Findings Citing § 200.303

FINDING 2025-003 Subject: COVID-19 - Education Stabilization Fund - Internal Controls 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, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 18 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the following compliance requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. There was not a documented oversight, review, or approval process in place over payroll-related disbursements paid from the program-related funds. The Treasurer approved a payroll summary report by fund; however, this report does not include payroll distribution information that would ensure the proper employees were being paid from the grant funds in the proper amounts. 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 that segregated key functions. Although a detailed payroll distribution report is generated and available for review in the financial software, the Treasurer was unaware that she should document a review of this or a similar report. Effect The lack of an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation strengthen its system of internal controls and document an oversight or review process over payroll distribution reports. 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: 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, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed a system of internal controls in order 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 federal grant awards to ensure adequate safeguards are in place to prevent loss or damage of items. The School Corporation used federal funds to pay for various purchases of capital assets totaling $361,012. Carpeting/flooring improvements, turf upgrades, and weight room equipment were all included in the School Corporation's capital asset listing; however, the 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 (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 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. . . ." Cause The School Corporation was unaware of the requirements regarding identifying information for assets purchased with federal funds. Effect The lack of an internal control system enabled noncompliance to occur and remain undetected. As a result, assets purchased with federal dollars were not properly identified in the School Corporation's capital asset records. 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 the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure asset records include all the necessary information for assets purchased with federal funds. 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: COVID-19 - Education Stabilization Fund - Earmarking 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, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 21 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Earmarking compliance requirement. Local Education Agencies must set aside at least 20 percent of ESSER III (ARP) funding for evidence-based activities to address learning loss. According to guidance from the Indiana Department of Education, summer programming, afterschool, and extended school day are examples, but they are not the only allowable activities to address learning loss and accelerate learning. Additionally, allowable activities that are deemed necessary to carry out the activities to address learning loss, such as transportation or staffing, may also be budged as an activity to address learning loss. Although the School Corporation budgeted 20 percent of its program expenditures for learning loss activities in its grant application, it did not differentiate, code, or track learning loss expenditures separately from non-learning loss activity expenditures. As a result, we could not identify whether 20 percent of the $1,703,452 total ESSER III allocation received by the School Corporation was used for learning loss activities. The School Corporation was unable to provide a complete, detailed list of its learning loss expenditures to demonstrate compliance with the Earmarking requirement. The lack of internal controls and noncompliance were systemic issues both during the audit period and since the beginning of the grant award. 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). . . ." Section 2001(e)(1) of the ARP Act states in part: "A local educational agency that receives funds under this section - (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups . . ." Cause The School Corporation officials were unaware that they should track or code learning loss expenditures separately throughout the grant's period of performance. INDIANA STATE BOARD OF ACCOUNTS 22 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Because the School Corporation could not identify which expenditures were considered learning loss, we were unable to obtain sufficient appropriate audit evidence on which to base our opinion on the School Corporation's compliance with the earmarking requirement. 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 the School Corporation's management strengthen its system of internal controls to ensure Earmarking requirements including learning loss set-asides are monitored and identified for audit purposes. 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 - Special Tests and Provisions - Wage Rate Requirements 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, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Construction and/or renovation contracts in excess of $2,000 financed by federal assistance funds must pay wages no less than those established for the locality for the project (prevailing wage rates) by the Department of Labor (DOL). Nonfederal entities are to include in their contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. INDIANA STATE BOARD OF ACCOUNTS 23 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation completed flooring alterations, renovation, and improvement projects with two vendors for multiple buildings and facilities within the School Corporation. The projects were funded partly or entirely with COVID-19 - Education Stabilization Funds; however, the School Corporation did not enter into formal contracts with the vendors which would include the applicable prevailing wage rate clauses therein. Additionally, the School Corporation did not obtain certified payroll documentation from contractors as required throughout the renovation projects and audit period. The lack of internal controls was a systemic issue throughout the audit period and noncompliance affected each of the two applicable renovation projects. 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). . . ." 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages– (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . INDIANA STATE BOARD OF ACCOUNTS 24 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (3) Records and certified payrolls– (ii) Certified payroll requirements– (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause School Corporation officials were unaware of the requirements to include Wage Rate Requirements (Davis Bacon) provisions in the respective renovation contracts and obtain weekly certified payrolls from the contractor(s) throughout the renovation period. Effect The lack of an effective internal control system enabled material noncompliance with the grant agreement and the aforementioned compliance requirement to occur and remain undetected. Lack of compliance could result in contractors paying wages below those required by the DOL regulations. 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. INDIANA STATE BOARD OF ACCOUNTS 25 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a system of internal controls and include the wage rate requirement clause in federally funded construction or renovation contracts. In addition, we recommended certified payrolls should be obtained as required for all federally funded construction or renovation contracts in excess of $2,000. 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 26

Condition: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirements. Grant awards with the Indiana Family and Social Services Administration outlines various reporting requirements. Criteria: 2 CFR section 200.303 states in part: "The Non-Federal entity must: • Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity 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)." Cause: CICOA fiscal management did not monitor the filing of the non-federal expenditures report required by the Indiana Family and Social Services Administration. Effect: The non-federal expenditures report is to be submitted within 15 days after the end of the quarter to the Indiana Family and Social Services Administration in accordance with its grant awards. None of the quarterly reports were filed until November 6, 2025. Recommendation: We recommend fiscal management establish a system to monitor all reporting requirements for grant awards, so the reports are prepared and submitted timely. Views of Responsible Officials and Planned Corrective Actions: Due to the oversight of the fractional CFO, other priorities had taken precedence over other financial matters. However, with the recent appointment of a full-time CFO specifically focused on CICOA's financial operations, we can now shift our attention back to these important reporting responsibilities. The full-time CFO will ensure that all financial reporting deadlines are respected and met in a timely manner, allowing for greater accuracy and accountability in our financial practices. This change will help us enhance our financial oversight and maintain the integrity of our reporting processes moving forward.

Federal Award U.S. Department of Transportation; Highway Planning and Construction; Assistance Listing Number 20.205 Criteria In accordance with Title 2 of the Code of Federal Regulations (2 CFR) section 200.303, the City must establish andmaintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the award. Condition During our testing of five certified payroll reports, we noted the reports maintained by the City did not include certification of the payroll by the contractor. Context The agreement with the contractor requires a copy of the payroll and statement of compliance be submitted to the City weekly. We selected five weeks for testing and found that all five weeks did not have a signed statement of compliance. Cause The City did not maintain the signed statement of compliance submitted by the contractor. Effect The absence of the signed statement of compliance with the certified payroll reports increases the risk that errors or irregularities in compliance with federal program requirements may not be detected and corrected in a timely manner. Questioned Costs No costs are questioned. Identification as Repeat Finding This is not a repeat finding from the prior year. Recommendation We recommend the City strengthen procedures to ensure proper documentation is maintained to demonstrate compliance with the Uniform Guidance requirements. View of Responsible Officials Management agrees with the comment and will ensure a process is in place for the receipt of signed certified payrolls.

Criteria: The Federal Funding Accountability and Transparency Act (FFATA) and its implementing regulations at 2 CFR Part 170 require prime awardees to report first-tier (tier one) subawards that meet the reporting threshold in the FFATA Subaward Reporting System (FSRS). Specifically, 2 CFR 170.220(b) requires reporting of applicable first-tier subawards by the end of the month following the month in which the subaward is made (obligated) and to report any subsequent changes. In addition, 2 CFR 200.303 requires the prime awardee to establish and maintain effective internal control over federal award compliance. Condition: During our review of the City’s FFATA reporting related to first-tier subawards, we noted the City did not report five (5) tier one subawards related to the Community Development Block Grants Cluster in FSRS in accordance with FFATA requirements. As of audit fieldwork, the required FFATA subaward reports for these five subawards had not been submitted. Cause: The City’s internal controls were not sufficient to ensure FFATA reporting requirements were consistently identified and timely performed. Specifically, the City did not have adequate documented procedures and monitoring controls to: • identify all first-tier subawards subject to FFATA reporting, • assign responsibility for FSRS reporting and secondary review, and • track reporting deadlines to ensure timely submission. Effect: The City was not in compliance with FFATA reporting requirements for five first-tier subawards. This reduces transparency of federal award spending and may subject the City to increased federal oversight and other administrative actions (e.g., additional monitoring or enforcement actions). No questioned costs were identified for this finding. Management’s Response: The City concurs with the finding. The City will (1) submit the required FFATA subaward reports for the five unreported tier one subawards, (2) implement a formal FFATA compliance checklist to be completed at the time of subaward execution, (3) designate responsible personnel for FSRS reporting with a documented secondary review, and (4) provide training to applicable staff on FFATA reporting requirements and deadlines. The City expects these corrective actions to be implemented for all applicable subawards for awards effective July 1, 2025, and forward.

FINDING 2025-002 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Construction and/or renovation contracts in excess of $2,000 financed by federal assistance funds must pay wages no less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL). Nonfederal entities are to include in their contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. Construction and renovation projects involving paving, painting, and landscaping improvements were performed during the audit period. The projects were funded partly or entirely with the COVID-19 - Education Stabilization Funds; however, the School Corporation did not enter into formal contracts with the vendors and include the applicable prevailing wage rates clauses therein. Additionally, the School Corporation did not obtain certified payroll documentation from contractors as required throughout the projects and audit period. The lack of internal controls was a systemic issue throughout the audit period and noncompliance affected each of the three vendors associated with the aforementioned renovation and construction projects. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 16 NORTH PUTNAM COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages - (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls - (ii) Certified payroll requirements - (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . INDIANA STATE BOARD OF ACCOUNTS 17 NORTH PUTNAM COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation officials were unaware of the requirements to include wage rate requirement (Davis-Bacon) provisions in the respective renovation contracts and obtain weekly certified payrolls from the contractors throughout the renovation period. Effect The lack of an effective internal control system enabled material noncompliance with the grant agreement and the aforementioned compliance requirement to occur and remain undetected. Lack of compliance could result in contractors paying wages below those required by the DOL regulations. 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 the School Corporation's management establish a system of internal controls and include the wage rate requirement clause in federally funded construction or renovation contracts. In addition, we recommended certified payrolls should be obtained as required for all federally funded construction or renovation contracts in excess of $2,000. 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 Award Year: 2024-2025 Federal program: U.S. Department of Agriculture – 10.553, 10.555,10.559, 10.582 Child Nutrition Cluster Pass-through entity: Oregon Department of Education Criteria: Per 2 CFR 200.303, 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.” Condition: The District could not provide documentation of review and approval of the indirect costs charged to the federal program. The deficiency in controls over compliance related to indirect costs is considered a significant deficiency. Cause: The cause appears to be related to staff turnover. Effect or potential effect: There is potential for indirect costs in excess of the allowed indirect cost rate to be charged to the federal program. Questioned Costs: No questioned costs identified. Context: The District appears to have not retained documentation of review and approval of the indirect costs charged to the federal program. Recommendation: The District should ensure controls related to compliance with indirect cost requirements are implemented. Views of responsible officials: The District understands and concurs with this finding.

Finding 2025-003 Award Year: 2024-2025 Federal program: U.S. Department of Education – 84.010 Title I Grants to Local Educational Agencies (Title 1, Part A of the ESEA) Pass-through entity: Oregon Department of Education Criteria: Per 2 CFR 200.303, 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.” Condition: The District could not provide documentation of review and approval of the indirect costs charged to the federal program. The deficiency in controls over compliance related to indirect costs is considered a significant deficiency. Cause: The cause appears to be related to staff turnover. Effect or potential effect: There is potential for indirect costs excess of the allowed indirect cost rate to be charged to the federal program. Questioned Costs: No questioned costs identified. Context: The District appears to have not retained documentation of review and approval of the indirect costs charged to the federal program. Recommendation: The District should ensure controls related to compliance with indirect cost requirements are implemented. Views of responsible officials: The District understands and concurs with this finding.

Finding 2025-004 Award Year: 2024-2025 Federal program: U.S. Department of Education – 84.010 Title I Grants to Local Educational Agencies (Title 1, Part A of the ESEA) Pass-through entity: Oregon Department of Education Criteria: Per 2 CFR 200.303, 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.” Condition: The District could not provide documentation of time and effort certifications or an acceptable alternative for payroll charged to the federal program. The deficiency in controls over compliance related to reporting is considered a significant deficiency. Cause: The cause appears to be related to staff turnover. Effect or potential effect: Without adequate controls over allowable costs related to payroll, the District could charge unallowable costs to the grant. Questioned Costs: No questioned costs identified. Context: Out of a population of 5,107 payroll transactions, excluding related benefits, totaling $6,240,176, a sample of 40 transactions, totaling $42,514, was selected. Of the sample selected, the District could not provide documentation of time and effort certifications or an acceptable alternative for 10 transactions, totaling $22,591. Recommendation: The District should ensure controls related to compliance with allowable costs requirements related to payroll are implemented. Views of responsible officials: The District understands and concurs with this finding.

Finding 2025-005 Award Year: 2024-2025 Federal program: U.S. Department of Education – 84.425 Education Stabilization Fund Pass-through entity: Oregon Department of Education Criteria: Per 2 CFR 200.303, 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.” Condition: The District could not provide documentation of review and approval of the indirect costs charged to the federal program. Additionally, indirect costs in excess of the allowed indirect cost rate of 4.51% were charged to the federal program prior to being corrected. The deficiency in controls over compliance related to indirect costs is considered a significant deficiency. Cause: The cause appears to be related to staff turnover and errors in the calculation to determine indirect costs originally charged to the federal program. Effect or potential effect: Audit procedures identified indirect costs of $1,603 in excess of the allowed indirect cost rate charged to the federal program prior to being corrected. Questioned Costs: As the error was corrected, no questioned costs identified. Context: Indirect costs for the fiscal year were recalculated based on total expenditures charged to the grant. Recommendation: The District should ensure controls related to compliance with indirect cost requirements are implemented. Views of responsible officials: The District understands and concurs with this finding.

Finding 2025-006 Award Year: 2024-2025 Federal program: U.S. Department of Education – 84.425 Education Stabilization Fund. Pass-through entity: Oregon Department of Education Criteria: Per 2 CFR 200.303, 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.” Condition: The District could not provide documentation of review and approval of the ESSER Annual Performance Report submitted to the Oregon Department of Education. The deficiency in controls over compliance related to reporting is considered a significant deficiency. Cause: The cause appears to be related to staff turnover. Effect or potential effect: Without adequate controls over reporting, the District could submit reports with errors or fail to comply with the reporting requirements of federal programs. Questioned Costs: No questioned costs identified. Context: For the one report the District was required to submit to the Oregon Department of Education, the District could not provide documentation of the review and approval of the report prior to being submitted. Recommendation: The District should ensure controls related to compliance with reporting requirements are implemented. Views of responsible officials: The District understands and concurs with this finding.

Non‐Material Non‐Compliance Material Weakness, Eligibility Criteria: Individuals receiving assistance benefits must meet the eligibility requirements defined in the State Plan and specified in the Child Welfare Manual, Chapter XIII. Additionally, in accordance with 2 CFR 200.303, management is responsible for establishing and maintaining effective internal controls to ensure case records contain sufficient documentation to support eligibility determinations. Condition: The County Department of Social Services could not locate adequate documentation to support eligibility determinations for two adoption cases. We were not able to determine whether these recipients were eligible to receive the Title IV-E benefits. Context: We tested 50 beneficiaries, consisting of 27 adoption cases, 21 foster care cases, and 2 guardianship assistance cases. The above condition was noted in 2 of the 27 adoption cases tested, representing 4% of the overall sample. Effect: Failure to maintain complete and accurate documentation of eligibility determinations increases the risk that assistance payments may be made to individuals who are not eligible to receive benefits. This could result in questioned costs and repayment obligations. Cause: Caseworkers did not maintain complete and accurate eligibility documentation as required by the Child Welfare Manual and related State Plan guidance. Questioned Costs: Known questioned costs total $8,972, representing the combined federal and state share of benefits paid for the two cases in which eligibility could not be verified. Based on the County’s funding allocation, the estimated federal portion of the known questioned costs is approximately 81%, or $7,268. Using the results of our testing and extrapolation to the population, we estimate that likely questioned costs exceed $25,000, based on the same 81% federal share allocation. In accordance with 2 CFR 200.516(a)(3), auditors are required to report known questioned costs and likely questioned costs when they exceed $25,000. Recommendation: The County should strengthen internal controls to ensure all required eligibility documentation is complete, accurate, and consistently maintained in each case file. Supervisory review procedures should be enhanced to verify that eligibility determinations are properly supported. View of Responsible Officials and Planned Corrective Actions: Management’s response and corrective action plan are included in the Corrective Action Plan section of this report.

Significant Deficiency in Internal Control over Compliance Compliance Requirement: Internal Controls (2 CFR §200.303) Criteria: Uniform Guidance (2 CFR §200.303) requires non-Federal entities to establish and maintain effective internal control over Federal awards, including policies and procedures that provide reasonable assurance of compliance with applicable Federal requirements. Condition: The Organization does not maintain formal, written policies and procedures addressing key Uniform Guidance compliance areas, including compensation and fringe benefits (2 CFR §200.430-§200.431). While certain procedures are performed in practice, controls are informal and not documented. Cause: Due to the Organization’s size and reliance on informal processes, management has not formalized compliance procedures into written policies. Effect: The absence of written policies increases the risk that Uniform Guidance requirements may be applied inconsistently, particularly in the event of staff turnover, and increases the likelihood that noncompliance may occur and not be detected timely. Questioned Costs: None. Statistical Sampling: Not applicable. Repeat Finding: No. Recommendation: We recommend the Organization update the accounting policy manual to include written policies surrounding compensation and fringe benefits in accordance with Uniform Guidance. Organization’s Response: The Organization’s response is included in their corrective plan.

Information on the federal program: Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting 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 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 could place the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of formal documented review of reports 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 claim reimbursements, we noted that monthly reimbursements are prepared and reconciled by Food Service Director. The reimbursements are reviewed informally by the Treasurer but this review is not formally documented and therefore, auditable evidence of the review was not available. The lack of formal, documented review existed throughout the audit period. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management review internal controls surrounding the claim reimbursement process. The secondary review of the request for reimbursement should include a review of the underlying meal count reports to ensure the claim reimbursement request is accurate and complete. That secondary review should be formally documented by the Treasurer. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Criteria - Uniform Guidance (2 CFR §200.303) requires recipients of federal awards to establish and maintain effective internal controls over compliance. Specifically, 24 CFR §982.201 and related program requirements for the Section 8 Housing Choice Voucher Program (HCV) (Assistance Listing Number 14.871) mandate the Authority obtain and retain a signed lease agreement between the tenant and owner. Condition - Out of 21 tenant files tested, seven were missing signed lease agreements. Cause - The Authority did not maintain adequate documentation in tenant files, indicating a lack of effective internal controls over file management and compliance monitoring. Effect - The absence of required documentation increases the risk of non-compliance with HUD regulations, which may result in findings during HUD reviews or audits and possible loss of HUD funding or sanctions if deficiencies are not corrected. Questioned Costs - None. Statistical Sampling - The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding - This was not a repeat finding. Recommendation - We recommend that the Authority conduct a full review of all tenant files to identify and resolve missing documentation, using a standardized checklist to ensure all required documents are included in each file. Management’s Response - (a) Comments on the finding and recommendation - The Authority agrees with the finding. The Authority also agrees with the recommendation, please see below for action. (b) Action taken - The Authority will strengthen internal controls and training of staff to ensure compliance deadlines are met and immediately obtain the missing leases. (c) Planned implementation date - The Authority expects to complete the corrective actions by June 30, 2026.

Subject: Special Education Cluster (IDEA) – Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Cluster Assistance Listing Number: 84.027, 84.027X Federal Award Year (or Other Identifying Numbers): 22611-023-PN01, 22611-023-ARP, 23611-023-PN01, 24611-023-PN01, 25611-023-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Suspension and Debarment Audit Findings: Significant Deficiency 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)...." 31 CFR 19.300 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 do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Condition: An effective system of internal controls was not in place at the School Corporation to ensure the Hamilton-Boone-Madison Special Education Cooperative’s compliance with applicable requirements related to the Special Education Cluster (IDEA), specifically with respect to Suspension and Debarment requirements. No instances of noncompliance (entering a contract with a vendor that was suspended or debarred) were identified in the transactions selected for testing. The matter represents a deficiency in internal controls over the Suspension and Debarment process, rather than identified noncompliance with program requirements. Cause: The School Corporation’s management had not developed an effective system of internal controls to ensure compliance with the Suspension and Debarment requirements for vendors procured by the School Corporation’s Cooperative. We note that no instances of noncompliance (entering a contract with a vendor that was suspended or debarred) were identified in the transactions tested. Rather, this matter reflects a deficiency in the internal control process over Suspension and Debarment, not identified noncompliance with applicable requirements. Effect: Without the proper implementation of an effectively designed system of internal controls, the Cooperative cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the Cooperative used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recovery them. Furthermore, 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 Cooperative. Questioned Costs: There were no questioned costs identified. Context: Suspension and Debarment As part of its internal control procedures, the Cooperative utilizes the System for Award Management (SAM.gov) to verify the eligibility status of vendors prior to engaging in financial transactions. This verification process is designed to ensure that vendors are not suspended, debarred, or otherwise excluded from participation in federal programs, in accordance with applicable procurement regulations. Three covered transactions that equaled or exceeded $25,000 were identified. Of the three transactions, all were selected for testing, totaling $141,578. The Cooperative did not verify the vendors' suspension and debarment status prior to payment for two of the three covered transactions. Identification as a repeat finding: Not a repeat finding. Recommendation: We recommend that the School Corporation strengthen its monitoring of the Cooperative to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participation in federal programs before entering into any contracts. Views of Responsible Officials and Planned Corrective Actions: For the views of the responsible officials, refer to the Corrective Action Plan that is part of this report.

Section 3 – Federal Award Findings and Questioned Costs Finding 2025-001 Identification of Federal Program: Department of Housing and Urban Development AL Number: 14.251 – Economic Development Initiative, Community Project Funding, and Miscellaneous Grants. Type of Finding: Significant Deficiency in Internal Control over Compliance - Reporting. Criteria / Requirement: 2 CFR section §200.303 requires that non-federal entities receiving federal awards establish, document and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per the program requirements and 2 CFR §200.328, non-federal entities must submit accurate and complete federal financial reports in accordance with the terms and conditions of the federal award. Condition / Context: The Department of Housing and Urban Development (HUD) requires a Performance Report to be submitted, which must include a completed Federal Financial Report as an attachment. The required Progress Report was filed timely and accepted by HUD, however the required Federal Financial Report was omitted from the submission. Cause: The entity did not have adequate controls in place to ensure that required reports were submitted in their entirety. Effect: Failure to submit required the required Federal Financial Report results in noncompliance with federal program requirements and limits the federal awarding agency’s ability to monitor program performance and use of federal funds. Questioned Costs: None. Recommendation: The entity should implement and document internal controls to ensure all required reports are prepared, reviewed, and submitted in accordance with federal award requirements. Management’s Response: Management concurs with the audit finding regarding the omission of the Federal Financial Report (FFR) from the Performance Report submission. We acknowledge that while the narrative Progress Report was submitted promptly, the accompanying financial data was inadvertently excluded due to a lapse in our final review process.

Significant Deficiency – Internal Control over Compliance – ACTIVITIES ALLOWED OR UNALLOWED AND ALLOWABLE COSTS/COST PRINCIPLES ALN 84.010 Title I, Part A, Basic grants Low-Income and Neglected United States Department of Education Passed through State of Illinois Department of Education Type of finding: Significant deficiency in internal controls over compliance. Criteria: In accordance with 2 CFR Part 200.303(a), the School must establish, document, and maintain effective internal control over Federal awards that provide reasonable assurance that the recipient of subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR 200.508(d) requires that the auditee ‘provide the auditor access to personnel, accounts, books, records, supporting documentation, and any other information needed for the auditor to perform the audit required by this part.’ Condition: The School was unable to provide supporting time and effort certification for 6 of the 40 samples tested due to data access restrictions in Chicago Public Schools (CPS) federal claim system. The existing CPS Federal Funds platform (Oracle) produces Time & Effort Attestation reports according to the month when reimbursement claims are submitted, not the actual period the work was completed, which leads to a compliance gap. Cause: The School did not maintain certain time and effort documentation for Title I employees within its own records, but instead relied on the records provided by the CPS system. The School was unable to access the CPS documentation for certain time periods charged to the program during the audit of the program. Questioned Costs: None. Effect: 6 of 40 samples tested did not have time and effort certification on file. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School revise and implement controls to ensure consistent maintenance of all supporting documentation needed for audit. Management Response: See corrective action plan on page 28.

FINDING 2025-001 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 An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Annual Report, High School Graduation Rate compliance requirement. The School Corporation must report graduation rate data for all public high schools within the School Corporation using the four-year adjusted cohort rate. To remove a student from the cohort, the School Corporation must confirm the reason for the removal in writing. Additionally, required documentation for each removal type must be retained by the School Corporation. Of the 25 students selected for testing, 10 students did not have supporting documentation to substantiate removal of the student 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 16 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Documentation explaining why the students were removed from the cohort was not retained in the student files. Effect Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure proper documentation is maintained for students that are removed from the cohort. 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: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027x Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-PN01, 22611-043-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters 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 was a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. Due to the timing of the Cooperative's corrective action, the nonpublic expenditures spent did not meet the earmarking requirements for grant award numbers 22611-043-PN01 and 22611-043-ARP. From the beginning of the grant awards until September 2022, total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. Beginning in September 2022, the Cooperative began tracking expenditures by member school for the nonpublic services. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE from the beginning of the grant awards through September 2022, as required. The lack of internal controls and noncompliance was isolated to the 22611-043-PN01 and 22611-043-ARP grant awards. 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 200.403 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." INDIANA STATE BOARD OF ACCOUNTS 18 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by each member school starting in September 2022, most of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Cooperative should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by member school. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the 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 2025-003 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027x Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-ARP, 23611-043-PN01, 24611-043-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation was a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 19 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. During 2023-2024, the Cooperative had three vendors which exceeded the SAT, and all three vendors were tested. The Cooperative did not obtain sealed bids or competitive proposals, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. The total dollar amount spent with all three vendors was $1,417,349. 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 200.320 states in part: "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: . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: INDIANA STATE BOARD OF ACCOUNTS 20 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause The Cooperative noted they were unaware of the procurement requirements of expenditures exceeding the SAT. They stated they have used the same vendors to provide professional services for several years but only recently started using federal grant award funds for the services. Effect Without the proper implementation of an effectively designed system of internal controls, the Cooperative cannot ensure the vendors paid with federal award funds are procured using the required methods. Without following the required methods for procurement, the Cooperative could be overpaying for services. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Cooperative should develop written policies and procedures which would require that appropriate procurement methods are used for vendors that exceed the SAT. Appropriate documentation should be maintained to ensure the procurement methods are being followed and compliance with procurement methods are being followed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDNG 2025-003 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, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 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 Finding: Material Weakness Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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: INDIANA STATE BOARD OF ACCOUNTS 19 MISSISSINEWA COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Management was not aware of the need to establish an effective system of internal controls that would ensure compliance with the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation establish and implement proper internal controls over process for verifying that vendors are not suspended or debarred to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. 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 - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Significant Deficiency Condition and Context The School Corporation did not have documented internal controls in place over the monthly reimbursement claim process for the audit period. The lack of evidence for internal controls was a systemic issue throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 MISSISSINEWA 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 Management was unaware of the requirements and had not established an effective system of internal controls that would ensure compliance with the Reporting compliance requirement. Effect The failure to establish an effective internal control system could enable material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation establish and implement proper internal controls over the monthly reimbursement claim process to ensure compliance with the Reporting compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Criteria: Compliance Supplement and 2 CFR 200.303(a) stated that the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the federal award. Condition/Context: As a result of our audit procedures, we noted management did not have policies and procedures established to ensure timely submission of quarterly financial and performance reports required by the program. Cause and Effect: Management has not implemented corrective actions to address prior year finding related to this compliance requirement, which resulted in late report filings. Questioned Cost: None Repeat Finding from Prior Year(s): Yes, Finding Number 2024-005 Recommendation: We recommend management implement policies and procedures to ensure financial and performance reports are submitted timely. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Health System has implemented the policy and procedures over the program to ensure that required reports are prepared and reviewed by separate individuals. Documentation is maintained by the program to evidence preparation and review processes and timely filing of the annual report. Management will continue to refine internal processes to ensure quarterly and annual reports are filed timely.

Criteria: Compliance Supplement and 2 CFR 200.303(a) stated that the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the federal award. Condition/Context: As a result of our audit procedures, we noted management did not have evidence retained to support its compliance with the program’s earmarking requirements related to Process Objectives, Quality Objectives, and Impact Objectives. Cause and Effect: Management has not implemented corrective actions to address prior year finding related to this compliance requirement, which led to non-compliance with program requirements. Questioned Cost: None Repeat Finding from Prior Year(s): Yes, Finding Number 2024-003 Recommendation: We recommend management implement policies and procedures to clearly identify the earmarking requirements of the program and retain proper documentations to support how the requirements are fulfilled. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Health System has implemented the policy titled, Alameda Health System Reports Policies – SUD Program, to ensure program earmarking requirements and proper documentation is retained to evidence fulfilled requirements. Management will continue to refine internal data collection processes to sufficiently monitor earmarking requirements.

FINDING 2025-001 Information on the federal program: Subject: Child Nutrition Cluster (CNC) – Internal Controls Federal Agency: Department of Education Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs - Cost Principles Audit Finding: Significant Deficiency 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 Activities Allowed or Unallowed, Allowable Costs - Cost Principles compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: During testing payroll disbursements charged to CNC grants, we noted: • One selection in a sample of 40 for which the employee was paid above their contracted hourly rate • One selection in a sample of 40 for which the contract sheet for fiscal year 2025 did not include an accurate breakdown for café employees employed for less than one year and employees employed more than one year Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management establish a system of controls to retain and track employe contracted hourly rates compared to their paid rate. We also recommend management make it explicitly clear as to the breakdown between café employees employed for more than one year and employees employed for less than one year. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Finding 2025-003 – Material Weakness in Internal Control and Compliance Over Special Reporting – Federal Funding Accountability and Transparency Act (FFATA) Identification of Federal Program: AL Number: 11.611 Manufacturing Extension Partnership Condition – During the year ended June 30, 2025, OMEP entered into four first-tier subawards greater than $30,000 under AL number 11.611. The auditor tested one of these subawards, noting that the award was not yet reported under the Federal Funding Accountability and Transparency Act to the Federal Subaward Reporting System (FSRS). Per further inquiry, all of the first-tier subawards were yet to be reported to the FSRS. Criteria – 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subawards meeting the above definition are to be reported no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Context and Cause – OMEP was aware of the FFATA reporting requirements, but the reporting was not made timely. Internal controls were not adequately designed, and procedures were not in place to track and report first-tier subawards within the time frame required by federal requirements. Effect of Condition – The failure to maintain sufficient internal controls and proper procedures, including identifying and tracking over reporting first-tier subawards may result in wrongful use of federal funds and non-compliance with federal awards. Questioned Cost – None. Recommendation – The Organization should establish written policies and procedures for reporting first-tier subawards. Views of Responsible Officials and Planned Corrective Actions – Management concurs with the finding and has developed a corrective action plan. We understand a material weakness is identified in internal control and compliance over special reporting. The finding does not impact the Organization’s ability to manage federal funds. Regardless, we place the utmost importance on the summary of auditors’ results and will work to increase the strength of our internal controls over special reporting.

Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Assistance Listing Number: Student Financial Aid Cluster Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Material Weakness in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition: During our testing, we noted the College did not have a formal review of their monthly reconciliations related to Direct Loans, Pell, SEOG, and FWS. Likewise, the College did not have a formal review of their award packaging during the 2024-25 academic year, R2T4 calculations, direct payment of FSA credit balances to students, and FISAP. Questioned Costs: None Context: The College did not have proper internal controls in place during the 2024-25 academic year to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Cause: The College's processes and controls were not formally documented during the year as they had limited personnel in the financial aid department in order to maintain proper segregation of duties. Effect or Potential Effect of Finding: The College is not in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Repeat Finding: Yes, see finding 2024-002. Recommendation: We recommend the College review and formalize its procedures to ensure that internal controls are in place to identify and correct any inconsistencies throughout the year. Views of Responsible Officials: There is no disagreement with the audit finding.

2025-004: Equipment Management U.S. Department of Education Passed through Missouri Department of Elementary and Secondary Education Education Stabilization Fund, Assistance Listing No. 84.425D (COVID-19—Elementary and Secondary School Emergency Relief Fund), 84.425U (COVID-19—American Rescue Plan-Elementary and Secondary School Emergency Relief), 84.425W (COVID-19—American Rescue Plan-Elementary and Secondary School Emergency Relief-Homeless Children and Youth) Federal award years 2023-2025 Criteria: The Uniform Guidance (2CFR 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. Also, in accordance with 2 CFR section 200.313(d)(1), property records must be maintained that include a description of the property, a serial number of other identification number, the source of funding for the property (including the federal award identification number), 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, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. In accordance with 2 CFR section 200.313(d)(2), a physical inventory of equipment and property must be taken, and the results reconciled with the property records at least once every two years. Condition: During the fiscal year 2024 audit, it was previously reported that the District’s controls were not operating effectively to reasonably ensure the District had maintained property records with the above required information, nor had it performed the required physical inventory of equipment within the two previous years. During fiscal year 2025, the District incorporated processes and controls over equipment management that met the property record requirements. The District also performed a physical inventory during fiscal year 2025 that included counting and reconciling approximately half of the District’s equipment and property within this grant program. Therefore, the District had not yet met the requirements of performing a physical inventory of all equipment and property within the previous two years. Cause: Given the timing of when the District incorporated its processes and controls, insufficient time remained to perform a physical inventory of all the District’s equipment and property within this grant program, and only approximately half of the items were subject to the physical inventory. Effect or potential effect: The District is not in compliance with federal grant requirements over the physical inventory of equipment. Improper equipment procedures could result in actions taken by oversight agencies which could impact future funding. Questioned costs: None Context: As noted above, the District updated its property records for all its property and equipment, and then approximately half of the District’s property and equipment was subject to a physical inventory. Identification as a repeat finding, if applicable: 2024-004 and 2024-006. Recommendation: We recommend the District continue to perform the processes and controls it added during fiscal year 2025, and complete the inventory count for the remaining items, to be compliance with the federal grant 2 year cycle. View of responsible officials: Management agrees with this finding.

Department of Health and Human Services Federal Financial Assistance Listing #93.044/93.045/93.053 – Aging Cluster Matching, Level of Effort, Earmarking Material Weakness in Internal Control Over Compliance and Noncompliance Deemed Not Material Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Agency calculated the value of its in-kind contributions, which were included in the Agency’s matching calculation, using the State of Nebraska minimum wage. The calculations contained errors as the wage rate used was not properly updated. Cause: The Agency’s internal controls in place to review the calculation of the valuation of the in-kind contributions did not identify errors in the calculation. Effect: The matching calculation was understated for all months reported for the fiscal year ended June 30, 2025 as the wage rate used had not been updated since 2022. The result of the errors did not result in material noncompliance as sufficient matching funds were obtained from other sources. Questioned Costs: None. While there were errors in the calculation of the valuation of in-kind volunteer hours, the errors did not impact federal funds awarded, nor did they have an impact on the Agency’s compliance with the required minimum matching calculation. Context: Three out of twelve monthly reports which included the in-kind contribution calculation were tested. Errors in the testing were identified in all three months tested. Repeat Finding from Prior Years: No. Recommendation: We recommend that management implement policies and internal control procedures to ensure the proper value is assigned to in-kind contributions. Views of Responsible Officials: Management agrees with the findings. Subsequent to year-end, management has implemented a control process whereby the in-kind calculation is checked against the current State of Nebraska minimum wage rate.

8. Criteria or specific requirement: Per Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200) Subpart D, Post Federal Award Requirements Section 200.303, Internal controls, the recipient must establish, document and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Per 7 CFR Section 210.8(a), the school food authority shall establish internal controls which ensure the accuracy of meal counts prior to the submission of the monthly claim for reimbursement. 9. Condition: Two (2) monthly claims for reimbursement reported meal counts less than those supported by records of the District. One (1) monthly claim for reimbursement reported meal counts in excess of those supported by records of the District. 10. Cause: The District's internal controls over compliance were not functioning effectively to ensure claims for reimbursement were accurately prepared. 11. Effect: The District was not in compliance with the reporting compliance requirement. 12. Questioned Costs: The following questioned costs were computed based on the excess meals claimed for reimbursement times the applicable reimbursement rate: $170 (Project No. 25-4220-00) $499 (Project No. 25-4210-00) 13. Context: From the population of eleven (11) monthly claims for reimbursement, a sample of four (4) claims were selected for testing. We noted two (2) months in which the claims for reimbursement reported meal counts less than those supported by records of the District. We noted one (1) month in which the claims for reimbursement reported meal counts in excess of those supported by records of the District as follows: February 2025: Actual meals served: 17,752; Meals claimed for reimbursement: 17,922. 14. Recommendation: We recommend that management review its policies and procedures and implement changes to strengthen internal control over compliance. 15. Management's response: The District agrees with the auditor's finding and recommendation.

Federal Agency: U.S. Department of Transportation Federal Program Name: Airport Improvement Program Assistance Listing Number: 20.106 Federal Award Identification Number and Year: Multiple Award Period: 8/23/2020 –1/28/2029 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to the Federal Aviation Administration's Advisory Circular 150-1500-19D, Guide for Airport Financial Reports Filed by Airport Sponsors, Financial Reports 5100-126 & 5100-127 "are due within 120 days of the end of the airport's fiscal year. A sponsor may request an automatic 60-day extension on the website. An airport that cannot file within the 60-day expensive should send a written explanation to Airport Compliance and Management Analysis" of the FAA. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure timely report submission. Management 's Progress for Repeat Findings: This is a repeated and modified finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: None Context: During our testing, it was noted that two of the six financial reports were not submitted timely. Form 5100-126 and Form 5100-127 were submitted on 02/26/2025 and 02/28/2025, respectively. These submissions occurred 61 and 63 days beyond the prescribed filing deadline of 180-days following the fiscal year end. Cause: Management oversight. The City did not submit the performance report by the due date. Effect: The auditor noted an instance of noncompliance. Noncompliance results in untimely submission of information to the federal agency. Recommendation: We recommend the City establish a reporting calendar and perform periodic reviews of the completeness, accuracy and adherence to the reporting calendar. Management Response: The City concurs with the finding. Beginning in December 2025, the Aviation Revenue and Finance Officer has implemented an internal control to strengthen compliance with federal reporting requirements. A centralized spreadsheet has been created to track all required financial report deadlines, including FAA Forms 5100-126 and 5100-127. This spreadsheet identifies the due dates, responsible personnel, and submission status to help ensure reports are prepared, reviewed, and submitted timely in accordance with applicable federal regulations. The Aviation Revenue and Finance Officer will also perform periodic reviews of the reporting calendar to monitor completeness, accuracy, and compliance to required deadlines. Timeline and Responsible Position: June 2026 – Aviation Department Revenue and Finance Officer

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: HOME Investment Partnerships Program Assistance Listing Number: 14.239 Federal Award Identification Number and Year: M20-MC350209 - 2020 M21-MC350209 - 2021 Award Period: 5/29/2020 - 9/01/2028 8/03/2021 - 9/01/2029 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.403 Factors affecting allowability of costs of 2 CFR Part 200, costs must conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. Additionally, according to §200.431 costs of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences should be equitably allocated to all related activities, including Federal awards. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure proper allocation of fringe benefits. Management 's Progress for Repeat Findings: This is a repeated and modified finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: $973.77 Context: During our testing, it was noted that for one of twenty-four samples, the City applied incorrect fringe benefits to the grant, resulting in $371.11 that should have been allocated to the grant. Additionally, for one of twenty-four samples, the City did not accurately apply sick leave conversion to wages, resulting in $973.77 of wages improperly allocated to the grant. Cause: Management oversight. The city did not have adequate controls in place to ensure proper allocation of fringe benefits. Effect: The auditor noted instances of noncompliance. Noncompliance results in potential pay back of federal funds. Recommendation: We recommend the City review fringe benefits charged to the grant to equitably allocate fringe benefits between federal and city funding sources. Management Response: The City concurs with the finding. The Department of Health, Housing & Homelessness will review the allocation of fringe benefits to grant payroll charges on a quarterly basis to ensure fringe benefits are properly allocated to funding sources. The reconciliations will be prepared by fiscal staff and approved by the Fiscal Manager. Additionally, the DFAS Grant Administrator will perform a semi-annual review of excess leave payouts to ensure they are charged to the correct grant funding string. Timeline and Responsible Position: June 2026 – Department of Health, Housing and Homelessness Fiscal Manager

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: NM0014L6B002316 NM0015L6B002316 NM0017L6B002215 NM0101L6B002308 NM0156L6B002200 Award Period:7/1/24-6/30/25 7/1/24-6/30/25 10/1/23-9/3/24 7/1/24-6/30/25 10/1/23-9/3/24 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.306 The fair market value of third-party in-kind contributions must be documented and, to the extent feasible, supported by the same methods used internally by the recipient or subrecipient. Condition: During our testing, we noted the City lacked sufficient internal controls to ensure subrecipients complied with cost‑sharing and matching requirements. We also noted that the City did not maintain documentation to substantiate the fair market value of in‑kind contributions. Questioned costs: None Context: During our testing, we noted the following: • For one of 5 samples tested, we noted the City did not have sufficient documentation for the values placed on in-kind contributions. • For 5 of 5 samples tested, the City only performed one monitoring review of subrecipient related match expenditures, resulting in partial coverage of the award period. Additionally, there was a lack of documentation of the City's process for selecting match samples to review. Finally, there was no review performed at the close out of the grant to ensure the subrecipient met the match requirement. • For 5 of 5 grant awards tested, we noted the amount of match reported on the HUD Annual Performance Report (APR) did not agree to underlying City records. Cause: Management oversight. The City did not have adequate controls in place to ensure proper monitoring of matching expenditures for subrecipients. 2025 – 007 Matching/Cost Sharing (continued) Effect: The auditor noted instances of noncompliance. Recommendation: We recommend the City design controls to ensure monitoring occurs related to subrecipient's adherence to the Continuum of Care program's Match requirements and the eligibility of the program's match expenditures. Additionally, we recommend implementing a tracking mechanism to ensure match expenditures are accurately reported to HUD. Management Response: The City concurs with the finding. The City will update Continuum of Care procedures related to subrecipient monitoring, in-kind contribution documentation, match tracking and reporting, and grant closeout review to strengthen compliance and oversight. Additionally, the City will provide additional grants training and a list of subject matter experts within each department that can work with auditors during the single audit. Timeline and Responsible Position: June 2026 – Department of Health, Housing and Homelessness Deputy Director of Social Services and Connections and Department of Finance & Administrative Services Grant Administrator

Management acknowledged its responsibility to establish and maintain effective internal controls to reasonably assure compliance with federal statutes, regulations and terms and conditions of federal awards and controls relating to preparing the Schedule of Expenditures of Federal Awards (the Schedule), as required by Uniform Guidance (2 CFR § 200.303(a)), in the audit engagement letter. Furthermore, Uniform Guidance (2 CFR Subpart F § 200.510(b)) requires the auditee prepare the Schedule for the period covered by the District’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. Due to insufficient controls over the monitoring of grant activity, the District did not retain appropriate support on the dates of the determination to charge prior year costs to the American Rescue Plan Elementary and Secondary School Emergency Relief Fund (ARP ESSER) grant in the amount of $678,544. The grant award was for $1,019,060, which had a grant period spanning calendar years 2020 through 2024. Lack of maintaining such documentation could result in expenditures determined to be unallowable under grant guidelines and funds required to be returned. Ineffective internal controls related to federal grants could lead to noncompliance with program requirements. Additionally, the determination of unallowable costs could have an adverse effect on future grant awards by the awarding agency or agencies in addition to an inaccurate assessment of major federal programs that would be subjected to audit. District management should implement a system to review the Schedule for errors and omissions as well as a method to monitor the related internal controls over compliance with federal grant requirements. This will help ensure the Schedule is complete and accurate, major federal programs are accurately identified for audit, and internal controls over compliance requirements are implemented and operating effectively.

Coronavirus State and Local Fiscal Recovery Funds: Material Weakness in Internal Control Over Reporting Condition: During our testing of reporting requirements, we noted that the Organization did not have adequate internal controls established to ensure the submission of complete and accurate required reports. We noted that reports were prepared by one individual without supervisory review or approval, and no other adequate internal control could be identified. Criteria: The Uniform Guidance (2 CFR 200.303) requires entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. Cause: Management has not established procedures requiring review of reports prior to submission. Effect: As a result of the lack of internal controls over reporting, reports may be submitted with inaccurate information. Although no noncompliance was identified, this lack of internal controls increased the risk of inaccuracies not being detected and corrected. Context: The population subject to reporting requirements included one report. The sample size of one report was determined. Recommendation: We recommend that management implement internal control procedures over reporting, including supervisory review and approval of reports prior to submission. Views of Responsible Officials: Management agrees with the finding.

Section III – Federal Award Findings and Questioned Costs Finding Reference Number: 2025-006 Federal Agency: Department of Health and Human Services (DHHS) Program Name: Research and Development Cluster ALN: 93.778 Award Number: GSA 22-630-8000-0015 Federal Award Year: 2024-2025 Compliance Requirement: Allowable Costs Condition: During our testing over allowable fringe expenditures, we identified a transaction in which the fringe expenditure charged to the grant was incorrectly calculated resulting in the overstatement of fringe expenditures. Specifically, we tested 40 fringe samples and noted 1 sample in which the FICA expense was incorrectly calculated resulting in an overstatement of FICA expenditures charged to the grant of $1,245.93. Criteria: Per 2 CFR section 200.430(a), costs of compensation for personal services are allowable to the extent the total compensation for individual employee is reasonable for the services rendered and conforms to the established written policy of the recipient or subrecipient consistently applied to both federal and nonfederal activities. Per 2 CFR § 200.303 requires the recipient of federal funds to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effect: UNM claimed and received payment on an unallowable expenditure under the grant agreement of $1,245.93. Cause: While management’s review over payroll adjustments ensures reversals were fully offsetting against the original payroll entry in total, the review did not properly ensure that reversals were fully offsetting against the original payroll entry at the index-account level (individual grants are tracked via index accounts). Questioned Costs: $1,245.93. Represents the difference between the actual FICA expenditure charged to the grant and that calculated using the gross pay allocated to the grant and the applicable FICA rate. Repeat Finding: No Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Auditor’s Recommendation: We recommend that UNM revise its’ procedures related to the review of payroll and fringe adjustments to ensure that reversing entries are completely and accurately reversed at the index-account level as opposed to performing the review in aggregate.

2025-001—Error in Reporting for National Student Loan Data System (NSLDS) U.S. Department of Education Student Financial Assistance Programs Cluster (Direct) Federal Direct Loan Program (84.268) Federal Award Year: 2024-2025 Repeat Finding: Yes 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’ Program-Level or Campus-Level enrollment status change to NSLDS. Out of the 25 students tested, we noted 3 students (12%) whose status change at the Program-Level and Campus-Level was not timely reported to NSLDS. Cause The College did not have adequate controls related to the process of enrollment reporting, which is required under Uniform Grant Guidance. An additional submission to the NSLDS was required for two students who withdrew and one student who was incorrectly marked as not reportable to NSLDS. Both changes were reported outside the allowable window of reporting noted above. Effect Noncompliance with federal regulations could result in the loss of future federal funding. Context We tested 25 students who received federal student aid with enrollment changes. For each student tested, management provided documentation from NSLDS showing when the student’s status changed, and when it was reported. Out of the 25 students tested, we noted 3 students (12%) whose status change at the Program-Level and Campus-Level was not timely reported to NSLDS. Questioned costs There were no questioned costs with respect to this finding. 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. Views of responsible officials Management agrees with this finding. See corrective action plan.

2025-003—Graham Leach Bliley Act – Student Information Security U.S. Department of Education Student Financial Assistance Programs Cluster (Direct) Federal Work Study Program (84.003) Federal Pell Grant Program (84.063) Federal Perkins Loan Program (84.038) Federal Supplemental Educational Opportunity Grants (84.007) Federal Direct Loan Program (84.268) Federal Award Year: 2024-2025 Repeat Finding: Yes Criteria The Code of Federal Regulations (2 CFR 200.303(a)) requires that 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. 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. The Program Participation Agreement (PPA) with the U.S. Department of Education requires the institution to comply with the Standards for Safeguarding Customer Information as described in 16 CFR Part 314 which includes the development of a comprehensive written security program that includes the following parts: • 16 CFR 314.4(a) requires institutions to designate a qualified individual responsible for overseeing and implementing the institution’s information security program and enforcing the information security program. • 16 CFR 314.4(b) requires institutions to provide for the information security program to be based on a risk assessment that identifies reasonably foreseeable internal and external risks to the security, confidentiality and integrity of customer information (as the term customer information applies to the institution) that could result in the unauthorized disclosure, misuse, alteration, destruction or other compromise of such information, and assesses the sufficiency of any safeguards in place to control these risks. • 16 CFR 314.4(c) requires institutions to provide for the design and implementation of safeguards to control the risks the institution provides through its risk assessment • 16 CFR 314.4(d) requires institutions to regularly test or otherwise monitor the effectiveness of the safeguards it has implemented. • 16 CFR 314.4(e) requires institutions to develop policies and procedures to ensure that personnel are able to enact the information security program. • 16 CFR 314.4(f) requires institutions to develop policies and procedures to oversee its information system service providers. Condition The College’s written information security program did not include the following elements required by regulation as agreed to in the PPA: • The College has performed a risk assessment utilizing internal resources but has not fully integrated the information security program on the results of this assessment, nor has the College included all required elements of internal and external risks to the security, confidentiality or integrity of customer information. The College’s risk assessment is in the process of implementing an inventory of IT systems that process and store customer information and the compliance with information security elements related to multifactor authentication, access control, change management, logging and alerting and encryption. • The College has not identified, designed or implemented safeguards for all of the risks identified in the risk assessment. The safeguards do not include the identification of security events the detection and response capabilities to support incident response is still being developed. • The College has not been able to test safeguards because safeguards have not been fully designed or implemented in response to the risk assessment. • The College has not developed written policies and procedures to ensure that personnel are able to enact the information security program. There is a lack of evidence of leadership being required to report to the board or an appropriate supervisory council to ensure those charged with governance are informed on the current state of the information security program. Cause The College’s information security policy did not include all of the required elements, in line with the Gramm-Leach-Bliley Act. Effect Noncompliance with federal regulations could result in the loss of future federal funding. Questioned costs There were no questioned costs with respect to this finding. Context Under a College’s PPA with the U.S. Department of Education, institutions must protect student financial aid information, with particular attention to information provided to institutions by the U.S. Department of Education or otherwise obtained in support of the administration of federal student financial aid programs Recommendation We recommend the College complete these requirements, in order to be compliance with the Gramm-Leach-Bliley Act. Views of responsible officials Management agrees with this finding. See corrective action plan.

U.S. Department of Health and Human Services - 93.600 Head Start 2025-002 Lack of Documented Approval Criteria: Per 2 CFR §200.303, the entity must establish and maintain effective internal controls over federal awards that provide reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the award. Adequate documentation of approvals is a fundamental internal control to ensure expenditures are necessary, allowable, and properly authorized. Condition: During our testing of expenditures charged to the Head Start program funded by the U.S. Department of Health and Human Services, we noted that the Organization did not maintain documented evidence of management approval prior to incurring or paying costs. The transactions reviewed lacked documented authorizations, supervisor sign-offs, or other documentation showing formal approval. Cause: The lack of documented approval appears to be due to inconsistent application of internal controls and the absence of a standardized process for documenting expenditure authorization for federal programs. Effect: Without documented approval, there is an increased risk that unallowable or unauthorized expenditures could be charged to the federal award. It also weakens the audit trail and compliance with Uniform Guidance requirements. Questioned Costs: None noted. Recommendation: We recommend the Organization implement and enforce a formal process requiring documented pre-approval of all expenditures charged to federal programs. This may include standardized approval forms or electronic workflows that clearly demonstrate appropriate review and authorization prior to payment. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has implemented various approval and documentation procedures.

2025-001 - REPORTING (REPEAT OF PRIOR YEAR FINDING 2024-002)- 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).” 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 $1,115,599 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, with proper review and approval prior to submission. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.

2025-002 – ELIGIBILITY (REPEAT OF PRIOR YEAR FINDING 2024-004) - 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).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of school youth or an in-school youth (29 USC 3164(a)(1), 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. Condition: During our testing of WIOA participants, it was noted that for one of the six youth participants selected for testing the WIOA intake application was not signed by the case manager. Questioned Costs: Unknown. Context: Total federal expenditures for the WIOA Cluster were $1,115,599 for the year ended June 30, 2025. Cause: The Board’s policies and procedures are not sufficient to ensure that all participant applications are complete and approved for eligibility prior to disbursement of federal funds. Effect: Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board thoroughly review all applications for Youth Activities to ensure that all required eligibility documentation is completed and properly approved. 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 – EARMARKING - 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).” Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Youth Activities: (1) A minimum of 75 percent of the Youth Activity funds allocated to states and local areas, except for the local area expenditures for administration, must be used to provide services to out-of-school youth (29 USC 3164(a)(4)(A), 128 Stat. 1506). (2) Not less than 20 percent of Youth Activity funds allocated to the local area, except for the local area expenditures for administration, must be used to provide paid and unpaid work experiences (29 USC 3164(c)(4)), WIOA, 128 Stat. 1510). Condition: During our testing of the earmarking requirements for the Youth Activities, we noted that approximately 13 percent of Youth Activity funds allocated to the local area, except for the local area expenditures for administration, was used to provide paid and unpaid work experiences, which is not in compliance with the provisions stated in the Uniform Guidance under the WIOA Cluster for Youth Activities. Questioned Costs: Unknown. Context: Total federal expenditures for the WIOA Cluster were $1,115,599 for the year ended June 30, 2025. Cause: The Board’s policies and procedures are not sufficient to ensure that the Board is managing Federal awards in compliance with the provisions set by the Uniform Guidance. 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 regularly review the grant expenditures for each of its programs and activities to ensure that all requirements for earmarking within the Uniform Guidance are met. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.

Material weakness in internal control over compliance - Lack of control over monitoring of maintenance of effort Federal Program: Title I, Part A, Improving Basic Programs (ALN 84.010A) Federal Agency: U.S. Department of Education Pass-through Entity: Texas Education Agency (24610101158901 and 25610101158901) Compliance Requirement: G - Matching, Level of Effort, Earmarking Criteria: According to the Uniform Guidance (2 CFR 200.303), non-federal entities must establish and maintain effective internal controls over federal awards to ensure compliance with applicable regulations and terms and conditions of the federal awards. Per 34 CFR 299.5, an LEA receiving funds under the applicable program must maintain fiscal effort per student of no less than 90% of the preceding fiscal year. Condition: The District could not provide the documentation demonstrating compliance with maintenance of effort. There is a limited awareness that the maintenance of effort calculation should be monitored throughout the year to ensure the District is in compliance. Cause: The District had a lack of understanding and control surrounding the maintenance of effort calculation and requirements. The District had not been preparing its own maintenance of effort calculation, therefore had no baseline to know if they were meeting the requirement of spending no less than 90% of the preceding fiscal year grant amount. Effect: Failure to perform and document maintenance of effort calculations increases the risk of noncompliance with federal requirements, which could result in potential repayment of funds or loss of future funding. Questioned Costs: No questioned costs were identified. Context: The District did not prepare the required maintenance of effort calculation. The federal program was not tested in the prior year, therefore, it has only been a known issue in the current year. The consequence of this audit finding is failure to document maintenance of effort may put the District at risk of noncompliance, which can result in questioned costs, loss of grant funding and required repayment. Recommendation: We recommend that the District assign responsibility to qualified personnel for the preparation of maintenance of effort calculations. Utilization of the calculation tools provided by TEA, including the guidance handbooks, will assist in the preparation. We also recommend the District implement procedures and provide the necessary training to qualified personnel to ensure maintenance of effort is calculated and reviewed as part of the grant monitoring process. Views of Responsible Officials: See Corrective Action Plan. None

Material weakness in internal control over compliance - Lack of control over monitoring of maintenance of effort Federal Program: Special Education Cluster (ALNs 84.027A, 84.173A) Federal Agency: U.S. Department of Education Pass-through Entity: Texas Education Agency (246600011589016600, 256600011589016600, 66002512, 2466100115890116610, 256610011589016610) Compliance Requirement: G - Matching, Level of Effort, Earmarking Criteria: According to the Uniform Guidance (2 CFR 200.303), non-federal entities must establish and maintain effective internal controls over federal awards to ensure compliance with applicable regulations and terms and conditions of the federal awards. Per 34 CFR 300.203, an LEA must budget at least the same amount from the same source as the prior year to maintain fiscal effort. Condition: The District could not provide the documentation demonstrating compliance with maintenance of effort. There is a limited awareness that the maintenance of effort calculation should be monitored throughout the year to ensure the District is in compliance. Cause: The District had a lack of understanding and control surrounding the maintenance of effort calculation and requirements. The District had not been preparing its own maintenance of effort calculation, therefore had no baseline to know if they were meeting the requirement of spending at a minimum of 100% of the preceding fiscal year. Effect: Failure to perform and document maintenance of effort calculations increases the risk of noncompliance with federal requirements, which could result in potential repayment of funds or loss of future funding. Questioned Costs: No questioned costs were identified. Context: The District did not prepare the required maintenance of effort calculation. The federal program was not tested in the prior year, therefore, it has only been a known issue in the current year. The consequence of this audit finding is failure to document maintenance of effort may put the District at risk of noncompliance, which can result in questioned costs, loss of grant funding and required repayment. Recommendation: We recommend that the District assign responsibility to qualified personnel for the preparation of maintenance of effort calculations. Utilization of the calculation tools provided by TEA, including the guidance handbooks, will assist in the preparation. We also recommend the District implement procedures and provide the necessary training to qualified personnel to ensure maintenance of effort is calculated and reviewed as part of the grant monitoring process. Views of Responsible Officials: See Corrective Action Plan.

GRANT FINANCIAL REPORTING AND ACCOUNTING CONTROLS Type of Finding: (E) Material Weakness in Internal Control Over Compliance of Federal Awards, (G) Material Non-Compliance Related to Federal Awards Funding Agency: U.S. Department of Homeland Security Title: Homeland Security and Emergency Management AL #: 97.067 Award #: EMW-2022-SS-00044 EMW-2023-SS-00015 EMW-2024-SS-05231 Award Period: January 1, 2023-March 31, 2025 Compliance Requirement: Reporting Questioned Costs: None Statement of Condition The County did not maintain effective internal controls over grant accounting and financial reporting related to Operation Stonegarden. This issue impacted the Operation Stonegarden expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA). In addition, the required grant financial and performance reporting was not submitted timely or was incomplete. Specifically: [See Table in Original Report] During the audit, grant expenditures and related revenues recorded in the general ledger did not reconcile to supporting drawdown activity and grant reporting support, and did not accurately reflect actual grant activity. As a result, audit adjustments totaling $257,480 were required to correct grant expenditures and revenues. These adjustments also required revision of the SEFA. Criteria Title 2 CFR §200.303 requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Award terms / reporting requirements require timely submission of complete and accurate financial and performance reports (e.g., quarterly performance/progress reports and required narrative reports) in accordance with due dates and award conditions. Cause The County did not design and/or consistently perform effective reconciliation and supervisory review controls to ensure consistency among the general ledger, drawdown requests, grant financial/performance reports, and SEFA preparation support. Additionally, grant reporting deadlines and documentation retention requirements were not consistently monitored or enforced. Effect These deficiencies resulted in inaccurate and untimely grant reporting and required audit adjustments to grant expenditures, revenues, and the SEFA. The deficiencies increased the risk of noncompliance with federal reporting requirements, increased the risk that reported amounts and drawdowns were not supported by verified accounting records, and increased the risk of grantor monitoring actions, delayed reimbursements, and other remedies available under award terms. Recommendation We recommend that the County: • Implement formal reconciliation procedures to ensure the general ledger, drawdown requests, grant financial reports, and SEFA are reconciled and reviewed prior to submission. • Establish documented review and approval controls to ensure grant reports are accurate, complete, and submitted timely. • Ensure drawdown requests are supported by verified expenditures recorded in the general ledger. Provide training to staff responsible for grant accounting and reporting to strengthen compliance with federal and state requirements. Views of Responsible Officials Management concurs with the finding. The Operation Stonegarden grants are managed by Broken Arrow Services, LLC, who is contracted with Otero County for this purpose. For future audits, management will refer auditors directly to Broken Arrow Services, LLC for all documentation, (other than the SEFA and general ledger reports), as they maintain the most accurate and up-todate records for all reporting, purchases, and reimbursements. Broken Arrow Services, LLC has communicated to all sub-recipients the importance of submitting reports and invoices in a timely manner so that financial and performance reports can be completed and submitted to DHSEM by the required deadlines each quarter. All late submissions by sub-recipients will be tracked and follow-up efforts will be documented. The SEFA report did not include the expenditures for sub-recipients, and this was an honest oversight that will not be omitted in the future. The Finance Department will continue to prepare the SEFA and provide general ledger reports to the auditors. Finding Resolutions Timeline: Completed. December 18, 2025 Designation Of Employee Position Responsible For Meeting This Deadline: Finance Director

FEDERAL PROGRAM (ALN – 97.036) DISASTER GRANTS – PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) PASS-THROUGH: PUERTO RICO CENTRAL OFFICE OF RECOVERY, RECONSTRUCTION, AND RESILIENCY (COR3) FEDERAL EMERGENCY MANAGEMENT AGENCY U.S. DEPARTMENT OF HOMELAND SECURITY (DHS) AWARD NUMBERS PA-02-PR-4339-PW-09011(9604) (FISCAL YEAR 2021) COMPLIANCE REQUIREMENT SPECIAL TESTS AND PROVISIONS – PROJECT ACCOUNTING TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY CRITERIA The 44 CFR Section 206.205 “Payment of Claims” state for large projects, the recipient is required to make an accounting to FEMA of eligible costs. Similarly, the subrecipient must make an accounting to the recipient. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, all grant conditions were met, and that payments for that project were made in accordance with the applicable payment provisions. The Puerto Rico Central Office of Recovery, Reconstruction, and Resiliency (COR3), as a Pass-Through Entity, requires Subrecipients to complete and submit a Quarterly Progress Report for each Project Worksheet (“PW”) through the Disaster Recovery Solution (“DRS”) Platform. This information is then submitted to the Federal Emergency Management Agency (FEMA) for ongoing and completed projects that are accounted for in accordance with the required certification. In addition, 2 CFR §200.303 (a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). STATEMENT OF CONDITION For purposes of the Special Test and Provision – Project Accounting testing for this program, the Institution maintains only one (1) large project identified under PW 9011. For this project, a population of four (4) quarterly reports was established, of which two (2) were selected for testing purposes for the fiscal year 2024–2025 audit. As a review of the 3rd Quarterly Progress Report for the period from April through June 2025, it was noted that the Institution reported $30,243.64 in expenditures for the period. However, upon comparison with the expenditures recorded in the Institution’s financial system, it was determined that the actual expenditures for the quarter totaled $98,481.96, resulting in a difference of $68,238.32 between the reported amount and the system records. In addition, for the requirement mentioned above, based on internal control interviews, we found that there is no designated individual responsible for independently reviewing the reports prior to submission to ensure accuracy and consistency with source data. QUESTIONED COSTS NonePERSPECTIVE INFORMATION After we received the Quarterly Progress Report, we proceeded to make a comparison between this report and the Expenditures Report issued by the Institution accounting system for each of the quarters selected, in order to validate the data accuracy. We noted that the Institution did not detect this discrepancy in the report before the submission of the required Quarterly Progress Report for the project to the pass-through entity due to the lack of adequate revision procedure. STATEMENT OF CAUSE The Institution did not have an effective internal control to ensure that the required financial information to be included as part of the preparation and submission of the Quarterly Progress Report is accurate according to their accounting system. POSSIBLE ASSERTED EFFECT The Institution did not have an effective internal control to ensure that the required financial information to be included as part of the preparation and submission of the Quarterly Progress Report is accurate according to their accounting system. IDENTIFICATION AS A REPEAT FINDING Not previously reported. RECOMMENDATION We recommend the Institution maintain an adequate Quarterly Progress Report validation control before its submission to Federal Agency. This will avoid the incorrect inclusion of erroneous data in this Federal report to the Pass-Through Entity.

Information on the federal program: Subject: Education Stabilization Fund – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over 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). . . ." 29 CFR 5.5 states in part: (1) Minimum wages. All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics… (3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part: In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week.. . .” 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 Special Tests and Provisions – Wage Rate Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: For all six vendors sampled, the School Corporation did not include the necessary clauses for the Davis-Bacon federal wage rate requirements in their contracts. For the two larger vendors representing $3,611,973, weekly payroll reports were properly collected. For the remaining four smaller vendors, the School Corporation did not obtain the weekly payroll report certifications for the work performed totaling $148,522 for the entire audit period Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2023-007. Recommendation: We recommend the School Corporation implement a formal process to ensure the required weekly payroll reports certifications are collected and reviewed to ensure compliance with the wage rate requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.