Findings Citing § 200.303

FINDING 2025-003 Subject: Water and Waste Disposal System for Rural Communities - Equipment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal System for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): 1780-12 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 2024-004. Condition and Context The Town had not properly designed and implemented a system of internal controls to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. A property record or capital asset listing is required to be maintained for all equipment purchased with federal grant awards to ensure adequate safeguards are in place to prevent loss or damage of items. The Town disbursed federal funds for its Sewer Construction project and added $4,394,122 to its capital asset records in 2025 noted as "Infrastructure" / "Construction Work in Progress." None of the required information, including description of the property, the source of funding for the property (including the FAIN), the title holder, the percentage of the federal agency contribution towards the original purchase, the location, etc., was included in the Town's property/asset records. 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 18 TOWN OF NEW MARKET SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.313(d) states: "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. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return." Cause The Town was unsure of the requirements regarding identifying information for assets purchased with federal funds. The corrective action plan from the prior audit had not been implemented. The Clerk-Treasurer is relatively new to the position and is still working to implement internal controls over the Town's federal grant programs. 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, assets purchased with federal dollars were not properly identified in the Town's capital asset listing. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town establish a proper system of internal controls and develop policies and procedures to ensure capital asset records include all the necessary information for assets purchased with federal funds and documented individually in the capital asset records. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF NEW MARKET SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: Water and Waste Disposal System for Rural Communities - Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal System for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): 1780-12 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-005. Condition and Context The internal control system in place was not properly designed or implemented at the Town to ensure compliance with requirements related to the grant agreement and the suspension and debarment portion of the Procurement and Suspension and Debarment compliance requirement. Prior to entering into subawards and covered transactions with federal funds, recipients are required to verify that contractors and vendors are not suspended, debarred, or otherwise excluded from receiving those federal funds. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under procurement and nonprocurement transactions (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking SAM exclusions online, collecting a certification from that vendor/contractor, or adding a clause or condition to the covered transaction with that vendor/contractor. The Town had three contracted vendors related to the wastewater project with combined federal expenditures of $3,733,722 during the audit period, including its engineering and main construction firms. The Town could not provide documentation that procedures were performed to verify that one of the vendors paid from the grant totaling $413,092 was not excluded or disqualified from participation in federal programs as a Certification Regarding Debarment and Suspension was not obtained. It should be noted that the Certification Regarding Debarment and Suspension for the one vendor was obtained prior to the conclusion of the audit. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF NEW MARKET SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The Clerk-Treasurer is still working to implement effective internal controls over the Town's federal grant programs. The Town did not ensure that all vendors performing work with the wastewater project that were paid with federal grant funds provided a Certification Regarding Debarment and Suspension. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot ensure the vendors paid with federal funds are eligible to participate in federal programs. Any program funds the Town used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town implement properly designed and effective internal controls to ensure that all contractors and vendors that are paid $25,000 or more, all or in-part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-005 Subject: Water and Waste Disposal Systems for Rural Communities - Reporting Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): 1780-12 Compliance Requirement: Reporting 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 2024-006. Condition and Context The Town had not designed or implemented adequate internal controls and procedures to ensure that reports were prepared, accurate, and submitted in accordance with the applicable compliance requirements for the federal grant. The United States Department of Agriculture required the following reports be submitted annually:  Statement of Budget, Income, and Equity (Form RD 442-2)  Balance Sheet (Form RD 442-3) The Form RD 442-2 covers financial operations relating to the Town's sewer construction and improvement project, and the Form RD 442-3 presents the financial status of the project. In both instances, a borrower may submit the financial data on other forms, provided the forms are in a similar format, and signed and dated by the organization's official to certify the correctness of the information. Alternatively, an annual audit may be submitted in lieu of the forms. The Town was required to file each report, as noted above, during the audit period; however, the reports were not filed nor was an annual audit filed by the September 30, 2025 Single Audit deadline as the Town did not report any federal expenditures to the USDA or the Indiana State Board of Accounts. In addition, the 2024 Single Audit was uploaded to the Federal Audit Clearinghouse on December 10, 2025, by the Indiana State Board of Accounts. However, the 2024 Single Audit Report was not certified by the local unit officials. Therefore, the submission could not be used in lieu of the required reports. 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: INDIANA STATE BOARD OF ACCOUNTS 22 TOWN OF NEW MARKET SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 1780.47(e) states in part: ". . . within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used." Cause The Town was unable to provide documentation to show that the Form RD 442-2 and the Form RD 442-3 reports were filed. The Clerk-Treasurer is still working to implement internal controls over the Town's federal grant programs. Effect Without the proper implementation of an effectively designed system of internal controls, the Town could not ensure that the required reports were filed with the awarding agency. As such, the awarding agency did not have accurate and current information to discern the financial status of the Town's project. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management design and implement a system of internal controls that would provide segregation of duties for the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that all required reports are filed timely and accurately and ensure that federal awards are properly reported to both the federal and state regulatory agencies to ensure the federal Single Audit deadline is met. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding 2025-001 US Department of Commerce 11.307 Economic Adjustment Assistance/ Economic Development Cluster Criteria: Pursuant to 2 CFR section 200.303(a), 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. Revolving Loan Fund (RLF) recipients must administer RLFs in accordance with an RLF Plan approved by EDA. Pursuant to 13 CFR 307.14 (a) All RLF Recipients, including those receiving Recapitalization Grants for existing RLFs, must complete and submit an RLF report, using Form ED-209, in a format and at a frequency as required by EDA. Pursuant to 13 CFR 307.14 (b) All RLF Recipients must certify as part of the RLF report to EDA that the RLF is operating in accordance with the applicable RLF Plan and that the information provided is complete and accurate. Condition: There were no adequate internal controls to identify and correct material misstatements in key line items in the Form ED-209, Revolving Loan Fund Financial Report (report) for the Cares Revolving Loan Funds. The key line items contain critical information and should reconcile to the Authority's financial documents and account balances. Cause: The current internal control system in place was not adequate to ensure: loan reporting procedures were followed in accordance with the RLF Plan approved by the EDA. Effect: The report does not contain accurate information. This is a repeat finding of 2024-001. Recommendation: We have the following recommendations: 1) the Authority should implement procedures to ensure that the RLF program is administered in accordance with the plan approved by the EDA, 2) the Authority should implement procedures to ensure that required reports are reviewed for accuracy prior to being submitted by the due date. View of Responsible Official: Management agrees with the finding. See separate corrective action plan.

Finding 2025-001 Assistance Listing Number(s): 81.135 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Energy Federal Award Identification Number: DE-AR0001838 Federal Award Year: 2024 Award Period: March 26, 2024 through September 25, 2025 Criteria or Specific Requirement: In accordance with 2 CFR § 200.303, Convergent Research is required to establish and maintain effective internal controls over Federal awards to provide reasonable assurance that expenditures are allowable, accurately reported, and comply with the terms and conditions of the award. Condition: Convergent Research did not have effective controls to reconcile provisional fringe and indirect cost rates to actual allowable costs or to perform a final award-level reconciliation before reporting Federal expenditures. Convergent Research charged fringe costs to the award using a provisional rate of 59.24%; however, the actual allowable fringe rate was 44.45%. In addition, Convergent Research did not have controls to identify award provisions permitting unused indirect-cost budget to be applied to additional allowable direct costs incurred during the period of performance or to identify unbilled allowable costs before closeout. As a result, Convergent Research initially reported gross questioned costs of approximately $132,000. During the audit, additional allowable direct costs of approximately $120,000, net of the required 10% cost share, were identified, resulting in net questioned costs of approximately $12,000. Convergent Research identified and reconciled these matters only after audit procedures were performed. Cause: Convergent Research did not establish formal procedures for:  Reconciling provisional rates to actual allowable costs;  Reviewing award-specific budget and indirect cost provisions;  Identifying allowable costs incurred during the period of performance; and  Performing a documented final award reconciliation before submitting final expenditure reports. Effect or Potential Effect: The lack of controls increased the risk that Federal expenditures would be inaccurately reported and that allowable costs would not be identified and charged to the award in accordance with the terms and conditions of the agreement. Questioned Costs: Gross questioned costs: $132,326 Less: Additional allowable direct costs, net of required cost share: ($120,084) Net questioned costs: $12,242 Repeat Finding: No Recommendation: We recommend Convergent Research establish written procedures and management review controls to:  Reconcile provisional indirect and fringe rates to actual allowable costs;  Review award-specific provisions related to indirect costs, cost sharing, and budget flexibility;  Identify all allowable costs incurred during the period of performance; and  Perform and document a final award reconciliation before submitting final expenditure reports. Views of Responsible Officials: Management agrees with the auditor’s recommendation and has implemented enhanced grant closeout procedures, including required reconciliations, award-specific reviews, and documented management review prior to final expenditure reporting.

FINDING 2025-003 Subject: Drinking Water State Revolving Fund - Allowable Costs Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number and Year (or Other Identifying Number): DW23148904 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The financial management system of each nonfederal entity must provide written procedures for determining the allowability of costs in accordance with federal regulations and terms and conditions of the federal award. The policy should provide clear guidance as to what costs constitute appropriate direct and indirect charges to federal awards as well as provide for consistency in charging practices across the Town. The Town did not have written procedures for determining the allowability of costs in accordance with Subpart E of 2 CFR 200 and the terms and conditions of the federal award as required by 2 CFR 200.302(7). 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 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF CENTERVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management of the Town had not established an effective system of internal controls that would ensure providing and maintaining on file written procedures for determining allowability of costs in accordance with terms and conditions of the federal award. These policies and procedures should also be implemented in the processes involving the expenditures of federal grant awards. The Town Council was not aware of the requirement to establish allowable costs policies over federal expenditures. Effect Without written procedures for determining the allowability of costs, the Town lacks documented guidance to ensure expenditures related to federal programs are evaluated consistently and in accordance with applicable grant requirements. Questioned Costs There were no known questioned costs identified. Recommendation We recommended that the Town's management and governance establish a proper system of internal controls and develop written policies and procedures to ensure expenditures made using federal grant funds are done so in accordance with allowable costs/cost principles guidelines as established in the federal compliance supplement and other OMB guidelines and considerations. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Section III – Federal Award Findings and Questioned Costs 2025-004 Federal Awards Internal Control Policy and Procedures Federal Agency: U.S. Department of Transportation Program Name: Highway Planning and Construction ALN: 20.205 Award Number & Year: STBG 5925(127), 2025 Pass-Through Agency: Minnesota Department of Transportation Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria: Uniform Guidance requires non-Federal entities to use and document procurement procedures applicable to Federal awards (2 CFR § 200.318(a)). In addition, non-Federal entities must maintain written standards of conduct covering conflicts of interest and governing the actions of employees engaged in the selection, award, and administration of contracts supported by Federal funds (2 CFR § 200.318(c)(1)). Uniform Guidance further requires non-Federal entities to establish and maintain effective internal control over Federal awards that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of Federal awards (2 CFR § 200.303). These requirements contemplate the adoption and implementation of written procurement policies and procedures governing procurements charged to Federal awards. Condition: The County had not established and formally adopted written policies and procedures governing the administration of Federal awards and compliance with Uniform Guidance requirements. Specifically, written guidance addressing key compliance areas such as allowable costs, procurement, reporting, subrecipient monitoring, cash management, and records retention had not been developed or approved by the County Board. Questioned Costs: None. Context: As part of our evaluation of internal controls over compliance and compliance with Uniform Guidance, we assessed whether the County had documented policies and procedures governing the administration of Federal awards. Cause: County management had not established a process to develop and obtain approval of a comprehensive Federal awards policy. Effect: Without an approved Federal expenditures policy, there is an increased risk that Federal awards may not be administered consistently in accordance with Uniform Guidance requirements. This could result in noncompliance with applicable Federal regulations and increase the likelihood that compliance requirements are not identified, communicated, or monitored appropriately. Recommendation: We recommend the County develop, formally approve, and implement a federal expenditures policy that addresses applicable Uniform Guidance requirements, including internal controls over compliance, allowable costs, cash management, procurement, subrecipient monitoring, reporting, and record retention. Repeat Finding: No. View of Responsible Officials: Acknowledged.

Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 21.027, Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year: E20250728-002, E20250157-001, MacombCty5211 Finding Type – Significant deficiency in internal control over compliance and noncompliance with the federal reporting requirements. Repeat Finding - Yes Criteria – Per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for reporting compliance, it was noted the client failed to submit the monthly expenditure reports for January, February, April, May, July, October, November within the required time frame. Context – The required report was not submitted by the due date. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management noted that the accounting staff were not completing necessary accounting tasks in a timely manner and, therefore required reports were not submitted on time. Effect – The report was submitted late. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports are completed and submitted by the required due dates. View of Responsible Officials and Corrective Action Plan – Management agrees with finding. See corrective action plan.

Finding No: 2025-001 Reporting: U.S. Department of Treasury U.S. Department of Justice Assistance Listing Number: 21.027 16.753 Programs: COVID-19 Coronavirus State and Local Fiscal Recovery Funds/City of Atlanta Diversion Center OJP - Congressionally Recommended Awards/City of Atlanta Diversion Center Award Years: October 1, 2022 – December 31, 2027 (a) Criteria or Requirement Per 2 CFR 200.303, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, the specific requirements for activities allowed or unallowed are unique to each federal program and are found in the federal statutes, regulations, and the terms and conditions of the federal award pertaining to the program. (b) Condition Found, Including Perspective Of the 12 reimbursement requests tested during the fiscal year 2025 reporting period for the City of Atlanta Diversion Center, there was one reimbursement request that included $300 in which the request was approved for reimbursement and reimbursed by the federal agency, however, the expenditure was not substantiated by documentation and therefore was not allowable. (c) Possible Cause While the System performs a review of documentation before payments are requested for reimbursement, controls were not designed or implemented effectively to ensure that unallowable charges were not submitted for reimbursement by the federal agency. (d) Questioned Cost No questioned costs as amounts did not exceed the threshold for reporting. (e) Effect Federal funds were expended for unallowable amounts and evidence of the effective operation of management review controls was not consistently maintained in accordance with Federal requirements. (f) Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. (g) Repeat Finding in the Prior Year This finding is not a repeat finding. (h) Recommendation We recommend that the System strengthen controls over the management review process to prevent unallowable costs from being charged to Federal programs. (i) View of Responsible Officials Management concurs with the finding. While appropriate controls exist relative to management review of expenditures, opportunities exist to retrain staff and further enhance controls related to procedures for submission, review, and approval of expenditures before submission for reimbursement.

U.S. Department of Treasury U.S. Department of Justice Assistance Listing Number: 21.027 16.753 Programs: COVID-19 Coronavirus State and Local Fiscal Recovery Funds/City of Atlanta Diversion Center OJP - Congressionally Recommended Awards/City of Atlanta Diversion Center Award Years: October 1, 2022 – December 31, 2027 (j) Criteria or Requirement Per 2 CFR 200.303, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, there are specific requirements for suspension and debarment for each federal program and are found in the federal statutes, regulations, and the terms and conditions of the federal award pertaining to the program. (k) Condition Found, Including Perspective Formal documentation was not maintained to evidence management’s follow up regarding potential suspension and debarment matches and vendor/supplier registration exemption request forms. (l) Possible Cause While the System performs a suspension and debarment review prior to vendor contracts being entered into and payments being made, controls were not implemented effectively to ensure that documentation was maintained to evidence management’s procedures over ensuring the vendor was not suspended or debarred. (m) Questioned Cost No questioned costs as amounts were noted. (n) Effect Federal funds were expended with vendors whom management did not maintain formal documentation to substantiate that the vendors were not subject to suspension or debarment in accordance with Federal requirements. (o) Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. (p) Repeat Finding in the Prior Year This finding is not a repeat finding. (q) Recommendation We recommend that the System strengthen controls over maintaining documentation regarding the suspension and debarment validation performed over vendors. (r) View of Responsible Officials Management concurs with the finding. Appropriate controls are in place relative to suspension and debarment policies and procedures. Opportunities exist to further enhance controls related to documenting and maintaining formal documentation related to potential matches and exemption request forms

U.S. Department of the Treasury Passed Through the Nevada Housing Division COVID‐19: Coronavirus State and Local Fiscal Recovery Funds, Assistance Listing #21.027 Reporting Significant Deficiency in Internal Control Over Compliance Grant Award Number: SLFRP2634 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: There was no evidence of review and approval (segregation of duties) between the preparer and reviewer of the quarterly financial reports. Cause: The Foundation's procedures did not include segregation of duties between the preparer and reviewer of the quarterly financial reports. Effect: Inaccurate information could be reported to the federal awarding agency. Questioned Costs: None noted. Context/sampling: Two quarterly financial reports out of a population of four was selected for testing. Repeat Finding from Prior Year: Yes, 2024-002 Recommendation: We recommend the Foundation enhance the internal controls to ensure quarterly financial reports are reviewed and approved. Views of Responsible Officials: The Foundation agrees with this finding; see corrective action plan.

Finding 2025-001: Federal Funding Accountability and Transparency Act Reporting Federal Agency: U.S. Agency for International Development (USAID) Federal Program: Foreign Assistance for Programs Overseas Assistance Listing Number: 98.001 Pass-through Entity (if applicable): Not applicable Award Identification Number and Year: All Criteria or Specific Requirement: 2 CFR part 170, Appendix A; 2 CFR 200.303 For Federal awards containing the applicable Transparency Act award term, a recipient generally must report each first-tier subaward that equals or exceeds $30,000 in Federal funds, including a modification that increases Federal funding to that level. The report is made through the Federal Funding Accountability and Transparency Act Subaward Reporting System and is due no later than the end of the month following the month in which the subaward was issued. Recipients are also required to establish and maintain effective internal control over Federal awards and comply with the terms and conditions of those awards. Condition: Internews Network was unable to provide documentation supporting its identification and reporting of first-tier subawards subject to FFATA during the year ended December 31, 2025. As a result, we were unable to determine whether all reportable subawards and modifications were identified, submitted completely and accurately, and reported within the required timeframe. Cause: Management indicated that significant reductions in grants and compliance personnel occurred after the termination of Federal awards and funding. Responsibilities for FFATA reporting and custody of related records were not formally reassigned, and management did not maintain a centralized, durable repository or documented closeout process sufficient to preserve evidence of compliance after staff departures. Effect or Potential Effect: The absence of supporting records prevented verification of compliance with the applicable FFATA award term. Untimely, incomplete, or omitted reporting, if it occurred, could result in inaccurate information in Federal spending transparency systems, noncompliance with award terms, and increased risk of Federal or pass-through entity follow-up. Because sufficient documentation was not available, the extent of any unreported or late subawards and any related monetary effect could not be determined. Questioned Costs: Undetermined Context: The Organization received Federal funding and issued or modified first-tier subawards during the audit period. The applicable Federal award terms required Internews Network to evaluate whether those subawards met FFATA reporting requirements and, when applicable, submit the required information through the designated Federal reporting system within the prescribed timeframe. Identification as a Repeat Finding, if Applicable: Not a repeat finding Recommendation: We recommend that Internews Network designate an accountable FFATA process owner and backup, establish a complete inventory of Federal awards and first-tier subawards, and implement a documented monthly review for new subawards and modifications. For each potentially reportable item, management should retain the threshold analysis, required data elements, FSRS submission confirmation, submission date, and evidence of review in a centralized repository with access that is not dependent on a single employee. When a Federal program is terminated or staffing is reduced, management should perform a formal records-transfer and awardcloseout checklist, including reassignment of outstanding reporting responsibilities and validation that compliance records remain accessible for the required retention period.

Finding 2025-002: Procurement, Suspension and Debarment Federal Agency: U.S. Agency for International Development (USAID) Federal Program: Foreign Assistance for Programs Overseas Assistance Listing Number: 98.001 Pass-through Entity (if applicable): Not applicable Award Identification Number and Year: All Criteria or Specific Requirement: 2 CFR 200.318 through 200.327; 2 CFR 200.303 Recipients and subrecipients must maintain and use documented procurement procedures consistent with applicable laws and the Federal procurement standards. Procurement transactions must be conducted using an appropriate method, with records sufficient to support the procurement history and required determinations. The standards also address competition, conflicts of interest, contractor oversight, cost or price analysis when applicable, required contract provisions, and suspension and debarment requirements. Condition: For several procurement transactions sampled, Internews Network was unable to provide some or all documentation necessary to support compliance. Missing items included procurement method determination, solicitation or quotations, bid/proposal evaluation, sole-source justification, price reasonableness or cost/price analysis. Accordingly, we were unable to determine whether the transactions were procured in accordance with Internews Network’s policies, 2 CFR 200.318 through 200.327, and applicable award terms. Cause: Management indicated that significant staffing reductions followed the termination of Federal awards and funding. Procurement and grants administration duties were dispersed or discontinued without a complete transition of electronic and paper records. Management did not have an enforced, centralized procurement file standard or a closeout control designed to confirm that each procurement file was complete before responsible staff separated. Effect or Potential Effect: The missing documentation prevented verification that procurement transactions were conducted with the required competition, approvals, price considerations, exclusion checks, and contract terms. This increases the risk of unsupported vendor selection, unreasonable costs, transactions with excluded parties, omitted Federal clauses, and costs that may be challenged by a Federal agency or pass-through entity. Questioned Costs: Undetermined Context: Internews Network used Federal award funds to acquire goods and services under during the audit period. Compliance with Federal procurement requirements is ordinarily demonstrated through a contemporaneous procurement file documenting the applicable method, competition or authorized noncompetitive justification, vendor selection, price or cost considerations, approvals, exclusion checks, contract terms, and oversight. Identification as a Repeat Finding, if Applicable: Not a repeat finding Recommendation: Implement a standardized procurement checklist scaled to method and threshold. Retain the funding source, threshold and method determination, competition or approved noncompetitive justification, vendor responses, evaluation, price support, conflicts documentation, exclusion verification, approvals, contract provisions, invoices, and oversight evidence. Require independent completeness reviews before award and final payment, centralize records, and use a staffing-reduction or award-termination protocol to transfer ownership, preserve access, and certify file completeness.

Finding 2025-003: Subrecipient Monitoring and Management Federal Agency: U.S. Agency for International Development (USAID) Federal Program: Foreign Assistance for Programs Overseas Assistance Listing Number: 98.001 Pass-through Entity (if applicable): Not applicable Award Identification Number and Year: All Criteria or Specific Requirement: 2 CFR 200.331 through 200.333; 2 CFR 200.329; 2 CFR 200.303 A pass-through entity must document subrecipient-versus-contractor determinations, verify that potential subrecipients are not excluded or disqualified, include required Federal information and conditions in subawards, evaluate risk of noncompliance, and monitor activities as necessary. Monitoring includes reviewing financial and performance reports, following up on deficiencies, and issuing management decisions for applicable audit findings. Procedures and specific conditions should respond to assessed risk. Condition: Internews Network could not provide complete documentation for several subrecipients tested. Missing items included classification, risk assessment, exclusion verification, complete agreement and award data, financial and programmatic reports and review evidence. We therefore could not determine whether risk was assessed, requirements communicated, performance and compliance monitored and issues resolved. Cause: Significant reductions in program, grants, and finance personnel followed termination of Federal awards and funding. Files and responsibilities were not fully transitioned; evidence was maintained across individual mailboxes, local drives, and other locations; and no staff-exit procedure required transfer and validation of subrecipient records. Effect or Potential Effect: The absence of monitoring documentation prevented verification that subrecipients used funds for authorized purposes, achieved required performance, complied with award terms, and corrected deficiencies. Noncompliance, unsupported costs, performance issues, or audit findings may not be detected and resolved timely. Questioned Costs: Undetermined Context: Internews Network served as a pass-through entity and provided Federal funds to subrecipients responsible for carrying out portions of the Federal program. It was therefore responsible for documenting pre-award determinations, communicating Federal requirements, assessing subrecipient risk, performing responsive monitoring, following up on deficiencies, and completing closeout. Identification as a Repeat Finding, if Applicable: Not a repeat finding Recommendation: Establish a risk-based lifecycle process with primary and backup owners. Central files should include classification, exclusion verification, risk assessment, required terms and identifiers, monitoring plan, reports, review evidence, invoice testing, audit determinations, finding follow-up, management decisions, corrective actions, and closeout. Use a register to track deadlines, risks, procedures, findings, and open items. Award termination or staffing reduction should trigger formal portfolio transfer, reconciliation of open matters, preservation of records, and certification that duties and system access were reassigned.

Finding 2025-005 N. Special Tests and Provisions: N4. Vacant Units Identification of the Federal Program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.856 Federal Program Name: Section 8 Project-Based Cluster Lower Income Housing Assistance Program – Section 8 Moderate Rehabilitation Program Year: January 1, 2025 through December 31, 2025 Program No.: Multiple Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): The Uniform Guidance 2 CFR section 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” “The PHA or owner must reduce claims for assistance on vacant units under certain circumstances. However, there are instances where special claims are allowed for vacancy losses, unpaid rent, and tenant damages on eligible units (24 CFR sections 880.611, 881.601, 882.411, 882.808(f), 883.701, 884.106, 886.109, and 886.309).” Condition: For 1 of 10 (10%) tenants with an end of participation action code sampled to test the Authority’s internal controls over and compliance with the vacant units compliance requirement, we noted that the claim (housing assistance payment) was not reduced in a timely manner. Cause: The Authority’s internal control over vacant units was not operating effectively during the fiscal year. Effect or Potential Effect: Claims for vacant units may not be reduced or may not be reduced in a timely manner. Questioned Costs: A total of $1,383 related to Assistance Listing No. 14.856, representing the two months of housing assistance payments that should have been reduced during fiscal year 2025. Context: There were 60 vacant units for the program during the fiscal year ended December 31, 2025. Identification as a Repeat Finding, if Applicable: This finding is not a repeat finding from the prior year. Recommendation: The Authority should reassess its internal control over vacant units to ensure claims are reduced or reduced in a timely manner. Views of Responsible Officials: CHA Management agrees and will strengthen oversight of vacancy payment processing by updating PBV quality-control procedures, training staff, and increasing compliance monitoring to prevent untimely or inaccurate claims.

Finding 2025-001 E. Eligibility, L. Reporting (Form HUD-50058 MTW), and N. Special Tests and Provisions – N1. Waiting List, N2. Reasonable Rent, N3. Utility Allowance Schedule, N6. Housing Assistance Payment Identification of the Federal Programs: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2025 through December 31, 2025 Program No.: IL002-01-00025D Section 8 – Housing Choice Vouchers (HCV) and Rental Assistance Demonstration (RAD) Program Year: January 1, 2025 through December 31, 2025 Program No.: Multiple Federal Assistance Listing Numbers: 14.871 and 14.879 Federal Program Name: Housing Voucher Cluster Section 8 – Housing Choice Vouchers (HCV) – Veterans Affairs Supporting Housing (VASH) and Emergency Housing Vouchers (EHV) Mainstream Vouchers Program Year: January 1, 2025 through December 31, 2025 Program No.: Multiple Federal Assistance Listing Number: 14.856 Federal Program Name: Section 8 Project Based Cluster Lower Income Housing Assistance Program – Section 8 Moderate Rehabilitation (MOD) Program Year: January 1, 2025 through December 31, 2025 Program No.: Multiple Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR section 200.303 of the Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” MTW Demonstration Program and Housing Voucher Cluster Eligibility – Most Public Housing Authorities (PHAs) devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of the household signs: (a) a certification that the information provided to the PHA is correct; (b) one or more release forms to allow the PHA to obtain information from third parties; (c) a federally prescribed general release form for employment information; and (d) a privacy notice. Under some circumstances, other members of the family are required to sign these forms (24 CFR sections 5.212, 5.230, and 5.601 through 5.615). The PHA must: • As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, 960.259, and 982.516). • For both family income examinations and reexaminations, obtain and document in the family file third-party verification of: (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income-based rent (24 CFR sections 960.259 and 982.516). • Determine income eligibility and calculate the tenant’s rent payment using the documentation from third-party verification in accordance with 24 CFR part 5 subpart F (24 CFR section 5.601 et seq.) (24 CFR sections 960.253, 960.255, 960.259, 982.201, 982.515, and 982.516). • Use the Enterprise Income Verification (EIV) system in its entirety to verify tenant employment and income information during mandatory reexaminations of family composition and income in accordance with 24 CFR 5.233; and reduce administrative and subsidy payment errors in accordance with 24 CFR 5.236 and other administrative guidance issued by HUD. • Select tenants from the waiting list (24 CFR sections 960.206 through 960.208 and 982.202 through 982.207). • Reexamine family income and composition at least once every 12 months (Public Housing program) or 24 months (HCV program) and adjust the tenant rent and housing assistance payment as necessary using the documentation from third-party verification (24 CFR sections 960.253, 960.257, 960.259, and 982.516). In addition, the Chicago Housing Authority (the Authority or CHA) is participating in HUD’s Moving to Work (MTW) Demonstration Program. The Authority’s initial MTW Agreement was signed by the Authority and HUD on February 6, 2000, at which time HUD allowed the Authority to implement its Plan for Transformation. On June 26, 2008, the Authority and HUD signed the Amended and Restated MTW Agreement that extended the Authority’s participation in the MTW program through December 31, 2018. On April 4, 2016, the MTW Agreement was further modified and extended through December 31, 2028. Through this agreement, HUD waived selected statutory and regulatory requirements to allow the Authority flexibility in achieving the stated objectives of the MTW Demonstration Program. As such, per the Authority’s HCV Administrative Plan, reexamination of family income and composition under the HCV program is performed biennially or triennially. Section 8 Project-Based Cluster Eligibility – The PHA or owner, as applicable, must: • Verify the eligibility of applicants by (a) obtaining signed applications that contain the information needed to determine eligibility (including designation as elderly, disabled, or homeless, if applicable), income, rent, and order of selection; (b) conducting verifications of family income and other pertinent information (such as assets, full time student and immigration status, and unusual medical expenses) through third parties the PHA or owner must use HUD’s Enterprise Income Verification (EIV) system in its entirety: (i) as a third-party source to verify tenant employment and income information during annual and streamlined reexaminations of family composition and income, and to reduce administrative and subsidy payment errors 24 CFR 5.233; (c) documenting inspections and tenant certifications, as appropriate; and, (d) determining that tenant income did not exceed the maximum limit set by HUD for the PHA’s jurisdiction, as shown in HUD’s published notice transmitting the Limits for Low-Income and Very Low-Income Families Under the Housing Act of 1937. For the Mod Rehab SRO program, eligible individuals must be homeless upon entry into the program (24 CFR sections 880.603, 881.601, 882.514, 882.808, 833.701, 884.214, 886.119, and 886.318). • Determine the total tenant rent payment in accordance with 24 CFR section 5.628. • Select participants from the waiting list in accordance with the admission policies in its administrative plan and maintain documentation which shows that, at the time of admission, the family actually met the preference criteria that determined the family’s place on the waiting list. For the Mod Rehab SRO program, eligible individuals may be referred to the PHA for eligibility determination as a result of the owner’s/sponsor’s outreach or through the PHA waiting list (24 CFR sections 880.603, 881.601, 882.514, 882.808(b)(2), 883.701, 884.214, and 886 subparts A and C). • Reexamine family income and composition at least once every 12 months and adjust the total rent payment and housing assistance payment, as necessary (24 CFR sections 5.657, 880.603, 881.601, 882.515, 883.701, 884.218, 886.124, and 886.324). The PHA or owner may elect to apply a streamlined income determination to families receiving fixed income as described in 24 CFR 5.657 (d)(3). MTW Demonstration Program and Housing Voucher Cluster Reporting (Form HUD-50058 MTW) – Per 24 CFR part 908 and 24 CFR section 982.158, the PHA is required to submit the Form HUD-50058 MTW, Family Report, each time the PHA completes an admission, annual reexamination, interim reexamination, portability move-in, or other change of unit for a family. The PHA must also submit the Form HUD-50058 when a family ends participation in the program or moves out of the PHA’s jurisdiction under portability. The following line items on Form HUD-50058 MTW contain critical information: (1) Line 1c – Program (2) Line 2a – Type of Action (3) Line 2b – Effective Date of Action (4) Line 2k – FSS Participation Now or in the Last Year (5) Line 3b, 3c – Last Name, First Name (6) Line 3e – Date of Birth (7) Line 3n – Social Security Numbers (8) Line 5a – Unit Address (9) Line 5h – Date Unit Last Passed HQS Inspection (10) Line 5i – Date of Last Annual Inspection (11) Line 7i – Total Annual Income (12) Line 13h – Contract Rent to Owner (13) Line 13k – Tenant Rent (14) Line 13x – Mixed Family Tenant Rent (15) Line 17a – Participation in Special Programs – Participation in the Family Self Sufficiency (FSS) Program (16) Line 17k(2) – FSS Account Information – Balance Section 8 Project-Based Cluster Reporting (Form HUD-50058) – The PHA is required to submit this form electronically to HUD each time the PHA completes an admission, annual reexamination, interim reexamination, portability move-in, or other change of unit for a family. The PHA must also submit the Family Report when a family ends participation in the program or moves out of the PHA’s jurisdiction under portability. The following line items on Form HUD-50058 contain critical information: (1) Line 2a – Type of Action (2) Line 2b – Effective Date of Action (3) Line 3b, 3c – Names (4) Line 3e – Date of Birth (5) Line 3n – Social Security Numbers (6) Line 5a – Unit Address (7) Line 5h, 5i – Unit Inspection Dates (8) Line 7i – Total Annual Income (9) Line 13h – Contract Rent to Owner (10) Line 13k or 13x – Tenant Rent Condition: MTW Demonstration Program – Eighty tenants and participants were selected for testing internal controls over compliance with the eligibility and Form HUD-50058 MTW reporting requirements for the program. These same tenants and participants were tested for compliance with Form HUD-50058 MTW reporting requirements. For the 80 tenants and participants selected, 40 were Public Housing and RAD tenants (23 Public Housing and 17 RAD) and 40 were Housing Choice Voucher (HCV) participants. • There were 11 Public Housing tenants, four RAD tenants, and 10 HCV participants for which control deviations were noted over eligibility (31.25% overall MTW deviation rate). • There were four Public Housing tenants and one HCV participant for which control deviations and compliance exceptions were noted over Form HUD-50058 reporting requirements (6.25% overall MTW deviation/exception rate). In addition, 80 tenants and participants were selected to test compliance with eligibility requirements for the program. For the 80 tenants and participants selected, 40 were Public Housing and RAD tenants (27 Public Housing and 13 RAD) and 40 were HCV participants. • There were 10 Public Housing tenants, three RAD tenants, and 18 HCV participants for which compliance exceptions were noted over eligibility requirements (38.75% overall MTW exception rate). The nature of the control deviations and compliance exceptions identified are as follows (some tenants/participants could have multiple issues): Control In the case that a certification and/or recertification was to be performed in 2025: • The examination/reexamination checklist was initialed by the certification specialist (CS), but forms were missing and/or not signed by tenant and recertification clerk (Public Housing – nine instances, RAD – four instances). • Relevant forms were not retained on file (Public Housing – three instances, RAD – four instances). • Annual income was not properly calculated; therefore, rent was not properly calculated (Public Housing – four instances, HCV – one instance). • Relevant forms were signed after the effective date (Public Housing – four instances, RAD – one instance). • Relevant forms were not signed (Public Housing – two instances). • Recertification was not conducted (Public Housing – one instance). In the case that a certification and/or recertification was to be performed in 2025 or in a prior year: • The recertification was not conducted within the required period (HCV – nine instances). Compliance In the case that a certification and/or recertification was to be performed: • Relevant forms were signed after effective date (Public Housing – four instances and RAD – one instance). • Relevant forms were not retained on file (Public Housing – two instances). • Annual income was not properly calculated; therefore, rent was not properly calculated (Public Housing – four instances, RAD – two instances). • Relevant forms were not updated or revised as required (Public Housing – one instance). • Recertification was not conducted (Public Housing – one instance, HCV – five instances). • Recertification was not conducted within the required period (RAD – one instance, HCV – thirteen instances). Housing Voucher Cluster – Forty participants were selected for testing internal controls over compliance with the eligibility and Form HUD-50058 reporting requirements for the program. These same participants were tested for compliance with Form HUD-50058 reporting requirements. There were two participants for which control deviations were noted over eligibility (5% deviation rate). Specifically, in the case that a certification and/or recertification was to be performed, the recertification was not conducted within the required period. In addition, 40 participants were selected for testing of compliance with eligibility requirements for the program. There were seven participants for which compliance exceptions were noted over eligibility requirements (17.50% exception rate). Specifically, in the case that a certification and/or recertification was to be performed in 2025: • The recertification was not conducted (one instance). • The recertification was not conducted within the required period (six instances). Section 8 Project-Based Cluster – Forty tenants were selected for testing internal controls over compliance with the eligibility and Form HUD-50058 reporting requirements for the program. These same tenants were tested for compliance with Form HUD-50058 reporting requirements. There were five tenants for which control deviations were noted over eligibility (12.50% deviation rate). Specifically, the reexamination performed in 2025 was not within the required twelve-month period. In addition, 40 participants were selected for testing of compliance with eligibility requirements for the program. There were 10 tenants for which compliance exceptions were noted over eligibility requirements (25% exception rate). The nature of the compliance exceptions was as follows: • Income calculated and in Form HUD-50058 did not agree to third-party income documentation (one instance). • In the case that a reexamination was to be conducted in 2025, the reexamination was not conducted in a timely manner (seven instances). • In the case that a reexamination was to be conducted in 2025, the reexamination was not conducted (two instances). MTW Demonstration Program, Housing Voucher Cluster and Section 8 Project-Based Cluster – Furthermore, the Authority’s quality review specialists perform a quality review of a sample of tenant/participant recertification files for all programs to ensure compliance with eligibility and reporting (Form HUD-50058 MTW) requirements and various special tests and provisions requirements. Forty tenants and participants were selected to test the quality control review. For the 40 tenants and participants selected, eight were Public Housing tenants, four were RAD tenants, 10 were HCV participants, 13 were Housing Voucher Cluster participants (five VASH, five EHV, and three Mainstream Vouchers) and five were MOD tenants. • There were 18 of 40 (45% deviation rate) quality control reviews sampled (five Public Housing tenants, one RAD tenant, two HCV participants, one VASH participant, four EHV participants, two Mainstream Vouchers participants, and three MOD tenants) for which control deviations were identified. The nature of the control deviations is as follows: o For eight of the 18, findings from the quality control review were not corrected in a timely manner (HCV – one instance, EHV – two instances, VASH – one instance, Mainstream Vouchers – one instance, and MOD – three instances). o For 11 of the 18, findings from the quality control review were not corrected (Public Housing – five instances, RAD – one instance, HCV – one instance, EHV – two instances, and Mainstream Vouchers – two instances). o For 15 of the 18, the Authority did not consistently monitor the file (i.e., follow-ups were not consistently documented to ensure corrections were made or made timely, or that proposed corrections were formally accepted or denied) (Public Housing – five instances, RAD – one instance, HCV – one instance, EHV three instances, Mainstream Vouchers – two instances, and MOD – three instances). Cause: MTW Demonstration Program, Housing Voucher Cluster and Section 8 Project-Based Cluster – Internal controls were not operating effectively during fiscal year 2025. In addition, the Authority redesigned its quality control review of tenant/participant files during fiscal year 2025 to include a more robust process related to the follow-up on identified findings and related corrections. However, the design of the internal control did not define what the Authority considers timely. Effect or Potential Effect: MTW Demonstration Program, Housing Voucher Cluster and Section 8 Project-Based Cluster – Ineligible tenants or participants may be inappropriately allowed to participate in federal programs, and information reported to HUD could be inaccurate or incomplete. Questioned Costs: MTW Demonstration Program, Section 8 Project-Based Cluster – Unknown. Housing Voucher Cluster – None. Context: MTW Demonstration Program – The Public Housing and RAD programs had 14,677 and 6,701 tenants on their rent rolls, respectively, during fiscal year 2025. The Public Housing and RAD programs reviewed 6,955 and 4,066 tenants for eligibility, respectively, during 2025. The HCV program had 44,590 participants during fiscal year 2025, and 32,748 participants that were reviewed for eligibility during 2025. All active tenants and participants have a Form HUD-50058 MTW, which is filed annually, biennially, or triennially. Housing Voucher Cluster – The program had 2,380 participants during fiscal year 2025 and 1,985 participants that were reviewed for eligibility during 2025. All active tenants and participants have a Form HUD-50058, which is filed annually, biennially, or triennially. Section 8 Project-Based Cluster – The program had 442 tenants during fiscal year 2025 and 424 tenants that were reviewed for eligibility during 2025. All active tenants and participants have a Form HUD-50058, which is filed annually. MTW Demonstration Program, Housing Voucher Cluster and Section 8 Project-Based Cluster – The Authority conducted 3,044 quality control reviews during fiscal year 2025. Identification as a Repeat Finding, if Applicable: MTW Demonstration Program – This finding is a repeat of finding 2024-001 from the prior year. Housing Voucher Cluster and Section 8 Project-Based Cluster – This finding is not a repeat finding from the prior year. Recommendation: MTW Demonstration Program, Housing Voucher Cluster and Section 8 Project-Based Cluster – The Authority should strengthen policies, procedures, and internal controls to ensure ineligible tenants or participants are not inappropriately allowed to participate in federal programs and reporting to HUD is complete and accurate. Views of Responsible Officials: CHA Management is in general agreement with the HCV findings, noting no ineligible HCV recipients were identified in the audit and significant process improvements had been implemented since the prior year audit. The CHA agrees with the Public Housing and RAD findings. Overall, the CHA will strengthen controls over eligibility, documentation, recertification, and HUD-50058 reporting through enhanced quality control reviews, a full tenant file audit, updated procedures, and improved tracking and training.

Finding 2025-002 N. Special Tests and Provisions: N16. Environmental Contaminants Testing and Remediation Identification of the Federal Program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2025 through December 31, 2025 Program No.: IL002-01-00025D Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): The Uniform Guidance 2 CFR section 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 24 CFR section 5.703 states, “To ensure that all residents live in safe, habitable dwellings, the items and components located inside the building, outside the building, and within the units of HUD housing must be functionally adequate, operable, and free of health and safety hazards. The standards under this section apply to all HUD housing.” Condition: Forty failed uniform physical condition standards (UPCS) inspections and 40 failed environmental inspections were selected for compliance testing out of the total 5,997 failed UPCS inspections and 1,108 failed environmental inspections, respectively, reported by the Authority. Internal controls were not in place to ensure that failed UPCS and environmental inspections were remediated or remediated timely. For 33 of the 40 (82.5%) failed UPCS inspections and 39 of the 40 (97.5%) failed environmental inspections tested for compliance, the Authority did not maintain adequate supporting documentation to evidence that the safety/environmental concern from the failed inspection was remediated or remediated in a timely manner. The nature of the issues is as follows: • For four failed UPCS inspections sampled, remediation was not completed. • For 22 failed UPCS inspections sampled, remediation was not completed timely. • For seven failed UPCS inspections sampled, part of the remediation was not completed and the other part was not completed timely. • For 39 failed environmental inspections sampled, the remediation was not completed in a timely manner. Cause: Internal controls were not in place over the follow-up of work orders related to failed UPCS and environmental inspection reports to ensure the identified safety/environmental concerns were remediated or remediated in a timely manner. Effect or Potential Effect: HUD housing may not meet the physical condition standards and environmental contaminants may not be remediated or remediated timely. Questioned Costs: None. Context: The Public Housing program had a total of 15,926 UPCS inspections performed during the year ended December 31, 2025, of which 5,997 were failed inspections that required remediation, 6,029 passed or passed with comments, 3,336 were inconclusive, 560 were canceled, and 4 were no show. The Public Housing program had a total of 1,108 environmental inspections performed during the year ended December 31, 2025. Identification as a Repeat Finding, if Applicable: This finding is a repeat of finding 2024-002 from the prior year. Recommendation: The Authority should implement internal controls over the monitoring of failed UPCS and environmental inspections to ensure that identified safety/environmental concerns are remediated or remediated in a timely manner. Adequate supporting documentation should be maintained of all remediation activities. Views of Responsible Officials: CHA Management agrees and had recently implemented and staffed a Green and Healthy Homes initiative that is actively addressing these concerns with subject matter experts. Specifically, the CHA will further reinforce environmental and inspection-related compliance by strengthening work-order controls, formalizing standard operating procedures, expanding environmental vendor oversight, and delivering ongoing training and quality-assurance reviews.

Finding 2025-003 N. Special Tests and Provisions: N4. NSPIRE/Housing Quality Standards Inspections Identification of the Federal Programs: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Section 8 – Housing Choice Vouchers (HCV) and Rental Assistance Demonstration (RAD) Program Year: January 1, 2025 through December 31, 2025 Program No.: Multiple Federal Assistance Listing Numbers: 14.871 and 14.879 Federal Program Name: Housing Voucher Cluster Section 8 – Housing Choice Vouchers (HCV) – Veterans Affairs Supporting Housing and Emergency Housing Vouchers Mainstream Vouchers Program Year: January 1, 2025 through December 31, 2025 Program No.: Multiple Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): The Uniform Guidance 2 CFR section 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” “MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the Secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))).” “The PHA must inspect the unit leased to a family at least biennially to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)).” The Authority performs inspections biennially, as per the Authority’s approved HCV Administrative Plan. Condition: MTW Demonstration Program – For 11 of 40 (27.5%) inspections sampled to test the Authority’s internal controls to ensure inspections are completed in accordance with the Authority’s HCV Administrative Plan and meet housing quality standards (HQS), we noted that the inspections completed by the Compliance Specialist in fiscal year 2025 were not conducted in accordance with the required biennial time frame. Based on the date of the prior inspections, the inspections were not conducted within the two years required by the HCV Administrative Plan. Housing Voucher Cluster – For 7 of 40 (17.5%) inspections sampled to test the Authority’s internal controls to ensure inspections are completed in accordance with the Authority’s HCV Administrative Plan and meet housing quality standards (HQS), we noted that the inspections completed by the Compliance Specialist in fiscal year 2025 were not conducted in accordance with the required biennial time frame. Based on the date of the prior inspections, the inspections were not conducted within the two years required by the HCV Administrative Plan. Cause: MTW Demonstration Program and Housing Voucher Cluster – The Authority’s internal control, whereby a knowledgeable Compliance Specialist (i.e., Inspector) performs a biennial inspection of the unit and completes a standardized inspection checklist to confirm the unit meets the housing quality standards, was not operating effectively during the fiscal year. Effect or Potential Effect: MTW Demonstration Program and Housing Voucher Cluster – HQS inspections may not be conducted biennially in accordance with the Authority’s HCV Administrative Plan. Questioned Costs: MTW and Housing Voucher Cluster – None. Context: MTW Demonstration Program – There were 27,055 HQS inspections for the HCV program under the MTW during the fiscal year ended December 31, 2025. Housing Voucher Cluster – There were 1,723 HQS inspections for the Housing Voucher Cluster programs during the fiscal year ended December 31, 2025. Identification as a Repeat Finding, if Applicable: MTW Demonstration Program – The finding is a repeat of finding 2024-004 from the prior year. Housing Voucher Cluster – This finding is not a repeat finding from the prior year. Recommendation: MTW Demonstration Program and Housing Voucher Cluster – The Authority should follow its established internal control over HQS inspections as outlined in its HCV Administrative Plan. Views of Responsible Officials: CHA Management generally agrees and noted that CHA personnel were generally found to be consistent and timely in requesting tenants to engage in the inspection process. The delays were primarily attributed to tenant failures to respond. Nevertheless, the CHA will ensure HQS/NSPIRE inspections are scheduled and completed on a timely basis by reviewing contractor processes, updating guidance, and using Yardi/Power BI reporting to monitor compliance.

Finding 2025-004 N. Special Tests and Provisions: H6. Housing Assistance Payment Identification of the Federal Programs: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Section 8 – Housing Choice Vouchers (HCV) and Rental Assistance Demonstration (RAD) Program Year: January 1, 2025 through December 31, 2025 Program No.: Multiple Federal Assistance Listing Numbers: 14.871 and 14.879 Federal Program Name: Housing Voucher Cluster Section 8 – Housing Choice Vouchers (HCV) – Veterans Affairs Supporting Housing and Emergency Housing Vouchers Mainstream Vouchers Program Year: January 1, 2025 through December 31, 2025 Program No.: Multiple Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): The Uniform Guidance 2 CFR section 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” “The PHA must pay a monthly HAP on behalf of the family that corresponds with the amount on line 12u of the HUD-50058. This HAP amount must be reflected on the HAP contract and HAP register (24 CFR section 982.158 and 24 CFR Part 982, Subpart K).” A “fully executed HAP” for the HCV Program means that the Housing Assistance Payments contract between the landlord (owner) and the Public Housing Agency (PHA) has been signed by both parties, signifying that the landlord has agreed to lease a unit to a voucher holder and the PHA has approved the unit and will provide housing assistance payments to the landlord on behalf of the tenant, with all necessary documents and conditions met according to HUD regulations. Similarly, a “tenancy addendum” is considered fully executed when both the landlord and tenant have signed the document, signifying their agreement to the additional terms and conditions outlined within it, which are now legally binding and part of the overall lease agreement; essentially, all parties involved have completed their required actions by signing the addendum. The PHA is required to accurately determine family income, adjusted income, tenant rent, and housing assistance payments (HAP) in accordance with HUD Housing Choice Voucher (HCV) Program requirements. Housing assistance payments must be disbursed in the proper amount based on the family’s eligibility, income determination, utility allowance, and approved contract rent. 24 CFR Part 982, Subpart K, section 982.516 (f) states “Accuracy of family income data. The PHA must establish procedures that are appropriate and necessary to assure that income data provided by applicant or participant families is complete and accurate. The PHA will not be considered out of compliance with the requirements in this section solely due to de minimis errors in calculating family income but is still obligated to correct errors once the PHA becomes aware of the errors. A de minimis error is an error where the PHA determination of family income deviates from the correct income determination by no more than $30 per month in monthly adjusted income ($360 in annual adjusted income).” Condition: MTW Demonstration Program – For 34 of 40 (85%) participants with a corresponding housing assistance payment (HAP) paid to the landlord during fiscal year 2025, we noted compliance exceptions of the following nature: • For one (RAD) of the 34, the HAP Register was not updated to reflect the correct HAP in a timely manner. • For 29 (HCV) of the 34, while the lease was executed between the landlord and the tenant, the Tenancy Addendum (HUD-52641-A) was not attached to the lease, and therefore not fully executed. • For one (RAD) of the 34, the “Amendment to the HAP Contract – Owner” with the updated HAP was not completed or on file. • For seven (one RAD and six HCV) of the 34, there was a missed reexamination date and therefore the HAP determination used outdated income. Adequate support was not provided for the missed reexamination date to evidence that the Authority was following its policies and procedures when a participant fails to comply with the Housing Choice Voucher program family obligations. Housing Voucher Cluster – For 28 of 40 (70%) participants with a corresponding housing assistance payment (HAP) paid to the landlord during fiscal year 2025, we noted compliance exceptions of the following nature: • For all 28, while the lease was executed between the landlord and the tenant, the Tenancy Addendum (HUD-52641-A) was not attached to the lease, and therefore not fully executed. Cause: MTW Demonstration Program – The Authority lacked an adequate internal control to ensure HAP Tenancy Addendums were completed, signed, and fully executed. In addition, the Authority’s internal control over HAP determination was not operating effectively during the fiscal year. Specifically, the HAP Register was not updated timely, and reexaminations were not completed by the required anniversary date and as a result, HAP continued to be calculated using income information that was no longer current. Housing Voucher Cluster – The Authority lacked an adequate internal control to ensure HAP Tenancy Addendums were signed and fully executed. Effect or Potential Effect: MTW Demonstration Program – The HAP Tenancy Addendums may not be completed or fully executed. The HAP Register may not properly reflect HAP. HAP may not be calculated using updated income. Housing Voucher Cluster – HAP Tenancy Addendums may not be completed or fully executed. Questioned Costs: MTW Demonstration Program – A total of $76,616 related to Assistance Listing No. 14.881, representing the seven participant files with HAP that used outdated income. The questioned costs were calculated using the monthly HAP paid the landlord during fiscal year 2025 multiplied by the number of months for which the HAP determination was based on outdated income. Housing Voucher Cluster – None. Context: HAP reported in the schedule of expenditures of federal awards totaled $762,336,909 for the year ended December 31, 2025, for the MTW Demonstration Program. HAP reported in the schedule of expenditures of federal awards totaled $37,392,356 for the year ended December 31, 2025, for the Housing Voucher Cluster. Identification as a Repeat Finding, if Applicable: MTW Demonstration Program and Housing Voucher Cluster – This finding is not a repeat finding from the prior year. Recommendation: MTW Demonstration Program and Housing Voucher Cluster – The Authority should implement internal controls over the execution of HAP Tenancy Addendums. The Authority should follow its established policies, procedures and internal controls over HAP determinations. Views of Responsible Officials: CHA Management asserts its position that the agency is in compliance with the instructions provided by HUD, noting that participant signatures are not required for the HUD 52641A Tenancy Addendum to be executed. That guidance states that the signature on the HAP contract is sufficient to execute the Tenancy Addendum. However, CHA also recognizes that the auditors’ position is based on the explicit text documented on page 4-14.871-22 in the 2025 OMB Compliance Supplement (2 CFR Part 200, Appendix XI Compliance Supplement), which states that signatures are required on the Addendum itself to be properly executed. Nevertheless, according to the HUD instructions provided to the CHA, all HAP contracts were properly executed, and no further action is deemed necessary in that regard. The CHA will seek clarification from HUD and the authors of the 2025 OMB Compliance Supplement to resolve this apparent discrepancy in guidance.

Finding 2025-006 I. Procurement, Suspension and Debarment Identification of the Federal Program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2025 through December 31, 2025 Program No.: IL002-01-00025D Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): The Uniform Guidance 2 CFR section 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” The Uniform Guidance 2 CFR section 200.318, general procurement standards states “(a) Documented procurement procedures. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services.” The Uniform Guidance 2 CFR section 200.319 states that “all procurement transactions under the Federal award must be conducted in a manner that provides for full and open competition and is consistent with the standards of this section and §200.320.” The Authority’s procurement policy for an intergovernmental purchasing agreement requires an agency contract and amendments. The Authority’s internal control procedures require procurements of more than $500,000 to have Board of Commissioners’ approval. 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 non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. 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 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 180.300). Condition: For one of nine (11.1%) procurement transactions and one of 40 (2.5%) procurement transactions tested for internal controls over and compliance with federal procurement compliance requirements, respectively, we identified one procurement exception. Specifically, the procurement lacked Board of Commissioners approval, and no executed agreement or amendment existed for fiscal year 2025. Therefore, the Authority was unable to demonstrate compliance with Uniform Guidance procurement standards. For three of 40 (7.5%) procurement transactions tested for internal controls over and compliance with the suspension and debarment compliance requirement, the suspension and debarment check was not performed or retained on file before entering the covered transaction. Therefore, the Authority was unable to demonstrate compliance with Uniform Guidance suspension and debarment standards. Cause: The Authority’s internal controls over the review and approval of procurement transactions and the review and retention of suspension and debarment checks were not operating effectively. Effect or Potential Effect: Procurements may not be made in accordance with Uniform Guidance procurement standards. Contractors/vendors may be suspended or debarred. Questioned Costs: A total of $6,412,600 related to Assistance Listing No. 14.881, representing one procurement with a procurement exception (invoices totaling $6,412,600). Context: The one procurement and three suspension and debarment transactions totaled $8,443,452 out of 40 procurement transactions sampled for compliance totaling $38,544,823. Public Housing expenditures reported in the schedule of expenditures of federal awards were $253,935,873 for the year ended December 31, 2025, representing 21.32% of total federal expenditures under Assistance Listing No. 14.881 of $1,190,937,657. Identification as a Repeat Finding, if Applicable: The finding is a partial repeat of finding 2024-006 from the prior year. Recommendation: The Authority should follow its established internal controls over the review and approval of procurement transactions and the review and retention of suspension and debarment checks. Views of Responsible Officials: CHA Management agrees. This finding pertains to an intergovernmental contractual agreement with the Chicago Police Department, which was under renegotiation and not yet approved by the Board. Although the suspension and debarment check had been performed, it was not documented in accordance with CHA procedures. Going forward, the CHA will ensure compliance with its existing procurement process and procedures.

PART II: FINDINGS RELATED TO THE REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Finding #25-001 – Significant Deficiency in Internal Control over Financial Reporting: Suspension & Debarment Program Names: Gypsum Sewer Collection Main Planning & Replacement CFDA Titles and Numbers: 15.437 Energy & Mineral Impact Assistance Programs 9693 & 9809 Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2025 Condition: The Town of Gypsum, Colorado, does not have policies and procedures in place to ensure that they do not contract with or make awards to parties that are suspended or debarred, resulting in a lack of internal controls over Federal procurement. Criteria or Specific Requirement: The Town of Gypsum, Colorado, must comply with procurement, suspension & debarment standards set out at 2 CFR section 200.303 et al. within Uniform Guidance. Per 2CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2CFR 200.213 Suspension and Debarment restricts awards, subawards, and contracts within certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2CFR 180.300 states that an entity may determine suspension and debarment status by: (a) Checking SAM (System for Award Management) Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person Questioned Costs: N/A Context: Although the Town of Gypsum, Colorado, does not have policies or procedures in place to ensure that they do not contract with or make subawards to parties that are suspended or debarred, we did not identify any instances where Federal grant awards were paid to suspended or debarred vendors for 5 of 5 suspension and debarment transactions selected for testing. However, 2 of 5 did not hold an active registration with Sam.gov. Cause: Management was not aware of the requirements for determining suspension and debarment status under 2CFR section 180 within Uniform Guidance. Effect: The Town of Gypsum, Colorado, is at risk for noncompliance with Federal grants as it relates to suspension and debarment. G8 Finding #25-001 – Significant Deficiency in Internal Control over Financial Reporting: Suspension & Debarment - continued Recommendation: We recommend that the Town of Gypsum, Colorado, implement policies and procedures to ensure that potential vendors are not suspended or debarred prior to contracting with them for goods and services. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will implement policies and procedures to ensure that potential vendors are not suspended or debarred prior to contracting with them for goods and services.

PART III: FINDINGS RELATED TO THE REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE Finding #25-002 – Suspension and Debarment Program Names: Gypsum Sewer Collection Main Planning & Replacement CFDA Titles and Numbers: 15.437 Energy & Mineral Impact Assistance Programs 9693 & 9809 Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2025 Condition: The Town of Gypsum, Colorado, does not have policies and procedures in place to ensure that they do not contract with or make awards to parties that are suspended or debarred, resulting in a lack of internal controls over Federal procurement. Criteria or Specific Requirement: The Town of Gypsum, Colorado, must comply with procurement, suspension & debarment standards set out at 2 CFR section 200.303 et al. within Uniform Guidance. Per 2CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2CFR 200.213 Suspension and Debarment restricts awards, subawards, and contracts within certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2CFR 180.300 states that an entity may determine suspension and debarment status by: (a) Checking SAM (System for Award Management) Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person Questioned Costs: N/A Context: Although the Town of Gypsum, Colorado, does not have policies or procedures in place to ensure that they do not contract with or make subawards to parties that are suspended or debarred, we did not identify any instances where Federal grant awards were paid to suspended or debarred vendors for 5 of 5 suspension and debarment transactions selected for testing. However, 2 of 5 did not hold an active registration with Sam.gov. Cause: Management was not aware of the requirements for determining suspension and debarment status under 2CFR section 180 within Uniform Guidance. G9 Finding #25-002 – Suspension and Debarment - continued Effect: The Town of Gypsum, Colorado, is at risk for noncompliance with Federal grants as it relates to suspension and debarment. Recommendation: We recommend that the Town of Gypsum, Colorado, implement policies and procedures to ensure that potential vendors are not suspended or debarred prior to contracting with them for goods and services. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will implement policies and procedures to ensure that potential vendors are not suspended or debarred prior to contracting with them for goods and services.

Finding 2025-003: Significant Deficiency - Control and Compliance Over Allowable Costs Program: Disaster Grants - Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Pass-Through Agency: Minnesota Department of Public Safety Criteria: In accordance with 2 CFR §200.303 and 200.403 through 200.405, the County is required to establish and maintain effective internal control over the federal award. Costs charged to a federal award must be allowable under the applicable federal cost principles, including being necessary and reasonable for the performance of the award, allocable to the award, and adequately documented with review and approval. Condition: Of the forty (40) expenditures tested, five (5) did not have sufficient evidence of review and approval or contained an error that was not identified during the review process. Cause: The County relied on in-person verification and approval for certain expenditures but did not consistently retain documentation evidencing the review performed. In addition, for one expenditure, the total invoice amount was erroneously entered as the unit price, and the review performed was not sufficiently detailed to identify and correct the error before the expenditure was claimed. Context: Four (4) of the exceptions were related to force account equipment costs for which the County did not retain documentation evidencing review and approval. One (1) exception involved an input error that caused the amount claimed as an eligible cost to exceed the amount actually incurred, resulting in questioned costs identified below. The sample was not statistically valid. Effect: Without adequate review controls and documentation evidencing the review performed, there is an increased risk that unsupported, inaccurate, or otherwise unallowable costs could be charged to the federal program and not detected timely. Such costs may be subject to disallowance and repayment to the grantor. Questioned Costs: $5,301 Recommendation: The County should strengthen its internal controls over expenditures claimed for reimbursement under the federal program. The County should require and retain documentation evidencing the review and approval of expenditures and ensure that the review includes verification of amounts claimed to underlying supporting documentation. The review should be performed at a sufficient level of detail to identify errors or irregularities before costs are claimed to the program. Views of Responsible Officials: The County will implement a documented review and approval process for expenditures included in reimbursement requests. Supporting documentation will be reviewed prior to submission to verify that amounts claimed agree to underlying records, including invoices, force account equipment records, and other applicable supporting documentation. Evidence of the review and approval will be retained with the reimbursement documentation. The County has reached out to the Minnesota Department of Public Safety to update the claimed costs as necessary for the mathematical error.

2025-003 - Federal Transit Cluster - Federal Transit - Formula Grants and State of Good Repair Grants Program - Assistance Listing No. 20.507 and 20.525; For the year ended December 31, 2025 Criteria: Uniform Guidance requires non-Federal entities to establish and maintain effective internal control over Federal awards and to maintain financial management systems that provide accurate, current, and complete disclosure of the financial results of each Federal award, including the source and application of funds (2 C.F.R. §§ 200.303 and 200.302). Condition: For the Federal Transit Cluster, the County did not consistently perform and document timely reconciliations between federal award activity (e.g., reimbursement claims/drawdowns), underlying eligible expenditures, and amounts recorded in the general ledger and reported on the Schedule of Expenditures of Federal Awards (SEFA). In addition, delays in submitting reimbursement claims by County departments contributed to improper timing of revenue recognition, as federal revenue was not consistently recognized in the period aligned with the underlying eligible expenditure activity. Cause: Controls were not adequately designed and/or consistently implemented to ensure that: departments prepared and submitted Federal Transit reimbursement claims timely and in accordance with award requirements; claim/drawdown status and supporting documentation were centrally tracked and communicated to the finance function; periodic reconciliations were performed between (1) claims/drawdowns, (2) supporting expenditure detail, and (3) the general ledger and SEFA; and period-end cutoff procedures evaluated whether federal revenue and related receivables/deferred inflows (as applicable) were recorded in the proper period based on underlying eligible expenditures. Effect of Condition: The lack of timely reconciliations and delays in claiming increase the risk that Federal Transit revenues, receivables/deferred inflows, and expenditures could be misstated and that SEFA reporting could be inaccurate. In addition, these conditions increase the risk of noncompliance with Uniform Guidance financial management and internal control requirements that may not be detected and corrected on a timely basis. Recommendation: The County should strengthen controls over Federal Transit grant financial management, claiming, and reporting by: implementing a standardized claiming calendar with assigned responsibilities and due dates by department; establishing a centralized tracking log for claims/drawdowns (submitted, approved, paid, pending) including required supporting documentation; performing and documenting routine reconciliations between claims/drawdowns, supporting expenditure detail, and the general ledger and SEFA; requiring documented supervisory review of reconciliations and period-end revenue cutoff (including evaluation of receivables/deferred inflows, as applicable); and providing periodic training to departmental and finance personnel on claiming requirements, reconciliation procedures, and period-end cutoff for federal awards.

Finding COVID-19 – 2025-001 Allowable Costs/Cost Principles Identification of the federal program: Federal agency: U.S. Department of Homeland Security Pass-through program from: State of New York Division of Homeland Security and Emergency Services Federal Assistance Listing Number: 97.036 COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Contract/pass-through entity identifying number: 140215 Award period of performance: January 20, 2020 – July 1, 2022 Criteria or specified requirement (including statutory, regulatory, or other citation): 2 CFR section 200.303 of the Uniform Guidance requires that non-federal entities receiving federal awards establish, document and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The 2 CFR section 200.303 indicates that the internal controls required to be established by a non-federal entity receiving federal awards 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. Section III – Federal Award Findings and Questioned Costs (continued) 2 CFR section 200.403 states the following: “Costs must meet the following criteria 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 non-Federal entity; (d) be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost; (e) be determined in accordance with generally accepted accounting principles; (f) not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period; (g) be adequately documented; and (h) administrative closeout costs may be incurred until the due date of the final report(s), 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.” Condition: The New York and Presbyterian Hospital (the Hospital) has processes and internal controls in place to ensure that costs submitted to the Federal Emergency Management Agency (FEMA) in relation to the Disaster Grants – Public Assistance program were eligible under FEMA’s provisions and were allowable COVID-19-related expenses. These internal controls include ensuring completeness and accuracy of the costs to ensure the costs comply with the terms and conditions of the award. However, the Hospital’s internal controls did not identify that management inadvertently included certain pharmacy costs under project number 140215 that were not paid by the Hospital. Cause: Pharmacy costs include a very high volume of primarily low cost items and, as a result, a separate process was developed by the Hospital for accumulating such activity as compared to other costs that were submitted to FEMA for reimbursement. When compiling pharmacy costs for project number 140215, management utilized the pharmacy cost information derived from a report from its materials management system detailing purchase orders that were placed by the Hospital with its primary vendor for medications and supplies used in the treatment of patients during the COVID-19 pandemic. In the normal course of business, the pharmacy vendor may modify the fulfillment of purchase orders for medications and supplies that are not available or are available at different quantities than requested in the purchase order. The Hospital’s internal controls specific to this pharmacy activity did not include a step for management to verify that the costs derived from the report detailing purchase orders placed (which were submitted for FEMA reimbursement) were actually paid. Effect or potential effect: Due to the above, the Hospital included certain costs under project number 140215 that were not paid. Accordingly, there is an overstatement of the total pharmacy costs reported in project number 140215, and the Hospital was reimbursed by FEMA for certain costs that it did not incur, resulting in questioned costs. Questioned costs: Known questioned costs observed in the audit sample selections totaled $235. This amount represents the difference between the amount reimbursed by FEMA and the amount paid by the Hospital for certain pharmacy costs to the specific vendor. Based on the audit procedures performed, likely questioned costs exceed $25,000. Context: During our testing of expenditures underlying FEMA project number 140215, we selected a random sample of 60 expenditures and 5 key item expenditures from the project period (activity during 2020 – 2022) related to FEMA obligations that were approved in calendar year 2025. In our tests of compliance and internal controls over compliance, we identified certain expenditures for activity with the specific pharmacy vendor that were included under project number 140215 (and subsequently paid to the Hospital by FEMA) that were not incurred and expended by the Hospital. For 4 of the sample items tested, the amount reimbursed exceeded the actual amount paid by approximately $235. The terms and conditions of the FEMA award require recipients to submit eligible costs incurred and paid, thus this issue results in questioned costs and a control deficiency. The total FEMA expenditures for project number 140215 reported on the Hospital’s Schedule of Expenditures of Federal Awards for the year ended December 31, 2025 is $340,396,170, which includes approximately $12.5 million of total costs submitted related to the specific pharmacy vendor referred to above. Management performed a further review of pharmacy cost activity for the specific vendor as a result of this issue and determined that likely questioned costs for certain items that were submitted exceed $25,000. Management also informed us that they identified certain eligible costs from the applicable period that were not submitted for FEMA reimbursement and therefore were not reimbursed. Identification as a repeat finding, if applicable: The finding is not a repeat finding. Recommendation: Management should consider the control deficiency described above to the extent there is applicability to other FEMA submissions or other federal programs in the future. Additionally, management should address with FEMA and remediate as appropriate the noncompliance for reimbursed amounts that were not expended by the Hospital. View of responsible officials: Management agrees with the finding.

Finding 2025-003 – Late Submission of Reporting Package and Data Collection Form Federal Reporting Requirement: Uniform Guidance – Subpart F Reporting Requirements Type of Finding: Significant Deficiency in Internal Control Over Compliance Noncompliance with Federal Reporting Requirements No Questioned Costs Criteria: Under 2 CFR § 200.512(a)(1), the audit, Data Collection Form, and reporting package must be submitted to the Federal Audit Clearinghouse within 30 calendar days after the auditee receives the auditor’s report or nine months after the end of the audit period, whichever is earlier. In addition, 2 CFR § 200.303 requires recipients and subrecipients to establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance of compliance with applicable Federal statutes, regulations, and the terms and conditions of Federal awards. Recipients and subrecipients are also required to evaluate and monitor compliance and take prompt action when instances of noncompliance are identified. Condition: The Organization did not timely submit its reporting packages and Data Collection Forms for the two preceding audit periods. For the year ended December 31, 2023, the reporting package was due no later than September 30, 2024. The Organization submitted the reporting package to the Federal Audit Clearinghouse on March 15, 2025, 166 days after the required submission date. For the year ended December 31, 2024, the reporting package was due no later than September 30, 2025. The Organization submitted the reporting package to the Federal Audit Clearinghouse on March 13, 2026, 164 days after the required submission date. Accordingly, the Organization did not comply with the reporting deadlines prescribed by 2 CFR § 200.512(a). Cause: The Organization did not have sufficiently effective procedures in place to monitor the status and timely completion of the annual audit and related Federal Audit Clearinghouse submission. Delays in completing the annual audit, including delays associated with obtaining and providing information necessary for completion of the audit, contributed to the late submissions. Effect or Potential Effect: Failure to timely submit the audit, reporting package, and Data Collection Form constitutes noncompliance with the reporting requirements of 2 CFR § 200.512. Late submission delays the availability of required audit information to Federal agencies and pass-through entities and may affect the Organization’s ability to qualify as a low-risk auditee in future periods or otherwise result in increased Federal or pass-through entity oversight. Recommendation: We recommend that management maintain a formal compliance calendar identifying the applicable Federal Audit Clearinghouse submission deadline and assign responsibility for monitoring compliance with that deadline. Management should regularly monitor the status of the annual audit, timely provide requested information to the auditors, promptly address outstanding audit items, and communicate with the auditors throughout the audit process to facilitate completion of the audit and submission of the reporting package and Data Collection Form within the required timeframe. Views of Responsible Officials and Planned Corrective Action: Management has added the Federal Audit Clearinghouse submission deadline to its annual compliance calendar and assigned responsibility for monitoring the deadline to the Executive Director. Management will actively monitor the progress of the annual audit, timely respond to auditor requests, and communicate with the auditors regarding outstanding items that could delay completion of the audit. The Board will provide oversight of the process. Management intends for these procedures to facilitate timely completion of the annual audit and submission of the reporting package and Data Collection Form within the timeframe required by Uniform Guidance. Repeat Finding: Yes. This finding is a repeat of Finding 2024-006.

FINDING 2025-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2020 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2024-001. INDIANA STATE BOARD OF ACCOUNTS 14 WARRICK COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that vendors or subrecipients are not suspended, debarred, or otherwise excluded from receiving federal funds. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification can be done by checking SAM Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the County, in order to review the procedures in place verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the County disclosed that the County Administrator reviews the SAM website to ensure that a vendor does not have any exceptions. The Administrator then prints a copy of the SAM website search, signs and dates the page, and includes it in the vendors' file for the County Commissioners' potential review. However, the County lacked effective monitoring internal controls, and there was no evidence that an independent secondary review or approval of these verifications was actually performed prior to executing the contracts. A total of 15 covered transactions exceeding $25,000 for goods or services that were paid using COVID-19 - Coronavirus State and Local Fiscal Recovery Funds award were identified during the audit period, and 4 were selected for testing. The County searched the federal database; however, the searches generated a "No matches found" result because the vendors did not maintain an active registration profile in the system. The County did not perform secondary follow-up procedures or obtain alternative compliance documentation to verify the suspension and debarment status prior to executing the contracts. The amount paid to all 4 vendors selected for testing was $254,641. 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). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 15 WARRICK COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The County Administrator performed the initial search on the SAM website; however, management was not aware that a "No matches found" search screen caused by a vendor's lack of an active registration profile did not constitute a valid suspension and debarment verification. Additionally, the County's review process was not operating effectively to independently verify documentation prior to contract execution. The County lacked adequate monitoring internal controls to ensure that secondary verification methods, such as collecting a direct vendor certification or adding a compliance clause to the contract, were executed when a vendor could not be located in the federal database. Effect The lack of an effective internal control system enabled material noncompliance to occur and remain undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could lead to contracting with vendors who are suspended or debarred from receiving federal grant funding. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure that appropriate suspension and debarment verification procedures are performed for vendors and subrecipients prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2020 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2024-002. INDIANA STATE BOARD OF ACCOUNTS 16 WARRICK COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The County was required to submit a quarterly Project and Expenditure (P&E) report to the U.S. Department of the Treasury (Treasury). The P&E report data to be submitted included, but was not limited to, current period and total cumulative obligations and current period and total cumulative expenditures. The County had not designed, nor implemented, a system of internal controls to ensure that the annual P&E report was complete and accurately submitted. The County Administrator prepared the annual P&E report based on reports provided by the County Auditor and submitted the reports to the County Commissioners for its review and approval. However, the internal control was not effective as the review of the quarterly P&E report was not effective to prevent or detect and correct material noncompliance. During a comprehensive review of the 2025 annual P&E report submitted to the federal portal, the annual P&E reported figures were not supported by the County's ledger and accounting records. The specific variances identified were as follows:  The 2024 quarter 4 P&E report cumulative expenditures were understated by $676,118, and the current period expenditures were understated by $19,802.  The 2025 quarter 1 P&E report cumulative expenditures were understated by $432,417, and the current period expenditures were understated by $156,408.  The 2025 quarter 2 P&E report cumulative expenditures were understated by $739,247, and the current period expenditures were understated by $334,126.  The 2025 quarter 3 P&E report cumulative expenditures were understated by $683,723, and the current period expenditures were overstated by $78,211. These variances were discussed with County management, who stated they were already aware that the numbers submitted through the federal portal did not match its local financial records. 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 17 WARRICK COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause The County Administrator reported that, due to persistent error messages in the submission system, the financial figures were manually modified to enable successful submission without performing a formal reconciliation to the general ledger. In addition, the County management failed to establish a secondary review process, provide proper administrative oversight, or perform any verification of the portal entries against the County's accounting records prior to submission. Effect Without a proper system of internal controls in place that operated effectively, the County did not file accurate quarterly P&E reports as required under the federal award. As a result, material noncompliance occurred and remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the County establish a system of internal controls and develop policies and procedures over the preparation and review of federal reports to ensure appropriate reviews, approval, and oversight take place. Additionally, management should develop policies and procedures to ensure that the County provides the Treasury with complete and accurate information for all reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding 2025-003 I. Procurement and Suspension and Debarment Identification of the Federal Program: Grantor: Department of Agriculture, Department of Defense, National Aeronautics and Space Administration, Promotion of the Arts Grants to Organizations and Individuals, National Science Foundation, Department of Veteran Affairs, Environmental Protection Agency, Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing No.: Various Criteria or Specific Requirement: 2 CFR 200.303 of the Uniform Guidance states the following regarding internal control: “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 200.214 – Suspension and debarment – Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities under 2 CFR 180. 2 CFR 180.300 further states that non-federal entities are responsible for verifying the eligibility of vendors and contractors prior to entering into covered transactions. Condition: Management was unable to provide evidence of a control being consistently performed throughout the entire audit period to address the risk that the System may enter into a transaction with an entity that is suspended, debarred, or otherwise excluded, due to the timing of the implementation of the prior year corrective action plan. We noted the following matters during our testing of suspension and debarment: (a) The System did not obtain a detailed listing of all vendors screened with related results from its third-party service provider. The System received a summarized results report with the total number of vendors screened for suspension and debarment by the third-party service provider. However, a reconciliation was not performed and retained between the vendors provided by the System and the service provider’s summarized results report to evidence that all vendors submitted were screened. (b) The System did not retain evidence of review of the results provided by the third-party service provider, including evidence that unverified vendors or those that were indicated as excluded were investigated and evaluated by the System. (c) The System did not retain evidence of review of new vendors being screened for suspension and debarment prior to entering into a transaction. Cause: The System did not have a process in place for the entire year to review the results of screened vendors to verify that all vendors are screened. Effect or Potential Effect: The lack of effective controls over suspension and debarment has the potential to result in noncompliance with the requirement. By not performing a reconciliation between the listings submitted by the System and the results provided by the third-party service provider, there is a risk that vendors are not screened by the third-party service provider and such vendors used for federally funded activities may be suspended or debarred. Questioned Costs: None identified. Context: Management was unable to provide evidence of a control being consistently performed throughout the entire audit period, as described in the Condition section above. Identification as a repeat finding, if applicable: Yes. Prior year finding 2024-008 Recommendation: Management should enhance the design of the System’s controls related to the screening of new vendors prior to entering into transactions, as well as the on-going monitoring and screening of its vendors for suspension and debarment. In addition, management should perform and retain documentation to support reconciliation of the vendor list submitted to the third-party service provider and the results obtained to support that the screening process is completed for all vendors and that no suspended or debarred vendors are utilized by the System prior to entering into transactions. Views of Responsible Officials: Mount Sinai has taken corrective actions to address this issue which were completed by December 31, 2025. During 2025, the Health System created a process to ensure a vendor is not considered suspended or debarred. All existing vendors in the vendor master file, as well as all newly onboarded vendors through our credentialing process, are screened monthly through our designated sanction screening provider. In addition, we have implemented a new monthly manual control to review, confirm, and reconcile our vendor master against the files submitted to our sanction-screening provider. Our Internal Audit team also performs periodic, independent sanction screening checks on a sample of vendors to validate the accuracy and completeness of the third party screening results.

2025-005 – Hearts for the Invisible Charlotte Coalition did not consistently maintain documentation of review and approval in accordance with established policies. Federal Agency: Department of the Treasury Assistance Listing Number: 21.027 Award Period: 05/01/2023 to 04/30/2026 Type of Finding: Significant Deficiency in Internal Controls Over Compliance for Each Major Program Criteria or Specific Requirement: In accordance with 2 CFR § 200.303, non-Federal entities are required to establish and maintain effective internal controls over Federal awards and ensure that established policies and procedures are consistently followed. Controls should provide appropriate review, approval, oversight, and documentation over transactions charged to Federal awards. Condition: During our audit, we noted that the Organization did not consistently maintain documentation demonstrating that review and approval controls established by its policies were performed. Specifically, independent Board/Treasurer oversight over expenditure was not in place until the middle of 2025. Formal timesheets supporting employee time were not implemented until end of October 2025. Questioned Costs: None Context: The deficiency relates primarily to the documentation and evidence of review and approval controls during portions of 2025. Board/Treasurer oversight was implemented during the middle of the year, and formal timesheets were implemented on October 27, 2025, to strengthen payroll documentation. Cause: The Organization did not consistently implement and document the review and approval controls established by its policies during the audit period. Effect: The lack of documented review and approval increases the risk that errors or noncompliance may not be timely prevented or detected. Repeat Finding: Yes Auditor’s Recommendation: We recommend that the Organization consistently implement and document the review and approval controls established by its policies, including continued Board/Treasurer oversight over expenditures. We also recommend continued use of formal timesheets to document and support employee time. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges the finding and agrees with the recommendation. The Organization implemented Board/Treasurer oversight during the middle of 2025 and formal timesheets effective October 27, 2025. Management will continue to maintain documented review and approval controls and utilize formal timesheets to support payroll activity.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Spokane Conservation District January 1, 2025 through December 31, 2025 2025-001 The District did not have adequate internal controls for ensuring compliance with federal subrecipient monitoring and suspension and debarment requirements, and it did not comply with federal suspension and debarment requirements. Assistance Listing Number and Title: 10.727 Inflation Reduction Act Urban & Community Forestry Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: 24-DG-11062765-154 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2024-001 Background During fiscal year 2025, the District spent $774,900 in federal funds from the Inflation Reduction Act Urban & Community Forestry Program. The objective of this program is to plan for, establish, manage and protect trees, forests, green spaces and related natural resources in and near cities and towns. Of this amount, the District passed through $260,472 to two subrecipients. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Subrecipient Monitoring When the District passes on federal funds to subrecipients, federal regulations require it to monitor subrecipient activities. This includes ensuring the subrecipient receives a federal single audit when required, following up and ensuring the subrecipient takes timely and appropriate action on all audit findings, and issuing a management decision as required. The District must maintain documentation showing it performed this verification. Suspension and Debarment Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District enters into contracts or purchases goods and services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The District may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The District must verify this before entering into the contract, and must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Subrecipient Monitoring The District did not have effective internal controls to document and demonstrate it verified the two subrecipients tested received a single audit and that it followed up with the results of that audit, when necessary, as federal regulations require. We consider this internal control deficiency to be a significant deficiency. Suspension and Debarment Our audit found the District did not have adequate internal controls to verify the one contractor we tested that it paid more than $25,000 in federal funds was not suspended or debarred from participating in federal programs before purchasing from them. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Subrecipient Monitoring Although District staff said they were aware of the requirement and reviewed the Federal Audit Clearinghouse site, they could not locate documentation showing they verified whether the subrecipients received a single audit when required. Suspension and Debarment Although District staff said they were aware of the requirements, they could not locate documentation to show they verified the contractor’s suspension and debarment status. Additionally, although the District subsequently verified the contractor’s status when it received the prior audit finding for the 2024 audit, it was after purchasing from the contractor. Effect of Condition Subrecipient Monitoring The District did not retain documentation showing it verified whether the subrecipients received a single audit when required. Without documentation, the District cannot demonstrate it is properly monitoring its subrecipients and that the subrecipients complied with federal program requirements and received a single audit when required. Suspension and Debarment The District did not obtain a written certification from the contractor, insert a clause into the contract or check for exclusion records at SAM.gov to verify the contractor it paid $185,998 with federal funds was not suspended or debarred before contracting. Without adequate internal controls, the District increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the District made to an ineligible party would be unallowable, and the awarding agency could potentially recover them. The District subsequently verified the contractor was not suspended or debarred. Therefore, we are not questioning costs. Recommendation Subrecipient Monitoring We recommend the District establish internal controls to retain documentation showing it verified that subrecipients received a single audit when required. Suspension and Debarment We recommend the District strengthen its internal controls to verify all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs and maintain documentation demonstrating compliance with this requirement. District’s Response The District concurs with Finding 2025-001. The District acknowledges that although staff performed searches of the Federal Audit Clearinghouse for both subrecipients and were aware of the suspension and debarment requirements; however, the District did not retain documentation demonstrating these verifications, as required by 2 CFR 200.303, 2 CFR 200.332, and 2 CFR 200.214. Subrecipient Monitoring District staff were aware of the single audit requirements and reviewed the Federal Audit Clearinghouse for both subrecipients during the audit period; however, documentation of those verifications was not retained. The District has since followed up in writing with both subrecipients and obtained written confirmation that neither subrecipient exceeded $1,000,000 in federal expenditures during fiscal year 2025 and that neither expects to exceed the single audit threshold in fiscal year 2026. Accordingly, single audits were not required for either subrecipient. The written correspondence is retained in the subaward files. Going forward, all subrecipient monitoring activities — including Federal Audit Clearinghouse searches, single audit determinations, follow-up on audit findings, and management decisions — will be documented and retained in each subaward file at the time the verification is performed. Suspension and Debarment The District concurs that documentation was not retained for the suspension and debarment verification of the contractor paid $185,998 in federal funds. The contractor was subsequently verified as not suspended or debarred, and no further contracting activity occurred under the affected award. The District has implemented controls requiring verification of suspension and debarment status — through a SAM.gov exclusion check, a written certification from the contractor, or a contract clause — before entering into any contract or purchase expected to equal or exceed $25,000, paid in whole or in part with federal funds, consistent with 2 CFR 200.214 and 2 CFR Part 180. Documentation of each verification will be retained in the procurement file at the time of award. Corrective Action To provide sustained assurance and to address both components of this finding, the District is implementing a project management system with automated reminders and checklists covering the full life cycle of federal awards, subawards, and procurements. In addition, the district has updated its suspension and debarment policy and will formalize subrecipient monitoring documentation requirements. These updates will be incorporated into the District's annual contract and procurement training for all relevant staff. Completion is anticipated by December 31, 2026. Auditor’s Remarks We appreciate the District’s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review corrective action taken during the next audit. Applicable Laws and Regulations 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 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

2025-001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: 2024-002 Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Agriculture Program: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award Number and Year: 252MN101S2514; 2025 Pass-Through Agency: Minnesota Department of Human Services and Minnesota Department of Children, Youth, and Families Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for the State Administrative Matching Grants for the Supplemental Nutrition Assistance Program are submitted to the Minnesota Department of Human Services (DHS) through the DHS Income Maintenance DHS-2550 report on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 41 expenditures tested: • One claim included activity that was allocated on an incorrect full-time equivalent (FTE) split. • One claim was paid to an incorrect vendor and the correct vendor in the same period. Both claims were included in the quarterly report. • One claim was included on the incorrect report. The items noted above are included in the Child Support Services Activities Allowed and Unallowed, Allowable Costs/Cost Principles finding (2025-004) and the Grants to States for Medicaid Activities Allowed and Unallowed, Allowable Costs/Cost Principles, and Reporting finding (2025-005). Questioned Costs: $1,595; known questioned costs were determined based on exceptions noted from a sample of transactions tested. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities and costs and provide detailed information necessary for maintaining proper oversight over federal programs. Total expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are $661,852, consisting of 2,729 transactions. A sample of 40 expenditures was selected for testing and was then expanded to include one State Administrative Matching Grants for the Supplemental Nutrition Assistance Program expenditure included in Child Support Services testing. The sample of 41 transactions totaled $116,616. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits, and subsequently expanded. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the Health and Human Services receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the Health and Human Services correct and resubmit reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reported incorrectly. View of Responsible Official: Acknowledge

2025-002 Procurement Policy Prior Year Finding Number: N/A Year of Finding Origination: 2025 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Agriculture Program: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award Number and Year: 252MN101S2514; 2025 Pass-Through Agency: Minnesota Department of Human Services and Minnesota Department of Children, Youth, and Families Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318 states that the non-federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform with applicable federal law and the standards identified in this regulation. Condition: The Health and Human Services has written procurement policies; however, these policies do not include the required components in accordance with Title 2 U.S. Code of Federal Regulations § 200.318. Questioned Costs: None. Context: This issue was discovered during the audit of the major federal program; however, it impacts federal programs entity-wide. Written policies that reflect the specific components of federal regulations improve controls to ensure compliance with federal award requirements. Effect: Written policies and procedures that are not updated to reflect the federal procurement requirements could increase the risk of noncompliance with federal program requirements. Cause: The Health and Human Services modified the procurement policy during the year resulting in language related to several procurement requirements being excluded due to an oversight. Recommendation: We recommend the Health and Human Services include the specific components of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requirements in its written procurement policies and procedures. View of Responsible Official: Concur

2025-003 Procurement, Suspension, and Debarment Prior Year Finding Number: 2024-003 Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Agriculture Program: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award Number and Year: 252MN101S2514; 2025 Pass-Through Agency: Minnesota Department of Human Services and Minnesota Department of Children, Youth, and Families Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the Health and Human Services must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Additionally, the Health and Human Services must follow further federal guidance over full and open competition as provided in Title 2 U.S. Code of Federal Regulations § 200.319 and perform a cost or price analysis as provided in Title 2 U.S. Code of Federal Regulations § 200.324. Condition: The following exceptions were noted in the procurement testing: • For three of the small purchases tested, the Health and Human Services did not have documentation of price or rate quotations obtained from an adequate number of qualified sources detailing the history of procurement or documentation of full and open competition. • For two of the micro-purchase procurements tested, the Health and Human Services did not document how purchases are distributed among qualified suppliers, as practical. • For the one transaction over the simplified acquisition threshold tested, no documentation was maintained detailing the history of the procurement, demonstrating full and open competition, or that a cost or price analysis was performed. Questioned Costs: $320,983; known questioned costs were determined based on exceptions noted from a sample of transactions. Context: The thresholds used for procurement testing were based on the Health and Human Services’ policy for simplified acquisition threshold (over $150,000), small purchases ($3,000 to $150,000), and micro-purchases ($3,000 or less) through November 18, 2025, and after November 18, 2025, then the thresholds used for procurement testing were small purchases ($10,000 to $100,000) and micro-purchases ($10,000 or less). The population consisted of one procurement over the simplified acquisition threshold, 32 small purchases, and 395 micro-purchases. The sample was one transaction over the simplified acquisition threshold, six small purchases, and five micro-purchases. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: It cannot be determined that the contracting process was open and fair because the Health and Human Services did not document the rationale for the contractor selection. Cause: The Health and Human Services does not have processes in place to ensure federal requirements for procurement are followed. Recommendation: We recommend the Health and Human Services maintain documentation on the history of a procurement, provide for full and open competition, and perform a cost or price analysis to support compliance with Title 2 U.S. Code of Federal Regulations §§ 200.318, 200.319, and 200.324. View of Responsible Official: Concur

2025-006 Eligibility – MAXIS Prior Year Finding Number: 2024-006 Year of Finding Origination: 2011 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Grants to States for Medicaid Award Number and Year: 2505MN5ADM; 2025 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Grants to States for Medicaid. Specific eligibility requirements are included for recipients’ citizenship verification and asset verification. Minnesota Statutes, Section 256B.05, requires agencies to administer Grants to States for Medicaid. Condition: The Minnesota Department of Human Services maintains the computer system, MAXIS, which is used by the Health and Human Services to support the eligibility determination process. In the case files reviewed for eligibility, not all documentation to support recipient eligibility was available, updated, or input correctly. The following exceptions were noted in the sample of 40 case files tested: • One recipient’s case file did not have verification of citizenship. • One recipient’s case file included amounts for client accounts (assets) that were not properly updated or supported for the most recent application or renewal. Questioned Costs: Not applicable. The Health and Human Services administers the program, but the State of Minnesota pays benefits to recipients in this program. Context: The State of Minnesota and the Health and Human Services split the eligibility determination process. Pursuant to Minnesota statutes, the Health and Human Services performs the “intake function” needed for this program, while the State maintains the MAXIS system, which supports the eligibility determination process. Recipients receive benefit payments from the State. The population consisted of 3,493 active MAXIS cases enrolled in Grants to States for Medicaid in 2025; the sample size was 40 case files. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The improper input or updating of information into MAXIS and the lack of verification or follow-up of eligibility-determining factors increase the risk that program recipients will receive benefits when they are not eligible. Cause: Program personnel entering case file information into MAXIS did not ensure all required information was input or updated correctly, supported, or retained. Recommendation: We recommend the Health and Human Services implement additional procedures to provide reasonable assurance that all necessary documentation to support eligibility determinations exists, the program personnel properly input or update the documentation in MAXIS, and the program personnel follow up on issues in a timely manner. In addition, the Health and Human Services should consider providing further training to program personnel. View of Responsible Official: Acknowledge

2025-005 Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Prior Year Finding Number: 2024-005 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Grants to States for Medicaid Award Number and Year: 2505MN5ADM and 2505MN5MAP, 2025 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for Grants to States for Medicaid are submitted to DHS through the DHS Income Maintenance (DHS-2550) report, the Social Service Fund Report (DHS-2556), and Local Collaborative Time Study Cost Schedule Reports (DHS-3220) on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 42 expenditures tested: • One claim included activity that was allocated on an incorrect full-time equivalent (FTE) split. • One claim was paid to an incorrect vendor and the correct vendor in the same period. Both claims were included in the quarterly report. • One claim was included on the incorrect report. The items noted above are included in the State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Activities Allowed and Unallowed, Allowable Costs/Cost Principles finding (2025-001) and the Child Support Services Activities Allowed and Unallowed, Allowable Costs/Cost Principles finding (2025-004). In addition, the following exceptions were noted in the second and fourth quarter DHS reports tested: • The DHS-2556 reports excluded $27,318 to be reported as Direct Materials and Supplies. • The DHS-3220 reports included amounts allocated at an incorrect rate for payroll. Payroll expenditures were overstated in the second quarter by $7,016 and by $16,883 in the fourth quarter. • The DHS-3220 reports improperly included payroll amounts for two staff not eligible for reimbursement resulting in expenditures being overstated by $65,654. Questioned Costs: $121,945. $5,074 known questioned costs were determined based on exceptions noted from a sample of transactions tested, and $116,871 known questioned costs were determined based on the exceptions noted in the DHS-2556 and DHS-3220 reports tested. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities and costs and provide detailed information necessary for maintaining proper oversight over federal programs. Total expenditures reported on the SEFA are $2,653,443, consisting of 6,791 transactions. A sample of 40 expenditures was selected for testing and was then expanded to include two Grants to States for Medicaid expenditures included in Child Support Services testing. The sample of 42 transactions totaled $130,315. The reporting population consisted of four quarterly DHS-2550, four quarterly DHS-2556, and four quarterly Public Health DHS-3220 reports; the sample was two quarterly DHS-2550, two quarterly DHS-2556, and two quarterly Public Health DHS-3220 reports. The sample sizes were based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits, and subsequently expanded. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the Health and Human Services receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation and review of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and accurately reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the Health and Human Services correct and resubmit reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reporting incorrectly. View of Responsible Official: Concur

2025-004 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: 2024-004 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.563 Child Support Services Award Number and Year: 2501MNSCSS and 2501MNICSS, 2025 Pass-Through Agency: Minnesota Department of Human Services and Minnesota Department of Children, Youth, and Families Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for Child Support Services are submitted to the Minnesota Department of Human Services (DHS) through the DHS Income Maintenance DHS-2550 report on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 40 expenditures tested: • One claim included activity that was allocated on an incorrect full-time equivalent (FTE) split. • One claim was paid to an incorrect vendor and the correct vendor in the same period. Both claims were included in the quarterly report. • One claim was included on the incorrect report. The items noted above are included in the State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Activities Allowed and Unallowed, Allowable Costs/Cost Principles finding (2025-001) and the Grants to States for Medicaid Activities Allowed and Unallowed, Allowable Costs/Cost Principles, and Reporting finding (2025-005). Questioned Costs: Known questioned costs and likely questioned costs were under $25,000. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. Total expenditures reported on the SEFA are $1,083,658, consisting of 2,196 transactions. The sample of 40 transactions totaled $159,828. The sample sizes were based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the Health and Human Services receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the Health and Human Services correct and resubmit reports submitted with costs allocated incorrectly. View of Responsible Official: Acknowledge

2025-001 Reporting Prior Year Finding Number: 2024-004 Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Grants to States for Medicaid Award Number and Year: 2505MN5ADM; 2025 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs are submitted to the Minnesota Department of Human Services (DHS) on a quarterly basis through the Local Collaborative Time Study Cost Schedule Report (DHS-3220) for the Grants to States for Medicaid program. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: Allocated expenses in the sampled second and fourth quarter DHS-3220 reports were overstated by $28,734. Questioned Costs: $28,734; known questioned costs were determined based on the exceptions noted in the DHS-3220 reports tested. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the County are for allowable federal program activities and costs and provide detailed information necessary for maintaining proper oversight over federal programs. Total Grants to States for Medicaid expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are $708,993. The reporting population consisted of four quarterly DHS-3220 reports. The sample was two quarterly DHS-3220 reports. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The County’s controls over the preparation and review of quarterly reports were not sufficient to identify these errors. Recommendation: We recommend the County implement controls to ensure activities are appropriately identified and accurately reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the County correct and resubmit reports submitted with costs allocated incorrectly. View of Responsible Official: Acknowledge

2025-001 Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Prior Year Finding Number: 2024-001 Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Grants to States for Medicaid Award Number and Year: 2505MN5ADM, 2025 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for Grants to States for Medicaid are submitted to the Minnesota Department of Human Services (DHS) on a quarterly basis through the DHS Income Maintenance Report (DHS-2550) and DHS Social Service Fund Report (DHS-2556). DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 40 expenditures tested: • One claim included activity that was not allocated based on the full-time equivalent (FTE) split. • Two timesheets tested included payroll costs that were incorrectly reported as Social Service Time Studies (SSTS) participants payroll expense. In addition, the following exception was noted during testing of the second and fourth quarter DHS reports: • The fourth quarter DHS-2556 report had $67,721 of revenue reported on line 8 – revenue offsets section 1, which should have been reported in the revenue lines under that same section, resulting in an understatement of total expenditures. Questioned Costs: $73,831. $6,110 known questioned costs were determined based on exceptions noted from a sample of transactions tested, and $67,721 known questioned costs were determined based on the exceptions noted in the DHS-2556 reports tested. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the County are for allowable federal program activities and costs and provide detailed information necessary for maintaining proper oversight over federal programs. Total Grants to States for Medicaid expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are $781,844, consisting of 1,417 transactions. The sample of 40 transactions totaled $244,550. The reporting population consisted of four quarterly DHS-2550 and four quarterly DHS-2556 reports; the sample was two quarterly DHS-2550 and two quarterly DHS-2556 reports. The sample sizes were based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The County’s controls over the identification of allowable activities and costs, preparation and review of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the County implement controls to ensure activities allowed and allowable costs are appropriately identified and accurately reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the County correct and resubmit reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reporting incorrectly. View of Responsible Official: Acknowledge

Condition Found Methodist College did not accurately and/or timely report student address changes and student enrollment status changes at both the campus-level and program-level to the National Student Loan Data System (NSLDS). The U.S. Department of Education (USDE) uses enrollment data reported by the College to determine: (1) eligibility for interest subsidies, (2) loan repayment start dates, and (3) in-school loan deferments. The enrollment information is also used by USDE to measure program completion data to evaluate the effectiveness of financial aid programs. Additionally, changes in a student’s permanent address are used by USDE to service loans. During our testing of enrollment reporting at the College for a sample of 26 students, we noted that submissions for 21 of them were made to NSLDS outside of the required number of days. Further, we noted review controls were not implemented in the period to ensure enrollment and student data submitted to NSLDS was accurate and sent in accordance with required timeframes. The College disbursed FDL loans to 235 students and Pell grants to 204 students during the year ended December 31, 2025 for which enrollment reporting requirements applied. The number of undergraduate students enrolled in the College during fiscal year Criteria According to 34 CFR Section 685.309, under the Federal Direct loan program, institutions must complete and return the Enrollment Reporting roster file via NSLDS within 15 days of receipt. Enrollment information must be reported within 30 days whenever attendance changes for students unless a roster will be submitted within 60 days. An institution must notify the Secretary of Education if it discovers that a loan under Title IV of the Act was made to or on behalf of a student who was enrolled or accepted for enrollment at the school, and the student has ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Effective internal controls should include establishing procedures to ensure student campus and program-level enrollment status changes and address changes are accurately and timely reported to the NSLDS. Cause In discussing these conditions with College officials, they stated that NSC was part of a security breach and when they were fixing their processes, Methodist College got incorrectly linked to Methodist University in Fayetteville, NC causing submissions to report incorrectly on the NSLDS end. Possible Asserted Effect Inaccurate and delayed submission of student enrollment status and student information affects the determinations that lenders and servicers of student loans make related to in-school deferments, grace periods, and repayment schedules, as well as the federal government’s payment of interest subsidies. Repeat Finding A similar finding was reported in the prior year audit (2024-002). Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend the College review its procedures to ensure timely and accurate reporting of student information and enrollment status information to the NSLDS. Views of Carle management: Methodist College agrees with the finding regarding inaccurate and delayed submissions. The delays were related to the NSC security breach and incorrect institution linking. These issues were resolved, and all submissions were brought current by the end of 2025.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: CA0802L9D012416, CA0802L9D012315, CA1348L9D012410, CA1348L9D012309, CA1510L9D012409, CA1510L9D012308, CA1883L9D012405, CA1883L9D012304, SIHI-25-07, HHI-26-08, SIHI-25-18, HHI-26-11 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 24 CFR §578.51(g), “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: In accordance with 24 CFR §578.51(g), we noted that: • 1 out of 60 rental payments tested did not have a comparable unit analysis conducted upon rent increase. • 8 out of 60 rental payments did not have a comparable unit analysis completed in a timely manner prior to the tenant’s move-in or prior to increases in rent. • 4 of the 60 rental payments that did have rent reasonableness performed did not have rent reasonableness analyzed in the past 12-months of the rent payment. • 1 out of the 60 rental payments were paid in excess of rent per the lease agreement. Cause: The Village did not appropriately retain or produce documentation verifying that rent reasonableness was assessed prior to move-in or during changes to lease terms, as required by its policies. Furthermore, not all supporting documentation for initial or changes to lease terms was obtained or retained. Effect or Potential Effect: The insufficient retention or creation of rent reasonableness forms and supporting documentation has led to ineffective operation of rent reasonableness controls, thereby not appropriately identifying rental amounts for the Village’s clients in need of rental assistance. Consequently, this deficiency could result in incorrect charges being applied to the Federal program. Questioned Costs: Known Questioned Costs: None above the $25,000 reporting threshold. Likely Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Questioned costs were determined as the amounts paid without supporting rent reasonableness documentation. The total costs subject to rent reasonableness amounted to $2,153,333. Repeat Finding: 2024-006 Recommendation: We recommend that the Village enhance existing policies to ensure rent reasonableness is performed on all rental assistance. In addition, we recommend management ensures determinations are performed prior to move-in or rent changes being charged, and documentation is maintained for both the rent amount and reasonableness of the rent. We further recommend a policy be enacted for reviewing rent reasonableness on a periodic basis (i.e. annually) for those tenants that have not had a change in rent during the period. Views of Responsible Officials: Management agrees with the finding. Management is in the process of enhancing and enforcing existing policies and procedures as well as performing a comprehensive tenant record review.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: CA0802L9D012416, CA0802L9D012315, CA1348L9D012410, CA1348L9D012309, CA1510L9D012409, CA1510L9D012308, CA1883L9D012405, CA1883L9D012304, SIHI-25-07, HHI-26-08, SIHI-25-18, HHI-26-11 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 24 CFR §578.73(b): “Notwithstanding 2 CFR 200.306(b)(5), a recipient or subrecipient may use funds from any source, including any other federal sources (excluding Continuum of Care program funds), as well as State, local, and private sources, provided that funds from the source are not statutorily prohibited to be used as a match. The recipient must ensure that any funds used to satisfy the matching requirements of this section are eligible under the laws governing the funds in order to be used as matching funds for a grant awarded under this program.” 2 CFR 200.306(c) states: “Unrecovered indirect costs, including indirect costs on cost sharing, may be included as part of cost sharing with the prior approval of the Federal agency or pass-through entity. Unrecovered indirect cost means the difference between the amount charged to the Federal award and the amount which could have been charged to the Federal award under the recipient's or subrecipient's approved indirect cost rate." Condition: We noted that the Village’s controls did not identify unrecovered indirect costs that were not pre-approved and were determined to be unallowable by the Federal agency. One out of six grants that ended during 2025 did not meet the required 25% match as a result of excluding these unallowable costs. Cause: The Village did not have adequate policies and procedures in place to ensure that only allowable costs were included in the matching pool used to satisfy matching requirements. Effect of Potential Effect: Due to inadequate controls, for one grant, the Village did not meet the matching requirements for the grant period. Not meeting matching requirements may result in repayment of funds and could affect future funding. Questioned Costs: Known Questioned Costs: $41,729 Likely Questioned Costs: $41,729 Context: This is a condition identified per review of the Village’s compliance with specified requirements not using a statistically valid sample. Six out of 12 grants ended during 2025. Total required matching costs on the ended grants amount to $1,275,698. Repeat Finding: 2024-008 Recommendation: We recommend Village enhance their policies and procedures to ensure that only allowable costs are utilized to satisfy matching requirements. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures to ensure that the costs in matching pools are appropriately reviewed.

Assistance Listing, Federal Agency, and Program Name - Assistance Listing 11.611, U.S. Department of Commerce, National Institute of Standards and Technology (NIST) – Manufacturing Extension Partnership Federal Award Identification Number and Year - Federal award numbers include 70NANB20H067, 70NANB25H095, 70NANB24H330, and 70NANB23H051 for the year ended December 31, 2025 Pass-through Entity - Not applicable – direct award from NIST Finding Type - Material weakness Repeat Finding - No Criteria - In accordance with Uniform Guidance (2 CFR 200.303), the Organization is required to establish and maintain effective internal control over federal programs, including controls to ensure reports used to support federal compliance requirements are accurate, complete, and subject to appropriate review and approval. Such controls should provide reasonable assurance of compliance with federal requirements related to reporting, allowable costs, matching, program income, and cash management. Condition - During the year ended December 31, 2025, NIST Recovery Reports were prepared without evidence of a secondary review or approval by an individual independent of the preparer and knowledgeable of grant requirements. The Recovery Reports are used not only for reporting to the federal agency but also to ensure compliance of allowable expenditures, matching contributions, program income, and the amount eligible for federal reimbursement and drawdown. Questioned Costs - None identified If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The deficiency affected NIST Recovery Reports prepared during the period July through December 2025. A sample of reports prepared during this period was tested, and no evidence of secondary review or approval was identified in any instance tested. The population consists of all NIST Recovery Reports submitted during the period. While no questioned costs were identified, the Recovery Reports are relied upon to ensure compliance of expenditures eligible for federal reimbursement, matching contributions, program income calculations, cash drawdowns, and amounts reported on the SEFA. Cause and Effect - The Organization did not design or consistently implement a control requiring independent review and approval of NIST Recovery Reports prior to submission. Additionally, responsibilities for review and oversight were not clearly defined, resulting in reports being prepared and submitted without secondary review. As a result, there is a reasonable possibility that errors in expenditure calculations, matching contributions, program income determinations, indirect cost allocations, reimbursement requests, or federal reporting would not be detected in a timely manner. This increases the risk of noncompliance with allowable cost, matching, program income, reporting, and cash management requirements, as well as the risk of inaccurate federal drawdowns and SEFA reporting. Recommendation - We recommend that management implement a formal control requiring documented secondary review and approval of all NIST Recovery Reports by a qualified individual prior to submission. The review should ensure accuracy, completeness, and compliance with applicable federal requirements. Views of Responsible Officials and Corrective Action Plan - Management agrees with the finding requiring documented secondary review and approval of NIST Recovery Reports prior to submission and will implement the following control: The Controller will prepare the monthly NIST Recovery Report and submit the report to the Vice President of Operations for review and approval. The Vice President of Operations will provide documented evidence of the review and approval to the Controller. Upon receipt of the documented evidence of review, the Controller will request that the Vice President of Operations initiate the recovery of the monthly NIST reimbursement amount.

FINDING: 2025-001 - Suspension and Debarment Federal Program: Research and Development Cluster – Various ALNs Federal Agency: U.S Department of Defense and U.S. Department of Health and Human Services Statement of Condition: The Foundation did not follow internal control procedures designed to ensure compliance with suspension and debarment requirements for covered contracts. During our testing of procurement transactions subject to suspension and debarment requirements, we noted that the Foundation did not retain documentation demonstrating that it had reviewed the System for Award Management (SAM.gov) exclusion records prior to entering into contractual agreements. Specifically, there was no evidence that a SAM.gov printout was reviewed or approved to verify that vendors were not suspended or debarred at the time of contract execution. In conjunction with the audit, we reviewed the SAM Exclusions for all transactions in our sample and we noted that no transactions were with entities that were suspended or debarred. Criteria: In accordance with 2 CFR Part 200.303, a non-Federal entity must establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity manages the Federal award in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The Foundation did not follow the internal control procedures to document the review of the SAM.gov exclusion list prior to contract execution. Effect: The lack of following internal control procedures to review the verification of suspension and debarment prior to entering into contracts, agreements, and grants, could result in the Foundation entering into covered transactions with entities that are suspended and debarred which is not allowed under the Research and Development Cluster. Although no actual noncompliance was identified during our procedures, the lack of documented verification represents a deficiency in internal control over compliance that could adversely affect the Foundation's ability to comply with suspension and debarment requirements. Questioned Costs: None Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Foundation consistently apply written procedures to verify, prior to executing any covered transaction expected to equal or exceed $25,000, that the prospective contractor is not suspended, debarred, or otherwise excluded. The Foundation should document its verification by retaining a dated SAM.gov exclusion search printout (or equivalent screenshot), obtaining a certification from the contractor, or including an appropriate suspension and debarment clause in the agreement. Evidence of the review and approval should be retained in the procurement file to demonstrate compliance. Views of responsible officials and planned corrective action: Management agrees with the finding. See separate corrective action plan.

FINDING: 2025-001 - Suspension and Debarment Federal Program: Research and Development Cluster – Various ALNs Federal Agency: U.S Department of Defense and U.S. Department of Health and Human Services Statement of Condition: The Foundation did not follow internal control procedures designed to ensure compliance with suspension and debarment requirements for covered contracts. During our testing of procurement transactions subject to suspension and debarment requirements, we noted that the Foundation did not retain documentation demonstrating that it had reviewed the System for Award Management (SAM.gov) exclusion records prior to entering into contractual agreements. Specifically, there was no evidence that a SAM.gov printout was reviewed or approved to verify that vendors were not suspended or debarred at the time of contract execution. In conjunction with the audit, we reviewed the SAM Exclusions for all transactions in our sample and we noted that no transactions were with entities that were suspended or debarred. Criteria: In accordance with 2 CFR Part 200.303, a non-Federal entity must establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity manages the Federal award in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The Foundation did not follow the internal control procedures to document the review of the SAM.gov exclusion list prior to contract execution. Effect: The lack of following internal control procedures to review the verification of suspension and debarment prior to entering into contracts, agreements, and grants, could result in the Foundation entering into covered transactions with entities that are suspended and debarred which is not allowed under the Research and Development Cluster. Although no actual noncompliance was identified during our procedures, the lack of documented verification represents a deficiency in internal control over compliance that could adversely affect the Foundation's ability to comply with suspension and debarment requirements. Questioned Costs: None Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Foundation consistently apply written procedures to verify, prior to executing any covered transaction expected to equal or exceed $25,000, that the prospective contractor is not suspended, debarred, or otherwise excluded. The Foundation should document its verification by retaining a dated SAM.gov exclusion search printout (or equivalent screenshot), obtaining a certification from the contractor, or including an appropriate suspension and debarment clause in the agreement. Evidence of the review and approval should be retained in the procurement file to demonstrate compliance. Views of responsible officials and planned corrective action: Management agrees with the finding. See separate corrective action plan.

FINDING: 2025-001 - Suspension and Debarment Federal Program: Research and Development Cluster – Various ALNs Federal Agency: U.S Department of Defense and U.S. Department of Health and Human Services Statement of Condition: The Foundation did not follow internal control procedures designed to ensure compliance with suspension and debarment requirements for covered contracts. During our testing of procurement transactions subject to suspension and debarment requirements, we noted that the Foundation did not retain documentation demonstrating that it had reviewed the System for Award Management (SAM.gov) exclusion records prior to entering into contractual agreements. Specifically, there was no evidence that a SAM.gov printout was reviewed or approved to verify that vendors were not suspended or debarred at the time of contract execution. In conjunction with the audit, we reviewed the SAM Exclusions for all transactions in our sample and we noted that no transactions were with entities that were suspended or debarred. Criteria: In accordance with 2 CFR Part 200.303, a non-Federal entity must establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity manages the Federal award in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The Foundation did not follow the internal control procedures to document the review of the SAM.gov exclusion list prior to contract execution. Effect: The lack of following internal control procedures to review the verification of suspension and debarment prior to entering into contracts, agreements, and grants, could result in the Foundation entering into covered transactions with entities that are suspended and debarred which is not allowed under the Research and Development Cluster. Although no actual noncompliance was identified during our procedures, the lack of documented verification represents a deficiency in internal control over compliance that could adversely affect the Foundation's ability to comply with suspension and debarment requirements. Questioned Costs: None Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Foundation consistently apply written procedures to verify, prior to executing any covered transaction expected to equal or exceed $25,000, that the prospective contractor is not suspended, debarred, or otherwise excluded. The Foundation should document its verification by retaining a dated SAM.gov exclusion search printout (or equivalent screenshot), obtaining a certification from the contractor, or including an appropriate suspension and debarment clause in the agreement. Evidence of the review and approval should be retained in the procurement file to demonstrate compliance. Views of responsible officials and planned corrective action: Management agrees with the finding. See separate corrective action plan.

FINDING: 2025-001 - Suspension and Debarment Federal Program: Research and Development Cluster – Various ALNs Federal Agency: U.S Department of Defense and U.S. Department of Health and Human Services Statement of Condition: The Foundation did not follow internal control procedures designed to ensure compliance with suspension and debarment requirements for covered contracts. During our testing of procurement transactions subject to suspension and debarment requirements, we noted that the Foundation did not retain documentation demonstrating that it had reviewed the System for Award Management (SAM.gov) exclusion records prior to entering into contractual agreements. Specifically, there was no evidence that a SAM.gov printout was reviewed or approved to verify that vendors were not suspended or debarred at the time of contract execution. In conjunction with the audit, we reviewed the SAM Exclusions for all transactions in our sample and we noted that no transactions were with entities that were suspended or debarred. Criteria: In accordance with 2 CFR Part 200.303, a non-Federal entity must establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity manages the Federal award in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The Foundation did not follow the internal control procedures to document the review of the SAM.gov exclusion list prior to contract execution. Effect: The lack of following internal control procedures to review the verification of suspension and debarment prior to entering into contracts, agreements, and grants, could result in the Foundation entering into covered transactions with entities that are suspended and debarred which is not allowed under the Research and Development Cluster. Although no actual noncompliance was identified during our procedures, the lack of documented verification represents a deficiency in internal control over compliance that could adversely affect the Foundation's ability to comply with suspension and debarment requirements. Questioned Costs: None Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Foundation consistently apply written procedures to verify, prior to executing any covered transaction expected to equal or exceed $25,000, that the prospective contractor is not suspended, debarred, or otherwise excluded. The Foundation should document its verification by retaining a dated SAM.gov exclusion search printout (or equivalent screenshot), obtaining a certification from the contractor, or including an appropriate suspension and debarment clause in the agreement. Evidence of the review and approval should be retained in the procurement file to demonstrate compliance. Views of responsible officials and planned corrective action: Management agrees with the finding. See separate corrective action plan.

FINDING: 2025-001 - Suspension and Debarment Federal Program: Research and Development Cluster – Various ALNs Federal Agency: U.S Department of Defense and U.S. Department of Health and Human Services Statement of Condition: The Foundation did not follow internal control procedures designed to ensure compliance with suspension and debarment requirements for covered contracts. During our testing of procurement transactions subject to suspension and debarment requirements, we noted that the Foundation did not retain documentation demonstrating that it had reviewed the System for Award Management (SAM.gov) exclusion records prior to entering into contractual agreements. Specifically, there was no evidence that a SAM.gov printout was reviewed or approved to verify that vendors were not suspended or debarred at the time of contract execution. In conjunction with the audit, we reviewed the SAM Exclusions for all transactions in our sample and we noted that no transactions were with entities that were suspended or debarred. Criteria: In accordance with 2 CFR Part 200.303, a non-Federal entity must establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity manages the Federal award in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The Foundation did not follow the internal control procedures to document the review of the SAM.gov exclusion list prior to contract execution. Effect: The lack of following internal control procedures to review the verification of suspension and debarment prior to entering into contracts, agreements, and grants, could result in the Foundation entering into covered transactions with entities that are suspended and debarred which is not allowed under the Research and Development Cluster. Although no actual noncompliance was identified during our procedures, the lack of documented verification represents a deficiency in internal control over compliance that could adversely affect the Foundation's ability to comply with suspension and debarment requirements. Questioned Costs: None Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Foundation consistently apply written procedures to verify, prior to executing any covered transaction expected to equal or exceed $25,000, that the prospective contractor is not suspended, debarred, or otherwise excluded. The Foundation should document its verification by retaining a dated SAM.gov exclusion search printout (or equivalent screenshot), obtaining a certification from the contractor, or including an appropriate suspension and debarment clause in the agreement. Evidence of the review and approval should be retained in the procurement file to demonstrate compliance. Views of responsible officials and planned corrective action: Management agrees with the finding. See separate corrective action plan.

FINDING: 2025-001 - Suspension and Debarment Federal Program: Research and Development Cluster – Various ALNs Federal Agency: U.S Department of Defense and U.S. Department of Health and Human Services Statement of Condition: The Foundation did not follow internal control procedures designed to ensure compliance with suspension and debarment requirements for covered contracts. During our testing of procurement transactions subject to suspension and debarment requirements, we noted that the Foundation did not retain documentation demonstrating that it had reviewed the System for Award Management (SAM.gov) exclusion records prior to entering into contractual agreements. Specifically, there was no evidence that a SAM.gov printout was reviewed or approved to verify that vendors were not suspended or debarred at the time of contract execution. In conjunction with the audit, we reviewed the SAM Exclusions for all transactions in our sample and we noted that no transactions were with entities that were suspended or debarred. Criteria: In accordance with 2 CFR Part 200.303, a non-Federal entity must establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity manages the Federal award in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The Foundation did not follow the internal control procedures to document the review of the SAM.gov exclusion list prior to contract execution. Effect: The lack of following internal control procedures to review the verification of suspension and debarment prior to entering into contracts, agreements, and grants, could result in the Foundation entering into covered transactions with entities that are suspended and debarred which is not allowed under the Research and Development Cluster. Although no actual noncompliance was identified during our procedures, the lack of documented verification represents a deficiency in internal control over compliance that could adversely affect the Foundation's ability to comply with suspension and debarment requirements. Questioned Costs: None Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Foundation consistently apply written procedures to verify, prior to executing any covered transaction expected to equal or exceed $25,000, that the prospective contractor is not suspended, debarred, or otherwise excluded. The Foundation should document its verification by retaining a dated SAM.gov exclusion search printout (or equivalent screenshot), obtaining a certification from the contractor, or including an appropriate suspension and debarment clause in the agreement. Evidence of the review and approval should be retained in the procurement file to demonstrate compliance. Views of responsible officials and planned corrective action: Management agrees with the finding. See separate corrective action plan.

FINDING: 2025-001 - Suspension and Debarment Federal Program: Research and Development Cluster – Various ALNs Federal Agency: U.S Department of Defense and U.S. Department of Health and Human Services Statement of Condition: The Foundation did not follow internal control procedures designed to ensure compliance with suspension and debarment requirements for covered contracts. During our testing of procurement transactions subject to suspension and debarment requirements, we noted that the Foundation did not retain documentation demonstrating that it had reviewed the System for Award Management (SAM.gov) exclusion records prior to entering into contractual agreements. Specifically, there was no evidence that a SAM.gov printout was reviewed or approved to verify that vendors were not suspended or debarred at the time of contract execution. In conjunction with the audit, we reviewed the SAM Exclusions for all transactions in our sample and we noted that no transactions were with entities that were suspended or debarred. Criteria: In accordance with 2 CFR Part 200.303, a non-Federal entity must establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity manages the Federal award in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The Foundation did not follow the internal control procedures to document the review of the SAM.gov exclusion list prior to contract execution. Effect: The lack of following internal control procedures to review the verification of suspension and debarment prior to entering into contracts, agreements, and grants, could result in the Foundation entering into covered transactions with entities that are suspended and debarred which is not allowed under the Research and Development Cluster. Although no actual noncompliance was identified during our procedures, the lack of documented verification represents a deficiency in internal control over compliance that could adversely affect the Foundation's ability to comply with suspension and debarment requirements. Questioned Costs: None Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Foundation consistently apply written procedures to verify, prior to executing any covered transaction expected to equal or exceed $25,000, that the prospective contractor is not suspended, debarred, or otherwise excluded. The Foundation should document its verification by retaining a dated SAM.gov exclusion search printout (or equivalent screenshot), obtaining a certification from the contractor, or including an appropriate suspension and debarment clause in the agreement. Evidence of the review and approval should be retained in the procurement file to demonstrate compliance. Views of responsible officials and planned corrective action: Management agrees with the finding. See separate corrective action plan.