the repayment of the excess funds as determined by the granting agency.

2025-001 - Internal Control over Compliance and Compliance with Subrecipient Monitoring Requirements Information on the Federal Program: United States Department of Treasury Assistance Listing Number: 21.027 Assistance Listing Name: Coronavirus State and Local Fiscal Recovery Fund Pass-Through Entity: Prince George’s Country Maryland Pass-Through Entity Number: 52-6000-998 Award Period: February 28, 2024 through June 30, 2025 Criteria– In accordance with §200.303(a), Internal Controls, a non-federal entity must 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. In accordance with 2 CFR §180.300, Suspension and Debarment, non-federal entities cannot enter into awards, subawards, or contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Non-federal entities must either check for exclusions in the System for Award Management (SAM); collect a certification from the entity, or add a clause or condition to the covered transaction with the entity prior to entering into a covered transaction with a non-federal entity. In addition, in accordance with §180.415(b), non-federal entities cannot renew or extend covered transactions (other than no-cost time extension) with any excluded person, or under which an excluded person is a principal, unless the non-federal entity obtains an exception under §180.135. 2 CFR §200.332(b), Requirements for pass-through entities, indicates that pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and that the subaward document includes the best available information provided within 2 CFR §200.332(b)(1). Condition – During our testing of the two subrecipients under this program, we noted that management did not determine whether the subrecipients were suspended or debarred prior to entering into the agreement with the subrecipients or when the subaward agreements were amended. Additionally, the agreements between The Community Foundation and the subrecipients did not contain certain key information, such as the assistance listing number, as required by 2 CFR §200.332(b)(1). Context – During our review of The Community Foundation’s compliance with the Uniform Guidance requirements, we noted that there were two subrecipients under the applicable federal program. Both subrecipients were selected for testing, resulting in a 100% examination rather than a sample-based approach. Upon identification of compliance errors, management subsequently verified the status of the subrecipients in the System for Award Management (“SAM”) to confirm that neither was suspended nor debarred. We reviewed supporting documentation from SAM and confirmed that both subrecipients were not suspended or debarred. Following the audit procedures, which identified missing data elements required by 2 CFR §200.332(b)(1), management issued communications to each subrecipient, providing the relevant information that had initially been omitted from the subaward agreements. Cause - The Community Foundation’s policies include requirements to determine whether vendors/subrecipients are suspended are debarred when working on Federal programs. The individuals executing the agreements between The Community Foundation and the two subrecipients did not properly follow the procurement policy with respect to checks for suspension and debarment. In addition, the individuals executing the agreements with the two subrecipients did not properly review the regulations and did not identify the need to include the information in 2 CFR §200.332(b)(1). Effect or Potential Effect - The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major federal program. Questioned Costs - There are no questioned costs. Repeat Finding - This is not a repeat finding from prior year. Recommendation - We recommend that The Community Foundation ensure consistent adherence to its policies and procedures. Given that federal funding is not received on a recurring basis, certain policies and procedures may become outdated. We further recommend that, upon receipt of federal funding in the future, management designate an individual with appropriate knowledge and experience to review applicable federal regulations and update policies and procedures as necessary to maintain compliance. Views of Responsible Officials – Management agrees with the finding and has implemented corrective actions, including verifying subrecipients’ eligibility in SAM.gov before awarding or amending federal subawards, updating subaward templates to meet federal requirements, and revising procurement and cash management policies for compliance. The Controller will act as Compliance Coordinator for future federal funding, overseeing regulation review, staff training, and quarterly compliance checks, with any deficiencies reported to the CFO for prompt resolution. These measures aim to ensure ongoing adherence to federal grant requirements.

2025-003 - Lack of Written Federal Program Policies. Type: Material Weakness. Condition: The Village does not have documented policies and procedures specific to the administration of the Water and Waste Disposal for Rural Communities program. This includes the absence of written guidance on key compliance areas such as procurement, subrecipient monitoring, allowable costs, and reporting requirements under Uniform Guidance. Criteria: Per 2 CFR 200.303 and 200.331 of the Uniform Guidance, non-federal entities are required to establish and maintain effective internal controls and written policies to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. These policies should be tailored to the specific requirements of each federal program. Cause: The entity has not developed formal written policies and procedures for the Water and Waste Disposal for Rural Communities program, possibly due to reliance on informal practices or general administrative policies that do not address federal-specific requirements. Effect: Without documented policies, there is an increased risk of noncompliance with federal requirements, inconsistent program administration, and lack of accountability. This may result in questioned costs, audit findings, or potential repayment of federal funds. Questioned Costs: n/a. Recommendation: We recommend that the Village develop and implement written policies and procedures specific to the Water and Waste Disposal Systems for Rural communities program. These should include: - Procurement standards in accordance with 2 CFR 200.318 – 200.327. - Subrecipient monitoring protocols. - Guidelines for allowable costs and cost principles. - Reporting and recordkeeping requirements. - Internal control procedures to ensure compliance. Training should also be provided to staff responsible for administering the program to ensure consistent application of these policies. Views of Responsible Officials: Management acknowledges the auditor’s finding regarding the absence of formally documented federal program policies. We recognize the importance of maintaining written procedures to ensure consistent compliance with Uniform Guidance requirements and to strengthen internal controls over federal awards. While informal practices have historically guided our federal program administration, we agree that formalizing these policies will enhance transparency, accountability, and operational efficiency. Management is currently in the process of developing written policies covering key areas such as procurement, allowable costs, subrecipient monitoring, and cash management. We anticipate completing this documentation and implementing the policies by February 28, 2026. We are committed to continuous improvement and appreciate the auditor’s recommendations as part of our efforts to maintain strong compliance and stewardship of federal funds.

Department of Homeland Security, State of Illinois Office of Emergency Management, Federal Financial Assistance Listing 97.036, 4728‐DR‐IL Disaster Grants – Public Assistance Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: Materials expenditures were claimed for reimbursement with no documented formal review and approval. Cause: The Cooperative did not retain documentation to support the review and approval over material costs claimed for reimbursement under the program. Effect: Without a formal documentation of review of expenses, demonstrating the expenditures comply with federal regulations is difficult. Questioned Costs: No questioned costs over $25,000. Context/Sampling: Nonstatistical sampling was used. Sample size was 60 transactions which accounted for $1,925,243 out of $2,310,004 of federal program expenditures of which $1,736,952 was submitted for reimbursement. Repeat Finding form Prior Year: No Recommendation: We recommend the Cooperative review the process for documenting the review and approval over material costs. Views of Responsible Officials: Management agrees with the finding.