Findings Citing § 200.303

Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. 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: For one of the two small purchase method procurements sampled for testing, we noted that the School Corporation did not obtain quotes from an adequate number of qualified sources. The sample item amount disbursed was $67,000 in fiscal year 2024 for food service equipment maintenance. The School Corporation also did not properly perform a suspension and debarment check on the vendor. This finding is isolated to fiscal year 2024. There were no purchases in 2025 that required a simplified acquisition or small purchase procurement other than those procured by the food service cooperative. Identification as a repeat finding, if applicable: No Recommendation: We recommend the School Corporation's management establish a system of internal controls related to ensure that the School Corporation’s procurement policy is adhered to and quotes are obtained from an adequate number of qualified sources as required for small purchase method procurements. We also recommend management perform a suspension and debarment check or have the vendor attest they are not suspended or debarred prior to entering into transactions that individually or the in aggregate exceed $25,000 and are charged to a fund that receipts federal funds. Views of Responsible Officials and Planned Corrective Actions: Management has agreed with the finding and prepared a corrective action plan.

Information on the federal program: Subject: Special Education Cluster (IDEA) – Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-ARP, 24611-047-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 34 CFR 300.202(a) states: "General. Amounts provided to the LEA under Part B of the Act – (1) Must be expended in accordance with the applicable provisions of this part; (2) Must be used only to pay the excess costs of providing special education and related services to children with disabilities, consistent with paragraph (b) of this section; and (3) Must be used to supplement State, local, and other Federal funds and not to supplant those funds." 34 CFR 300.208 states: "(a) Uses. Notwithstanding §§ 300.202, 300.203(b), and 300.162(b), funds provided to an LEA under Part B of the Act may be used for the following activities: (1) Services and aids that also benefit nondisabled children. For the costs of special education and related services, and supplementary aids and services, provided in a regular class or other education-related setting to a child with a disability in accordance with the IEP of the child, even if one or more nondisabled children benefit from these services. (2) Early intervening services. To develop and implement coordinated, early intervening educational services in accordance with § 300.226. (3) High cost special education and related services. To establish and implement cost or risk sharing funds, consortia, or cooperatives for the LEA itself, or for LEAs working in a consortium of which the LEA is a part, to pay for high cost special education and related services. (b) Administrative case management. An LEA may use funds received under Part B of the Act to purchase appropriate technology for recordkeeping, data collection, and related case management activities of teachers and related services personnel providing services described in the IEP of children with disabilities, that is needed for the implementation of those case management activities." 34 CFR 300.800 states: "The Secretary provides grants under section 619 of the Act to assist States to provide special education and related services in accordance with Part B of the Act – (a) To children with disabilities aged three through five years; and (b) At a State's discretion, to two-year-old children with disabilities who will turn three during the school year." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items . . . (g) Be adequately documented. . 511 IAC 7-34-9 states in part: “(a) The public agency must hold title to and exercise continuing administrative control of all: (1) property; (2) equipment; and (3) supplies; the public agency acquires with Part B funds for the benefit of nonpublic school students with disabilities. (b) The public agency may place equipment and supplies in a nonpublic school for the period of time needed to provide special education and related services. The public agency must ensure that the equipment and supplies: (1) are used only for the provision of special education and related services; and (2) can be removed from the nonpublic school without remodeling the nonpublic school facility.” Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Special Education Cluster program and Activities Allowed or Unallowed and Allowable Costs compliance requirements. Cause: Management was not aware that non-public school officials have no authority to obligate or receive federal funds and that School Corporation must maintain control of all Special Education funds, property, equipment and supplies; therefore, reimbursements were made to a non-public school for proportionate share expenditures. Effect: The payment of proportionate share expenditures to a non-public school resulted in the potential misuse of funds that were meant to pay the excess costs of providing special education to students. The unallowable nature of these expenditures may also result in the School Corporation not meeting their requirements related to Non-Public Proportionate Share for the respective grants. Questioned Costs: There were questioned costs identified in the amount of $17,857. Context: During fiscal year 2023-2024, the School Corporation was a member of Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For costs related to non-public schools, the practice of the Cooperative was to separate out the required amount for each member school from the Cooperative budget, and the member schools would work with the non-public schools to determine how to spend their proportionate share amount. Each member school would then request reimbursement from the Cooperative for non-public school expenditures incurred. This allowed both the Cooperative and member schools to maintain control of all Special Education funds, property, equipment and supplies. In the initial sample of 25 expenditures, there was no noncompliance identified. However, while performing a review of separate transactions for the Period of Performance compliance requirement, it was noted that non-public schools received direct reimbursements from the Cooperative for their proportionate share expenditures, which is not allowable under the grant award. The audit team reviewed the expenditure population in entirety and identified a total of 5 expenditures, totaling $17,857, that were made from Special Education funds directly to non-public schools by the cooperative during the audit period. The lack of controls and noncompliance was an isolated to the 22611-047-PN01, 22611-047-ARP, 22619-047-ARP and 24611-047-PN01 grant awards. This issue was isolated to fiscal year 2024. No direct payments to non-public schools were identified during fiscal year 2025. Identification as a repeat finding, if applicable: No Recommendation: We recommended that the School Corporation's management establish a system of internal controls to ensure that no direct reimbursements are made to the non-public schools and to ensure compliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management has agreed with the finding and prepared a corrective action plan.

Information on the federal program: Subject: Special Education Cluster (IDEA) – Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, 22619-047-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . 2 CFR 200.309 states: “A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance (except as described in §200.461 Publication and printing costs) and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity.” 34 CFR 76.707 states in part: “….If the obligation is for – a) Acquisition of real or personal property…. The obligation is made – On the date on which the State or subgrantee makes a binding written commitment to acquire the property.” Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Special Education Cluster program and Period of Performance compliance requirements. Cause: Management had established an initial obligation date that occurred in September of the second fiscal year but modified the final vendor for payment. The new obligation occurred after the period in which the School Corporation was allowed to incur the expense. Effect: If funds are not obligated by the end of the specified date, the grantor agency is not obligated to reimburse the School Corporation for costs incurred. This may indicate that the funding reimbursed that was incurred outside of the period of performance will need to be repaid to the grantor agency, and the School Corporation will then need to support the costs with non-federal funding. Questioned Costs: There were no questioned costs identified. Context: During fiscal year 2023-24, the School Corporation was a member of Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For Special Education Cluster awards, funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. When testing transactions occurred in the liquidation period for the 22611-047-PN01, 22611-047-ARP, 22619-047-PN01 and 22619-047-ARP grant awards, two exceptions were identified in the sample of five transactions. For the above listed awards, costs must be obligated by September 30, 2023. For the two identified exceptions, an initial purchase order was made in September, but the ultimate transaction was paid to a separate vendor than the original purchase order, and this obligation was incurred in November 2023. This issue was isolated to fiscal year 2024. No costs incurred outside of the period of performance were identified in fiscal year 2025. Identification as a repeat finding, if applicable: No Recommendation: We recommended that the School Corporation's management establish a system of internal controls to ensure that no costs are incurred after the September 30 deadline and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management has agreed with the finding and prepared a corrective action plan.

Information on the federal program: Subject: Special Education Cluster (IDEA) –Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 23611-047-PN01, 22619-047-PN01, 22619-047-ARP, 23619-047-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, and Earmarking Audit Finding: Significant Deficiency, Other Matters Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).... 2 CFR 200.207(a) states in part: "The Federal awarding agency or pass-through entity may impose additional specific award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools and facilities, must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools or facilities within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the earmarking portion of the Matching, Level of Effort, Earmarking compliance requirement. Cause: The School Corporation participates in a Special Education Cooperative that manages and operates the special education program and oversees the majority of the federal compliance requirements. The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system placed the School Corporation in noncompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Noncompliance with the grant agreement or the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: $34,365 Context: The School Corporation did not meet the earmarking requirements for the grants, which concluded during the audit period. Both the Special Education Grants to States and Special Education Preschool Grants required a proportionate share of their funding to be spent on non-public school students with disabilities. The 22611-047-PN01, 22611-047-ARP, 23611-047-PN01, 22619-047-PN01, 22619-047- ARP, and 23619-047-PN01 grant awards were fully expended during the audit period with minimum Non- Public Proportionate Share earmarking requirements of $27,189, $5,074, $26,124, $1,171, $453, and $1,929, respectively. There were not sufficient non-public school expenditures incurred to meet the non-public proportionate share requirement for any of the six grants. The non-public school expenditures fell short of the minimum requirement by $11,679, $3,176, $16,405, $1,171, $4, and $1,929, respectively. Identification as a repeat finding: Yes – see Finding 2023-002. Recommendation: We recommended that the School Corporation's management establish internal controls to monitor earmarking requirements periodically to ensure compliance with the earmarking compliance requirements by the end of the grant period. This includes meeting with the Cooperative periodically to monitor and track progress towards meeting the earmarking requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Federal Agency: U.S. Department of Education Assistance Listing Number: 84.007; 84.063; 84.268 Cluster Name: Student Financial Assistance Cluster Program Names: Federal Supplemental Education Opportunity Grants; Federal Pell Grant Program; Federal Direct Student Loans Award Numbers: N/A; Federal Award Year 2024-2025 Questioned Cost: None Program Expenditures: $768,137; $45,573,205; $87,147,867 Cluster Expenditures: $137,694,385 The Illinois State University (University) did not accurately report student enrollment information to the U.S. Department of Education’s National Student Loan Data System (NSLDS) and internal controls in place did not identify the errors. Condition Out of twenty-five students tested, we noted fourteen students’ (56%) enrollment status changes had discrepancies in Enrollment Effective Dates between the NSLDS Campus-Level Record and the NSLDS Program-Level Record, with the NSLDS Program-Level Record dates being inaccurate by 17 days. The sample was not intended to be, and was not, a statistically valid sample. Criteria According to the NSLDS Enrollment Reporting Guide, a student’s Program-Level enrollment status should be reported with the same enrollment status as student’s Campus-Level enrollment status for all programs the student is enrolled in at a location, even if the student is not currently taking coursework which 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 the program, even if the student is still taking coursework applicable to other programs in which the student is enrolled. The NSLDS Enrollment Reporting Guide also states the University is responsible for accurately reporting all Program-Level Record and Campus-Level Record data elements. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the federal award. Effective internal controls should include procedures to ensure accurate student enrollment information is submitted to NSLDS. Cause University management indicated the failure to report accurate enrollment information was due to a technical error in the University’s process to transfer data to NSLDS. Effect Failure to accurately report Campus-Level student enrollment information to NSLDS resulted in noncompliance with federal guidelines and inaccurate NSLDS records. (Finding Code No. 2025-004) Recommendation We recommend the University review current processes for reporting to NSLDS and implement procedures to ensure student enrollment information is reported accurately. University Response The University acknowledges the above finding. The identified issue was isolated and only impacted fall graduates. This issue was fully addressed when the university filed its fall 2025 enrollment reporting. The university has conducted an internal audit to identify students that were reported incorrectly and has manually updated files to ensure dates were properly reflected. At current state, internal monitoring and manual edits are made if discrepancies appear. It is expected that the Enterprise Resource Planning System will launch an automatic fix for this issue in a software update for all users in the first quarter of calendar year 2026. Should the software issue not result in an automation of the fix, the University plans to continue the manual edits, then customize the NSLDS reporting logic to ensure continued future alignment.

FINDING 2025-003 Subject: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): SY24/SY25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness 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, 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 Eligibility compliance requirement. Any child enrolled in a participating school, who meets the applicable program's definition of "child," may receive meals under applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reduced-priced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation of its participation in one of those programs, or the School Corporation may obtain the information directly from the State or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. One employee downloaded the Direct Certification reports from the state and updated the free or reduced status of those students into the software system without a documented oversight or review process in place to ensure direct certified students were properly processed. The lack of internal controls was systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 17 BORDEN-HENRYVILLE 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 The School Corporation's management had not developed an oversight or review process to ensure that the Direct Certification report was properly processed. Effect The failure to design or implement a system of internal controls places the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Noncompliance could result in students either receiving benefits they were not entitled to or not receiving benefits they would otherwise be entitled to. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place regarding the processing of direct certifications into the software system. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: Child Nutrition Cluster - Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Number and Year (or Other Identifying Number): SY25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 18 BORDEN-HENRYVILLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Most large purchases for food and supplies are made through contracts entered into by a purchasing cooperative that the School Corporation belongs to. Those transactions were tested at the cooperative level, and no noncompliance or lack of internal controls were noted. It is the School Corporation's policy that it will either require a certification from the vendor or check the exclusion list prior to entering a covered transaction. The School Corporation only entered into one covered transaction at the School Corporation level. It was unable to provide evidence that it followed its policy for ensuring that the vendor was not suspended or debarred prior to making a series of purchases that totaled $53,414. The lack of internal controls and noncompliance was only noted in the second year of the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 19 BORDEN-HENRYVILLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation's management failed to properly design and implement an internal control system that would have ensured that its policy over the Procurement and Suspension and Debarment compliance requirement was adhered to during the audit period. Effect The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal funds to the School Corporation. Additionally, the School Corporation could have made payments to a vendor that was suspended or debarred. Payments to such vendors are unallowable. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The system should be designed to ensure that vendors are not suspended or debarred, or otherwise excluded, prior to the School Corporation entering into a covered transaction. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-005 Subject: Special Education Cluster (IDEA) - Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-167-PN01, 23611-167-PN01, 24611-167-PN01, 25611-167-PN01, 22611-167-ARP, 22619-167-PN01, 22619-167-ARP, 23619-167-PN01, 24619-167-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 20 BORDEN-HENRYVILLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not properly designed and implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Procurement and Suspension and Debarment compliance requirement. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the School Corporation, it was determined that the School Corporation had not established internal controls to ensure that its suspension and debarment policy was being followed. A population of seven covered transactions for goods or services that equaled or exceeded $25,000 paid from special education grant funds during the audit period was identified. A sample of four transactions, totaling $254,887, was selected for testing. For three of the four transactions, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or INDIANA STATE BOARD OF ACCOUNTS 21 BORDEN-HENRYVILLE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation's management failed to properly design and implement an internal control system that would have ensured that its policy over the Procurement and Suspension and Debarment compliance requirement was adhered to during the audit period. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments were equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. 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 management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Department of Aging Office of the Budget - Office of Comptroller Operations Finding 2025 – 005: ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Department of Aging’s Program Income and Reporting Process Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PASTPH (1/01/2022 – 9/30/2025), 2301PAOACM (10/01/2022 – 9/30/2025), 2301PAOAHD (10/01/2022 – 9/30/2025), 2301PAOASS (10/01/2022 – 9/30/2025), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2501PAOACM (10/01/2024 – 9/30/2026), 2501PAOAHD (10/01/2024 – 9/30/2026), 2501PAOASS (10/01/2024 – 9/30/2026) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Program Income, Reporting Condition: The Pennsylvania Department of Aging (PDOA) is required to submit a SF-425, Federal Financial Report to the United States Department of Health and Human Services (HHS) for the Aging Cluster of grants. The reports are due annually 90 days after the reporting period with a final submission due 120 days after the project period end date. The SF-425 report includes data related to federal cash receipts and disbursements, federal expenditures to date, the federal share of unliquidated obligations, the federal program income earned, the federal program income expended and unexpended, indirect charges to the grant, as well as other general information that is necessary to ensure compliance with program requirements. We selected two of 11 SF-425 reports submitted during the audit period for testing. Our testing disclosed that federal program income did not agree to supporting documentation and was incorrectly reported on the September 30, 2024 annual filing for the federal fiscal year (FFY) 2024 federal grant. Although the SF-425 report was certified by an authorized official, the overstatement of federal program income earned and expended went undetected by Commonwealth management until it was brought to their attention by the auditor. Our testing also disclosed that $2,983,034 of unexpended federal program income was reported on the September 30, 2024, final filing for the FFY 2021 federal grant. This amount agreed to supporting documentation; however, PDOA could not adequately explain what action was taken to ensure the balance was expended in the subsequent fiscal year, as required by federal regulations and Aging Program Directives. Our testing of federal program income included the review of cost sharing fees collected from services provided through Aging Cluster grants and PDOA provided reports from their accounting system used to track program income, but auditors were unable to determine the amount of federal cost sharing collections and if they were allowable. Criteria: The 2025 OMB Uniform Guidance Compliance Supplement, Part 4 – III. Compliance Requirements for Aging Cluster, L. Reporting states, in part: For State Agency- 1. Financial Reporting c. SF-425, Federal Financial Reports – Semi-Annual (OMB No. 4040-0014)- Applicable Finding 2025 – 005: (continued) 45 CFR Section 1321.9(c)(2)(xii), Use of program income, states: Program income is subject to the requirements in 2 CFR 200.307 and 45 CFR 75.307 and as follows: (A) Voluntary contributions and cost sharing payments are considered program income; (B) Program income collected must be used to expand a service funded under the Title III grant award pursuant to which the income was originally collected; (C) The State agency must use the addition alternative as set forth in 2 CFR 200.307(e)(2) and 45 CFR 75.307(e)(2) when reporting program income, and prior approval of the addition alternative from the Assistant Secretary for Aging is not required; (D) Program income must be expended or disbursed prior to requesting additional Federal funds; and (E) Program income may not be used to match grant awards funded by the Act without prior approval. 45 CFR Section 1321.9(c)(2)(xi), Cost Sharing states, in part: A State agency is permitted under section 315(a) of the Act (42 U.S.C. 3030c-2(a)), to implement cost sharing for services funded by the Act by recipients of the services, except as provided for in paragraph (c)(2)(xi)(D) of this section. (H) Collection of program income. All cost sharing contributions collected are considered program income and are subject to the requirements of 2 CFR 200.307, 45 CFR 75.307, and in § 1321.9(c)(2)(xii). 2 CFR Section 200.303(a), Internal controls, states: The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Aging Program Directive (APD) #25-01-03, Program Income, states in part: Federal Program Income - All program income generated from services funded, in whole or in part, by federal OAA funds on hand as of June 30, 2024, is to be budgeted and expended during SFY 2024-25… Failure to comply with these policies may result in the reduction of Block Grant funding to the AAA [Area Agency on Aging]… AAAs will comply with the provisions of APD #05-01-11 concerning excessive balances of program income collections. AAAs are advised that payments of funds on SFY 2024-25 Aging Block Grant contracts will be contingent upon the compliance of AAAs with the federal and state requirements for program income and cost sharing fund balances… Finding 2025 – 005: (continued) When a AAA has excessive balances of Federal Program Income, Local Program Income or OPTIONS Cost Sharing Funds as of June 30, 2024 (Fourth Quarter FRR), its SFY2024-25 Block Grant monthly payment(s)may be reduced or withheld until the AAA achieves compliance with the established program income balance requirements. Aging Program Directive #05-01-11, Area Agency on Aging (AAAs) Program Income Policies, states in part: Federal Program Income - All Federal program income generated from services funded, in whole or in part, by federal Older Americans Act funds that is on hand as of June 30 must be budgeted and expended during the following fiscal year. Failure to comply with this policy could result in the reduction of Block Grant funding to the AAA… The AAA must also ensure that appropriate financial records for program income are maintained by service provider. The purpose of such records is to ensure compliance with standards established by the Department of Aging, i.e. that program income collections are expended on a timely basis and no excessive balances for program income collections are accumulated. Records must be available that properly reflect beginning balances, receipts, expenditures and ending balances. In addition, Commonwealth Management Directive 325.12 Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should design control activities to achieve objectives and respond to risk. Management should implement control activities through policies. Cause: PDOA stated that management turnover, outdated policies, inconsistencies and timing of AAA reporting contributed to the incorrect reporting of program income. In addition, the accounting system, used by the AAAs to report program income to PDOA, reports federal program income as a single figure, commingling the reporting of program income of the various grant awards. As a result, the liquidation of program income by grant award could not be determined to ensure it was fully spent in compliance with federal requirements. Also, the report does not differentiate between voluntary contributions or cost sharing fees to determine compliance with federal program income requirements specific to cost sharing fees. Effect: Since PDOA’s controls over reporting program income and the preparation process for the SF-425 report were not effective, program income was incorrectly reported on the SF-425 report submitted to HHS. In addition, PDOA was not in compliance with federal regulations and their Aging Program Directives related to program income requirements. Recommendation: We recommend that PDOA update their written policies and procedures to ensure federal program income is accurately recorded, reported and in compliance with federal regulations. Program income should be monitored and reconciled to ensure that the balance on hand is budgeted and expended in accordance with federal regulations and PDOA’s policies. PDOA policy should allow for consistent accounting and reporting amongst the AAAs. PDOA and the Office of Comptroller Operations (OCO) should also develop a policy for the review, approval, and submission of the SF-425 reports to ensure the reports are prepared accurately and submitted timely in accordance with federal regulations. Finding 2025 – 005: (continued) PDOA Response: PDOA agrees with this finding. OCO Response: OCO agrees with this finding. Questioned Costs: None

FINDING 2025-002 Subject: Title I Grants to Local Educational Agencies - Eligibility 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): S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Modified Opinion Condition and Context Eligibility for Title I is determined on the Eligible School Summary of the Tile I Application. Enrollment and Poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment count for each school into the Eligible School Summary page of the Tile I application. The counts that are prepopulated should be based on the School Corporation's records as of October of the prior fiscal year. During the audit period, the School Corporation submitted two Title I Applications. The School Corporation was required to use the October 2022 Real Time Report data for the fiscal year 2023-2024 Title I application and the October 2023 Real Time Report data for the 2024-2025 Title I application submitted to the IDOE. Data to be submitted included student socioeconomic status information. Of the 25 students tested, the School Corporation could not provide documentation supporting enrollment status for 1 student or the socioeconomic status for 3 students. 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 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." INDIANA STATE BOARD OF ACCOUNTS 17 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." Cause The School Corporation did not have effective internal controls in place to ensure documentation was complete for all student enrollment and socioeconomic statuses. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, documentation was not complete to ensure all student enrollment and socioeconomic statuses in the Title I Application were accurate. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would ensure documentation is complete for all student enrollment and socioeconomic statuses. 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: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Assessment System Security Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Assessment System Security Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 18 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context State educational agencies (SEA), in consultation with local educational agencies (LEA), are required to establish and maintain an assessment security system that is valid, reliable, and consistent with relevant professional and technical standards. Within their assessment system, SEAs must have policies and procedures to maintain test security measures and ensure that LEAs implement those policies and procedures. As such, the Indiana Department of Education created and published the Indiana Assessments Policy Manual. As a part of the assessment security, any individual who administers, handles, or has access to secure test materials at the School Corporation shall complete assessment training and sign a testing security and integrity statement that remains on file in the appropriate building-level office each year. Everyone required to sign the testing integrity agreement shall sign the form by an established date. The School Corporation had a process to provide assessment system security training and to ensure each employee that attended training signed the agreement indicating training was received. However, the School Corporation had not established a process to ensure that all training documentation and signed statements remained on file in the appropriate building-level office each year. Due to the lack of internal controls over the retention of training documentation and signed statements, the School Corporation could not provide evidence that 4 of the 20 employees tested for fiscal year 2024-2025 had completed the assessment security training or had signed the assessment security agreement. The lack of internal controls and noncompliance were isolated to 2024-2025. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 5-5-5(b) states: "Any individual who administers, handles, or has access to secure test materials at the school or school corporation shall complete assessment training and sign a testing security and integrity agreement to remain on file in the appropriate building-level office each year." Cause The School Corporation did not have effective internal controls in place to ensure certifications for assessment security training were properly maintained for 2024-2025. INDIANA STATE BOARD OF ACCOUNTS 19 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, certifications were not properly maintained to ensure employees attended the assessment system training or signed the assessment security agreement for 2024-2025. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management design and implement a proper system of internal controls, including policies and procedures that would ensure certifications for assessment security training are properly maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP, 22619-042-ARP 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 is a member of the Northeast 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. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. INDIANA STATE BOARD OF ACCOUNTS 20 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement 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. 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. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented, full and open competition or a documented rationale for limited competition. For 2023-2024, three vendors with disbursements totaling $175,125 were identified as being less than the simplified acquisition threshold of $150,000 but exceeding the $50,000 micropurchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the Cooperative in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Cooperative disclosed there were not any documented internal controls or procedures. Nine covered transactions were identified. The covered transactions totaling $803,836 were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. 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 21 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award 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: . . . (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 costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 22 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The Cooperative noted that the ARP portion of the special education grant was new for the 2023-2024 school year. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using special education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micropurchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the suspension and debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Cooperative's management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred, or otherwise excluded or disqualified, prior to entering into any covered transactions. 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 - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. INDIANA STATE BOARD OF ACCOUNTS 23 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not established an effective internal control system to ensure compliance with the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation had not completed a capital asset inventory since June 30, 2023. Additionally, the School Corporation purchased the following items from the grant award during the audit period that exceeded its capitalization threshold, none of which were added to the capital asset ledger:  One 86" LifeTouchPro for $8,359  Three Tem Spec Units for $14,550  Five Tem Spec Units for $13,650 each  6,000' Fiber Cable for $46,330  900' Fiber Cable for $7,610  1,600' Fiber Cable for $23,853 The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. INDIANA STATE BOARD OF ACCOUNTS 24 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. . . ." Cause The School Corporation did not have effective internal controls in place to ensure equipment was properly managed. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, equipment was not properly managed and could lead to misuse of the grant award. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management design and implement a proper system of internal controls, including policies and procedures that would ensure equipment is properly managed for compliance with the grant agreement and the Equipment and Real Property Management 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 2025-006 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, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context Local educational agencies that receive funds under the American Rescue Plan - Elementary and Secondary School Emergency Relief Fund (ESSER III) are to reserve not less than 20 percent of the 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. This requirement was set out in the enabling legislation for the funds and further implemented in the Education Stabilization Relief Fund Application III, which the School Corporation was required to complete for its award. INDIANA STATE BOARD OF ACCOUNTS 25 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation was responsible for monitoring each required set aside throughout the life of the grant to ensure the obligation was met; however, there was no oversight or review process in place to ensure monitoring of the required set aside. Additionally, the School Corporation could not provide documentation to show that the obligation was met, or not met, to address student learning loss due to the impact of COVID-19 in the School Corporation. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 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 did not have effective internal controls in place to ensure documentation over the required set aside for learning loss was maintained and monitored. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, documentation was not provided to determine if the required set aside for learning loss was met and monitored. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 26 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that the required set aside for learning loss is documented and met in accordance with the grant agreement and the earmarking compliance requirement. 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 27

Material Weakness Material Noncompliance Program: Assistance Listing 84.010A - Title I Grants To Local Educational Agencies Assistance Listing: 84.02784.173– Special Education Cluster (IDEA) Assistance Listing: 84.425U– Elementary and Secondary School Emergency Relief Fund (ARP ESSER) Repeat Finding: Yes Criteria: 2 CFR 200.302 and 2 CFR 200.303 outline key requirements for non-federal entities managing federal awards. Section 200.302 mandates that a financial management system be in place to prepare reports as required by both general and program-specific terms and conditions. It also requires tracing funds to a level of expenditure that demonstrates compliance with federal statutes, regulations, and the terms of the federal award, including comparing expenditures with the budget for each federal award. Section 200.303 requires non-federal entities to establish and maintain effective internal controls over federal awards, ensuring reasonable assurance that the entity is managing the award in compliance with federal laws, regulations, and the award's terms and conditions. Condition: The District’s internal controls over budgeting for federal grants are insufficient to ensure compliance with federal regulations and to stay within the budgetary limits established by the federal awards, as specified in the Mississippi Comprehensive Automated Performance-based System (MCAPS), administered through the Mississippi Department of Education. Specifically, the District has not adequately adhered to budgeting restraints outlined for its federal grants. Our audit procedures identified the following instances where actual expenditures appear to exceed the budgeted amounts:  ESSER ARP III grant, totaling $204,010.20.  SPED Cluster - IDEA Part B grant, totaling $12,819.75.  Title I, Part A grant, totaling $10,224.19. Context/ Perspective: This finding is a result of our comparisons of budget items in the Mississippi Department of Education’ MCAPS system to actual amounts spent in major programs. This condition cited appears to be a systematic issue. Cause: The District did not properly monitor budget limits established in MCAPS to ensure that budgeting requirements were fulfilled. Effect: Failure to remain within established budget limits in MCAPS could affect future eligibility for federal award programs or result in a loss or misappropriation of public assets. Questioned Costs: $204,010.20 (ARP ESSER III) Recommendation: The District should establish additional internal controls to ensure that it remains within budget limits for each grant maintained in MCAPS. Views of Responsible Officials: The Auditee’s Corrective Action Plan lists the District’s response to the findings.

FINDING 2025-001 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-046-PN01, 22611-046-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Porter County Education Services (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-046-PN01and 22611-046-ARP grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The non-public proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per each applicable member schools’ grant award was expended and properly reported to IDOE, as required. The lack of internal controls was isolated to the 22611-046-PN01 and 22611-046-ARP grant awards which were fully expended during fiscal year 2024. These two grant awards had minimum earmarking requirements for the Non-Public Proportionate Share of $35,513 and $8,472, respectively. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior finding number was 2023-003. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Federal Award Identification Number and Year: P007A243438 - 2025, P033A243438 - 2025, P063P242047 - 2025, P268K252047 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding:  Compliance, Other Matter  Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The Code of Federal Regulations, 34 CFR 685.309(b), states the school is required to report changes in the student’s enrollment status, the effective date of the status, and an anticipated completion date. Condition: The University did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). Questioned costs: N/A Context: During our testing of 40 students, we identified 2 students with effective dates reported to NSLDS that did not align with institutional records. Cause: The University didn't have proper procedures in place to verify students' status in NSLDS matched the institution’s records accurately. Effect: The University was not in compliance with the requirements to properly report student enrollment data correctly. Incorrect dates submitted to NSLDS may be used to determine the grace period for the repayment and interest of outstanding Title IV student loans. Repeat Finding: Yes, 2024-004 Recommendation: We recommend the University review current processes for reporting to NSLDS and implement procedures to ensure submissions are reported accurately. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Information on the federal program: Subject: Education Stabilization Fund – Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425U Federal Award Numbers: S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: 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). . . ." 29 CFR 5.5 states in part: a. The Agency head shall cause or require the contracting officer to insert in full 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 acts listed in §5.1, the following clauses… (1) Minimum wages. (i) 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. The School Corporation did not retain the construction contract document. Therefore, the audit team could not confirm that the contract contained the appropriate Davis-Bacon wage rate requirement clause. However, the School Corporation did collect weekly payroll data. 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: The School Corporation expended $63,854 during the audit period on a construction project for the North Central High School Kitchen/Cafeteria remodel, which was charged to the ESSER III grant award (84.425U). The construction contract was not retained by the School to verify its inclusion of the Davis- Bacon clause prescribing federal wage rate requirements required for construction contracts. Identification as a repeat finding: Yes. See finding 2023-003. Recommendation: We recommend the School Corporation implement a formal process to ensure the contract documentation is retained and that all applicable contracts include the Davis-Bacon clause to ensure compliance with the federal wage rate requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Information on the federal program: Subject: Child Nutrition Cluster, Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: Child Nutrition Cluster Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion 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 awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 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: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Condition: The School Corporation did not have internal controls in place to ensure compliance with the procurement and suspension and debarment requirements. The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchase and simplified acquisition procurement thresholds were followed. Cause: Although the School Corporation has adopted a procurement policy that establishes purchasing requirements based on defined dollar thresholds and requires verification of vendor suspension and debarment status, the policy was not fully adhered to. Required procurement methods were not utilized for certain purchases that exceeded applicable thresholds and the required suspension and debarment verifications were not consistently performed. This condition resulted from insufficient oversight and monitoring to ensure compliance with all aspects of the School Corporation’s procurement policy. Effect: Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. 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. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation did not review procurements done by the food service management company to ensure that proper procurement policies were followed. The School Corporation did not ensure that the food service management company did not use suspended or debarred vendors. During the audit period, we noted two small purchases for which the School Corporation did not have evidence of obtaining multiple quotes or documented rationale for selecting the vendor. Only the final invoice, purchase order, and quote from the selected vendor were available. During fiscal year 2024, we noted that for one of the three vendors tested, the correct procurement method was not followed. Purchases from the vendor were in excess of $150,000 during the fiscal year, requiring the simplified acquisition procurement process; however, the School Corporation applied the small purchase procurement process. The purchase was for equipment at two different buildings. The School Corporation issued two requests for quotes, one for each school, and treated them as separate procurements. However, as the purchases were similar in nature, the requests for quotes were dated the same day and sent to the same vendor, this should have been treated as one procurement in aggregate. The School Corporation did not have support for public advertisement, requests for formal sealed bids, or formal documentation for the basis of award. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, we noted two vendors out of three that were sampled, over the $25,000 suspension and debarment threshold for which the School Corporation did not have evidence of a suspension and debarment check. Identification as a repeat finding: No Recommendation: We recommend that the School Corporation strengthen its system of internal control by establishing and implementing policies and procedures to ensure that procurement activities for goods and services comply with applicable requirements and that contractors and subrecipients are verified as not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Information on the federal program: Subject: COVID-19 - Education Stabilization Fund, Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Programs: Elementary and Secondary School Emergency Relief Fund (ESSER III) Assistance Listings Number: 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Audit Finding: Material Weakness, Internal Control 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 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: The School Corporation did not have internal controls in place to ensure compliance with the activities allowed or unallowed and allowable cost/cost principles requirements. The School Corporation had not designed or implemented adequate policies or procedures to ensure that stipend and wage rates were properly reviewed and approved. Cause: Management of the School Corporation did not design an adequate system of internal controls. A properly designed and implemented internal control system should include formal policies and procedures. Policies establish management’s expectations regarding internal controls, while procedures outline the specific actions necessary to implement those policies. Effect: Without the proper design or implementation of the components of a system of internal control, including policies and procedures that provide segregation of duties and additional oversight as needed, the control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. 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. Context: For the testing of activities allowed and unallowed costs-cost principles, 12 vendor disbursements and 40 payroll disbursements were selected for testing. The following deficiencies were noted related to controls over pay rate approvals: • For 10 of 10 stipends sampled, the School Corporation could not provide proper approval of the stipend amount. The total of amount of stipends sampled was $5,056. The total amount of stipends charged to the grant for the audit period was $57,558. • One employee was underpaid by $9, and the error was not caught during the review process. • For two of seven hourly employees sampled, the School Corporation provided a pay chart. However, approval of the rates was not available. • One teacher received twice their regular paycheck amount due to a contract pay off. The School Corporation could not provide approval or additional support related to the contract payoff amount of $1,528. Identification as a repeat finding: No Recommendation: We recommend that the School Corporation strengthen its system of internal control by establishing and implementing policies and procedures to ensure that stipend and wage rates are properly approved and adequate support is maintained to validate those approvals. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Finding 2025-001: Significant Deficiency in Internal Control Over Federal Awards – Inadequate Review of Payroll Reports Federal Programs 93.912 and 93.110 U.S Department of Health and Human Services Criteria: Under 2 CFR 200.303 and 2 CFR 200.508, the auditee is required to maintain adequate internal controls over federal awards, including sufficient review and approval procedures to ensure costs charged to the federal program are allowable, properly supported, and accurately coded. Condition: During the transition to a new payroll provider, timesheets were processed and payroll was run without official supervisor review and approval, as required by the Organization’s policy. In several instances, there was no evidence of supervisor approval on the timesheets prior to processing. Cause: The deficiency occurred due to a misunderstanding in the manual approval process during the transition to the new payroll provider. Specifically, supervisors were approving timesheets in the new system but not saving their work, resulting in the absence of official approvals. Effect: This deficiency increases the risk that unauthorized or inaccurate payroll transactions could occur and not be detected or corrected in a timely manner, which could result in noncompliance with applicable federal requirements related to payroll costs. However, we did not identify any questioned costs or evidence of material noncompliance as a result of this deficiency during audit procedures. Questioned Costs: None. Recommendation: The Organization should strengthen payroll approval controls by requiring formal, documented supervisor approval for all timesheets prior to payroll processing, with clear evidence of approval retained for audit purposes. These updates to controls should be included in internal control documents to ensure all users understand their responsibilities. Views of responsible officials: See attached corrective action plan.

Information on the federal program: Subject: Child Nutrition Cluster (CNC) 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): FY23-FY24, FY24-FY25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed and Unallowed, Allowable Costs Audit Findings: Material Weakness, Other Matters Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The School Corporation did not have adequate internal controls in place to ensure that the School Corporation complied with the allowable cost requirements. Cause: A proper system of internal control was not designed by management of the School Corporation that included a thorough review of expenditures charged to the food service program fund (Fund 0800). Effect: Without the proper implementation of an effectively designed system of internal controls, the control system could not be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs: $6,388 (known questioned costs). Context: During our testing of the School Corporation’s compliance with the allowable cost requirements for the Child Nutrition Cluster (CNC), we tested 40 vendor disbursement transactions and 40 payroll disbursement transactions and identified the following exceptions: 1. For one vendor disbursement, the School Corporation incorrectly recorded the disbursement for $820 to Fund 800 (School Lunch Fund) that should have been recorded to Fund 300 (Operations Fund), resulting in an unallowable cost being charged to the food service fund. 2. For one payroll disbursement, the School Corporation mistakenly entered the number of hours worked by a cafeteria employee for one pay period due to a typo, resulting in an overpayment to the employee by $5,568. The employee notified the School Corporation of the overpayment and remitted the overpayment back to the School Corporation. These errors were attributable to deficiencies in the internal controls over the review and approval of vendor and payroll expenditures. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management of the School Corporation review internal controls in place to ensure the review controls detect and correct errors in processing transactions including verifying the transactions are recorded to the appropriate fund and hours worked supported by timecards are accurately entered and reviewed prior to processing payments. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Information on the federal program: Subject: Child Nutrition Cluster (CNC) – Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (Or Other Identifying Numbers): FY23-FY24, FY24-FY25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Eligibility compliance 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 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 of internal controls over eligibility requirements, we noted there is no formal, documented review of the eligibility income guidelines entered into the food service software to ensure that system parameters were in agreement with USDA guidelines on an annual basis. For the 2023-2024 school year, the income eligibility guidelines were not updated timely by the School Corporation. During compliance testing of eligibility, we noted 3 instances isolated to 2023-2024, in a sample of 60 students, in which the eligibility status was incorrectly determined. In two instances, the eligibility status was changed from Reduced to Free upon updating the eligibility income guidelines. In one stance, the status changed from Pay to Reduced. The lack of internal controls over the review of the eligibility income guidelines impacted both years under audit. The noncompliance with eligibility determinations was isolated to fiscal year 2024. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation implement an internal control to ensure the annual updates to the income eligibility guidelines are updated in the food service software prior to each school year. By July 1 of every year, the new income eligibility guidelines are issued by the USDA and posted on the IDOE website. The income eligibility guidelines updates made to the food service software should be reviewed by two parties to ensure any errors are caught prior to processing applications for the upcoming school year. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Information on the federal program: Subject: Education Stabilization Fund (ESF) 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: 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). . . ." 29 CFR 5.5 states in part: a. The Agency head shall cause or require the contracting officer to insert in full 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 acts listed in §5.1, the following clauses… (1) Minimum wages. (i) 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 establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have an internal controls/procedure in place to ensure compliance with the Davis-Bacon requirement. For one vendor selected for testing, in a sample of two, the School Corporation did not include the wage-rate requirements in the written contract with the vendor to communicate the federal wage rate requirements. The School Corporation did subsequently obtain the weekly wage reports from the vendor. The vendor tested had total costs of $102,800, which includes material and labor, to install a portion of a new roofing to the Junior/Senior High School Building. The finding is isolated to the ESSER III grant (84.425U). Identification as a repeat finding, if applicable: No. Recommendation: We recommend the School Corporation implement an internal control to review contracts funded by federal grants and ensure the contract includes Davis-Bacon wage requirements when required. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027; 84.027X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-001-PN01, 22611-001-ARP, 23611-001-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters Condition and Context The School Corporation is a member of the Adams Wells Special Services Cooperative (Cooperative). During the audit period, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were 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 NORTH ADAMS COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place during fiscal year 2023-2024 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. During 2023-2024, the staff member providing the services to students did not differentiate between their hours worked with preschool and elementary students on their timesheet. Preschool and elementary services are funded by different grants. As the hours for the elementary services were unavailable, we were unable to determine what hours were worked that applied to the elementary grant. The lack of internal controls and noncompliance was isolated to the 2023-2024 school year. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Through inquiry of management and review of documentation, we determined the Cooperative was tracking the hours spent at all nonpublic schools associated with the member schools. However, the staff members were not tracking their time within the nonpublic school between the preschool hours and elementary school hours. The discussion with the Cooperative revealed they were unaware of the requirement to track funds separately. INDIANA STATE BOARD OF ACCOUNTS 20 NORTH ADAMS COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effort Without proper implementation of effectively designed system of internal controls, the Cooperative did not track expenditures for nonpublic services between preschool grant funds and Part B grant funds. Consequently, the amounts requested for reimbursement were not supported by actual hours worked between the preschool and elementary School but rather the combination of nonpublic proportionate share amounts for both grants. Recommendation Management of the Cooperative should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by grant. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the Earmarking requirements. Questioned Costs There were no questioned costs identified. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-001 Subject: Child Nutrition Cluster - Eligibility Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 13 NORTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the eligibility determination of a child receiving meals and to the verification of free and reduced price applications. Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and the School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced price. Children who have been determined ineligible for free or reduced price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. As a general rule, a child's eligibility for free or reduced price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be direct certified. For a direct certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs; or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. The Food Service Director was responsible for generating and the IT Department was responsible for inputting the Direct Certification reports into the School Corporation's software system (Harmony). There was no evidence of an oversight, review, or approval process to ensure that the Direct Certification reports were generated and input into the system correctly and periodically reviewed for updates. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 14 NORTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation's management had not developed an oversight or review process to ensure that the direct certification report was properly processed and updated. Effect The failure to design or implement a system of internal controls places the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Noncompliance could result in students either receiving benefits they are not entitled to or not receiving benefits to which they would otherwise be entitled. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place regarding the processing of direct certifications into the software system. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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

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

Information on the federal program: Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the reporting requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $156,357 (known questioned costs) Context: During the testing of meal claim reimbursements, we noted 3 monthly reimbursements in a sample of 6 claims selected where the School Corporation was unable to produce auditable support of meals served and claimed via underlying meal system reports. The claim reimbursements for these 3 months unsupported by meal claim data totaled $157,708. Additionally, we noted other variances when comparing the remaining 3 monthly reimbursements in our to sample to underlying meal system reports. Those variances aggregated to a net amount under claimed of $1,341. Additionally, we noted that management has no formal, documented review control in place for monthly meal claims prior to submission to the Indiana Department of Education (IDOE). Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation's management review internal controls surrounding the claim reimbursement process. The School Corporation should implement a secondary, documented review of the request for reimbursement prior to the submission to IDOE and should include a review of the underlying meal count reports to ensure the claim reimbursement request is accurate and complete. All meal count data and reports should be maintained to support meal claim reimbursements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the eligibility compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with eligibility requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: During the testing of internal controls over eligibility determinations for free and reduced meals, we noted there was no formal review control in place. Additionally, there was no documented review by School Corporation personnel of the Income Eligibility Guidelines used by the food service software which are updated on annual basis. The lack of review was isolated to fiscal year 2024 as the School Corporation qualified under the Community Eligibility Provision for fiscal year 2025. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the School Corporation's management establish an internal control process to review the updates to the annual adjustments to the Income Eligibility Guidelines made to the food service software to determine eligibility to ensure updated guidelines are accurate and complete. This review should be documented on annual basis to confirm management’s oversight and monitoring of eligibility determinations. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Finding 2025-001: NSLDS Reporting Federal Agency U.S. Department of Education Federal Program Student Financial Assistance Cluster (CFDA # 84.268, 84.063) Federal Award Year July 1, 2024 through June 30, 2025 46 (Continued) Federal Award Numbers P268K251300; P063P241300 Criteria or Requirement Per Sections 34 CFR 690.83(b)(2) and 34 CFR 685.309, a school shall update the student status confirmation report for changes in student status, report the date the enrollment status was effective and return the student status confirmation report to the Secretary within 30 days unless it plans to submit an enrollment report within the next 60 days of receipt. Per Sections 4.4.2 through 4.4.4 of the NSLDS enrollment reporting guide, institutions are responsible for accurately reporting all Campus-Level Record data elements and considers certain data elements to be high risk including OPEID Number, Enrollment Effective Date, Enrollment Status, and Certification Date. Per Section 4.4.8 of the NSLDS enrollment reporting guide, institutions are responsible for accurately reporting all Program-Level Record data elements and considers certain data elements to be high risk including OPEID Number, CIP Code, CIP Year, Credential Level, Published Program Length Measurement, Published Program Length, Program Begin Date, Program Enrollment Status, and Program Enrollment Effective Date. Per 2 CFR 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition Found For 3 out of 40 students, the graduate status was reported to NSLDS between 78 and 101 days after the date the school became aware of the status change. There were a total of 34 graduates from the Spring 2025 semester, certified outside of the normal graduation timeline, for which this same condition applied. For 1 out of 40 students, the three-quarter time status was reported to NSLDS 120 days after the date the school became aware of the status change. For 1 out of 40 students, the half-time status with an effective date of 8/21/2024 was not reported to NSLDS Program-Level Record data. For 1 out of 40 students, the effective date for the half-time status reported to NSLDS per the Program-Level Record data does not match the Campus-Level Record data by 19 days. Possible Cause and Asserted Effect The control that management reviews all reports for the accuracy of all data elements prior to submission was not operating at a level to identify all discrepancies. Questioned Costs None identified. Identification of Whether the Audit Finding is a Repeat of a Finding in the Immediately Prior Audit No. Recommendation We recommend the University enhance the precision of the control around the review of accuracy and timeliness of the enrollment statuses, program level data records, and campus level data records within the NSLDS reporting submissions. Views of Responsible Officials The University agrees with the finding as written. Responsibility for NSLDS reporting submissions of enrollment statuses, program level data records, and campus level data records lies within the Office of the Registrar. For the three instances of enrollment status change and consistency with program-level record data, these relate to the omission of changing a program-level effective date but not a campus-level effective date. Procedures are being updated and appropriate review and reporting for any status changes will have secondary review going forward. The graduation date reporting errors relate to students whose graduation certification occurred outside the normal bounds of semester-end graduation cycles, again requiring a more manual human intervention to ensure timely reporting. The Office of the Registrar is implementing procedures for system reporting and a secondary reviewer of all graduation status changes on a monthly basis to ensure timely filing, and procedures also are updated to ensure manual updating of Clearinghouse to NSLDS records immediately upon logging any off-cycle graduation in the Office of the Registrar. This ensures a double review - at the time of the off-cycle record change, and in the monthly reporting of all status changes which will be reviewed and sent to NSLDS via Clearinghouse.

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

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

FINDING 2025-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22619-068-PN01, 23611-068-PN01, 23619-068-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with the earmarking requirement of the Special Education Cluster (IDEA) during the audit period. The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met as indicated on the grant agreements during the audit period. The Non-Public Proportionate Share expenditures recorded for the 22619-068-PN01, 23611-068- PN01, and 23619-068-PN01 were less than the total amount required for each of these respective grants. The appropriations reports provided by the School Corporation indicated that the total expenditures paid for these grant funds was not sufficient for meeting the nonpublic proportionate share requirement. The lack of internal controls and noncompliance were isolated to the 22619-068-PN01, 23611-068-PN01, and 23619-068-PN01 grant awards. The minimum earmarking requirement for the 22619-068-PN01, 23611-068-PN01, and 23619-068-PN01 grant awards was $1,405, $68,728, and $982, respectively. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 FAYETTE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools and facilities, must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools or facilities within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation is the fiscal agent of a Special Education Cooperative (Cooperative) that manages and operates the special education program and oversees the majority of the federal compliance requirements. The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. A method to track expenditures to ensure earmarking requirements were complied with had not been implemented. Additionally, the Cooperative did not obtain a waiver from the Indiana Department of Education for the 22619-068-PN01, 23611-068-PN01, and 23619-068-PN01 grant awards. Effect The failure to establish an effective internal control system placed the School Corporation in noncompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Noncompliance with the grant agreement or the compliance requirement could result in the loss of federal funds to the School Corporation. Questioned Costs There were no known questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to monitor the Matching, Level of Effort, Earmarking compliance requirement periodically to ensure compliance with the earmarking compliance requirements by the end of the grant period. This includes meeting with the Cooperative periodically to monitor and track progress towards meeting the required nonpublic proportionate share amounts. Views of Responsible Officials Management agrees with the finding and has prepared a corrective action plan.

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

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

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

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

Federal Program: Student Financial Aid Cluster Type of Finding: Significant Deficiency in Internal Control Over Compliance and Other Matters Federal Agency: Department of Education ALN Number: 84.063, 84.268, 84.033, 84.007 Criteria: The Code of Federal Regulations (34 CFR 685.309) requires enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status. Regulations require the status include an accurate effective date. According to the NSLDS Enrollment Reporting Guide, a student’s Program-Level enrollment status should be reported with the same enrollment status as that student’s campus-level enrollment status for all programs the student is enrolled in at that location, even if the student is not currently taking coursework that applies to a particular program. If the student has withdrawn or graduated from an academic program, a “terminal enrollment status” of ‘W’ or ‘G,’ as appropriate, should be reported for that program, even if the student is still taking coursework applicable to other programs in which the student is enrolled. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure enrollment reporting is completed properly. Condition: The College did not properly report the student enrollment change for students who received federal student aid to the NSLDS. The College did not timely report three students’ Campus-Level enrollment status change to NSLDS. Context: Out of the thirty one students tested, we noted three students whose status change at the Program-Level and Campus-Level was not timely reported to NSLDS. Questioned costs: None. Cause: The College did not have formally documented controls related to the process of enrollment reporting, which is required under Uniform Grant Guidance. Effect: Student status changes exceeded the 60-day period for student enrollment changes reported in roster files. Recommendation: We recommend the College review current processes and implement updated processes and controls for reporting to NSLDS, implementing procedures to ensure submissions are reported timely and accurately. In addition, we recommend the College review the reporting in the system to ensure it can pull accurate reports of student enrollment status. Grantee Comments: See corrective action plan.

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

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

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

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

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

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

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

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

Information on the federal program: Subject: Special Education Cluster (IDEA) – Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 34 CFR 300.202(a) states: "General. Amounts provided to the LEA under Part B of the Act – (1) Must be expended in accordance with the applicable provisions of this part; (2) Must be used only to pay the excess costs of providing special education and related services to children with disabilities, consistent with paragraph (b) of this section; and (3) Must be used to supplement State, local, and other Federal funds and not to supplant those funds." 34 CFR 300.208 states: "(a) Uses. Notwithstanding §§ 300.202, 300.203(b), and 300.162(b), funds provided to an LEA under Part B of the Act may be used for the following activities:  Services and aids that also benefit nondisabled children. For the costs of special education and related services, and supplementary aids and services, provided in a regular class or other education-related setting to a child with a disability in accordance with the IEP of the child, even if one or more nondisabled children benefit from these services. (2) Early intervening services. To develop and implement coordinated, early intervening educational services in accordance with § 300.226. (3) High cost special education and related services. To establish and implement cost or risk sharing funds, consortia, or cooperatives for the LEA itself, or for LEAs working in a consortium of which the LEA is a part, to pay for high cost special education and related services. (b) Administrative case management. An LEA may use funds received under Part B of the Act to purchase appropriate technology for recordkeeping, data collection, and related case management activities of teachers and related services personnel providing services described in the IEP of children with disabilities, that is needed for the implementation of those case management activities." 34 CFR 300.800 states: "The Secretary provides grants under section 619 of the Act to assist States to provide special education and related services in accordance with Part B of the Act – (a) To children with disabilities aged three through five years; and (b) At a State's discretion, to two-year-old children with disabilities who will turn three during the school year." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items . . . (g) Be adequately documented. . . ." 511 IAC 7-34-9 states in part: “(a) The public agency must hold title to and exercise continuing administrative control of all: (1) property; (2) equipment; and (3) supplies; the public agency acquires with Part B funds for the benefit of nonpublic school students with disabilities. (b) The public agency may place equipment and supplies in a nonpublic school for the period of time needed to provide special education and related services. The public agency must ensure that the equipment and supplies: (1) are used only for the provision of special education and related services; and (2) can be removed from the nonpublic school without remodeling the nonpublic school facility.” Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Special Education Cluster program and Activities Allowed or Unallowed and Allowable Costs compliance requirements. Cause: Management was not aware that non-public school officials have no authority to obligate or receive federal funds and that School Corporation must maintain control of all Special Education funds, property, equipment and supplies; therefore, reimbursements were made to a non-public school for proportionate share expenditures. Effect: The payment of proportionate share expenditures to a non-public school resulted in the potential misuse of funds that were meant to pay the excess costs of providing special education to students. The unallowable nature of these expenditures may also result in the School Corporation not meeting their requirements related to Non-Public Proportionate Share for the respective grants. Questioned Costs: There were questioned costs identified in the amount of $3,399. Context: During fiscal year 2023-2024, the School Corporation was a member as well as the fiscal agent of Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For costs related to non-public schools, the practice of the Cooperative was to separate out the required amount for each member school from the Cooperative budget, and the member schools would work with the non-public schools to determine how to spend their proportionate share amount. Each member school would then request reimbursement from the Cooperative for non-public school expenditures incurred. This allowed both the Cooperative and member schools to maintain control of all Special Education funds, property, equipment and supplies. In the initial sample of 25 expenditures, there was no noncompliance identified. However, while performing a review of transactions for the Period of Performance compliance requirement, it was noted that non-public schools received direct reimbursements from the Cooperative for their proportionate share expenditures. A total of 13 expenditures were made from Special Education funds to non-public schools on behalf of the member schools during the audit period. Of the 13 expenditures, 3, totaling $3,399, were made on behalf of the School Corporation to a non-public school. In addition, one of the expenditures was used to reimburse the non-public school for the purchase of gift cards and certificates, totaling $670, which was not for the benefit of non-public students. The lack of controls and noncompliance was an isolated to the 22611-047-PN01 grant award. This issue was isolated to fiscal year 2024. Identification as a repeat finding, if applicable: No Recommendation: We recommended that the School Corporation's management establish a system of internal controls to ensure that no direct reimbursements are made to the non-public schools and to ensure compliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management has agreed with the finding and prepared a corrective action plan.

Information on the federal program: Subject: Special Education Cluster (IDEA) – Period of Performance Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-PN01, 22619-047-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Period of Performance Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.309 states: “A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance (except as described in §200.461 Publication and printing costs) and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity.” 34 CFR 76.707 states in part: “….If the obligation is for – a) Acquisition of real or personal property…. The obligation is made – On the date on which the State or subgrantee makes a binding written commitment to acquire the property.” Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Special Education Cluster program and Period of Performance compliance requirements. Cause: Management had established an initial obligation date that occurred in September of the second fiscal year but modified the final vendor for payment. The new obligation occurred after the period in which the School Corporation was allowed to incur the expense. Effect: If funds are not obligated by the end of the specified date, the grantor agency is not obligated to reimburse the School Corporation for costs incurred. This may indicate that the funding reimbursed that was incurred outside of the period of performance will need to be repaid to the grantor agency, and the School Corporation will then need to support the costs with non-federal funding. Questioned Costs: There were no questioned costs identified. Context: During fiscal year 2023-24, the School Corporation was a member as well as the fiscal agent of Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For Special Education Cluster awards, funds must be obligated during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. When testing transactions occurred in the liquidation period for the 22611-047-PN01, 22611-047-ARP, 22619-047-PN01 and 22619-047-ARP grant awards, two exceptions were identified in the initial sample of five transactions. When expanding the sample, a third exception was noted, and it was concluded that it would not be appropriate to examine the remaining 14 transactions. For the above listed awards, costs must be obligated by September 30, 2023. For the three identified exceptions, an initial purchase order was made in September, but the ultimate transaction was paid to a separate vendor than the original purchase order, and this obligation was incurred in November 2023. This issue was isolated to fiscal year 2024. Identification as a repeat finding, if applicable: No Recommendation: We recommended that the School Corporation's management establish a system of internal controls to ensure that no costs are incurred after the September 30 deadline and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management has agreed with the finding and prepared a corrective action plan.

Information on the federal program: Subject: Special Education Cluster (IDEA) –Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027A, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 23611-047-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, and Earmarking Audit Finding: Material Weakness, Other Matters Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).... 2 CFR 200.207(a) states in part: "The Federal awarding agency or pass-through entity may impose additional specific award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools and facilities, must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools or facilities within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the earmarking portion of the Matching, Level of Effort, Earmarking compliance requirement. Cause: The School Corporation participates in a Special Education Cooperative that manages and operates the special education program and oversees the majority of the federal compliance requirements. The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Effect: The failure to establish an effective internal control system placed the School Corporation in noncompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Noncompliance with the grant agreement or the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: $27,967 Context: The School Corporation did not meet the earmarking requirements for the grants, which concluded during the audit period. Both the Special Education Grants to States and Special Education Preschool Grants required a proportionate share of their funding to be spent on non-public school students with disabilities. The 22611-047-PN01, 22611-047-ARP, and 23611-047-PN01 grant awards were fully expended during the audit period with minimum Non-Public Proportionate Share earmarking requirements of $20,890, $4,238, and $17,240, respectively. There were not sufficient non-public school expenditures incurred to meet the non-public proportionate share requirement for any of the four grants. The non-public school expenditures fell short of the minimum requirement by $12,644, $1,648 and $13,675 respectively. Identification as a repeat finding: Yes, Finding 2023-003. Recommendation: We recommended that the School Corporation's management establish internal controls to monitor earmarking requirements periodically to ensure compliance with the earmarking compliance requirements by the end of the grant period. This includes meeting with the Cooperative periodically to monitor and track progress towards meeting the earmarking requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.