Findings Citing § 200.303

Section III – Findings and questioned costs for Federal awards U.S. Department of Homeland Security, Federal Emergency Management Agency Passed through Missouri Department of Public Safety, State Emergency Management Agency Program Name: Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing #: 97.036 Finding: 2024 – 001 SIGNIFICANT DEFICIENCY Reporting Condition: During our original audit, the Cooperative initially failed to identify and properly report $878,271 of FEMA aid funding received from the State of Missouri. This error was identified subsequent to the issuance of the report and requires a re-issuance of the related audit reports. The internal control system did not prevent or detect this error to trigger the SEFA preparation process. Cause: The Cooperative's procedures for identifying and reporting federal expenditures were insufficient. The Cooperative finance personnel initially misunderstood the proper period for reporting FEMA disaster assistance expenditures. While the FEMA aid funding was approved by the State on December 20, 2024, with inspection by SEMA completed January 15, 2025, management initially concluded the expenditures should be reported in 2025 based on the cash receipt date. However, the expenditures should have been reported in 2024 when the eligible disaster recovery costs were actually incurred. This timing confusion, combined with the Cooperative's infrequent receipt of federal funding, resulted in the omission from the original 2024 SEFA. Effect: The initial error resulted in the audit report being issued without the required single audit report. While this error has been corrected, the control deficiency increases the risk that future federal awards could be incorrectly reported on the SEFA, potentially resulting in noncompliance with federal reporting requirements and incomplete or inaccurate identification of major programs subject to audit. Questioned Costs: $0 Criteria: 2 CFR 200.510(b) requires that the auditee prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires that non-federal entities establish and maintain effective internal control over Federal awards that provides reasonable assurance that the non-federal entity is managing the awards in compliance with Federal statutes, regulations, and the terms and conditions of the related awards. Recommendation: We recommend the Cooperative implement written procedures for SEFA preparation that include: (1) obtaining and reviewing all award agreements to identify federal funding sources; (2) maintaining a master listing of all awards that identifies the funding source (federal/state/local) and applicable Assistance Listing Numbers; (3) implementing cutoff procedures to ensure federal expenditures are reported in the correct period based on when eligible costs are incurred, not when funds are received from federal systems; and (4) requiring independent review of the SEFA by someone knowledgeable about federal compliance requirements who verifies completeness against award documentation and proper period reporting. We note that the Cooperative's finance office maintains good communication practices with auditors regarding federal funding when they are aware of such awards; therefore, strengthening the internal identification and cutoff processes will enhance the Cooperative's ability to provide complete, accurate, and timely information to auditors about all federal funding sources. Views of responsible personnel and planned corrective actions: Management concurs with this finding. The Cooperative will implement the following corrective actions prior to December 31, 2025: • The CFO will document written procedures for SEFA preparation that specifically address proper period cutoff based on when costs are incurred versus when funds are received. • All current grant agreements will be reviewed to identify federal funding sources and ensure compliance with the single audit threshold. • The CFO will perform quarterly and annual reviews of federal expenditure reporting for completeness, accuracy, and proper period reporting. • Prior to year-end, the CFO will independently review all award documentation to the draft SEFA against all grant documentation to verify completeness and proper period reporting.

2024-001 – Coronavirus State and Local Fiscal Recovery Funds – ALN No. 21.027 - Distribution of Compensation – Internal Controls over Allowable Costs and Activities (Significant Deficiency) Grant No. X50-8-018 Passed through Office of the Governor, Criminal Justice Coordinating Council Grant Period: October 1, 2023-September 30, 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 200.430(i) compensation records must support the distribution of the employee’s compensation among specific activities or costs objectives if the employee works on more than one Federal award and compensation of employees used in meeting cost sharing or matching requirements on Federal awards must be supported in the same manner. Condition: For specific payroll costs selected, the compensation records supporting the distribution of employees’ compensation to the federal award did not equal the amounts charged to the federal grant. Effect: The lack of controls to ensure the correct amounts are charged to the federal program based on the time and effort of the personnel could result in charging unallowable costs to the federal program. Cause: The Foundation calculated the amounts charged to the federal grant based on the budgeted percentage of time for each employee rather than the actual hours per the compensation records. Known Questioned Costs: $273 Likely Questioned Costs: $3,122 Perspective: This finding represents a systematic problem. Of the twenty-five transactions tested, five had errors. The sample was not statistically valid. Repeat Finding: No Recommendation: We recommend the Association establish policies and procedures to ensure that compensation is properly documented and distributed between Federal awards and properly approved.

Criteria or specific requirement: Per 2 CFR 200.331(a) states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes, federal award identification, subrecipient name, subrecipient’s DUNS number, federal award identification number (FAIN), federal award date, subaward start and end date, amount of federal funds obligated, total amount of federal award, federal award project description, name of federal awarding agency, Assistance Listing (ALN) number and name, identification of whether the award is R&D and indirect cost rate for federal award. Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control should include procedures to ensure required information is communicated prior to the issuance of the subaward. Per 2 CFR 200.331(a)(1), pass-through entities must evaluate each subrecipient’s risk of noncompliance to determine the appropriate level of monitoring of the subrecipient. Per 2 CFR 200.332(d) through (f), pass-through entities must monitor the activities of the subrecipient, which includes reviewing financial reports required by the pass-through entity. Condition: During our testing, we noted subrecipients tested had required information omitted from the sub agreements to the subrecipients including Assistance Listing (CFDA) title and number, subrecipient’s DUNS number, Federal Award Identification Number (FAIN), identification of whether the award is research and development, and indirect cost rate for federal award. Subrecipients tested did not have evidence of the County’s evaluation of the risk of noncompliance by the subrecipients, nor was there evidence of monitoring of annual audits for the subrecipients. Internal checklists that aid in compliance were missing for certain subrecipients. Reporting requirements from the subrecipients to the County were also not met. Per 2 CFR 200.331(a)(1), pass-through entities must evaluate each subrecipient’s risk of noncompliance to determine the appropriate level of monitoring of the subrecipient. Questioned costs: None. Context: Five out of the five subrecipients did not include required information in subaward agreements issued to subrecipients and lacked evidence of both the evaluation of risk of noncompliance of the subrecipient and monitoring of annual audits for the subrecipients. Five of the five subrecipients were missing an internal checklist that is signed by the County Manager. Cause: Lack of sufficient controls in place to ensure that subrecipient agreements contain all required information and are monitored appropriately. Effect: Failure to communicate required information and to adequately monitor the subrecipients could result in subrecipients not properly administering the federal programs in accordance with federal regulations. Repeat Finding: Yes, repeat of prior year finding 2023-004. Recommendation: CLA recommends that the County review its procedures for communicating information to subrecipients and implement the procedures necessary to ensure information is included in the subrecipient award documents at time of funding and that appropriate monitoring is performed for each subrecipient. Views of responsible officials: There is no disagreement with the audit finding.

Criteria or specific requirement: Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures in place to ensure the required certifications for covered contracts and subawards are received, documented, and contracts are not made with a debarred or suspended party. Condition: During our testing of five covered transactions, we noted the County did not have proper suspension and debarment documentation for the vendors and subawards selected for testing. Questioned costs: None. Context: All five covered transaction tested did not have proper supporting documentation for suspension and debarment procedures. Cause: Lack of sufficient controls in place to ensure that suspension and debarment checks were performed prior to entering into contracts. Effect: Failure to obtain the required certifications or perform verification procedures with the SAM could result in the payment of federal funds to vendors that are suspended or debarred from participation in federal assistance programs. Repeat Finding: Yes, repeat of prior year finding 2023-005. Recommendation: CLA recommends the County obtain certifications from vendors stating their organization is not suspended, debarred, or otherwise excluded from participation in federal assistance programs or document the procedures performed to verify the vendor is not identified as suspended or debarred on SAM. Views of responsible officials: There is no disagreement with the audit finding.

Finding 2024-003 Information on the federal program: Subject: Water and Waste Disposal Systems for Rural Communities – Equipment and Real Property Management Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Federal Award Number: N/A Pass-Through Entity: N/A Compliance Requirements: Equipment and Real Property Management Audit Finding: Material Weakness, Noncompliance, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.313(d)(1) states in part: "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 federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property" Condition: An effective internal control system was not in place at the District to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. Cause: Management had not established a system of internal control that would have ensured proper procedures are followed to comply with the Equipment and Real Property Management compliance requirements. Effect: The failure to establish an effective internal control system enabled noncompliance to go undetected and the proper tracking of assets acquired with federal funds was not taking place. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the District. Questioned Costs: There were no questioned costs identified. Context: The District did not maintain an updated asset listing that reflects the construction in process balance related to the project funded with federal funds. There was approximately $25.0 million of disbursements from federal funds related to the project as of December 31, 2024. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Recommendation: We recommend that the District’s management establish controls related to the grant agreement and the Equipment and Real Property compliance requirement to ensure that assets being purchased with federal funds are added to the capital asset listing and all required information is maintained on the capital asset listing. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Finding 2024.004: Allowable Costs/Activities Allowed or Unallowed - Significant Deficiency Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care), COVID-19 - Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Assistance Listing Numbers: 93.224 Federal Award Identification Number and Year: H80CS00053 - 2023 and 2024, H8FCS41422 - 2023 Criteria In accordance with 2CFR 200.303(a), Internal Controls, 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. The specific allowability requirements are unique to each federal program, in accordance with the terms and conditions of the federal award pertaining to the program. Condition Charges to federal awards for cash disbursements were not supported by illustration of proper approval. Cause The Center’s internal controls over cash disbursements were not consistently followed to ensure invoices were properly approved. Effect or Potential Effect Failure to ensure cash disbursements across programs have proper approval could result in noncompliance with the grant requirements or unallowable costs being charged. Questioned Costs None Context A test of 25 cash disbursement transactions was performed and resulted in four instances where the Center was unable to provide approved documentation. Our sample was a statistically valid sample. Identification of Repeat Finding This finding is a repeat finding (see prior year finding number: 2023.004) Recommendation The Center should establish a system of internal controls to ensure that all cash disbursements are properly approved. Views of Responsible Officials and Planned Corrective Actions Management agrees with the audit finding and will strengthen internal controls and accountability to correct the deficiency. Management has prepared a Corrective Action Plan that outlines the additional controls implemented.

FINDING 2024-001 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number or Year (or Other Identifying Number): Interim Financing Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The City did not have an effective system of internal controls over federal award requirements, including procurement and suspension and debarment. The City failed to properly design and implement internal controls, such as appropriate segregation of duties, to ensure compliance and detect or correct noncompliance in a timely manner. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the 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. Procurement - Small Purchases During the audit period, the City had six vendors with purchases under the $150,000 threshold that were considered simplified acquisition procurements and over the $10,000 threshold that was considered micro-purchase procurements. All six vendors were selected for testing, and for five of those vendors, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total dollar amount spent with these five vendors during 2024 was $246,055. Procurement - Simplified Acquisitions During the audit period, the City had three vendors with purchases over the $150,000 threshold that were considered simplified acquisition procurements. All three vendors were selected for testing, and for two of those vendors, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total dollar amount spent with these two vendors during 2024 was $2,654,999. Procurement - Policy Per Uniform Guidance, 2 CFR 200.318(a), a non-federal entity that receives federal funds must have and use documented procurement procedures that conform to applicable federal, state, and local laws and regulations. Additionally, state law, such as Indiana Code 5-22, prescribes specific procedures for purchasing supplies and services based on various dollar thresholds. The City did not provide a purchasing policy for review that included the applicable federal regulation, such as 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 services to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Suspension and Debarment Prior to entering into subawards and covered transactions, recipients are required to verify that such contracts 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 (ELPS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City failed to verify that vendors were not suspended or debarred prior to entering into covered transactions exceeding $25,000. Of the eight vendors tested, no documentation was provided to show that a check was performed against the EPLS or through other acceptable verification methods. The lack of internal controls and noncompliance was determined to be a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (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. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City's management was not aware of federal compliance requirements related to procurement and suspension and debarment. The City had not established or implemented the necessary internal controls and written policies to ensure purchases and contracts were administered in accordance with federal and state regulations. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that the services obtained provided full and open competition or the basis of the price. In addition, the City cannot ensure the vendors paid were eligible to participate in federal programs. Any program funds the City 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 statues, 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'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. We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Criteria: 2 CFR 200.319 states that all procurement transactions under the Federal award must be conducted in a manner that provides full and open competition and is consistent with Federal procurement standards. 2 CFR 200.214 states in part that recipients and subrecipients are subject to the suspension and debarment regulations. In addition, 2 CFR 200.303 in part states that a recipient of a Federal award must establish, document, and maintain effective internal control over the Federal award. Condition: We have selected and tested one vendor for suspension and debarment with expenditures in excess of $25,000 for the construction of a new shelter and office space for compliance with suspension and debarment. We identified the one vendor were not properly verified for suspension and debarment prior to the contract execution date. It appears that the vendor was not suspended or debarred by the federal government. Cause: Internal controls over suspension and debarment were not properly designed to verify that all vendors are in compliance with suspension and debarment. Effect: Our testing identified that the Organization’s internal controls over compliance with suspension and debarment are not in place to comply with the suspension and debarment requirements. Based on our testing, the vendor was in compliance with suspension and debarment. Repeat Finding: No. Recommendation: We recommend that the Organization re-evaluate the design of internal controls over compliance with suspension and debarment compliance requirements based on 2 CFR 200.214 and establish policies and procedures to comply with these requirements as they relate to requirements related to federal grants. Corrective Action Plan: Reported on page 20.

Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance ALN 21.019: Coronavirus Relief Fund Criteria: A recipient of federal funds 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). Condition: The District incurred project costs that were not formally approved for payment by the Board of Directors. Formal approval of payments is an important internal control over the use of federally awarded funds. However, no documentation was provided to demonstrate such approval, and there was no evidence of formal authorization in the Board meeting minutes. Context: The project started in calendar year 2024, and costs were paid throughout the year for water and sewer system upgrades. Effect: Without adequate oversight, there could be unallowable costs and costs incurred outside of the grant period. Questioned Costs: None. Cause: The District discussed invoices during their monthly meetings and reviewed reports supplied by the engineer, but no formal documentation of approval was recorded in the meeting minutes or on the invoices and supporting documentation. Auditor Recommendation: We recommend that the District record in the meeting minutes or on the invoices and supporting documents, board approval for payment of invoices prior to payment. District Response: The Water District Secretary will bring before the board every invoice from Central, WET, Shumaker, and payroll for a separate vote for approval. This will be completed at the November 2025 meeting.

Federal Agency: U.S. Department of Transportation Federal Program Title: Formula Grants for Rural Area and Tribal Transit Program AL Number: 20.509 Federal Award Identification Number and Year: MN-2023-045-00 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Number(s): 1054531 Award Period: 1/1/2024-12/31/2024 Type of Finding: • Material Weakness in Internal Control over Compliance Criteria or Specific Requirement: Under 2 CFR section 200.303, a non-federal entity must establish and maintain effective internal controls over the federal awards 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). Timely review and approval should be maintained to ensure accurate amounts are being drawn down prior to submission. Condition: The Organization did not have adequate internal controls in place for the full fiscal year to ensure cash drawdowns are approved by the appropriate personnel before being submitted. Questioned Costs: N/A Context: Three of the three selections did not have a documented review process in place on the drawdown prior to submission to the state. This was not a statistically valid sample. Cause: Management did not have a separate individual assigned to review the cash drawdown for the request for funds. Effect: Potential for inaccurate amounts of funds to be requested. Repeat Finding: This is not a repeat finding. Recommendation: A separate individual with supervisory authority over the preparer should be assigned to review and approve the cash drawdown prior to submission. Views of responsible officials and planned corrective actions: There are no disagreements with the audit finding. The Organization will ensure there are proper segregation of duties regarding the cash drawdown process.

Finding 2024-002: Information on the Federal Program: Compliance Requirements: Other—Schedule of Expenditure of Federal Awards Preparation Type of Finding: Material Noncompliance and Material Weakness in Internal Control over Compliance. Criteria: 2 CFR 200.510 indicates that the auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 200.502 Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as: expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Condition: The Organization failed to prepare a complete and accurate SEFA for the year ended December 31, 2024. The SEFA is a required supplementary schedule that provides detailed information on all federal awards received and expended during the fiscal year, in accordance with 2 CFR 200.510. Cause: The noncompliance resulted from a deficiency in the Organization’s internal controls. The Organization does not have established policies and procedures to ensure all federal awards are properly identified, tracked, and included in the SEFA preparation process. Effect or Potential Effect: Due to the control deficiencies described above, if not for auditor assistance, inaccurate expenditures result in a high risk that material noncompliance with federal regulations could occur and not be detected and corrected in a timely manner; inaccurate reporting to federal agencies on the Organization’s federal expenditures; and persistent noncompliance can lead to potential loss of funding. Questioned costs: No questioned costs were identified as a result of this compliance finding. Context: The Organization mistakenly omitted to report expenditures of federal award expenditures on an accrual basis under the Sexual Risk Avoidance, ALN 93.060, and Title V Sexual Risk Avoidance Education Program (Discretionary Grants), ALN 93.787. Recommendation: We recommend that the Organization establish formal procedures to ensure SEFA preparation along with all federally funded contracts included in the SEFA as expenditures; implement a robust process to track all federal awards under government auditing standards, provide training on Uniform Grant Guidance, including SEFA preparation; perform management review to ensure the SEFA is accurate, complete, and prepared in a timely manner. Views of responsible officials and planned corrective actions: Management acknowledges the omission of the auditee’s prepared SEFA. Management is committed to properly preparing the SEFA, and to address this oversight, management will identify trainings for accounting personnel related to SEFA reporting and for those reviewing the schedule, to ensure its accuracy.

Criteria or specific requirement: CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §200.303 specifies that a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Organization did not have policies and procedures in place to ensure all the requirements of subrecipient monitoring were being performed. Questioned costs: None. Context: Of the 5 subrecipients selected for testing (there were 11 in the population), we noted that none of them had proper monitoring in place. Cause: Policies and procedures were not in place to provide adequate subrecipient monitoring. Effect: The Organization could pass through federal funding to subrecipients who are not responsible or capable recipients of the funds. Funding could be used by the subrecipients in ways that are incompatible with program goals and compliance requirements. Repeat Finding: Yes. Recommendation: We recommend that the Organization implements policies and procedures to perform subrecipient monitoring and that monitoring is formally documented and approved. Views of responsible officials: There is no disagreement with the audit finding.

Finding 2024-001: U.S. Department of Housing and Urban Development, Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 223(f)/207) Statement of Condition: Internal control processes over financial reporting did not ensure that all transactions were properly recorded. Criteria: The HUD Handbook 4370.2, Chapter 2 requires the books and accounts to be complete and accurate. Additionally, 2 CFR Part 200 Section 200.302 Financial Management states that the financial management system of each non-federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award in accordance with the reporting requirements. Additionally, 2 CFR Part 200 Section 200.303(a), Internal Controls, requires that non-federal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the award in compliance with federal statutes, regulations and the terms and conditions. Effect: Noncompliance with HUD and Uniform Guidance regulations. Cause: Management oversight. Context: A review of journal entries made during the year revealed journal entries made in the incorrect period and erroneous journal entries. Additionally, the review process of the Corporation's financial information did not discover these errors. Recommendation: We recommend management review/enhance its accounting and internal control procedures to ensure that all key accounts are reconciled and reviewed with supporting evidence of such review. Questioned Costs: N/A Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding and will review the accounting and financial procedures, system of internal controls and policies.

2024-003 - IMMUNIZATION COOPERATIVE AGREEMENTS- INTERNAL CONTROLS - LACK OF SUPPORT FOR PAYROLL APPROVALS - ALN #93.268 – SIGNIFICANT DEFICIENCY FINDING TYPE: SIGNIFICANT DEFICIENCY Finding 2024-003 Federal Program: FAIN: IMMUNIZATION COOPERATIVE AGREEMENT NH23IP922623 ALN: 93.268 Year(s): 2024 Federal Agency: U.S. Department of Health and Human Services Pass Through Agency: North Dakota Department of Health Questioned Cost: $0 Condition Upper Missouri District Health Unit does not have documented approval of the payroll transactions to ensure that the expenditures are allowable to the Immunization Cooperative Agreements program and are coded to the proper grant. Effect There is an increased risk that Upper Missouri District Health Unit charged unallowable expenditures to the grant. Cause Upper Missouri District Health Unit does not have consistent procedures in place to approve payroll. Criteria "Standards for Internal Control in the Federal Government" (Green Book) requires management to design, implement, and operate internal controls to achieve its objectives related to operations, reporting, and compliance. Management is to design appropriate types of control activities for the entity's internal control system. Control activities help management fulfill responsibilities and address identified risk responses in the internal control system. Uniform Guidance 2 CFR 200.303(a) states “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Context The majority of the expenses charged to the grant during the audit period were relating to payroll expenses. During the audit, it was discovered that the district does not have documented procedures relating to the approval of payroll transactions to ensure the expenditures are allowable and coded to the proper grant. 100% of reimbursement requests that were reviewed were found to be lacking payroll approval. In total, there were 19 reimbursement requests totaling $246,778 of expenses that were paid during the audit period. This appears to be a systematic problem as no proper controls are in place. Where sampling was performed, the audit used a non-statistical sampling method. Repeat Finding No. Recommendation We recommend Upper Missouri District Health Unit establish and maintain internal controls over its payroll approval process and procedures in compliance with the Uniform Guidance 2 CFR 200.303(a) and the Green Book. Upper Missouri District Health Unit’s Response See corrective action plan.

2024-007 – CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS – IMPROPER REPORTING OF EXPENDITURES – ALN 21.027 – SIGNIFICANT DEFICIENCY & OTHER NONCOMPLIANCE FINDING TYPE: OTHER NONCOMPLIANCE Finding 2024-007 Federal Program: FAIN: CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS SLFRP5522 ALN: 21.027 Year(s): 2024 Federal Agency: U.S. Department of Treasury Questioned Cost: $0 Condition Pembina County did not properly report expenditures and obligations on the March 31, 2024, Project and Expenditure Report for the Coronavirus State and Local Fiscal Recovery Funds program. The total cumulative and current expenditures and cumulative and current obligations reported were understated by $17,797.40. Effect The amounts reported as cumulative and current expenditures and current obligations on the March 31, 2024, Project and Expenditure Report were inaccurate. Cause Pembina County did not ensure that all expenditures and obligations were included when completing reporting for the March 31, 2024 Project and Expenditure Report. Criteria Page 19 of the Coronavirus State and Local Fiscal Recovery Funds: Project and Expenditure Report User Guide Version 12 (September 30, 2024) states: • An expenditure is the amount that has been incurred as a liability of the entity (the service has been rendered or the good has been delivered to the entity). • An obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. An obligation also means a requirement under federal law or regulation or provision of the award terms and conditions to which a recipient becomes subject as a result of receiving or expending funds. • 2 CFR 200.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Context As stated in the SLFRF Compliance and Reporting Guidance for counties allocated less than $10 million with a population below 250,000 residents such as Pembina, "the initial Project and Expenditure Report covered the period from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports will cover one calendar year and must be submitted to Treasury by April 30 each year." Therefore, each year after March 31, 2022, the Pembina County must then submit an annual P&E report for the period covering April 1 202X - March 31, 202Y. Pembina County did submit the 2024 (period covering April 1, 2023-March 31, 2024) report by April 30, 2024, but did not properly include 3 expenses/obligations that were incurred between January 2024 - March 2024, totaling $17,797.40 on the 2024 P&E report. Repeat Finding No. Recommendation We recommend Pembina County review and comply with all reporting requirements of the Coronavirus State and Local Fiscal Recovery Funds program by properly reporting all expenditures and obligations in the Project and Expenditure Reports. Pembina County’s Response See Corrective Action Plan.

2024-003 Federal Highway Project Sponsor Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance Severity of Deficiency: Significant Deficiency Federal Agency: U.S. Department of Transportation Program: 20.205 Highway Planning and Construction Award Number and Year: 1052200, 2024 Pass-Through Agency: Minnesota Department of Transportation 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. The Minnesota Department of Transportation State Aid Manual provides guidance and responsibilities for project sponsors. In addition to acting as the fiscal agent, the sponsor takes responsibility that the project will be completed in accordance with federal and state rules and regulations that apply. Condition: Murray County acted as the sponsor for a highway construction project for a local city and the Minnesota Department of Transportation. The County did not develop controls over the sponsored project to ensure compliance. This included: • The County did not have documented approval of disbursements by the appropriate County staff with knowledge of the project and the sponsorship relationship. • The County did not maintain documentation to demonstrate the expenditures were for allowable costs. • The County did not verify the correct percentage was used for the local matching requirements or that the source of the funds used for matching requirements were from an allowable source. • The County did not have evidence of internal controls over the contracting process, including approval of the construction contract by the County Board. • The County did not maintain documentation that the requirements for suspension or debarment were met by (a) checking SAM.gov exclusions, (b) collecting a certification from the vendor, or (c) verifying a clause or condition was included in the contract. • The County did not maintain evidence that the prevailing wage rate clause was included in the contract. • The County did not maintain evidence that the Build America Buy America clause was included in the contract. • The County did not maintain evidence of review of certified payrolls submitted by contractors and subcontractors. Questioned Costs: None. Context: In December 2019, the County approved a resolution to act as a sponsoring agent for a city project. The resolution indicates the sponsorship includes a willingness to secure and guarantee the local share of costs associated with this project and responsibility for seeing this project through to its completion, with compliance of all applicable laws, rules, and regulations. Total project expenditures were $241,256 with payments made to the city to reimburse for contractor payments. The city contracted with one prime contractor who used five subcontractors. Effect: Without controls in place over the sponsored project, there is an increased risk of noncompliance with applicable laws, rules, and regulations. Cause: The County was unaware of the responsibilities of a project sponsor. Recommendation: We recommend the County implement controls to ensure projects the County sponsors are completed in accordance with all the federal and state rules and regulations that apply. View of Responsible Official: Acknowledge

2024-004 Special Tests and Provisions – Davis-Bacon Act Prior Year Finding Number: 2023-003 Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Transportation Program: 20.205 Highway Planning and Construction Award Number and Year: 1052200; 2024 Pass-Through Agency: Minnesota Department of Transportation 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. The Davis-Bacon Act (23 U.S.C. § 113) and Title 29 U.S. Code of Federal Regulations Part 5 require that contractors and subcontractors performing work on federal contracts in excess of $2,000 pay their laborers and mechanics not less than the prevailing wage rates and fringe benefits listed in the contract’s wage determination class. Each contractor and subcontractor must, on a weekly basis, provide a copy of the payrolls providing the information listed under payrolls and basic records of Title 29 U.S. Code of Federal Regulations § 5.5 (a)(3)(i) for the preceding weekly payroll period. Condition: Murray County did not obtain or review all required certified payroll reports for contracts that received federal funding in 2024. Questioned Costs: None. Context: The County did not obtain one of nine certified payrolls selected for testing from the two contracts that received federal funding. Total federal expenditures related to the contracts were $2,421,256. The work was performed by two prime contractors and 24 subcontractors between May and July 2024, with a total of 83 payroll periods. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The County is not in compliance with the Davis-Bacon Act and Title 29 U.S. Code of Federal Regulations Part 5. Cause: Murray County indicated they did not have procedures in place to ensure all weekly certified payroll reports were received and reviewed. Recommendation: We recommend County staff obtain and properly review the certified payrolls received from all contractors and subcontractors for compliance with the Davis-Bacon Act and Title 29 U.S. Code of Federal Regulations Part 5 and ensure documentation exists to support monitoring of and compliance with this requirement. View of Responsible Official: Acknowledge

Criteria or specific requirement: Compliance: 2 CFR 200.213 Suspension and Debarment restricts 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 180.300 states that an entity may determine suspension and debarment status by: (a) Checking SAM (System for Award Management) Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person (7) Distribution of work to individuals and firms or economic considerations. 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 of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Township could not provide supporting documentation that suspension and debarment status was determined prior to award. Context: The suspension and debarment status for all of the vendors tested were not documented on the 40 transactions tested. Questioned costs: There are no questioned costs related to this finding as the vendors were not federally suspended or debarred. Cause: The Township relied on State policies and procedures for suspension and debarment for State piggyback contracts, rather than applying their own established controls to these contracts Effect: The Township is not in compliance with federal suspension and debarment regulations. Repeat Finding: No. Recommendation: The Township should ensure that established policies and procedures related to suspension and debarment are applied to all contracts, even for piggyback agreements adopted from the State. Views of Responsible Officials and Planned Corrective Action: The Township has created a procedure to regularly check Sam.gov for suspension and debarment prior to issuing purchases orders or contracts and have it reviewed.

Section III – Major Federal Awards Programs – Findings and Questioned Costs (Cont.) Finding 2024-009: Eligibility - Lack of Segregation of Duties in Expenditure Determination and Approval (Material Weakness) Federal Program : Grants for Transportation of Veterans in Highly Rural Areas Assistance Listing Number : 64.035 Criteria: As per 2 CFR 200.303(a), entities must maintain effective internal controls, including segregation of duties, to prevent unauthorized or inaccurate transactions. Condition: The same individual was responsible for determining expenditure allowability and approving expenditures for reimbursement. Cause: Staffing limitations and the absence of written policies resulting in inadequate role separation. Effect: Insufficient segregation of duties increases the risk of errors or inappropriate expenditures. Recommendation: Management should reassign roles so that expenditure allowability reviews and expenditure approvals are performed by separate individuals. If staffing is limited, implement compensating management review controls. Repeat Finding: This is not a repeat finding.

2024-003 Internal Controls and Compliance over Allowable Costs and Activities - Payroll (Material Weakness and Material Noncompliance) Legal Services Corporation 09.744060 Basic Field Grant Grant Period: 1/1/2024 – 12/31/2024 Contract Number: 744060 U.S Department of Justice 16.575 Victims of Crime Act Grant Periods: 10/1/23-9/30/24 and 10/1/24 – 9/30/25 Contract Number: 4055104; 4055105 Supreme Court of Texas Basic Civil Legal Services Program Grant Period: 9/1/2023 – 8/31/2025 Contract Number: 26030 Criteria: Under 2 CFR Section 200.303(a) a non-Federal entity is required to establish and maintain internal controls over compliance with Federal statutes, regulations, and the terms and conditions of the Federal grant. In addition, under 2 CFR Section 200.430 – Compensation – personal services, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates may be used for interim accounting purposes, but budget estimates alone do not qualify as support for charges to Federal awards. The entity’s system of internal controls must include a process to review after-the-fact interim charges made to a Federal award to budget estimates and make any necessary adjustments such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Texas Grant Management Standards also contains provisions for selected items of cost for Compensation – personal services which mirrors the requirements of 2 CFR Section 200.430. Condition: The Organization’s internal control process to compare actual time charged on the employee’s time sheet to the budget allocation charged to the grant to determine if budget estimates reflect reasonable approximations of the activities performed, did not consistently occur. For 16 of 75 payroll disbursements selected for testing, the allocation on the time sheet provided did not agree to the allocation of the employee’s wages to the program. In addition, of 9 of 75 payroll transactions selected for testing, the Organization was unable to provide a time sheet to substantiate the application of the employee’s time for that period. The finding appears to be a systemic issue. The sample was not statistically valid. Cause: Time sheets were not consistently compared against budget estimates by the Director of Finance. Time sheets could not be located for employees no longer employed by the Organization. Effect: Failure to review time sheets or maintain time sheets to support compensation allocations could result in an over/under statement of compensation charged to the Federal or State grants. Questioned Costs: (See chart) Perspective: There is not observable evidence of the Organization’s review and reconciliation of time sheets to budget estimates which affects both the allowable activities and allowable costs requirements. Repeat Finding: No Auditor’s Recommendation: We recommend the Organization review its timekeeping policies and procedures and provide additional training to employees to ensure time sheets are retained for all payroll transactions to support the allocation of compensation. We also recommend the Organization review and refine its policies to reconcile the percentage of hours charged on the time sheets to the budget estimates used to bill Federal and State grantors. This should be done in conjunction with monthly or quarterly billings (or other determined regular interval), at fiscal year end, and at the end of the grant year (if different from the Organization’s fiscal year). Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.

Incorrect equipment hours used on the project worksheet submission Compliance Requirement: Allowable Costs/Cost Principles Condition/Criteria: The recipient and subrecipient must: Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. (2 CFR section 200.303(a)). Cause: The Cooperative personnel did not match the labor hours from employee timesheets to the project worksheet. Effect: Incorrect hours were recorded on the project worksheet. The errors noted did not result in material known or likely questioned costs required to be reported. Recommendation: Review timesheets to ensure they agree to the hours reported on the project worksheet. Implement a second level of review by another employee so the individual tasked with preparing the project worksheet is not performing the review.

2024-007 Allowable Costs/Cost Principles – Cost Allocation Plan 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 Health and Human Services Programs: 93.563 Child Support Services, 93.778 Medicaid Cluster Award Number and Year: 2301MNCSES; 2024, 2405MN5ADM; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish 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 § 2 CFR 200.403(a) and § 2 CFR 200.403(g) require costs to be necessary and reasonable and be adequately documented. Condition: For two of the five departments tested, incorrect expenditure amounts were used in the cost allocation plan. In addition, for one of the five departments tested, the County did not have support for the basis of allocating the costs to benefiting departments. Questioned Costs: $2,968,953, which is calculated as $1,299,253 of department costs tested within the cost allocation plan that were derived from incorrect information and $1,669,700 in department costs without a documented basis for allocating costs. Not all questioned costs were allocated to the department reporting grant expenditures or to the grant tested as a major program. Additionally, the rate of reimbursement of allocated costs to the grant is not known to the auditor. Context: The 2024 cost allocation plan is prepared using activity and expenditures from 2022. The cost allocation plan is prepared annually by a contractor and submitted to the Minnesota Department of Human Services (DHS) for reimbursement of county-wide indirect cost reimbursement. For one department, the cost allocation plan included expenditure accounts with credit balances as debit balances and, for another department, the 2023 general ledger expenditures were used rather than 2022. Furthermore, the basis for one department was determined in direct conversation between the cost allocation plan preparer and the County, with no documented support retained. Effect: Errors in reporting expenditures and the basis of the allocations used in the cost allocation plan calculation could result in incorrect county-wide indirect cost reimbursements from DHS. Cause: The cost allocation plan preparer’s work contained errors or lacked proper support, and the County did not identify the errors or lack of support. Recommendation: We recommend the County provide accurate and supported information to the cost allocation plan preparer and appropriate staff review the cost allocation plan to ensure the data, basis, and calculation are accurate, complete, and supported. View of Responsible Official: Concur

Finding: Finding Type: Material Weakness Title and Federal Assistance Listing Number of Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: In accordance with 2 CFR 200.320, non-federal entities must conduct all procurement transactions in a manner providing full and open competition. For purchases exceeding the micro-purchase threshold of $10,000, the entity must obtain price or rate quotations from an adequate number of qualified sources, unless the purchase qualifies as a sole-source procurement under 2 CFR 200.320(c). Additionally, 2 CFR 200.303 requires the non-federal entity to establish and maintain effective internal control over compliance with federal statutes, regulations, and the terms and conditions of the federal award. Furthermore, 2 CFR 200.318(b) and 200.324 require that written contracts be executed with contractors, including all required Federal provisions to safeguard Federal funds. Condition: We examined 60 transactions during our testing of procurement transactions under the Coronavirus State and Local Fiscal Recovery Funds. We noted that a competitive bidding process was not used in 42 of 60 transactions tested. In all 42 instances, Historic South did not provide evidence that multiple bids or quotes were solicited. The documentation and explanation provided by Historic South was not deemed to be adequate justification to qualify for the use of sole-source procurement under 2 CFR 200.320(c). Additionally, all 60 procurement transactions tested did not have a fully executed, signed contract with the respective contractors. The award/contracting process and methods used to render and pay services did not meet the expected level of formal contractual agreements in place. Cause: In early 2024, Historic South made revisions to the procurement process in order to maximize efficiency and improve overall project outcomes. These revisions were made based on the challenges of securing bids on all potential projects, the need to expend the awarded dollars in a timely fashion and a verbal agreed-upon understanding with the Ohio Department of Health. The requirement to obtain multiple bids was replaced with a strategic invitation approach based on a preferred vendor pool. The result was that Historic South did not have a procedure in place to ensure that procurement transactions were conducted in compliance with Uniform Guidance. Specifically, the procurement policy lacked provisions to enforce competitive procurement practices for purchases above the micro-purchase threshold. Additionally, the process Historic South used to make awards to contractors did not meet the expected standards required for formal contract execution prior to project initiation or payment. - 29 - Historic South Initiative Schedule of Findings and Questioned Costs - continued Year Ended December 31, 2024 Section III – Federal Program Audit Findings and Questioned Costs - continued Effect: Failure to obtain competitive bids or quotes increases the risk of paying higher prices for goods/services, or unfair contracting practices. Additionally, the lack of competitive procurement represents noncompliance with Uniform Guidance, which may lead to questioned costs and potential disallowance by the granting agency. Furthermore, the lack of formally signed contracts increases the risk of misuse of federal funds and an inability to enforce contractual obligations or resolve disputes. While our testing did not identify any instances of misspent or improperly used federal funds, the control deficiencies represent a material weakness in internal control over compliance. Questioned Costs: $1,555,114 These costs are considered questioned due to lack of compliance with Uniform Guidance. The amount represents the total bid/contract amount of the 42 transactions tested, that did not meet the competitive bidding requirements. Recommendation: We recommend that Historic South implement and enforce formal procurement procedures that comply with the requirements of 2 CFR 200.317-200.327. These procedures should include obtaining competitive bids and/or maintaining documentation for any alternative bidding process used and approval requirements. Additionally, Historic South should require that fully executed, signed contracts be obtained prior to the start of work or payment to contractors. Staff responsible for procurement should be trained on federal procurement standards to ensure compliance. Views of Responsible Official and Planned Corrective Action: Prospectively, Historic South will review best practices related to the contract awarding process and formal contracting arrangements for construction work. In addition, Historic South will implement policies of: 1. Requiring the solicitation of multiple bids for all construction work in excess of $10,000 2. Establishing criteria for awarding all construction work 3. Implementing formal contracting processes for all construction work

Criteria – The HRSA Compliance Manual requires federally qualified health centers (FQHCs) to establish and maintain a sliding fee discount program to ensure that services are accessible to patients regardless of their ability to pay. Eligibility must be based solely on income and family size, supported by appropriate documentation. Under Uniform Guidance (2 CFR §200.303), non-federal entities must establish and maintain effective internal controls over compliance with federal statutes, regulations, and program requirements. The OMB Compliance Supplement (Part 4, Health Center Program Cluster) further emphasizes that health centers must document income and family size to properly apply sliding fee discounts and must consistently implement the approved discount schedule. Condition and Description – During our testing of compliance with the sliding fee discount program, we identified deficiencies in the application and documentation of the sliding fee discount schedule. Of 10 patient encounters selected for review, 6 patient files did not contain a registration form to support determination of sliding fee eligibility. In addition, although the Organization’s policy requires retention of two paystubs for each patient to verify income, only one paystub was maintained in several patient records. Further, 4 patient files reviewed did not contain documentation of household member information, which is required to calculate family size for eligibility determination. These deficiencies reflect noncompliance with the Organization’s policies and federal program requirements and may result in patients not being charged in accordance with their ability to pay. Questioned Costs – Unknown. Cause/Effect –. The Organization did not obtain or retain adequate documentation of patient income, family size, and registration forms to support eligibility determinations. Without this information, compliance with the sliding fee discount requirements could not be demonstrated, creating the risk that discounts were not applied appropriately and federal program requirements were not met

Finding 2024-004: 93.591 - U.S. Department of Health and Human Services - Family Violence Prevention and Services/State Domestic Violence Coalitions Allowable Costs/Cost Principles, Material Weakness in Internal Control and Noncompliance Criteria: In accordance with 2 CFR §200.403(g), costs must be adequately documented in order to be allowable under a federal award. Additionally, per 2 CFR §200.302(b)(3), recipients must maintain records that identify the source and application of funds for federally funded activities. Furthermore, effective internal controls per 2 CFR §200.303 require that transactions be properly authorized and reviewed to ensure compliance with applicable requirements. Condition: During our testing of expenses charged to the federal award, we reviewed a sample of 10 transactions totaling $9,284. Of those, 7 transactions (representing $8,980) were found to be noncompliant due to one or both of the following: • Missing supporting documentation, such as receipts or invoices • Missing approval documentation, such as required supervisor sign-offs These issues impaired our ability to determine whether the expenses were allowed, reasonable, and allocable under the terms of the award. Due to the high rate of errors, we performed extrapolation procedures over the population of similar expenses totaling $107,782. Based on the sample error rate and our extrapolation methodology, we estimate that $36,846 of the total expenses charged to the federal award may be unallowable and are thus considered extrapolated questioned costs. Effect: As a result of insufficient supporting and approval documentation, the allowability of a significant portion of expenses charged to the federal award could not be determined. This has led to an extrapolated questioned cost of $36,846. Questioned Costs: $36,846 (extrapolated) Cause: The deficiencies noted appear to be the result of weak internal controls related to documentation and approval workflows for federal expenditures. Specifically, the Organization does not appear to have a consistent process to: • Ensure documentation is retained for all expenses • Verify and record supervisory or grant-related approvals Recommendation: We recommend the Organization take immediate steps to improve internal controls related to documentation and record retention for federal program expenditures. The Organization should ensure that all expenses charged to the federal award are supported with adequate documentation. Additionally, the Organization should also ensure approvals are properly documented regardless if the expense is paid by check or electronic payment.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Supplemental Nutrition Assistance Program Cluster Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 242MN101S2514 – 2024 Passed Through Entity: Minnesota Department of Human Services Pass Through Number: H55240010 Compliance Requirement: Special Provisions Award Period: 2024 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Agencies are required to automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning SNAP (7 CFR sections 272.10 and 277.18). This includes: (1) processing and storing all case file information necessary for eligibility determination and benefit calculation, identifying specific elements that affect eligibility, and notifying the certification unit of cases requiring notices of case disposition, adverse action and mass change, and expiration; (2) providing an automatic cutoff of participation for households that have not been recertified at the end of their certification period by reapplying and being determined eligible for a new period (7 CFR sections 272.10(b)(1)(iii) and 273.10(f) and (g)); and (3) generating data necessary to meet federal issuance and reconciliation reporting requirements. 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: The Minnesota Department of Human Services (DHS) maintains the computer system, MAXIS, which is used by the County to support the eligibility determination process. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. While periodic supervisory case reviews are performed to monitor compliance with grant requirements for eligibility, when performing our case file review for eligibility, we noted: • There was no verification of income on 2 of the 60 casefiles tested. • There was not a proper documented redetermination of eligibility on 1 of the 60 casefiles tested. Questioned costs: None Context: Three of the 60 casefiles tested had the above noted issues. Cause: The County has had significant turnover and new staff over the past few years as well as increases in caseloads. There was also changing guidance as waivers from the pandemic expired. All of this provided more opportunities for errors to occur. Effect: Improper input or updating of information in MAXIS and lack of verification or follow-up of eligibility determining factors increase the risk that a program participant will receive benefits when they are not eligible. Repeat finding: Yes – 2023-007 Recommendation: We recommend the County implement processes and procedures to provide reasonable assurance that all necessary documentation to support eligibility determination exists and is properly input or updated in MAXIS and issues are followed up in a timely manner. Views of responsible officials: There is no disagreement with the finding.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Supplemental Nutrition Assistance Program Cluster Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 232MN101S2514 – 2024 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55240010 Compliance Requirement: Procurement, Suspension, and Debarment Award Period: 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: The County must follow Uniform Guidance Subsection 200.320 Methods of Procurement for all applicable procurements over the County’s micro-purchase threshold. For purchases over the County's micro-purchase threshold of $10,000 but not exceeding the simplified acquisition threshold of $250,000, the County should follow small purchase procedures. 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 County. 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: During our testing, it was noted that for one contract out of four tested the County was unable to provide documentation showing that the county followed the open competition requirement. Questioned costs: None Context: One out of the four contracts tested had no documentation of open competition. Cause: The County purchasing likely followed County purchase policies for nonfederal expenditures. Effect: It would be possible that the County could end up spending more federal dollars than necessary for a product or service, if they are not going through the steps to ensure they are utilizing the best vendor for the county and documenting this process each year. Repeat finding: 2023-010 Recommendation: We recommend the County follow their federal purchasing policy in all their federal programs and retain documentation of that process occurring. As necessary, the County may need to add internal controls that are specific to each program to ensure this properly occurs. Views of responsible officials: There is no disagreement with the finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Numbers: 93.778 Federal Award Identification Numbers and Years: 2405MN5ADM - 2024 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55245048 Compliance Requirement: Allowable Activities Award Period: 2024 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: The Minnesota Department of Human Services (DHS) requires a listing of employees working on social services programs to be submitted quarterly, known as a random moment study listing (RMS listing). DHS then determines the amount applicable to the applicable income maintenance programs through random moment studies. Each quarter the County’s coordinator reviews their RMS listing to ensure the employees listed are accurate for the people working and being coded in the general ledger. 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: One individual was included in the 2nd quarter Social Services RMS listing sent to the State that was not supposed to be included in the listing, one individual was noted to have the same issue on the 2nd quarter of the public health local collaborative time study participant listing. Questioned costs: None Context: In our testing of two of the eight quarterly RMS listings, one individual was included in the 2nd quarter Social Services RMS listing sent to the State that was not supposed to be included in the listings, one individual was noted to have the same issue on the 2nd quarter public health local collaborative time study participant listing. There were 335 County staff listed in the 2nd quarter’s RMS listing and 52 participants listed in the 2nd quarter public health LCTS RMS listing. Cause: The County's RMS controls and procedures were not robust enough to note that the RMS listings should have excluded the noted individuals. Increased turnover and growth of the programs also created an increase in the number changes that were needed to be made to the listings. Effect: Lack of proper controls could affect allocation of fundings due to the staff not being in MAXIS or actually assigned to social services or public health LCTS case files to properly respond to the random moment requests that are sent by the State as part of the random moment study. Repeat Finding: Yes 2023-009 Recommendation: We recommend that the County review its procedures and control to ensure all RMS listings sent to the State properly exclude those necessary individuals no longer working in the programs. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Numbers: 93.778 Federal Award Identification Numbers and Years: 2405MN5ADM - 2024 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55245048 Compliance Requirement: Special Provisions Award Period: 2024 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters 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. The County and the Minnesota Department of Human Services (DHS) have a contract surrounding the federal funds. This contract has several obligations and reporting requirements the County must follow including the requirement the county must work with its collaborative partners to ensure that the LCTS coordinators and staff sampled by the LCTS have completed training approved by the State in the LCTS. Condition: The County was unable to provide a documented formal review process to ensure that LCTS fiscal site contacts were trained on completing cost schedules. Questioned costs: None Context: The County did not provide the documentation of the review over the noted requirement. Cause: The County did not maintain a record of their review process. Also, there has been fewer resources provided in recent years from the Minnesota Department of Human Services to help meet the specific training requirements of LCTS fiscal site contacts completing cost schedule reports. Effect: There is no way to verify the review process was completed and completed timely. Repeat finding: 2023-013 Recommendation: We recommend that the County reviews its polices and controls to ensure there is a formally documented control that ensures all required training of LCTS fiscal site contacts is completed and the documentation of the completions of the training is retained. Views of responsible officials: There is no disagreement with the finding.

2024-001: Internal Controls Over SEFA Preparation Federal Assistance Listing Number: 21.027 Name of Program or Cluster: Coronavirus State and Local Fiscal Recovery Funds Agency: U.S. Department of the Treasury Criteria Per 2 CFR §200.510(b), non-federal entities that expend $750,000 or more in federal awards during the fiscal year are required to prepare a SEFA that includes accurate and complete information about all federal awards expended. The Uniform Guidance also emphasizes the importance of internal control systems over compliance and reporting, as outlined in 2 CFR §200.303. Entities must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards Condition Life Management, Inc. (LMI) does not appear to have implemented sufficient internal controls to ensure the complete and accurate preparation of the Schedule of Expenditures of Federal Awards (SEFA) for the year ended December 31, 2024. Although LMI’s SEFA preparation memo states that the Chief Financial Officer (CFO) is responsible for compiling the SEFA using information from the accounting system and supporting grant documentation, in practice, we noted that the entity relied on an external entity to provide essential grant documentation necessary for SEFA preparation. Additionally, the SEFA/SESFA provided appeared to be outdated and not reflective of current-year grant activity. Cause The absence of a fully developed control structure and oversight mechanism appears to have contributed to reliance on external or related-party sources for preparing SEFA-related documentation. This suggests a lack of staff with adequate skills, knowledge, and experience (SKE) necessary for SEFA preparation. Repeat Finding No Recommendation We recommend that Life Management, Inc. strengthen its internal control processes over SEFA preparation. This may include: • Providing training to appropriate staff to ensure they have the requisite skills, knowledge, and experience to independently prepare the SEFA in accordance with federal requirements. • Engaging or hiring qualified personnel with federal grant accounting expertise to oversee the SEFA preparation process. • Reducing reliance on external or related parties for documentation by maintaining a centralized, internal repository of grant agreements and related records. Views of Responsible Officials See Corrective Action Plan

Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Passed Through: N/A Finding Type: Material weakness Condition: During our testing of this major program, we noted that the County incorrectly completed the SLFRF Compliance Report – SLT-2073 – P&E Report – 2025 by reporting erroneous amounts for all categories of obligations and expenditures during the period. Criteria: The Uniform Guidance (2 CFR section 200.303) requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effective internal controls should include procedures in place to ensure accurate reporting of the activity. Cause: The County has not designed and implemented internal controls over its federal award programs to ensure compliance with the terms and conditions of its federal award programs. Effect: The County could provide incorrect information to the federal government regarding the actual federal awards expended and obligated. Context: Reporting was direct and material to the program. Each category of the report had incorrect information reported. Questioned Costs: None Recommendation: We recommend that management design and implement internal controls that would ensure the accurate preparation of all required reporting. Repeat Finding: No Views of Responsible Officials and Planned Corrective Action: The County agrees with the finding and the recommendation will be implemented.

Criteria:2 CFR §200.303(a) requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effective internal control should be consistent with the COSO Internal Control—Integrated Framework or the GAO Green Book. In addition, Uniform Guidance requires written policies and procedures in certain compliance areas. Condition:The entity does not have a formally documented system of internal control, including written policies and procedures, over its federal programs. While certain controls are performed in practice, these controls are not formally documented Cause:Management has not developed or formally documented written policies and procedures related to internal control over compliance with federal requirements. Effect / Potential Effect: The absence of written policies and procedures increases the risk that controls may not be consistently applied, that staff may not have clear guidance regarding compliance responsibilities, and that noncompliance with federal requirements could occur and not be detected or prevented in a timely manner. No instances of noncompliance were identified during audit testing. Questioned Costs:None. Repeat Finding:No. Recommendation:We recommend that management develop, implement, and maintain written policies and procedures documenting its system of internal control over federal programs to ensure compliance with Uniform Guidance and applicable federal requirements. Views of Responsible Officials and Planned Corrective Action:Management agrees with the finding and plans to develop and implement written internal control policies and procedures over federal programs. Management anticipates completion by June 30, 2026.

Program: ALL No. 10.523 Centers of Excellence at 1890 Institutions Significant Deficiency and Noncompliance over Subrecipient Monitoring Repeat Finding: Yes Condition: Management did not verify that its subrecipients were not suspended or debarred or otherwise excluded from participating in the transactions. Criteria: In accordance with 2 CFR §200.303, the non-federal entity must establish and maintain effective internal controls 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. Pursuant to 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h), a pass-through entity must identify the award and applicable requirements, evaluate risk, monitor, and ensure accountability of subrecipients. Additionally, when entering into subaward transactions, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2CFR 180.300). Cause: Program personnel were unaware of the requirement included in Uniform Guidance related to procedures required for subrecipient monitoring. Effect: If subrecipients were not in compliance with Uniform Guidance, the Foundation would not identify the noncompliance timely. Questioned Costs: Unknown. Recommendation: We recommend that the Foundation implements subrecipient monitoring controls by documenting and implementing procedures in accordance with Uniform Guidance requirements, including providing training to program personnel and developing written policies and checklists to ensure consistent compliance. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.

CRITERIA: In accordance with Uniform Guidance (2 CFR 200.303), recipients of federal awards are required to establish and maintain effective internal controls. These internal controls over major federal programs are essential to ensure that federal funds are managed properly, used efficiently, and administered in compliance with all applicable laws, regulations, and award provisions. CONDITION: During our audit, we noted that while the Organization has established procurement policies and procedures, it does not have comprehensive written accounting policies and procedures. Additionally, the Organization is not currently utilizing accounting software to track and manage federal award activity. CAUSE: The Organization operates with limited personnel, making it challenging to appropriately segregate financial duties. The absence of detailed policies and procedures further increases the likelihood of inconsistent practices, operational inefficiencies, and errors. EFFECT: These conditions weaken the Organization’s overall internal control environment, increasing the risk that errors, misstatements, or irregularities may occur and remain undetected. RECOMMENDATION: We recommend that the Organization enhance its internal control environment by developing and implementing formal accounting policies and procedures. This should include strengthening processes related to federal award management and improving segregation of duties where feasible. Implementing appropriate accounting software would also support more efficient and accurate financial reporting. MANAGEMENT’S RESPONSE: See management’s corrective action plan on page 17.

2024-002 – IMPROPER REPORTING OF EXPENDITURES - ALN 21.027 – OTHER NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY FINDING TYPE: OTHER NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY Finding 2024-002 Federal Program: Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Year(s): SLFRP5402, 2024 Federal Agency: U.S. Department of Treasury Pass Through Agency: North Dakota State Treasurer Office Questioned Cost: $0 Condition Morton County did not properly report expenditures on the March 31, 2024, Project and Expenditure Report for the Coronavirus State and Local Fiscal Recovery Funds program. The total cumulative expenditures were understated by $233,268. Context As stated in the SLFRF Compliance and Reporting Guidance for counties allocated less than $10 million with a population below 250,000 residents such as Morton County, "the initial Project and Expenditure Report covered the period from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports will cover one calendar year and must be submitted to Treasury by April 30 each year." Therefore, each year after March 31, 2022, Morton County must then submit an annual P&E report for the period covering April 1 202X - March 31, 202Y. Morton County did submit the 2024 (period covering April 2023 - March 31, 2024) report by April 30, 2024, but did not properly include 6 expenses that were incurred between January 2024 - March 2024, totaling $233,268 on the 2024 P&E report. Effect The amounts reported as cumulative expenditures on the March 31, 2024, Project and Expenditure Report were inaccurate. Cause Morton County did not ensure that all expenditures were included when completing reporting for the March 31, 2024 Project and Expenditure Report. The County identified the misstatement after the P&E Report had been submitted. As Treasury does not allow revisions to submitted reports, the County was unable to amend the inaccurate report. Criteria Page 19 of the Coronavirus State and Local Fiscal Recovery Funds: Project and Expenditure Report User Guide Version 12 (September 30, 2024) states: • An expenditure is the amount that has been incurred as a liability of the entity (the service has been rendered or the good has been delivered to the entity). • 2 CFR 200.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Repeat Finding No. Recommendation We recommend Morton County develop a review process that includes reconciling SLFRF expenditures to supporting documentation prior to preparing and submitting the P&E Report. Strengthening review steps will help ensure accurate reporting in accordance with Treasury and Uniform Guidance requirements. Morton County’s Response See Corrective Action Plan.

2024-003 –LACK OF CONTROLS OVER SUSPENSION AND DEBAREMENT - ALN 21.027 – SIGNIFICANT DEFICIENCY FINDING TYPE: SIGNIFICANT DEFICIENCY Finding 2024-003 Federal Program: Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Year(s): SLFRP5402, 2024 Federal Agency: U.S. Department of Treasury Pass Through Agency: North Dakota State Treasurer Office Questioned Cost: $0 Condition Morton County did not have documented policies in place to verify that vendors receiving federal funds were not suspended or debarred from participation in federal programs. During the audit period, the County did not perform checks of the federal System for Award Management (SAM.gov) or obtain certifications from vendors to demonstrate compliance with federal suspension and debarment requirements. Context During the audit period, Morton County entered one contract in the amount of $190,400. The vendor was not on the suspension and debarment listing on SAM.gov. Effect Without documented controls to verify vendor eligibility, the County was exposed to an increased risk of noncompliance with federal requirements. Although no instances of transactions with suspended or debarred parties were identified during audit testing, the lack of controls limits the County’s ability to demonstrate ongoing compliance with suspension and debarment regulations. Cause Morton County was not aware of the requirement to establish and document procedures specific to suspension and debarment compliance under the Uniform Guidance. As a result, controls and documentation practices were not implemented during the audit period. Criteria 2 CFR §200.214 and 2 CFR §180.300 require non-federal entities to verify that parties to covered transactions are not suspended or debarred prior to entering such transactions. Additionally, 2 CFR 200.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Repeat Finding NO. Recommendation We recommend Morton County develop and implement documented procedures to verify vendor eligibility under federal suspension and debarment requirements prior to entering into contracts. Acceptable verification methods include SAM.gov checks, vendor certifications, or contract clauses, and documentation of compliance should be retained. Morton County’s Response See Corrective Action Plan.

2 CFR § 300 codified in 45 CFR part 75 gives regulatory effect to the Department of Health and Human Services. 2 CFR § 200.303(a) provides that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The General Health District has established procedures to approve timesheets by requiring the employee and department supervisor to sign the timesheets indicating they are accurate (employee) and approved (supervisor). For 2024, 11% of payroll disbursement timesheets tested over the Community Health Workers for Public Health Response and Resilient Program were not signed by the Health Commissioner and/or Director of Administration to indicate timesheets were accurate. Failure to follow the approved procedures could result in the occurrence of unallowable payroll transactions. The General Health District should ensure that both the employee and department supervisor sign the timesheets. These approvals should be maintained for audit.

2024-004 Procurement and Suspension and Debarment 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 Transportation Program: 20.205 Highway Planning and Construction Award Number and Year: 1057187; 2024 Pass-Through Agency: Minnesota Department of Transportation 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. The Minnesota Department of Transportation State Aid Manual provides guidance and responsibilities for project sponsors. In addition to acting as the fiscal agent, the sponsor is taking on responsibility that the project will be completed in accordance with all of the federal and state rules and regulations that apply. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the County must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 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 with the contracting party. Condition: Faribault County acted as the sponsor for a project for a local city and the Minnesota Department of Transportation. The County did not develop controls over the sponsored project to ensure compliance for procurement. This included: • The County did not maintain records to support the history of procurement. • The County did not maintain documentation that the requirements for suspension or debarment were met by (a) checking SAM.gov exclusions, (b) collecting a certification from the vendor, or (c) verifying a clause or condition was included in the contract. Questioned Costs: None. Context: In June 2024, the County approved a resolution to act as a sponsoring agent for a city project. The project expenditures were $61,458 with payments made to the city for reimbursement. Effect: Without controls in place over the sponsored project, there is an increased risk of noncompliance with applicable laws, rules, and regulations. Cause: The County was unaware of the responsibilities of a project sponsor. Recommendation: We recommend the County implement controls to ensure projects the County sponsors are completed in accordance with all the federal and state rules and regulations that apply. View of Responsible Official: Acknowledge

2024-005 Suspension and Debarment Prior Year Finding Number: 2023-007 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 the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: Federal Direct; 2022 Pass-Through Agency: N/A – Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must maintain internal control over federal programs that provides reasonable assurance that the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 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. The County’s procurement policy requires SAM.gov search results to be documented prior to entering into a covered transaction. Condition: The County did not have documentation to support that verification for suspension or debarred vendors was performed by County staff prior to entering into the covered transactions. Questioned Costs: None. Context: None of the vendors tested were listed as suspended or debarred on SAM.gov at the time of the audit. There were two covered transactions during 2024. 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 under the grant. Cause: The County informed us that documentation of SAM.gov searches for covered transactions could not be located due to staffing changes. In addition, staff were unaware of the requirements. Recommendation: We recommend the County maintain documentation to demonstrate that vendors were not suspended, debarred, or otherwise excluded from conducting business with the County; the County should complete this documentation prior to entering into a covered transaction. View of Responsible Official: Acknowledge

2024-006 Reporting Prior Year Finding Number: 2023-006 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 the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: Federal Direct; 2022 Pass-Through Agency: N/A – Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must maintain internal control over federal programs that provides reasonable assurance that the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The U.S. Department of the Treasury requires submission of an annual Project and Expenditure Report for Coronavirus State and Local Fiscal Recovery Funds (SLFRF) that includes current period expenditures. Condition: The County overstated current period obligations and expenditures reported on the annual Project and Expenditure Report submitted to the U.S. Department of the Treasury by $997,578 and $1,149,654, respectively, due to not updating projects reported in prior annual reports. Additionally, cumulative expenditures were understated by $49,837, due to not including all applicable expenditures. Also, the County did not submit the annual Project and Expenditure Report by the federal deadline of April 30, 2025. Questioned Costs: None. Context: The County opted to spend the SLFRF award under the Revenue Replacement category, which allows spending on broader types of government services. The annual Project and Expenditure Report required to be submitted to the U.S. Department of the Treasury by April 30 of each year for the reporting period ending March 31 was submitted June 6, 2025. Effect: The County is not in compliance with federal reporting requirements. Cause: The County indicated difficulty tracking project expenditures due to staff turnover. Recommendation: We recommend the County review the U.S. Department of the Treasury’s guidance and form instructions to ensure accurate reporting of SLFRF activity. We also recommend the County submit future Project and Expenditure Reports by the federal deadline. View of Responsible Official: Acknowledge

2024-002 – CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS – IMPROPER REPORTING OF EXPENDITURES & OBLIGATIONS – ALN 21.027 – MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE FINDING TYPE: MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Finding 2024-003 Federal Program: FAIN: CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS SLFRP3716, 2024 ALN: 21.027 Year(s): 2024 Federal Agency: U.S. Department of Treasury Questioned Cost: $0 Condition Mountrail County did not properly report total expenditures and obligations on the March 31, 2024, Project and Expenditure Report for the Coronavirus State and Local Fiscal Recovery Funds program. The total reported cumulative and current period expenses were overstated by $516,186 and $500,897, respectively, and the total cumulative and current period obligations were overstated by $49,056 and $144,401, respectively. Effect The amounts reported as cumulative and current expenditures and obligations on the March 31, 2024, Project and Expenditure Report were inaccurate. Cause Mountrail County did not ensure that all expenditures and obligations were in agreement with their ledger when completing reporting for the March 31, 2024 Project and Expenditure Report. Criteria Page 19 of the Coronavirus State and Local Fiscal Recovery Funds: Project and Expenditure Report User Guide Version 12 (September 30, 2024) states: • An expenditure is the amount that has been incurred as a liability of the entity (the service has been rendered or the good has been delivered to the entity). • An obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. An obligation also means a requirement under federal law or regulation or provision of the award terms and conditions to which a recipient becomes subject as a result of receiving or expending funds. • 2 CFR 200.303 states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Context As stated in the SLFRF Compliance and Reporting Guidance, for counties allocated less than $10 million with a population below 250,000 residents such as Mountrail, "the initial Project and Expenditure Report covered the period from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports will cover one calendar year and must be submitted to Treasury by April 30 each year." Therefore, each year after March 31, 2022, the Mountrail County must then submit an annual P&E report for the period covering April 1 202X - March 31, 202Y. Mountrail County did submit the 2024 (period covering April 1, 2023-March 31, 2024) report by April 30, 2024, but did not properly include the current and cumulative expenses and obligations on the 2024 P&E report. Repeat Finding No. Recommendation We recommend Mountrail County review and comply with all reporting requirements of the Coronavirus State and Local Fiscal Recovery Funds program by properly reporting all expenditures and obligations in the Project and Expenditure Reports. Mountrail County’s Response See Corrective Action Plan.

Finding 2024-001: Lack of documentation of review and approval - Material Weakness Program name:Office for Coastal Management Assistance Listing: 11.473 Federal award Identification number: 20 NFWF 339630 Federal award year: 9/1/2020 - 9/30/2024 Federal awarding agency: U.S. Department of Commerce Criteria - In accordance with 2 CFR 200.303, recipients and subrecipients must establish, document 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: Expenses: Ensuring proper documentation and approval. (2 CFR 200.400(d) ) Reporting: Ensuring financial reports are accurate, complete, and reviewed prior to submission (2 CFR 200.328). Condition - The Organization has limited written processes of certain transaction classes. There was a pervasive lack of documentation of approval over transactions, including expenses, and reporting. Cause - The Organization did not maintain or consistently apply documentation protocols for internal control reviews. Formal documentation practices were not in place during the audit period. 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. Questioned costs - None identified. 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. Identification of Repeat Findings - This is a repeat finding from the prior year (Finding 2023-002). As a result of the 2023 audit report, issued in February 2026, the Organization began the process of developing updated policies for compliance. In 2025, the Organization formally adopted new policies and procedures that align with the internal control standards per 2 CFR Part 200. Recommendation - We recommend that the Organization ensure updated policies and procedures are implemented and consistently applied. This includes: Documented review and approval of all transactions related to expenses, and reporting. Maintenance of written evidence supporting such reviews. Regular training and internal monitoring to ensure control procedures are consistently followed. Management response - Management agrees with this assessment and has committed to a corrective action plan. Management has also engaged with a new accounting firm to oversee the financial reporting functions at the Organization.

2024 – 004 INTERNAL CONTROLS OVER CASH MANAGEMENT Federal Agency: Department of Transportation Federal Program: Formula Grants for Rural Areas and Tribal Transit Program Assistance Listing Number: 20.509 Federal Award Identification Number and Year: MN-2020-020-01, MN-2023-045-00 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Number: MN-2020-020-01, MN-2023-045-00 Award Period: Year Ended December 31, 2024 Compliance Requirement Affected: Cash Management Type of Finding: Significant Deficiency in Internal Controls 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: The Transit Board did not have adequate internal controls over the cash management reports. Questioned Costs: None Context: The Transit Board did not have anyone internally reviewing the quarterly reports being submitted. Cause: Limited personnel. Effect: The Transit Board could be reporting inaccurate information effecting the status of cash management. Repeat Finding: No Recommendation: We recommend the Transit Board designate qualified personnel for conducting the quarterly reporting review. The review should be performed and documented. Formal procedures should be documented to ensure consistency and effectiveness of the quality review process. Views of responsible officials: There is no disagreement with the audit finding.

Finding Reference Number: 2024-002 Reportable finding considered a significant deficiency - Inadequate support for distribution of donated food Title and CFDA Number of Federal Program: Emergency Food Assistance Program: 10.568 & 10.569 Federal award numbers & periods: 22-MOU-00108 23/24. 10/1/2023 - 9/30/2024 22-MOU-00108 24/25. 10/1/2024 - 9/30/2025 Type of Finding: Financial Statement and Federal Award Finding Finding Resolution Status: In Process Identification of Repeat Finding and Finding Reference Number: This is not a repeat finding Criteria: Organizations are required to maintain adequate documentation and an audit trail for all food distributions, including goods sent to distribution sites and goods used for on-site meal preparation, in accordance with sound internal control practices and applicable grant requirements (e.g., Uniform Guidance 2 CFR §200.302 – Financial Management and §200.303 – Internal Controls). Statement of Condition: During the audit, Food Bank Distribution Reports were provided showing goods sent to three locations, including recipient sign-offs, stating they received the food. Each location tracks food received and distributed to individuals. Leftover food is sent to various nonprofits to assist with distribution, if any. However, documentation for goods that were received and not distributed, at these three locations, could not be produced for review as an audit trail for who received and distributed leftover food. Additionally, Congregate Aggregate Feeding Reports, which track goods used for on-site meal preparation, and subsequent distribution, were also not available for review as they were not kept on file. The Organization lacked distribution documentation to support their monthly Distribution Report for goods distributed resulting in an incomplete audit trail. Cause: The Organization did not have formalized procedures or controls to ensure that all food distributions and on-site meal preparation activities were consistently documented and retained. Tracking was handled internally without standardized reporting requirements, resulting in incomplete records. Effect or Potential Effect: The absence of complete supporting documentation limits the Organization’s ability to demonstrate compliance with internal policies and donor requirements. It increases the risk of misstatement, misappropriation of goods, and potential noncompliance with grant or regulatory requirements. Questioned Costs: There are no questioned costs associated with this finding. Context: During our testing of food distribution documentation, we selected Food Bank Distribution Reports from three distribution locations for the audit period. For each location, we reviewed documentation supporting goods received, goods distributed, and any goods remaining at the end of the distribution cycle. While signed recipient logs were available to support goods initially received at the locations, supporting documentation for goods that were received but not distributed—including records identifying where leftover food was subsequently sent—was not available for any of the three locations reviewed. Additionally, for onsite meal preparation activities, we requested Congregate Aggregate Feeding Reports used to track the quantities of goods prepared and served; however, the Organization did not retain these reports for the period under audit. As a result, none of the sampled items related to meal preparation activities had supporting documentation available for review. Recommendation: We recommend that management implement and enforce policies to ensure that all food distributions, including on-site meal preparation and any goods not distributed separately, are properly tracked and supported by documentation. This should include maintaining Congregate Aggregate Feeding Reports, retaining all distribution records and reconciling them to the Monthly Distribution Report, establishing procedures to ensure discarded goods are documented appropriately. These steps will strengthen internal controls and provide a clear audit trail for all commodities. Auditors’ Summary of the Auditee’s Comments on the Findings and Recommendations: See Corrective Action Plan

Finding 2024-005 - Reporting Federal Award Information: Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Texas Department of Housing and Community Affairs Assistance Listing Number (ALN): 93.568 Federal Program Name: Low-Income Home Energy Assistance Type of Finding: Material Weakness in Internal Control Over Compliance Reporting Compliance Requirement No Questioned Costs Criteria: Under 2 CFR 200.303, the Organization is required to establish and maintain effective internal control over Federal awards that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, 2 CFR 200.302(a) requires that the financial management system provide accurate, current, and complete disclosure of the financial results of each Federal award. Further, 2 CFR 200.334 requires financial records, supporting documents, statistical records, and all other records pertinent to a Federal award be retained to support amounts reported. The OMB Compliance Supplement identifies Reporting as a compliance requirement for this program and requires that financial reports be supported by underlying accounting records and subject to appropriate review prior to submission. Condition: During our audit, we noted that financial reports submitted to the Federal awarding agency were not consistently supported by retained documentation demonstrating how reported amounts were calculated. In addition, there was no documented evidence of supervisory review or approval of the reports prior to submission. During interim testing of reports, we noted that certain periodic financial reports submitted to the pass-through entity did not reconcile to the Organization’s general ledger at the time of submission. The variances were attributable to journal entries, voided checks, and other posting adjustments recorded after report submission. While cumulative and final reports ultimately agreed to the Organization’s accounting records and no amended reports were required, documentation reconciling the differences at the time of submission was not retained. documentation was retained for amounts reported to the Federal awarding agency or to require documented supervisory review of reports prior to submission. Effect or Potential Effect: The absence of supporting documentation and independent review increases the risk that inaccurate, incomplete, or unsupported information could be reported to the Federal awarding agency and not be detected in a timely manner. Although no questioned costs were identified as a result of our audit procedures, this deficiency creates a reasonable possibility that material noncompliance with reporting requirements could occur and not be prevented or detected on a timely basis. Questioned Costs: None. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management implement procedures to:  Retain supporting documentation for all amounts reported to Federal awarding agencies, including reconciliations to the general ledger;  Require documented supervisory review and approval of reports prior to submission; and  Ensure that adjustments occurring after report submission are documented and, when necessary, corrected through revised reporting. Views of Responsible Officials and Planned Corrective Action: Management acknowledged that supporting documentation was not consistently retained and that supervisory review was not formally documented. Management has indicated that procedures will be implemented to ensure reports are reconciled to accounting records, properly supported, and reviewed prior to submission.

Finding 2024-006 – DCF Audit Submission Federal Reporting Requirement: Uniform Guidance – Subpart F Reporting Requirements Type of Finding: Significant Deficiency in Internal Control Over Compliance Noncompliance with Federal Reporting Requirements No Questioned Costs Criteria: Under 2 CFR 200.512(a), the auditee must submit the reporting package and Data Collection Form (DCF) to the Federal Audit Clearinghouse (FAC) no later than the earlier of:  30 calendar days after receipt of the auditor’s report(s), or  Nine months after the end of the audit period. Further, 2 CFR 200.303 requires the Organization to establish and maintain effective internal control over Federal awards to provide reasonable assurance that the entity complies with Federal statutes, regulations, and the terms and conditions of Federal awards. Effective internal control includes procedures to monitor compliance with required reporting deadlines. Condition: The Organization did not submit the reporting package and Data Collection Form (DCF) for the year ended December 31, 2023 within the timeframe required by 2 CFR 200.512(a). The reporting package was due no later than September 30, 2024 (nine months after fiscal year-end). The Organization submitted the reporting package to the Federal Audit Clearinghouse (FAC) on March 15, 2025, which was 166 days after the required deadline. Cause: The Organization did not have adequate procedures in place to monitor and ensure timely submission of the reporting package and Data Collection Form. In addition, broader financial reporting control deficiencies contributed to delays in completing the audit process, which affected the timeliness of submission. Effect or Potential Effect: Failure to submit the reporting package and Data Collection Form timely constitutes noncompliance with Uniform Guidance reporting requirements. Late submission delays Federal oversight and public transparency of audit results and increases the risk of heightened Federal scrutiny or potential funding restrictions. Questioned Costs: None. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management implement procedures to ensure timely submission of the reporting package and Data Collection Form. Such procedures should include:  Establishing a formal compliance calendar with assigned responsibility;  Monitoring audit progress against statutory deadlines; and  Addressing underlying financial reporting control deficiencies that impact audit completion timelines. Views of Responsible Officials and Planned Corrective Action: Management acknowledged that the prior year reporting package and Data Collection Form were not submitted within the required timeframe. Management indicated that procedures will be implemented to monitor deadlines and improve the timeliness of financial reporting and audit completion going forward.

Finding 2024-001 - U.S. Department of Housing and Urban Development, Mortgage Insurance Rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate, CFDA #14.135 Statement of Condition: Internal control processes over financial accounting did not ensure that all transactions were properly recorded. Internal control processes over financial accounting did not ensure that key accounts were reconciled or reviewed on a periodic basis. Criteria: The HUD Handbook 4370.2 REV-1, Chapter 2 requires the books and accounts to be complete and accurate. HUD Handbook 4370.2 REV-1, Chapter 2, Section 12 requires monthly reconciliations of all cash accounts. Additionally, 2 CFR Part 200 Section 200.302 Financial Management states that the financial management system of each non-federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award in accordance with the reporting requirements. Additionally, 2 CFR Part 200 Section 200.303(a), Internal Controls, requires that non-federal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the award in compliance with federal statutes, regulations and the terms and conditions. Effect: Noncompliance with HUD and Uniform Guidance requirements and the possibility of undetected material misstatements and/or undetected misappropriation of assets. Cause: Prior management oversight. Context: An understanding of processes and internal controls was performed with the Corporation's management and tests were performed to determine if the processes and internal controls were implemented and effective. As part of this process we noted the following processes and internal controls were not effective and/or implemented. 1) Only two of the six bank accounts were reconciled. The outsourced bookkeeper only performed a bank reconciliation for the operating and security deposit cash accounts. 2) The accounts receivable, tenants and accounts receivable, HUD were not reconciled. 3) The monthly review process of the Corporation's financial information is not fully supported by evidence of such review. Questioned Costs: N/A Recommendation: We recommend management review/enhance its accounting and internal control procedures to ensure that all key accounts are reconciled and reviewed with supporting evidence of such review. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding and will review the accounting and financial procedures, system of internal controls and policies. The Corporation has executed a new management agreement with Remnant Management Inc. effective October 1, 2024. Remnant Management Inc. will ensure that all transactions are properly recorded and that key accounts are reconciled and reviewed on a periodic basis beginning October 1, 2024 and going forward.

2024-003 Reporting 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 Health and Human Services Program: 93.778 Medicaid Cluster Award Number and Year: 2405MN5ADM; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish 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. For County federal awards received from the Minnesota Department of Human Services (DHS), internal control should be established and maintained to provide assurance that program reports submitted to DHS are completed in accordance with DHS reporting instructions. As part of Western Prairie Human Services’ reporting requirements, the County submits the Social Service Fund Report, Form DHS-2556 on a quarterly basis to DHS. Condition: The following errors were noted in the Social Service Fund Report, Form DHS-2556 submitted to DHS for the third quarter of 2024: • State revenues were understated by $158,645. • Federal revenues were understated by $41,926. • Charges for services were understated by $1,130. • Miscellaneous revenue was overstated by $51,837. Questioned Costs: None. Context: Western Prairie Human Services was unable to submit corrections for the Social Service Fund Report, Form DHS-2556 for the third quarter of 2024. The population consisted of eight quarterly reports: four for the Income Maintenance Quarterly Expense Report, Form DHS-2550 and four for the Social Services Fund Report, Form DHS-2556. The sample size of four quarterly reports was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Incorrect information relating to revenues was reported to DHS on a Social Service Fund Report, Form DHS-2556. Cause: The Western Prairie Human Services’ controls over preparation of the quarterly reports were not sufficient to identify that the related revenues were not properly reported. Recommendation: We recommend that Western Prairie Human Services implement controls that ensure that all applicable amounts are reported on the reports in a manner that is consistent with DHS guidance. View of Responsible Official: Concur

Department of the Treasury Local Assistance and Tribal Consistency Fund (ALN 21.032) Activities Allowed and Unallowed, Allowable Costs / Cost Principles, and Reporting Criteria or specific requirement: In accordance with 2 CFR Part 200.303, non-Federal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Furthermore, effective internal control should include regular reconciliations between subsidiary tracking systems (spreadsheets) and the primary accounting system (General Ledger) to ensure data integrity. Condition: While the County utilizes General Ledger software for its primary accounting functions, grant-level financial tracking and reporting are often performed using manual spreadsheets. Although the data entered into these spreadsheets is intended to reflect the same transactions recorded in the General Ledger, formal reconciliations are not regularly performed to ensure the spreadsheet data matches the General Ledger records. Cause: Management relied on the assumption that because the spreadsheet data originates from General Ledger transactions, the output would inherently remain consistent. Management has not implemented a formal policy or procedure requiring a periodic, documented reconciliation between these two data sets. Effect of potential effect: The lack of reconciliation between spreadsheets and the General Ledger increases the risk of misstatements within the Schedule of Expenditures of Federal Awards or noncompliance of individual grants and programs. Furthermore, the use of spreadsheets alone lack the automated controls found in the General Ledger software, such as: 1) Data Protection: Risk of accidental deletion or modification of formulas/data. 2) Data Validation: No automated prevention of duplicate entries or formatting errors. 3) Dual Entry/Audit Trail: No systematic record of who changed data or why. Questioned costs: No reportable questioned costs. Context: A total of 60 transactions were selected for testing from programs that relied on spreadsheets for tracking and reporting. Of the 60 transactions selected, a sole deviation was identified. The difference between what was reported on the tracking spreadsheet and the General Ledger was trivial in amount and clearly immaterial to the program and Schedule of Expenditures of Federal Awards as a whole. However, the reliance on spreadsheets, and a lack of reconciliation back to the General Ledger for grant tracking and reporting, was found to be systemic to the County’s system of internal control over grant reporting. Repeat finding: No Recommendation: We recommend that the County implement a formal reconciliation process between the grant tracking spreadsheets and the General Ledger. This reconciliation should be performed periodically, such as monthly, and should include: 1) Documented Comparison: A side-by-side verification of total expenditures and revenues per grant on amounts reported within the general ledger and amounts included on subsidiary tracking spreadsheets. This verification should include specific general ledger account numbers used for tracking revenues and expenditures. 2) Supervisory Review: Reconciliations should be reviewed and signed off by a person independent of the spreadsheet preparation. 3) System Integration: The County should explore available grant management features and modules within their existing General Ledger software to eliminate the reliance on manual "shadow" systems or spreadsheets. Views of responsible officials: Management acknowledged the finding and recommendation, and plans to implement a formal reconciliation process between grant tracking spreadsheets and the General Ledger. This reconciliation will be performed at minimum quarterly (when most grants are submitted).

U.S. Department of Agriculture Federal Financial Assistance Listing #10.766 FaCommunity cilities Loans and Grants Special Tests and Provisions Material Weakness in Internal Control 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. The Loan Resolution Security Agreement requires a monthly amount to be set aside in a reserve fund until the specific account balance is reached. Condition – The Hospital did not sufficiently fund their reserve account. As of December 31, 2024, the Hospital should have USDA debt reserves at least equal to $459,327. The USDA debt reserves equaled $141,821 as of December 31, 2024. Cause – Management has not funded the USDA debt reserves adequately. Effect – The Hospital was not in compliance with their provisions of the USDA debt agreements. Questioned Costs – None reported. Context – Sampling was not used. Repeat Finding from Prior Years – Yes, repeated finding 2023-003. Recommendation – We recommend the Hospital fund the reserve account adequately at each measurement date. Views of Responsible Officials – Management agrees with the finding.