Findings Citing § 200.303

FINDING 2025-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed and implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 15 NORTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were tested that exceeded the small purchase threshold during the audit period. For one vendor no quotes were obtained. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. The School Corporation entered into four covered transactions during the audit period and were unable to provide evidence they followed its policy for one of those transactions. The total purchases made from that vendor totaled $29,091. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." INDIANA STATE BOARD OF ACCOUNTS 16 NORTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 17 NORTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, adequate documentation was not retained for procurements that fell within the small purchase threshold. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Federal Agency: U.S. Department of Transportation Federal Program Name: Formula Grants for Rural Areas and Tribal Transit Program Assistance Listing Number: 20.509 Federal Award Identification Number and Year: 2025; FAIN not available. Pass-Through Agency: State of Vermont Agency of Transportation Pass-Through Numbers: EA#FT202201-704 EA#FT25FLEX-054 EA#FT25FLEX-954 EA#FT23FLEX-954 EA#FT25FLEX-454 EA#FT23FORM-704 EA#FT25FLEX-554 EA#FT24FORM-924 EA#FT25FLEX-854 EA#FT24FORM-934 EA#FT25FLEX-924 Award Period: July 1, 2024 through June 30, 2025 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Material weakness in internal control over compliance; material noncompliance and modified opinion on compliance Criteria or Specific Requirement: The United States Code of Federal Regulations (CFR) Title 2, Part 200.319 indicates procurement transactions under the Federal award must be conducted in a manner that provides full and open competition. Additionally, 2 CFR Part 200.320 indicates that for any allowable method chosen, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the requirements of 2 CFR Part 200, Subpart D. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR Part 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR Part 180.300). 2 CFR Part 200.303 indicates that non-Federal entities receiving Federal awards 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: The District did not maintain documentation to support the procurement, suspension and debarment procedures performed for covered transactions in order to demonstrate compliance with 2 CFR Part 180 and 2 CFR Part 200. Questioned Costs: None. Context: Two (2) of the six (6) procurement transactions and two (2) of the five (5) suspension and debarment transactions. Cause: Procedures were not implemented to maintain documentation to support compliance with the standards of procurement, suspension and debarment contained in 2 CFR Part 180 and 2 CFR Part 200. Effect: Compliance with the requirements of the federal award could not be demonstrated. Repeat Finding: Yes, 2024-004 Recommendation: We recommend management enhance procedures and controls to ensure documentation is maintained to support all procurements and suspension and debarment verifications related to expenditures from federal award programs. Justification for noncompetitive procurements (i.e., sole source, public exigency, or consent of the awarding agency), should also be documented. Such documentation should be consolidated and maintained in a secure, accessible location. Views of Responsible Officials: Management agrees with the finding.

Information on the federal program: Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness, Qualified Opinion 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). . . ." 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 reporting compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the reporting 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: $156,357 (known questioned costs) Context: During the testing of meal claim reimbursements, we noted 3 monthly reimbursements in a sample of 6 claims selected where the School Corporation was unable to produce auditable support of meals served and claimed via underlying meal system reports. The claim reimbursements for these 3 months unsupported by meal claim data totaled $157,708. Additionally, we noted other variances when comparing the remaining 3 monthly reimbursements in our to sample to underlying meal system reports. Those variances aggregated to a net amount under claimed of $1,341. Additionally, we noted that management has no formal, documented review control in place for monthly meal claims prior to submission to the Indiana Department of Education (IDOE). Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation's management review internal controls surrounding the claim reimbursement process. The School Corporation should implement a secondary, documented review of the request for reimbursement prior to the submission to IDOE and should include a review of the underlying meal count reports to ensure the claim reimbursement request is accurate and complete. All meal count data and reports should be maintained to support meal claim reimbursements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

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, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness 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). . . ." 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 eligibility compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with eligibility 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: During the testing of internal controls over eligibility determinations for free and reduced meals, we noted there was no formal review control in place. Additionally, there was no documented review by School Corporation personnel of the Income Eligibility Guidelines used by the food service software which are updated on annual basis. The lack of review was isolated to fiscal year 2024 as the School Corporation qualified under the Community Eligibility Provision for fiscal year 2025. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation's management establish an internal control process to review the updates to the annual adjustments to the Income Eligibility Guidelines made to the food service software to determine eligibility to ensure updated guidelines are accurate and complete. This review should be documented on annual basis to confirm management’s oversight and monitoring of eligibility determinations. 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 Federal Agency U.S. Department of Education Federal Program Student Financial Assistance Cluster (CFDA # 84.268, 84.063) Federal Award Year July 1, 2024 through June 30, 2025 46 (Continued) Federal Award Numbers P268K251300; P063P241300 Criteria or Requirement Per Sections 34 CFR 690.83(b)(2) and 34 CFR 685.309, a school shall update the student status confirmation report for changes in student status, report the date the enrollment status was effective and return the student status confirmation report to the Secretary within 30 days unless it plans to submit an enrollment report within the next 60 days of receipt. Per Sections 4.4.2 through 4.4.4 of the NSLDS enrollment reporting guide, institutions are responsible for accurately reporting all Campus-Level Record data elements and considers certain data elements to be high risk including OPEID Number, Enrollment Effective Date, Enrollment Status, and Certification Date. Per Section 4.4.8 of the NSLDS enrollment reporting guide, institutions are responsible for accurately reporting all Program-Level Record data elements and considers certain data elements to be high risk including OPEID Number, CIP Code, CIP Year, Credential Level, Published Program Length Measurement, Published Program Length, Program Begin Date, Program Enrollment Status, and Program Enrollment Effective Date. Per 2 CFR 200.303, 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 Found For 3 out of 40 students, the graduate status was reported to NSLDS between 78 and 101 days after the date the school became aware of the status change. There were a total of 34 graduates from the Spring 2025 semester, certified outside of the normal graduation timeline, for which this same condition applied. For 1 out of 40 students, the three-quarter time status was reported to NSLDS 120 days after the date the school became aware of the status change. For 1 out of 40 students, the half-time status with an effective date of 8/21/2024 was not reported to NSLDS Program-Level Record data. For 1 out of 40 students, the effective date for the half-time status reported to NSLDS per the Program-Level Record data does not match the Campus-Level Record data by 19 days. Possible Cause and Asserted Effect The control that management reviews all reports for the accuracy of all data elements prior to submission was not operating at a level to identify all discrepancies. Questioned Costs None identified. Identification of Whether the Audit Finding is a Repeat of a Finding in the Immediately Prior Audit No. Recommendation We recommend the University enhance the precision of the control around the review of accuracy and timeliness of the enrollment statuses, program level data records, and campus level data records within the NSLDS reporting submissions. Views of Responsible Officials The University agrees with the finding as written. Responsibility for NSLDS reporting submissions of enrollment statuses, program level data records, and campus level data records lies within the Office of the Registrar. For the three instances of enrollment status change and consistency with program-level record data, these relate to the omission of changing a program-level effective date but not a campus-level effective date. Procedures are being updated and appropriate review and reporting for any status changes will have secondary review going forward. The graduation date reporting errors relate to students whose graduation certification occurred outside the normal bounds of semester-end graduation cycles, again requiring a more manual human intervention to ensure timely reporting. The Office of the Registrar is implementing procedures for system reporting and a secondary reviewer of all graduation status changes on a monthly basis to ensure timely filing, and procedures also are updated to ensure manual updating of Clearinghouse to NSLDS records immediately upon logging any off-cycle graduation in the Office of the Registrar. This ensures a double review - at the time of the off-cycle record change, and in the monthly reporting of all status changes which will be reviewed and sent to NSLDS via Clearinghouse.

Finding 2025-001: Special Tests and Provisions: Enrollment Reporting Program Name: Student Financial Assistance Cluster: Federal Direct Student Loans. Assistance Listing No. 84.268 Federal Pell Grant Program, Assistance Listing No. 84.063 Awarding Agency: U.S. Department of Education Finding Type: Significant Deficiency on Internal Controls over Compliance Questioned Costs: None Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, 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. 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). In addition, the Department of Education relies on institution’s enrollments reports to determine a student’s enrollment status based on reductions or increases in attendance levels, withdrawals, graduations or approved leaves-of-absence. According to 34 CFR 690.83(b)(2) and 685.309, the University is required to submit changes in student attendance to the National Student Loan Data System (NSLDS) at a minimum of every 60 days. Context/Condition: Of the 40 students selected for enrollment reporting testing, one (1) student within the sample was reported to NSLDS outside the maximum 60-day window. This was not a statistically valid sample. Cause: The University did not have effective controls in place to ensure timely reporting of all status changes. Effect: Without timely notification of withdrawals or graduation, the NSLDS is unable to accurately determine when a student enters repayment status. Recommendation: We recommend that the University review and update internal controls to ensure student enrollment status in the NSLDS is updated in a timely manner to ensure compliance with Federal requirements. Views of Responsible Officials:Management agrees with the finding. The instance in question was the result of the student receiving an Incomplete on a course in their final semester of enrollment, and therefore was not eligible for graduation. When the student subsequently completed the coursework during the following semester outside of the normal NSLDS reporting window, their grade for the prior semester was updated and their university record updated to graduated. However due to human error, this subsequent change was not reported to NSLDS at the time the grade was updated. See accompanying Corrective Action Plan.

Finding 2025-001: Period of Performance and Allowability Federal Agency: Department of Health and Human Services Federal Division: National Institutes of Health Federal Program: Research and Development (R&D) Cluster (ALN 93.866) Federal Award Year: September 15, 2017 – May 31, 2024 Federal Award Number: R01AG057725 Criteria Section 2 Code of Federal Regulations (CFR) 200.309, states that costs charged to a federal award must be incurred during the approved period of performance. Section 2 CFR 200.403, indicates that costs must be allowable under Federal awards. CFR 200.303, states 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, including proper perspective We sampled 50 University R&D procurement transactions aggregating $5,834,093 and identified one instance where the vendor was paid despite the services not being performed and outside the federal award’s period of performance. Costs in the amount of $286,140 were determined to be unallowable and outside of the period of performance. Total procurement expenditures within the University’s R&D program aggregated $166,760,329. Cause and Effect The control in place over period of performance was not operating at a level of precision to prevent or detect non-compliance. There was insufficient review and monitoring of vendor invoices by the departmental management to ensure that costs were incurred within the approved period of performance which resulted in costs being incurred on the award after the period of performance ended. Questioned Costs There are known questioned costs of $468,555, inclusive of $286,140 direct costs and $182,415 indirect costs. Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year No. Recommendation We recommend that the University reinforce its policies and internal controls over grant expenditure review. Specifically, expenditures should be verified for compliance with the grant period of performance and confirmation that services were performed. Periodic training for staff responsible for grant administration is also recommended. Views of Responsible Officials The University accepts this finding and has removed the questioned costs from the award. Management will reinforce and reiterate our internal controls around 2 CFR 200 to the staff. Management will provide targeted 2 CFR 200 training to the impacted department.

FINDING 2025-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22619-068-PN01, 23611-068-PN01, 23619-068-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with the earmarking requirement of the Special Education Cluster (IDEA) during the audit period. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met as indicated on the grant agreements during the audit period. The Non-Public Proportionate Share expenditures recorded for the 22619-068-PN01, 23611-068- PN01, and 23619-068-PN01 were less than the total amount required for each of these respective grants. The appropriations reports provided by the School Corporation indicated that the total expenditures paid for these grant funds was not sufficient for meeting the nonpublic proportionate share requirement. The lack of internal controls and noncompliance were isolated to the 22619-068-PN01, 23611-068-PN01, and 23619-068-PN01 grant awards. The minimum earmarking requirement for the 22619-068-PN01, 23611-068-PN01, and 23619-068-PN01 grant awards was $1,405, $68,728, and $982, respectively. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 FAYETTE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools and facilities, 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 or facilities within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation is the fiscal agent of a Special Education Cooperative (Cooperative) that manages and operates the special education program and oversees the majority of the federal compliance requirements. The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. A method to track expenditures to ensure earmarking requirements were complied with had not been implemented. Additionally, the Cooperative did not obtain a waiver from the Indiana Department of Education for the 22619-068-PN01, 23611-068-PN01, and 23619-068-PN01 grant awards. Effect The failure to establish an effective internal control system placed the School Corporation in noncompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Noncompliance with the grant agreement or the compliance requirement could result in the loss of federal funds to the School Corporation. Questioned Costs There were no known questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to monitor the Matching, Level of Effort, Earmarking compliance requirement periodically to ensure compliance with the earmarking compliance requirements by the end of the grant period. This includes meeting with the Cooperative periodically to monitor and track progress towards meeting the required nonpublic proportionate share amounts. Views of Responsible Officials Management agrees with the finding and has prepared a corrective action plan.

FINDING 2025-003 Subject: Head Start Cluster - Equipment and Real Property Management Federal Agency: Department of Health and Human Services Federal Program: Head Start Assistance Listings Number: 93.600 Federal Award Numbers and Years (or Other Identifying Numbers): 05CH012250-01a, 05CH012250-02 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation designed a system of internal controls; however, it was not properly implemented to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. A property record or capital asset listing is required to be maintained for all equipment purchased with the Head Start grant award to ensure adequate safeguards are in place to prevent loss or damage of items. The School Corporation used federal funds in the amount of $224,077 to purchase two buses. The equipment was included in the capital asset listing of the School Corporation; however, it did not include the proper identifying information. The School Corporation's capital asset listing did not include the following required information:  The use and condition of the property.  The percentage of federal participation in the project costs for the federal award under which the property was acquired.  Source of funding for the property (including the federal award identification number (the FAIN)). The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 FAYETTE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause A proper system of internal controls was not designed and implemented by management of the School Corporation to ensure that assets purchased using federal dollars were added to the School Corporation's capital asset listing with all required information. Effect The failure to establish an effective system of internal controls placed the School Corporation in noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation's capital asset listing did not include all information required for assets acquired with federal funds. Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure that equipment purchased with federal funds are added to the inventory listing with the required information necessary for compliance with requirements as outlined in the grant agreements and Compliance Supplement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025-002 - EARMARKING (REPEAT OF PRIOR YEAR FINDINGS 2024-002; 2023-003; 2022-03) Federal Program Information: Federal Agency and Program Name- U.S. Department of Labor WIOA Cluster Federal Assistance Listing Number - 17.258/17.259/ 17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: During our testing of earmarking, it was noted that for 2 of the 60 transactions tested, management could not provide adequate support that the charge was properly reviewed and approved prior to payment. Questioned Costs: Unknown. Context: Total federal expenditures for the WIOA Cluster were $2,843,125 for the year ended June 30, 2025. Cause: The Board did not demonstrate that proper internal controls are in place and operating effectively to ensure the expenditures of the WIOA Cluster are within the earmarking requirements noted within the Uniform Guidance. Effect: Transactions that were part of the earmarking calculations could have been coded improperly or not met the earmarking requirements due to lack of effective internal controls. Recommendation: We recommend that the Board implement controls and procedures to ensure that all requirements for earmarking within the Uniform Guidance are properly followed. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.

2025-003 - REPORTING (REPEAT OF PRIOR YEAR FINDINGS 2024-003, 2023-004; 2022-05) Federal Program Information: Federal Agency and Program Name : U.S. Department of Labor WIOA Cluster Federal Assistance Listing Number - 17.258/17.259/ 17.278 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” The Board is required to submit MACC reports to WorkForce WV on a monthly basis. Condition: During our testing of reporting, for all MACC reports selected for testing management could not provide adequate support that the MACC reports were properly reviewed and approved prior to being submitted. Questioned Costs: Unknown. Context: Total federal expenditures for the WIOA Cluster were $2,843,125 for the year ended June 30, 2025. Cause: The Board did not have adequate policies and internal controls in place to ensure that all required reports for the WIOA Cluster were reviewed and approved prior to submission. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board design and implement controls to ensure that all required reporting is submitted accurately and in a timely fashion. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.

2025-004 - ACTIVITIES ALLOWED OR UNALLOWED Federal Program Information: Federal Agency and Program Name - U.S. Department of Labor WIOA Cluster. Federal Assistance Listing Number - 17.258/17.259/ 17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: During our testing of activities allowed or unallowed, it was noted that for 1 of the 60 nonpayroll items tested, management could not provide adequate support that the charge was properly reviewed and approved prior to payment. Questioned Costs: Unknown. Context: Total federal expenditures for the WIOA Cluster were $2,843,125 for the year ended June 30, 2025. Cause: The Board did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: Unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.

Federal Program: Student Financial Aid Cluster Type of Finding: Significant Deficiency in Internal Control Over Compliance and Other Matters Federal Agency: Department of Education ALN Number: 84.063, 84.268, 84.033, 84.007 Criteria: The Code of Federal Regulations (34 CFR 685.309) requires enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status. Regulations require the status include an accurate effective date. According to the NSLDS Enrollment Reporting Guide, a student’s Program-Level enrollment status should be reported with the same enrollment status as that student’s campus-level enrollment status for all programs the student is enrolled in at that location, even if the student is not currently taking coursework that applies to a particular program. If the student has withdrawn or graduated from an academic program, a “terminal enrollment status” of ‘W’ or ‘G,’ as appropriate, should be reported for that program, even if the student is still taking coursework applicable to other programs in which the student is enrolled. 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 enrollment reporting is completed properly. Condition: The College did not properly report the student enrollment change for students who received federal student aid to the NSLDS. The College did not timely report three students’ Campus-Level enrollment status change to NSLDS. Context: Out of the thirty one students tested, we noted three students whose status change at the Program-Level and Campus-Level was not timely reported to NSLDS. Questioned costs: None. Cause: The College did not have formally documented controls related to the process of enrollment reporting, which is required under Uniform Grant Guidance. Effect: Student status changes exceeded the 60-day period for student enrollment changes reported in roster files. Recommendation: We recommend the College review current processes and implement updated processes and controls for reporting to NSLDS, implementing procedures to ensure submissions are reported timely and accurately. In addition, we recommend the College review the reporting in the system to ensure it can pull accurate reports of student enrollment status. Grantee Comments: See corrective action plan.

Federal Agency: US Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.268 Federal Award Identification Number: P268K250099 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Compliance, Other Matter • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 34 CFR 682.604, states that a school must ensure that exit counseling is conducted with each Stafford Loan borrower and graduate or professional student PLUS Loan borrower either in person, by audiovisual presentation, or by interactive electronic means. In each case, the school must ensure that this counseling is conducted shortly before the student borrower ceases at least half-time study at the school. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not properly have documentation for exit counseling notification. Context: During our testing of 40 students, we identified 1 student that did not have documentation of exit counseling notification. Questioned costs: None Cause: The University did not have proper procedures in place to ensure that notification of required exit counseling was sent to applicable students. Effect: Exit counseling helps federal student loan borrowers understand how to repay their loans and reviews deferment and repayment plans options. If students are not notified of exit counseling, they could be at risk of not understanding their rights and responsibilities regarding loan repayment. Repeat finding: No Recommendation: We recommend the University review reporting processes to ensure all students that require exit counseling receive it in a timely manner. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: US Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.033, 84.268, 84.063, 84.007 Federal Award Identification Number: P033A241086 - 2025, P268K250099 - 2025, P063P240099 - 2025, P007A241086 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Compliance, Other Matter • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless of if they receive aid from the institution or not. Changes to said status are required to be reported within 30 days of becoming aware of the status change, or with the next scheduled transmission of statuses if the scheduled transmission is within 60 days. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). Context: During our testing of 40 students, we identified 1 student with an effective date reported to NSLDS that did not align with institutional records and 1 student that was reported after the 60 day requirement. Questioned costs: None. Cause: The University did not have proper procedures in place to verify students' status in NSLDS matched the institutions records accurately and reported timely. Effect: The University was not in compliance with the requirements to properly report student enrollment data correctly. Incorrect dates submitted to NSLDS may be used to determine the grace period for the repayment and interest of outstanding Title IV student loans. Repeat finding: Yes Recommendation: We recommend the University review current processes for reporting to NSLDS and implement procedures to ensure submissions are reported accurately and timely. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: US Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.033 Federal Award Identification Number: P033A241086 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Compliance, Other Matter • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations, 34 CFR 675.18(g) require institutions to use at least seven percent of the sum of its initial and supplemental Federal Work Study allocation for an award year to compensate students employed in community service activities unless a waiver is obtained from the Department of Education. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not meet the community service requirement for its Federal Work Study program and was unable to obtain a waiver from the Department of Education releasing it from the requirement. Context: The University did not use at least 7% of its Federal Work Study (FWS) funds for students employed in community service activities. Questioned costs: None. Cause: The University did not meet the community service expenditure requirement due to decreased participation by off‑campus agencies. Effect: If the University fails to meet any of the FWS community service requirements, then they will be required to return FWS federal funds in an amount equal to the difference between the amount a school should have spent for community service and the amount it actually spent. The University could also be denied future participation in the FWS Program and possibly other FWS programs. Repeat finding: No Recommendation: We recommend the University review current processes for calculating and tracking the students employed in community service activities for its Federal Work Study funds to meet the minimum 7% requirement. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Assistance Listing, Federal Agency, and Program Name - 93.224, 93.527 - Health Center Program Cluster Federal Award Identification Number and Year - 23H80CS30717, 23H8LCS51933C6, 23H8GCS48653; 2024-2025 Pass through Entity - No Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303 and 42 USC 254b(k)(3)(E), (F), and (G); 42 CFR sections 51c.303(e), (f), and (g); and 42 CFR sections 56.303(e), (f), and (g), health centers must prepare and apply a sliding fee discount schedule (SFDS) so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient’s ability to pay. The Organization is responsible for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the Organization's federal programs. Condition - During the current year, the Organization did not apply the sliding fee scale discount to certain patient claims accurately. During our testing, we noted 13 instances of the sliding fee scale not being accurately applied to patient services out of the 40 transactions tested. 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 no questioned costs Identification of How Questioned Costs Were Computed - None Context - During the testing of the sliding fee scale discount, it was noted that 13 of the 40 patient claims tested did not have the sliding fee scale discount properly or consistently applied when the patient was eligible. The Organization was not properly and consistently applying the sliding fee scale discount to patients that were eligible. Cause and Effect - The Organization did not apply the sliding fee scale discount appropriately to the eligible patients. This caused patients to be overcharged for services. Recommendation - The Organization should apply the sliding fee scale discount consistently and accurately to all eligible patients. Views of Responsible Officials and Corrective Action Plan - Management acknowledges the sliding fee scale discount should have been applied consistently and accurately and plan to improve the process going forward. Management corrected the patient accounts by applying the sliding fee scale discount.

FINDING 2025-002 Subject: Child Nutrition Cluster - Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.582 Federal Award Number and Year (or Other Identifying Number): FY25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed and implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Procurement and Suspension and Debarment compliance requirement. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. It is the School Corporation's policy that they either require a certification from the vendor or check the exclusion list prior to entering into a covered transaction. INDIANA STATE BOARD OF ACCOUNTS 16 SPRINGS VALLEY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation entered into three covered transactions during the audit period and it was unable to provide evidence that it followed its policy for one of those transactions. The total purchases made from that vendor totaled $64,855. The lack of internal controls and noncompliance were only noted in the second year of the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation's management failed to properly design and implement an internal control system that would have ensured that its policy over the Procurement and Suspension and Debarment compliance requirement was followed during the audit period. Effect The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal funds to the School Corporation. Additionally, the School Corporation could have made payment to a vendor that was suspended or debarred. Payments to such vendors are unallowable. INDIANA STATE BOARD OF ACCOUNTS 17 SPRINGS VALLEY COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The system should be designed to ensure that vendors are not suspended or debarred, or otherwise excluded, prior to the School Corporation entering into a covered transaction. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 18

2025-001: Internal Controls over Compliance for Allowable Costs Federal Grantor: U.S. Department of Health and Human Services Pass-Through Grantor: Missouri Department of Health and Senior Services Federal Assistance Listing Number: 93.044/93.045/93.053 Program Title: Aging Cluster Pass-through Entity Identifying Number: ERS10525004 Award Year: 2025 Questioned Costs: None Criteria: 2 CFR 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR 200.430(g)(1) states that, “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 that provides reasonable assurance that the charges are accurate, allowable, and properly allocated….” Condition: During our audit, we noted instances where the organization did not have procedures in place to maintain adequate documentation of charged to federal awards: • During our testing of payroll expenses, we selected a sample of 25 payroll transactions across four different pay periods consisting of seven different employees. Five of the seven employees selected were hourly employees. For these five hourly individuals, documentation supporting the authorized rate of pay for each of the four pay periods selected could not be provided. The Board of Directors minutes from July 2024 indicated that the Board approved an across-the-board pay increase of 5%, however, the pay rates of the individuals tested were more than 5% higher than the ending pay rates from fiscal year 2024. In all cases, the actual hourly rate of pay was 11.1% higher than the expected rate of pay after the 5% increase. • During our testing of cash disbursements, we selected a sample of 40 expense transactions, which included monthly expense reimbursement reports from six different subrecipient contractors. We requested copies of the fiscal year 2025 contracts with these service providers to ensure that per unit reimbursement rate used to determine the contractor’s payment for the month was correct. However, the organization could not provide copies of the signed fiscal year 2025 contracts. We were able to view the procurement files and the organization’s on-site monitoring files for each service provider. Cause: The organization has had significant turnover in the Chief Executive Officer and Chief Financial Officer positions in the past 24 months, in addition to undergoing multiple office relocations during that time. The organization could not determine how the prior Chief Financial Officer calculated the fiscal year 2025 pay rates which were entered into QuickBooks and could not locate the signed copies of the fiscal year 2025 contracts with service providers. Effect: The maintenance of proper documentation of authorized employee pay rates and contractor reimbursement rates helps to ensure that expenses charged to federal awards are allowable. Recommendation: We recommend that the Agency implement procedures to ensure that authorized pay rates are properly documented and maintained through forms maintained in personnel files or other means. We also recommend that copies of signed contracts with contractors be documented and maintained in a location where they are accessible to all authorized staff.

Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Numbers: 84.063 and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2023-24 and 2024-25 award years. Award Period: July 1, 2024, through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria The Code of Federal Regulations, consisting of 2 CFR 200.303, 34 CFR 685.309, and 34 CFR 690.83(b)(2), requires that enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status. Additionally, schools are required to certify enrollment at a minimum of every 60 days or every other month. Condition and Context During our testing of NSLDS Enrollment Reporting on the State System, we noted: 1) Status change received by NSLDS was outside of the 60-day time frame.• Cheyney University (P268K242131, P268K252131, P063P232131, and P063P242131): 1 of the 8 students tested for award year 2024-25 • Kutztown University (P268K242135, P268K252135, P063P232135, and P063P242135): 19 of the 27 students tested for award year 2024-25 2) Enrollment was not certified at a minimum of every 60 days or every other month. • Cheyney University (P268K242131, P268K252131, P063P232131 and P063P242131): 3 of the 8 students tested for award year 2024-25 Questioned costs: N/A Cause The Universities’ policies and procedures were not designed to ensure that student status changes were timely reported to NSLDS. Effect The NSLDS system is not updated with the student information which can cause over-awarding should the student transfer to another institution and the student may not properly enter the repayment period. Repeat Finding Cheyney University – Yes – Finding 2024-001 Kutztown University – Yes – Finding 2024-001 Recommendation The Universities should review their reporting procedures to ensure that students’ statuses are timely reported to NSLDS as required by Federal regulations. Views of Responsible Officials There is no disagreement with the audit finding.

Significant Deficiency: Finding 2025-001 This finding impacts the activities allowed/disallowed and unallowable cost principle compliance requirement for the major program, Assistance Listing Number 84.287, Twenty-First Century Community Learning Centers, funded by the U.S. Department of Education and passed through by the State of Rhode Island, Department of Education (RIDE). Criteria: Per 2 CFR 200.303, the Collaborative must establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Controls should ensure payroll transactions are properly authorized, disbursements agree to supporting documentation, and reimbursements are appropriately monitored. Condition: During testing of twenty-five payroll and twenty-five cash disbursement transactions we identified the following exceptions: • One employee timesheet did not match the hours paid to the employee. • A $6 variance was identified between the authorized pay rate and the amount paid in a selected payroll transaction. • A cash disbursement exceeded the related invoice by $5. Cause: These exceptions occurred due to insufficient review and monitoring controls over payroll approvals and cash disbursement reconciliations. Effect: Failure to consistently enforce payroll approval procedures and reconcile disbursements increases the risk of improper payments, misstatements, or noncompliance with federal requirements. Questioned Costs: There were no questioned costs as a result of the significant deficiency. Was the finding a repeat of a finding in the immediately prior year?: No Recommendation: AAFCPAs recommends the Collaborative strengthen internal controls by requiring supervisory approval of all timesheets prior to payroll processing, implementing review procedures to ensure payroll amounts agree to authorized pay rates, and reconciling disbursements to invoices and monitoring outstanding reimbursement checks to ensure resolution. Management Response: The Collaborative acknowledges the findings related to internal controls over payroll and cash disbursements. While the monetary values of the identified variances were minor, management recognizes the importance of maintaining rigorous oversight to ensure full compliance with federal laws and to mitigate the risk of misstatement. To address these concerns, the Collaborative is implementing the following corrective actions: 1. Enhanced Payroll Approval Process: Timesheets are approved by the respective supervisor and then sent to the Executive Director for final approval prior to payroll submission. 2. Pay Rate Verification: The finance department will implement a secondary review procedure to ensure that all payroll amounts align precisely with authorized pay rates. This cross-verification will occur prior to each payroll cycle to prevent future rate variances. 3. Disbursement Reconciliation: Management is updating its cash disbursement procedures to require a formal reconciliation of every check or payment against its original invoice. This process will ensure that no payment exceeds the authorized invoiced amount. 4. Monitoring Reimbursements: The Collaborative will establish a monthly review of all outstanding reimbursement checks and related documentation to ensure timely and accurate resolution of all financial obligations.

Information on the federal program: Subject: Special Education Cluster (IDEA) – Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness Criteria: 2 CFR 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 award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 34 CFR 300.202(a) states: "General. Amounts provided to the LEA under Part B of the Act – (1) Must be expended in accordance with the applicable provisions of this part; (2) Must be used only to pay the excess costs of providing special education and related services to children with disabilities, consistent with paragraph (b) of this section; and (3) Must be used to supplement State, local, and other Federal funds and not to supplant those funds." 34 CFR 300.208 states: "(a) Uses. Notwithstanding §§ 300.202, 300.203(b), and 300.162(b), funds provided to an LEA under Part B of the Act may be used for the following activities:  Services and aids that also benefit nondisabled children. For the costs of special education and related services, and supplementary aids and services, provided in a regular class or other education-related setting to a child with a disability in accordance with the IEP of the child, even if one or more nondisabled children benefit from these services. (2) Early intervening services. To develop and implement coordinated, early intervening educational services in accordance with § 300.226. (3) High cost special education and related services. To establish and implement cost or risk sharing funds, consortia, or cooperatives for the LEA itself, or for LEAs working in a consortium of which the LEA is a part, to pay for high cost special education and related services. (b) Administrative case management. An LEA may use funds received under Part B of the Act to purchase appropriate technology for recordkeeping, data collection, and related case management activities of teachers and related services personnel providing services described in the IEP of children with disabilities, that is needed for the implementation of those case management activities." 34 CFR 300.800 states: "The Secretary provides grants under section 619 of the Act to assist States to provide special education and related services in accordance with Part B of the Act – (a) To children with disabilities aged three through five years; and (b) At a State's discretion, to two-year-old children with disabilities who will turn three during the school year." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items . . . (g) Be adequately documented. . . ." 511 IAC 7-34-9 states in part: “(a) The public agency must hold title to and exercise continuing administrative control of all: (1) property; (2) equipment; and (3) supplies; the public agency acquires with Part B funds for the benefit of nonpublic school students with disabilities. (b) The public agency may place equipment and supplies in a nonpublic school for the period of time needed to provide special education and related services. The public agency must ensure that the equipment and supplies: (1) are used only for the provision of special education and related services; and (2) can be removed from the nonpublic school without remodeling the nonpublic school facility.” Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Special Education Cluster program and Activities Allowed or Unallowed and Allowable Costs compliance requirements. Cause: Management was not aware that non-public school officials have no authority to obligate or receive federal funds and that School Corporation must maintain control of all Special Education funds, property, equipment and supplies; therefore, reimbursements were made to a non-public school for proportionate share expenditures. Effect: The payment of proportionate share expenditures to a non-public school resulted in the potential misuse of funds that were meant to pay the excess costs of providing special education to students. The unallowable nature of these expenditures may also result in the School Corporation not meeting their requirements related to Non-Public Proportionate Share for the respective grants. Questioned Costs: There were questioned costs identified in the amount of $3,399. Context: During fiscal year 2023-2024, the School Corporation was a member as well as the fiscal agent of Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. 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. For costs related to non-public schools, the practice of the Cooperative was to separate out the required amount for each member school from the Cooperative budget, and the member schools would work with the non-public schools to determine how to spend their proportionate share amount. Each member school would then request reimbursement from the Cooperative for non-public school expenditures incurred. This allowed both the Cooperative and member schools to maintain control of all Special Education funds, property, equipment and supplies. In the initial sample of 25 expenditures, there was no noncompliance identified. However, while performing a review of transactions for the Period of Performance compliance requirement, it was noted that non-public schools received direct reimbursements from the Cooperative for their proportionate share expenditures. A total of 13 expenditures were made from Special Education funds to non-public schools on behalf of the member schools during the audit period. Of the 13 expenditures, 3, totaling $3,399, were made on behalf of the School Corporation to a non-public school. In addition, one of the expenditures was used to reimburse the non-public school for the purchase of gift cards and certificates, totaling $670, which was not for the benefit of non-public students. The lack of controls and noncompliance was an isolated to the 22611-047-PN01 grant award. This issue was isolated to fiscal year 2024. Identification as a repeat finding, if applicable: No Recommendation: We recommended that the School Corporation's management establish a system of internal controls to ensure that no direct reimbursements are made to the non-public schools and to ensure compliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management has agreed with the finding and prepared a corrective action plan.

Information on the federal program: Subject: Special Education Cluster (IDEA) – Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, 22619-047-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Finding: Material Weakness Criteria: 2 CFR 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 award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.309 states: “A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance (except as described in §200.461 Publication and printing costs) and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity.” 34 CFR 76.707 states in part: “….If the obligation is for – a) Acquisition of real or personal property…. The obligation is made – On the date on which the State or subgrantee makes a binding written commitment to acquire the property.” Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Special Education Cluster program and Period of Performance compliance requirements. Cause: Management had established an initial obligation date that occurred in September of the second fiscal year but modified the final vendor for payment. The new obligation occurred after the period in which the School Corporation was allowed to incur the expense. Effect: If funds are not obligated by the end of the specified date, the grantor agency is not obligated to reimburse the School Corporation for costs incurred. This may indicate that the funding reimbursed that was incurred outside of the period of performance will need to be repaid to the grantor agency, and the School Corporation will then need to support the costs with non-federal funding. Questioned Costs: There were no questioned costs identified. Context: During fiscal year 2023-24, the School Corporation was a member as well as the fiscal agent of Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. 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. For Special Education Cluster awards, funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. When testing transactions occurred in the liquidation period for the 22611-047-PN01, 22611-047-ARP, 22619-047-PN01 and 22619-047-ARP grant awards, two exceptions were identified in the initial sample of five transactions. When expanding the sample, a third exception was noted, and it was concluded that it would not be appropriate to examine the remaining 14 transactions. For the above listed awards, costs must be obligated by September 30, 2023. For the three identified exceptions, an initial purchase order was made in September, but the ultimate transaction was paid to a separate vendor than the original purchase order, and this obligation was incurred in November 2023. This issue was isolated to fiscal year 2024. Identification as a repeat finding, if applicable: No Recommendation: We recommended that the School Corporation's management establish a system of internal controls to ensure that no costs are incurred after the September 30 deadline and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management has agreed with the finding and prepared a corrective action plan.

Information on the federal program: Subject: Special Education Cluster (IDEA) –Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027A, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 23611-047-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, and Earmarking Audit Finding: Material Weakness, Other Matters Criteria: 2 CFR 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 200.207(a) states in part: "The Federal awarding agency or pass-through entity may impose additional specific 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 and facilities, 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 or facilities 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 the earmarking portion of the Matching, Level of Effort, Earmarking compliance requirement. Cause: The School Corporation participates in a Special Education Cooperative that manages and operates the special education program and oversees the majority of the federal compliance requirements. The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system placed the School Corporation in noncompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Noncompliance with the grant agreement or the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: $27,967 Context: The School Corporation did not meet the earmarking requirements for the grants, which concluded during the audit period. Both the Special Education Grants to States and Special Education Preschool Grants required a proportionate share of their funding to be spent on non-public school students with disabilities. The 22611-047-PN01, 22611-047-ARP, and 23611-047-PN01 grant awards were fully expended during the audit period with minimum Non-Public Proportionate Share earmarking requirements of $20,890, $4,238, and $17,240, respectively. There were not sufficient non-public school expenditures incurred to meet the non-public proportionate share requirement for any of the four grants. The non-public school expenditures fell short of the minimum requirement by $12,644, $1,648 and $13,675 respectively. Identification as a repeat finding: Yes, Finding 2023-003. Recommendation: We recommended that the School Corporation's management establish internal controls to monitor earmarking requirements periodically to ensure compliance with the earmarking compliance requirements by the end of the grant period. This includes meeting with the Cooperative periodically to monitor and track progress towards meeting the earmarking requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Significant Deficiency 2025-001. Procurement United States Department of Education, passed through New York State Department of Education Title I Grants to Local Educational Agencies ALN: 84.010A United States Department of Agriculture, passed through New York State Department of Education Child Nutrition Cluster Non-Cash Assistance (food distribution) National School Lunch Program ALN: 10.555 Cash Assistance School Breakfast Program ALN: 10.553 National School Lunch Program ALN: 10.555 Criteria: 2 CFR §200.303 of the Uniform Guidance requires non-federal entities receiving federal awards to establish and maintain 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. Under the Uniform Guidance, federal awards recipients must maintain written documentation of internal control policies and procedures, such as procurement policies that adhere to state and local law, as well as federal regulations and statutes; procedures for documenting how costs are to be allocated to federal awards, documenting actual time and effort for payroll costs charged to federal awards; cash management procedures to minimize the time elapsed between the receipts and disbursements of federal funds; and, how to safeguard personally identifiable information. Condition: The District has not updated its existing policies and written procedures to conform to Uniform Guidance requirements. Cause: Staffing constraints have limited the District’s ability to perform a timely review of its existing policies and written procedures. Effect: Having insufficient or non-compliant written policies and procedures weaken internal controls over the federal awards received, increasing the risk of noncompliance with federal statutes and regulations. Questioned Costs: Dollar amount undetermined, as adequate documentation was not available. Identification of a Repeat Finding: This is a repeat finding from the previous audit referenced, 2024-001 in connection with the audit of the Educational Stabilization Fund awards expended, ALN: 84.425D, ALN: 84.425U, and ALN: 84.425W. Recommendation: The District must review its existing written policies and procedures and update them as needed in order to comply with requirements of Uniform Guidance. Views of Responsible Officials of Auditee: The District has developed a policy entitled “Procurement: Uniform Grant Guidance for Federal Awards” that addresses the Uniform Guidance requirements related to procurement. This policy was adopted by the Board of Education at the November 17, 2025 Board meeting.

2025-002: Material Weakness in Internal Controls over Compliance with Suspension and Debarment Federal Assistance Listing Number: 10.553 and 10.555 Federal Award Year: 2025 Program Title: Child Nutrition Cluster Name of Federal Agency: U.S. Department of Agriculture Name of Pass-Through Entity: Colorado Department of Education COVID-19 Program: No Criteria: 2 CFR §200.303 requires that the grant 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 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: Based on our sample selection of four vendors for testing, we have identified that two of the four vendors tested did not have adequate verification of suspension and debarment. Upon further testing and discussion, the District does not have internal controls in place to verify suspension and debarment on vendors that are paid greater than or equal to $25,000, as required by 2 CFR 200 for various federal awards. Upon further compliance testing, vendors in our testing were in compliance with the requirement. Questioned Costs: No questioned costs have been identified. Cause: The District’s internal controls over suspension and debarment requirement were not properly designed or implemented. Effect: Without internal controls over compliance, the District may not be able to identify noncompliance with a suspended or debarred vendors in a timely manner and may incur potential questioned costs without knowledge of the noncompliance. Repeat Finding: No. Recommendation: We recommend that the District implement internal controls over the suspension and debarment requirement and add this requirement to the procurement process at the District. In addition, we recommend that the District periodically review federal expenditure reports to identify vendors that may have been paid with federal grants in excess of the $25,000 suspension and debarment threshold to prevent potential noncompliance. Corrective Action Plan: Reported on page 64.

Criteria or Specific Requirement: Per 2 CFR 200.303 - Internal Controls and the OMB Compliance Supplement: Child Nutrition Cluster, Procurement and Suspension and Debarment - the District is required to have internal controls to ensure vendors utilized in federal programs are not suspended, debarred, or otherwise excluded from participating in covered transactions. Condition: The District, as a subrecipient of federal awards, contracted with multiple vendors, both directly and indirectly through the use of a purchasing cooperative, without verifiying that the vendor was not suspended, debarred, or otherwise excluded from participating in covered transactions. Questioned Costs: This condition resulted in no identified questioned costs. Context: The District does not have internal controls in place to verify that vendors are not suspended or debarred. Effect: Contracts could be made with vendors that are suspended or debarred, resulting in noncompliance with federal regulations. Cause: In the first instance, the District relied upon a purchasing cooperative to verify that the vendor was not suspended or debarred, but this was not done by the cooperative. In the second instance, the District's contract solicitation requested that a return of a quote or bid act as a self-certification that the vendor was not suspended or debarred. The District made purchases from a vendor, even though the vendor did not return a quote or bid to the District. Recommendation: The District should ensure that the purchasing cooperative has procedures in place to verify that vendors are not suspended or debarred. For other contracts in instances where the vendor does not self-certify, the District should use SAM.gov to verify that vendors are not suspended or debarred before entering into the contract. Management's Response: District personnel will ensure that all vendors utilized are not suspended or debarred, whether that be through vendor self-certification or the documented use of SAM.gov

FINDING 2025-003 Subject: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented an effective system of internal controls over review of individual free and reduced status applications and information management in the Skyward Software System used to determine and maintain eligibility status. Individual Applications The School Corporation noted individual applications for both direct certification and income eligible students would be printed and reviewed after the system makes a determination of eligibility status. Out of 40 students tested, no documentation of this review was provided for 34 of the students. INDIANA STATE BOARD OF ACCOUNTS 20 WAWASEE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Skyward Software System The School Corporation is required to design internal controls ensuring computer systems used to maintain student benefit status are secured. Currently, the Skyward Software System allows all school lunch employees to make changes to student benefit status, and there is no indication or record within the system who makes these changes. Additionally, income eligibility guidelines in the system that determine whether students are eligible based on income are updated by the system automatically every year. The School Corporation is required to perform an annual review to ensure these guidelines are accurate. However, no annual review is done by the School Corporation staff. The issues were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 245.3(c) states in part: "Each School Food Authority shall serve free and reduced price meals or free milk in the respective programs to children eligible under its eligibility criteria. . . ." 7 CFR 245.6(f)(1) states in part: ". . . Only persons directly connected with the administration or enforcement of a program or activity listed in paragraphs (f)(2) or (f)(3) of this section may have access to children's eligibility information, without parental consent. Persons considered directly connected with administration or enforcement of a program or activity listed in paragraphs (f)(2) or (f)(3) of this section are Federal, State, or local program operators responsible for the ongoing operation of the program or activity or responsible for program compliance. Program operators may include persons responsible for carrying out program requirements and monitoring, reviewing, auditing, or investigating the program. Program operators may include contractors, to the extent those persons have a need to know the information for program administration or enforcement. Contractors may include evaluators, auditors, and others with whom Federal or State agencies and program operators contract with to assist in the administration or enforcement of their program in their behalf." Cause A proper system of internal controls over the Skyward Software System was not properly designed and implemented as the School Corporation was not aware its process did not cover the requirements to restrict access to the Skyward Software System and review the income eligibility guidelines yearly. Additionally, the School Corporation was unable to provide documentation to demonstrate it reviewed individual applications to ensure eligibility status was determined accurately. The School Corporation noted that staff turnover resulted in lost documentation; therefore, the School Corporation was unable to provide any other records supporting that staff verified the eligibility status was determined accurately. INDIANA STATE BOARD OF ACCOUNTS 21 WAWASEE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without a proper system of internal controls, the School Corporation cannot ensure eligibility determinations made by either the Skyward Software System or employees are accurate. The School Corporation cannot ensure modifications made in the Skyward Software System to student eligibility status are traceable, which could result in improper changes to student eligibility status. Additionally, a properly designed annual review process over the income eligibility guidelines within the Skyward Software System is necessary to ensure accurate determinations. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation strengthen its internal controls over eligibility applications to ensure eligibility determinations made by either the Skyward Software System or employees are accurate. We further recommended the School Corporation update the Skyward Software System to identify who makes any modifications within the system to ensure modifications are fully traceable. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: Child Nutrition Cluster - Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Significant Deficiency Condition and Context Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. The School Corporation had not designed or implemented internal controls, which would consist of policies and procedures, to ensure that vendors were not suspended, or debarred prior to entering into a covered transaction. The School Corporation verifies through review of the SAM exclusions each time it begins doing business with a new vendor. However, a second individual does not verify the website has been reviewed. INDIANA STATE BOARD OF ACCOUNTS 22 WAWASEE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The School Corporation provided documentation showing it checked the SAM exclusions to verify the contractor was not suspended or debarred prior to entering into the contract but acknowledged no second employee reviews to ensure the procedure was performed as the School Corporation was not aware this was necessary. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure vendors with whom contracts are entered into are not suspended or debarred from doing business with governmental entities. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls that includes review of processes performed to ensure vendors are not suspended or debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-005 Subject: Title I Grants to Local Educational Agencies - Internal Controls Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Matching, Level of Effort, Earmarking Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 23 WAWASEE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding for internal controls only from the immediately prior audit report. The prior audit finding numbers were 2023-007 and 2023-008. Condition and Context Eligibility Eligibility for Title I is determined on the Eligible School Summary of the Tile I application. Enrollment and poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment count for each school into the Eligible School Summary page of the Tile I application. The counts that are prepopulated should be based on the School Corporation's records as of October of the prior fiscal year. There was no documented review by the School Corporation of the enrollment and poverty counts that were prepopulated into the School Corporation's Title I grant application. Level of Effort - Individual Transactions (Vendor) The Form 9 (financial) data was submitted by the School Corporation to the IDOE semiannually. The data reported included the School Corporation's expenditures recorded during that period. The IDOE calculated Maintenance of Effort based on the expenditure information submitted on the Form 9 for that fiscal year. To verify amounts used by the IDOE in their computation were derived from the books and records of the School Corporation, costs were reviewed to ensure they were recorded properly as to account and object code and reported correctly on the Form 9. The School Corporation did not have an oversight process in place to ensure that expenditures for vendors were posted to the correct fund, account, and object codes. During review of expenditures, it was determined that there was not a documented second review in place for all vendor payments being made. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 24 WAWASEE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Although the School Corporation stated that one person is verifying the enrollment and poverty counts that are prepopulated by the IDOE into the School Corporation's Title I grant application each year back to School Corporation records in the student information system and program eligibility files, documentation could not be presented for audit that this verification occurred. There was also not an additional person reviewing the verification for accuracy. One person entered and posted vendor expenditures in the accounting system without a review in place to ensure the expenditures were posted to the correct fund, account, and object codes. Although additional employees were involved in the claims process either by submitting paper accounts payable vouchers, signing invoices, or approving purchase orders for some claims we reviewed, there was no review by a second person after the expenditures were entered into the accounting system. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure that the enrollment and poverty counts prepopulated into the School Corporation's Title I grant applications are accurate, nor can the School Corporation ensure that expenditures entered into the accounting system are coded correctly. Incorrect enrollment and poverty counts in the Title I application can lead to an incorrect amount of Title I funding being received by the School Corporation. Incorrect coding of expenditures in the accounting system can result in incorrect Maintenance of Effort calculations. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation strengthen its system of internal controls over the verification of enrollment and poverty counts prepopulated into the Title I grant application by having an additional person review the verification of the counts back to School Corporation records. We also recommended strengthening the School Corporation policies and procedures to ensure that appropriate supporting documentation of this verification and review is retained to be presented for audit. We further recommend that management of the School Corporation establish and implement an effective system of internal controls over vendor expenditures to ensure expenditures for vendors are posted to the correct fund, account, and object codes. For all vendor expenditures, we recommended they are reviewed by an individual other than the person entering them into the accounting system, along with the supporting documentation of the expenditure, and that this process is documented as to the preparer and reviewer. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-006 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card, High School Graduation Rate Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation is required to report graduation rate data for its public high school using the four-year adjusted cohort rate. To remove a student from the cohort, the School Corporation must confirm the reason for removal in writing. Additionally, required documentation for each removal type must be retained by the School Corporation. The School Corporation did not have effective internal controls to ensure required documentation to support the reason for a student's removal from the high school graduation cohort for mobility reasons was prepared, reviewed, and retained. Although one person updated the reason for a student's removal in the Student Information System, and another reviewed the documentation and approved the reason, the internal control was not sufficient to ensure compliance. Of the seven students tested, the School Corporation provided incorrect supporting documentation to substantiate the removal of two students from the cohort. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 20 USC 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." INDIANA STATE BOARD OF ACCOUNTS 26 WAWASEE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause There were two instances we noted where proper documentation was not retained. For one of the instances, the employee preparing the documentation was aware of the documentation requirements for the mobility code used, the proper documentation was just not retained due to an oversight. For the other instance, the employee preparing the documentation was not aware of the documentation requirements of the specific mobility code used. Additionally, although the School Corporation had a documented internal control in place where one person updated the reason for a student's removal in the Student Information System, and another person reviewed the documentation and approved the reason, the internal control was not sufficient to ensure proper documentation was prepared, reviewed, and retained for all students removed from the cohort. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure proper documentation is maintained to support the removal of all students from the high school graduation cohort for mobility reasons. As a result, proper documentation was not maintained for all students removed from the cohort to support their removal. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation strengthen its system of internal controls over students' removal from the high school graduation cohort for mobility reasons by ensuring the documentation supporting each student's removal from the cohort for mobility reasons is in compliance with the different documentation requirements established by the Indiana Department of Education. We also recommended strengthening the School Corporation policies and procedures to ensure that appropriate supporting documentation is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-007 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Assessment System Security Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Assessment System Security Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 27 WAWASEE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context State educational agencies (SEA), in consultation with local educational agencies (LEA), are required to establish and maintain an assessment security system that is valid, reliable, and consistent with relevant professional and technical standards. Within its assessment system, SEAs must have policies and procedures to maintain test security measures and ensure that LEAs implement those policies and procedures. As such, the Indiana Department of Education created and published the Indiana Assessments Policy Manual. As a part of the assessment security, any individual who administers, handles, or has access to secure test materials at the school or school corporation shall complete assessment training and sign a testing security and integrity statement that remains on file in the appropriate building-level office each year. Each individual required to sign the testing integrity agreement shall sign the form by an established date. The School Corporation had a process to provide assessment system security training and to ensure each employee that attended training signed the agreement indicating training was received. However, there was no process in place to ensure that all school employees required to be trained were trained. Due to the lack of internal controls over ensuring employees requiring training received training, some employees that should have been trained were not. A sample of 27 employees required to receive training was selected for testing from the School Corporation's roster. Of the 27 employees tested, 2 did not receive the training as required. Additionally, 1 employee completed the training and signed the agreement, but it was completed 37 days late. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 511 IAC 5-5-5(b) states: "Any individual who administers, handles, or has access to secure test materials at the school or school corporation shall complete assessment training and sign a testing security and integrity agreement to remain on file in the appropriate building-level office each year." Cause There was not an internal control in place to ensure that all employees who were required to complete assessment training took the training and signed the agreement by the date established. The School Corporation was not aware that this was necessary, noting that they used a training platform to provide the training, which sends automated email reminders to employees to complete the training until it is completed. INDIANA STATE BOARD OF ACCOUNTS 28 WAWASEE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure all employees required to complete the training and sign the testing security and integrity statement do so by the established date. As a result, not all employees required to complete the assessment training and sign the testing security and integrity statement did so. Additionally, not all employees who completed the assessment training and signed the testing security and integrity statement did so by the established date. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish and implement an effective system of internal control over security assessment training which ensures that all employees required to complete the training and sign the testing security and integrity statement do so by the established date. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-008 Subject: Special Education Cluster (IDEA) - Matching, Level of Effort, Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 21611-113-PN01, 22611-113-PN01, 23611-113-PN01, 24611-113-PN01, H027X210084, 23619-113-PN01, 24619-113-PN01, 25619-113-PN01, 22619-113-ARP, 86203 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Finding: Material Weakness Condition and Context The Form 9 (financial) data was submitted by the School Corporation to the Indiana Department of Education (IDOE) semi-annually. The data reported included the School Corporation's expenditures recorded during that period. The IDOE calculated Maintenance of Effort based on the expenditure information submitted on Form 9 for that fiscal year. To verify amounts used by the IDOE in their computation were derived from the books and records of the School Corporation, costs were reviewed to ensure they were recorded properly as to account and object code and reported correctly on the Form 9. INDIANA STATE BOARD OF ACCOUNTS 29 WAWASEE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have an oversight process in place to ensure that expenditures for vendors were posted to the correct fund, account, and object codes. During review of expenditures, it was determined that there was not a documented second review in place for all vendor payments being made. This issue was systemic throughout the audit period. 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause One person entered and posted vendor expenditures in the accounting system without a review in place to ensure the expenditures were posted to the correct fund, account, and object codes. Although additional employees were involved in the claims process either by submitting paper accounts payable vouchers, signing invoices, or approving purchase orders for some claims we reviewed, there was no review by a second person after the expenditures were entered into the accounting system. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure that expenditures entered into the accounting system are coded correctly. Incorrect coding of expenditures in the accounting system can result in incorrect Maintenance of Effort calculations. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish and implement an effective system of internal controls over vendor expenditures to ensure expenditures for vendors are posted to the correct fund, account, and object codes. For all vendor expenditures, we recommended they are reviewed by an individual other than the person entering them into the accounting system, along with the supporting documentation of the expenditure, and that this process is documented as to the preparer and reviewer. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-001 Subject: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY24, FY25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context Any child enrolled in a participating school or summer camp, or attending a SFSP meal service site, who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced price. Children who have been determined ineligible for free or reduced price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's eligibility for free or reduced price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be direct certified. For a direct certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs; or the school, institution, or sponsor may obtain the information directly from the State or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. Direct Certifications The Food Service Director ran the direct certification report monthly and uploaded it to the school lunch point-of-sale system. However, documentation of an oversight or review process to ensure the monthly upload occurred, had imported correctly, and students' status was updated accordingly was not evidenced. Applications The Food Service Director was responsible for reviewing the online and paper application eligibility status and entering the information into the school lunch point-of-sale system. Furthermore, the Assistant Food Service Director had access to make changes to eligibility. Documentation of an oversight or review process to ensure that the income verification, calculations, and eligibility status entered into the school lunch point-of-sale system and subsequent changes were accurate and properly supported was not evidenced. Of the 60 students tested for the school year ended June 30, 2024, the eligibility determinations were not correct as follows:  There was 1 student that received free meals; however, based on the application's income and family size, eligibility should have been for reduced-price meals.  Students were determined to be free or reduced without a properly completed application. As a result, 2 students received free meals and 1 student received reduced-price meals instead of paying regular price for meals. INDIANA STATE BOARD OF ACCOUNTS 14 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, the Indiana Department of Education (IDOE) conducted an administrative review in April 2025 covering the 2024-2025 school year. The IDOE review identified multiple applications that were certified incorrectly or were approved with falsified information. The finding noted household income reported on the income application was changed by a school staff member to allow households to qualify for a free or reduced benefit. The lack of internal controls and noncompliance was systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 245.6(c)(4) states: "Calculating income. The local educational agency must use the income information provided by the household on the application to calculate the household's total current income. When a household submits an application containing complete documentation, as defined in § 245.2, and the household's total current income is at or below the eligibility limits specified in the Income Eligibility Guidelines as defined in § 245.2, the children in that household must be approved for free or reduced price benefits, as applicable." 7 CFR 245.6(e) states: "Recordkeeping. The local educational agency must maintain documentation substantiating eligibility determinations on file for 3 years after the date of the fiscal year to which they pertain, except that if audit findings have not been resolved, the documentation must be maintained as long as required for resolution of the issues raised by the audit." Cause Management had not developed an adequate system of internal controls to ensure student eligibility status was properly determined. Effect As a result of the IDOE administrative review, the School Corporation had to return funds totaling $32,052, of which $24,639 was from the National School Lunch Program and $7,413 from the School Breakfast Program. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 15 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure student eligibility is accurately determined. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY24, FY25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-005. Condition and Context Procurement When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. The School Corporation procured goods totaling $149,426 from five vendors that fell under the small purchase threshold during the audit period. Price or rate quotes were not obtained for any of the vendors nor was there any documentation detailing the history of procurement, which must include the reason for the procurement method used. INDIANA STATE BOARD OF ACCOUNTS 16 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions, recipients are required to verify that contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the SAM exclusions list, collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. There were four covered transactions over $25,000 identified during the audit period totaling $130,448. All four were selected for testing; however, the School Corporation did not verify that two of the four vendors totaling $70,411 were not suspended, debarred, or otherwise excluded from participation in federal assistance programs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." INDIANA STATE BOARD OF ACCOUNTS 17 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not designed or implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect Material noncompliance with the grant agreement and compliance requirements could cause federal expenditures to be unallowable which the funding agency could potentially recover. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure compliance with requirements related to procurement and suspension and debarment. INDIANA STATE BOARD OF ACCOUNTS 18 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-003 Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY24, FY25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Department of Education based upon the number of meals served for the month. The Claims were prepared by the School Corporation's Food Service Director without an oversight or review process in place to ensure accuracy and completeness. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Management had not developed a system of internal controls to ensure the Claims were complete and accurate. Effect The failure to establish an effective system of internal controls could have enabled material noncompliance with the grant agreement and the compliance requirement to go undetected. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 19 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure reports submitted are complete and accurate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-151-PN01, 22611-151-ARP, 23611-151-PN01, 23619-151-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not have internal controls in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met. Although the Proportionate Share Report was prepared by the Treasurer and reviewed and approved by the Special Education Director, the internal controls were not effective to ensure nonpublic school expenditures were appropriately identified and reported. The nonpublic expenditures spent did not meet the earmarking requirements for grant award numbers 22611-151-PN01, 22611-151-ARP, 23611-151-PN01, and 23619-151-PN01. The required expenditures for nonpublic proportionate shares were $11,074, $2,423, $9,363, and $504, respectively. The School Corporation could only provide documentation of expenditures of $10,465, $0, $2,561, and $0, respectively. In addition, the School Corporation did not track the expenditures in a separate line item within the ledger to specifically identify services provided for nonpublic school students. The lack of internal controls and noncompliance were isolated to the 22611-151-PN01, 22611-151-ARP, 23611-151-PN01, and 23619-151-PN01 grants. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 20 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 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." Cause Through inquiry of management, they were unaware of the requirements to track the nonpublic proportionate share expenditures separately. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation was unable to track expenditures for nonpublic services and ensure the proper amount was spent which could result in the repayment of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure the required level of expenditures for nonpublic school students with disabilities is met and properly tracked to ensure compliance with the matching, level of effort, earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-005 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-151-PN01, 23611-151-PN01, 24611-151-PN01, 22611-151-ARP, 23619-151-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. The School Corporation procured goods totaling $60,002 from four vendors that fell under the small purchase threshold during the audit period. The School Corporation did not provide adequate documentation detailing the history of procurement, which must include the reason for the procurement method used, for all four vendors. Price or rate quotes were not obtained for three of the vendors as required. The School Corporation obtained three quotes for one vendor; however, the highest quote was selected without a documented reason. Suspension and Debarment Prior to entering into subawards and covered transactions, recipients are required to verify that contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the SAM exclusions list, collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. There was one covered transaction over $25,000 identified during the audit period which was selected for testing. The School Corporation did not verify that the vendor was not suspended, debarred, or otherwise excluded from participation in federal assistance programs. INDIANA STATE BOARD OF ACCOUNTS 22 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— INDIANA STATE BOARD OF ACCOUNTS 23 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not designed or implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect Material noncompliance with the grant agreement and compliance requirements could cause federal expenditures to be unallowable which the funding agency could potentially recover. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-006 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context A property record or capital asset listing which would include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, and use and condition of the property is to be maintained for assets purchased that exceed the School Corporation's capitalization threshold of $5,000. The School Corporation hired a consultant to compile a capital asset listing report that was to contain all inventory and assets purchased that exceeded the School Corporation's capitalization threshold through June 30, 2025. The consultant prepared the report; however, the School Corporation did not have any policies or procedures in place to ensure the listing was complete. The School Corporation spent $802,314 on improvements, of which $344,829 was paid with COVID-19 - Education Stabilization Funds. The improvements should have been recorded as a capital asset purchased with grant funds as this project exceeded the capitalization threshold. The capital asset listing provided only included part of the project totaling $167,208 and did not identify the source of the funding, the correct cost of the property, or the percentage of federal participation as required. The lack of internal controls and noncompliance were isolated to the ESSER III grant S425U210013 in both fiscal years 2023-2024 and 2024-2025. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. INDIANA STATE BOARD OF ACCOUNTS 25 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause Effective internal controls were not in place to ensure that all assets purchased with federal funds were added to the School Corporation's capital asset listing. The School Corporation uses a consultant to prepare the capital asset listing which did not include all required information. Effect Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls that would ensure compliance with the equipment and real property management requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Criteria or Specifc Requirement: Per 2 CFR 200.303 - Internal Controls and the OMB Compliance Supplement: Special Education Cluster (IDEA), Procurement and Suspension and Debarment - the District is required to create, implement, and document an effective system of internal controls to certify that vendors utilized by the District are neither suspended nor debarred by the federal government. Condition: District personnel perform a search for all new vendors on SAM.gov's exclusion list to ensure that the vendor is neither suspended nor debarred from contracting with federal agencies; however, District personnel do not retain documentation that this search was performed. Questioned Costs: This condition resulted in no identified questioned costs. Context: District personnel are not documenting the procedures performed to ensure that vendors are neither suspended nor debarred by the federal governemnt. Effect: Is is possible for District personnel to not perform internal control procedures, as there is no way for management to determine if the procedure had been performed. Cause: The District's policies do not require that this procedure be documented. Recommendation: The District's policies should require that documentation is retained for all internal control procedures performed, including a search to verify that vendors are neither suspended nor debarred by the federal government. Management's Response: Management does not disagree with this response. Documentation will be maintained for this internal control in the future.

Finding Reference Number: 2025-001 Name of Federal Agency: U.S. Department of Treasury Name of Pass-through Entity: Howard County Government Program Title: Coronavirus State and Local Fiscal Recovery Fund Federal Award No.: 02-11-0-D000-0237 Assistance Listing Number: 21.027 Federal Award Year: 2024-2025 Compliance Requirement: Suspension and debarment Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria: Per 2 CFR 200.213 Suspension and Debarment restricts awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2 CFR 180.300 states that an entity may determine suspension and debarment status by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Per 2 CFR section 200.303(a), 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. 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: during our fiscal year 2025 compliance audit, we noted that the Authority awarded all twenty-seven (27) subawards without checking for suspension and debarment. Context: The Authority awarded twenty-seven (27) subawards during fiscal year 2025 totaling $1,000,000, which represents over 99% of the total federal expenditures during fiscal year 2025. Cause: The Authority did not establish controls to check for suspension and debarment before awarding contracts. The Authority was also not aware of the fact that they had to check for suspension and debarment. Effect: As a result of not checking for suspension and debarment, awards may have been made to organizations that are not eligible. Identification as a Repeat Finding, if Applicable: No. Questioned Costs: None identified.Recommendation: We recommend the Authority evaluate its policies and procedures to ensure that suspension and debarment requirements are being met prior to entering into covered transactions. Policies and procedures should reiterate the three options for determining suspension and debarment status listed in 2 CFR 180.300. Responsible Official: Controller Views of Responsible Official and Planned Corrective Action: Management concurs with the audit finding. See the accompanying management’s corrective action plan for planned corrective action.

Finding Reference Number: 2025-002 Name of Federal Agency: U.S. Department of Treasury Name of Pass-through Entity: Howard County Government Program Title: Coronavirus State and Local Fiscal Recovery Fund Federal Award No.: 02-11-0-D000-0237 Assistance Listing Number: 21.027 Federal Award Year: 2024-2025 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria: Non-Federal entities are required to comply with the terms of the grant agreement. This includes preparing and submitting all required reports in a timely manner. Per 2 CFR section 200.303(a), 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. 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: during our fiscal year 2025 compliance audit, we noted that the Authority did not submit two out of the four quarterly detailed expense list per childcare provider report selected for testing. Context: The Authority is required to submit (4) quarterly project and expenditure report and (4) quarterly detailed expense list per childcare provider. While the quarterly project and expenditure reports were submitted timely, the authority did not prepare and submit the quarterly detailed expense list per childcare provider reports. Cause: The Authority did not have proper internal controls to ensure that all required reports were submitted timely to the grantor. Effect: As a result, the authority did not prepare and submit the quarterly detailed expense list per childcare provider reports timely. Identification as a Repeat Finding, if Applicable: No. Questioned Costs: None identified. Recommendation: We recommend the Authority evaluate its policies and procedures to ensure that it complies with the reporting requirements of the grant. Responsible Official: Controller Views of Responsible Official and Planned Corrective Action: Management concurs with the audit finding. See the accompanying management’s corrective action plan for planned corrective action.

Finding Reference Number: 2025-003 Name of Federal Agency: U.S. Department of Treasury Name of Pass-through Entity: Howard County Government Program Title: Coronavirus State and Local Fiscal Recovery Fund Federal Award No.: 02-11-0-D000-0237 Assistance Listing Number: 21.027 Federal Award Year: 2024-2025 Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria: A pass-through entity (PTE) must Identify the Award and Applicable Requirements – Clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR 200.332(a)(1); (2) all requirements imposed by the PTE on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR 200.332(a)(2)); and (3) any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR 200.332(a)(3)). Per 2 CFR section 200.303(a), 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. 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: During our fiscal year 2025 compliance audit, we noted that the Authority awarded all twenty-seven (27) subawards without referring to federal statutes, regulations, and the terms and conditions of the award as described in 2 CFR 200.332(a)(1), 2 CFR 200.332(a)(2), and 2 CFR 200.332(a)(3). Context: The Authority awarded twenty-seven (27) subawards during fiscal year 2025 totaling $1,000,000, which represents over 99% of the total federal expenditures during fiscal year 2025. Cause: The Authority did not have adequate controls to review subaward agreements to ensure all compliance requirements are captured, that information is consistent between pass-through entity records and the subaward, and that all required elements are included. Effect: As a result of not including the proper information in the subaward agreements, the subrecipients may not be able to comply with the terms of the grant agreement and 2 CFR part 200. Identification as a Repeat Finding, if Applicable: No. Questioned Costs: None identified.Recommendation: We recommend the Authority evaluate its policies and procedures to ensure that subaward agreements include all required information as described in 2 CFR 200.332(a)(1), 2 CFR 200.332(a)(2), and 2 CFR 200.332(a)(3). Responsible Official: Controller Views of Responsible Official and Planned Corrective Action: Management concurs with the audit finding. See the accompanying management’s corrective action plan for planned corrective action.

Federal Agency: US Department of Agriculture (USDA) Program Name: SNAP Cluster: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program ALN #: 10.561 Award Number (Federal Award Year): IDHS SNAP FCSDQ03623 (2024-2025) Questioned Costs: None 2025-004. Finding: Internal Controls over Procurement The University of Illinois Urbana-Champaign did not have sufficient rationale documented for the noncompetitive procurement method selected within their iBuy procurement system at the time of approval of the purchase to allow a reviewer to determine the appropriateness of the procurement method. Condition: The University of Illinois Urbana-Champaign’s internal controls over small purchases include review and approval of a purchase requisition form that documents the procurement method selected. Prior to June 15, 2025, when a noncompetitive procurement method was selected, a radio button within the iBuy system allowed for selection of one of several circumstances where noncompetitive procurement is permitted by 2 CFR 200.320, including that the procurement can only be fulfilled by a single source. When this selection was made, additional information supporting this rationale should have been available to the reviewer to determine that this noncompetitive procurement method was appropriate. Out of four small purchase procurement transactions tested prior to June 15, 2025, for one transaction (25%), there was not sufficient evidence to support that documentation of the noncompetitive procurement method selected was provided at the time of review and approval. Based on additional information provided to us during our testing, there were no indications that the noncompetitive method selected was inappropriate. This transaction was selected from the period prior to the iBuy enhancement. Subsequent to June 15, 2025, the purchase requisition form in the iBuy system was enhanced to require users to complete mandatory fields within the purchase requisition form when a noncompetitive procurement method is selected and provide detailed written justification. The sample was not intended to be, and was not, a statistically valid sample. Criteria: Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to 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 procurement procedures are properly followed and support is properly maintained as required by 2 CFR 200.318. Cause: University officials stated a single e-procurement system is used to collect and capture procurement-related information. University officials further stated the electronic system required selection of the relevant procurement method in the form of a radio button but did not require additional information in the central procurement file. Rather, this information was maintained by the requesting unit. Effect: If the procurement purchase requisition forms do not include sufficient supporting documentation of the rationale for the noncompetitive method of procurement selected, the University could approve payments of federal funds to vendors that do not meet federal regulations. (Finding Code No. 2025-004, 2024-004) Recommendation: We recommend the University of Illinois Urbana-Champaign review current processes within the iBuy system for noncompetitive procurement transactions to ensure sufficient documentation is included to support the rationale for the noncompetitive method of procurement selected. University Response: While the University accepts the finding, we note that corrective action was implemented on June 15, 2025. No exceptions related to the iBuy central procurement file were found after implementation.

Federal Agencies: US Department of Defense (DoD); US Department of Energy (DOE); US Health and Human Services (HHS) Program Names: Research & Development Cluster: Basic, Applied and Advanced Research in Science and Engineering; Research and Technology Development; Fossil Energy Research and Development; and HIV-Related Training and Technical Assistance ALN #s: 12.630; 12.910; 81.089; 93.145 Award Numbers (Federal Award Year): ARMY W911NF-17-2-0196 (2024-2025); DARPA HR0011-23-2-0004 (2024-2025); DOE DE-FE0031581 (2024-2025); and HRSA 5 U1OHA32109-07 (2024-2025) Questioned Costs: None 2025-003. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and the controls in place did not identify the late payments. Condition: Out of seventeen subrecipient payments tested which were made by the University of Illinois Urbana-Champaign under the Research & Development Cluster, three payments (18%) were not made within 30 days after receipt of the billing from the subrecipient. The payments ranged from 37-79 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of eight subrecipient payments tested which were made by the University of Illinois Chicago under the HIV-Related Training and Technical Assistance Program, two payments (25%) were not made within 30 days after receipt of the billing from the subrecipient. The payments were made 34 and 40 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Criteria: Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to 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 subrecipient payments are made timely. Cause: University of Illinois Urbana-Champaign officials stated the multi-layered review and approval process along with workload caused the exceptions noted. University of Illinois Chicago officials stated the subrecipient payments were late due to competing priorities. Effect: Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2025-003, 2024-002, 2023-006, 2022-008) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the receipt of billings from the subrecipient and the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.

FINDING 2025-002 Subject: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): SY23-24, SY24-25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that was effective in preventing, or detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals. Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable program. For the School Breakfast Program and the National School Lunch Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children who have been determined ineligible for free or reduced-price school meals pay the full price set by the School Food Authority for their meals. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. INDIANA STATE BOARD OF ACCOUNTS 17 EASTERN PULASKI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, a child may be directly certified. For a direct certification, annual eligibility determinations are based on the child's household receiving benefits under the Supplemental Nutrition Assistance Program (SNAP), the Food Distribution Program on Indian Reservations (FDPIR), the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs, or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. The School Corporation's child nutrition program software company, Skyward, automatically imported the eligibility parameters into the system and the Food Service Director (FSD) reviewed to ensure accuracy. Parents submitted applications online as part of the registration packet with eligibility determined by the software; the FSD would then approve the application. The FSD generated and reviewed the direct certification reports without an oversight or review process in place. Based on a test of 60 students who received free or reduced-price meals, 9 were determined to not be eligible for free or reduced meals as follows:  There were 2 students identified as eligible for free meals due to income applications that did not submit applications for that school year and were not included on the direct certifications provided by the School Corporation.  There were 3 students identified as eligible for reduced meals due to income applications that did not submit applications for that school year and were not included on the direct certifications provided by the School Corporation.  There were 3 students identified as eligible for free meals due to being directly certified that were not included on any of the direct certification reports provided by the School Corporation.  There was 1 student identified as eligible for reduced meals due to being directly certified that was not included on any of the direct certification reports provided by the School Corporation. All 9 of the students identified above should have had a paid status in the nutrition program software. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 EASTERN PULASKI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 245.6 states in part: ". . . (b) Direct certification. In lieu of requiring a household to complete the free and reduced price meal or free milk application, as specified in paragraph (a) of this section, the local educational agency must certify children as eligible for free meals or free milk in accordance with paragraph (b)(1)(i) of this section or may certify children as eligible for free meals or free milk in accordance with paragraph (b)(2) of this section. If a household also submits an application for directly certified children, the direct certification eligibility determination will take precedence. . . . (5) Direct certification documentation. (i) The required documentation for direct certification is provided in paragraph (2) of the definition of Documentation in § 245.2. (ii) (A) Beginning in School Year 2012-2013, direct certification with SNAP shall be conducted using a data matching technique only. Letters to households for direct certification may be used only as an additional means to notify households of children's eligibility based on receipt of SNAP benefits. The last period that letters to households may be used as the primary method for direct certification is School Year 2011-2012. While such notices cannot be the primary method used by a state to document receipt of SNAP, the local educational agency shall accept such a letter if presented by a household. . . . (iii) Individual notices from officials of eligible programs for a Foster child, a Homeless child, a Migrant child, a Runaway child, or a Head Start child, as defined in § 245.2, may continue to be used. These notices are provided to school officials who must certify these children as eligible for free meals or free milk, as applicable, without further application, upon receipt of such notice. . . ." (c) Determination of eligibility— (1) Duration of eligibility. Except as otherwise specified in paragraph (c)(3) of this section, eligibility for free or reduced price meals, as determined through an approved application or by direct certification, must remain in effect for the entire school year and for up to 30 operating days into the subsequent school year. The local educational agency must determine household eligibility for free or reduced price meals either through direct certification or the application process at or about the beginning of the school year. The local educational agency must determine eligibility for free or reduced price meals when a household submits an application or, if feasible, through direct certification, at any time during the school year. . . . (4) Calculating income. The local educational agency must use the income information provided by the household on the application to calculate the household's total current income. . . ." Cause The School Corporation did not have effective internal controls in place to ensure the students' eligibility status went to paid when a current application was not received or the student was not included on the direct certification list for that year. INDIANA STATE BOARD OF ACCOUNTS 19 EASTERN PULASKI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure students receiving free or reduced-price meals are eligible for the benefits received. Providing ineligible students with reduced or free meals would cause the School Corporation to receive too much federal funding from the program as funding received is based on meals served to eligible students. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure student eligibility for free or reduced-price lunches is accurately determined. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-003 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context The School Corporation had not properly implemented an effective system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. A property record or capital asset listing, which would include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, and use and condition of the property, is to be maintained for assets purchased that exceed the School Corporation's capitalization threshold. INDIANA STATE BOARD OF ACCOUNTS 20 EASTERN PULASKI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation purchased six pieces of equipment with COVID-19 - Education Stabilization Funds that exceeded the capitalization threshold. Of the six assets, one was not added to the detailed listing of capital assets. Additionally, of the five that were added to the capital asset listing, the records did not include all the required information such as a serial or identification number, the source of funding for the property (including the federal award identification number), who holds title, acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, location of the property, and the use and condition of the property. In addition, assets were not properly safeguarded and maintained. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause The School Corporation did not have adequate internal controls to ensure compliance with the Equipment and Real Property Management compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 21 EASTERN PULASKI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure that capital asset purchases are properly accounted for in the capital asset listing. Not properly accounting for equipment that meets the capital asset threshold does not provide an accurate depiction of the total capital assets maintained by the School Corporation and does not denote whether federal funds were used to acquire the asset. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure asset records include all the necessary information and new assets are added individually. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025-001 Improve Controls Over Reporting (Significant Deficiency) Federal Agency: U.S. Department of the Treasury Program: COVID-19 - State and Local Fiscal Recovery Fund AL Number: 21.027 Award Year: 2025 Type of Finding Internal Control over Compliance – Significant Deficiency Criteria In accordance with 2 CFR 200.303 Internal controls, management of the City is responsible for establishing, documenting, and maintaining effective internal control over the Federal award that provides reasonable assurance that the City is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context Reports submitted to grantors were not independently reviewed by a person other than the preparer. Cause Weaknesses in the design of internal controls. Effect or Potential Effect There are no questioned costs as a result of this finding as there are no costs directly associated with the finding. Recommendation The City should implement formal policies and procedures regarding separation of duties and the requirement of a second individual being involved in the reporting process. Views of Responsible Official and Planned Corrective Action Management’s views and Corrective Action Plan are included at the end of this report.

Criteria or Specific Requirement: Per 2 CFR 200.303 - Internal Controls and the OMB Complaince Supplement: Child Nutrition Cluster, Reporting - The District is required to have internal controls, including segregation of duties, over reporting of monthly reimbursement claims. Condition: The same individiual is responsible for preparing and submitting monthly reimbursement claims for the Child Nutrition Program without an independent review or approval before submission. Questioned Costs: The condition has resulted in no identified questioned costs. Context: Currently one individual is responsible for preparing and submitting the monthly reimbursement claims. Effect: Meal claims could be submitted to the Illinois State Board of Education that do not accurately reflect the number of meals served. Consequently, the District could be over- or under-reimbursed by this program. Cause: Abscense of formal internal control procedures resulted in one person performing all reporting functions. Recomendation: Implement segregation of duties by requiring one person to prepare the monthly claim and a second person (e.g., supervisor) to review and approve the claim before submission. The review should be suppported with signatures or electronic approval logs. Management's Reponse: A corrective action plan will be developed and implemented. A secondary review of the meal claim to the supporting documents will be performed before the meal claim is submitted.

FINDING 2025-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Number and Year (or Other Identifying Number): FY2023-24 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Findings: Significant Deficiency, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context Food Service - Expenditures The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to transfers of the grant. A transfer totaling $148,955 was made from the School Lunch fund to the Payroll Clearing fund on July 1, 2023, as a part of the conversion to the new financial system. Documentation to support that this was to fund an allowable activity or cost of the grant was not provided for audit. Food Service - Revenues The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to food service revenues being accounted for in the School Food Account. A School Food Authority (SFA) is required to account for all revenues and expenditures of its nonprofit school food service in accordance with state and federal requirements. A SFA must operate its food services on a nonprofit basis; all revenue generated by the school food service must be used to operate and improve its food services. In the prior audit, the School Corporation's process was to receipt the School Lunch reimbursement received into a Food Service Federal Reimbursement fund and then transfer that reimbursement to the School Lunch fund the following month. The April 2022 and April 2023 reimbursements of $158,679 and $91,108, respectively, were receipted into the Food Service Federal Reimbursement fund on July 7, 2022, and June 2, 2023. The reimbursements, totaling $249,787, had not been transferred to the School Lunch fund, which is the designated school food service fund, as of June 30, 2023. INDIANA STATE BOARD OF ACCOUNTS 23 GRIFFITH PUBLIC SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) In July 2023, the School Corporation converted to a new financial system. The $250,995 balance in the Food Service Federal Reimbursement fund was not converted into the new financial system, and, therefore, was not transferred to the School Lunch fund. Audit adjustments were proposed, accepted by the School Corporation, and made to the financial statement and the Combining Schedule of Receipts, Disbursements, Other Financing Sources (Uses), and Cash and Investment Balances - Regulatory Basis presented as Other Information in the Financial Statement Audit Report of the School Corporation. The lack of internal controls and noncompliance was isolated to the 2023-2024 school year. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 220.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service. . . ." INDIANA STATE BOARD OF ACCOUNTS 24 GRIFFITH PUBLIC SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 7 CFR 210.2 states in part: ". . . Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause The School Corporation's management did not have properly designed internal controls in place to ensure all funds in the prior financial system were properly converted into the new financial system. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, unsupported costs were transferred out of the School Lunch fund and prior period errors were not corrected. Noncompliance with the grant agreement and the compliance requirements could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $148,955 were identified as explained in the Condition and Context. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure costs transferred out are adequately documented and that reimbursements errors are corrected. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.