Findings Citing § 200.303

FINDING 2025-002 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with the Allowable Costs/Cost Principles compliance requirement. Form 9 Expenditures The School Corporation submits a Form 9 to the Indiana Department of Education (IDOE) every six months. The expenditures reported on the Form 9 are used by the IDOE to calculate the School Corporation's indirect cost rate. The rate represents the percentage of indirect costs (overhead, administration) that can be recovered from federal grant funds, derived from the cost incurred in a previous fiscal year. As such, the amounts submitted to the IDOE in fiscal year 2022-2023 are to be used in the indirect costs computation for 2024-2025 and are tested to ensure they were recorded properly in the School Corporation's records as to the account or object codes. A test of 53 disbursement line items were sampled from the IDOE Form 9 submitted for 2022-2023 totaling $935,432 and 3 line items were not properly supported by the School Corporation's records. The School Corporation's ledger was filtered for the fund, account, and object code reported on the Form 9, and we determined 3 line item expense variances as follows: INDIANA STATE BOARD OF ACCOUNTS 17 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)  There were 2 expense line items under reported on the Form 9 by a total of $1,604.  There was 1 expense line item over reported on the Form 9 by $8. The lack of internal controls and noncompliance over the Form 9 expenditures was isolated to 2024-2025. School Corporation Expenditures - Indirect Cost Rate In a test of 50 School Corporation expenditures, we were unable to determine if 9 expenditures totaling $29,948.32 were posted to the proper account and object codes within the accounting records to ensure the underlying data used by the IDOE to calculate the indirect cost rate was accurate. Records to support these 9 expenditures could not be located for audit. The lack of internal controls and noncompliance over the School Corporation expenditures were 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 200.403 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 . . ." Cause The School Corporation's management had not developed a system of internal controls that would have ensured compliance. The School Corporation did not ensure that supporting documentation was maintained and made available for audit, as related to the Allowable Costs/Cost Principles compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure compliance with the Allowable Costs/Cost Principles compliance requirement. As a result, amounts reported to the oversight agency were not accurately reported. INDIANA STATE BOARD OF ACCOUNTS 18 MICHIGAN CITY AREA SCHOOLS 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 proper system of internal controls and develop policies and procedures to ensure the data submitted on the Form 9's and underlying expenditures are properly documented and retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Level of Effort/Maintenance of Effort Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 24611-036-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Level of Effort - Maintenance of Effort Maintenance of Effort (MOE) is a district-level test that determines whether the School Corporation is providing a consistent level of financial support to public schools from year to year. This rule ensures that the School Corporation does not use special education funds to shore up reductions in state and local support for public education. The Indiana Department of Education (IDOE) performs the maintenance of effort calculation utilizing Form 9 information provided by the School Corporation from the prior year. As such, the amounts submitted to the IDOE in the prior year to be used in the computation are tested to ensure they were recorded properly in the School Corporation's records as to the account or object code. A test of 53 disbursement line items were sampled from the IDOE Form 9 submitted for fiscal year 2022-2023 totaling $935,432, and 3 line items were not properly supported by the School Corporation's records. The School Corporation's ledger was filtered for the fund, account, and object code reported on the Form 9, and we determined the 3 line item expense variances as follows:  There were 2 expense line items under reported on the Form 9 by a total of $1,604.  There was 1 expense line item over reported on the Form 9 by $8. INDIANA STATE BOARD OF ACCOUNTS 19 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The ineffective internal controls and noncompliance were isolated to the 2022-2023 Form 9 information used to calculate the MOE for the 2023-2024 grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 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 . . ." Cause The School Corporation's management had not developed a system of internal controls that would have ensured compliance. The School Corporation did not ensure that supporting documentation was maintained and made available for audit, as related to the Matching, Level of Effort, Earmarking compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. As a result, amounts reported to the oversight agency were not accurately reported. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure the data submitted on the Form 9's and underlying expenditures are properly documented. 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: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card, High School Graduation Rate Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirement. The School Corporation must report graduation rate data for all public high schools within the School Corporation using the four-year adjusted cohort rate. To remove a student from the cohort, the School Corporation must confirm the reason for removal in writing. Additionally, required documentation for each removal type must be retained by the School Corporation. The School Corporation did not ensure that there was written documentation retained from the receiving school for students removed from the cohort for mobility reasons. Of the 20 students tested, 3 did not have the required supporting documentation to substantiate removal from the cohort for mobility reasons. Of those, 2 students were foreign exchange students, and the School Corporation did not retain a school acceptance form or formal agreement with the exchange organization. Another student was incarcerated, and the School Corporation did not have a court order or documentation from the Indiana Department of Corrections. 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 21 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 20 USC 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." Cause The School Corporation did not have effective internal controls to ensure required documentation to support the reason for a student's removal from the high school graduation cohort for mobility reasons was prepared and retained. Effect Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management evaluate the internal control policies and procedures to ensure the proper documentation is maintained for students that are removed from the cohort. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-005 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles 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: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-005. INDIANA STATE BOARD OF ACCOUNTS 22 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The COVID-19 - Education Stabilization Fund (ESF) grant was established by the Coronavirus Aid, Relief and Economic Security (CARES) Act to respond to the Coronavirus outbreak and assist schools in creating healthy learning environments, return students to classrooms, and address local needs. The ESF grant was further funded by the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and the American Rescue Plan (ARP) Act. The School Corporation did not have effective internal controls in place over the Allowable Costs/Cost Principles compliance requirement. A sample of 13 payroll claims paid from the School Corporation's ESF grant were selected for testing. Of the sample, 6 employee pay rates could not be verified to a School Board-approved, allowable hourly pay rate for a high dosage tutor position. High dosage tutors were paid anywhere from $20 to $77 an hour. The School Corporation was unable to provide documentation that the School Board approved a pay rate for the high dosage tutor positions during the audit period. The total amount paid to high dosage tutors during the audit period was $472,354, which were considered questioned costs. In addition, the School Corporation paid a consulting firm to provide general support to the finance department. The expenditures were deemed unallowable as there was no documentation available that the consultants were assisting the School Corporation in preventing, preparing for, and responding to COVID-19. The total amount expended to the consultant during the audit period was $514,156, which were considered questioned costs. The lack of internal controls and noncompliance were isolated to the costs noted above for the ESSER II and ESSER III grants. 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 the 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 23 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must 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 requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b). (g) Be adequately documented. See §§ 200.300 through 200.309. (h) Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. At its discretion, the Federal agency is authorized to waive prior written approvals to carry forward unobligated balances to subsequent budget periods. See § 200.308(g)(3). 2 CFR 200.430(i)(1) states in part: "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 24 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.404 states: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134 Stat. 1924 (2020) states in part: "For an additional amount for "Education Stabilization Fund".to remain available through September 30, 2022, to prevent, prepare for, and respond to coronavirus, domestically, or internationally . . ." Cause Payroll records were incomplete as the School Corporation was unable to provide documentation that all rates of pay were approved by the School Board. The School Corporation did not include the consultants above in the budget submitted as part of the grant application, and so the School Corporation did not get the required prior approval for the purchases. Effect Without proper documentation, the allowability of the ESF grant expenditures cannot be substantiated, creating a risk that unallowable costs may be charged to the federal grant. Additionally, we could not determine how the expenditures met the purpose of the program. Questioned Costs We identified $986,510 in known questioned costs as described above in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 25 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure rates of pay are approved by the School Board and adequately documented and that costs are allowable. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-006 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings 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 2023-006. Condition and Context The School Corporation had not properly designed a system of internal controls to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation did not have any policies or procedures in place to ensure a detailed capital asset listing was completed for the audit period and that the listing contained all the required information. During the audit period, the School Corporation purchased equipment totaling $11,495,065 with COVID-19 - Education Stabilization Fund funds. However, the purchased equipment was not included on a capital asset listing or physical inventory. Due to the lack of a detailed capital asset listing, the equipment was not adequately safeguarded or maintained. The School Corporation should include the following required information in the detailed capital asset listing for each capital asset purchased with federal funds: a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, and use and condition of the property. A capital asset listing is to be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The lack of internal controls and noncompliance were systemic issues throughout the audit period for the ESSER II and ESSER III grants. INDIANA STATE BOARD OF ACCOUNTS 26 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause The School Corporation did not have policies or procedures in place to complete an inventory or maintain a fixed asset detail report. 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, not all assets purchased with federal dollars were added to a capital asset listing. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 27 MICHIGAN CITY AREA SCHOOLS 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 asset records include all the necessary information, new assets are properly added, and any discrepancies are reconciled. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025-101 Funds to be Returned Worksheets Not Documented as Being Independently Reviewed Assistance Listing Number: 84.063 Program Title: Federal Pell Grant Program Compliance Requirement: Special Tests and Provisions – Return of Title IV Funds Federal Agency: United States Department of Education FAIN and year: P063P203385, 2024-2025 Finding Type: Material Weakness in Internal Control Known Questioned Costs: $0 Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition: Return of Funds R2T4 and Pell Grant Early Completer Re-Proration worksheets were calculated and funds properly returned, however the worksheets to determine the return of the funds were not signed off as having been independently reviewed and approved. While calculations are reviewed by someone other than the preparer, no documentation of the review is evident. Cause: Haney Technical School (School) staff review the worksheets but have not set up a formal policy where the independent reviewer signs off and dates the review of the worksheet. Effect: Incorrect amounts could be returned in error. Recommendation: The School should set up a formal policy where worksheets for the return of Title IV funds should include a signature and date of both the preparer and the reviewer. Management Response: See attached Corrective Action Plan.

2025-102 Return of Title IV Funds Not Made Within the Required Timeline Assistance Listing Number: 84.063 Program Title: Federal Pell Grant Program Compliance Requirement: Special Tests and Provisions – Return of Title IV Funds Federal Agency: United States Department of Education FAIN and year: P063P203385, 2024-2025 Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Awards. Institutions are responsible for returning funds to students and Title IV programs as appropriate if students withdraw, drop out or are expelled from their program of study within a 45-day period from the date of withdrawal. Condition: Title IV funds for two of the nine students selected for testing for the return of Title IV funds were returned to the Department of Education after the 45-day time period. Cause: Human error resulted in delays in returning funds to the Department of Education. The controls in place are manual only and did not operate to prevent the late returns. Effect: Noncompliance with the return of funds could result in future loss of Pell Award funding. Recommendation: The School should implement a process possibly with the use of a software program that would identify when funds are due back based on the student’s withdrawal date. Management Response: See attached Corrective Action Plan.

2025-103 Multi-factor Authentication Not Required When Accessing Student Information Assistance Listing Number: 84.063 Program Title: Federal Pell Grant Program Compliance Requirement: Special Tests and Provisions – Gramm-Leach Bliley Act- Student Information Security Federal Agency: United States Department of Education FAIN and year: P063P203385, 2024-2025 Finding Type: Material Weakness in Internal Control Known Questioned Costs: $0 Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The institution’s written information security policy must address the implementation of safeguards identified in 16 CFR 314.4(c) which includes the implementation of multi-factor authentication for anyone accessing student information on the institution’s system. Condition: Multi-factor authentication has not been implemented on the District’s system in regards to access of student information. Cause: The security parameters for accessing student information do not include multi-factor authentication in conjunction with passwords when accessing student information from the District’s information system. Effect: Student information could be inappropriately accessed. Recommendation: The requirement for multi-factor authentication policy should be put in place. Management Response: See attached Corrective Action Plan.

Prior Year Finding: N/A Federal Agency: U.S. Environmental Protection Agency Pass-Through Agency: Maryland Department of Environment Federal Program Name: Clean Water State Revolving Fund Assistance Listing Number: 66.458 Award Number and Year: Urban Storm Water Retrofit (7/1/2024-6/30/2025) Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Recipients and subrecipients are prohibited from contracting with or making subawards under covered transactions to parties that are suspended, or debarred. “"Covered transactions" include contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All nonprocurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a recipient or subrecipient enters into a covered transaction with an entity at a lower tier, the recipient or subrecipient must verify that the entity, as defined in 2 CFR section 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) and available at SAM.gov (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Control: Per 2 CFR section 200.303(a), a nonfederal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply 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 suspension and debarment status of vendors with expenditures exceeding $25,000 was not verified as required by federal regulations. Context: For five of five transactions selected for testing, the County did not verify the suspension and debarment status before entering into covered transactions with the vendors. Cause: County's procedures and internal controls over suspension and debarment are not sufficient to ensure that all vendors’ suspension and debarment status was verified timely. Effect: Failure to verify the suspension and debarment status of vendors may result in the procurement of goods or services from vendors that are suspended or debarred and result in unallowable expenditures charged to the program. Questioned costs: There are no questioned costs related to this finding as the vendors were not federally suspended or debarred. Recommendation: The County should ensure policies and procedures include the three options for determining suspension and debarment status listed in 2 CFR 180.300 and that controls are sufficient to ensure that the suspension and debarment status is verified for all vendors prior to entering into covered transactions. Views of responsible officials: There is no disagreement with the audit finding.

Prior Year Finding: 2024-001 Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Maryland Department of Aging Federal Program Name: Aging Cluster Assistance Listing Number: 93.044, 93.045 Award Number and Year: 650123/15, 650223/15 (10/1/2022-9/30/2024); 650124/15, 650224/15 (10/1/2023-9/30/2025); 650125/15, 650225/15 (10/1/2024-9/30/2026) Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per Maryland Department of Aging guidance, the County is required to submit quarterly financials forms outlining grant spending progress, matching requirements, budget categories, and any other revenue sources for all open grants. Control: Per 2 CFR section 200.303(a), a nonfederal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply 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: Prince George’s County, Maryland (the County) did not submit required information on its quarterly reports to the Maryland Department of Aging during FY25. Context: For eight of eight quarterly reports selected for testing, the County did not report required information in the section related to matching funds. The County omitted reporting matching expenditures even though local funds were incurred to meet the required match. Cause: The County’s policies and procedures were not sufficient to ensure that all required information was included in the reports submitted to the Maryland Department of Aging. Internal controls did not prevent or detect the omission. Effect: The County was not in compliance with reporting requirements. Questioned costs: None noted. Recommendation: We recommend that the County develop internal controls and procedures to ensure that all required information is submitted with the quarterly reports to the Maryland Department of Aging. Views of responsible officials: There is no disagreement with the audit finding.

2025-001: Department of Health and Human Services - Temporary Assistance for Needy Families (TANF), Federal Assistance Listing #93.558; Pass Through Virginia Department of Social Services, Pass Through Entity Identifying Number BEN-21-054. Criteria: The Organization should have processes and procedures in place to keep and maintain client eligibility records, per 2 CFR 200.303 and 2 CFR 200.334. Condition: During our audit, we noted that the Organization was unable to locate records substantiating the eligibility of clients served. Context: During testing, the Organization was unable to find supporting eligibility records for 35 out of the 53 samples that received services as part of a federal program. The sample was not intended to be, and was not, a statistically valid sample. Cause/Effect: Internal control processes over proper maintenance of clients’ records were not operating effectively, causing documentation to not be located. Questioned Costs: $40,400 calculated based on the dollar amount submitted for reimbursement for each item tested without proper eligibility records. Identification of Repeat Finding: Repeat Finding 2024-001. Recommendation: We recommend procedures are implemented to ensure proper maintenance of client records. Views of Responsible Officials: Management agrees with the recommendation and has implemented corrective action as outlined in the corrective action plan.

2025-002: Department of Health and Human Services - Temporary Assistance for Needy Families (TANF), Federal Assistance Listing # 93.558; Pass Through Virginia Department of Social Services, Pass Through Entity Identifying Number BEN-21-054. Criteria: The Organization should have effective policies and procedures in place to ensure there is proper documentation supporting funds were used in compliance with the federal award, per 2 CFR 200.303 and 2 CFR 200.334. Condition: During our audit, it was noted that there was not an effective process in place to keep and maintain the required records to support pay-for-performance outputs and outcomes. Context: The Organization was unable to provide documentation supporting the allowability of 7 of the 52 samples selected for testing. Cause/Effect: Internal control processes over maintenance of records supporting pay-for-performance outcomes and outputs were not operating effectively from July 2024 through June 2025. Questioned Costs: $7,200 calculated based on the dollar amount submitted for reimbursement for each item tested without proper records supporting the required outcome or output was met. Identification of Repeat Finding: 2024-002 Recommendation: We recommend that the Organization implements a review process to ensure that documentation is retained to support pay-for-performance outputs and outcomes submitted to the grantor. Views of Responsible Officials: Management agrees with the recommendation and has implemented corrective action as outlined in the corrective action plan.

2025-003: Department of Health and Human Services - Temporary Assistance for Needy Families (TANF), Federal Assistance Listing #93.558; Pass Through Fairfax County, Pass Through Entity Identifying Number 4400012652. Criteria: The Organization should have processes and procedures in place to keep and maintain client eligibility records, per 2 CFR 200.303 and 2 CFR 200.334. Condition: During our audit, we noted that the Organization was not performing procedures to ensure eligibility of clients participating in the program and thus were unable to locate records substantiating the eligibility of clients served. Context: During testing, the Organization was unable to support eligibility for 7 out of the 7 samples that received services as part of a federal program. The sample was not intended to be, and was not, a statistically valid sample. Cause/Effect: Internal control processes over proper processes for eligibility and maintenance of clients’ records were not operating effectively, causing documentation to not be located. Questioned Costs: Unknown. Identification of Repeat Finding: N/A Recommendation: We recommend procedures are implemented to ensure only eligible clients participate in the federal program and client records are maintained. Views of Responsible Officials: Management agrees with the recommendation and has implemented corrective action as outlined in the corrective action plan.

Finding 2025-002 – U.S. Department of Education (ED), TRIO Programs (material weakness): Information on Federal Programs – TRIO Upward Bound Assistance Listing, FAL No. 84.047, June 30, 2025 Criteria – Federal regulations require that at least two-thirds (67%) of participants served by the TRIO Upward Bound Program be low-income and first-generation college students. 20 U.S.C. § 1070a-11 34 CFR § 645.3 (Definitions); 34 CFR § 645.11 (Participant eligibility and selection). In addition, recipients are required to maintain accurate eligibility documentation and report complete and reliable participant data in the annual performance report in accordance with 2 CFR § 200.303 and 2 CFR § 200.328. Condition – The TRIO Upward Bound Program did not meet the federally required two-thirds first-generation/low-income participant threshold. The annual performance report reflected that only 51% of participants were identified as first-generation and/or low-income. During testing of participant eligibility documentation, the participant roster reflected that only 58% of participants met the first-generation and/or low-income eligibility requirement. Cause – The condition appears to be the result of insufficient internal controls over participant eligibility determination and monitoring, including: a) inadequate review procedures to ensure eligibility requirements were met prior to participant enrollment; b) lack of ongoing monitoring to ensure continued compliance with the two-thirds eligibility requirement throughout the program year and c) insufficient reconciliation between eligibility documentation and performance reporting data. Effect – Failure to meet the statutory eligibility threshold places the program out of compliance with federal requirements and may result in: a) questioned eligibility of program participants, b) increased risk of enforcement actions, including corrective action plans or repayment of federal funds.; c) possible loss or reduction of future funding and d) risk of program eligibility. Repeat Finding – Yes. Although this is a repeat finding for Upward Bound, Student Support Services was resolved in the current year. Questioned Costs – Questioned costs could not be reasonably determined for this finding due to the inability to directly associate program expenditures with individual ineligible participants. Auditor’s Perspective – From the auditor’s perspective, this finding represents material noncompliance with federal eligibility and reporting requirements for the TRIO Upward Bound Program. Federal statutes and regulations require that at least two-thirds (67%) of program participants be low-income and first-generation college students. The program’s failure to meet this threshold both in reported data (51%) and in tested eligibility documentation (58%) demonstrates a systemic breakdown in compliance, rather than an isolated or clerical error. The discrepancy between eligibility documentation and the annual performance report further indicates weaknesses in internal controls over compliance, as required by 2 CFR § 200.303. Accurate eligibility determination is a core program requirement, directly tied to the program’s statutory purpose and funding authorization. Noncompliance with this requirement undermines assurance that federal funds were used to serve the intended population. Auditor’s Perspective – (continued) Because eligibility compliance affects the allowability of participant-related costs, the inability to demonstrate that the required proportion of participants met eligibility criteria creates an elevated risk of questioned or disallowed costs. While questioned costs could not be reasonably quantified, the scope and pervasiveness of the condition support classification of this finding as material. Absent corrective action, the program remains exposed to continued noncompliance, increased federal oversight, and potential enforcement actions by the U.S. Department of Education. Strengthening eligibility controls, monitoring, and reporting reconciliation is necessary to restore compliance and reduce future audit risk. Auditor’s Recommendation – We recommend that management: a) strengthen internal controls over participant eligibility determination, including documented review and approval procedures; b) implement periodic monitoring to ensure the two-thirds first-generation/low-income require-ment is met throughout the program year; c) Ensure accurate and consistent reporting between eligibility records and annual performance reports and d) provide staff training on federal eligibility requirements for the TRIO Upward Bound Program. View of Responsible Officials – The correct 2/3 requirement percentage from the 2024-2025 TRIO Upward Bound APR is 63%; the referenced 51% was from the 2023-2024 APR. The TRIO Upward Bound Program’s fiscal year for 2024-2025 was September 1, 2024, to August 31, 2025, which is different from the College’s fiscal year. A roster was requested and submitted reflecting TRIO Upward Bound participants during the College’s fiscal year, July 1, 2024 -June 30, 2025. The submitted roster did not reflect the participants for the Program’s 2024-2025 fiscal year. Failure to meet the 2/3 requirement stems from ongoing challenges in recruiting Program participants. Recruitment has been and continues to be a challenge for TRIO Programs nationwide since the pandemic. The TRIO Upward Bound Staff are very knowledgeable about Program eligibility and documentation requirements. A thorough review of eligibility is completed to ensure applicants meet at least one (and preferably both) eligibility criteria PRIOR TO acceptance. The TRIO Upward Bound Program received funding for FY2025 (September 1, 2025, - August 31, 2026) in the full amount of $550,864.00. The receipt of a Non-Competing Continuation (NCC) Grant Award Notice means the U.S. Department of Education is giving approval to allow the Paine College TRIO Upward Bound Program to continue serving students without any stipulations to the Program or College. The Program is operating under normal terms and conditions. Program Staff is working diligently to recruit more students to ensure compliance with the 2/3 eligibility requirement for the 2025-2026 program/fiscal year.

2025-004: U.S. Department of Education Passed through State of Nevada Department of Education Title I Grants to Local Educational Agencies, 84.010 Eligibility Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards included under assistance listing number 84.010 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 provides that non-federal entities must establish and maintain effective internal control 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. Local educational agencies are required to equitably allocate Part A funds to each participating school, in rank order, on the basis of the number of public-school children from low-income families residing in the area or attending the school (20 USC 6313). Condition: In certain instances, the amounts disbursed to each school was not in accordance with the allocation. In addition, an amendment was made to the original allocation and was not equitably distributed. Cause: Elko County School District did not have sufficient internal controls to ensure eligibility determinations of the amounts disbursed were being appropriately followed. Effect: Noncompliance with eligibility requirements may not be detected. Questioned Costs: None Context/Sampling: Eligibility requirements were tested as a whole for the District. It was noted that there was an amended allocation of $6,228.22 that was not equitably distributed across the eleven eligible schools. In addition, $32,657.07 of the funds were not properly disbursed to the schools in accordance with the allocation or carried forward into the following year’s budget. Repeat Finding from Prior Year(s): No Recommendation: We recommend Elko County School District enhance internal controls to ensure eligibility requirements are being followed, specifically regarding allocations and disbursement of funds. Views of Responsible Officials: Management agrees with the finding.

2025-005: U.S. Department of Education Passed through State of Nevada Department of Education Title I Grants to Local Educational Agencies, 84.010 Matching, Level of Effort, and Earmarking Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards included under assistance listing number 84.010 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 provides that non-federal entities must establish and maintain effective internal control 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: Underlying supporting documentation that the Elko County School District compiled to monitor local compliance with level of effort requirements was not maintained. Cause: Elko County School District did not have sufficient internal controls to ensure level of effort tracking was maintained and reviewed. Effect: Noncompliance with level of effort requirements may not be detected. Questioned Costs: None Context/Sampling: Underlying supporting documentation for monitoring was not maintained. A recalculation of the level of effort requirements, as applicable, for the fiscal year ending June 30, 2025, was performed and no issues of noncompliance were noted. Repeat Finding from Prior Year(s): Yes, prior year finding 2024-005. Recommendation: We recommend Elko County School District enhance internal controls to ensure information used in the level of effort monitoring is maintained. Views of Responsible Officials: Management agrees with the finding.

2025-006: U.S. Department of Education Passed through State of Nevada Department of Education Title I Grants to Local Educational Agencies, 84.010 Special Tests and Provisions – Annual Report Card, High School Graduation Rate Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards included under assistance listing number 84.010 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 provides that non-federal entities must establish and maintain effective internal control 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. Pursuant to 20 USC 2011h, the District is required to report graduation rate data for all public high schools for the District for each graduating cohort. To remove a student from the cohort, the District must confirm, in writing, that the student transferred out, emigrated to another country, transferred to a prison or juvenile facility, or is deceased. Condition: Underlying supporting documentation that the Elko County School District was reviewing the reporting for removal of a student from the cohort was missing in some instances. Cause: Elko County School District did not have sufficient internal controls to ensure all documentation for the removal of students from the cohort was maintained. Effect: Noncompliance with the special test for annual report grade, high school graduation rate requirements may not be detected. Questioned Costs: None Context/Sampling: A nonstatistical sample of sixty-eight removals out of 617 was selected for testing. Seventeen of the sixty-eight sample selections did not maintain approval documentation. Repeat Finding from Prior Year(s): No Recommendation: We recommend Elko County School District enhance internal controls to support the review of information used to support the removal of students from a cohort is maintained. Views of Responsible Officials: Management agrees with the finding.

2025-004 Impact Aid Application Controls CFDA Title: Impact Aid CFDA Number: 84.041 Federal Award Number: N/A Federal Agency: Department of Education Pass-through Entity: N/A Condition: The District does not have an internal control system in place to ensure that supporting documentation is maintained to support the Impact Aid Applications for the elementary and high school. Context: We requested the supporting documentation to test the compliance of reported students counts on the elementary and high school impact aid applications, but the District had a difficult time providing the supporting documentation and/or could not provide it at all. Criteria: (1) 2 CFR section 200.303 requires that the District establish and maintain an effective internal control system over the federal award to provide reasonable assurance that the District is managing the federal awards in compliance with federal statutes, regulations and the terms and conditions of the federal award. (2) Application for Impact Aid - Section 7003 (OMB No. 1810-0687) - Each year an LEA must submit this application, which provides the following information: counts of federally connected children in various categories, membership and average daily attendance data, and information on expenditures for children with disabilities. This form is in the Impact Aid Grant System, which does not have a public link, therefore school districts will need to provide a copy to the auditor. Effect: The District risk of noncompliance with federal programs increases if documentation is not maintained to support those compliance requirements. In addition, we found variances in both total enrollment reported, as well as children living on Indian lands. There was no support for the children with disabilities reported on the applications. Cause: The District did not establish and maintain an adequate internal control system ensure that supporting documentation is maintained to support the number reported on the application. Recommendation: We recommend that the District review its internal control systems over its Impact Aid application, and ensure that the document management systems are adequate to ensure appropriate filing of supporting documentation to the applications are maintained so that information can be found in future years.

2 CFR § 3474.1 provides that the Department of Education (ODE) adopts the Office of Management and Budget (OMB) guidance in 2 CFR part 200. Thus, this part gives regulatory effect to the OMB guidance and supplements the guidance as needed for the ODE, except as otherwise noted in that section. 2 CFR § 200.303 states a recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Due to deficiencies in internal policies and procedures, the Academy did not approve three out of six (50%) of invoices that were for allowable costs and activities prior to being paid. Failure to have the appropriate controls in place may result in the Academy using federal funds for unallowable costs or activities. The Academy should develop internal control policies over Federal awards to help ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.

U.S. Department of Housing and Urban Development, passed through Barren County Fiscal Court ALN 14.251 – Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Contract No. B-22-CP-KY-0347 (2022) and B-23-CP-KY-0612 (2023) Criteria: 2 CFR 180 subpart C includes the responsibilities of persons who participate in covered transactions. 2 CFR 200.303 requires recipients and subrecipients to establish, document, and maintain effective internal controls over Federal awards. Condition: During our audit procedures, we noted there was no process in place to ensure vendors were not on a suspension or debarment list, and were eligible to be reimbursed with federal grant funds. Cause: Certain internal controls were not in place to prevent or detect and correct payments made to suspended or debarred vendors. Effect: Federal funds could be used to reimburse payments made to vendors that are suspended or debarred. Questioned Costs: None. Recommendation: We recommend management obtain a greater understanding of the suspension and debarment contained in 2 CFR 180, and implement a review process whereby vendors are periodically checked for suspension and debarment. Views of Responsible Officials and Planned Corrective Actions: Management concurs with the finding and as a result, the Authority will implement procedures to include verifying new and existing vendors are not on suspension and debarment listings.

U.S. Department of Housing and Urban Development, passed through Barren County Fiscal Court ALN 14.251 – Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Contract No. B-22-CP-KY-0347 (2022) and B-23-CP-KY-0612 (2023) Criteria: 2 CFR 200.327 requires non-Federal entities to include a provision for compliance with the Davis-Bacon Act as supplemented by Department of Labor regulations. The Davis-Bason Act requires contractors to pay prevailing wages on federally funded or assisted construction projects, and requires non-Federal entities entering into such construction contracts to collect weekly certified payroll reports for all weeks in which wages are paid to construction workers. 2 CFR 200.303 requires recipients and subrecipients to establish, document, and maintain effective controls over Federal awards. Condition: During our audit procedures, we noted the Authority did not notify contractors that Federal funds would be in payments. As such, contractors did not include federal prevailing wage language in their bids/contracts, and did not provide weekly certified payroll reports to the Authority. Cause: Management was unaware of the requirements of prevailing wage for federal construction grants, and as such, did not communicate to contractors that federal funds would be utilized. Effect: The Authority was not in compliance with the Davis-Bacon Act and related regulations. Questioned Costs: Unable to determine. Recommendation: We recommend management obtain a greater understanding of the Davis-Bacon Act, and implement a review process whereby contracts and invoices are not approved without appropriate prevailing wage consideration and certified payrolls. Views of Responsible Officials and Planned Corrective Actions: Management concurs with the finding and as a result, the Authority will gain a greater understanding of HUD grants, and will implement a review process to ensure prevailing wage requirements are considered prior to approving contracts and invoices.

U.S. Department of Housing and Urban Development, passed through Barren County Fiscal Court ALN 14.251 – Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Contract No. B-22-CP-KY-0347 (2022) and B-23-CP-KY-0612 (2023) Criteria: 2 CFR 200.303 requires recipients and subrecipients to establish, document, and maintain effective internal controls over Federal awards. Condition: During our audit procedures, we noted there was no process in place to ensure periodic reporting was submitted timely and accurately. Cause: Certain internal controls were not in place to prevent or detect lack of periodic reporting, or inaccurate reporting. Effect: Federal funds could be withheld if periodic reports are not submitted, or are inaccurate. Questioned Costs: None Recommendation: We recommend management implements a review process whereby there is a review control over the submission of period reports. Views of Responsible Officials and Planned Corrective Actions: Management concurs with the finding and as a result, the Authority will implement a review process over required periodic reporting.

2025-003 Allowability of Rental Assistance Payments – Landlord Verifications U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Continuum of Care Program—Assistance Listing No. 14.267 Hennepin County Contract HS00001366; Grant Period – Year ended June 30, 2025 Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303 requires non-Federal entities to establish and maintain effective internal control over Federal awards to provide reasonable assurance that the entity is managing the awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Agate Housing and Services, Inc.’s internal control policies require landlord verifications to be completed prior to submitting a rental assistance payment, as evidenced by a completed and filed W- 9 form. Condition: Documentation to support that Agate Housing and Services, Inc.’s landlord verification process was completed prior to the disbursement of rental assistance payments was not available for nine of the forty sampled transactions. Cause: During 2025, Agate Housing and Services, Inc. digitized its inventory of W-9 forms and retained only the most recent W-9 for each vendor. Older versions of W-9 forms were purged, and any missing W-9 documentation was likely lost during this conversion process. Effect: The landlord verification process is a key internal control to ensure the legitimacy and existence of landlords and to help prevent fraud or mismanagement in the disbursement of Federal funds. As a result of missing documentation, there is insufficient evidence to demonstrate that landlord verifications were performed prior rental assistance payments being made. Context: A statistically valid sample of 40 rental assistance payment transactions totaling $52,138 was selected for testing from a population of 393 transactions totaling $561,523. The audit identified nine payments to landlords that were disbursed prior to documentation evidencing completion of landlord verification. Known Questioned Costs: None. In five of the nine instances, landlord verification documentation was obtained after-the-fact, supporting the legitimacy of the payments. In the remaining four instances, the landlords were well-established business entities. No concerns regarding allowability were identified. Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Agate Housing and Services, Inc. strengthen internal controls to ensure landlord verifications are completed and required documentation, including W-9 forms, is obtained and retained for all vendors prior to the disbursement of rental assistance funds. Management should implement a procedure to verify that required documentation is present before payment approval. Views of Responsible Officials and Planned Corrective Actions: Agate Housing and Services, Inc. agrees with the finding and is in the process of strengthening its controls over the verification of landlords.

Condition During our audit of the School Board’s financial statements for the year ended June 30, 2025, we encountered circumstances that imposed pervasive limitations on the scope of our audit. Specifically: • We were unable to obtain sufficient appropriate audit evidence regarding significant financial statement balances, transactions, and disclosures. • Accounting records and supporting documentation necessary to perform audit procedures were incomplete, unavailable, or unreliable. • Management representations, including written representations required under auditing standards, could not be relied upon due to concerns regarding the reliability of management representations. • These conditions, combined with the risk that management could override internal controls, further limited our ability to obtain evidence that financial reporting was complete and accurate. In addition, these same conditions prevented us from performing required audit procedures over the School Board’s federal programs, including testing of internal control over compliance and compliance with applicable federal statutes, regulations, and terms and conditions of federal awards. As a result, we were unable to obtain sufficient appropriate audit evidence to support an opinion on compliance for each major federal program. Criteria Uniform Guidance (2 CFR §200.303 and §200.514) requires non-federal entities to establish and maintain effective internal control over federal programs and to provide auditors with access to records and personnel necessary to perform a Single Audit. Uniform Guidance §200.516 requires auditors to report material weaknesses and noncompliance when identified. Cause The conditions described above resulted from inadequate recordkeeping and documentation practices, deficiencies in internal control over financial reporting, and management actions and behaviors that restricted the auditor’s ability to obtain reliable audit evidence and representations. These conditions directly impaired the auditor’s ability to perform planned audit procedures and obtain sufficient appropriate audit evidence. These conditions affected both financial reporting and compliance with federal program requirements. Effect Because of these pervasive limitations and the risk of management override, we were unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. The potential effects on the financial statements are both material and pervasive, and therefore we issued a disclaimer of opinion on the School Board’s financial statements for the year ended June 30, 2025. For the same reasons, we were also unable to obtain sufficient appropriate audit evidence to support an opinion on compliance for each of the School Board’s major federal programs and on internal control over compliance. Accordingly, we disclaimed an opinion on compliance for each major federal program under the Single Audit. Context Questioned costs could not be determined due to the disclaimer of opinion. Recommendation We recommend that the School Board take immediate action to strengthen its internal control environment. Specifically, management should: • Ensure that all accounting records and supporting documentation are complete, accurate, and readily available. • Enforce oversight of financial reporting and internal control procedures. • Promote transparency, accountability, and cooperation with auditors to facilitate future audits. • Implement measures to mitigate the risk of management override, including additional supervisory review, approval requirements, and segregation of duties. • Ensure compliance documentation for federal programs is complete, accurate, and available for audit. Views of Responsible Officials and Planned Corrective Action A. OBJECTION On December 29, 2025, following LPSB’s submission of its Response to the Draft Findings of Kolder, Slaven, and Company, LLC (“KS&C”) relating to its 2024-2025 Annual Audit, LPSB received two additional findings characterized as Disclaimers of Opinion. The issuance of these post-response Disclaimers of Opinion regarding the findings highlights KS&C’s apparent lack of objectivity and its failure to adhere to generally accepted government auditing standards in conducting the 24-25 audit. A Disclaimer of Opinion “is expressed when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive.”1 According to LLA, “a local auditee that provides for an audit report with a disclaimer of opinion” is regarded as being in noncompliance with its reporting requirements to LLA under the audit law (Louisiana Revised Statute 24:513). LLA further expects the CPA to include in such a report a finding that provides a full explanation for the disclaimer of opinion.2 The two supplemental responses provided are, however, substantially lacking the “full explanation” mandated by the Legislative Auditors for the serious allegations being presented by KS&C. As with its other findings, these recent findings fail to cite any specific conditions present during the audit period that would have precluded KS&C from forming a conclusion. Therefore, as with the original findings, LPSB, on January 6, 2026, again requested that KS&C provide supporting evidence for its claim that it was unable to obtain “evidence regarding significant financial statement balances, transactions, and disclosures.” KS&C responded by stating that these new findings were based on Finding 16 - Invoices Paid Without Sufficient Supporting Detail (IC & C), Finding 26 - Management Override of Established Internal Controls (IC), Finding 31 - Unsupported Experience-Based Pay Increases (IC), and other undisclosed matters. Notably, none of these specific findings are instances where KS&C was prevented from forming a conclusion. To the contrary, the original findings identified by KS&C reflect otherwise. For instance, in Finding 16, KS&C notes it “tested 539 and identified 213 in which invoices were paid without sufficient documentation.” Despite KS&C’s assertions, LPSB has at no point failed to provide information to KS&C upon request (see Corrective Action sections below). In fact, KS&C issued 33 Findings, each purportedly substantiated by documentation. As stated in LPSB’s Response, a request was made by LPSB for KS&C to produce the referenced specific supporting documentation. However, KS&C declined to provide the documentation. Auditing standards stipulate: “Auditors should document supervisory review, before the report release date, of the evidence that supports the findings and conclusions contained in the audit report.”3 They further require: “Auditors should document any departures from the GAGAS requirements and the effect on the audit and on the auditors’ conclusions when the audit is not in compliance with applicable GAGAS requirements because of law, regulation, scope limitations, restrictions on access to records, or other issues affecting the audit.”4 Despite LPSB, in its Response and communications prior thereto pointing out erroneous references to the law and facts, KS&C refused to modify its findings. Instead, it introduced these two ambiguous Disclaimers of Opinion, alleging that LPSB failed to provide necessary information for KS&C to reach a conclusion. However, a cursory review of its original findings clearly reflect that KS&C did reach conclusions, which they assert were based upon conditions found during their investigation. Which is it? Are KS&C’s findings supported or not? KS&C’s ex post Disclaimers of Opinion not only misrepresent LPSB’s cooperation and full disclosure of information, but they are also predicated upon the unfounded assertion that LPSB’s “representations, including written representations required under auditing standards, could not be relied upon due to concerns regarding the reliability of management representations.” After 33 years of engagement with LPSB audits, KS&C has now made the unwarranted claim that LPSB’s representations are unreliable, without pointing to a specific instance of unreliability. Ironically, it is the auditor’s own representations that are demonstrated to be unreliable, as evidenced by the submission of these two vague and contradictory Disclaimers of Opinion. “[A] CPA cannot enter into the engagement with a pre-conceived notion that the local auditee is doing everything wrong. Going into an engagement with [this] attitude impairs the independence of the CPA firm.” The two findings, submitted after LPSB responded to its original findings, do not meet the standards set forth in the Louisiana Governmental Audit Guide. They contradict the original findings, misrepresent LPSB’s cooperation throughout the audit, insert slanderous statements as to the reliability of LPSB’s representations, and fail to provide a full explanation for the disclaimer of opinion. KS&C should remove these findings from its report. 1 LGAG 400-1160, Types of Auditor’s Opinions 2 LGAG 400-1160, Types of Auditor’s Opinions 3 GAO-24, Sections 6.31 (emphasis added) 4 GAO-24, Sections 6.32 B. CORRECTIVE ACTION Prior to the financial audit, Lafayette Parish School Board (LPSB) staff prepared reports and documentation for at least 185 requests that were made by the external auditors. These requests consisted of, but were not limited to, all General Ledger data and information on all Major and Non Major Funds (i.e. General Fund, Construction Funds, Debt Service Funds, and Special Revenue funds), worksheets, personnel records, copies of checks, copies of invoices, grant reimbursement requests, expenditure detail reports, capital asset data and reports, accounts payable data and reports, the type of computer equipment used (including the software and operating systems), construction related documents, copies of contracts, insurance invoices, schedules of judgments and agreements, check registers, calendars, securities pledged, accounts payable details, financial statements, schedule of construction contracts, retirement reports, listing of new hires, purchase orders, check requests, financial reconciliations, sales tax reports and documents, other insurance related documents, insurance policies, monitoring reports, AFR report, arbitrage documentation, copies of deposits receipts, copies of budgets, outstanding checks, revenue reports, expenditure reports, and balance sheet reports. Under the Department of Education agreed upon procedures audit, LPSB staff provided Class size data, PEP data and a user guide. Under the Statewide Agreed Upon procedure, LPSB staff provided proof of required trainings such as ethics, bond insurance policies, list of all bank accounts, a listing of employees, officials employed during the year, and a list of deposit and collection sites. Other requests from our external auditors may come via email throughout the audit process and responses are provided likewise. All of the items listed above, and other items that were not listed above, are routinely provided each year. For several decades this has been the standard and nothing has changed in terms of provided supporting documentation within this particular audit. Internal controls have been in place for many decades. The external auditors have been reviewing, studying and auditing our internal controls for three decades. Over the years, LPSB internal controls have been adjusted, strengthened or heighten to prevent operational deficiencies, fraud and/or non-compliance of which the auditors have contributed to its advancement. Substantially, there has been no change to internal controls as they are in place for a reason. Systematically, internal controls are planted and executed in various areas and departments for various functions and/or lawful requirements. The biggest threats to any organization are misappropriation or improper disbursement of funds. Neither have occurred, because internal controls such as the utilization of electronic requisitions and check request processes were in place to ensure goods and services were precured properly and vendor payments were substantiated. LPSB stands by its management representations that have been provided to the auditors. We acknowledge our responsibility for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In addition to supporting documentation, the external auditors had complete access to our financial software to ascertain the completeness and accuracy of our financial records. Auditor’s Response The School Board’s response to this finding contains statements and characterizations that are inconsistent with the audit evidence obtained and the procedures performed. The auditor stands by the condition, criteria, cause, and effect as presented in the finding, which are based on documentation, observations, interviews, and other information available during the audit. Management’s response has not resulted in any change to the finding or the auditor’s conclusions.

Condition During our audit of the School Board’s financial statements for the year ended June 30, 2025, we encountered circumstances that imposed pervasive limitations on the scope of our audit. Specifically: • We were unable to obtain sufficient appropriate audit evidence regarding significant financial statement balances, transactions, and disclosures. • Accounting records and supporting documentation necessary to perform audit procedures were incomplete, unavailable, or unreliable. • Management representations, including written representations required under auditing standards, could not be relied upon due to concerns regarding the reliability of management representations. • These conditions, combined with the risk that management could override internal controls, further limited our ability to obtain evidence that financial reporting was complete and accurate. In addition, these same conditions prevented us from performing required audit procedures over the School Board’s federal programs, including testing of internal control over compliance and compliance with applicable federal statutes, regulations, and terms and conditions of federal awards. As a result, we were unable to obtain sufficient appropriate audit evidence to support an opinion on compliance for each major federal program. Criteria Uniform Guidance (2 CFR §200.303 and §200.514) requires non-federal entities to establish and maintain effective internal control over federal programs and to provide auditors with access to records and personnel necessary to perform a Single Audit. Uniform Guidance §200.516 requires auditors to report material weaknesses and noncompliance when identified. Cause The conditions described above resulted from inadequate recordkeeping and documentation practices, deficiencies in internal control over financial reporting, and management actions and behaviors that restricted the auditor’s ability to obtain reliable audit evidence and representations. These conditions directly impaired the auditor’s ability to perform planned audit procedures and obtain sufficient appropriate audit evidence. These conditions affected both financial reporting and compliance with federal program requirements. Effect Because of these pervasive limitations and the risk of management override, we were unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. The potential effects on the financial statements are both material and pervasive, and therefore we issued a disclaimer of opinion on the School Board’s financial statements for the year ended June 30, 2025. For the same reasons, we were also unable to obtain sufficient appropriate audit evidence to support an opinion on compliance for each of the School Board’s major federal programs and on internal control over compliance. Accordingly, we disclaimed an opinion on compliance for each major federal program under the Single Audit. Context Questioned costs could not be determined due to the disclaimer of opinion. Recommendation We recommend that the School Board take immediate action to strengthen its internal control environment. Specifically, management should: • Ensure that all accounting records and supporting documentation are complete, accurate, and readily available. • Enforce oversight of financial reporting and internal control procedures. • Promote transparency, accountability, and cooperation with auditors to facilitate future audits. • Implement measures to mitigate the risk of management override, including additional supervisory review, approval requirements, and segregation of duties. • Ensure compliance documentation for federal programs is complete, accurate, and available for audit. Views of Responsible Officials and Planned Corrective Action A. OBJECTION On December 29, 2025, following LPSB’s submission of its Response to the Draft Findings of Kolder, Slaven, and Company, LLC (“KS&C”) relating to its 2024-2025 Annual Audit, LPSB received two additional findings characterized as Disclaimers of Opinion. The issuance of these post-response Disclaimers of Opinion regarding the findings highlights KS&C’s apparent lack of objectivity and its failure to adhere to generally accepted government auditing standards in conducting the 24-25 audit. A Disclaimer of Opinion “is expressed when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive.”1 According to LLA, “a local auditee that provides for an audit report with a disclaimer of opinion” is regarded as being in noncompliance with its reporting requirements to LLA under the audit law (Louisiana Revised Statute 24:513). LLA further expects the CPA to include in such a report a finding that provides a full explanation for the disclaimer of opinion.2 The two supplemental responses provided are, however, substantially lacking the “full explanation” mandated by the Legislative Auditors for the serious allegations being presented by KS&C. As with its other findings, these recent findings fail to cite any specific conditions present during the audit period that would have precluded KS&C from forming a conclusion. Therefore, as with the original findings, LPSB, on January 6, 2026, again requested that KS&C provide supporting evidence for its claim that it was unable to obtain “evidence regarding significant financial statement balances, transactions, and disclosures.” KS&C responded by stating that these new findings were based on Finding 16 - Invoices Paid Without Sufficient Supporting Detail (IC & C), Finding 26 - Management Override of Established Internal Controls (IC), Finding 31 - Unsupported Experience-Based Pay Increases (IC), and other undisclosed matters. Notably, none of these specific findings are instances where KS&C was prevented from forming a conclusion. To the contrary, the original findings identified by KS&C reflect otherwise. For instance, in Finding 16, KS&C notes it “tested 539 and identified 213 in which invoices were paid without sufficient documentation.” Despite KS&C’s assertions, LPSB has at no point failed to provide information to KS&C upon request (see Corrective Action sections below). In fact, KS&C issued 33 Findings, each purportedly substantiated by documentation. As stated in LPSB’s Response, a request was made by LPSB for KS&C to produce the referenced specific supporting documentation. However, KS&C declined to provide the documentation. Auditing standards stipulate: “Auditors should document supervisory review, before the report release date, of the evidence that supports the findings and conclusions contained in the audit report.”3 They further require: “Auditors should document any departures from the GAGAS requirements and the effect on the audit and on the auditors’ conclusions when the audit is not in compliance with applicable GAGAS requirements because of law, regulation, scope limitations, restrictions on access to records, or other issues affecting the audit.”4 Despite LPSB, in its Response and communications prior thereto pointing out erroneous references to the law and facts, KS&C refused to modify its findings. Instead, it introduced these two ambiguous Disclaimers of Opinion, alleging that LPSB failed to provide necessary information for KS&C to reach a conclusion. However, a cursory review of its original findings clearly reflect that KS&C did reach conclusions, which they assert were based upon conditions found during their investigation. Which is it? Are KS&C’s findings supported or not? KS&C’s ex post Disclaimers of Opinion not only misrepresent LPSB’s cooperation and full disclosure of information, but they are also predicated upon the unfounded assertion that LPSB’s “representations, including written representations required under auditing standards, could not be relied upon due to concerns regarding the reliability of management representations.” After 33 years of engagement with LPSB audits, KS&C has now made the unwarranted claim that LPSB’s representations are unreliable, without pointing to a specific instance of unreliability. Ironically, it is the auditor’s own representations that are demonstrated to be unreliable, as evidenced by the submission of these two vague and contradictory Disclaimers of Opinion. “[A] CPA cannot enter into the engagement with a pre-conceived notion that the local auditee is doing everything wrong. Going into an engagement with [this] attitude impairs the independence of the CPA firm.” The two findings, submitted after LPSB responded to its original findings, do not meet the standards set forth in the Louisiana Governmental Audit Guide. They contradict the original findings, misrepresent LPSB’s cooperation throughout the audit, insert slanderous statements as to the reliability of LPSB’s representations, and fail to provide a full explanation for the disclaimer of opinion. KS&C should remove these findings from its report. 1 LGAG 400-1160, Types of Auditor’s Opinions 2 LGAG 400-1160, Types of Auditor’s Opinions 3 GAO-24, Sections 6.31 (emphasis added) 4 GAO-24, Sections 6.32 B. CORRECTIVE ACTION Prior to the financial audit, Lafayette Parish School Board (LPSB) staff prepared reports and documentation for at least 185 requests that were made by the external auditors. These requests consisted of, but were not limited to, all General Ledger data and information on all Major and Non Major Funds (i.e. General Fund, Construction Funds, Debt Service Funds, and Special Revenue funds), worksheets, personnel records, copies of checks, copies of invoices, grant reimbursement requests, expenditure detail reports, capital asset data and reports, accounts payable data and reports, the type of computer equipment used (including the software and operating systems), construction related documents, copies of contracts, insurance invoices, schedules of judgments and agreements, check registers, calendars, securities pledged, accounts payable details, financial statements, schedule of construction contracts, retirement reports, listing of new hires, purchase orders, check requests, financial reconciliations, sales tax reports and documents, other insurance related documents, insurance policies, monitoring reports, AFR report, arbitrage documentation, copies of deposits receipts, copies of budgets, outstanding checks, revenue reports, expenditure reports, and balance sheet reports. Under the Department of Education agreed upon procedures audit, LPSB staff provided Class size data, PEP data and a user guide. Under the Statewide Agreed Upon procedure, LPSB staff provided proof of required trainings such as ethics, bond insurance policies, list of all bank accounts, a listing of employees, officials employed during the year, and a list of deposit and collection sites. Other requests from our external auditors may come via email throughout the audit process and responses are provided likewise. All of the items listed above, and other items that were not listed above, are routinely provided each year. For several decades this has been the standard and nothing has changed in terms of provided supporting documentation within this particular audit. Internal controls have been in place for many decades. The external auditors have been reviewing, studying and auditing our internal controls for three decades. Over the years, LPSB internal controls have been adjusted, strengthened or heighten to prevent operational deficiencies, fraud and/or non-compliance of which the auditors have contributed to its advancement. Substantially, there has been no change to internal controls as they are in place for a reason. Systematically, internal controls are planted and executed in various areas and departments for various functions and/or lawful requirements. The biggest threats to any organization are misappropriation or improper disbursement of funds. Neither have occurred, because internal controls such as the utilization of electronic requisitions and check request processes were in place to ensure goods and services were precured properly and vendor payments were substantiated. LPSB stands by its management representations that have been provided to the auditors. We acknowledge our responsibility for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In addition to supporting documentation, the external auditors had complete access to our financial software to ascertain the completeness and accuracy of our financial records. Auditor’s Response The School Board’s response to this finding contains statements and characterizations that are inconsistent with the audit evidence obtained and the procedures performed. The auditor stands by the condition, criteria, cause, and effect as presented in the finding, which are based on documentation, observations, interviews, and other information available during the audit. Management’s response has not resulted in any change to the finding or the auditor’s conclusions.

Criteria or specific requirement: Per Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200) Subpart D, Post Federal Award Requirements Section 200.303, Internal controls, the recipient must establish, document and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Per 2 CFR Part 200, Subpart E, Cost Principles, the accounting practices of the recipient must be consistent with the cost principles and support the accumulation of costs as required by the cost principles, including maintaining adequate documentation to support costs charged to the Federal award. Condition: The District claimed expenditures that did not have adequate supporting documentation, such as invoices, receipts, purchase orders and proof of payment. Cause: The District's internal controls over compliance were not functioning effectively to ensure reimbursements were claimed for only actual expenditures incurred and supported by adequate documentation. Effect: The District was not in compliance with the allowable costs/cost principles compliance requirement. Questioned Costs: The following questioned costs were computed based on differences between the amounts claimed for reimbursement by the District and its expenditure accounting records: $1,185 (Project No. 24-4300-00) $10,423 (Project No. 25-4331-00) Context: The condition noted was identified upon reconciling reimbursements claimed by the District to the general ledger accounts in which related expenditures were recorded and investigation of differences identified. Recommendation: We recommend the District strengthen internal controls to ensure all expenditures charged to federal programs are supported by proper documentation prior to being submitted for reimbursement. Documentation should be retained in accordance with federal record retention requirements. Management's response: The District agrees with the auditor's finding and recommendation.

Criteria or specific requirement :Per Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200) Subpart D, Post Federal Award Requirements Section 200.303, Internal controls, the recipient must establish, document and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. The requirements for activities allowed or unallowed are contained in program legislation, federal awarding agency regulations, and the terms and conditions of the award. Condition: The District incurred program expenditures that were not charged in accordance with the approved grant budget. Cause: The District's internal controls over compliance were not functioning effectively to ensure program expenditures were compliant with the activities allowed or unallowed compliance requirement. Effect: The District was not in compliance with the activities allowed or unallowed compliance requirement. Questioned Costs:The following questioned costs were computed based on exceptions identified in the activities allowed or unallowed compliance testing performed: $10,016 (Project No. 25-4300-00) Context: From the population of non-payroll expenditures totaling $1,230,248, a sample of forty (40) transactions totaling $123,816 were selected for testing, from which two (2) transactions totaling $10,016 were considered exceptions. A statistically valid sample was not utilized. Recommendation: We recommend that the District strengthen controls over expenditure coding and grant claiming processes by ensuring invoices are reviewed against the approved budget detail prior to claiming. This should include management review and periodic reconciliation of claimed expenditures to the grant budget. Management's response: The District agrees with the auditor's finding and recommendation.

Material Weakness in Internal Controls over Compliance and Noncompliance Condition: The Organization could not provide documentation to support that personnel costs were charged to the federal awards based on actual costs and time spent on the federal program. Criteria: Per §200.430(g)(1) of the Code of Federal Regulations, charges to Federal awards for personnel costs must be based on records that accurately reflect the work performed. These records must support the distribution of employees’ salary among specific activities or cost objectives and must not exceed the actual time worked. Per § 200.303 of the Code of Federal Regulations, recipients must establish, document, and maintain internal controls over Federal awards that provides reasonable assurance that the recipient is managing the Federal Award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: Due to staff transitions during the year, the Organization could not provide documentation to support the amount of personnel costs charged to federal awards. While staff reported time spent on work performed under the federal awards, no review of the reported time was documented and no allocation documentation could be provided to trace the amount of personnel costs charged to federal awards to the time reported by staff. Effect: Federal expenditures on the Schedule of Federal Awards (SEFA) could be overstated resulting in noncompliance with federal cost principles and unallowable cost. Context: During our testing of payroll transactions charged to the federal program, we selected a sample of four out of 26 payroll periods to test. In all four payroll periods tested, the amount charged to the federal program could not be supported by documentation of actual personnel costs incurred for time spent on program activities. Documentation of the review of time spent on program activities reported by staff also could not be provided. Questioned costs total $436,615, which is the total amount of personnel costs reported under the major program grants for the year. Recommendation: We recommend the Organization implement written policies and procedures to ensure that payroll charges to federal awards are based on actual costs incurred. Employees should prepare time and effort documentation reflecting actual hours worked on the federal program activities for each payroll period. This documentation should be reviewed, and evidence of this review should be maintained. This documentation should be used to determine the amount of personnel costs to charge to the federal award, and documentation of this allocation should be maintained. Views of Responsible Officials: Management agrees with the finding.

Material Weakness in Internal Controls over Compliance Condition: During our testing of matching, level of effort, and earmarking, it was noted the Organization did not perform or document required controls over matching, level of effort, and earmarking requirements. Criteria: Per § 200.303 of the Code of Federal Regulations, recipients must establish, document, and maintain internal controls over Federal awards that provides reasonable assurance that the recipient is managing the Federal Award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: Controls to document proper tracking of matching, level of effort, and earmarking were not implemented by the Organization. The responsibility for oversight along with monitoring activities was not documented. Effect: Failure to establish, document, and maintain internal controls increases the risk that federal funds may not be used in accordance with applicable laws and regulations, potentially resulting in noncompliance with program requirements. Context: During our testing of matching, level of effort, and earmarking requirements, no evidence of controls over the compliance requirement could be provided. Recommendation: We recommend the Organization develop and implement formal documented monitoring procedures to ensure accuracy and track compliance with matching, level of effort, and earmarking requirements. Views of Responsible Officials: Management agrees with the finding.

2025 – 001 Federal Agency: U.S. Department of Agriculture Federal Program Name: Child and Adult Care Food Program Assistance Listing Number: 10.558 Federal Award Identification Number and Year: 142607000-2025 Pass-Through Agency: State of Arizona Department of Education Award Period: 07/01/2024 – 06/30/2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Per 2 CFR 200.303(a), WACOG must establish and maintain effective internal control over the Federal award. WACOG Finance Policies & Procedures requires periodic vendor due diligence, including evaluation of multiple prequalified contractors and confirmation of suspension and debarment status, to ensure compliance with procurement standards and eligibility requirements. Condition: Per WACOG Finance Policies & Procedures, the entity is required to perform vendor due diligence at least once every three years. Due diligence procedures include, at a minimum, (1) evaluation of at least two pre-qualified contractors and (2) verification that vendors are not suspended or debarred. For the single vendor tested, sufficient documentation and support for evidence of vendor due diligence was not furnished. Questioned costs: No questioned costs noted. Context: WACOG utilized cooperative contracts and external vendors to support program operations during the audit period. Per WACOG Finance Policies & Procedures, vendors used by the entity are subject to periodic due diligence requirements designed to ensure continued eligibility and compliance with procurement standards. These procedures are intended to be performed at least once every three years and documented to support ongoing vendor use. Cause: Program management encountered internal changes and due diligence procedures were performed informally, resulting in supporting documentation not being retained in a central or systematic manner. Effect: WACOG is not in compliance with its established procurement policies related to vendor due diligence and suspension and debarment requirements. Failure to document these procedures increases the risk of continued engagement with ineligible vendors and noncompliance with internal control expectations. Repeat Finding: No. Recommendation: WACOG should enhance internal procedures related to the continued review and monitoring of vendors used under cooperative contracts. Management should implement standardized checklists and maintain a centralized repository for documenting vendor due diligence activities, including prequalification evaluations and suspension and debarment verifications. Views of responsible officials: There is no disagreement with the audit finding.

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

8. Criteria or specific requirement Per Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200) Subpart D, Post Federal Award Requirements Section 200.303(a), Internal controls, the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per the Frequently Asked Questions, Elementary and Secondary School Emergency Relief Programs (ESSER), Governor's Emergency Education Relief (GEER) Programs, December 7, 2022 Update, a local educational authority has until September 30, 2024 to obligate the American Rescue Plan (ARP) ESSER funds it received and ESSER funds must be liquidated within 120 calendar days after the end of the performance period. The original liquidation period applicable to the District for its ARP ESSER funds was January 28, 2025. The U.S. Department of Education approved extension of the District's liquidation period through March 28, 2026 for funds obligated on or before September 30, 2024. On March 28, 2025, the U.S. Department of Education modified the liquidation period extension to end on March 28, 2025. On May 6, 2025, the liquidation period was extended to May 24, 2025 per a preliminary injunction entered by the U.S. District Court for the Southern District of New York as a result of litigation initiated by the State of New York challenging the U.S. Department of Education's revocation of the March 28, 2026 liquidation period extension. On June 26, 2025, the U.S. Department of Education ultimately reinstated the March 28, 2026 liquidation period extension. 9. Condition On May 15, 2025, ISBE communicated to the District that ARP ESSER recipients had until May 24, 2025 to liquidate obligations and that the District needed to submit its expenditure report to ISBE by May 21, 2025 for ISBE to process and submit to the U.S. Department of Education by the new deadline. On May 21, 2025, the District submitted a claim for reimbursement of expenditures totaling $4,343,814. The expenditures comprising this claim by date incurred and liquidated were as follows: $1,668,710 incurred through May 21, 2025 and liquidated as of that date $31,692 incurred through May 21, 2025 but not liquidated as of that date $325,805 incurred from May 21, 2025 through June 30, 2025 and liquidated as of June 30, 2025 $531,321 incurred from May 21, 2025 through June 30, 2025 but not liquidated as of June 30, 2025 $1,786,286 incurred after June 30, 2025 At May 21, 2025 and June 30, 2025, expenditures totaling $2,675,104 and 2,349,299, respectively, out of the $4,343,814 claimed for reimbursement were not incurred, not liquidated or both and, therefore, did not qualify for reimbursement based on the Federal statutes, regulations and the terms and conditions of the Federal award in effect at those dates. 10. Cause The District's established internal controls over compliance were able to be overridden. '11. Effect The District was not in compliance with the activities allowed or unallowed compliance requirement. 12. Questioned Costs The District's expenditures claimed for reimbursement but not incurred and liquidated as of June 30, 2025 were not reported in the schedule of expenditures of federal awards for the year ended June 30, 2025. These expenditures will be reported in the schedule of expenditures of federal awards when both incurred and liquidated in the year ending June 30, 2026. Accordingly, no questioned costs have been identified. '13. Context The population of sixty-four (64) expenditures comprising the May 21, 2025 claim for reimbursement totaling $4,343,814 were identified as high risk and all were selected for tested to determine the elements of the finding reported herein. However, our sample of thirteen (13) expenditure transactions selected from throughout the year for testing resulted in no identified exceptions. A statistically valid sample was not utilized. 14. Recommendation We recommend that management review its policies and procedures and implement changes to strengthen internal control over compliance. 15. Management's response The District agrees with the auditor's finding and recommendation.

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4374, 2021 Pass-Through Agency: Iowa Economic Development Authority Pass-Through Number: 23-INIA-023 Award Period: September 14, 2022 – September 30, 2026 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Section 200.303 requires entities to establish and maintain effective internal controls over Federal Awards. Condition: During our testing we noted internal controls over expenditures were not properly followed. Questioned Costs: None Context: During our testing we noted construction pay applications from March 2023 – August 2023 did not have documented review. Cause: Project Manager was not in place prior to September 2023 to properly review pay applications. Effect: The auditor noted no instances of noncompliance with the allowability of costs or support for costs; the lack of internal controls over expenditures provides an opportunity for noncompliance. Repeat Finding: Yes, 2024-003 Recommendation: We recommend the Organization ensure proper review and approval over expenditures. Views of Responsible Officials: There is no disagreement with the finding.

Federal agency: Department of Housing and Urban Development Federal program title: Continuum of Care Program FALN Number: 14.267 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: September 1, 2023 – August 31, 2024; September 1, 2024- August 31, 2025. Type of Finding: Significant Deficiency in Internal Control over Compliance and Immaterial Noncompliance Criteria or specific requirement: 2 CFR § 200.303 requires recipients and subrecipients to establish, document, and maintain effective internal controls over Federal awards, aligned with the COSO Internal Control–Integrated Framework. Condition: The Organization could not provide documentation that certain rent reasonableness checks were done for selected clients. Questioned costs: None Context: This condition impacted three (3) of nine (9) checklists selected for testing. Cause: Oversight. Effect: The Organization could pay rent on behalf of a client that is 1) unreasonable in relation to rents being charged in the area of comparable unassisted units or 2) in excess of the HUD-determined fair market rate. Repeat Finding: No Recommendation: We recommend program managers verify that rent reasonableness checklists and certifications are fully completed by HUD staff. Views of responsible officials: There is no disagreement with the audit finding.

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. This includes the enrollment effective date and related enrollment status, which must be reported for both the Campus-Level and the Program-Level, as well as the program begin date. 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. In addition, 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. Condition: There were instances in which the status changes were not always reported timely, the program enrollment effective date did not match institutions records, and the program enrollment status did not match institutions records. In addition, the College did not have a control in place to ensure timely and accurate reporting to NSLDS. Questioned costs: None. Context: In our sample of sixty student's selected for National student's Loan Data System (NSLDS) enrollment reporting testing, we identified one student's enrollment status did not match the enrollment status reported in NSLDS, twelve student's enrollment effective dates did not match those reported in NSLDS, fifteen student's enrollments were not reported to NSLDS in a timely manner, seven student's program enrollment effective dates did not match institutional records and, three student's program enrollment statuses that did not match institutional records. Additionally, there was no control in place to ensure timely and accurate reporting to NSLDS. Cause: The College did not have proper controls or procedures in place to verify students' status in NSLDS matched the institution’s records in a timely manner. Effect: Failure to properly report enrollment status changes on NSLDS could affect the timing of the grace period for repayment of Title IV loans. Additionally, the College was not in compliance with the requirements to properly report student enrollment data correctly or timely to NSLDS. Repeat Finding: Yes, 2024-003. Recommendation: We recommend the College implement changes in process and procedures for NSLDS enrollment reporting and implement an internal control that ensures reporting is both timely and accurate. Views of responsible officials: There is no disagreement with the audit finding.

Criteria or specific requirement: The Department of Education requires the College to report the disbursement dates and amounts to the Common Origination and Disbursement (COD) system within 15 days of disbursing Pell (34 CFR 690.83(b)(2) and Direct Loan (34 CFR 685.309) funds to a student. In addition, per the Uniform Guidance 2 CRF 200.303, non-federal 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: During our testing of COD reporting, we were not able to test a control that ensures timely and accurate reporting to COD. Questioned costs: None. Context: We did not note evidence of a key control occurring for COD disbursement reporting. Cause: The College did not maintain documentation of a control in place to ensure timely and accurate reporting to COD. Effect: A lack of timely reporting may prevent the College and other schools from having the most accurate student information which may lead to over awards. Repeat Finding: Yes, 2024-005. Recommendation: We recommend the College evaluate its policies and procedures around reporting to COD to ensure that information is reported accurately and timely and to retain evidence of the key control having occurred. Views of responsible officials: There is no disagreement with the audit finding.

Finding Number: 2025-001 Program: Community Development Block Grant (CDBG) ALN #: 14.218 Pass-through Entity: N/A- Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Year: July 1, 2024–June 30, 2025 Compliance Requirement: Performance Reporting Type of finding: Material weakness and noncompliance Criteria Special Reporting for Federal Funding Accountability and Transparency Act Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No.109-282), as amended by Section 6202 of Public Law 110-252, herein referred to as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. Title 2 US Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 200.1 defines subaward as an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. Further, 2 CFR 200.1 defines subrecipient as a nonfederal entity that receives a subaward from a passthrough entity to carry out part of a federal program but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency. Lastly, 2 CFR 200.303(a) states, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 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 City’s Community Development Department (CDBG) did not report awards granted to subrecipients for the CDBG program by the end of the month following the month in which the City awarded the subrecipient award. FFATA requires the City to report certain identifying information related to awards made to subrecipients in amounts greater than or equal to $30,000. Of the information to be reported, the following key data elements are required to be audited: 1. Subawardee name 2. Subawardee DUNS/UEI number 3. Amount of subaward 4. Subaward obligation/action date 5. Date of report submission 6. Subaward number 7. Subaward project description 8. Subawardee names and compensation of highly compensated officers During our testing, we noted that the City did not establish control procedures to submit FFATA reports for all subawards as required by federal regulations. Cause The condition found was due to the City not reporting amounts passed through to subrecipients for the period from July 2024 to June 2025 within the required time after the award is granted to the subrecipient. Proper perspective During our testing of the three selected subawards, we noted reporting exceptions as subawards were not reported within the one month following the month that the City awarded the subrecipient contract. Additionally, there was a control exception to ensure that the data submitted is complete and accurate.Possible asserted effect Failure to submit subaward amounts passed through to subrecipients and subcontractors under subawards as defined by 2 CFR 200.1 in the City’s FFATA reporting could result in the City reporting inaccurate and incomplete amounts to the federal government. Questioned costs None noted Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2024-002 Recommendation We recommend that the City continue to review and enhance their policies, procedures, and internal controls to ensure that all amounts passed through to subrecipients under subawards, as defined in 2 CFR 200.1 are reported in accordance with the FFATA federal regulations. In addition, we recommend that the City use obligation date for FFATA reporting. Views of responsible officials and corrective actions The City will continue strengthening its policies, procedures, and internal controls to ensure all subawards are reported in full compliance with FFATA. The City reported subawards using the subaward obligation date, which is the date the agreement is fully executed, rather than the July 1 performance start date. As a result, obligation dates varied depending on when each agreement is signed.

Finding Number: 2025-002 Program: Housing Opportunities for Persons with AIDS (HOPWA) ALN #: 14.241 Pass-through Entity: N/A- Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Year: July 1, 2024 – June 30, 2025 Compliance Requirement: Subrecipient Monitoring Type of finding: Material weakness and material noncompliance Criteria The 2 CFR sections 200.332(d) through (f) provide the principles to be applied to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. According to 2 CFR 200.303, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 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 City has not implemented the designed controls and procedures to ensure compliance with the following requirements: • Each subrecipients risk of noncompliance is appropriately evaluated and level of monitoring is determined. • Appropriate monitoring and review of the subrecipient based on their risk of noncompliance. • Ensure that subrecipients are not suspended or debarred prior to entering into a contract with the City. Cause The City does not have formal written policies, procedures, and internal controls in place to ensure that all required subrecipient monitoring procedures are performed.Proper perspective During our audit, we noted that four of the four subrecipients selected for testing did not have a completed risk assessment to determine their risk of noncompliance. As such, we were unable to determine that the proper level of monitoring was completed throughout the fiscal year over the contracted subrecipient. Additionally, there was no evidence that the City ensured the subrecipient was not suspended or debarred from working under a federal engagement prior to entering into the contract. Possible asserted effect Lack of effective controls over subrecipient monitoring could result in the City’s noncompliance with program requirements. Questioned costs None Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2024-003 Recommendation We recommend the City establish a checklist or formal documentation to assess each subrecipient and their risk of non compliance prior to entering into a formal contract. The City should then use this risk assessment to determine the level of monitoring that is required throughout the term of the contract. Views of responsible officials and corrective actions The City has established a Risk Assessment tool that rates each HOPWA subrecipient across nine factors: 1) award amount, 2) timeliness of reporting, 3) timeliness of invoicing, 4) quality of reporting, 5) program complexity, 6) staff capacity, 7) staff turnover, 8) management changes, and 9) grantee history. The City will use this tool to determine the appropriate level and frequency of monitoring for each subrecipient.

Finding Number: 2025-003 Program: Housing Opportunities for Persons with AIDS (HOPWA) ALN #: 14.241 Pass-through Entity: N/A- Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Year: July 1, 2024–June 30, 2025 Compliance Requirement: Reporting Type of finding: Material weakness and noncompliance Criteria Special Reporting for Federal Funding Accountability and Transparency Act Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No.109-282), as amended by Section 6202 of Public Law 110-252, herein referred to as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. Title 2 US Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 200.1 defines subaward as an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. Further, 2 CFR 200.1 defines subrecipient as a nonfederal entity that receives a subaward from a passthrough entity to carry out part of a federal program but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency. Lastly, 2 CFR 200.303(a) states, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 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 City’s Community Development Department did not report awards granted to subrecipients for the HOPWA program by the end of the month following the month in which the City awarded the subrecipient award. FFATA requires the City to report certain identifying information related to awards made to subrecipients in amounts greater than or equal to $30,000. Of the information to be reported, the following key data elements are required to be audited: 1. Subawardee name 2. Subawardee DUNS/UEI number 3. Amount of subaward 4. Subaward obligation/action date 5. Date of report submission 6. Subaward number 7. Subaward project description 8. Subawardee names and compensation of highly compensated officers During our testing, we noted that the City did not establish control procedures to submit FFATA reports for all subawards as required by federal regulations. Cause The condition found was due to the City not reporting amounts passed through to subrecipients for the period from July 2024 to June 2025 within the required time after the award is granted to the subrecipient. Proper perspective During our testing of four selected subawards, we noted reporting exceptions as subawards were not reported within the one month following the month that the City awarded the subrecipient contract. Additionally, there was a control exception to ensure that the data submitted is complete and accurate. Possible asserted effect Failure to submit subaward amounts passed through to subrecipients and subcontractors under subawards as defined by 2 CFR 200.1 in the City’s FFATA reporting could result in the City reporting inaccurate and incomplete amounts to the federal government. Questioned costs None Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2024-004 Recommendation We recommend that the City continue to review and enhance their policies, procedures, and internal controls to ensure that all amounts passed through to subrecipients under subawards, as defined in 2 CFR 200.1 are reported in accordance with the FFATA federal regulations. In addition, we recommend that the City use obligation date for FFATA reporting. Views of responsible officials and corrective actions The City will continue strengthening its policies, procedures, and internal controls to ensure all subawards are reported in full compliance with FFATA. The City reported subawards using the subaward obligation date, which is the date the agreement is fully executed, rather than the July 1 performance start date. As a result, obligation dates var depending on when each agreement is signed.

Finding Number: 2025-004 Program: Housing Opportunities for Persons with AIDS (HOPWA) ALN #: 14.241 Pass-through Entity: N/A- Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Year: July 1, 2024–June 30, 2025 Compliance Requirement: Performance Reporting Type of finding: Material weakness and material noncompliance Criteria Performance Reporting for the HOPWA Consolidated Annual Performance and Evaluation Report Per HUD, the Consolidated Annual Performance and Evaluation Report (CAPER) provides annual performance reporting on client outputs and outcomes that enables an assessment of grantee performance in achieving the housing stability outcome measure. The CAPER fulfills statutory and regulatory program reporting requirements and provides the grantee and HUD with the necessary information to assess the overall program performance and accomplishments against planned goals and objectives. Both HOPWA formula and competitive grantees submitting reports after January 1, 2023, must complete and submit the HUD-4155 “Consolidated APR/CAPER” (OMB number 2506-0133). HOPWA Formula Grantees that accept the supplemental funding authorized under the CARES Act should report on the use of supplemental grant funds in the same performance report as their use of entitlement funds. Both formula and competitive grantees are required to submit their completed HUD-4155 no later than 90 days after the close of their program or operating year. Competitive grantees have 120 days after the end of their grant’s last period of performance to submit the final HUD-4155. Grantees should be able to demonstrate that funds disbursed through federal financial systems are traceable in local accounts and accurately reported in Key Line Items in the HUD-4155. Lastly, 2 CFR 200.303(a) states, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 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 City does not have properly designed controls and documented procedures in place to ensure compliance with the following requirements: • CAPER report is submitted to HUD within 90 days of the end of the 12-month program year. • Review of subrecipient’s CAPER to ensure complete and accurate reporting over key line items. Cause Subrecipients are required to submit their individual CAPER reports to the City prior to the City submitting its report to HUD. The City has had difficulty in getting the subrecipients to comply with the CAPER reporting, which is primarily due to staffing issues at the subrecipients. As a result, the City did not submit its CAPER to HUD within the required time-frame. Proper perspective The City failed to submit the CAPER that covers the period from July 1, 2023 to June 30, 2024 to HUD by the September 30, 2024 deadline. The City ultimately submitted the CAPER on February 28, 2025. Additionally, for four of four subrecipients selected for testing, the City was unable to provide documentation that the subrecipients’ CAPER reconciled to the Integrated Disbursement and Information System (IDIS) or the City’s general ledger system. Possible asserted effect Incomplete or inaccurate information from its subrecipients has resulted in the City’s inability to properly comply with HUD’s CAPER reporting requirements. Questioned costs Not determinable Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2024-005 Recommendation We recommend that the City establish policies, procedures, and internal controls to ensure that all subrecipient CAPER reports are reconciled to the IDIS system and submitted to HUD within 90 days of year-end. Views of responsible officials and corrective actions The Audit, while investigating FY25 programs and activities, assessed the FY24 HOPWA CAPER, which was delivered to HUD past its due date. For the FY25 CAPER, a submission by nature of general reporting timelines occurs in FY26, was completed by the grantees on time and submitted to the City on time, including certain specific revisions and corrections, and was delivered to and accepted by HUD by the required submission deadline. The City expects future CAPERs to be submitted in a timely manner as grantees successfully adapted to the new Excel based reporting format.

Finding Number: 2025-005 Program: Coronavirus State and Local Fiscal Recovery Funds ALN #: 21.027 Pass-through Entity: N/A- Direct Award Federal Agency: U.S. Department of Treasury Federal Award Year: July 1, 2024–June 30, 2025 Compliance Requirement: Subrecipient Monitoring Type of finding: Material weakness and material noncompliance Criteria The 2 CFR sections 200.332(d) through (f) provide the principles to be applied to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. According to 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 nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City does not have effective controls in place to ensure compliance with the following requirements: • Each subrecipients risk of noncompliance is appropriately evaluated and level of monitoring is determined. • Verification and review that subrecipients are audited as required when they are expected to exceed the threshold for having a single audit. • All required elements of the subrecipient contracts are included during execution. Cause The City’s lack of effective internal controls which caused the following noncompliance and control exceptions.Proper perspective During the audit, we noted that six of the nine subrecipient selections did not contain all the required elements of the contract. Additionally, for nine of the nine selections, the City did not complete a risk assessment or conclude on the subrecipient's risk of noncompliance. We also noted that for two of the subrecipients that required a single audit, there was no evidence to support the nature and extent of the City's review of those audit reports. Therefore, we were unable to determine, based on the subrecipient's risk assessment and single audit reports, the proper level of monitoring procedures to be performed. Possible asserted effect Lack of effective controls over subrecipient monitoring could result in the City’s noncompliance with program requirements. Questioned costs None Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding Yes, 2024-009 Recommendation We recommend the City establish a checklist or formal documentation requirements for both risk assessments and review of single audit report procedures. Employees can complete these checklists when obtaining and reviewing the documentation. The City should then conclude on and document the subrecipient’s risk of noncompliance based on the checklist to ensure the proper level of monitoring occurs throughout the year. Views of responsible officials and corrective actions The city already established a well-designed internal control manual of policies and procedures over the ARPA grant's full cycle grant management, as well as various templates to evaluate the subrecipients' risks and monitoring their performances. In FY26, the city will implement its internal control by conducting timely subrecipient monitoring activities with signed documents

Finding 2025-001: The Corporation for National and Community Service – Foster Grandparent/Senior Companion Cluster – ALN 94.011 and 94.016 – Significant Deficiency – Controls over Stipend Allocations Criteria: AmeriCorps Foster Grandparent Program guidelines limit stipends charged to the grant to $4.00 per hour, with any excess required to be funded by non-Federal sources. Internal controls must ensure that costs charged to Federal awards are allowable and properly allocated (2 CFR 200.303, 200.403, 200.405). Condition: We noted that volunteer stipends of $5.00 per hour were initially allocated to the AmeriCorps program. The portion in excess of the allowable allocation was removed and funded with non-Federal sources. Cause: Controls were not sufficient to ensure stipend rates were reviewed for compliance before being charged to the grant. Effect: Without proper review, unallowable costs may be charged to the AmeriCorps program and go undetected. Context: For the 18 out of 26 stipends tested, the allocation rate was not correct. Recommendation: Strengthen controls to ensure stipend rates are reviewed for compliance with AmeriCorps limits before allocation to the Federal award. Views of Responsible Officials: Management acknowledges the finding and agrees with the recommendation. Once notified of the stipend rate issue, management immediately corrected the allocation and ensured the unallowable portion was funded with non-Federal resources. To prevent future occurrences, SoFIA Management has reinforced controls by (1) requiring a compliance review of stipend rates before charging costs to the AmeriCorps award, (2) updating written procedures to reflect stipend limits, and (3) providing further training to program and finance staff. These measures will ensure that only allowable stipend costs are charged to the Federal program going forward. We are committed to maintaining strong fiscal controls and ensuring full compliance with all federal grant requirements.

Federal Agency: United States Department of Education Federal Program Name: Special Education Cluster (IDEA programs) Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number and Year: H027A240064-2024; H173A240070-2024 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number(s): 2025 - 403619 - DPI - YIPPE – 342, 2025-403619-DPI-FLOW-341, 2025-403619-DPI-FLOW-341, 2025 - 403619 - DPI - FNC – 342, 2025-403619-DPI-ELIMG-348, 2025-403619-DPI-ELTAI-348, 2025-403619-DPI-PRESCH-347 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: In accordance with 2 CFR 200.303(a), the District must establish and maintain effective internal control over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. In accordance with 2 CFR 200.430(h), costs charged to federal awards must be incurred during the approved budget period as defined in the grant agreement. Condition: For one (1) of the 40 payments to vendors selected for testing, the District did not correctly allocate the cost to the proper grant period. This sample was not statistically valid. Questioned costs: Cost in the amount of $29,850 were identified as being related to periods outside the grants award period. Context: One instance of a payment to a vendor related to services that will provide benefit during the subsequent fiscal year were accrued to the fiscal year and grant period under audit. Cause: From 2023 through 2025, the District experienced substantial turnover within the finance department, including management positions. Individuals in these roles lacked the necessary skills, knowledge, and experience to oversee day-to-day operations, resulting in controls not operating effectively to ensure proper classification of vendor payments by applicable grant period and fiscal year. Effect: This resulted in amounts claimed for reimbursement that did not meet eligibility requirements for reimbursement from the grant award. Repeat Finding: No Recommendation: We recommend the District implement controls that allow for the identification and proper classification of vendor payments to applicable grant period. Views of responsible officials: There is no disagreement with this finding.

Federal Agency: United State Department of Education Federal Program Name: Title II, Part A – Supporting Effective Instruction State Grants Special Education Cluster (IDEA) Title I A – Grants to Local Educational Agencies Assistance Listing Number: 84.367 84.027, 84.173 84.010 Federal Award Identification Number and Year: S367A240047-2024 H027A240064-2024, H173A240070-2024 S010A240049-2024 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number(s): 2025 - 403619 - DPI - YIPPE - 342, 2025-403619-DPI-FLOW-341, 2025-403619-DPI-FLOW-341, 2025 - 403619 - DPI - FNC - 342, 2025-403619-DPI-ELIMG-348, 2025-403619-DPI-ELTAI-348, 2025-403619-DPI-PRESCH-347, 2025-403619-DPI-TI-A-141 Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: In accordance with 2 CFR 200.303(a), the District must establish and maintain effective internal control over the federal award that provides reasonable assurance that the District entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. In accordance with 2 CFR 200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under federal awards. Condition: During testing, instances were identified in which the semi-annual certifications utilized by the District to support time charged to federal awards completed and approved prior to the final claims. Title II, Part A – Supporting Effective Instruction State Grants (ALN 84.367) Three (3) of the 40 individuals selected for testing time was supported by a semi-annual certification that was not approved timely. The semi-annual certification was approved after the submission of the final reimbursement claim. This was not a statistically valid sample. Special Education Cluster (IDEA) (ALN 84.027, 84.173) Two (2) of the 40 individuals selected for testing time was supported by a semi-annual certification that was not approved timely. The semi-annual certification was approved after the submission of the final reimbursement claim. This was not a statistically valid sample. Title I-A – Grants to Local Educational Agencies (ALN 84.010) Three (3) of the 60 individuals selected for testing time was supported by a semi-annual certification that was not approved timely. The semi-annual certification was approved after the submission of the final reimbursement claim. This was not a statistically valid sample. Questioned costs: None Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of the final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. During the fiscal year under audit the collection and review of these certifications were delayed, resulting in some being collected after the final claim dates. Cause: From 2023 through 2025, the District experienced substantial turnover within the finance department, including management positions. Individuals in these roles lacked the necessary skills, knowledge, and experience to oversee day-to-day operations, resulting in delays in execution of controls and collection of required supporting time and effort reporting. Effect: Lack of timely collection and review of approved semi-annual could result in unallowable costs may be submitted for reimbursement. Repeat Finding: This is a repeat of prior year finding 2024-009 Recommendation: We recommend the District design and implement controls to ensure semi-annual time and effort certification are obtained and reviewed timely. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: United State of Department of Health and Human Services Federal Program Name: Medicaid Cluster Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2405WI5MAP-2024, 2505WI5MAP-2025 Pass-Through Agency: Wisconsin Department of Health Services Pass-Through Number(s): Not Available Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: In accordance with 2 CFR 200.303(a), the District must establish and maintain effective internal control over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award In accordance with Wisconsin Department of Public Instruction guidance, each local education agency (LEA) that is a Medicaid-certified SBS provider is required to have a signed and dated DPI Consent to Bill Wisconsin Medicaid for Health-Related Special Education and Related Services (Form M-5) from the parent or guardian of a student with an IEP before claims can be submitted to BadgerCare Plus. Condition: A not statistically valid sample of 40 individuals with Medicaid billings filed during the fiscal year was selected. 3 of the 40 tested individuals did not have a DPI Consent to Bill Wisconsin Medicaid for Health-Related Special Education and Related Services (Form M-5) available for review. Questioned costs: $279.47 Context: The District was not able to produce documentation of the required Authorization to Bill (Form M-5) three (3) individuals selected for testing. The third-party billing service provided included that records had been sighted previously for these individual, but were not available for review during testing. Cause: Internal controls in place at the District are not designed and implemented to ensure the required authorization to bill Medicare is obtained prior to initial billing and retained for future review. Effect: The District may bill for services that are not eligible for reimbursement under the state of Wisconsin administered Medicaid program. Repeat Finding: No. Recommendation: We recommend the District design and implement controls to ensure required authorization to bill Medicare (Form M-5) is obtained prior to initial billing. We also recommend the District design and implement controls to ensure a copy of this form is retained in accordance with federal and state requirements and is available for future required reviews. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: United State of Department of Health and Human Services Federal Program Name: Medicaid Cluster Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2405WI5MAP-2024, 2505WI5MAP-2025 Pass-Through Agency: Wisconsin Department of Health Services Pass-Through Number(s): Not Available Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: In accordance with 2 CFR 200.303(a), the District must establish and maintain effective internal control over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award In accordance with Wisconsin Department of Public Instruction guidance, each school district’s salary and benefit information of direct medical service providers are required to be reported through quarterly financial submissions. These submissions automatically aggregate into the annual cost report and are utilized to calculate the Medicaid Administrative Claims (MAC) amounts. The salary and fringe benefits included in these reports are required to be supported by District payroll records and financial ledgers and be appropriately classified and identified. Condition: Three (3) of the 40 individuals selected for testing were reported on the Quarterly Report tested in Job Categories that are inconsistent with the role or duties that employee filled during the reporting period. In addition, the District’s reconciliation of the District’s payroll summary reports to the Quarterly Report for the period July 1, 2024 to September 30, 2024 was not documented and available for review during audit testing. Questioned costs: None Context: The three (3) reported in in Job Categories that are inconsistent with the role or duties, fulfilled role that would be eligible for reporting in the Quarterly Report, but were classified into incorrect Job Categories. The District generates a series of reports from internal payroll systems, general ledger and subledger systems, and third party claim systems to support each Quarterly Report. These reports are reviewed and reconciled to support the final Quarterly Reports submission. For the quarter covering July 1, 2024 through September 30, 2024, the District generated the reports and prepared the Quarterly Report, however, the reconciliations were not retained documenting the standard process of the District. Cause: The District did not design and implement controls to ensure amounts reported were supported by internal records of employees roles or positions at the time of the reporting and that all supporting records and reconciliations are maintained. Effect: Amounts reported as eligible expenditures utilized in calculations of award did not agree to available supporting District payroll and financial records. This could result in calculations of award being inaccurate. Repeat Finding: No. Recommendation: We recommend the District design and implement controls to ensure amounts reported are supported by employees current roles and positions. Views of responsible officials: There is no disagreement with the audit finding.

Finding No. 2025-047 Prior Year Finding: 2024-053 Federal Awarding Agency: U.S. Department of Agriculture (USDA) Impact: Material Weakness, Material Noncompliance AL Number and Title: 10.551, 10.561 Supplemental Nutrition Assistance Program (SNAP) Cluster Federal Award Number: 25AK35050292301, 24AK35050292301 Applicable Compliance Requirement: Allowable Costs/Cost Principles, Special Tests and Provisions Condition: The amount of FY 25 SNAP benefits reported to USDA as issued by the State’s Electronic Benefits Transfer (EBT) contractor, Fidelity National Information Services (FIS), was $1,235,577 more than the amount of authorized benefits reported in data from the Division of Public Assistance’s (DPA) Eligibility Information System (EIS). Furthermore, FIS could not provide a reliable audit trail of issuances. Context: DPA relies on its legacy eligibility system, EIS, to determine eligibility for SNAP and calculate monthly benefit amounts. Benefit amounts are calculated based on household size, income, and other financial resources of all qualifying members of a household, less specific allowable deductions. Each day EIS transmits an issuance batch file, including authorized beneficiaries and benefit amounts, to the State’s EBT contractor, FIS, which maintains accounts for each beneficiary. When an EBT card is utilized by a beneficiary, FIS functions as the intermediary between the State’s U.S. Treasury benefit account and the retailers by settling SNAP benefit transactions with retailers before drawing down federal reimbursement. The State is required to ensure its automated data processing systems accurately and completely process and store all case file information for eligibility determinations and benefit calculations, and provide the data necessary to meet federal issuance and reconciliation reporting requirements. A reconciliation of FIS issuance records with EIS authorized beneficiaries and benefit amounts demonstrates the completeness and accuracy of the EBT process. In FY 25, the EIS benefit data provided by DPA could not be reconciled to the amount of SNAP benefits issued per FIS data or the issuance amounts reported by DPA to USDA. Furthermore, FIS could not provide a detailed list of issuances to support the monthly amounts reconciled by DPA staff and reported to USDA. Cause: DPA management and FIS staff could not identify the cause of the variances. DPA’s outdated legacy eligibility system and the lack of daily reconciliations (see Finding No. 2025-049) contributed to the deficiencies. Criteria: Title 7 CFR 274.1(h) requires that the State agency create and maintain a master issuance file that consolidates records of all certified SNAP households, record participation activity for each household, and supply all information necessary to fulfill the reporting requirements outlined in Title 7 CFR 274.4. Title 7 CFR 274.4(a) requires the State to reconcile benefits posted to household accounts on the central computer against benefits on the issuance authorization file. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant awards. Effect: Significant discrepancies between EIS benefit data and the EBT contractor’s issuance records undermine confidence in the eligibility system and may be indicative of significant unidentified processing errors. Inadequate system controls increase the risk of incorrect or ineligible benefits. Questioned Costs: AL 10.551: $1,235,577 Recommendation: DPA’s director should identify the cause of the discrepancies between EBT contractor issuance data and the State’s eligibility system and take action necessary to ensure SNAP benefit payments are supported by eligibility and benefit data. Views of Responsible Officials: The department agrees with the finding but does not concur with the questioned costs. The Division of Public Assistance completes reconciliations between FIS daily transaction records and EBT Account Management Agent (AMA) data to ensure issuance accuracy. Auditor’s Concluding Remarks: Management concurs with the finding, but not the questioned costs. Questioned costs are defined by Title 2 CFR 200.1, which states: Questioned cost means a cost that is questioned by the auditor because of an audit finding:  Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a federal award, including for funds used to match federal funds;  Where the costs, at the time of the audit, are not supported by adequate documentation; or  Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Based on Uniform Guidance, the SNAP benefits issued that were not supported by eligibility determinations were reported as questioned costs.

Finding No. 2025-048 Federal Awarding Agency: USDA Impact: Material Weakness, Material Noncompliance AL Number and Title: 10.551, 10.561 SNAP Cluster Federal Award Number: 25AK35050292301, 24AK35050292301 Applicable Compliance Requirement: Allowable Costs/Cost Principles, Special Tests and Provisions Condition: Testing of 72 FY 25 SNAP EBT issuances found two automated EIS benefit calculations that did not consider an increase in unearned income related to Alaska’s Senior Benefits Program. Context: SNAP benefits are calculated based on household size, income, and other financial resources of all qualifying members of a household, less specific allowable deductions. The State is required to ensure the SNAP system accurately and completely processes and stores all case file information for eligibility determinations and benefit calculations, automatically cuts off households at the end of a certification period unless recertified, and provides the data necessary to meet federal issuance and reconciliation reporting requirements. SNAP recipients aged 65 or older with low to moderate income are eligible to receive monthly payments from the Senior Benefits Program. Senior benefit amounts are based on available state funding and the number of eligible applicants. Beginning August 1, 2024, monthly benefits increased from $49 to $125. For SNAP purposes, senior benefits are classified as unearned income and the increase should have been incorporated into all SNAP recipient benefit calculations completed after August 1, 2024. Between September 2024 and June 2025, on average, 6,277 SNAP households included at least one member aged 65 or older. The EIS benefit calculation errors were systematic and potentially impacted all SNAP households that include a senior member. Likely questioned costs exceed $25,000. Cause: Management stated that the system change implemented to increase senior benefits in EIS failed to adequately include the increase on prospective SNAP benefit calculations. DPA’s information system change management and monitoring procedures were insufficient to prevent or detect the processing flaw. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant award. Title 7 CFR 272.10(b) requires the State to use an automated data processing system for SNAP. The system is to be used to determine eligibility and calculate benefits or validate eligibility workers’ calculations by processing and storing all case file information necessary for the eligibility determinations and benefit computations including, but not limited to, all household members’ names, addresses, dates of birth, social security numbers, individual household members earned and unearned income by source, deductions, resources, and household size. Also, the system must be used to redetermine or revalidate eligibility and benefits based on notices of change in households’ circumstances. Title 7 CFR 274.1(a) requires the State to establish issuance and accountability systems which ensure that only certified eligible households receive benefits; that program benefits are timely distributed in the correct amounts; and that benefit issuance and reconciliation activities are properly conducted and accurately reported to USDA Food and Nutrition Service (FNS). Effect: Inadequate SNAP automated data processing controls increases the risk of incorrect or ineligible benefits. Errors in SNAP benefit determinations could result in federal sanctions and/or penalties imposed on DOH. Questioned Costs: AL 10.551: $660 Recommendation: DPA’s director should strengthen SNAP automated data processing controls to ensure EIS system changes are adequately evaluated prior to implementation. Views of Responsible Officials: Management agrees with this finding.

Finding No. 2025-049 Federal Awarding Agency: USDA Impact: Material Weakness, Material Noncompliance AL Number and Title: 10.551, 10.561 SNAP Cluster Federal Award Number: 25AK35050292301, 24AK35050292301 Applicable Compliance Requirement: Allowable Costs/Cost Principles, Special Tests and Provisions Condition: DOH’s information technology staff did not properly limit user access to EIS during FY 25. Context: EIS is used to determine eligibility for SNAP. The details related to this control weakness and the relevant audit criteria are being withheld from this report to prevent the weakness from being exploited. Pertinent details have been communicated to agency management in a separate confidential document. Cause: The control weakness was attributed to human error and competing priorities. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant award. State of Alaska Information Security Policies provide specific criteria related to the identified deficiency. Effect: The internal control weakness increases the risk of unauthorized system use, including risk of data manipulation, which may result in ineligible benefit recipients or unallowable costs. Questioned Costs: None Recommendation: DOH’s Division of Finance and Management Services director should strengthen monitoring procedures to address the control weakness. Views of Responsible Officials: Management agrees with this finding.

Finding No. 2025-050 Prior Year Finding: 2024-055 Federal Awarding Agency: USDA Impact: Material Weakness, Material Noncompliance AL Number and Title: 10.551, 10.561 SNAP Cluster Federal Award Number: 25AK35050292301, 24AK35050292301 Applicable Compliance Requirement: Special Tests and Provisions Condition: Daily SNAP EBT reconciliations were not performed in FY 25. Context: A state must have a system in place to reconcile, on a daily basis, all of the funds entering into, exiting from, and remaining in the system each day with a state’s U.S. Treasury benefit account and FIS’s records. States must also have systems in place to reconcile retailer credit activity as reported into the banking system to client transactions maintained by the processor and to the funds drawn down from the EBT benefit account with the U.S. Treasury. The reconciliation process ensures that a state only draws federal funds for authorized transactions. In FY 25, required daily reconciliations were not performed. Cause: According to DPA management, daily reconciliations were not performed due to inadequate procedures, staff turnover, and the lack of trained staff. Implementation of corrective action was also delayed due to inadequate system access for new staff. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant award. Title 7 CFR 274.4(a) requires that State agencies account for all issuance through a reconciliation process. The EBT system must provide reports and documentation pertaining to reconciliation. Reconciliations must be conducted and records kept as follows: • Verification of retailer’s credits against deposit information entered into the automated clearinghouse network; and • Reconciliation of total funds entered into, exiting from, and remaining in the system each day. Effect: The lack of daily reconciliations increases the risk of unidentified processing errors and unallowable costs, including potential non-federal liabilities. States are responsible for efficiently and effectively administering SNAP in accordance with federal laws, regulations, and the FNS approved Plan of Operations. A determination by FNS that the State has failed to comply with any of these requirements may result in a suspension or disallowance of the federal share of the State’s administrative funds. Questioned Costs: None Recommendation: DPA’s director should develop and implement daily reconciliation and monitoring procedures and train staff to ensure daily reconciliations are conducted in accordance with federal regulations. Views of Responsible Officials: Management agrees with this finding.