Findings Citing § 200.303

2024-004 Corporation for National and Community Service Federal Financial Assistance Listing #94.012, 22BIICA001 10/1/2022 – 9/30/2025, 23BIACA001 10/1/2023 – 9/30/2026, 23BIFNY001 10/1/2023 – 9/30/2026 Americorps September 11th National Day of Service and Remembrance Grants Reporting Material Weakness in Internal Controls over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. 2 CFR 200.328 and 2 CFR 200.329 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. 2 CFR Part 170 establishes requirements for recipients’ reporting of information on subawards as required by the Federal Funding Accountability and Transparency Act of 2006 (FFATA). Condition: Reporting of information on subawards as required by the Federal Funding Accountability and Transparency Act of 2006 (FFATA) was not completed for each of the four subrecipients in which pass through funds exceeded $30,000. Cause: There was a misunderstanding with management over reporting requirements surrounding amounts passed through to subrecipients. Effect: Not having a clear understanding of FFATA reporting requirements lead to required information not being reported. Questioned Costs: None reported. Context/Sampling: There was a total of six federal financial reports, of which 2 were selected for testing. There were a total of four FFATA reports, of which 2 were selected for testing. Repeat Finding from Prior Year: Yes, prior year finding 2023-005. Recommendation: We recommend that management review procedures and control processes to ensure they comply with the federal requirements noted above. Views of Responsible Officials: Management is in agreement.

2024-005 Corporation for National and Community Service Federal Financial Assistance Listing #94.012, 22BIICA001 10/1/2022 – 9/30/2025, 23BIACA001 10/1/2023 – 9/30/2026, 23BIFNY001 10/1/2023 – 9/30/2026 Americorps September 11th National Day of Service and Remembrance Grants Subrecipient Monitoring Material Weakness in Internal Controls over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. 2 CFR 200.332 identifies the requirements for all pass-through entities surrounding subrecipient monitoring and management. Condition: We noted the following during testing; a) Subawards did not contain minimum required elements in accordance with 2 CFR 200.332(b) b) The organization did not consider all suggested elements when evaluating subgrantee’s fraud risk and risk of noncompliance with subaward in accordance with 2 CFR 200.332(c) c) Documentation could not be provided to substantiate whether suspension and debarment was considered prior to awarding subgrant d) The organization required the subgrantee to complete performance reports, however, did not require completion of a financial report in accordance with 2 CFR 200.332(e)(1) e) The organization did not considered whether subgrantee was required to be audited and therefore did not review whether subgrantee had deficiencies reported over the federal program in accordance with 2 CFR 200.332(e)(2) through 2 CFR 200.332(e)(4) Cause: Management was not familiar with all subrecipient monitoring requirements as published under 2 CFR 200.332. The organization has not adopted a subrecipient monitoring policy. Effect: Without full understanding of subrecipient monitoring requirements under 2 CFR 200.332, demonstrating that the program complies with laws, regulations, and other compliance requirements is difficult. Questioned Costs: None reported. Context/Sampling: Four out of seventeen subrecipients were reviewed for testing. Repeat Finding from Prior Year: No. Recommendation: We recommend management to review subrecipient monitoring requirements as published under 2 CFR 200.332 and adopt a subrecipient monitoring policy. Views of Responsible Officials: Management is in agreement.

Federal Agency: U.S. Department of Labor Federal Program Title: Reintegration of Ex-Offenders Assistance Listing No. 17.270 Award Periods: 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance – Cash Management and Reporting Questioned Costs: None Condition: During our testing of 5 drawdown requests and 4 reports. CLA noted no instance of a review process performed by the Organization prior to the submission of those drawdown requests or reports. All drawdown requests and reports were submitted by the outsourced accountant, but proof of review by the organization was not documented. Criteria: Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure drawdowns and reports are formally reviewed by someone who did not prepare the drawdown or report to verify the correct amount is required. Context: The Organization did not maintain adequate documentation related to internal controls over cash management and reporting. Cause: The Organization did not have effective internal controls over compliance in place to ensure that cash management and reporting procedures were followed and documented. Effect: Failure to properly approve drawdowns, reports and maintain documentation may result in drawdown requests for unapproved or unrelated costs charged to the grant. Recommendation: The Organization should update and strengthen their policies to match UG and DOL guidelines, and create an internal control for drawdown request and report approval and review. The Organization should ensure these policies are followed for all drawdowns, reports and that documentation related to these policies are maintained. Views of Responsible Officials: There is no disagreement with the audit finding.

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: DA-202212-01187, DA-202407-02967, DA 202210 01319 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 §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “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: For 3 out of 13 clients tested, a comparable unit analysis was not formally reviewed and approved. For 8 out of 13 clients tested, the comparable unit analysis was not reviewed and approved until significantly after the preparation of the form. For 9 out of 13 clients tested, comparable unit analysis was completed after tenant move in, of which 4 were completed more than 20 days after move in. Cause: Due to turnover, LifeWire’s staff did not timely review the rent reasonableness documentation until procedures were put into place after the deficiency was identified in the prior year audit. Therefore, the implementation of the control process in late 2024 caused the delay in the documented review of the comparable unit analyses. Effect or Potential Effect: Lack of timely review of the comparable unit analysis could result in charging of unallowed expenditures to the federal program. Questioned Costs: None. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $662,077. Identification as a Repeat Finding: 2023-002. Recommendation: We recommend that LifeWire enforces the modified procedures to review approve, and retain rental reasonableness documentation, including the comparable unit analysis. Views of Responsible Officials: Management agrees with the finding that documentation was not timely reviewed. Management has modified its policies and procedures to ensure completion and review of rent reasonableness forms in a timely manner.

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: DA-202212-01187, DA-202407-02967, DA 202210 01319 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 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that certain individuals who work in certain departments complete time attestations to certify the time spent on and allocated to the grant for reimbursement. For 1 out of 47 selections, the employee approval of time attestation was not available. For 6 out of 47 selections, the employee attested to time that was less than what was allocated to the grant and no true-up was completed. Cause: LifeWire did not follow their procedures to review and reconcile the estimated amounts of payroll expenditures charged to the Continuum of Care to the actual expenditures for all employees. Effect or Potential Effect: Without adequate controls in place to reconcile the attestations to the costs based on budgeted allocations are appropriate and do not require adjustment, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitled to under the terms of the grants. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total payroll costs for the Continuum of Care grants in 2024 were $609,817. Any payroll costs not adequately support by time and effort reports are considered questioned costs. Any payroll costs charged greater than attested time and effort reports are considered questions costs. Identification as a Repeat Finding: 2023-005. Recommendation: We recommend that LifeWire follow their procedures to review and reconcile the estimated amounts of payroll expenditures charged and that sufficient document be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved and time and effort reports are completed by staff timely and documentation is retained.

Finding 2024-002 – Procurement and Suspension and Debarment Identification of the federal program: U.S. Department of Health and Human Services U.S. Department of Defense Research and Development Cluster Assistance Listing Numbers: 12.910 – Research and Technology Development 93.279 – Drug Use and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research Federal Award Numbers Award Period Pass-Through Entity, if Applicable HR00112420365 7/23/2024-1/22/2026 Texas A&M Engineering Experiment Station (M2404608) U19AI135972-07 1/1/2024-12/31/2024 Icahn School of Medicine at Mount Sinai P51OD011133-26 5/1/2024-4/30/2025 N/A R01DA052845-04 7/1/2023-6/30/2024 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 200.318 General procurement standards. (i) Procurement records. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. 200.319 Competition. (a) All procurement transactions under the Federal award must be conducted in a manner that provides full and open competition and is consistent with the standards of this section and § 200.320. 200.320 Procurement Methods There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319. (a) Informal procurement methods for small purchases. These procurement methods expedite the completion of transactions, minimize administrative burdens, and reduce costs. Informal procurement methods may be used when the value of the procurement transaction under the Federal award does not exceed the simplified acquisition threshold as defined in § 200.1. Recipients and subrecipients may also establish a lower threshold. Informal procurement methods include: (1) Micro-purchases — (i) Distribution. The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold defined in § 200.1. To the extent practicable, the recipient or subrecipient should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the recipient or subrecipient considers the price reasonable based on research, experience, purchase history, or other information; and maintains documents to support its conclusion. Purchase cards may be used as a method of payment for micro-purchases. (iii) Micro-purchase thresholds. The recipient or subrecipient is responsible for determining and documenting an appropriate micro-purchase threshold based on internal controls, an evaluation of risk, and its documented procurement procedures. The micro-purchase threshold used by the recipient or subrecipient must be authorized or not prohibited under State, local, or tribal laws or regulations. (2) Simplified acquisitions — (i) Simplified acquisition procedures. The aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate. (ii) Simplified acquisition thresholds. The recipient or subrecipient is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk, and its documented procurement procedures, which may be lower than, but must not exceed, the threshold established in the FAR. (b) Formal procurement methods. Formal procurement methods are required when the value of the procurement transaction under a Federal award exceeds the simplified acquisition threshold of the recipient or subrecipient. Formal procurement methods are competitive and require public notice. The following formal methods of procurement are used for procurement transactions above the simplified acquisition threshold determined by the recipient or subrecipient in accordance with paragraph (a)(2)(ii) of this section: (1) Sealed bids. This is a procurement method in which bids are publicly solicited through an invitation and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid conforms with all the material terms and conditions of the invitation and is the lowest in price. The sealed bids procurement method is preferred for procuring construction services. (i) For sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders have been identified as willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm-fixed-price contract, and the selection of the successful bidder can be made principally based on price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them with sufficient response time prior to the date set for opening the bids. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate. For local governments, the invitation for bids must be publicly advertised. (B) The invitation for bids must define the items or services with specific information, including any required specifications, for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids. For local governments, the bids must be opened publicly. (D) A firm-fixed-price contract is awarded in writing to the lowest responsive bid and responsible bidder. When specified in the invitation for bids, factors such as discounts, transportation cost, and life-cycle costs must be considered in determining which bid is the lowest. Payment discounts must only be used to determine the low bid when the recipient or subrecipient determines they are a valid factor based on prior experience. (E) The recipient or subrecipient must document and provide a justification for all bids it rejects. (2) Proposals. This is a procurement method used when conditions are not appropriate for using sealed bids. This procurement method may result in either a fixed-price or cost-reimbursement contract. They are awarded in accordance with the following requirements: (i) Requests for proposals require public notice, and all evaluation factors and their relative importance must be identified. Proposals must be solicited from multiple qualified entities. To the maximum extent practicable, any proposals submitted in response to the public notice must be considered. (ii) The recipient or subrecipient must have written procedures for conducting technical evaluations and making selections. (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the recipient or subrecipient considering price and other factors; and (iv) The recipient or subrecipient may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby the offeror’s qualifications are evaluated, and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where the price is not used as a selection factor, can only be used to procure architectural/engineering (A/E) professional services. The method may not be used to purchase other services provided by A/E firms that are a potential source to perform the proposed effort. (c) Noncompetitive procurement. There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate of single-use plastic products. See Executive Order 14057, section 101, Policy. 200.324 Contract cost and price. (a) The recipient or subrecipient must perform a cost or price analysis for every procurement transaction, including contract modifications, in excess of the simplified acquisition threshold. The method and degree of analysis conducted depend on the facts surrounding the particular procurement transaction. For example, the recipient or subrecipient should consider potential workforce impacts in their analysis if the procurement transaction will displace public sector employees. However, as a starting point, the recipient or subrecipient must make independent estimates before receiving bids or proposals. (b) Costs or prices based on estimated costs for contracts under the Federal award are allowable only to the extent that the costs incurred or cost estimates included in negotiated prices would be allowable for the recipient or subrecipient under subpart E of this part. The recipient or subrecipient may reference its own cost principles as long as they comply with subpart E of this part. (c) The recipient or subrecipient must not use the “cost plus a percentage of cost” and “percentage of construction costs” methods of contracting. Condition Texas Biomed did not comply with procurement requirements per the Uniform Guidance. Specifically, Texas Biomed did not comply with informal procurement methods for small purchases and noncompetitive procurement requirements. Texas Biomed also did not comply with its own procurement policy in relation to procurements of small purchases and noncompetitive procurements. Additionally, Texas Biomed did not maintain records for certain procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, the basis for the contract price, and the performance of a cost or price analysis, when required. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed complied with federal procurement requirements and Texas Biomed’s procurement policy and also maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements, including a cost or price analysis, when required. Effect or potential effect Texas Biomed did not comply with the general procurement standards, methods of procurement, and cost or price analysis requirements, according to the Uniform Guidance. Questioned costs $270,923 in total as follows: $29,438 – Assistance Listing Number 12.910, Award Identification Number – HR00112420365 $149,500 – Assistance Listing Number 93.351, Award Identification Number – P51OD011133-26 $11,295 – Assistance Listing Number 93.855, Award Identification Number – U19AI135972-07 $80,690 – Assistance Listing Number 93.279, Award Identification Number – R01DA052845-04 Questioned costs were computed by using the total procurements over $10,000 that did not adhere to procurement methods per the Uniform Guidance or were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement and the performance of a cost or price analysis, when required. Per 2 CFR 200.1, questioned cost means an amount, expended or received from a Federal award, that in the auditor’s judgment: (1) Is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award; (2) At the time of the audit, lacked adequate documentation to support compliance; or (3) Appeared unreasonable and did not reflect the actions a prudent person would take in the circumstances. Context EY issued a material weakness for Texas Biomed related to internal control over procurement in the prior year. Based upon the implementation date for the corrective action provided by management, the finding related to this internal control had not been remediated for the full period under audit. As such, we did not test the operating effectiveness of this control and are issuing a material weakness consistent with the prior year finding. EY tested 12 procurements over the micro-purchase threshold of $10,000, with expenditures totaling $2,148,830 from a population of 48 procurements over $10,000 with expenditures totaling $3,629,769 during the year ended December 31, 2024. For 1 procurement with expenditures in the amount of $29,438 for supplies, Texas Biomed obtained only 2 quotes rather than 3 quotes, as required by Texas Biomed’s procurement policy in effect at the time of the procurement. Documentation of the history of the procurement did not include a reason for obtaining 2 quotes instead of 3 quotes. For 1 procurement with expenditures in the amount of $149,500, related to a total purchase order of $980,500, for animal food, Texas Biomed did not contemporaneously document sole source justification at the time of the procurement. Additionally, since the total purchase order for this procurement exceeded $250,000, the simplified acquisition threshold, a cost or price analysis was required but was not performed. For 2 procurements with expenditures in the amounts of $11,295 for supplies and $80,690 for animal purchases, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. We consider the expenditures related to these procurements to be questioned costs due to Texas Biomed not adhering to federal procurement requirements per the Uniform Guidance and also Texas Biomed’s procurement policy. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2023-002. Recommendation Texas Biomed should comply with federal procurement requirements, as well as Texas Biomed’s procurement policy with regards to obtaining quotes for small purchases and documentation of sole source justification at the time of the procurement, as applicable. Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, the basis for the contract price, and the performance of a cost or price analysis, when required. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.

Finding 2024-001 – Cash Management – Pass-Through Entities Identification of the federal program: U.S. Department of Health and Human Services U.S. Department of Defense Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 12.420 – Military Medical Research and Development 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period W81XWH1910496-02 5/1/2020-10/31/2025 R01MH116844-05 2/1/2022-1/31/2024 R01MH130193-02 3/1/2023-2/29/2024 R01MH130193-03 3/1/2024-2/28/2025 R01DA052845-04 7/1/2023-6/30/2024 U42OD010442-22 2/1/2023-1/31/2024 P51OD011133-25 5/1/2023-4/30/2024 P51OD011133-26 5/1/2024-4/30/2025 R01HL145411-05 1/1/2023-12/31/2025 R01AI048071-21 12/1/2022-11/30/2023 R01AI048071-22 12/1/2023-1/31/2025 R01AI138587-05 5/1/2022-4/30/2025 R01AI172539-02 8/1/2023-7/31/2024 1503702001-03 8/1/2024-7/31/2025 R21AI170148-02 8/1/2023-7/31/2025 R01AI134245-07 5/1/2023-4/30/2025 P30AI168439-02 3/1/2023-2/29/2024 P30AI168439-03 3/1/2024-2/28/2025 R61AI169026-02 5/1/2023-4/30/2024 R61AI169026-03 5/1/2024-4/30/2026 R56AI174877-01 4/1/2023-3/31/2025 Federal Award Numbers Award Period R01AI176309-01 4/1/2023-3/31/2024 R01AI176309-02 4/1/2024-3/31/2025 R01AI158963-03 4/1/2024-3/31/2025 R01AI179465 6/21/2024-4/30/2025 U34AG068482-03 6/1/2022-5/31/2025 R01AG065546-04 6/1/2023-5/31/2024 R01AG065546-05 6/1/2024-5/31/2025 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.305(b)(1) requires “The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomedical Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 18 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3). Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context EY issued a significant deficiency for Texas Biomed related to internal controls over cash management for subrecipients in the prior year. Based upon the implementation date for the corrective action provided by management, the finding related to this internal control had not been remediated for the full period under audit. As such, we did not test the operating effectiveness of this control and are issuing a significant deficiency consistent with the prior year finding. For 18 of 40 subrecipient payments to 13 unique subrecipients, Texas Biomed made payments to subrecipients at dates ranging from 31 to 109 days (average of 64 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement for the following award numbers: • R01MH116844-05 • R01AG065546-04 (3 late payments) • P30AI168439-02 • R56AI174877-01 (2 late payments) • R01AI176309-02 (2 late payments) • R01AI048071-22 • R01HL145411-05 • R01DA052845-04 • R01AI134245-07 • P51OD011133-26 • R01MH130193-03 • R01AI172539-02 (2 late payments) • P51OD011133-25 The total for the 18 subrecipient payments paid after 30 days was $127,273 and the total subrecipient payments in our sample of 40 was $323,770. Texas Biomed’s subrecipient expenditures totaled $2.6 million during the period, which represented 5.7% of Texas Biomed’s total research and development expenditures of $45.3 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001 and 2023-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient. Views of responsible officials Management agrees with the finding and implemented corrective action in September 2024 to implement controls to ensure payments to subrecipients are made timely.

Criteria or Specific Requirement: 2 CFR 200.303(a) states that a nonfederal entity must "Establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the term 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: Proper review and approval of reimbursement requests submitted to SPDA and financial as well as progress report submitted to all funders were not retained. Questioned Costs: None Context: In statistically valid samples, CliftonLarsonAllen LLP (CLA) tested eight reimbursement requests for cash management testing, five reimbursement request for indirect cost testing, four quarterly financial reports for matching, four performance reports for reporting, and five quarterly financial reports for reporting testing. Context: (Continued) All five reimbursement requests tested for cash management testing related to the funder SPDA and lacked sufficient documentation of review, although there was substantiating evidence of review, including meeting invite emails. One of five reimbursement requests tested for indirect costs testing related to the funder SPDA and lacked sufficient documentation of review, although there was substantiating evidence of review, including meeting invite emails. All reports tested for matching and reporting testing lacked sufficient documentation of review, although substantiating evidence, including meeting invite emails, were retained. Cause: Lack of adequate knowledge about what is considered sufficient review documentation. Effect: Without adequate controls in place to ensure reimbursement requests and financial/progress reports are accurate, there is an increased risk in inaccurate reimbursement requests as well as reports, which could result in misappropriation of funds. Repeat Finding: No Recommendation: CLA recommends that additional emphasis of documentary evidence of approvals be made, and such evidence obtained and retained by SFP as proof of oversight of expenditure of federal funds. This could include: signatures on reports, emails indicating review and approval from appropriate individuals, retention of meeting agendas and minutes to corroborate that review occurred during the meetings, etc. Views of Responsible Officials: There is no disagreement with the audit finding.

Finding 2024-002 Significant deficiency in internal controls over compliance and instance of noncompliance related to eligibility. Federal Agency: United States Department of State Program Titles: Refugee Admissions Program Pass-Through Entity: Global Refugee (fka Lutheran Immigration and Refugee Services) Assistance Listing Number: 19.510 Award Identification: All awards Criteria Compliance requirements contained in Title 2 U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance) , Subpart D ‐ Post Federal Award Requirements, Section 200.303, require that a nonfederal entity 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. The Federal award referenced requires that eligible participants be Afghan arrivals as defined in the award. Condition/Context During the year ended December 31, 2024, out of a sample of 25 eligible participants, two selections who were provided direct payments under the award were not Afghan arrivals as defined in the award and were therefore not eligible. Cause The Organization’s internal controls over eligibility did not operate effectively to ensure that only eligible participants benefited from the award. Effect or Potential Effect Ineligible participants benefited from the award. Questioned Costs Payments on behalf of ineligible beneficiaries identified under award SPRMCO23CA0364 totaled $3,263. Recommendation We recommend the Organization implement internal controls to ensure that only eligible participants benefit from federal awards. Views of Responsible Individuals Management agrees with the finding and has provided the accompanying corrective action plan. Repeat Finding Not a repeat finding.

FINDING 2024-003 Subject: Drinking Water State Revolving Fund - Procurement and Suspension and Debarment Federal Agency: Environmental Protection Agency Federal Programs: Drinking Water State Revolving Fund Assistance Listing Number: 66.468 Federal Award Numbers (or Other Identifying numbers): DW23150901, DW24660904 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement - Policy The City had not established a purchasing policy that reflected applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain a policy that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in evaluation of bids or proposals. Procurement The City expended federal funds to pay ten separate vendors to provide goods and services for the duration of the City's Lead Service Line Replacement project. A population of seven vendors were tested that had aggregated expenditures for the audit period that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. All seven of the vendors were tested; for four of the seven vendors, the City was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. The history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. Additionally, a population of three vendors were identified with contract amount or aggregated total of expenditures that exceeded the simplified acquisition threshold of $150,000. All three vendors were tested; for one of these vendors, the procurement method used was not appropriate as the City relied on quotes obtained, rather than a formal procurement method as required for purchases that exceed the simplified acquisition threshold. Suspension and Debarment Prior to entering into sub-awards and covered transactions with award funds, recipients are required to verify that vendors are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the agreement with the Indiana Finance Authority (IFA), the City was not required to perform testing over suspension and debarment for a majority of the vendors used; however, several drawdowns from the State Revolving Funds (SRF) program were used to reimburse the City for payments made to specific vendors. The vendors paid directly by the City were not included in IFA's procedures for checking suspension and debarment; therefore, the City was obligated to meet the requirement. The City did not maintain a set of procedures for checking suspension and debarment status of vendors for expenditures related to the SRF awards. A total of three vendors paid directly by the City exceeded the S&D threshold of $25,000 and were subject to testing. No documentation to show that suspension and debarment was verified prior to entering into the contract could be provided for any vendor. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 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." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(d) states: "The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach." 2 CFR 200.319(c) states: "The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract." 2 CFR 200.319(d) states: "The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a 'brand name or equivalent' description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and (2) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals." Cause The City did not maintain a procurement policy that would demonstrate the appropriate procedures to be followed when procuring with federal funding and were not aware of the need to follow federal guidelines for procurement or suspension and debarment for expenditures associated with the SRF awards. Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the City could be overpaying for services, or providing federal funds to an entity that is suspended or debarred. 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 funds to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award and ensure that vendors paid from federal funds are neither suspended nor debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 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 Numbers and Years (or Other Identifying Numbers): CONTRACT 64511, YR 2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods or services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the U.S. Department of the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the County was only required to comply with suspension and debarment requirements related to covered transactions. The County did not have any policies or procedures in place during the audit period for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded. A population of six covered transactions, totaling $760,544, that equaled or exceeded $25,000 paid from SLFRF funds was identified. For each of the six transactions, the County did not provide any evidence that a verification took place to ensure the vendor was not suspended or debarred. The lack of internal controls and noncompliance were systematic 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). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County did not have policies or procedures in place to document the process performed to ensure each vendor related to the SLFRF program was not suspended or debarred from participation in federal awards. Effect Without the proper implementation of an effectively designed system of internal controls and procedures, the County could not ensure the vendors paid with federal funds were eligible to participate in federal programs. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable and the funding agency could potentially recover the funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and establish policies and procedures to ensure that vendors paid $25,000 or more, all or in part with federal funds, are verified to ensure they are not suspended or debarred, or other excluded from participating in federal programs. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 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 Numbers and Years (or Other Identifying Numbers): CONTRACT 64511, YR 2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The County elected to receive the standard revenue loss allowance, allowing it to claim a total COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation of $7,107,956 as revenue loss to use for government services. As such, all SLFRF program funds expended from January 1, 2024 to December 31, 2024, were under the revenue loss eligible category. The U.S. Department of the Treasury (Treasury) determined that there were no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships as there is no federal program or purpose to carry out in the case of revenue loss portion of the award. Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the Treasury. The reporting periods, as well as the respective due dates are based on the type of recipient and the recipient's population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of less than $10 million in SLFRF. As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The County submitted the P&E report by April 30, 2024, as required during the audit period. Although the County Auditor's Bookkeeper prepared the P&E report, and the County Auditor reviewed and submitted the report, internal controls were not effective in preventing, or detecting and correcting, errors. The data summited included amounts which were not supported by the County's records. The County reported current expenditures for three projects on the annual report, for which there were no expenditures during the reporting period. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, 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 or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds, . . ." Cause The County Auditor's Bookkeeper stated that they understood that current expenditures and current obligations should agree to the cumulative expenditures and cumulative obligations, which resulted in reporting errors. 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 such, the County did not report current period obligations properly when filing the P&E report for the period April 1, 2023 to March 31, 2024. 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. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public and the Treasury will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls to provide for a segregation of duties in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. We also recommended the development of policies and procedures to ensure the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2024-005: ELIGIBILITY Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2405MN5MAP and 2405MN5ADM, 2024 Pass-Through Agency: Minnesota Department of Human Services and Meeker-McLeod-Sibley Community Health Services Pass-Through Number: 2405MN5MAP and 2405MN5ADM Award Period: Year Ended December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish 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. Condition: No internal casefile reviews were performed for quarter 1 through 3 during 2024. Questioned Costs: None noted. Context: During eligibility testing, it was noted that casefile review was not performed for quarters 1 through 3 during 2024. Cause: Turnover within the department. Effect: Errors made in determining eligibility may not be discovered and benefits may be issued to clients who are not eligible. Repeat Finding: Yes – 2023-005. Recommendation: We recommend the County implement additional procedures to ensure case file reviews are being performed on a regular basis. Views of responsible officials: There is no disagreement with the audit finding.

FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and 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 Numbers and Years (or Other Identifying Numbers): CONTRACT# 64280, FY2024 Pass-Through Entity: Indiana Department of Health Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - State and Local Fiscal Recovery Funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County did not perform procedures to ensure that the vendors were not suspended or debarred or otherwise excluded or disqualified from participation in federal assistance programs or activities at any time during the audit period for two of the four covered transactions tested. The lack of internal controls and noncompliance were isolated to two County departments. 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 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 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." INDIANA STATE BOARD OF ACCOUNTS 18 HENDRICKS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County believed the procedures they were following were sufficient to cover Procurement and Suspension and Debarment compliance requirements. Effect Without the proper implementation of an effectively designed system of internal controls, the County could not ensure the vendors paid with federal funds were eligible to participate in federal programs. Any program funds the County 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 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 County strengthen its system of internal controls to ensure that all 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 2024-004 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 Numbers and Years (or Other Identifying Numbers): CONTRACT# 64280, FY2024 Pass-Through Entity: Indiana Department of Health Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 19 HENDRICKS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, and the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds funding. As such, the initial P&E report, covering three calendar quarters from March 3, 2021 to December 31, 2021, was required to be submitted to the Treasury by January 31, 2022. The subsequent quarterly reports are to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. The County submitted the P&E report, as required, and had a system of internal controls in place whereby one employee prepared and submitted the P&E reports and another employee reviewed the reports; however, it was not sufficient to prevent, or detect and correct, errors. The data submitted included amounts that were not supported by the County's records and amounts that should not have been included. Errors identified included the following: Quarter 1 P&E report - January 1, 2024 to March 31, 2024  The current Period Obligations were understated by $1,440. Quarter 2 P&E report - April 1, 2024 to June 30, 2024  The current Period Obligations were understated by $29,020. Quarter 3 P&E report - July 1, 2024 to September 30, 2024  The current Period Obligations were understated by $30,197.  The total Cumulative Obligations were understated by $299,096.  The total Cumulative Expenditures were understated by $16,370. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 HENDRICKS 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 or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds . . ." Cause The County's system of internal controls, including policies and procedures, was insufficient to prevent or detect errors on the P&E report prior to submission. Internal controls were in place but were not effective. 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 such, the County did not accurately report current period obligations and cumulative obligations when filing the P&E report. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management implement a proper system of internal controls, including policies and procedures, to ensure that the County provided the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed and Allowable Costs/Cost Principles 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): FY2023 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context Prior to receipt of the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), all eligible entities were required to execute a Financial Assistance Agreement (Agreement), which included the Award Terms and Conditions that recipients must comply within carrying out the objectives of their award. Per the Agreement, the County was responsible for the effective administration of the federal award, as well as the application of sound management practices and administration of the federal funds in a manner consistent with the program objectives and the terms and conditions of the award. Recipients may use SLFRF funds for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act, as added by section 9901 of the American Rescue Plan Act of 2021. The SLFRF program provides substantial flexibility for each recipient to meet local needs within four separate eligible use categories. Recipients may use SLFRF funds to: • Respond to the COVID-19 public health emergency and its negative economic impacts; • Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of eligible employers that have eligible workers who are performing essential work; • Provide government services, to the extent COVID-19 caused a reduction in revenues collected in the most recent full fiscal year of the recipient; and • Make necessary investments in water, sewer, or broadband infrastructure. Throughout its fleet procurement program, the City has relied on lease-to-own agreements to acquire police vehicles, structuring payments so that title transfers upon final lease settlement. During the recent audit period, staff applied $72,435 of SLFRF funds toward the early payoff of one such vehicle lease, aiming both to eliminate future interest costs and to ensure full obligation of grant resources by year end. This transaction was undertaken under a misapprehension of the SLFRF eligibility criteria. The SLFRF Final Rule expressly prohibits the use of grant funds for debt service, which the buyout of the police vehicle lease falls squarely within the definition of debt service, and it constitutes an unallowable expenditure under federal requirements. The City had a system of internal controls over the compliance requirement; however, it was not properly implemented to prevent noncompliance. INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 35.9 states in part: "A recipient must comply with all other applicable Federal statutes, regulations, and executive orders, and a recipient shall provide for compliance with the American Rescue Plan Act, . . ." Federal Register, Vol. 87, No.18, page 4340, January 27, 2022, states in part: ". . . For all recipients, funds may not be used for debt service or replenishing financial reserves. . . ." Federal Register, Vol. 87, No.18, page 4430, January 27, 2022, states in part: ". . . The final rule maintains the restriction on the use of funds for debt service . . . First, debt service and reserve replenishment costs do not constitute the provision of services to constituents. As noted in the interim final rule, financing expenses - such as issuance of debt or payment of debt service - do not provide services or aid to citizens. . . . With SLFRF resources available, recipients have less need to incur debt for otherwise-eligible SLFRF uses. . . ." Cause The City applied its SLFRF award toward the payoff of an existing lease to ensure that all grant funds would be legally obligated or expended by year end and to eliminate any future interest charges. At the time, staff was not aware that paying off a preexisting lease constitutes debt service, which is expressly unallowable under the SLFRF Final Rule. Effect Due to a misunderstanding of SLFRF requirements, the City inadvertently allocated federal grant funds to an unallowable expenditure. Questioned Costs We identified $72,435 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that management of the City design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties, to ensure appropriate reviews, approvals, and oversight are taking place prior to payment of funds from the SLFRF award. We also recommended City officials review and become familiar with the grant requirements. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF NEW CASTLE 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 2024-004 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 Fund Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirement: Reporting Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-005. Condition and Context Recipients of the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) grants are required to quarterly or annually submit Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of less than $10 million in SLFRF award funds. As such, the initial P&E report covering the period from April 1, 2022 to March 31, 2023, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The City submitted one P&E report during the audit period; however, the Clerk-Treasurer prepared and submitted the P&E report without a review or oversight process in place to prevent, or detect and correct, errors. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the City, to ensure that policies and procedures were in place related to reporting. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The City had a process in place whereby there were two people involved in submitting reports with the assistance of a consulting firm. However, Officials were not aware documentation of reviews was necessary to obtain and maintain. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls and develop policies and procedures over the preparation and review of federal reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-005 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 Fund Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Suspension and Debarment The City elected to receive the standard revenue loss allowance, allowing it to claim its total SLFRF allocation from the U.S. Department of the Treasury (Treasury) of $3,870,958 as revenue loss to use for government services. As such, all SLFRF program funds were expended under the revenue loss eligible use category. The Treasury determined that there are no subawards under this eligible use category and that recipients' use of revenue loss funds would not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the City in order to review the procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the City divulged that it was unaware of the suspension and debarment requirements related to the SLFRF awards. Seven covered transactions that equaled or exceeded $25,000 were identified. Of the seven transactions, three were selected for testing, totaling $472,540. The City did not verify the vendors' suspension and debarment status prior to payment on any of the covered transactions. The City had policies or procedures in place to verify that contractors were neither suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities; however, there was no evidence to suggest that these policies or procedures had been followed. The 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). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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." Cause A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Clerk-Treasurer took office January 1, 2024, and was inexperienced and lacked understanding of requirements for verifying and documenting the verification of the suspension and debarment status of vendors. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recovery them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City strengthen its system of internal controls to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participations in federal programs before entering into any contracts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding Number:2024-002: Community Development Block Grant Cluster - 14.218, Workforce Investment and Opportunity Act - 17.259, and 93.558 -Temporary Assistance for Needy Families Criteria:Uniform Guidance (2 CFR 200.303 and 2 CFR 200.430) requires that charges to federal awards be accurate, allowable, and supported by sufficient documentation. Internal controls should be designed and implemented to provide reasonable assurance that payroll costs are accurately billed to federal programs. Condition:During testing of payroll disbursements for allowable costs and activities allowed/unallowed compliance requirement under the Workforce Innovation and Opportunity Act (WIOA), Community Development Block Grant, and Temporary Assistance for Needy Families (TANF) the following billing errors were identified in our audit testing: WIOA: Two payroll billing errors were identified, totaling $31.  CDBG: One payroll billing error was identified, totaling $505.  TANF: Two payroll billing error were identified, totaling $7.Payroll charges are entered by accounting staff and subject to monthly review by the CFO. While this review process represents a key control, the errors identified indicate that the review was not sufficiently detailed to detect all inaccuracies. Cause:The errors resulted from insufficient internal control over the review of grant invoices and supporting documentation before billed to grantors. Effect or potential effect:The absence of a robust review process increases the risk of noncompliance with grant requirements and the potential for inaccurate billing to federal programs, even if the financial impact is not material. Recommendation:We recommend enhancing the existing review process to ensure payroll charges billed to federal programs are supported by underlying documentation such as payroll registers, time records, and allocation spreadsheets. This could include developing a standardized reconciliation checklist or requiring secondary review for accuracy. Strengthening the existing control will help minimize the risk of billing errors due to human oversight. Views of responsible officials:Salary and fringe benefit allocations to grants are entered by accounting staff and subject to monthly review by the CFO. While this control provides a layer of oversight, the manual nature of data entry and review introduces a risk of human error. To strengthen the reliability of this control, management will implement enhanced review procedures, including more detailed reconciliations and cross-verification steps. These improvements are designed to reduce the likelihood of errors and ensure the accuracy and integrity of grant-related payroll charges. Responsible party:Nora Davis, Chief Financial Officer

FINDING 2024-001 Subject: Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii - Equipment and Real Property Management Federal Agency: Department of Housing and Urban Development Federal Program: Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii Assistance Listings Number: 14.228 Federal Award Number and Year (or Other Identifying Number): B22DC180001 Pass-Through Entity: Indiana Office of Community and Rural Affairs Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The Town had not properly designed a system of internal controls in order to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. A property record or capital asset listing is required to be maintained for all equipment purchased with federal grant awards to ensure adequate safeguards are in place to prevent loss or damage of items. The Town used federal funds to pay for renovation work on the North Lift Station Building costing $1,064,127. The building renovations were included in the capital asset listing of the Town; however, it did not include the required property identifying information. The Towns's capital asset listing did not include the following required information: • The use and condition of the property • The percentage of federal participation in the project costs for the federal award under which the property was acquired. • Source of funding for the property (including the federal award identification number [the FAIN]) • The location of the property 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 14 TOWN OF UPLAND SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause The Town did not have adequate internal controls in place to ensure personnel were aware of the federal requirements for assets. The Town was unaware of the requirements regarding identifying information for assets purchased with federal funds. 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 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 asset records include all the necessary information. We also recommended the Town ensure it has a proper understanding of all grant requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-002 Subject: Drinking Water State Revolving Fund - Procurement Federal 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): DW23332501 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town had not established an effective internal control system related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The Town was not in compliance with the Procurement and Suspension and Debarment compliance requirement. Purchasing Policy The Town's purchasing policy did not reflect applicable state laws and regulations. In addition, the policy did not include procedures to avoid acquisition of unnecessary or duplicative items, procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured, or procedures that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals. Additionally, the Town's policy did not contain written standards of conduct covering conflicts of interest and governing the performance of its employees engaged in the selection, award, and administration of contracts. Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. INDIANA STATE BOARD OF ACCOUNTS 16 TOWN OF KEWANNA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two vendors were identified that fell within the small purchase threshold. Purchases from the vendors totaled $34,414 and $92,437. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the Town did not obtain price or rate quotations for the purchases nor was full and open competition provided for the vendors. Additionally, the history of each procurement was not adequately documented, including rationale for the method of procurement, selection of vendor, and basis for price. The lack of internal controls and noncompliance were isolated to the purchasing policy and to small purchases procured during the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(c)(1) states: "The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity." INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF KEWANNA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318(d) states: "The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach." 2 CFR 200.319(c) states: "The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract." 2 CFR 200.319(d) states: "The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a 'brand name or equivalent' description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and (2) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF KEWANNA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause The Town was unable to provide documentation to demonstrate it had policies or procedures in place to comply with the Procurement and Suspension and Debarment compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot demonstrate it obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the Town could have overpaid for the services obtained. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management design and implement a system of internal controls to ensure that a purchasing policy is in place and that quotes are obtained for all small purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 64.033, Department of Veteran Affairs, VA Supportive Services for Veteran Families Program Federal Award Identification Number and Year: 20-MI-221-SS, 20-MI-221-LT, 20-MI-221 Pass-through Entity – N/A Finding Type – Material weakness in internal control over compliance Repeat Finding – Yes Criteria – Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. Criteria - Grant and cooperative agreement recipients and contractors are required to register FSRS and report subaward data through FSRS. Compliance testing of the Transparency Act reporting requirements must include the following key data elements about the first-tier subrecipients and subawards under grants and cooperative agreements. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – During our testing for reporting compliance, it was noted that the Organization did not submit the Federal Funding Accountability and Transparency Act report within the reporting timeline for prime grant recipients. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The Organization’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2024. Subawards were not reported to FSRS in accordance with FFATA requirements. The Organization was required to report the subaward details above. The Organization was not required to report executive compensation. Recommendation – We recommend the Organization establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. View of Responsible Officials and Corrective Action Plan – The Agency agrees with this finding. As part of the subaward review process, the Chief Financial Officer will ensure that first tier subawards are checked to see if FFATA reporting is needed based on the award amount. If FFATA reporting is required, the Chief Financial Officer will assign this task to the Assistant Director for Financial Compliance to ensure that reporting is completed to the FFATA Reporting System FSRS.

Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.600, Department of Health and Human Services, Head Start Federal Award Identification Number and Year: 05CH011937-04-02 Pass-through Entity – N/A Finding Type – Material weakness in internal control over compliance Repeat Finding – Yes Criteria – Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. Criteria - Grant and cooperative agreement recipients and contractors are required to register FSRS and report subaward data through FSRS. Compliance testing of the Transparency Act reporting requirements must include the following key data elements about the first-tier subrecipients and subawards under grants and cooperative agreements. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – During our testing for reporting compliance, it was noted that the Organization did not submit the Federal Funding Accountability and Transparency Act report within the reporting timeline for prime grant recipients... Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The Organization’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2024. Subawards were not reported to FSRS in accordance with FFATA requirements. The Organization was required to report the subaward details above. The Organization was not required to report executive compensation. Recommendation – We recommend the Organization establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. View of Responsible Officials and Corrective Action Plan – The Agency agrees with this finding. As part of the subaward review process, the Chief Financial Officer will ensure that first tier subawards are checked to see if FFATA reporting is needed based on the award amount. If FFATA reporting is required, the Chief Financial Officer will assign this task to the Assistant Director for Financial Compliance to ensure that reporting is completed to the FFATA Reporting System FSRS.

2024-001: Procurement – Material Weakness Federal Program Information: Funding Agency: U.S Department of Transportation FALN: 20.942 Thriving Communities Program Award Year: 2023-2025 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.320, the Foundation must have and use documented procurement procedures for acquisition of goods and services under a federal award or a sub‐award. Condition: 2 CFR Section 200.320, the Foundation is required to have and use documented procurement procedures for acquisition of goods and services under a federal award. The Foundation does not have approved policies and procedures over procurement. The Foundation was unable to identify any controls to ensure that transactions weren’t had between ineligible parties. Effect: Not having a procurement policy may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting procurement documentation for the acquisition of goods and services were not properly established largely due to overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: None Recommendation: We recommend the Foundation strengthen its policies and procedures to ensure procurement is adequately documented for that goods and services purchased in accordance with Uniform Guidance and other federal guidelines.

2024‐002: Suspension and Debarment‐ Material Weakness Federal Program Information: Funding Agency: U.S Department of Transportation FALN: 20.942 Thriving Communities Program Award Year: 2023-2025 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Under 2 CFR part 180, the Foundation is required to verify suspension or debarment from the excluded parties list system regarding compliance. Condition: Under 2 CFR part 180, the Foundation is required to verify suspension or debarment from the excluded parties list system regarding compliance. Though the Foundation did not have a policy for suspension and debarment, the Foundation complied with the requirements. Effect: Not having a suspension and debarment policy may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting suspension and debarment documentation for the acquisition of goods and services were not properly established in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: None Recommendation: We recommend the Foundation strengthen its policies and procedures to ensure suspension and debarment is adequately documented that goods and services purchased in accordance with Uniform Guidance and other federal guidelines. In addition, the Foundation should verify that all vendors under covered transactions are not listed on the excluded parties list system by performing a search on sam.gov and maintaining the results of such search in the vendor’s file.

Criteria According to 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain internal controls over federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition During the testing of eligibility, the auditor identified one instance where proper eligibility information was not maintained within the client files. Specifically, the individual was marked as married on their initial application but was marked as single on their renewal and there was no support within the file to determine which was correct. Cause The primary cause of the error identified was lack of administrative oversight and a lack of effective control activities such as effective review procedures and monitoring. Effect The Organization granted a notice of eligibility without the required supporting documentation and/or proper approval. Questioned Costs Not applicable Context Prior to a notice of eligibility (NOE) being granted, it must be verified that the individual has a valid proof of HIV diagnosis, be considered low-income based on household size, and be a resident of the state in which they are applying in. Eligibility documentation should be retained in the client file. Out of the sample of 40 client files tested, we noted one individual who did not have all requirements within their file. This individual did not have adequate support for the household size of one to calculate low-income status. BASIC NWFL, Inc. was able to obtain the support that the individual was indeed married and the form was completed incorrectly. After the income was recalculated with the spouse’s income, it was determined that the individual still met the low-income threshold. Recommendation We recommend the client implement controls to ensure all eligibility documentation is obtained and properly reviewed before granting eligibility. This includes providing regular staff training and conducting periodic internal audits to ensure compliance. Views of Responsible Officials See corrective action plan.

FINDING 2024-004 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 Numbers and Years (or Other Identifying Numbers): Regular FY 2024, Revenue Loss FY 2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-005. Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the SAM exclusions list, collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. Upon inquiry of the County to determine its policies and procedures related to suspension and debarment requirements for the SLFRF funds, the County stated procedures were not in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. The County had not performed procedures to ensure the vendors were not suspended or debarred or otherwise excluded or disqualified from participation in federal assistance programs or activities during the audit period on all of the 11 vendors determined to have covered transactions totaling $816,950 that were paid with SLFRF funds. 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). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management of the County did not develop a system of internal controls to ensure that policies and procedures were in place and followed related to suspension and debarment as they were unaware of the requirements. Effect Without proper implementation of an effectively designed system of internal controls, the County was unable to verify whether contractors and subrecipients were not suspended, debarred, or excluded. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County develop written policies and procedures to ensure its compliance with requirements related to suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Program name: State and Local Fiscal Recover Funds Assistance Listing: 21.027 Federal award Identification number: 43210256 Federal award year: All Federal awarding agency: U.S. Department of Treasury Criteria: In accordance with 2 CFR 200.303, non-Federal entities must establish and maintain effective internal control over Federal awards. These controls should be in compliance with Federal statutes, regulations, and the terms and conditions of the award, and should align with standards such as the “Standards for Internal Control in the Federal Government” (Green Book) or the COSO framework.. This includes controls over: 1) Payroll: Ensuring labor charges are accurate, allowable, and properly approved (2 CFR 200.430). 2) Reporting: Ensuring financial reports are accurate, complete, and reviewed prior to submission (2CFR 200.328). Condition: The Company has limited written processes of certain transaction classes. There was a pervasive lack of documentation of approval over transactions, including payroll, vendor payments, cash management, and reporting. Cause: The Company did not maintain or consistently apply documentation protocols for internal control reviews. Formal documentation practices were not in place during the audit period. Effect or Potential Effect: Lack of documentation as evidence that controls over compliance were being performed. Documentation should be maintained as evidence that sufficient control activities are in place and would effectively prevent or detect and correct noncompliance. Controls must be followed for every transaction and documentation of the control being performed must be maintained. Repeat finding: This is not a repeat finding. Questioned costs: There are no questioned costs associated with this finding. Perspective: The deficiency was pervasive across multiple compliance areas and was not isolated to a specific transaction or department. The scope indicates a systemic control weakness during the audit period. Recommendation: We recommend that the Company ensure updated policies and procedures are implemented and consistently applied. This includes: 1) Documented review and approval of all transactions related to payroll, cash management, and reporting. 2) Maintenance of written evidence supporting such reviews. 3) Regular training and internal monitoring to ensure control procedures are consistently followed. Management’s response and corrective action plan (unaudited): See corrective action plan.

FINDING 2024-003 Subrecipient Monitoring (Significant Deficiency) Federal Program Information: Education Stabilization Fund (ALN 84.425U) Criteria: 2 CFR 200.303 states that a receipt or subrecipient of federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization has a policy in place to reimburse subrecipients for allowable expenses once all invoice and payment support is provided by the subrecipient and reviewed and approved by the Organization. While the Organization obtained support from the subrecipient, there was no evidence that the supporting documentation was reviewed and approved by the Organization before reimbursing the subrecipient. Cause: Insufficient internal control and administrative oversight. Effect or Potential Effect: Failure to maintain adequate internal controls to ensure that all subrecipients are sufficiently monitored may result in the wrongful use of federal funds and non-compliance with the provisions of applicable requirements of the federal awards. Questioned Costs: None Context: The Organization made payments to 39 subrecipients. During our audit we tested 4 subrecipients and noted that the Organization did not have evidence of review of source documentation from the subrecipient for any of the subrecipients selected for testing. Prior Year Finding: Reported as 2023-003 in the prior year. Recommendation: We recommend the Organization enhance its procedures and internal controls over subrecipient monitoring to ensure subrecipient invoices are properly reviewed and the review is documented. Views of Responsible Officials: Management agrees with the finding and the auditors’ recommendation. See Corrective Action Plan at the end of the report.

2024-001 – INTERNAL CONTROLS OVER COMPLIANCE Other Matter/Significant Deficiency U.S. Department of Housing and Urban Development ALN #: 14.871 – Housing Choice Voucher Program ALN #: 14.850 – Public Housing Operating Fund CRITERIA A recipient of federal funding must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. (2 CFR 200.303(a)) CONDITION During our review of internal controls over compliance, which included reviewing monitoring reports from federal agencies, we identified the following matters: • The Authority did not have a policy in place governing the use of HUD’s Enterprise Income Verification (EIV) system. • The Authority was not following its administrative plan for the Housing Choice Voucher program related to minimum rents. The Authority has not established a minimum rent policy for Public Housing. • The Authority did not have a written methodology for how it conducts annual quality control reviews of HCV participant files. • The Authority did not follow its administrative plan regarding terminating participant from the Housing Choice Voucher Program. The Authority did not have a policy addressing participants being terminated from the Public Housing Program. • The VHA was not in compliance with updated Violence Against Women Act (VAWA) requirements. • The Authority’s day-to-day practices for the administration of the Public Housing program differ from the Admissions and Continued Occupancy Policy. • The Authority did not have a Section 3 policy. • The Authority did not follow its Administrative Plan related to preferences for the Project Based Voucher (PBV) waiting list. CAUSE The Authority did not perform a review and update its compliance policies for changes in HUD regulations. EFFECT The lack of updated or written policies increases the risk of noncompliance with federal requirements, as staff may not have clear guidance. QUESTIONED COSTS None identified. CONTEXT The Authority administers both the Housing Choice Voucher and Public Housing Programs. Uniform Guidance requires the Authority to have written policies related to compliance with federal statutes, regulations, and terms of federal awards. REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Authority review all compliance-related policies and procedures and update or develop written documentation to align with current Uniform Guidance requirements. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

Finding No.: 2024 001 Federal Agency: U.S. Department of Housing and Urban Development Program Name: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Assistance Listing No.: 14.251 Federal Award Year: Funding periods between January 1, 2024 and December 31, 2024 Compliance Requirement: Reporting Finding Type: Significant Deficiency Criteria Article VI of the executed Grant Agreement states the following: "The Grantee must submit a performance report in DRGR on a semi annual basis and must include a complete Federal financial report as an attachment to each performance report in DRGR. Performance report shall consist of a narrative of work accomplished during the reporting period. During the Period of Performance, the Grantee must submit these reports in DRGR no later than 30 calendar days after the end of the six month reporting period." Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, Section 200.303(a) states that non federal entities 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 reporting testing, the auditors identified that two semi annual required reports for the 14.251 program during the year under audit were not filed within the 30 day calendar period identified in the grant agreement. Effect West End Neighborhood House, Inc. (the Organization) was not in compliance with reporting. Cause Due to lack of internal controls surrounding ensuring that reports were filed timely, both program reports filed during the period were filed outside of the 30 day calendar window. Questioned Costs There are no questioned costs related to the finding. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This is not identified as a repeat finding. Recommendation We recommend that the Organization enhance its policies and procedures to ensure responsible program personnel timely files all performance reporting. View of Responsible Official Management experienced a miscommunication with its contractor regarding responsibility for preparing and submitting the required program performance report. When management reviewed the HUD reporting website, it appeared the reports were completed. Upon further review, it was identified that the contractor had not completed the filing and that the submit button had not been pushed. Management promptly prepared and submitted the reports. These reports were submitted in August and September 2025. To prevent future delays, management is updating its compliance procedures to include verification of the timely filing of all required reports.

Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the Federal award that provides assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, 2 CFR Appendix IV to Part 200 Section B.2(b) requires that both the direct costs and the indirect costs must exclude capital expenditures and unallowable costs. Per Compliance Supplement, these indirect costs must conform to the allowability of cost provisions in 2 CFR Part 200, Subpart E or award agreement. Condition: During our testing of indirect costs, we noted that the Corporation charges the Federally approved rate of 28.7% on specific grant awards based on direct salaries and wages. However, the Corporation did not maintain ongoing supporting documentation of eligible indirect costs. Cause: The Corporation did not have formal process and policies to demonstrate adherence to the allowability requirements of indirect costs in accordance with 2 CFR Appendix IV to Part 200 Section B.2(b). Effect or Potential Effect: Additional efforts after year end were required to determine whether indirect costs charged to Federal awards conform to the allowability of cost provisions in 2 CFR Part 200, Subpart E or award agreement. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: None Context: Additional efforts after year end were required by management in order to provide sufficient and appropriate evidence that the reported indirect costs conformed to the allowability of cost provisions in 2 CFR Part 200, Subpart E or award agreement. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2023-009 in the 2023 report. Recommendation: We recommend the Corporation develop and incorporate internal controls and policies to demonstrate adherence to the allowability requirements of indirect costs in accordance with 2 CFR Appendix IV to Part 200 Section B.2(b). View of Responsible Officials: Due to staff turnover the Corporation did not have adequate personnel or infrastructure in place to monitor costs in order to calculate and determine an updated indirect cost rate. Also, the current indirect cost rate allocations is based on historical assumptions.

Federal Program(s): Enhanced Mobility of Seniors and Individuals with Disabilities (ALN 20.513) Agencies: U.S. Department of Transportation – Federal Transit Administration Criteria - 2 CFR §200.510: Auditee must prepare an accurate SEFA including ALN, program name, award number, award year, pass-through number, and total expenditures. 2 CFR §200.332: Pass-through entities must identify the ALN in all subaward documents. 2 CFR §200.303: Auditees must establish and maintain effective internal controls over federal awards. Condition - During our audit of ENVIDA’s federal programs, we identified an internal control deficiency affecting the accuracy of the Schedule of Expenditures of Federal Awards (SEFA). Context - The issue stems from the Envida's need to formalize documented procedures and adequate review over the SEFA preparation process, as well as the need to implement controls for verifying federal award information received from pass-through entities. Specifically, ENVIDA’s SEFA included initial misstatements, including erroneous reporting of $61,576 in required matched funds as federal expenditures (which they were not), the inclusion of $79,225 in OnDemand expenditures that were not federally funded (incorrect information from passthrough entity), and a $45,403 posting error that misclassified expenditures between grant years. These errors resulted in a material overstatement of the SEFA federal expenditures as originally prepared. Management corrected these errors during the audit process. Cause - Due to lack of funding information provided in the contracts with a major passthrough entity, Envida is unable to verify accuracy of federal funding information contemporaneously. For 2024, incomplete or inaccurate information from pass-through entities, coupled with the absence of formalized internal controls to verify and document federal award details, led to initial errors in SEFA reporting. Contracts with the pass-through entity, Pikes Peak Area Council of Governments (PPACG), did not include the required Assistance Listing Numbers (ALNs), which contributed to the confusion and misreporting. These deficiencies are inconsistent with the requirements of 2 CFR §200.510(b), §200.303, and §200.332(a)(1), which collectively mandate accurate SEFA reporting, proper identification of federal awards, and internal controls over federal funding. Effect - SEFA initially overstated by 15.5% due to match and OnDemand errors. FY24 award overstated by 17.5%; FY25 award understated by 14.6% Potential audit coverage gaps and risk misassessment under 2 CFR §200.518. Recommendation - We recommend that ENVIDA establish and document clear procedures for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) as well as for the proper classification of accounts receivable. In addition, ENVIDA should implement a supervisory review process to help ensure accuracy and compliance with federal requirements. To further strengthen controls, all subaward agreements should require written confirmation of the Assistance Listing Numbers (ALNs). Finally, ENVIDA should verify federal award information directly against official federal award notices prior to preparing the SEFA. Views of Responsible Official and Planned Corrective Action - Management has agreed with the finding and plans to revise the SEFA to reflect accurate federal expenditures. They will work with pass-through entities to ensure future subaward documentation includes all required federal award identifiers and will implement internal controls to prevent recurrence.

2024-001- Significant Deficiency: Activities Allowed or Unallowable Costs/Cost Principles Criteria: According to federal regulations, expenditures charged to federal grants must follow the allowable cost principles found in 2 CFR Part 200, subpart E. Additionally, 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. Condition: During our testing of federal expenditures, we noted that certain expenses were not allowable activities under the Uniform Guidance. Cause: Internal controls surrounding the review of supporting documentation of expenditures charged to grants are not properly implemented to detect and correct errors. Effect: The Organization received reimbursement for unallowable expenditures. Questioned Costs: ALN 84.215J - $18,603 Recommendation: We recommend that management of the Organization review internal controls over compliance and ensure they are properly designed and implemented to ensure that expenditures are allowable under federal regulations. Views of Responsible Officials: Management agrees with this finding and their response is included in the corrective action plan.

2024-001 Suspension and Debarment Prior Year Finding Number: 2023-003 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 Treasury Program: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLFRP2192; 2021 Pass-Through Agency: N/A - Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish 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. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. Condition: For five of seven covered transactions selected for testing, the County did not perform the verification for suspended or debarred vendors prior to entering into the covered transactions. Questioned Costs: None. Context: Covered transactions totaled $4,211,707 consisting of 37 payments to vendors. The sample size of seven payments to vendors totaled $2,456,687. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Failure to verify vendors are not suspended, debarred, or otherwise excluded prior to entering into a covered transaction may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services to the grant. Cause: The County informed us there was a lack of staff available to check the covered transactions for suspension and debarment. Recommendation: We recommend the County maintain documentation to demonstrate that vendors were not debarred, suspended, or otherwise excluded from conducting business with the County; this documentation should be completed prior to entering a covered transaction. View of Responsible Official: Acknowledge

Program Information: U.S. Department of the Interior BIA Consolidated Tribal Government/ COVID-19 - ARPA ATTG & HIP Assistance Listing #: 15.021 Award Number: A20AV00601, A17AV00362, A20AV00601 Award Period: 1/1/2020-12/31/2023 Criteria: 2 CFR § 200.303 - Internal controls states, the recipient and subrecipient 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). The cost principles in 2 CFR Part 200, subpart E (Cost Principles), prescribe the cost accounting requirements associated with the administration of Federal awards by: a. States, local governments, and Indian tribes. Except where otherwise authorized by statute, cost must meet the following general criteria in order to be allowable under Federal awards: 7. Be adequately documented. Condition/Context: During testing of non-payroll transactions, the following was noted: • For 4 of 23 non-payroll transactions (3 of 4 Individually Important Item (III) transactions tested and 1 of 19 samples tested), supporting documentation was insufficient to determine whether the gift cards purchased were spent properly for allowable costs. • For 1 of 23 non-payroll transactions, the expenditure tested represented an unallowable cost. [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Cause: The Department did not have adequate internal controls in place to ensure that gift card purchases and other expense were sufficiently supported and restricted to allowable program purposes. Effect: As a result, there is an increased risk that Federal funds were used for unallowable purposes. Questioned Costs: Known – $48,929 Repeat Finding: No. Recommendation: We recommend the Department strengthen controls over the purchase and distribution of gift cards and require documentation demonstrating the business purpose and allowable use of all gift card expenditures. Additionally, the Department should review and approve all non-payroll expenditures for allowability prior to charging them to the Program. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.

Program Information: U.S. Department of the Treasury COVID-19 - American Rescue Plan Act Assistance Listing #: 21.027 Award Number: SLFRP1559, SLFRP5012 Award Period: 5/19/2021-12/31/2026 Criteria: 2 CFR § 200.303 - Internal controls states, the recipient and subrecipient 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). The Tribe’s procurement policy requires that purchases above certain thresholds be supported by evidence of competitive bids or quotes to ensure fair and open competition. For revenue loss eligible use category expenditures under CSLFRF, the May 2024 OMB Compliance Supplement and Treasury Final Rule FAQ 13.15 clarify that federal procurement requirements in 2 CFR 200.318–200.327 do not apply. Condition/Context: During testing of procurement transactions charged to the program under the revenue loss eligible use category, 3 of 6 Individually Important Item procurement samples selected for review did not contain documentation of competitive bids or quotes as required by the Tribe’s procurement policy. These transactions were not subject to federal procurement requirements. [ ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: The deficiency appears to be the result of staff not consistently following the Tribe’s established procurement procedures and a lack of management oversight to ensure compliance with local procurement requirements. Effect: Failure to obtain and document competitive bids or quotes increases the risk that the Tribe may not obtain goods and services at the best value and may not provide for full and open competition, as required by its own policy. Questioned Costs: N/A - as the compliance attribute does not apply for revenue loss transactions. Repeat Finding: No. Recommendation: We recommend that management reinforce and monitor compliance with the Tribe’s procurement procedures, including obtaining and retaining documentation of competitive bids or quotes for all purchases above the micro-purchase threshold, and provide training to staff responsible for procurement. Management should also implement periodic reviews of procurement files to ensure compliance with the Tribe’s procurement requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.

Federal Agency: U.S. Department of Homeland Security Federal Program Title: Federal Emergency Management Agency Disaster Grants Assistance Listing Number: 97.036 Federal Award Number and Year: 4496DR 2024 Pass-Through Agency: State of Massachusetts Pass-Through Number: CTFEMA4496STPAT00971 Award Period: Year Ended December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: In accordance with 2 CFR §200.403(g), to be allowable under federal awards, costs must be adequately documented. Additionally, 2 CFR §200.303 requires nonfederal entities to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the award. Condition: During testing of expenditures under the FEMA grant, the System was unable to provide documentation showing approval of an invoice dated May 2020. This invoice was selected as part of the single audit sample. The lack of approval documentation represents a deficiency in internal controls over compliance with federal requirements. Questioned Costs: None. Context: The invoice in question was incurred in May 2020, prior to the implementation of the Acumatica AP approval workflow. In June 2020, the facility transitioned to Acumatica, which provides electronic tracking of invoice approvals. Cause: At the time of the expenditure, the facility did not have a centralized or electronic approval process in place. Approval documentation was maintained manually and was not retained or accessible during the audit. Effect: The absence of approval documentation for the invoice creates a risk that expenditures may not be properly reviewed or authorized, potentially leading to noncompliance with federal requirements. Although the cost was ultimately deemed allowable, the control deficiency could impact future compliance if not addressed. Recommendation: We recommend that the System ensure all expenditures under federal awards are supported by documented approvals. For legacy transactions, efforts should be made to retain or reconstruct approval documentation where feasible. Continued use and monitoring of the Acumatica system should be maintained to ensure compliance going forward. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. The invoice in question was incurred during an emergency response period prior to the implementation of the Acumatica system. While approval was likely obtained at the time, documentation was not retained. With the implementation of the Acumatica AP approval process in June 2020, the System has taken appropriate steps to address the finding and enhance internal controls over invoice approvals.

Internal Control over Special Tests and Provisions Federal Agency: U.S. Department of Housing and Urban Development Assistance Listing Number: 14.267 Federal Program Name: Continuum of Care Pass-through Entity: King County Regional Homelessness Authority Pass-through Award Numbers: DA-202212-01215 Criteria: Under 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over compliance with the special tests and provisions requirements of federal awards. When funds are used to pay for rent, the Continuum of Care program includes a requirement that recipients must determine that the rent paid is reasonable in relation to rents being charged in the area for comparable space. Condition: Documentation of the rent reasonable determination could not be located for one of seven program participants selected for testing. Cause and Context: The Organization had been dealing with staff turnover in late 2023 when this program participant initially applied for assistance and had not retained documentation of its determination of rent reasonableness. Effect: Inadequate internal controls over requirements for special tests and provisions may result in the Organization incurring disallowed costs. Questioned Costs: Documentation of the rent reasonableness determination had not been performed for costs totaling $3,935 during the year ended December 31, 2024. Recommendation: We recommend that management verifies documentation of rent reasonableness verifications for all participants before rent payments are authorized. Views of Responsible Officials: There is no disagreement with the finding.

CONDITION: During my review of the Borough of Ellwood City’s internal controls over federal awards, I noted that the Borough does not have formal written policies and procedures surrounding the management of their federal award funds. Although not all-inclusive, an example of some of the required polices would include written procedures for procurement, conflict of interest, and allowable costs. This is a repeat finding (2023-001) from the prior year.CRITERIA: Section 2 CFR 200.303 of the Uniform Guidance requires non-federal entities such as the Borough of Ellwood City to maintain effective internal controls over federal awards. In addition, the Uniform Guidance also recommends these internal controls follow guidance in Standards for Internal Control in the Federal Government (the Green Book), issued by the Comptroller General of the United States.EFFECT: The Borough of Ellwood City is not in compliance with Section 2 CFR 200.303 of the Uniform Guidance which requires non-federal entities to maintain effective internal controls over federal awards.QUESTIONED COST: NoneCAUSE: It was not readily determinable as to why the Borough of Ellwood City had not formally adopted written policies and procedures surrounding the management of their federal award funds.RECOMMENDATION: I recommend that the Borough of Ellwood City adopt the required written policies and procedures surrounding the management of federal award funds as prescribed by Section 2 CFR 200.303 of the Uniform Guidance. The focus of these policies and procedures should be to ensure that the Borough officials who are responsible for carrying out the objectives of the federal financial award understand 1) the federal statutes, regulations, and terms and conditions of the award, 2) how to evaluate and properly monitor compliance, and 3) the steps to take if noncompliance is identified.VIEWS OF RESPONSIBLE OFFICIALS: The Borough of Ellwood City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.

2024-005- Internal Control over Grant Monitoring and Reporting Finding Type: Material Weakness in Internal Control and Material Noncompliance in accordance with Uniform Guidance. Federal Program and Agency: Airport Improvement Program – ALN #20.106; U.S. Department of Transportation – Federal Aviation Administration (FAA) Repeat Finding: No Criteria: Per 2 CFR § 200.303 and 2 CFR § 200.510(b), the recipient is required to establish and maintain effective internal control over federal awards and to ensure complete and accurate reporting of all federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA). Adequate oversight and reconciliation processes must be in place to ensure all allowable expenditures are properly recorded and submitted for reimbursement. Condition: During the financial audit for fiscal year ending December 31, 2024, it was identified that approximately $2.7 million in expenditures related to a federally funded airport construction project were not communicated to the finance department in a timely manner. Consequently, the expenses were not reported in the correct accounting period and were excluded from the County’s grant monitoring process. These expenditures were incurred under ALN #20.106 and were not submitted for reimbursement timely. Questioned Costs: None. While invoices were not submitted timely, the costs incurred appear allowable, supported, and related to the approved project scope. The County has since submitted the majority of expenditures for reimbursement. Context: The prior period adjustment was identified during 2024 audit testing. Due to the lack of communication and oversight by the former Airport Manager and Grant Manager, these amounts were not reported in the proper period or submitted for reimbursement timely. The issue was not limited to a single transaction. A prior period adjustment was recognized in the 2024 financial statements to properly reflect these federal expenditures. Cause: The County did not have adequate internal controls in place to ensure timely receipt and tracking of grant-related invoices. The project oversight was insufficient, and the individuals responsible for managing the grant and construction activities failed to communicate expenditures to the finance department timely. Effect: The County materially understated federal expenditures in prior reporting period(s) and did not submit timely reimbursement request for eligible costs. This resulted in a material adjustment to the County’s financial statements and required correction in the current audit period. Recommendations: The County should implement formal internal control procedures to ensure all involved personnel are held accountable for timely communication of incurred costs. All federal grant activities should be monitored on a regular basis by the County and related departments to ensure expenditures are properly recorded and reported. View of Responsible Officials: The County concurs with the finding. The omission of the expenditures was the result of a lack of communication between the former Airport Manager, Grant Manager and finance department. Since discovery, the County has taken steps to ensure improved coordination and documentation of all grant-related expenditures. Project oversight and internal controls will be strengthened through regular reconciliation between project managers and the finance department to ensure timely reporting, submission for reimbursement, and inclusion on the SEFA. The County is in the process of submitting the allowable expenditures for reimbursement and updating internal procedures to prevent future occurrences.

Federal Agency U.S. Department of Housing and Urban Development Finding Reference Number 2024 001 Major Federal Program Section 811 Supportive Housing for Persons with Disabilities (14.181) Type of Finding Significant Deficiency, Noncompliance Compliance Requirement Special Tests and Provisions Replacement Reserves Account Criteria Line 10(a) of the HUD Regulatory Agreement states the following, "Borrower shall deposit a monthly amount of $__________. The amount of the monthly deposit may be increased or decreased from time to time at the written direction of HUD without a recorded amendment to this agreement" Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, Section 200.303(a) states that non federal entities 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 Special Tests and Provisions Replacement Reserves, the auditors identified deposits made to two HUD Replacement Reserve accounts that did not agree to amounts within the current HUD agreements. For one account, the deposit required was $275, and the Arc's deposit was $262. For the second account, the Arc deposited $394 instead of $410 as required, such that the deposits were being made timely, however for an incorrect amount. Effect The Arc was not in compliance with the Special Tests and Provisions Replacement Reserves requirement. Cause Due to lack of internal controls surrounding the review of changes to the replacement reserve requirements, the new required deposit amount was not input in the Arc's software, resulting in deposits of incorrect amounts. Questioned Costs There are no questioned costs related to this finding. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This is a repeat finding of 2023 001. Recommendation We recommend that the Arc enhance its policies and procedures to ensure responsible program personnel timely reviews HUD communications and then validates replacement reserve account deposit amounts are adjusted accordingly for any required changes. Views of Responsible Officials We agree with the finding and have established additional internal controls to ensure future compliance as outlined in our corrective action plan.

2024 – 001 Federal Agency U.S. Department of the Treasury U.S. Department of Housing and Urban Development Federal Program Title Coronavirus State and Local Fiscal Recovery Funds Community Development Block Grants/Entitlement Grants Assistance Listing Number 21.027 14.218 Award Period January 1, 2024, through December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 2 CFR part 200.303 require that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Internal Control-Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission, provides a framework for organizations to design, implement, and evaluate control that will facilitate compliance with the requirements of Federal laws, regulations, and program compliance requirements. 2 CFR Subpart D 200.302 (1) and 200.303 (a) stipulates that the auditee must identify, in its accounts, all Federal awards received and expended and the Federal programs under which they were received. Federal programs and award identification shall include, as applicable, the CFDA title and number, Federal award identification number and year, name of Federal agency, and name of the pass-through entity; establish and maintain effective internal control over Federal award that provides reasonable assurance that the auditee is managing Federal awards in compliance with Federal statutes, regulation, 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 Controller General of the United State and the "Internal Control Integrated Framework", issued by the Committee on Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Authority’s schedule of expenditures of federal awards (SEFA) did not include the expenditures related to the Coronavirus State and Local Fiscal Recovery Funds and the expenditures related to the Community Development Block Grants on the SEFA as required by Uniform Guidance for federal program 14.218. . Questioned costs: None Context: During the review of revenue for these federal grants, it was discovered and determined that they were not reported on the SEFA. Cause: The Agency was not aware of the requirements to include these expenditures on the SEFA. Effect: The Authority was not in compliance with 2 CFR Subpart D 200.302 (1), 200.303 (a). The Agencies’ programs’ expenditures may be disallowed if the expenditures are not reported correctly on the SEFA. Repeat Finding: No Recommendation: We recommend that the Agency review current procedures for creating the SEFA to ensure that it is accurately reporting loan balances and expenditures during the year under audit for all federal programs to ensure compliance with the Uniform Guidance. Views of responsible officials: There is no disagreement with the audit finding.

Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states the auditee must establish 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. Condition: The Minnesota Department of Human Services (DHS) maintains the computer system, MAXIS, which is used by the County to support the eligibility determination process. In the case files reviewed for eligibility, not all documentation was available or updated to support participant eligibility. In 6 of 40 the case files reviewed in 2024, documentation contained inconsistent information for citizenship verification in MAXIS. Context: The State of Minnesota contracts with the County Health and Human Services Department to perform the “intake function” (meeting with the social services clients to determine income and categorical eligibility), while the Minnesota Department of Human Services maintains the computer system, MAXIS, which supports the eligibility determination process and actually pays the benefits to the participants. Effect: The improper input of information into MAXIS and lack of verification or follow-up of eligibility determining factors increases the risk that a program participant will receive benefits when they are not eligible. Cause: Program personnel entering case information into MAXIS did not review or ensure all required information was input or updated correctly. Recommendation: We recommend the County implement additional procedures, including reviews, to provide reasonable assurance that all necessary documentation to support eligibility determination exists and is properly input into MAXIS. County’s Response: A Corrective Action Plan has been established with an anticipated completion date of December 31, 2025.

Finding number 2024-002, material weakness in internal controls over compliance – cash management Federal Agency: U.S. Department of Justice Federal Program: Justice Reinvestment Initiative, ALN 16.827 Criteria: 2 CFR 200.303 states that the non-Federal entity is responsible for maintaining effective internal controls over cash management to comply with the terms and conditions of the Federal award. Under CFR 200.305(b), the timing of cash draws for cost reimbursement awards should be as close as administratively feasible to the actual disbursements of the expenditures. Condition: During the year ended December 31, 2024, the Organization’s federal draw down requests were not properly reconciled to actual cash needs. This also resulted in an instance where $121,533 was required to be returned to the awarding agency in June 2024. Cause: Inadequate procedures to monitor cash needs based on actual expenditures. Effect: The Organization temporarily held federal funds without immediate need and is not requesting funds based on actual expenditures incurred. Questioned Costs: None Recommendation: Management should improve the monitoring of actual expenditures to better align cash needs and draw down requests with actual expenditures incurred. Views of Responsible Officials: Management concurs with this finding. See Corrective Action Plan.

US Department of Agriculture Federal Financial Assistance Listing #10.558 Child and Adult Food Care Program (CACFP) Applicable Federal Award Number and Year – 28-1183-000 7/1/2023 – 6/30/2024 and 7/1/2024 – 6/30/2025 Cash Management Material Weakness in Internal Control Over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: The Organization was unable to provide adequate documentation to support the number of meals claimed for reimbursement. Cause: The Organization did not properly reconcile its reimbursement claims to its meal counts included in its attendance records. Effect: Meals claimed for reimbursement by the Organization were not properly supported by its internal records. Questioned Costs: None reported Context: Reimbursement to institutions is based upon the actual and verifiable daily counts of meals served by meal type (breakfast, lunch, snack and supper) and eligibility status (paid, reduced, free) multiplied by the applicable meal rate of reimbursement. A sample of four monthly reimbursement requests made by the Organization subject to the reporting requirement was selected for testing. Of the four monthly reimbursement requests selected, each of them contained variances between the reported number of meals served not agreeing to the Organization’s meal counts included in attendance records for the selected month. Of the items tested, meal counts were overstated by 396 meals for the meal types (breakfast, lunch and snack) on one monthly reimbursement request and understated by a total of 365 meals for the meal types (breakfast, lunch and snack) on three of the monthly reimbursement requests. Repeat Finding from Prior Years: Yes Recommendation: We recommend that management continue to evaluate its processes and controls to ensure that reimbursement requests for meals are properly reconciled to supporting documentation. Views of Responsible Officials: Management is aware of the deficiency in internal control over compliance. Management is in the process of reviewing its existing controls over the tracking and submitting of its meal counts included in its attendance records for reimbursement.

Finding: Eligibility Federal Assistance Listing Number 10.557 WIC – Special Supplemental Nutrition Program for Women, Infants, and Children Department of Agriculture Pass-through Entity: State of Colorado Department of Public Health and Environment FAIN: 253CO701W1003 Award Date: 10/1/2024 Criteria: According to 2 CFR Part 200.303 – 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), (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards, (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. As the funds are passed through the Colorado Department of Public Health and Environment, the Authority is required to utilize the State WIC eligibility system (COMPASS). Condition: The Authority is responsible for determining client eligibility and entering data into the COMPASS system. Although the Medicaid ID number is required for individuals with adjunct eligibility, it is not a mandatory field in COMPASS. Therefore, eligibility can be processed without entering this number. Testing revealed that the Authority did not consistently follow established controls requiring documentation of the state case ID for individuals deemed eligible based on participation in other state programs. Cause: Since the Medicaid ID number is not a required field in COMPASS, eligibility determinations can be processed without it. The system lacks reporting capabilities to identify missing entries in this field. Additionally, due to a high caseload, the Authority does not have the capacity to conduct 100% case reviews for all clients served. Effect: Although the individuals were correctly determined to be eligible for the WIC program, the Authority did not enter all required information into the COMPASS system. Questioned Costs: None. Context: We tested 25 clients for the WIC program for the year ended December 31, 2024 and noted four instances in which documentation of Medicaid ID number was not included within the COMPASS system. The total clients served by the Authority during the year was 25,906. A non-statistical sampling methodology was used to select the sample. Identification as a Repeat Findings: Not applicable. Recommendation: We recommend that the Authority expand existing case reviews to include five participant records per month per staff member. The results should be incorporated into annual performance evaluations. Additionally, we recommend enhanced training for all staff involved in eligibility determinations. Views of Responsible Officials and Planned Corrective Actions: Agree. See separate report for planned corrective actions.

2024-001 Cash Management – WIC Reimbursement to Member Counties Prior Year Finding Number: N/A 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 Agriculture Program: 10.557 WIC Special Supplemental Nutrition Program for Women, Infants, and Children Award Number and Year: 202792; 2024 Pass-Through Agency: Minnesota Department of Health Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish 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 § 200.305(b) states payment methods must minimize the time elapsing between the transfer of funds from the federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition: One of four subrecipient payments tested for compliance with federal cash management requirements was not paid timely to minimize the time elapsing between receipt of federal funds and disbursement to subrecipients. Questioned Costs: None. Context: Payment was made 126 days after receipt of the reimbursement request. The total amount reimbursed by the Minnesota Department of Health and paid to subrecipients is $1,087,575, consisting of 12 reimbursements. The sample of four reimbursements totaled $393,605. The payment made 126 days after receipt was for $89,935. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Partnership4Health is not in compliance with cash management requirements. Cause: Partnership4Health did not have backup procedures in place during an employee transition. Recommendation: We recommend Partnership4Health establish procedures to ensure cash management requirements are met. View of Responsible Official: Concur

Reference Number: 2024-003 Prior Year Finding: No Federal Agency: U.S Department of Housing and Urban Development Federal Program: Community Development Block Grants Assistance Listing Number: 14.218 Award Number: B-19-UC-42-0001, B-20-UC-42-0001, B-21-UC-42-0001, B-22-UC-42-0001, B-23-UC-42-0001, B-24-UW-42-0001 Compliance Requirement: Program Income Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Condition The County did not timely and accurately report program income received which caused the County’s reporting to HUD to be inaccurate. Criteria or specific requirement Compliance: CFR 570.504(a) states that the receipt and expenditure of program income as defined in §570.500(a) shall be recorded as part of the financial transactions of the grant program. Additionally, CFR 570.504(b)(2)(ii)) requires that program income be disbursed for eligible activities before additional funds are drawn from the U.S. Treasury account. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions the Federal award. These internal controls should comply with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Context Program income reported on Line 05 of the PR 26 report was $787,553, an additional $131,863 was collected in fiscal year 2024 but not reported. Cause Amounts received by the County were not identified timely. Effect The amount reported by the County to HUD related to program income was inaccurate. Questioned Costs Management indicated that $131,863 of collections in fiscal year 2024 was omitted from the PR 26 report. Recommendation We recommend that management identify its collections related to program income in a timely manner, modify its draw request appropriately, and report the accurate amounts to HUD. Views of responsible officials and planned corrective actions The county will continue to report the correct amount of program income to HUD. Receipts will be entered more timely.

Reference Number: 2024-004 Prior Year Finding: No Federal Agency: U.S Department of Housing and Urban Development Federal Program: Community Development Block Grants Assistance Listing Number: 14.218 Award Number: B-19-UC-42-0001, B-20-UC-42-0001, B-21-UC-42-0001, B-22-UC-42-0001, B-23-UC-42-0001, B-24-UW-42-0001 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Condition The County could not report the prime awards within the required timeframes for its first-tier subawards of $30,000 or more. Criteria or specific requirement Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA) And Title 2 U.S. Code of Federal Regulations (CFR) Part 170 Appendix A, prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. As of March 8th 2025, FSRS.gov was retired, and all subaward reporting data and functionality are now on SAM.gov. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions the Federal award. These internal controls should comply with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Context The seven subawards selected for testing were not reported in FSRS or SAM.gov by the end of the month following the month in which the amounts were awarded. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause The County’s controls were not operating effectively to ensure the reporting was performed in accordance with federal requirements. Effect Subawards were not reported to FSRS or SAM.gov in accordance with FFATA requirements. Questioned Costs None noted. Recommendation We recommend that the County develop internal controls and procedures to ensure that FFATA reporting requirements are met and ensure that all required subawards are reported accurately and timely to FSRS or SAM.gov. Views of responsible officials and planned corrective actions All of the County’s 2024 grants have been entered into FFATA and our 2025 grants and going forward will be entered when awarded.