Findings Citing § 200.303

2025-085: Conduct Information Technology Security Audits Applicable to: Department of Social Services Assigned Topic: Audit and Accountability Prior Finding Number: 2024-058; 2023-056 Finding Type: Internal Control and Compliance Finding Severity: Significant Deficiency Financial Statement Finding: Yes Federal Awards Finding: Yes ALPT - ALN: Grants to States for Medicaid – 93.778 Federal Award ID (Year): 2505VA5MAP (2025) Federal Agency: U.S. Department of Health and Human Services Compliance Requirement: Other - 2 CFR § 200.303(e) Known Questioned Costs: $0 Social Services is making progress in conducting a comprehensive IT security audit on each sensitive IT system at least once every three years. Social Services identified 78 sensitive IT systems which currently require an IT security audit and completed audits for 30 of these systems during calendar years 2022 and 2023. These systems are due to be audited again during the three-year audit period covering calendar years 2024 to 2026. Additionally, Social Services completed audits for 31 sensitive IT systems during calendar year 2024. However, 17 sensitive IT systems (22%) remain unaudited, including one system that has not been audited since 2017. Social Services hired a contractor to complete an audit over each of the remaining unaudited systems and those due for audit during the audit period covering calendar years 2024 to 2026. Social Services did not perform the remaining IT security audits due to prioritizing required federal audits and needing additional funding to contract out the remaining sensitive system audits. Lack of a documented procedure and process for conducting IT security audits also contributed to the lapse in IT security audits conducted over the last three years. Additionally, Social Services drafted an IT Audit Policy for conducting IT security audits over each sensitive system but has not implemented it since it is pending management’s approval. Social Services indicates it is on track to approve the draft policy and complete the remaining IT security audits by the end of calendar year 2026. The Security Standard requires that each IT system classified as sensitive undergo an IT security audit as required by and in accordance with the current version of the Commonwealth’s IT Security Audit Standard, SEC502 (IT Audit Standard). The IT Audit Standard requires that IT systems containing sensitive data, or systems with an assessed sensitivity of high on any of the criteria of confidentiality, integrity, or availability, receive an IT security audit at least once every three years. Without conducting full IT security audits for each sensitive system once every three years, Social Services increases the risk that IT staff will not detect and mitigate existing weaknesses. Malicious parties taking advantage of continued weaknesses could compromise sensitive and confidential data. Further, such security incidents could lead to mission-critical systems being unavailable. Social Services should finalize and implement its IT Audit Policy then complete all outstanding IT security audits to ensure it meets its IT Audit Policy and Security Standard requirements. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.

2025-093: Evaluate Separation of Duty Conflicts within the Case Management System Applicable to: Department of Social Services Assigned Topic: Access Control Prior Finding Number: 2024-041; 2023-034 Finding Type: Internal Control and Compliance Finding Severity: Significant Deficiency Financial Statement Finding: Yes Federal Awards Finding: Yes ALPT - ALN: Grants to States for Medicaid – 93.778 Federal Award ID (Year): 2505VA5MAP (2025) Federal Agency: U.S. Department of Health and Human Services Compliance Requirement: Other - 2 CFR § 200.303(e) Known Questioned Costs: $0 Benefit Programs continues to implement corrective actions pertaining to evaluating separation of duties conflicts within its case management system. In response to the prior audit findings, Benefit Programs developed a collaborative strategy to address separation of duties conflicts in the case management system and generated a complete listing of current roles and responsibilities. However, because of the extent of its corrective actions, Benefit Programs could not fully develop and implement all corrective actions by the end of fiscal year 2025. Benefit Programs intends to create a matrix to identify individual conflicts, generate a report of users with conflicting roles, and develop justifications and internal controls for these instances by the end of fiscal year 2026. Social Services, in conjunction with local departments of social services, other state agencies, and numerous contractors, uses the case management system to determine applicant eligibility and authorize benefit payments for the Medicaid, SNAP, CCDF Cluster, LIHEAP, and TANF federal grant programs. Social Services authorized over $18 billion in assistance payments to beneficiaries from these federal programs through its case management system during fiscal year 2025. The Security Standard requires the agency to separate duties of individuals as necessary, document separation of duties of individuals, and define information system access authorizations to support the separation of duties. Further, Social Services’ Information Security Policy states that the system owner is responsible for identifying and documenting separation of duties for individuals and defining system access authorizations to support separation of duties. Without identifying and evaluating separation of duties conflicts, Benefit Programs does not know which combination of roles may pose a separation of duties conflict in its case management system. As a result, Benefit Programs is unable to implement compensating controls, which increases the possibility of a system breach or other malicious attack on Social Services’ data and places Social Services’ reputation at risk. Benefit Programs should continue to implement its corrective actions pertaining to evaluating separation of duties within its case management system. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.

2025-100: Continue Developing Record Retention Requirements and Processes for Electronic Records Applicable to: Department of Social Services Assigned Topic: Contingency Planning Prior Finding Number: 2024-067; 2023-066; 2022-064; 2021-047; 2020-041; 2019-049; 2018-054 Finding Type: Internal Control and Compliance Finding Severity: Significant Deficiency Financial Statement Finding: Yes Federal Awards Finding: Yes ALPT - ALN: Grants to States for Medicaid – 93.778 Federal Award ID (Year): 2505VA5MAP (2025) Federal Agency: U.S. Department of Health and Human Services Compliance Requirement: Other - 2 CFR § 200.303(e); 45 CFR § 155.1210 Known Questioned Costs: $0 Social Services continues to operate without an adequate data retention process that ensures consistent compliance with retention requirements for its case management system and adherence to federal regulations and state law. Social Services’ case management system stores several types of federal benefit program records with varying retention requirements supporting ten programs and services, such as the Medical Assistance (Medicaid), Supplemental Nutrition Assistance (SNAP), Child Care and Development Fund (CCDF) Cluster, Low-Income Home Energy Assistance (LIHEAP), and TANF federal grant programs. Social Services’ case management system authorized over $18 billion in public assistance payments to beneficiaries from these federal programs during fiscal year 2025. Social Services encountered delays with its record purge and retention project because of the magnitude and complexities associated with effectively implementing a retention and purge process for an integrated eligibility system. Additionally, Social Services identified an additional required element of the purge and retention project following its Release 1 implementation in February 2024. For these reasons, Social Services’ plan includes updating the purge and retention design document and implementing Release 2 in August 2025, then completing the purge and retention project with the final releases, Release 3 and Release 4, by February 2026. Title 45 CFR § 155.1210 governs record retention for Medicaid and requires state agencies to maintain records for ten years. Additionally, the Virginia Public Records Act, outlined in § 42.1-91 of the Code of Virginia, makes an agency responsible for ensuring that its public records are preserved, maintained, and accessible throughout their lifecycle, including converting and migrating electronic records as often as necessary so that the agency does not lose information due to hardware, software, or media obsolescence or deterioration. Further, the Virginia Public Records Act (§ 42.1-76 et seq. of the Code of Virginia) details requirements for the disposition of records. Section § 42.1-86.1 requires that records created after July 1, 2006, and authorized to be destroyed or discarded, must be discarded in a timely manner and such records that contain identifying information as defined by subsection C of § 18.2 - 186.3 of the Code of Virginia shall be destroyed within six months of the expiration of the records retention period. Finally, the Security Standard requires agencies to implement backup and restoration plans that address the retention of the data in accordance with the records retention policy for every IT system identified as sensitive relative to availability. Without implementing records retention requirements, Social Services increases the risk of a data or privacy breach. Additionally, destroying documents that should be available for business processes or audit, or keeping data longer than stated, could expose Social Services to fines, penalties, or other legal consequences. Further, Social Services may not be able to ensure that backup and restoration efforts will provide mission-critical information according to recovery times. Finally, retaining records longer than necessary causes the Commonwealth to spend additional resources to maintain, back-up, and protect information that no longer serves a business purpose. Social Services should complete the record purge and retention project for its case management system and should subsequently implement consistent records retention and destruction processes across business divisions to ensure compliance with laws and regulations. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.

2025-101: Upgrade End-of-Life Technology Applicable to: Department of Social Services Assigned Topic: System and Information Integrity Prior Finding Number: 2024-064; 2023-058; 2022-060 Finding Type: Internal Control and Compliance Finding Severity: Significant Deficiency Financial Statement Finding: Yes Federal Awards Finding: Yes ALPT - ALN: Grants to States for Medicaid – 93.778 Federal Award ID (Year): 2505VA5MAP (2025) Federal Agency: U.S. Department of Health and Human Services Compliance Requirement: Other - 2 CFR § 200.303(e) Known Questioned Costs: $0 Social Services continues to use end-of-life technologies in its IT environment and maintains technologies that support mission-essential data on IT systems running software that its vendors no longer support. We communicated the control weaknesses to management in a separate document marked FOIAE under § 2.2-3705.2 of the Code of Virginia, due to it containing descriptions of security mechanisms. The Security Standard prohibits agencies from using software that is end-of-life and which the vendor no longer supports to reduce unnecessary risk to the confidentiality, integrity, and availability of Social Services’ information systems and data. By not meeting the minimum requirements in the Security Standard, Social Services cannot ensure the confidentiality, integrity, and availability of data within its systems. Project delays, including prioritizing other initiatives, slowed remediation efforts. Social Services should dedicate the necessary resources to evaluate and implement the controls and recommendations discussed in the communication marked FOIAE in accordance with the Security Standard. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.

2025-094: Improve Access Controls for the Grants Management System Applicable to: Department of Behavioral Health and Developmental Services Assigned Topic: Access Control Prior Finding Number: N/A Finding Type: Internal Control and Compliance Finding Severity: Significant Deficiency Financial Statement Finding: Yes Federal Awards Finding: Yes ALPT - ALN: Block Grants for Prevention and Treatment of Substance Abuse - 93.959 Federal Award ID (Year): 1B08TI088137-01 (2025) Federal Agency: U.S. Department of Health and Human Services Compliance Requirement: Other - 2 CFR § 200.303(e) Known Questioned Costs: $0 DBHDS has not implemented adequate access controls for its grants management system. DBHDS has created an administrative manual for its grants management system, which includes information such as granting and approving user access, properly removing user access, and outlining an annual review, as well as roles and responsibilities for individuals within the agency and the grants management system’s service provider. However, DBHDS is not adhering to the controls outlined in this manual nor does it have sufficient documentation of these access controls. As a result, we identified the following deficiencies: DBHDS management does not monitor the activity of system administrators who have privileged role assignments. DBHDS management does not have a formal process for periodically reviewing system access for all users. For four of four (100%) terminated employees tested, DBHDS did not remove access within 24 hours of the employee’s separation with access removal ranging from 144 to 265 days after termination. For nine of 13 (69%) users tested, DBHDS management did not retain supporting documentation to verify the user’s level of access or the supervisor’s approval. For three of 13 (23%) active users tested, DBHDS did not deactivate the user’s account after the employee’s termination. The Security Standard requires reviewing accounts for compliance with account management requirements on an annual basis and following an environmental change; disabling user accounts within 24 hours of when users are terminated or transferred; monitoring privileged role assignments; and creating and enabling accounts in accordance with the agency-defined logical access control policy. By not properly approving system access or terminating access timely, DBHDS increases the risk of unauthorized individuals entering or approving transactions which could affect the integrity of the information within the grants management system. Without a review of user access levels on an annual basis or a process to monitor the activity of privileged users, DBHDS cannot verify that each user’s access is appropriate based on job function, does not violate the principle of least privilege or separation of duties, and has not been used for inappropriate activity. Due to lack of training and management oversight, DBHDS did not perform all access control requirements as outlined by the Security Standard. In addition, users gain access to the grants management system by submitting a ticket to the DBHDS help desk; however, the ticketing system does not require supervisory approval before granting access. DBHDS should improve the design and implementation of access controls for the grants management system to ensure they align with the DBHDS administrative manual and the Security Standard. Specifically, DBHDS should provide training regarding the administrative manual. DBHDS should also ensure supervisors approve access before granting access; remove access timely when employees terminate; and retain all supporting documentation regarding system access including approving, granting, and removing new and existing access. In addition, DBHDS should develop a formal process for periodically reviewing system access as well as reviewing activity for privileged users. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.

2025-023: Strengthen Internal Controls over Payroll Processes Applicable to: Department for Aging and Rehabilitative Services Assigned Topic: Federal Grants Management Prior Finding Number: N/A Finding Type: Internal Control and Compliance Finding Severity: Significant Deficiency Financial Statement Finding: No Federal Awards Finding: Yes ALPT - ALN: Social Security Disability Insurance - 96.001 Federal Award ID (Year): 04-2404VADI00 (2024); 04-2504VADI00 (2025) Federal Agency: U.S. Social Security Administration Compliance Requirement: Allowable Costs/Cost Principles - 2 CFR § 200.303(a); 2 CFR 200.430(g)(1)(i) Known Questioned Costs: $0 Aging and Rehabilitative Services’ Finance Division is not maintaining adequate internal control over several of its key payroll processes. During fiscal year 2025, Aging and Rehabilitative Services spent approximately $213 million in federal funds, of which about $85 million (40%) was for personal service expenses. We identified the following specific weaknesses: Aging and Rehabilitative Services’ Finance Division does not have written, agency-specific payroll policies and procedures governing all critical payroll processes, including payroll reconciliations and payroll certifications. The Department of Accounts’ (Accounts) Commonwealth Accounting Policies and Procedures (CAPP) Manual Topic 10305 requires agencies to develop and maintain their own written policies over critical processes, including payroll, rather than relying solely on system guidance or the CAPP Manual. Aging and Rehabilitative Services’ Finance Division was unable to provide documentation supporting the completion and review of payroll (pay period) reconciliations for five out of the five (100%) payroll (pay period) reconciliations selected. CAPP Manual Topic 50905 requires agencies to complete payroll (pay period) reconciliations to ensure payroll transactions are accurate, complete, and properly reviewed. Aging and Rehabilitative Services’ Finance Division relies on the Accounts’ Cardinal Human Capital Management (HCM) materials and CAPP Manual provisions to support its payroll activities. While the use of Accounts’ guidance provides a foundation for internal control, it is not intended to be a substitute for the agency’s own internal policies and procedures. The absence of documented internal policies and procedures limits consistency, accountability, and management oversight and increases the risk that Aging and Rehabilitative Services will not prevent and/or detect errors or discrepancies in a timely manner. Title 2 CFR § 200.303(a) requires that federal grant recipients 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. Further, 2 CFR 200.430(g)(1)(i) states that charges to federal awards for salaries and wages must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Aging and Rehabilitative Services’ Finance Division experienced staffing shortages during the period under review because of turnover and was unable to devote the resources necessary to establish internal controls over several of its key payroll processes. Aging and Rehabilitative Services’ management should devote the necessary resources to establish and maintain proper internal control over its payroll processes. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.

Finding 2025-002: Lack of Internal Controls Over Key Compliance Requirement Significant Deficiency Federal Agency: U.S. Department of Homeland Security Program Name: Transit Security Grant Programs ALN Number: 97.075 Award Number: 97.075 Award Year: 2025 Criteria: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Uniform Guidance) requires compliance with provisions of procurement, suspension, and debarment. Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.985 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. 2 CFR § 200.303, also states non-Federal entities must establish and maintain effective internal control over federal awards to ensure compliance with applicable statutes, regulations, and the terms and conditions of the award. Condition: During the audit of the Transit Security Grants Program, we identified a deficiency in the design of internal controls related to the suspension and debarment compliance requirement, particularly concerning certain external government entities. Specifically, the Authority had not established documented procedures, oversight mechanisms, or review processes sufficient to ensure compliance on funded special agreements, including these Memorandums of Understanding, negotiated independent of the procurement process. This design gap limited the entity’s ability to potentially prevent or detect noncompliance effectively. Cause: The Authority had not sufficiently developed or implemented internal control procedures to verify suspension and debarment status for funded memorandums of understanding with external governments involved in the grant. These contracts were negotiated without the participation of the Office of Procurement and Materials of the Authority and therefore were not subject to the procurement process, which includes such controls. Effect or Potential Effect: The internal controls insufficiency creates a reasonable possibility that material noncompliance with the suspension and debarment requirement could occur and not be prevented or detected and corrected in a timely manner. As a result, this represents a significant deficiency in internal control over compliance. Although no federal funds were disbursed to an excluded party, the lack of timely verification represents noncompliance with federal requirements and increases the risk of future violations. Context: Of the three items tested, two lacked documented procedures, and sufficient oversight and review processes to potentially prevent or detect noncompliance. Additionally, one other government entity was identified that may fall under the same compliance gap. Question Costs: None Repeat Finding: Yes. This repeat finding designation results from the concurrent identification of the control deficiency in both fiscal years during the fiscal year 2025 Single Audit and the fiscal year 2024 Schedule of Expenditures of Federal Awards restatement procedures. This deficiency existed in both reporting periods, and the findings for fiscal year 2024 and fiscal year 2025 were evaluated and communicated to management in 2026. Recommendation: We recommend the Authority design and implement internal control procedures to ensure compliance with the suspension and debarment requirements for federal grants. This may include developing written policies, assigning responsibilities, and establishing monitoring and reviewing processes. View of Responsible Officials: Management agrees with the finding: The Authority acknowledges that controls established in the procurement process are not consistently followed for funded special agreements if they are negotiated without participation of the Procurement and Materials. While Procurement and Materials has controls in place to verify whether entities, including government entities, are suspended or debarred prior to awarding any contract, it does not perform these checks for funded special contracts for which they do not participate in the process. The condition identified pertains specifically to funded transactions executed by the Metro Transit Police Department through Memorandums of Understanding in accordance with the Compact and Policy Instructions (PI) 9.6 Delegation of Authority - Special Agreements, which did not go through the standard procurement process. The Authority will revise PI 9.6 to provide clarity on roles, responsibilities, and compliance steps. including a documented process requiring verification of suspension and debarment status through SAM.gov or other appropriate mechanism for all funded transactions under delegated authority. This requirement will be communicated to all departments and integrated into standard operating practices. Additionally, targeted training sessions will be provided to staff on the revised PI 9.6 and SAM.gov verification procedures to ensure consistent application across the Authority.

Criteria: 2 CFR, section 200.430 states, in part: (i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 2 CFR, section 200.303 states, in part: The non- Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CSAM Procedure 905 states, in part: Periodic (Semiannual) Certification Employees who work solely on a single federal award or cost objective need only complete a periodic certification. The periodic certification must:  Be prepared at least semiannually.  Be signed by the employee or the supervisory official having firsthand knowledge of the work performed by the employee.  State the employee worked solely on that single federal program or cost objective during the period covered by the certification. Where multiple employees work on the same cost objective, a blanket certification may be used as the documentation for all employees who worked on the cost objective. Personnel Activity Report Except as provided in “Substitute Systems for Time Accounting” … employees who work on multiple activities or cost objectives of which at least one is federal must complete a personnel activity report (PAR) or equivalent documentation. A PAR may be as detailed as a document that identifies the employee’s activity daily by hours, or it may be as simple as a report of the total hours or percentage of hours spent in each categorical program or cost objective. The level of detail can generally be determined by the diversity and variation of the employee’s work activities. The safest approach is to provide more documentation rather than less. Condition: The District has five employees who must complete PARs on a monthly basis. Upon review of the PARs the following deficiencies were noted.  PARs were not filled out properly from April 2025 through June 2025, which required amendment.  Due to errors on the PARs from April 2025 through June 2025, the Districts year end entries to charge salaries and benefits to Title I were incorrect. Context: Exceptions are recurring among the five employees who are required to fill out PAR forms. Questioned Costs: The net overcharge to Title I, Part A was $29,675 for all five employees. Cause: District personnel do not follow the established procedures as to when and how PAR forms must be prepared. In addition, there is a lack of oversight to ensure that PAR forms are collected after the end of each month, filled out accurately, and signed by the employee as well as their supervisor. Effect: Estimated questioned cost of $29,675 for the 2024-25 fiscal year. Recommendation: The District should provide training to employees regarding how to complete PAR forms and enforce timelines. In conjunction, the District should assign an employee who is responsible for reviewing and ensuring that all PAR forms have been collected and signed by the employee and supervisor. Lastly once it has been verified that the PAR form is complete, a copy should be forwarded to Fiscal Services so that they may ratify the salaries and benefits charged to Title I to reflect the percentage noted on the PAR form. Views of Responsible Officials: The District recognizes the finding and is committed to ensuring that all federal time accounting requirements are properly followed for staff funded through Title I programs. The District understands that accurate and complete Personnel Activity Reports (PARs) are necessary to support appropriate salary and benefit charges to federal resources. To address this, the District will reinforce expectations through additional training and support for employees and supervisors on the correct preparation and monthly submission of PAR forms. The District will also strengthen internal review procedures by assigning responsibility for confirming that PARs are completed accurately, collected on time, and signed by both the employee and the supervising administrator. In addition, the District will ensure PAR documentation is consistently forwarded to Fiscal Services to allow for timely review and necessary adjustments so that payroll expenditures align with the actual percentage of time worked on Title I activities.

2025-002 Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.559 Federal Award Identification Number and Year: Not Available Pass-Through Agency: Maryland State Department of Education Pass-Through Number: Not Available Award Period: 7/1/2024 – 6/30/2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: Compliance: Nonfederal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All nonprocurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. 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. Control: Per 2 CFR section 200.303(a), a nonfederal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: For seven of eight vendors selected for testing, the Board was unable to provide documentation that it had verified the suspension and debarment status before entering into covered transactions with the vendor. Questioned Costs: There are no questioned costs related to this finding as the vendors were not federally suspended or debarred. Cause: The Board’s procedures and internal controls over suspension and debarment were updated in response to finding 2024-001 in the prior year but were not implemented until 4/1/2025. Therefore, all contracts executed prior to this date did not follow the updated suspension and debarment requirements. Effect: Failure to verify the suspension and debarment status of vendors may result in the procurement of goods or services from vendors that are suspended or debarred and result in unallowable expenditures charged to the program. Repeat Finding: Yes, refer to prior year finding 2024-001. Recommendation: We recommend that the Board review its policies and procedures to ensure they include the three options for determining suspension and debarment status listed in 2 CFR 180.300 and that controls are sufficient to ensure that the suspension and debarment status is verified for all vendors prior to entering into covered transactions. Views of Responsible Officials: There is no disagreement with the finding.

U.S. Department of Education 2025-005: Special Tests and Provisions – NSLDS Enrollment Reporting Student Financial Aid Cluster – Assistance Listing No. 84.063, 84.268 Condition: Enrollment status changes were either not reported to NSLDS within 60 days 2025 – 005: Special Tests and Provisions – NSLDS Enrollment & Reporting Federal Agency: U.S. Department of Education Federal Program Name: Student Financial Aid Cluster Assistance Listing Number: 84.063, 84.268 Federal Award Identification Number: P063P233052, P063P243052, P268K243052, P268K253052 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Internal 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 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). 2025 – 005: Special Tests and Provisions – NSLDS Enrollment & Reporting Federal Agency: U.S. Department of Education Federal Program Name: Student Financial Aid Cluster Assistance Listing Number: 84.063, 84.268 Federal Award Identification Number: P063P233052, P063P243052, P268K243052, P268K253052 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Internal 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 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). Compliance – The Code of Federal Regulations, 34 CFR 685.309(b), states that: Institutions must have some arrangement to report student enrollment data to NSLDS through an enrollment roster file. The institution is required to report changes in the enrollment status, the effective date of the status, and an anticipated completion date. Also, the Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless of if they receive aid from the institution or not. Condition: Enrollment status changes were either not reported to NSLDS within 60 days or did not match the College’s records for a portion of the sampled students. Questioned Costs: None Context: In our statistically valid sample of 60 students, we found 16 cases where enrollment status changes were not reported to NSLDS within 60 days, and 4 cases where the students’ status changes did not match between the College’s records and NSLDS. Cause: The College's internal controls did not identify the errors in compliance with the criteria mentioned above. Effect: Student enrollment status was not reported accurately and/or timely to NSLDS. Repeat Finding: Yes Recommendation: The institution should evaluate their procedures and policies related to reporting status changes and effective dates to NSLDS and enhance as deemed necessary to ensure that accurate information is reported to NSLDS. Views of responsible officials: There is no disagreement with the audit finding.

Criteria or specific requirement: 2 CFR part 200 section 200.303 requires that non-Federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the federal award. The Code of federal Regulations, 34 CFR 688.164, requires any Title IV federal funds disbursed to a student or parent that are not received or negotiated must be returned to the appropriated federal financial aid program no later than 240 days after the check or electronic fund transfer (EFT) was issued. If a check or an EFT is returned, the College may make additional attempts to deliver the funds, provided that those attempts are made no later than 45 days after the funds were returned or rejected. In cases where the College does not make another attempt, the funds must be returned before the end of the initial 45-day period. The College must cease all attempts to disburse the funds and return them no later than 240 days after the date it issued the first check. Under no circumstances may unclaimed Title IV FSA funds escheat to the state, or revert to the college, or any other third party. Condition: The College had outstanding Title IV Federal Student Aid (FSA) checks issued to students that remained unclaimed for more than 240 days from the date of issuance. Questioned Costs: None Context: During testing of outstanding Title IV–funded checks, we identified three checks that exceeded 240 days from the date of issuance and had not been returned to the U.S. Department of Education. Cause: The College’s existing processes do not adequately monitor outstanding Title IV–funded checks to ensure timely identification and return of unclaimed funds. Effect: As a result, the College is not in compliance with federal requirements related to the return of unclaimed Title IV–funded checks issued to students or parents. Repeat Finding: Yes, 2024-003 Recommendation: We recommend the College return the funds related to unclaimed Title IV–funded checks that are older than 240 days. In addition, we recommend that the College review applicable requirements and implement effective controls and procedures to monitor outstanding Title IV–funded checks throughout the year to ensure timely compliance. Views of responsible officials: There is no disagreement with the audit finding.

Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless of if they receive aid from the institution or not. This includes the enrollment effective date and related enrollment status, which must be reported for both the Campus-Level and the Program-Level, as well as the program begin date. Changes to said status are required to be reported within 30 days of becoming aware of the status change, or with the next scheduled transmission of statuses if the scheduled transmission is within 60 days. In addition, Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: There were instances in which the College did not report the correct status and effective dates, enrollment was not certified timely, and the status changes were not always reported timely. In addition, the College did not have a control in place to ensure timely and accurate reporting to NSLDS. Questioned Costs: None Context: In our sample of 60 students selected for National Student Loan Data System (NSLDS) enrollment reporting testing, we identified 23 students where the campus enrollment status was not reported correctly, 21 students where the enrollment effective date was not reported correctly, 37 students where the enrollment was not reported timely to NSLDS, and 56 students where enrollment was not certified every 60 days. There was also no control in place to ensure timely and accurate reporting to NSLDS. Cause: The College did not have proper controls or procedures in place to verify students' status in NSLDS matched the institution’s records in a timely manner. Effect: Failure to properly report enrollment status changes on NSLDS could affect the timing of the grace period for repayment of Title IV loans. Additionally, the College was not in compliance with the requirements to properly report student enrollment data correctly or timely to NSLDS. Repeat Finding: Yes, 2024-004 Recommendation: We recommend the College implement an internal control that ensures timely and accurate reporting. We also recommend the College implement changes in process and procedures for NSLDS enrollment reporting and implement an internal control that ensures reporting is both timely and accurate. Views of Responsible Officials: There is no disagreement with the audit finding.

Finding number: 2025-001 Federal agency: U.S. Department of Education Programs: Student Financial Assistance (SFA) Cluster Assistance Listing Number: 84.007, 84.033, 84.268, 84.063 Award year: 2025 Criteria The Code of Federal Regulations, consisting of 2 CFR 200.303, 16 CFR 314.3(a), and 16 CFR 314, requires that financial institutions, including institutions participating in Title IV programs, develop, implement, and maintain a comprehensive written information security program that includes administrative, technical, and physical safeguards appropriate to the sensitivity of the information being protected aligned with federal information security standards. Condition During our testing of the SFA Cluster, we requested the College’s Written Information Security Plan (WISP). The Colleges were unable to provide a formal, documented WISP. The Colleges' general IT policies and procedures provided did not fully meet WISP requirements. Cause The Colleges have not developed or formalized a standalone WISP. Effect Without a formalized WISP, the Colleges are at a heighted risk of inadequate safeguarding of sensitive data, inconsistent application of security practices and procedures, and an increased likelihood of unauthorized access, data loss or misuse. Questioned Costs N/A Perspective Due to its nature, this deficiency is systemic, affecting the entire SFA Cluster population and related programs. Identification as a Repeat Finding, if applicable N/A Recommendation The Colleges should develop, approve, and implement a Written Information Security Plan (WISP) aligned with 16 CFR Part 314 requirements and tailored to the systems and data associated with the SFA Cluster. View of Responsible Officials The Colleges agree with the finding. This issue was the result of information security policies that did not reflect actual current practices. Such current practices were updated over the last two years in response to industry standards, insurance requirements, and Gramm Leach Billey Act requirements, which are believed to meet the requirements of these regulations. However, because they were not documented formally in a comprehensive policy form, they could not be adequately provided during the audit. In early Fall 2025, the Colleges hired a new Chief Information Security Officer (CISO), who has begun overhauling the information security policies to reflect current practices. The CISO has also created a preliminary draft of a WISP that reflects the Colleges current policies and procedures. This WISP is expected to be completed and implemented during fiscal year 2026, pending board review and approval.

FINDING 2025-002 Subject: Child Nutrition Cluster - Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed and implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Procurement and Suspension and Debarment compliance requirement. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. It is the School Corporation's policy that they will either require a certification from the vendor or check the exclusion list prior to entering a covered transaction. The School Corporation entered into three covered transactions during the audit period, and it was unable to provide evidence that it followed its policy for two of those transactions. The total purchases made from these two vendors totaled $93,895. INDIANA STATE BOARD OF ACCOUNTS 15 PAOLI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance was only noted in the first year of the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation's management failed to properly design and implement an internal control system that would have ensured that its policy over the Procurement and Suspension and Debarment compliance requirement was adhered to during the audit period. Effect The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal funds to the School Corporation. Additionally, the School Corporation could have made payment to a vendor that was suspended or debarred. Payments to such vendors are unallowable. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 16 PAOLI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The system should be designed to ensure that vendors are not suspended or debarred, or otherwise excluded, prior to the School Corporation entering into a covered transaction. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Assistance Listing, Federal Agency, and Program Name - ALN 14.218, Department of Housing and Urban Development, Community Development Block Grants Federal Award Identification Number and Year - B24MC260070 2025 Pass through Entity - N/A Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition - The City initially reported $30,000 of expenditures on the SEFA that related to activity not related to fiscal year 2025. Questioned Costs - N/A If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - Recipients of federal awards must have controls in place to verify that costs being recorded in the appropriate period. Cause and Effect - The City did not properly allocate the expenditures over the term of the subsciption which led to expenses being improperly recorded in the City's initial SEFA sent to the auditors. Recommendation - We recommend that the City implement stronger internal controls to ensure the expenses are reviewed for cutoff and approved before they are charged to the grant. Views of Responsible Officials and Planned Corrective Actions - The City will ensure that all future expenses under this program go through stronger internal control review for cutoff.

Criteria or specific requirement: According to 2 CFR §200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to 2 CFR §200.405(d), if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit However, when those proportions cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. According to 2 CFR §200.431(b), the cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable if all of the following criteria are met: (1) They are provided under established written leave policies; (2) The costs are equitably allocated to all related activities, including Federal awards; and, (3) The accounting basis (cash or accrual) selected for costing each type of leave is consistently followed by the recipient or subrecipient or a specified grouping of employees. Condition: During our testing, we noted that the Department did not allocate leave to grants in accordance with the time and effort employees spent on the grants. Questioned costs: $887 Context: During our testing of twenty payroll disbursements, we noted that the Department had a net undercharge of $887 to eight grants. Cause: The Department was unaware of the federal regulations pertaining to leave allocations. Effect: The auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grant. Repeat Finding: No. Recommendation: We recommend that the Department develop and implement a written policy for leave allocation consistent with federal regulations. Also, we recommend that the Department provides training to ensure employees understand and comply with the written policy. Views of responsible officials and planned corrective actions: The Department recognizes the audit finding and its responsibility to comply with 2 CFR §200.405(d). Corrective action was taken. The Department revised the procedures and will no longer charge any type of leave activity to a grant, effective July 1, 2025, and for the foreseeable future. An email was sent out by the CFO on June 26, 2025 advising all Department employees about this change. The Federal Aid Cost Tracking System (FACTS) has also been changed to block access to all grants for any leave time reporting code entries. If a system is developed in the future to enable the allocation of leave consistent will the federal regulations, training will be provided for all employees. Responsible Employee Position: CFO Timeline: July 31, 2026

Criteria or specific requirement: According to 2 CFR §200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to 2 CFR §200.403(f), except where otherwise authorized by statute, costs must meet not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. Condition: During our testing of drawdowns related to matching, we noted that the Department did not adjust its reimbursement request to account for a duplicate travel reimbursement. Questioned costs: $169 Context: The Department processed a travel reimbursement twice, resulting in a duplicate payment of $225 to the employee. The employee reimbursed the Department for this duplicate payment. However, the Department did not adjust its reimbursement request to reflect the credit in the financial records. Cause: The Department was unaware that the query used for the reimbursement request excluded the credit. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible under or over charges to the grant. Repeat Finding: No. Recommendation: We recommend that the Department identify the reason for the exclusion of the credit in its query. Additionally, the Department should consider reviewing the query to the general ledger as part of the final review before submitting the reimbursement request. Views of responsible officials and planned corrective actions: The Department recognizes the audit finding and its responsibility to comply with 2 CFR §200.403(f). Corrective action will be taken. The Department revised the policies and procedures for cash disbursements within the Administrative Services Division. Effective immediately, upon running the monthly query of federal expenditures for the cash reimbursement for federal grants, the Federal Financial Analyst will submit the query to the Budget Director and the Accountant/Auditor. A reconciliation to the General Ledger will be completed by them prior to the Federal Financial Analyst requesting the cash reimbursement. Responsible Employee Position: CFO Timeline: July 31, 2026

FINDING 2025-001 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Number and Year (or Other Identifying Number): S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 15 GREATER JASPER CONSOLIDATED SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-006. Condition and Context A property record or capital asset listing would include the following for each asset: a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. The property record or capital asset listing should be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The School Corporation did not properly design or implement a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation purchased a laser engraver during the audit period from the ESSER II grant totaling $29,655. The asset was purchased using ESSER II funds obtained by the Special Education Cooperative (Cooperative), for which the School Corporation is the fiscal agent. The asset exceeded the School Corporation's capitalization threshold of $5,000; but was omitted from the capital asset listing. Additionally, proper safeguards were not put in place to protect the asset. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, 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. INDIANA STATE BOARD OF ACCOUNTS 16 GREATER JASPER CONSOLIDATED SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. . . ." Cause Although management was aware of the equipment purchase by the Cooperative and the related invoice, they misidentified the ownership of the asset, believing it did not belong to the School Corporation. Furthermore, the School Corporation and the Cooperative had not established formalized procedures to ensure that assets acquired under such agreements were identified, communicated, and recorded in accordance with federal guidelines and the School Corporation's capital asset policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, assets purchased with federal dollars, ESSER funds, were not properly added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether federal funds were used to acquire the asset or an identification number. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure asset records include all the necessary information and new assets are added, including those of the Cooperative. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Item 2025-001 Reporting Head Start ALN# 93.600 US Department of Health & Human Services Federal Grant/Contract Number: 04CH01239502 Grant period – 2025 Criteria – Grantees should have controls in place to ensure that grant reports are being submitted to the grantor and that those reports are being properly reviewed and approved prior to submission. 2 CFR 200.303 requires the non-Federal entity to “(a) establish, document and maintain effective internal controls over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition – Adequate controls were not in place to ensure reports were being submitted to the grantor. One of the two Federal Financial Reports (SF-425) for the Head Start Cluster grants was not properly complete and submitted to the Payment Management System. Cause – The Agency encountered turnover within its fiscal staff during the current year which resulted in a lack of awareness of the report filing requirements and deadlines. Effect – Failure to complete and submit the proper reporting could result in a delay or loss of funding. Questioned Costs – Not applicable. Recommendation – We recommend the Agency implement controls designed to ensure that grant reporting requirements are met on a timely basis. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.

FINDING 2025-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, 23619-021-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. INDIANA STATE BOARD OF ACCOUNTS 16 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Greater Lafayette Area Special Services Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The nonpublic proportionate share expenditures for the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, and 23619-021-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, and 23619-021-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." INDIANA STATE BOARD OF ACCOUNTS 17 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Records were not kept at the School Corporation or the Cooperative of funds spent by each member school corporation on nonpublic school students with disabilities. In reporting the amount expended for this purpose, the amounts reported as expenditures for nonpublic school students was based on a percentage to the schools nonpublic budgeted expenditures. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the School Corporation's nonpublic proportionate share expenditures could not be determined, and it could not be determined if the School Corporation met its minimum nonpublic proportionate share as required by the grant agreement. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025-001 Child Nutrition Claims Reporting CFDA No: 10.553, 10.555 Program Name: Child Nutrition Cluster Award Number: 7AZ300AZ3 Federal Agency: U.S. Department of Agriculture Pass-Through Grantor: Arizona Department of Education Compliance Requirement: L. Reporting Questioned Costs: N/A Summary of Finding: Significant Deficiency in internal control over major programs Repeat Finding? No Condition For the period reviewed, the District submitted meal counts that did not agree to supporting documentation and accurate claim totals. Specifically, the District: Overreported breakfasts by 2,527 free breakfasts and 143 reduced-price breakfasts Underreported lunches by 2,139 free lunches and 125 reduced-price lunches. These errors indicate that the reported counts used to prepare the District’s Claim for Reimbursement were not accurate and were not adequately reviewed prior to submission. Criteria According to 7 CFR §210.8, the District shall establish internal controls which ensure the accuracy of meal counts prior to the submission of the monthly claim for reimbursement. The Uniform Guidance requires non-federal entities to establish and maintain effective internal control over the federal award to provide reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the federal award (2 CFR 200.303). Cause The District did not have adequately designed and/or consistently implemented internal controls over the reporting process to ensure meal counts reported on claims were accurate prior to submission. Effect The District is not in compliance with the requirements of the Uniform Guidance and related federal grant federal regulations. Recommendation The District should ensure adequate supporting documentation is maintained and the monthly meal reimbursements are reviewed by management before submission to the Arizona Department of Education.

FINDING 2025-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2024, FY 2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Adequate internal controls were not in place over procurements made under the simplified acquisition threshold for one of two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2023-2024 totaling $289,127, but it did not provide audit evidence that methods and procedures performed for the selection of the vendor aligned with requirements related to vendors procured under the simplified acquisition threshold. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of five vendors tested during the audit period. The School Corporation made purchases with a vendor in 2023-2024 totaling $103,519 and in 2024-2025 totaling $111,613, but it did not provide audit evidence that the procurement procedures performed in relation to the award had been reviewed or approved. The School Corporation did not provide documentation that it had entered into a contract with the vendor during either year of the audit period. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318(a): "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (1) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, (C) For public institutions, a higher threshold consistent with State law. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Cause Staff responsible for purchasing were not adequately trained on the School Corporation's procurement policy for obtaining bids for purchases above the simplified acquisition threshold and formal contract requirements for purchases above $50,000. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure that contractors paid under the small purchase and simplified acquisition methods were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We also recommended strengthening its policies and procedures to ensure that appropriate audit evidence is retained for audit. Views of Responsible Official For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card, High School Graduation Rate Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014; S010A230014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance to ensure that documentation regarding the reason for a student being removed from the high school graduation cohort for mobility reasons was prepared, reviewed, and retained. The Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirement necessitated that for students removed from the high school graduation cohort for mobility reasons there be proper written documentation to support the identified mobility code. There were 15 students selected for testing. Of the 15 students tested, 3 students did not have the required supporting documentation to substantiate removal from the cohort for mobility reasons. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 20 USC 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause The School Corporation did not have consistent procedures for maintaining and retaining supporting documentation related to student cohort changes. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper documentation was not maintained for students that were removed from the cohort for mobility reasons. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure proper documentation is maintained for students that are removed from the cohort. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-003 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 23 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-005. Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to its laborers and mechanics. Nonfederal entities are to include in its construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. Seven contracts entered into by the School Corporation during the audit period were to be paid from multiple fund sources, including the COVID-19 - Education Stabilization Fund grant funds. Total expenditures from the COVID-19 - Education Stabilization Fund grant funds during the audit period was $1,267,312. Of the seven contracts, two were tested and did not contain the required prevailing wage rate clause. Furthermore, five invoices were tested and did not include the required certified payrolls from the contractors. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . INDIANA STATE BOARD OF ACCOUNTS 24 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Minimum wages– (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls– . . . (ii) Certified payroll requirements– (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation did not amend contracts that were entered into prior to the guidance of the wage rate clause being required to be included in the contracts. INDIANA STATE BOARD OF ACCOUNTS 25 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, construction contracts entered into did not contain the required wage rate requirements clauses, nor were certified payrolls obtained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and include the wage rate requirement clause in construction contracts. In addition, certified payrolls should be obtained as required in a timely manner. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X; 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-056-PN01, 22611-056-ARP, 22619-056-PN01, 22619-056-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Proportionate share is an amount of funds that must be expended on special education/related services for parentally placed private school and homeschooled students. The amount to be spent is automatically calculated within each grant application. The School Corporation had not designed, nor implemented, policies and procedures to ensure that the required level of expenditures for nonpublic students was met for each grant. The Non-Public Proportionate Share expenditures for the 22611-056-PN01, 22619-056-PN01, 22611-056-ARP, and 22619-056-ARP grants were not spent in full, and the School Corporation did not file a waiver, which, if approved, would have allowed the funds to be moved and spent under the regular Part B special education scope. INDIANA STATE BOARD OF ACCOUNTS 26 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation did not request a waiver so that unused preschool funds could be carried over to Part B of the program. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement could result in the loss of future funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 27 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-005 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-056-PN01, 22611-056-ARP, 22619-056-PN01, 22619-056-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a similar finding from the immediately prior audit reports. The prior audit finding numbers were 2021-002 and 2023-003. Condition and Context Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. There were 23 vendors identified that fell within the small purchase's threshold. Of those vendors, 4 were selected for testing. For each of those 4 vendors tested that fell within the small purchases threshold, the School Corporation did not obtain an adequate number of price or rate quotations to ensure the procurements provided full and open competition. In addition, history of the procurements which would include the rationale for the method of procurement, selection of the vendor, and basis for price was not documented. INDIANA STATE BOARD OF ACCOUNTS 28 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement - Simplified Acquisition When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the threshold the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. One vendor was identified that fell within the SAT, with total purchases of $165,816. Sealed bids or competitive proposals were not obtained, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 29 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not in place to ensure that bids were solicited before entering into a contract or that quotes were obtained. The School Corporation was unaware of the requirement to solicit bids for contracts that exceed the simplified acquisition threshold. Additionally, they were unaware of the requirement to obtain an adequate number of quotes for purchases that exceeded the small purchase threshold. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to for procurements that fell within the small purchase threshold. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods for small purchases and simplified acquisition purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Federal Agency: U.S. Department of the Treasury Federal Program Name: COVID-19 Coronavirus Relief Fund Assistance Listing Number: 21.019 Award Period: March 3, 2021 – December 31, 2024 Type of Finding: Significant Deficiency over Compliance and Other Matters Criteria or specific requirement: 2 CFR 200.303 requires non-federal entities to establish and maintain internal control designed to reasonably ensure compliance with federal statutes and regulations, including procedures to verify and document vendor eligibility. 2 CFR 200.214 requires verification that vendors are not suspended or debarred prior to entering into covered transactions. Condition: The City does not have a documented control to perform and retain evidence of suspension and debarment verification (e.g., SAM.gov check or vendor certification) at the time of entering into covered transactions funded by federal awards. Management indicated that vendor eligibility checks are performed as part of standard operating practice; however, documentation evidencing the timing and performance of these checks was not retained. Questioned costs: None. Context: Four of the five covered transactions selected did not have proper supporting documentation for suspension and debarment procedures. Cause: For three of the transactions tested, the City relied on cooperative purchasing agreements. Accordingly, the City did not perform or retain documentation of its own suspension and debarment verification. For the remaining transaction, documentation evidencing suspension and debarment compliance was not retained. Effect: The City did not have a documented control to perform and retain evidence of suspension and debarment verification at the time of award, as required by 2 CFR 200.303. Repeat Finding: No. Recommendation: We recommend the City 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.gov. Views of responsible officials: There is no disagreement with the audit finding.

FINDING 2025-001 Subject: Title I Grants to Local Educational Agencies - Eligibility Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the enrollment and poverty data as reported by the Indiana Department of Education (IDOE) and the School Corporation in the Title I application. Public School (Local Educational Agency) Eligibility for Title I is determined on the Eligible School Summary of the Title I application. Enrollment and poverty numbers for the public school district are automatically pulled from the IDOE's Official Pupil Enrollment (PE) count for each school into the Eligible School Summary page of the Title I application. These counts are based upon the School Corporation's records as of October of the prior fiscal year. The School Corporation had not established a process of review of the Eligibility Summary in the Title I application for the student enrollment and poverty counts. There was no documentation of the School Corporation verifying the enrollment and poverty counts in the Title I application. Nonpublic Schools Enrollment and poverty numbers for any nonpublic schools are manually entered into the application by the School Corporation. The School Corporation established a process to receive and review the listing of students from the nonpublic schools for enrollment and poverty counts to be entered into the Title I application. However, the internal controls were ineffective as the School Corporation requested to receive a listing of poverty student counts only; the list of enrolled nonpublic students was not reported into the Tile I application. Therefore, we were unable to determine if the enrolled student count in the application was accurate. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 14 SCHOOL TOWN OF SPEEDWAY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to affect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, documentation was not available to determine if the enrollment and poverty counts for the public or nonpublic data in the Title I application was accurate. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure documentation is retained to support information in the Title I application for the public and nonpublic enrollment and poverty counts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Number and Year (or Other Identifying Number): S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. Condition and Context The School Corporation had not properly designed a system of internal controls in order to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. A property record or capital asset listing is required to be maintained for all equipment purchased with the COVID-19 - Education Stabilization Fund grant award to ensure adequate safeguards are in place to prevent loss or damage of items. Equipment is to be included in the capital asset listing when valued over $5,000. The School Corporation maintained a detailed listing of capital assets; however, the capital asset listing provided did not identify which assets were purchased with federal dollars, the federal award identification number, or the percentage of federal participation in the project costs for the federal award under which the property was acquired. One identifiable capital asset purchased using federal dollars was omitted from the School Corporation's detailed listing of capital assets. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 SCHOOL TOWN OF SPEEDWAY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause The School Corporation's management was unaware of the recording requirements for equipment and real property obtained through the use of federal awards or that an asset got omitted from its capital asset record. Any assets, obtained through the use of federal monies, are not immediately identifiable due to the omission of the federal award identification number field. Effect The failure to establish an effective system of internal controls placed the School Corporation in noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation's capital asset listing did not include all information required for assets acquired with federal funds. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls that would ensure compliance with the Equipment and Real Property compliance requirement and update the capital asset listing include the missing asset as well as to include all required information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-003 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Number and Year (or Other Identifying Number): S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to its laborers and mechanics. Nonfederal entities are to include in its construction contracts subject to the wage rate requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation did not maintain policies or procedures ensuring that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause prior to management signing the contract. Four of the six construction and manufacturing vendors, paid from the COVID-19 - Education Stabilization Fund grant funds, were tested to verify the inclusion of the Davis Bacon Wage Rate clause. None of these contracts contained the required prevailing wage rate clause. There were 15 required weekly payrolls due from the six construction and manufacturing vendors paid from the COVID-19 - Education Stabilization Fund grant funds. A sample of 4 of these were tested to verify that the vendor submitted a copy of the payroll and statement of compliance to the School Corporation and the requirement was only complied with in 1 instance. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 18 SCHOOL TOWN OF SPEEDWAY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages— (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls— . . . (ii) Certified payroll requirements— (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . INDIANA STATE BOARD OF ACCOUNTS 19 SCHOOL TOWN OF SPEEDWAY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation officials were unaware of the requirements to include wage rate requirements (Davis Bacon) provisions in the respective renovation contracts and obtain weekly certified payrolls from the contractors throughout the renovation period. Effect The lack of an effective internal control system enabled material noncompliance with the grant agreement and the aforementioned compliance requirement to occur and remain undetected. Lack of compliance could result in contractors paying wages below those required by the DOL regulations. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and include the wage rate requirement clause in federally funded construction or renovation contracts. In addition, we recommended certified payrolls should be obtained as required for all federally funded construction or renovation contracts in excess of $2,000. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025 – 001: National Student Loan Data System (NSLDS) Reporting Federal agency: U.S. Department of Education Federal program title: Student Financial Aid Cluster ALN Number: 84.063, 84.268 Federal Award Identification Number: P063P241568, P063Q241568, P2687K251568, P268K261568 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Internal 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 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). Compliance: 1. The Code of Federal Regulations, consisting of 34 CFR 685.309 and 34 CFR 690.83(b)(2), requires that enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status. Additionally, schools are required to certify enrollment at a minimum of every 60 days or every other month. 2. The Code of Federal Regulations, consisting of 34 CFR 685.309 and 34 CFR 690.83(b)(2), requires certain student enrollment information be reported to the Department of Education. Information provided to the Department of Education should agree to the institution’s records. Condition: The change in status was not reported timely to the NSLDS. Questioned costs: None Context: This condition occurred for 3 out of 24 students Cause: The Registrar's Office has been through several transitions over the past five years and training has been inadequate during this period. Specifically, there was not sufficient training on enrollment submissions, error resolutions, and timely updates. Effect: The NSLDS system is not updated timely with the student information which may cause over awarding should the student transfer to another institution and the students may not properly enter the repayment period. Repeat Finding: Yes, 2024-001 Recommendation: We recommend the College review its reporting procedures to ensure that students’ statuses are accurately and timely reported to NSLDS as required by regulations. Views of responsible officials: There is no disagreement with the audit finding.

Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Federal awards MN0238L5K002209, MN0238L5K002310, MN0448L5K002203, MN0448L5K002304, MN0457L5K012203, MN0457L5K012304, MN0449L5K002201, and MN0449L5K002302 included under Federal Financial Assistance Listing 14.267 on the Schedule Special Tests and Provisions Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. When grant funds are used by Catholic Charities to pay for rent, Catholic Charities must ensure that the rents do not exceed rents currently being charged by the same owner for comparable unassisted units and the portion of grant funds may not exceed HUD-determined fair market rents. These calculations should be reviewed prior to the rent being paid. Condition: During our testing, we identified eight instances where the participant’s file had incomplete or inaccurate documentation of review and approval for the rent reasonableness test. Cause: Catholic Charities’ internal controls did not operate as designed, which resulted in rent reasonableness tests not being reviewed before the rent was paid. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 10 tenants were selected out of 56 tenants for rent reasonableness testing. Repeat Finding from Prior Years: Yes, 2024-001 Recommendation: We recommend management revise their internal control procedures with applicable employees to make sure that all rent reasonableness tests are performed and reviewed by the appropriate personnel prior to the rent being paid. Views of Responsible Officials: Management is in agreement with this finding.

Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Affects all grant awards included under Federal Financial Assistance Listing 14.267 on the Schedule Procurement, Suspension, and Debarment Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform to procurement standards in sections 200.317 through 200.327. Condition: Catholic Charities has documented procurement and suspension and debarment procedures that conform to applicable federal standards regarding procurement and testing vendors for suspension and debarment; however, the procedures were not followed for four vendors selected for testing for procurement and one for suspension and debarment. Cause: Catholic Charities did not have adequate internal controls in place to ensure that the processes laid out in their procurement policy regarding the process of obtaining quotes to support procurement and testing vendors for suspension and debarment were followed. Effect: Payments could be made to vendors who have higher costs than other vendors or who were suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 17 vendors out of 83 total transactions were selected for testing, which accounted for $81,494 of $681,188 federal program expenditures. Repeat Finding from Prior Year(s): Yes, 2024-002 Recommendation: We recommend Catholic Charities enhance internal control procedures to ensure all procurement and suspension and debarment verification procedures are performed prior to entering into the transactions. Views of Responsible Officials: Management agrees with the finding.

Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Affects all grant awards included under Federal Financial Assistance Listing 14.267 on the Schedule Activities Allowed or Unallowed/Allowable Cost Principles, Matching and Earmarking, Period of Performance Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Internal control procedures should ensure expenses and other records tracking allowable costs, allowable activities, period of performance, indirect expenses, matching and earmarking are approved and the approval is documented in a timely manner. Condition: Catholic Charities has documented review procedures that conform to applicable federal standards regarding activities allowed or unallowed, allowable cost principles, matching, earmarking, and period of performance. However, the procedures were not followed for 34 of 60 selections for expense items, seven of 12 employees tested for payroll expenditures did not have documented approval on the allocation rate applied, as well as two of three months selected for testing for matching, earmarking, and indirect expenses. Additionally, for four of 12 employees errors in the payroll calculations were identified that were not corrected or identified by Catholic Charities and for one employee there was no evidence of approval on the hours paid for two pay periods during the year. Cause: Catholic Charities’ internal controls did not operate as designed, which resulted in transactions not being reviewed timely or the review process not being formally documented and maintained. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: None reported.Context/Sampling: Activities Allowed or Unallowed/Allowable Cost Principles and Period of Performance: Expenses: A nonstatistical sample of 60 transactions out of 2,324 total transactions were selected for testing, which accounted for $23,406 of $681,188 federal program expenditures. Payroll expenses: A nonstatistical sample of 12 employees out of 61 were selected for testing, which accounted for $196,230 of $473,784 federal program expenditures. Indirect expenses: A nonstatistical sample of three months out of 12 were selected for testing. Matching and Earmarking: A nonstatistical sample of three months out of 12 were selected for testing. Repeat Finding from Prior Year(s): No Recommendation: We recommend Catholic Charities enhance internal control procedures to ensure the control process is properly supported and the documentation is retained. Views of Responsible Officials: Management agrees with the finding.

Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Federal awards MN0308L5K012209, MN0203L5K002308, MN0399L5K012205, MN0448L5K002203, MN0457L5K012203, and MN0449L5K002302 included under Federal Financial Assistance Listing 14.267 on the Schedule Activities Allowed or Unallowed/Allowable Cost Principles and Period of Performance Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Catholic Charities has documented review procedures that conform to applicable federal standards regarding indirect expenses; however, the procedures failed to detect that indirect costs were billed at the wrong rate as allowed under uniform guidance. Cause: Catholic Charities did not have adequate internal controls in place to ensure that the de minimis rates were appropriately billed as allowed under uniform guidance. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of three months out of 12 were selected for testing. Repeat Finding from Prior Year(s): No. Recommendation: We recommend Catholic Charities enhance internal control procedures to ensure all indirect cost are correctly calculated and billed. Views of Responsible Officials: Management agrees with the finding.

Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Federal awards MN0308L5K012310, MN0203L5K002308, MN0203L5K002409, MN0399L5K012306, MN0448L5K002203, and MN0448L5K002304 included under Federal Financial Assistance Listing 14.267 on the Schedule Earmarking Material Weakness in Internal Control Over Compliance and 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 the terms and conditions of the federal award. Condition: Catholic Charities has documented review procedures that conform to applicable federal standards regarding earmarking; however, the procedures failed to detect that administrative costs billed exceeded the 10% allowed under uniform guidance. Cause: Catholic Charities did not have adequate internal controls in place to ensure that the administrative costs were appropriately billed as allowed under uniform guidance. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: MN0308L5K012310 for $7,709; MN0203L5K002308 for $1,480; MN0203L5K002409 for $139; MN0399L5K012306 for $5,679; MN0448L5K002203 for $1,065; and MN0448L5K002304 for $1,234 Context/Sampling: A nonstatistical sample of three months out of 12 were selected for testing. Repeat Finding from Prior Year(s): No. Recommendation: We recommend Catholic Charities enhance internal control procedures to ensure all administrative costs are correctly calculated and billed. Views of Responsible Officials: Management agrees with the finding.

FINDING 2025-003 Subject: Title I Grants to Local Educational Agencies - Eligibility Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Condition and Context Eligibility for Title I is determined on the Eligible School Summary of the Tile I application. Enrollment and Poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment count for each school into the Eligible School Summary page of the Tile I application. These counts that are pre-populated should be based on the School Corporation's records as of October of the prior fiscal year. One person compiled and uploaded enrollment data, including poverty status for Real Time reports, to the IDOE without a documented oversight or review process to ensure that the information was accurate. In addition, there was no documented review by the School Corporation of the enrollment and poverty counts that were pre-populated into the School Corporation's Title I grant application. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Due to turnover at the School Corporation, a proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 18 SALEM COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Enrollment and poverty counts that are not reviewed for accuracy could result in incorrect eligibility determinations. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that the information entered into the Title I application was accurate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card, High School Graduation Rate Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Findings: Material Weakness, Qualified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirement. The School Corporation must report graduation rate data for all public high schools within the School Corporation using the four-year adjusted cohort rate. To remove a student from the cohort, the School Corporation must confirm the reason for removal in writing. Additionally, required documentation for each removal type must be retained by the School Corporation. The School Corporation did not have effective internal controls in place to ensure that documentation for each removal was retained. INDIANA STATE BOARD OF ACCOUNTS 19 SALEM COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Documentation of the reason for removal from the cohort was not retained for six of the eight students selected for testing. The School Corporation was unable to locate documentation for any students who exited the cohort prior to the current high school counselor taking her position. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 20 USC 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation to ensure documentation was retained for the required period of time. When turnover occurred, the required files were not retained or could not be located. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper documentation to support students' mobility was not retained or provided for audit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 20 SALEM COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure mobility documentation is collected and retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-005 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance to ensure that reimbursement requests were properly supported. The documentation provided to the reviewer was not sufficient to detect and correct unsupported or duplicate amounts requested for reimbursement. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 21 SALEM COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation to ensure reimbursement requests were properly supported. Documentation or listings provided to support the amounts requested for reimbursement were not always generated from the School Corporation's financial system, so they were not sufficient to properly detect and correct errors. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. This could result in incorrect amounts being requested for reimbursement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management strengthen its system of internal controls to ensure reports are properly supported by the records and are accurate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-006 Subject: COVID-19 - Education Stabilization Fund - Earmarking Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Finding: Material Weakness Condition and Context Local educational agencies that receive funds under the American Rescue Plan - Elementary and Secondary School Emergency Relief Fund (ESSER III) are to reserve not less than 20 percent of the funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs, and address the disproportionate impact of the coronavirus on the student subgroups. This requirement was set out in enabling legislation for the funds and further implemented in the Education Stabilization Relief Fund Application III, which the School Corporation was required to complete for its award. The Treasurer maintained a spreadsheet of learning loss expenses, but there was no documented internal control in place to ensure earmarking requirements were met. INDIANA STATE BOARD OF ACCOUNTS 22 SALEM COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls was isolated to the ESSER III grant noted above. 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). . . ." Cause The spreadsheet maintained by the Treasurer to monitor earmarking was reviewed by a second person, but that review was not documented. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of ensuring compliance with earmarking requirements. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance with the grant agreement and the Matching, Level of Effort, and Earmarking compliance requirement and to ensure the internal controls were properly documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-007 Subject: BRIC: Building Resilient Infrastructure and Communities - Internal Controls Federal Agency: Department of Homeland Security Federal Program: BRIC: Building Resilient Infrastructure and Communities Assistance Listings Number: 97.047 Federal Award Numbers and Years (or Other Identifying Numbers): PDMC-PJ-05-IN-2018-003, PDMC-PJ-05-IN-2018-007 Pass-Through Entity: Indiana Department of Homeland Security Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Reporting, Matching, Level of Effort, Earmarking Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 23 SALEM COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-006. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting, noncompliance. Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Matching, Level of Effort, Earmarking The Building Resilient Infrastructure and Communities (BRIC) program expenditures were to be used for costs associated with building "safe rooms" at the School Corporation's middle school and high school. The School Corporation provided paid claims to a grant administrator, who then prepared and filed reimbursement requests on behalf of the School Corporation. The School Corporation relied on the grant administrator to determine if costs submitted on the paid claims were allowable, in conformance with the cost principles, and adhered to the cash management and matching requirements of the grant. Once the claims were provided to the grant administrator, there was no oversight or review from the School Corporation. Reporting Quarterly performance reports were required to be filed electronically with the Indiana Department of Homeland Security. The grant administrator prepared and submitted the required quarterly reports without any oversight or review from the School Corporation. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The School Corporation relied on a grant administrator to ensure compliance; when they became aware that additional review and oversight of the School Corporation was required, the majority of the activity for the grant was already complete. INDIANA STATE BOARD OF ACCOUNTS 24 SALEM COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 23-24, FY 24-25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Significant Deficiency INDIANA STATE BOARD OF ACCOUNTS 15 NORTHWEST ALLEN COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation and inspection of supporting documentation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, it was identified that the School Corporation did not have internal controls in place to ensure that its policies and procedures over suspension and debarment were completed. The lack of effective internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed and implemented by management of the School Corporation. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. INDIANA STATE BOARD OF ACCOUNTS 16 NORTHWEST ALLEN COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls to ensure that its policies and procedures over suspension and debarment were completed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: Child Nutrition Cluster - Allowable Costs/Costs Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. The School Corporation's salary ordinance for classified staff reported the beginning wage rate and not the current wage rate. As a result, 11 of the 13 payroll disbursements sampled for classified employees did not agree with the School Corporation's salary ordinance, which totaled $714. This amount was considered questioned costs. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 MACONAQUAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause The School Corporation was not aware of the need for reporting the current wage rate within its salary ordinance. Effect Payroll disbursements for classified employees paid from the grant did not agree with the School Corporation's salary ordinance. As a result, known questioned costs of $714 were identified in the Condition and Context. Questioned Costs Known questioned costs of $714 were identified as described above in the Condition and Context. Recommendation We recommended that the School Corporation's management report the current wage rate within its salary ordinance and establish effective internal controls to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-003 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 MACONAQUAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation's salary ordinance for classified staff reported the beginning wage rate and not the current wage rate. As a result, six of the seven payroll disbursements sampled for classified employees did not agree with the School Corporation's salary ordinance, which totaled $952. This amount was considered questioned costs. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause The School Corporation was not aware of the need for reporting the current wage rate within its salary ordinance. Effect Payroll disbursements for classified employees paid from the grant did not agree with the School Corporation's salary ordinance. As a result, known questioned costs of $952 were identified in the Condition and Context. Questioned Costs Known questioned costs in the amount of $952 were identified as described above in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 18 MACONAQUAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that School Corporation's management report the current wage rate within its salary ordinance and establish effective internal controls to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: COVID-19 - Education Stabilization Fund - Earmarking Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Local Education Agencies must set aside at least 20 percent of ESSER III (ARP) funding for evidence-based activities to address learning loss. According to guidance from the Indiana Department of Education, summer programming, afterschool, and extended school day are examples, but they are not the only allowable activities to address learning loss and accelerate learning. Additionally, allowable activities that are deemed necessary to carry out the activities to address learning loss, such as transportation or staffing, may also be budgeted as an activity to address learning loss. Although the School Corporation budgeted 20 percent of its program expenditures for learning loss activities in its grant application, it did not differentiate, code, or track learning loss expenditures separately from non-learning loss activity expenditures. As a result, we could not identify whether 20 percent of the $684,357 total ESSER III allocation received by the School Corporation was used for learning loss activities. The lack of effective internal controls and noncompliance were systemic issues both during the audit period and since the beginning of the grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 19 MACONAQUAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Section 2001(e)(1) of the ARP Act states in part: "A local educational agency that receives funds under this section— (1) shall reserve not less than 20 percent of such funds to address learning loss through the implementation of evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive afterschool programs, or extended school year programs, and ensure that such interventions respond to students' academic, social, and emotional needs and address the disproportionate impact of the coronavirus on the student subgroups . . ." Cause The School Corporation's financial management system was not set up to separately track program expenditures relating to learning loss activities. Effect As a result of the School Corporation not separately tracking program expenditures relating to learning loss activities, we were unable to obtain sufficient appropriate audit evidence on which to base our opinion on the School Corporation's compliance with the earmarking requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management develop policies and procedures to separately track program expenditures relating to learning loss activities. In addition, we also recommended that the School Corporation's management establish effective internal controls to ensure that compliance with the earmarking requirement is documented and maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-001 Subject: Twenty-First Century Community Learning Centers - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Twenty-First Century Community Learning Centers Assistance Listings Number: 84.287 Federal Award Numbers and Years (or Other Identifying Numbers): S287C220014, S287C230014, S287C240014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The Twenty-First Century Community Learning Centers grant is awarded to schools to provide opportunities for academic enrichment for children, particularly students who attend a high-poverty and lowperforming school. The program is intended to help students meet state and local academic achievement standards in core academic subjects, such as reading and math; to offer students a broad array of enrichment activities that reinforce and complement their regular academic programs; and to offer literacy and other educational services to the families of participating children. Program funds are intended to be used for activities that provide students with activities that complement the regular school-day program of participating students and also fund local activities that are included as part of an expanded learning time (ELT) program that provides students at least 300 additional program hours before, during or after the traditional school day. A sample of 41 vouchers reimbursed by the Indiana Department of Education from the School Corporation's grant funds were selected for testing, consisting of 17 vendor claims and 24 payroll claims. Of the 17 vendor claims selected, 2 were for activities and costs that were determined to be unallowable. The first voucher was paid to NLB Sportswear to purchase 85 Sport-Tek Stripe Pom Pom Beanies in the amount of $1,190. The second voucher was paid to Shoup's Country Foods for a Staff Christmas Dinner in the amount of $1,504. We found 3 additional payments made to Shoup's Country Foods from grant funds during the audit period totaling an additional $3,209, 1 for a December 2024 Christmas dinner and 2 for a December 2023 Christmas dinner. The total amount of charges for these expenditures was $5,903, which we considered to be questioned costs. Internal controls over grant expenditures were not properly designed and implemented to detect and prevent the noncompliance noted above. Criteria 2 CFR 200.303 states in part: "The recipient and subrecipient must: INDIANA STATE BOARD OF ACCOUNTS 14 CLINTON CENTRAL SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control-Integrated Framework' issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federallyfinanced and other activities of the non-Federal entity. . . ." Cause The grant manager approved the expenses and directed that they be paid from this funding. The Treasurer, who reviewed all expenses, did not consider it appropriate to question the expenses because the grant manager had already approved them. Effect Without proper implementation of an effectively designed system of internal controls, the School Corporation made purchases for unallowable items. Examiners were unable to determine how these items benefited the program. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Questioned costs in the amount of $5,903 were identified as described in the Condition and Context. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including documented policies and procedures, that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are obtained to support disbursements that are charged to the respective grants. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Information on the federal program: Subject: Education Stabilization Fund – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425U Federal Award Numbers: S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions – Wage Rate Requirements Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 29 CFR 5.5 states in part: (1) Minimum wages. (Continued) PERRY CENTRAL COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS July 1, 2023 through June 30, 2025 48. Section III – Federal Award Findings and Questioned Costs (Continued) FINDING 2025-002 (Continued) (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics… (3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part: In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week.. . .” Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had one project for a bus garage addition that which was funded with ESSER III (84.425U) grant awards. The School Corporation did not execute a formal contract with the vendor as the transaction was under the simplified acquisition threshold of $150,000. As such, there was no internal controls to communicate required prevailing wage rate requirements to the vendor prior to entering into the transaction. The School Corporation did obtain the weekly wage reports from the vendor. The total project cost disbursed during the audit period was $88,727, which included materials and labor. Identification as a repeat finding: No. Recommendation: We recommend the School Corporation implement a formal process to ensure the contracts are being completed with vendors and contain all of the necessary elements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

U.S. Department of Health and Human Services Community Pr Foject unding Federal Financial Assistance Listing Numbers: 93.493 Compliance Requirements: Reporting Type of Finding: Significant Deficiency in Internal Control Criteria: Uniform Guidance at 2 CFR 200.303 requires nonfederal 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 applicable laws, regulations, and the terms and conditions of the award. Effective internal control includes appropriate independent review of reports to ensure accuracy prior to submission. Condition: During our testing over the report submissions for the fiscal year, we noted there was not an independent review completed over the quarterly expenditure report. Cause: There was transition in several key roles during the fiscal year, causing the review not to be completed over the quarterly submissions. Effect: The two quarterly expenditure reports submitted during the fiscal year were not reviewed by someone independent of the individual preparing the reports. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 3 reports out of a total of 5 submitted for the year. Repeat Finding from the Prior Year(s): No Recommendation: The College should ensure there is an independent review of all report submissions during the year to ensure accuracy prior to submission. Views of Responsible Officials: Management agrees with the finding.

Program: AL 12.401 – National Guard Military Operations and Maintenance (O&M) Projects – Cash Management & Reporting Grant Number & Year: Appendices – W91243-23-2-1001, FFY 2023; W91243-24-2-1001, FFY 2024; W91243-25-2-1024, FFY 2025; W91243-25-2-1001, FFY 2025; W91243-25-2-1021, FFY 2025 Federal Grantor Agency: U.S. Department of Defense Criteria: Per 2 CFR § 1128.100 and 2 CFR § 1128.200 (January 1, 2024, and January 1, 2025), the Department of Defense adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR parts 200.302, 200.303, and 200.305. Per 2 CFR § 200.303 (January 1, 2024, and January 1, 2025), a non-Federal entity must establish and maintain effective internal control over the Federal award to provide 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. Title 2 CFR § 200.302 (January 1, 2024, and January 1, 2025) requires financial management systems of the State be sufficient to permit preparation of required reports and permit the tracing of funds to expenditures adequate to establish the use of these funds were in accordance with applicable regulations. EnterpriseOne is the official accounting system for the State of Nebraska, and all expenditures are generated from it. Per Title 2 CFR § 200.305(a) (January 1, 2024, and January 1, 2025), payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205. National Guard Policy (NG Policy) 5-1, National Guard Grants and Cooperative Agreements, Section 11-5, Advance Payment Method, Section (5), states in part, “[T]he grantee agrees to minimize the time elapsing between the transfer of funds from the U.S. Treasury and their disbursement by the State. (no more than 45 days).” GCAPL 20-02 AQ-A Policy (February 4, 2020) turned NGR 5-1 into NG Policy 5-1. It generally maintained the principles and operational aspects of NGR 5-1, except as provisions of the document were adjusted in the AQ-A Policy. The AQ-A Policy did not make any changes to the 45-day requirement found in NGR 5-1. The instructions for OMB Standard Form 270 (REV. 1/2016) include the following for line 11a: Enter program outlays to date (net of refunds, rebates, and discounts), in the appropriate columns. For requests prepared on a cash basis, outlays are the sum of actual cash disbursements for goods and services, the amount of indirect expenses charged, the value of in- kind contributions applied, and the amount of cash advances and payments made to subcontractors and subrecipients. A good internal control plan would include procedures to ensure the time between the drawdown of Federal funds and disbursements is minimized and in compliance with National Guard Regulations. Condition: The Agency was noncompliant with the Federal cash management requirements during the fiscal year and did not properly report program outlays on the OMB Standard Form (SF) 270. A similar finding was noted in the prior audit. Repeat Finding: 2024-066 Questioned Costs: None Statistical Sample: No Context: We tested five drawdowns of Federal funds to support the Agency’s operations. We tested to determine whether the Agency had expended the cumulative amounts drawn down for the awards tested within the required timeframe and noted the following: • Three drawdowns were noncompliant with NG Policy 5-1. Cumulative drawdowns for one of the draws were expended 63 days after the drawdown of the Federal funds. Cumulative draws for the other draws had yet to be fully expended as of January 8, 2026. The table below provides a summary of the three draws: See Schedule of Findings and Questioned Costs for chart/table. • For 5 of 5 SF-270’s tested, the Agency did not properly report total program outlays on the OMB SF-270 report. The Agency reported the total drawdowns for the program to date, rather than actual cash disbursements, as total program outlays. The variance between what was reported and what should have been reported ranged from an overreporting of $2,764 to an overreporting of $3,530,797, with a net total overreporting of expenditures by $4,074,284 for the five reports tested. Cause: Inadequate procedures for estimating fund needs for the upcoming month. Regarding SF-270 reporting, the Agency has stated it agrees with the finding; however, it has yet to implement corrective action. Effect: The Agency is noncompliant with Federal cash management and reporting requirements, which could result in sanctions. Additionally, there is an increased risk for the loss of Federal funding. Recommendation: We recommend the Agency ensure the amount of time between the Federal draw and the disbursement of funds by the State is minimized and in compliance with National Guard requirements. We also recommend the Agency report total program outlays in compliance with Federal requirements. Management Response: The Agency agrees with the finding. The drawdown timeline is a partial result of the variances in federal reimbursement functionalities and the advance state requirement function. Program obligations and liquidations are reconciled and reported on at least a quarterly basis with federal constituents.

Program: AL 10.561 – State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.558 – Temporary Assistance for Needy Families; AL 93.563 – Child Support Services; AL 93.566 – Refugee and Entrant Assistance State/Replacement Designee Administered Programs; AL 93.575 Child Care and Development Block Grant; AL 93.658 – Foster Care Title IV-E; AL 93.659 – Adoption Assistance; AL 93.767 – Children’s Health Insurance Program; AL 93.778 – Grants to States for Medicaid – Allowable Cost/Cost Principles Grant Number & Year: 243NE406S2514, FFY 2024; 253NE406S2514, FFY 2025; 2201NETANF, FFY 2022; 2501NESCSS, FFY 2025; 2401NERCMA, FFY 2024; 2301NECCDD, FFY 2023; 2401NECCDD, FFY 2024; 2401NEFOST, FFY 2024; 2501NEFOST, FFY 2025; 2401NEADPT, FFY 2024; 2501NEADPT, FFY 2025; 2405NE5021, FFY 2024; 2505NE5021, FFY 2025; 2405NE5ADM, FFY 2024; 2505NE5ADM, FFY 2025 Federal Grantor Agency: U.S. Department of Health and Human Services and U.S. Department of Agriculture Criteria: Per 2 CFR § 400.1 (January 1, 2024, and January 1, 2025), the U.S. Department of Agriculture adopted the OMB Uniform Guidance as its policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards. Per 45 CFR § 75.405(a) (October 1, 2024) and 2 CFR § 200.405(a) (January 1, 2024, and January 1, 2025), costs are allocable to Federal awards or other cost objectives if the costs involved are assignable to those Federal awards or other cost objectives in accordance with relative benefits received. 45 CFR § 75.403 (October 1, 2024) and 2 CFR § 200.403 (January 1, 2024, and January 1, 2025) require costs to be necessary, reasonable, and adequately documented. 45 CFR § 75.303 (October 1, 2024) and 2 CFR § 200.303 (January 1, 2024, and January 1, 2025) require the State to “maintain effective internal control over the Federal award that provides reasonable assurance that the [State] is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 45 CFR § 75.302 (October 1, 2024) and 2 CFR § 200.302 (January 1, 2024, and January 1, 2025) require financial management systems of the State sufficient to permit both preparation of required reports and tracing of funds to a level of expenditures adequate to establish that the use of those funds was in accordance with applicable regulations. Per Title 471 NAC 25, Attachment A, Claiming Issues, C. Offset of Revenues (eff. 10/4/2020) and the Medicaid School-Based Administrative Claiming Guide provided by the Centers for Medicare and Medicaid Services (May 2003), Section V (“Claiming Issues”), C. (“Offset Revenues”), “[a] government program may not be reimbursed in excess of its actual costs, i.e., make a profit.” EnterpriseOne is the official accounting system for the State of Nebraska, and all expenditures are generated from it. Good internal control requires procedures to ensure that amounts charged to Federal funds are proper. 45 CFR § 75.511 (October 1, 2024) and 2 CFR § 200.511 (January 1, 2024, and January 1, 2025) require the auditee to prepare a summary schedule of prior audit findings. Subsection (b)(2) of both regulations also requires that, when the audit findings were not corrected or only partially corrected, the auditee must describe the reasons for the findings recurrence and planned corrective action. Condition: Inadequate procedures to ensure the accuracy of journal entries and adjustments to the Public Assistance Cost Allocation Plan (PACAP), resulting in multiple Federal programs being overcharged. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2024-037 Questioned Costs: $3,986,559 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: We selected 14 journal entries related to the PACAP. We noted the following: • Four journal entries to reconcile Foster Care Title IV-E expenditures to the PACAP contained multiple errors, including using aid amounts as administrative costs, miscalculating the portion of the Bridge to Independence (B2I) program that can be charged to the grant, not accounting for all amounts already charged to the grant, and adding in additional amounts earned that did not exist or were calculated incorrectly. For one entry, the Agency not only calculated the wrong amounts to charge to the grant, but then posted the exact same entry from the previous quarter instead of the current quarter’s entry. In total, $306,667 was overcharged to the Foster Care Title IV-E grant due to these errors. We consider this amount to be Federal questioned costs. • Another journal entry for Foster Care Title IV-E was posted to correct an error in previous quarters’ journal entries. The Agency was charging program-related training costs at a 50% Federal financial participation rate (FFP), while such activity is allowable at a 75% FFP. However, the Agency did not correctly account for all the costs that had already been charged to the grant for training costs. This error led to the Agency charging an additional $1,777,318 in costs to the Federal award that was already charged to the grant. We consider this amount to be Federal questioned costs. • One journal entry was to reconcile Supplemental Nutrition Assistance Program (SNAP) expenditures to the PACAP. The Agency’s calculation included costs earned by the Summer EBT program but failed to include amounts already charged to the Summer EBT Federal grant of $72,292. Additionally, the Summer EBT program is a separate Federal grant from SNAP and should have been accounted for separately. The full $72,292 is the Federal portion and is considered questioned costs. • One journal entry to reconcile Medicaid administrative expenditures to the PACAP did not properly account for $35,114 in personnel costs that had already been charged to the grant. As a result, the Federal funds were overcharged this amount and are considered questioned costs. • One journal entry to allocate costs related to Field Office Administration to various programs across the Agency for the month of March 2025 was calculated incorrectly and did not account for all programs involved. Each quarter, Field Office Administration costs are allocated in the PACAP to various programs based on hours worked in the field offices. The journal entry tested was meant to do the same calculation, but on a monthly basis, so programs can keep track of their budgets more timely. When calculating the amounts to allocate, however, the Agency used six months of costs, or $1,798,755, rather than just the costs that occurred in March 2025, or $171,255. Further, the Agency did not move the costs to all of the applicable programs, such as Foster Care and SNAP. Lastly, the Agency used the Labor Hours from the quarter ending December 31, 2023, rather than the quarter ending March 31, 2025. Due to these errors, Medicaid was overcharged $131,637, which are considered Federal questioned costs. • For one journal entry to move costs from the State General Fund to a Cash Fund for $1,766,949, the Agency used the incorrect business units within EnterpriseOne, which resulted in multiple Federal programs being overcharged through the PACAP, as listed below. We consider these to be Federal questioned costs. See Schedule of Findings and Questioned Costs for chart/table. We also selected six adjustments made to the PACAP and noted the following: • Two adjustments tested were related to the Medicaid School-based Administration program. The Agency uses a contractor to determine the allowable Medicaid activities by school district, and the amounts owed to each school district, for the Federal share of expenses. Schools are responsible for covering matching funds. The Agency makes an adjustment to the Cost Allocation Plan to account for the matching funds that are not shown on the State Accounting records. However, we noted that the Agency is calculating this adjustment based on the amount of allowable expenses provided by the contract, and not the actual amount of Federal funds paid to the schools. The Agency reduces the amount to pay to the schools for missing provider enrollment, negative claims, and/or recoupments. We then reviewed the CMS-64 reports and noted that the Agency is claiming the entire amount of allowable expenses provided by the contractor, and not just the amount paid to the schools. It is not reasonable to claim costs on the CMS-64 reports that are not actually spent. We recalculated the amounts that should have been reported based on the actual amounts paid to the schools and noted that the Agency overclaimed $566,018 in Federal costs. Of the $566,018, $110,970 is due to a 3% fee for administration that the Agency subtracts from each school’s payment. The Agency then essentially pays itself this amount through a reconciliation journal entry. Administrative costs of the Agency are distributed through the PACAP to benefiting programs and would include charges to Medicaid; therefore, the Federal portion of the 3% administrative fee should have been credited back to Medicaid, but it was not. The $566,018 is considered Federal questioned costs. • Two adjustments tested were to correct prior period allocation errors. Both errors were due to a finding from the Fiscal Year 2024 Single audit. The Agency’s calculations to correct allocations included errors, such as using the incorrect statistics, using the incorrect amounts, and inputting the incorrect amounts into the cost allocation system. These errors resulted in the following programs being overcharged. See Schedule of Findings and Questioned Costs for chart/table. Cause: Inadequate procedures to ensure that adjustments to the PACAP are proper, and journal entries are appropriate for each program. Effect: Unallowable expenditures were charged to Federal funds and an increased risk for errors, fraud, and noncompliance with Federal regulations. Recommendation: We recommend the Agency strengthen procedures to ensure adjusting entries are complete and accurate. We further recommend the Agency strengthen procedures to ensure compliance with Federal regulations. Management Response: The Agency agrees with the finding.