Findings Citing § 200.303

Finding Number: 2024-093 Prior Year Finding Number: 2023-076 Compliance Requirement: Reporting Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Social Services Block Grant ALN: 93.667 Award #: Various Award Period: Various Criteria – Each State or Territory must file various financial, programmatic, and special reports. Additionally, the requirements necessitate that all submitted reports should be supported by the underlying performance records and presented in accordance with program requirements. More specifically for the program, in accordance with the compliance Supplement, the states and territories are required to submit to the Federal administering agency, the Office of Community Services (OCS), SF-425 ‘Federal Financial Report’ and an annual ‘Post Expenditure Report’ (42 USC 1397e) no later than six months following the close of the fiscal year. Further, in accordance with OCS SSBG Supplemental Terms and Conditions, SSBG is required to submit an interim and final SF-425 report covering Year 1 and the entire 2-year of the project period, 90 days following Year 1 (FFY 1) and 90 days following the end of Year 2 (FFY 2), respectively. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition - We sampled and selected 2 out of 4 financial (SF-425) and special (Post-Expenditure) reports and noted the following: • For 1 financial report, we were unable to agree a line item of the report to the underlying supporting records. • For 1 special report, there was no evidence indicating the date the report was prepared, reviewed, or submitted to the federal grantor. Additionally, we were unable to agree the key line item reported to the underlying supporting records. Additionally, internal controls do not appear to be operating at a level of precision to ensure federal reports are prepared accurately, reviewed and submitted timely, and maintained for inspection. Cause – It appears that policies and procedures, including oversight over submission of required reports were not functioning as intended. Effect or Potential Effect - DHS is not in compliance with the stated provisions. Questioned Costs – None. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. Recommendation – We recommend that DHS strengthen its process with respect to ensuring proper retention, monitoring, and review of the required reports by an appropriate official. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DHS remains in collaboration with Federal Partners relative to the required change to reflect a consolidated report in the Payment Management System financial reporting module and for formal notification of report submissions. In addition, a Federal Grants Financial Analyst has been onboarded and processes enhanced to allow for a match to all reports inclusive of Federal draws. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2024-094 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Department of Human Services (DHS) Medicaid Cluster ALN: 93.775, 93.778 Award #: 75X0512 Award Period: 10/01/2022 – 09/30/2024 Criteria – Federal funds can be used only for Medicaid and CHIP benefit payments (as specified in the state plan, federal regulations, or an approved waiver/demonstration), expenditures for administration and training, expenditures for the State Survey and Certification Program, and expenditures for the establishment and operation of state MFCUs (42 CFR 435.10, 440.210, 440.220, and 440.180). Payments may only be made to providers determined by the SMA to be eligible to participate in the Medicaid program. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We sampled and selected 60 of 971 payroll transactions and noted the following: • 1 instance where the project code on an employee’s Notice of Personnel Action (NOPA), used to record time and effort to the appropriate grant, had not been updated. However, during the fiscal year, program personnel made adjustments to ensure the employee’s time and effort was recorded to the correct grant. • 1 instance in which the hours noted per the employee’s timesheet did not agree to the hours in the payroll register. We have also noted that the expense population included expenditures for 3 grant awards with award periods beginning after September 30, 2024. Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the allowable costs/cost principles compliance requirement. Cause – DHS does not appear to have adequate policies and procedures in place to ensure compliance with stated provisions. Effect or Potential Effect – DHS is not in compliance with the stated provisions. Failure to properly review and report expenditures can result in noncompliance with laws and regulations along with loss of funding. Questioned Costs – $61,457. Context – This is a condition identified per review of DHS’ compliance with the specified requirements and general compliance principles. Recommendation – We recommend that DHS deploy resources that are given the responsibility to ensure monitoring and compliance of stated requirement throughout the fiscal year. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DHS will continue to strengthen its review and documentation procedures to ensure compliance with federal requirements and has adopted an electronic system for payroll, replacing manual processes. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2024-095 Prior Year Finding Number: 2023-078 Compliance Requirement: Eligibility Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Medicaid Cluster ALN: 93.775, 93.778 Award #: 75X0512 Award Period: 10/01/2022 – 09/30/2024 Children’s Health Insurance Program ALN: 93.767 Award #: 2205VQ5021 Award Period: 10/01/2022 – 09/30/2025 Criteria – Plan and eligibility requirements must comply with various Federal requirements. The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, in accordance with the State Plan under Title XIX of the Social Security Act, Section 4.7, Maintenance of Records, the Medicaid agency maintains or supervises the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provisions of medical assistance, and administrative costs, statistical, fiscal and other records necessary for reporting and accountability. Condition – In our review of 60 of 2,207 participant case files, we noted the following: • 33 instances where documentation supporting the eligibility determinations were not available. • 4 instances where there was no evidence of completed application. • 12 instances where there was no evidence that the eligibility determination had been reviewed and approved, or that the application was processed in a timely manner. In addition, we were unable to determine the completeness of the population of eligible participants, as an ADP/Risk analysis was not performed on the VIBES system (which houses the eligibility database). Cause – DHS does not appear to have adequate policies and procedures in place to ensure a consistent and systematic review and maintenance of the data in its participant case files. Effect or Potential Effect – Noncompliance with program requirements could result in disallowances of costs and program participants could be receiving benefits that they are not entitled to receive. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. Recommendation – We recommend that DHS perform regular reviews of the data in its participant case files to ensure accuracy and completeness and confirming that only eligible participants are receiving the entitled benefits. Additional levels of review by a supervisor or manager can provide more timely quality assurance oversight over the eligibility process. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DHS has enhanced internal control policies and processes including implementing in-person/active renewal requirements, enhancing the treatment and steps for obtaining and maintaining required supporting documentation, updating system configurations, implementing a review tracker, outlining roles and responsibilities, and conducting targeted staff training. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2024-096 Prior Year Finding Number: 2023-080 Compliance Requirement: Reporting Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Medicaid Cluster ALN: 93.775, 93.778 Award #: 75X0512 Award Period: 10/01/2022 – 09/30/2024 Children’s Health Insurance Program ALN: 93.767 Award #: 2205VQ5021 Award Period: 10/01/2022 – 09/30/2025 Criteria – Each State or Territory must file various financial, programmatic, and special reports. Additionally, the requirements necessitate that all submitted reports should be supported by the underlying performance records and presented in accordance with program requirements. In accordance with the Compliance Supplement, the State or Territory is required to submit CMS-64, Quarterly Statement of Expenditures for the Medicaid Assistance Program, thirty days after the end of the quarter. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – For Medicaid Cluster, we reviewed 2 of 4 quarterly CMS-64 reports submitted during the fiscal year and noted the following: • 1 report did not contain evidence of review or approval. • 2 reports had not been submitted in a timely manner. For Children’s Health Insurance Program, we noted 1 of 2 reports tested that did not contain evidence of review or approval. Cause – It appears that policies and procedures, including review over reporting procedures were not functioning as intended. Effect or Potential Effect – DHS is not in compliance with stated provisions and inaccurate information may have been reported to the Federal government. Questioned Costs – None. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. Recommendation – We recommend that DHS reevaluate its policies and procedures to ensure proper monitoring and review of the required reports by an appropriate official who would ensure the information submitted is complete, accurate, consistent, and submitted within the required timeframe. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DHS has implemented a shared folder where copies of approval emails and any time extension requests are stored to enhance current internal control processes. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2024-098 Prior Year Finding Number: 2023-082 Compliance Requirement: Special Tests and Provisions - Inpatient Hospital and Long-Term Care Facility Audits Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Medicaid Cluster ALN: 93.775, 93.778 Award #: 75X0512 Award Period: 10/01/2022 – 09/30/2024 Criteria – The SMA pays for inpatient hospital services and long-term care facility services through the use of rates that are economic and efficient and are in accordance with the state plan. To the extent the state pays reconciled costs, the SMA must provide for the filing of uniform cost reports for each participating provider in order to establish payment rates. The SMA must provide for the periodic audits of financial and statistical records of participating providers. The specific audit requirements will be established by the state plan (42 CFR 447.253). Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – DHS provides Medicaid services to eligible Territory residents through inpatient hospitals and long-term care facilities. These hospitals and facilities include various Territory agencies and third-party service providers. The costs incurred by these facilities are summarized in a cost report that is submitted to DHS. DHS awarded a contract in August 2017 for the audit of these cost reports; however, we noted that DHS had not received any audited cost reports for fiscal year 2024. Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Cause – DHS does not appear to have adequate policies and procedures in place for the provision of audited cost reports of its participating providers. Effect or Potential Effect – Without timely audits of the cost reports, DHS has no assurance that the costs incurred by the medical facilities are actual costs incurred. Further, the difference between costs submitted for reimbursement and the costs actually reimbursed result in the use of local, rather than Federal, dollars to fund Medicaid expenditures. Questioned Costs - None. Context – This is a condition identified per review of DHS’ compliance with the specified requirements. Recommendation – We recommend that DHS evaluate and develop policies and procedures to obtain and audit the cost reports. This will allow DHS to reduce the time between the Medicaid expenditures being incurred and the ultimate reimbursement from the Federal government. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DHS has strengthened its oversight of Medicaid financial reporting through the establishment of a Director of Audits position in September 2025. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2024-099 Prior Year Finding Number: 2023-083 Compliance Requirement: Special Tests and Provisions – ADP Risk Analysis and System Security Review Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Medicaid Cluster ALN: 93.775, 93.778 Award #: 75X0512 Award Period: 10/01/2022 – 09/30/2024 Criteria – SMAs must establish and maintain a program for conducting periodic risk analyses to ensure that appropriate and cost-effective safeguards are incorporated into new and existing systems. SMAs must perform risk analyses whenever significant system changes occur. SMAs shall review the ADP system security installations involved in the administration of HHS programs on a biennial basis. At a minimum, the reviews shall include an evaluation of physical and data security operating procedures, and personnel practices. The SMA shall maintain reports on its biennial ADP system security reviews, together with pertinent supporting documentation, for HHS on-site reviews (45 CFR 95.621). Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – DHS did not perform the required ADP Risk Analysis and System Security Review for the systems that support the Medicaid Program. Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Cause – DHS’ records do not permit a determination as to the sufficiency of the design and operation of key controls surrounding the environment in which the Medicaid claims reside. Effect or Potential Effect - The absence of policies to ensure these analyses and reviews are performed may lead to physical and data security issues and noncompliance with program requirements. Questioned Costs - None. Context – This is a condition identified per review of DHS’ compliance with the specified requirements. Recommendation - We recommend that DHS should perform and review a risk analysis and system security review for all systems that support the Medicaid program. All issues should be addressed by DHS. If DHS becomes aware that such a report will not be available, we recommend that management conduct its own review. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. To address this finding, DHS is actively pursuing Requests for Qualifications (RFQs) seeking to partner with a technology system vendor to perform a comprehensive security risk assessment of the Medicaid Enterprise Systems (MES), including the VIBES Eligibility and Enrollment System, Provider Enrollment Application (PEA), Pharmacy Benefit Management (PBM) solution, and related supporting systems. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2024-100 Prior Year Finding Number: 2023-084 Compliance Requirement: Special Tests and Provisions – Provider Eligibility Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Medicaid Cluster ALN: 93.775, 93.778 Award #: 75X0512 Award Period: 10/01/2022 – 09/30/2024 Children’s Health Insurance Program ALN: 93.767 Award #: 2205VQ5021 Award Period: 10/01/2022 – 09/30/2025 Criteria – Medicaid – In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR 431.107 and 447.10; and Section 1902(a)(9) of the Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Providers who have been barred from participation by the OIG exclusion list are not eligible to be enrolled in the Medicaid program (see 42 CFR 455.436). CHIP – In order to receive CHIP payments, CHIP providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the CHIP program (42 CFR 457.900); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR 457.990(a), cross referencing 455.107). CHIP managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Guidance was provided to states in the Medicaid Provider Enrollment Compendium (MPEC) to enroll CHIP providers into their Medicaid programs to ensure that they meet federal requirements. Providers who have been barred from participation by the OIG exclusion list are not eligible to be enrolled in the CHIP program (42 CFR 457.990, 42 CFR 455 Subpart E). Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We sampled 60 of 834 providers that provided Medicaid and CHIP services during fiscal year 2024. We noted 26 total exceptions: • 9 instances in which no supporting documentation was provided for review. • 16 instances in which the Medicaid Provider Agreement was not provided for review. • 11 instances in which evidence of exclusion screening from the Office of Inspector General (OIG) list was not provided for review. In addition, we were unable to determine the completeness of the population of eligible providers, as an ADP/Risk analysis was not performed on the VIBES system (which houses the eligibility database). Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Cause – DHS does not appear to have adequate policies and procedures in place to ensure documentation is maintained and available to be inspected. Effect or Potential Effect – DHS is not in compliance with the stated provisions for provider eligibility, including maintaining appropriate evidence of compliance. Noncompliance with program requirements could result in future impacts to funding. Questioned Costs – None. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. Recommendation - We recommend that DHS implement policies and procedures to ensure provider enrollment documentation is maintained and available for inspection. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. To address these challenges and strengthen program integrity, DHS implemented the Provider Enrollment Application (PEA) Portal on March 2, 2026. In addition to implementing the PEA Portal, DHS is strengthening policies and procedures related to provider file maintenance, document retention, and quality assurance reviews. Staff training and periodic monitoring will help ensure required enrollment documents and exclusion screening records are consistently maintained and available for inspection. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2024-101 Prior Year Finding Number: 2023-081 Compliance Requirement: Special Tests and Provisions - Utilization Control and Program Integrity Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Medicaid Cluster ALN: 93.775, 93.778 Award #: 75X0512 Award Period: 10/01/2015 – 09/30/2024 Criteria – The state plan must provide methods and procedures to safeguard against unnecessary utilization of care and services. In addition, the state must have (1) methods of determining criteria for identifying suspected fraud cases; (2) methods for investigating these cases; and (3) procedures, developed in cooperation with legal authorities, for referring credible allegations of fraud cases to law enforcement officials (42 CFR parts 455, 456, and 1002). Credible allegations of provider fraud must be referred to the state MFCU or an appropriate law enforcement agency in states with no certified MFCU (42 CFR Part 455.21). The SMA must establish and use written criteria for evaluating the appropriateness and quality of Medicaid services. The agency must have procedures for the ongoing post-payment review, on a sample basis, of the need for, and the quality and timeliness of, Medicaid services. The SMA may conduct this review directly or may contract with an independent entity (42 CFR 456.5, 456.22 and 456.23). In addition, the SMA as required per Section 1902(a)(68) – [42 USC 1396a(a)(68)] False Claims Education must ensure that providers and contractors receiving or making payments of at least $5 million annually under a state’s Medicaid program have (a) established written policies for all employees (including management) about the Federal False Claims Act, whistleblower protections, administrative remedies, and any pertinent state laws and rules; (b) included as part of these policies detailed provisions regarding detecting and preventing fraud, waste, and abuse; and (c) included in any employee handbook a discussion of the False Claims Act, whistleblower protections, administrative remedies, and pertinent state laws and rules. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, 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. Condition – We noted that a Program Integrity Director was onboarded in 2024 and started implementing policies & procedure in a defined phased manner to establish the Program Integrity Unit for the compliance requirements detailed above. As such DHS was not able to provide evidence of meeting compliance requirements during Fiscal Year 2024. Specifically, we noted the following: • The method of determining criteria for identifying suspected fraud cases was still being developed. • The method for investigating these cases was still being developed. • The procedures, developed in cooperation with legal authorities, for referring credible allegations of fraud cases to law enforcement officials was still being developed. Further, we noted DHS had not provided evidence of established and used written criteria for evaluating the appropriateness and quality of Medicaid services, including procedures for the ongoing post-payment review. Additionally, DHS did not provide evidence they ensure that providers and contractors receiving or making payments of at least $5 million annually under a state’s Medicaid program have (a) established written policies for all employees (including management) about the Federal False Claims Act, whistleblower protections, administrative remedies, and any pertinent state laws and rules; (b) included as part of these policies detailed provisions regarding detecting and preventing fraud, waste, and abuse; and (c) included in any employee handbook a discussion of the False Claims Act, whistleblower protections, administrative remedies, and pertinent state laws and rules. Finally, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – None. Context – This is a condition identified per review of DHS’ compliance with the specified requirements. Effect – There may be prolonged, ongoing cases of unnecessary utilization and fraud which may be unnoticed and remain unreported by the program. Funds available are possibly being used inappropriately, with no methodology of properly identifying or tracking the amounts. Cause – DHS does not appear to have an effective system in place to address the program’s requirements. Recommendation – As the Program Integrity Director was onboarded and started the groundwork, DHS should be involved and monitor the progress of Program Integrity Unit against the planned roll out of this Unit and take corrective action for any deviations, as necessary, in a timely manner to ensure compliance. The written procedures should reflect the actual actions to be taken. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The Program Integrity Unit has established SOPPs which identifies the method for identifying fraud cases, investigating cases, and developed procedures in collaborating and cooperating with legal authorities, for referring credible allegations of fraud cases to law enforcement officials. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2024-102 Prior Year Finding Number: 2023-085 Compliance Requirement: Reporting Program: U.S. Department of Homeland Security Government Department/Agency: Virgin Islands Territorial Emergency Management Agency (VITEMA) Disaster Grants - Public Assistance (Presidentially Declared Disasters) ALN: 97.036 Award#: FEMA-4335-DR, FEMA-4340-DR-VI, FEMA-4513-DR FEMA-3603-EM, FEMA-3581-EM Award Periods: 09/20/2017 – 09/07/2026 09/07/2017 – 09/16/2025 04/02/2020 – 05/11/2023 Criteria – Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, each State or Territory must file various financial, programmatic, and special reports. Additionally, the requirements necessitate that all submitted reports should be supported by the underlying performance records and presented in accordance with program requirements. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We selected 60 projects with first-tier subawards greater than $30,000 and noted the following: • There was no evidence of review of the FFTA reporting prior to submission. • The timeliness of FFATA reporting could not be verified. Additionally, we sampled and selected 8 out of 40 financial and progress reports and noted that 6 performance/progress reports were not available for review. Cause – It appears that policies and procedures, including review over reporting procedures, were not functioning as intended. Effect or Potential Effect – Lack of internal controls over compliance may lead to material noncompliance with the stated provision. Questioned Costs – None. Context – This is a condition identified per review of VITEMA’s compliance with the specified requirements using a statistically valid sample. Recommendation – We recommend that VITEMA reevaluate its policies and procedures to ensure proper review of the required reports by an appropriate official who would ensure that information submitted is complete, accurate, consistent and submitted within the required timeframe. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VITEMA remains committed to submitting all required reports by the last day of the month following each award. A certification process has also been implemented to verify the date reports are filed and reviewed. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2024-103 Prior Year Finding Number: 2023-086 Compliance Requirement: Subrecipient Monitoring Program: U.S. Department of Homeland Security Government Department/Agency: Virgin Islands Territorial Emergency Management Agency (VITEMA) Disaster Grants - Public Assistance (Presidentially Declared Disasters) ALN: 97.036 Award#: FEMA-4335-DR, FEMA-4340-DR-VI, FEMA-4513-DR FEMA-3603-EM, FEMA-3581-EM Award Periods: 09/20/2017 – 09/07/2026 09/07975/2017 – 09/16/2025 04/02/2020 – 05/11/2023 Criteria – A pass-through entity (PTE) must: • Verify the Subrecipient – Verify that the subrecipient is not excluded or disqualified in accordance with 2 CFR 180.300. Verification methods are provided in 2 CFR 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds (2 CFR 200.322(a)). • Identify the Award and Applicable Requirements – Clearly identify to the subrecipient the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.332(b). • Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(c)). This evaluation of risk may include consideration of such factors as the following: 5. The subrecipient’s prior experience with the same or similar subawards; 6. The results of previous audits including whether or not the subrecipient receives a single audit in accordance with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a major program; 7. Whether the subrecipient has new personnel or new or substantially changed systems; and 8. The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). • Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(e) through (g)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 5. Reviewing financial and performance reports required by the PTE. 6. Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward in accordance with 2 CFR 200.332(e)(2). 7. Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. 8. Resolve audit findings specifically related to the subaward. • Ensure Accountability of For-Profit Subrecipients – Some Federal awards may be passed through to for-profit entities. For-profit subrecipients are accountable to the PTE for the use of the Federal funds provided. Because 2 CFR Part 200 does not make Subpart F applicable to for-profit subrecipients, the PTE is responsible for establishing requirements, to ensure compliance by for-profit subrecipients. The subaward with the for-profit subrecipient must describe applicable compliance requirements and the for-profit subrecipient's compliance responsibility. Methods to ensure compliance for Federal awards made to for-profit subrecipients may include pre-award audits, monitoring throughout the performance of the subaward, and post-award audits (2 CFR section 200.501(i)). Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We have selected 8 of 32 subrecipients for testing and found the following: • 8 instances where we were unable to obtain Quarterly Progress Reports. • 8 instances where we were unable to obtain completion/inspection certificate. • 8 subrecipients with no supporting documentation that VITEMA verified that subrecipients expected to be audited as required by 2 CFR part 200, subpart F. Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the subrecipient monitoring compliance requirements or proper identification of subrecipients. Cause – VITEMA does not have internal controls in place to properly identify and monitor subrecipients to ensure adherence to applicable federal regulations, including expending federal awards for allowable expenditures. Effect or Potential Effect – VITEMA is not in compliance with the stated provisions. Failure to properly identify and monitor subrecipients can result in noncompliance with laws and regulations and failure to meet the program's objectives. Questioned Costs – None. Context – This is a condition identified per review of VITEMA’s compliance with the specified requirements using a statistically valid sample. The total amount of expenditures passed through to subrecipients in fiscal year 2024 was $194,161,499. The total amount of our samples totaled $104,355,230. Recommendation – We recommend that VITEMA implement policies, procedures, and controls to ensure subrecipients are identified and monitored in accordance with federal statutes. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VITEMA has implemented new policies and procedures by implementing a quarterly report deadline, a centralized location for supporting documentation and audit compliance, an inspection and certification of reports, and an annual notification to subrecipients of their audit responsibilities. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Unknown Area: Equipment and Real Property Management Questioned Costs: $0 Criteria: In accordance with 2 CFR 200.303(a), recipients must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Article VI Section 1(f)(vi)(a) of the Fiscal Procedures Agreement (FPA) states that Property records shall be maintained which include: (1) a description of the property, (2) a serial number or identification number; (3) the source of property; (4) who holds title; (5) the acquisition date and cost of the property; (6) the percentage of Grants used in the purchase; (7) the location, use, and condition of the property; and (8) any ultimate disposition data including the date of disposal and sale price. Further, Article VI Section(f)(vi)(c) states that a control system shall be developed to ensure adequate safeguards against property loss, damage, or theft. Any loss, damage, or theft shall be investigated. Lastly, Article VI Section(f)(vi)(d) states that adequate maintenance procedures shall be developed to keep the property in good condition. Condition: 1. FSMNG’s capital asset listing does not contain all required information identified in Article VI Section 1(f)(vi)(a) of the Fiscal Procedures Agreement. The current listing does not include the source of property, the percentage of Grants used in the purchase, the use and condition of the property. 2. For twenty-seven (or 93%) of twenty-nine equipment selected for physical inspection testing, FSMNG did not properly safeguard and maintain the federal capital assets to ensure that the property exists and is in proper working condition. Based on the physical inspection, the following capital assets were either not located or found to be in a broken state, with no evidence indicating that they are currently under repair. Cause: 1. FSMNG’s current policy and procedure for capital asset listing management and maintenance is not in accordance with the requirements of Article VI Section 1(f)(vi)(a) of the Fiscal Procedures Agreement (FPA). 2. FSMNG does not have established maintenance and security procedures to ensure that all federal capital assets are properly maintained and secured in the assigned premises. 3. There was a lack of proper transitioning of responsibilities to the newly assigned personnel designated to manage, maintain and safeguard the federal capital assets. Effect or potential effect: FSMNG is in noncompliance with applicable equipment and real property management requirements and a total questioned costs is $0 which is based on the total net book value of the assets. Identification as a Repeat Finding: Finding No. 2023-007 Recommendation: 1. FSMNG should update the structure and contents of their current capital asset listing to include all the information required by Article VI Section 1(f)(vi)(a) of the FPA. Additionally, the FSMNG should improve their policies and procedures on management and maintenance of their capital asset listing. 2. FSMNG should establish safeguarding and maintenance procedures that ensure performance of periodic inspections, timely repairs, and adequate security in each location of all capital assets of the program. 3. FSMNG could consider training additional personnel for equipment management, safeguarding and maintenance, to ensure that during the period of transitioning of responsibilities, capable individuals can still perform the procedures on behalf of the main responsible individual. Views of Responsible Officials: Management agrees with the finding. As set out in the response to Finding 2024-006, management recognizes that the current Fixed Asset Register (FAR) needs to be rebuilt, with proper recording aligned to the Fiscal Management Regulations and to the property record requirements of Article VI, Section 1(f)(vi)(a) of the Fiscal Procedures Agreement (FPA). The rebuilt register will capture the required data elements — including the description, serial or identification number, source of the property, title holder, acquisition date and cost, the percentage of grant funds used in the purchase, and the location, use, and condition of each asset — so that capital assets procured with federal funding under the program can be clearly identified, and a schedule of disposals, including disposal dates and sale prices, can be maintained and produced for audit. The rebuild must be completed well ahead of the FY2025 audit, as the FAR will then be migrated into the new integrated FMIS (FreeBalance), which maintains a fixed asset register module of its own within the system. Establishing a clean, accurate register prior to migration — with the funding source of each asset identified — will ensure the system-based FAR carries correct and complete records from the outset and can readily support sample selection and audit procedures in future periods. Proper advice and guidance have now been provided to the Supply Team on the recording, tracking, and reconciliation of capital assets, including the FPA property record requirements. Once the rebuild of the FAR is completed, the Supply Team will conduct physical checks and counts of assets so that adjustments — including deletions and other corrections — can be made for FY2025, ensuring the right schedule is carried and used moving forward. Summary Schedule — Remarks (2024-011): Repeat 2023-007. Finding agreed. Addressed together with 2024-006 — FAR to be rebuilt aligned to the regulations and FPA Article VI, Section 1(f)(vi)(a) property record elements, identifying assets procured with federal funding and maintaining a disposals schedule. Rebuild ahead of the FY2025 audit and migration into the new FMIS (FreeBalance) FAR module. Guidance provided to the Supply Team; physical checks and counts to follow the rebuild.

Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D23AF00017, D23AF00019 Area: Reporting Questioned Costs: $0 Criteria: In accordance with 2 CFR 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with the Federal statutes, regulations, and the terms and conditions of the Federal award. Based on the grant award agreements, FSMNG is required to submit quarterly Federal Financial Reports (SF-425) that are accurately presented, comparable and reconcilable. Condition: For two (or 25%) of eight SF-425 reports tested, FSMNG did not provide the copy of SF-425 and the attached accounting records extracted from Fundware reports. Cause: FSMNG did not prepare and failed to submit the required quarterly SF-425 reports to OIA for the identified periods. Effect or potential effect: FSMNG is in noncompliance with applicable reporting requirements. No questioned cost is identified as the nature of noncompliance is nonmonetary. Identification as a Repeated Finding: 2023-011 Recommendation: FSMNG should establish controls to ensure that responsible personnel timely monitor the preparation and submission of the required reports to OIA. Views of Responsible Officials: Management agrees with the finding. For the quarter ended September 30, 2023, the quarterly report could not be submitted by the due date due to delays in the submission of reports from a few of the FSM State Governments. As the SF-425 for these awards is compiled incorporating the reports of the participating states, the report for that quarter was incomplete and could not be submitted until the outstanding state reports were received. The final report, following the liquidation period, was subsequently completed and submitted to DOI, and was accepted. Management notes that no questioned costs arise, as the nature of the noncompliance is nonmonetary. Moving forward, DOFA will continue to follow up with the FSM State Governments on the timely submission of their quarterly reports so that the consolidated SF-425 reports can be prepared, reconciled to the accounting records, and submitted to OIA by the applicable due dates. Summary Schedule — Remarks (2024-012): Repeat 2023-011. Finding agreed. For the quarter ended 9/30/2023, delays in a few states' reports left the consolidated SF-425 incomplete and unable to be submitted by the due date; the final report following the liquidation period was submitted to DOI and accepted. No questioned costs — nonmonetary. Follow-up with the states on timely quarterly submissions to continue.

Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000513 Area: Equipment and Real Property Management Questioned Costs: $19,824 Criteria: In accordance with 2 CFR 200.303(a), recipients must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, in accordance with 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or another identification number, the source of funding for the property (including the Federal award identification number), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. Further, according to 2 CFR Section 200.313(d)(3), a control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. Lastly, according to 2 CFR Section 200.313(d)(4), regular maintenance procedures must be in place to ensure the property is in proper working condition. Condition: 1. FSMNG’s capital asset listing does not contain all required information identified in 2 CFR 200.313. The current listing does not clearly determine which program each asset belongs to. No questioned cost identified as the finding is non-monetary. 2. For four (or 21%) of 19 equipment selected for physical inspection testing, FSMNG did not properly safeguard and maintain the federal capital assets to ensure that the property is existing and is in proper working condition. Based on the physical inspection, the following capital assets were either not located or found to be in a broken state, with no evidence indicating that they are currently under repair. Cause: 1. FSMNG’s current policy and procedure for capital asset listing management and maintenance is not in accordance with 2 CFR 200.313(d)(1). 2. FSMNG does not have established maintenance and security procedures to ensure that all federal capital assets are properly maintained and secured in the assigned premises. Effect or Potential Effect: FSMNG is in noncompliance with applicable equipment and real property management requirements and a total questioned costs $19,824 result. The amount of the questioned cost is based on the net book value of the asset. Identification as a Repeat Finding: Finding No. 2023-017. Recommendation: 1. FSMNG should update the structure and contents of their current capital asset listing to include all the information required by 2 CFR 200.313(d)(1). Additionally, FSMNG should improve their policies and procedures on management and maintenance of their capital asset listing. 2. FSMNG should establish safeguarding and maintenance procedures that ensure performance of periodic inspections, timely repairs, and adequate security in each location of all federal capital assets. Views of Responsible Officials: Management agrees with the finding. As set out in the responses to Findings 2024-006 and 2024-011, management recognizes that the current Fixed Asset Register (FAR) needs to be rebuilt, with proper recording aligned to the Fiscal Management Regulations and to the property record requirements of 2 CFR Section 200.313(d)(1). The rebuilt register will capture the required data elements — including the description, serial or identification number, the source of funding for the property including the Federal award identification number, the title holder, acquisition date and cost, the percentage of Federal contribution, and the location, use, and condition of each asset — so that capital assets procured with federal funding under the program can be clearly identified, together with any disposition data. The rebuild must be completed well ahead of the FY2025 audit, as the FAR will then be migrated into the new integrated FMIS (FreeBalance), which maintains a fixed asset register module of its own within the system. Establishing a clean, accurate register prior to migration — with the funding source of each asset identified — will ensure the system-based FAR carries correct and complete records from the outset. Proper advice and guidance has now been provided to the Supply Team on the recording, tracking, reconciliation, safeguarding, and maintenance of capital assets. Once the rebuild of the FAR is completed, the Supply Team will conduct physical checks and counts of assets — which will include locating and confirming the status and condition of the assets identified in this finding — so that adjustments, including deletions and other corrections, can be made for FY2025 and the appropriate action taken on assets found to be missing, broken, or requiring repair or disposition, in line with the safeguarding and maintenance requirements of 2 CFR Sections 200.313(d)(3) and (d)(4). In line with the auditors' recommendation, a written policy with comprehensive procedures will be established covering effective safeguards against loss, damage, or theft of property, together with maintenance protocols to preserve the property in good condition, and these procedures will be enforced to ensure federal capital assets are kept safe and in good working condition. Summary Schedule — Remarks (2024-015): Repeat 2023-017. Finding agreed. Addressed together with 2024-006 and 2024-011 — FAR to be rebuilt aligned to the regulations and 2 CFR 200.313(d)(1) property record elements, identifying assets procured with federal funding including the award identification number. Rebuild ahead of the FY2025 audit and migration into the new FMIS (FreeBalance) FAR module. Physical checks and counts to follow the rebuild, including confirmation of the status of the assets identified. Per the recommendation, a written safeguarding and maintenance policy with comprehensive procedures to be established and enforced per 2 CFR 200.313(d)(3) and (d)(4).

Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000513 Area: Procurement, Suspension and Debarment Questioned Costs: $509,463 Criteria: In accordance with 2 CFR 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with the Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, in accordance with 2 CFR section 180.300, entities that enter into covered transactions must verify that the person with whom they intend to do business is not excluded or disqualified by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Lastly, according to 2 CFR 180.220(b)(1), a procurement transaction is considered a cover transaction if the contract amount is expected or to equal or exceed $25,000. Condition: For nine (or 100%) of eight purchase orders or contracts selected for testing, with a total population of $509,463, FSMNG did not perform verification whether the individual or contractor was suspended or debarred prior to entering into a covered transaction. Cause: FSMNG does not have an established policy and procedure for verification of the suspension and debarment status of persons or contractors prior to entering into a covered transaction that is in accordance with 2 CFR 180.300. Effect or potential effect: FSMNG is in noncompliance with the applicable procurement and suspension and debarment requirements, questioned costs of $509,463 result. Identification of a Repeat Finding: 2023-018 Recommendation: FSMNG should establish policies and procedures that monitor the suspension and debarment status of vendors prior to entering into a covered transaction that is designed based on any of the suggested methods in 2 CFR 180.300. Views of Responsible Officials: Management agrees with the finding as it relates to the absence of an established written policy and procedure for verifying the suspension and debarment status of persons or contractors prior to entering into a covered transaction, but disagrees with the questioned costs. Management's position is that this constitutes an internal control deficiency and does not warrant questioned costs. With respect to the questioned costs of $509,463, management notes that the entire population from which the questioned costs derive comprises allowable transactions, and verification against the SAM.gov exclusions list confirmed that no vendor or contractor in the population was suspended, debarred, or otherwise excluded. The purpose of the verification requirement in 2 CFR 180.300 — to ensure that covered transactions are not entered into with excluded or disqualified parties — was therefore met in substance: no federal funds went to any excluded party. The costs did not result from a violation of the terms and conditions of the Federal award in substance, are fully supported by adequate documentation, and are not unreasonable. Under the definition of questioned costs in 2 CFR 200.1, including paragraph (3)(i), there should not be a questioned cost for this type of finding, and management accordingly requests that the finding be reported as an internal control deficiency with questioned costs of $0. As corrective action, the compliance team and all departments have now been guided on and made aware of this requirement, and suspension and debarment verification checks are being performed on an ongoing basis as part of the standard checklist of checks prior to entering into covered transactions. In line with the auditors' recommendation, this practice will be formalized into established policies and procedures for monitoring the suspension and debarment status of vendors, designed on the verification methods provided in 2 CFR 180.300. Summary Schedule — Remarks (2024-016): Repeat 2023-018. Finding agreed as an internal control deficiency — absence of a written S&D verification policy; questioned costs disagreed: the full population comprises allowable transactions and no vendor was on the SAM.gov exclusions list, so the substantive purpose of 2 CFR 180.300 was met — per 2 CFR 200.1, including paragraph (3)(i), questioned costs of $0 are warranted. Compliance team and all departments guided and aware; S&D checks performed on an ongoing basis as part of the standard checklist, to be formalized into policies and procedures per the recommendation.

Finding: 2024-002 - Reporting Type of Finding: Noncompliance and Material Weakness in Internal Control Over Compliance Federal Agency: U.S. Department of Treasury Federal Program Title: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: N/A; October 1, 2023 – September 30, 2024 Criteria or specific requirement Per 2 CFR 200.303(a), the City must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During testing of reporting, we noted an amount of $310,037 of fiscal year 2024 expenditures were not included in the fiscal year 2024 quarterly reports submitted to the grantor agency. Additionally, we noted $57,426 of fiscal year 2025 expenditures incorrectly reported in the third quarter of fiscal year 2024. Questioned costs $0 Cause The under reporting of fiscal year 2024 expenditures was caused by allowable project costs being reclassified to the grant after the quarterly report submission dates. The inclusion of fiscal year 2025 expenditures in the fiscal year 2024 quarterly reports is due to insufficient review of program activity and improper reporting cut-off. Effect The U.S. Department of Treasury uses the reports internally for oversight purposes and to fulfill transparency and legal obligations. Improper reporting to the federal agency can lead to data inaccuracies. Repeat Finding No Recommendation We recommend the City review expenditure details thoroughly before submitting quarterly reports to the grantor agency. Views of Responsible Official(s) and Planned Corrective Actions See corrective action plan.

Assistance Listing Number, Federal Agency, and Program Name - 14.128, U.S. Department of Housing and Urban Development (HUD), Mortgage Insurance Hospitals Federal Award Identification Number and Year - N/A (2021) 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 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 (COSO). Condition - Controls were not designed or implemented effectively to ensure the following: a) mortgage and escrow payments were made in accordance with the due dates and amounts specified in the executed mortgage note agreement. b) earnings are retained in the replacement reserve account. c) the Organization completes the required financial reports in accordance with the applicable accounting basis, supported by underlying records representing the activity for the period reported. Questioned Costs - None 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 - While gaining an understanding of management's processes and internal controls to ensure compliance with the areas noted above, we noted no effectively designed control in place to ensure compliance. Cause and Effect - Though noncompliance was not identified, a lack of internal controls could result in noncompliance with program requirements. Recommendation - We recommend that management design and implement internal controls to ensure compliance with mortgage escrow payments, reserve account funding, and quarterly financial reporting requirements. Views of Responsible Officials and Corrective Action Plan - Management will design and implement internal controls to ensure compliance with mortgage escrow payments, reserve account funding, and quarterly financial reporting requirements, including a process to ensure that documentation of reviews is retained.

Finding No.: 2024-010 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact of Free Association, As Amended Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $2,307,732 Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with activities allowed or unallowed and allowable costs/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award 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 1: For 2 (or 9%) of 22 payroll transactions tested, aggregating $13,560 of $17,799,660 in total payroll program expenditures, leave hours were not supported by an approved leave form for the following: Item # Employee # PPE Hours Expenditure Amount Questioned Cost 1 4216312 9/21/2024 8 $ 57 $ 57 2 4244959 7/27/2024 2.60 16 16 $ 73 $ 73 Condition 2: For 6 (or 16%) of 38 non-payroll transactions tested, aggregating $4,498,991 of $30,128,050 in total non-payroll program expenditures, cost was not adequately documented due to lack of supporting vendor invoice or internship program timesheet for the following: Item # Fund # Encumbrance # Account Expenditure Amount Questioned Cost 1 10401 23/00002464TRAVELMISS Repatriation and Home Leave $ 525 $ 525 2 10402 23/00001606 BRV Contractual Services (internship) 216 216 3 10402 23/00001575 BRV Contractual Services (internship) 240 240 4 10402 23/00001486 BRV Contractual Services (internship) 221 221 5 10403 23/00000485TRAVELMISS Travel – Domestic 1,550 1,550 6 10409 23/00002363 BRV Construction In Progress 76,285 76,285 $ 79,037 $ 79,037 Condition 3: The terms and conditions for grant award nos. D23AF000740, D24AF00030, D24AF00071, and D24AF00369 state that assistance under the awards may not be sub-granted or transferred. However, $2,228,622 of the grant assistance was disbursed directly to the Enewetak/Ujelang Local Government (EULGOV) and a subgrant agreement with EULGOV was not available. Accordingly, reportable questioned cost results. This item is also reported as a matter of noncompliance within Finding No. 2024-016, including associated questioned costs. Cause: RepMar did not effectively maintain documentation to support expenditures charged to federal programs and did not effectively monitor the validity and allowability of expenditures. Furthermore, RepMar lacks adequate internal control policies and procedures to facilitate adherence with grant terms and conditions. Effect or Potential Effect: RepMar is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $2,307,732. Identification as a Repeat Finding: 2023-011 Recommendation: Documents supporting expenditures should be maintained. Further, RepMar management should strengthen monitoring controls so that expenditures are verified for validity and allowability. Finally, RepMar should adopt adequate internal control policies and procedures to facilitate adherence with grant terms and conditions. Views of Responsible Officials: Condition 1: Effective FY2025, all ministries submit leave forms for all annual and sick leave taken, regardless of the number of days. The Ministry of Finance issued a clarifying memorandum on July 29, 2025. Condition 2: Item 1. MOF to set a policy providing a repatriation allowance of $500 to expatriates who have completed their employment contracts and exiting for good, and receipt is not required. Item 2-4. During the second year of FMIS implementation, limited staffing and scanning equipment prevented the timely upload of supporting documents. The Ministry has since improved its staffing and equipment, and in FY2025 all supporting documentation is uploaded to FMIS before payment processing. Item 5. The Ministry disagrees with the finding. The per diem and transportation expenses are accounted for in the liquidation supporting documents. The Government accepts acknowledgment receipts as supporting documentation for transportation services provided in neighboring islands due to the vendors' limited resources and inability to issue invoices or printed receipts. Views of Responsible Officials, continued: Item 6. The Laura Elementary School PDP & Detailed Design contract was an old/completed project originally funded under expired grant D21AF102130 and was subsequently regranted under FY2024 grant D24AF00024 along with three other projects. The payment was supported by a PMU letter identifying the contractor's total outstanding unpaid invoices. Condition 3. Effective 3rd quarter of FY2025, all transactions charged to the Enewetak grant go through the national procurement and payment process. Auditor’s Response: Condition 2, item # 5: We acknowledge management’s disagreement; however, supporting documentation was not provided by the agreed-upon deadline. Accordingly, based on the evidence available at the time of audit conclusion, the finding remains unchanged.

Finding No.: 2024-011 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories/ Federal Award No.: Compact of Free Association, As Amended Area: Cash Management Questioned Costs: $ Undeterminable Criteria: Compact payments shall be made in accordance with Article VI of Fiscal Procedure Agreement (FPA). Further, Article VIII stipulates that to the extent that the Government of the Republic of the Marshall Islands awards Sub-Grants to local governments or other entities, it shall establish reasonable procedures to ensure the timely receipt of the reports on cash balances and cash disbursements to enable the preparation of complete and accurate transactions reports. 2 CFR section 200.305(b) states that for recipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award 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 1: RepMar does not have effective cash management monitoring procedures to facilitate compliance with Article VI of the Fiscal Procedure Agreement. Furthermore, there is no expenditures report on file to support drawdowns made during the year, to ascertain whether expenditures were incurred prior to the date of reimbursement request and whether the time elapsing between transfer of funds was minimized. Lack of such report hinders the preparation of complete and accurate transactions reports. Questioned costs, if any, that may result from inadequate records are not determinable. Condition 2: RepMar utilizes a cumulative deductive reimbursement method for payment, therefore, management is unable to provide or correlate when an invoice or drawdown is made. Cause: RepMar lacks adequate internal controls over compliance related to cash management, including retention of documentation supporting cash drawdowns. Effect or Potential Effect: RepMar is in noncompliance with applicable cash management requirements. Identification as a Repeat Finding: 2023-013 Recommendation: RepMar should strengthen controls to ensure that complete and accurate transactions reports are retained to evidence compliance with applicable cash management requirements. Views of Responsible Officials: Effective FY2025, the Accounting Division is now required to prepare drawdown request forms using the detailed expenditure report (journal listing). Each request is submitted to the Finance Secretary only after approval by Accounting Management.

Finding No.: 2024-012 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories/ Federal Award No.: Compact of Free Association, As Amended Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: Section 200.313(d) of the Uniform Guidance and Article VIII, Section 1(f)(iv) of the Fiscal Procedures Agreement state that procedures for managing equipment, whether acquired in whole or in part with grant funds, must meet the following requirements: a. Property records shall be maintained which include: (1) a description of the property; (2) a serial number or other identification number; (3) the source of property; (4) who holds title; (5) the acquisition date and cost of the property; (6) the percentage of Grants used in the purchase; (7) the location, use, and condition of the property; and (8) any ultimate disposition data including the date of disposal and sale price; b. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years; c. A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program; d. Adequate maintenance procedures shall be developed to keep the property in good condition; and e. If the property is sold, proper sales procedures shall be established to ensure the highest possible return. Additionally, the carrying amount of long-lived assets and the estimated useful lives of assets should be periodically re-assessed and adjusted, as appropriate, based on actual experience and relevant factors and circumstances. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award 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: 1. Ministry of Finance, Banking and Postal Services (MOFBPS) lacks adequate internal control policies and procedures over compliance with the applicable federal property rules and regulations. 2. MOFBPS’s does not maintain capital asset records that meet the criteria above. 3. MOFBPS has not conducted a physical inventory of program equipment, whether acquired in whole or in part with program funds. Therefore, as of September 30, 2024, the required biannual physical inventory and reconciliation of program property records was not performed. 4. As capital asset records are not effectively maintained, it does not appear that MOFBPS has implemented an effective means of adequately safeguarding capital assets from loss, damage or theft, or to reasonably investigate such occurrences. 5. MOFBPS has not established policies and procedures governing property maintenance. We are unable to assess the overall cumulative monetary value of these deficiencies. In addition, MOFBPS is unable to provide a list of program equipment. Cause: RepMar lacks adequate entity-wide internal control policies and procedures to satisfy compliance with federal property rules and regulations and lacks effective procedures governing equipment management. Effect or Potential Effect: RepMar is in noncompliance with applicable equipment and real property management requirements. Questioned costs, if any, which may result from inadequate property records, maintenance procedures, and the lack of physical inventory and reconciliation are not determinable. Identification as a Repeat Finding: 2023-014 Recommendation: MOFBPS should implement adequate internal control policies and procedures to facilitate compliance with applicable property rules and regulations. MOFBPS should conduct a physical inventory of program equipment and reconcile the results with property records and should develop adequate maintenance procedures in order to keep equipment in good condition. In addition, MOFBPS should consider coordinating with other RepMar ministries and agencies to offer training on property management requirements to all personnel responsible for capital assets. Views of Responsible Officials: The MOF recruited a dedicated asset management officer and began a government-wide asset inventory in April 2026. Upon completion, the FMIS asset module will be fully implemented in FY2027 to improve the classification, recording, reporting, and monitoring of capital assets. The MOF also continues to coordinate with Ministries and Agencies to update and reconcile asset records. Repeated finding: same response on Finding Nos. 2024-007, 2024-019, and 2024-25

Finding No.: 2024-013 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories/ Federal Award No.: Compact of Free Association, As Amended Area: Period of Performance Questioned Costs: $0 Criteria: 2 CFR 200.303(a) states that a recipient of a Federal award 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: RepMar lacks adequate internal controls, as required by 2 CFR 200.303(a), to provide reasonable assurance that costs charged to Federal awards are incurred within the approved period of performance. Cause: Adequate internal controls have not been implemented, as required. Effect or Potential Effect: The lack of adequate internal controls over period-of-performance requirements increases the risk that expenditures may be charged to the Federal award outside the period of performance and not be timely detected. No questioned cost is reported because the condition relates to inadequacies in internal control policies and procedures. Identification as a Repeat Finding: 2023-015 Recommendation: RepMar should implement adequate internal controls over compliance with period of performance requirements. Views of Responsible Officials: The Bisan system includes functionality to control expenditures within a specified funding period, typically the Budget Period or Period of Performance. These are the Start Date, End Date and Closing Date in each SPG code setup. The Ministry utilizes this feature to help ensure compliance with funding requirements. The Ministry acknowledges, however, that the process still requires human input and oversight. As a result, there remains a risk that expenditures may be processed or incurred outside the approved funding period due to human error. The Ministry will reinforce and continue to strengthen its review and monitoring procedures to minimize this risk and ensure expenditures are charged to the appropriate funding period.

Finding No.: 2024-014 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories/ Federal Award No.: Compact of Free Association, As Amended Area: Procurement and Suspension and Debarment Questioned Costs: $268,128 Criteria: Section 200.317 of 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards states that, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. RepMar enacted Procurement Code Act, 2023, which took effect on October 1, 2023. RepMar’s new Procurement Code states the following: (a) Section 118 - Unless otherwise provided for in Section 119, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 119(b) - A contract may be awarded for a supply, service, or construction item without competition when, under regulations, the Chief Procurement Officer, the head of a Procurement Entity, or a designee of either officer above the head of a Procurement Entity, or a designee of either officer above the level of the Procurement Officer determines in writing that there is only one source for the required supply, service, or construction item. (c) Section 119(c) - Any procurement not exceeding $50,000, or a lesser amount established by regulation, may be made in accordance with small purchase procedures promulgated in accordance with the Regulation. Ministry of Finance, Banking and Postal Services has declared that if small purchase procedures are used, price or rate quotations shall be obtained from three sources. Section 123 of the new Procurement Code stipulates that debarred, suspended, or sanctioned parties are ineligible to participate in solicitations or contract awards. Section 151 stipulates that regulations shall be issued to implement its provisions. 2 CFR 200.214 states that recipients and subrecipients are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Criteria, continued: 2 CFR 180.300 states that when an entity enters into a covered transaction with another person at the next lower tier, the entity must verify that the person with whom the entity intends to do business is not excluded or disqualified by doing the following: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award 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 1: To date, Regulations have not been issued as required by Section 151 of the Procurement Code. Despite the absence of finalized implementing guidance, procurement officials applied the new Procurement Code thresholds in practice without adequate supporting regulations, documented procedures, or formally approved guidance to ensure consistent and compliant implementation. Condition 2: Of 60 procurement transactions tested, aggregating $4,418,361 of $14,241,569 in total non-payroll program transactions subject to procurement requirements, the following deficiencies were noted: 1. For 9 (or 15%), supporting procurement documentation was not sufficient to substantiate compliance with applicable procurement requirements: Item # Fund # Encumbrance # Expenditure Amount Questioned Cost 1 10401 23/00000348‬ PORDER $ 4,889 $ 4,889 2 10401 ‪23/00000358‬ PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 799 799 3 10401 ‪23/00001156‬TRAVELMISS‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 508 508 4 10406 23/00001316 TRAVELMISS 3,482 3,482 5 10406 23/00002686 TRAVELMISS 508 508 6 10406 23/00002687 TRAVELMISS 508 508 7 10305 23/00002983‬ PORDER 40,000 40,000 8 10406 23/00003511 BRV 36,000 36,000 9 10403 23/00001396 BRV 600 600 $ 87,294 $ 87,294 2. For 4 (or 7%), the procurement documentation is insufficient to support the rationale for vendor selection in accordance with 2CFR section 200.323 and 48 CFR section 15.404-3: Item # Fund # Encumbrance # Expenditure Amount Questioned Cost 1 10403 ‪23/00000404‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ $ 9,150 $ 9,150 2 10401 ‪23/00000793‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬ 403 403 3 10401 ‪23/00002008‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 867 867 4 10415 23/00005212 BRV 87,240 87,240 $ 97,660 $ 97,660 Item # 4 pertains to expenditures also reported as questioned cost under Finding No. 2024-016. 3. For 9 (or 15%), supporting procurement files were not provided, as follows: Item # Fund # Encumbrance/Voucher # Expenditure Amount Questioned Cost 1 10406 ‪23/00001108‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ $ 4,333 $ 4,333 2 10403 23/00002692 BRV 3,253 3,253 3 10406 23/00002708 BRV 718 718 4 10406 ‪23/00003836‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 1,664 1,664 5 10402 ‪23/00004196‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 9,999 9,999 6 10402 ‪23/00004275‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 1,140 1,140 7 10402 ‪23/00004466‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 19,115 19,115 8 10402 23/00004622 BRV 25,900 25,900 9 10406 23/00014479‬ PV 17,052 17,052 $ 83,174 $ 83,174 Condition 3: Documented evidence of compliance with Section 123 of the RMI procurement code and 2 CFR 200.214 and 2 CFR 180.300 regarding debarred, suspended, or otherwise excluded persons or entities was not available. Cause: RepMar did not enforce adequate internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Further, RepMar lacks procurement regulations requiring verification of the status of an entity with which RepMar intends to enter into a covered transaction. Effect or Potential Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $268,128. Identification as a Repeat Finding: 2023-016 Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection, and verification of whether an entity or person with whom RepMar intends to do business is not excluded or disqualified. Furthermore, Procurement Regulations required by Section 151 of the Procurement Code should be issued. Views of Responsible Officials: Condition 1. The Ministry disagrees with this finding. The revised procurement threshold of $25,000 to $50,000 became effective upon adoption of the Procurement Code of 2023 on October 1, 2023, as provided under Section 119(c) Small Purchases. A Regulation is not necessary to support this change. All other provisions of the Procurement Code remained in force and continue to govern procurement activities. Furthermore, an amended Procurement Code was endorsed by Cabinet in March 2026 and will be introduced to Parliament during the August session. Upon its adoption, the corresponding Regulation will be formally issued. Condition 2-1. Items 1-2,7 The Ministry disagrees with the findings. All three purchase orders were supported by the required documentation at the time of review and prior to the issuance of the purchase orders. Items 3-6 The Ministry intends to revisit the existing travel policy and update accordingly. Item 8 The vendor was directly selected as the authorized distributor & service provider for medical equipment & supplies in the Marshall Islands. Going forward, the Ministry will ensure a signed justification letter from the Head of Department is attached to support sole-source procurements. Item 9 The Ministry will return requisitions with insufficient supporting documentation and will conduct a procurement training in October 2026 to reinforce procurement requirements. Condition 2-2 Item 1 The Ministry now requires a Request for Quotation (RFQ) form to be submitted as evidence of compliance with competitive procurement requirements. Items 2-3 The Ministry disagrees with the findings. Supporting documentations can be found on PR 23/00023360 (#2) & PR 23/00001990 (#3) Item 4 Effective in FY2025, the Enewetak/Ujelang Local Government operations were transferred to the Ministry of Finance. As a result, all procurement activities are now processed through the Ministry and are required to comply with the applicable procurement code, established regulations, and the Ministry's internal procurement policies and procedures, thereby strengthening oversight and ensuring compliance. Condition 2-3 1-7 The Ministry now requires a Request for Quotation (RFQ) form to be submitted as evidence of compliance with competitive procurement requirements 8 The Ministry of Finance will require that the PSS Hot Lunch Vendor selection Report (endorsed by the Bid Committee) be submitted with the initial payment to the Hot Lunch Vendors. 9 Once the DLS contract expires, it will be advertised for competitive bidding. Condition 3 At the start of a new fiscal year, the MOF Compliance team will perform an annual screening of all Funder/Client (Supplier) in Bisan against the SAM.gov list of debarred/suspended entities. Auditor’s Response: Condition 1: We acknowledge management’s disagreement; however, Section 151 of the Procurement Code requires adoption of Procurement Regulations, which has not occurred to date. Condition 2-1, item #s 1, 2 and 7 and Condition 2-2, item #s 2 and 3: We acknowledge management’s disagreement; however, supporting documentation was not provided by the agreed-upon deadline. Accordingly, based on the evidence available at the time of audit conclusion, the finding remains unchanged.

Finding No.: 2024-015 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact of Free Association, As Amended Area: Reporting Questioned Costs: $0 Criteria: Grant agreements stipulate the type and frequency of reports to be submitted. Furthermore, timely, accurate and complete reporting should be facilitated by an internal control framework conducive to effective monitoring, preparation and independent review of required reports. Lastly, financial reports should reconcile with underlying accounting records. 2 CFR 200.303(a) states that a recipient of a Federal award 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 1: There are no policies and procedures to monitor the due dates of required reports and track the status of report submissions. It does not appear that RepMar has developed means to monitor compliance with reporting requirements. Condition 2: For 34 of 141 financial reports due in fiscal year 2024, the following deficiencies were noted: 1. For 2 (or 6%), the underlying FMIS expenditure report was not provided or was incomplete: Item # Fund # SPG Code Award # Quarter End 1 10406 70020300 D23AF00006-00 9/30/2023 2 10409 71940100 D24AF00122-00 06/30/2024 2. For 21 (or 62%), the financial reports were not available for examination: Item # Fund # SPG Code Award # Quarter End Due Date Date Submitted 1 10409 70041300 D23AF00046-00 09/30/2023 10/31/2023 unknown 2 10409 70120100 D23AF00037-00 09/30/2023 10/31/2023 unknown 3 10409 70220100 D23AF00075-00 09/30/2023 10/31/2023 unknown 4 10405 70570200 D24AF00368-00 12/31/2023 01/31/2024 unknown 5 10409 70120100 D23AF00037-00 12/31/2023 01/31/2024 unknown 6 10409 70520600 D23AF00011-01 12/31/2023 01/31/2024 unknown 7 10409 71960100 D24AF00091 12/31/2023 01/31/2024 unknown 8 10412 71880000 D20AF00061-02 12/31/2023 01/31/2024 unknown 9 10405 70570200 D24AF00368-00 03/31/2024 04/30/2024 unknown 10 10406 70500300 D24AF00008-00 03/31/2024 04/30/2024 unknown 11 10409 70520600 D23AF00011-01 03/31/2024 04/30/2024 unknown 12 10409 71930100 D24AF00048-00 03/31/2024 04/30/2024 unknown 13 10412 70610100 D21AF10198-02 03/31/2024 04/30/2024 unknown 14 10406 70130101 D23AF00038-00 06/30/2024 07/31/2024 unknown 15 10409 71960100 D24AF00091 06/30/2024 07/31/2024 unknown 16 10412 70610100 D21AF10198-02 06/30/2024 07/31/2024 unknown 17 10415 70620300 D24AF00071-00 12/31/2023 01/31/2024 unknown 18 10419 72090100 D24AF00416-00 12/31/2023 01/31/2024 unknown 19 10415 70620100 D24AF00030-00 03/31/2024 04/30/2024 unknown 20 10415 70620300 D24AF00071-00 03/31/2024 04/30/2024 unknown 21 10415 70620500 D24AF00369-00 03/31/2024 04/30/2024 unknown 3. For 2 (or 6%), SF-425 reports do not align with the underlying FMIS expenditure report: Item # Fund # SPG Code Award # Quarter End SF-425 Amount FMIS Amount Difference 1 10305 11030101 D23AP00147-00 06/30/2024 $ – $ 421 $ (421) 2 10305 11110101 D23AP00145-00 06/30/2024 $ 29,950 $ 200 $ 29,750 Additionally, the SF-425 reports for item #s 1 and 2 and Award No. D22AP00180-00 for the same quarter end did not include the applicable Special Purpose Grant (SPG) codes. As a result, the completeness and accuracy of the reported amounts could not be verified. Cause: RepMar lacks adequate internal control policies and procedures governing effective monitoring, preparation and independent review of required reports. Moreover, RepMar lacks adequate internal control policies and procedures over retention of required reports and the underlying accounting records. Effect or Potential Effect: Sufficient appropriate audit evidence supporting compliance with applicable reporting requirements were not obtained which results in report modification. No questioned cost is reported as the condition relates to inadequacy of internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and the underlying accounting records. Identification as a Repeat Finding: 2023-018 Recommendation: RepMar should establish adequate internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and the underlying accounting records. Views of Responsible Officials: Condition 1. Item 1. A financial reporting tool was recently established to support the timely preparation and submission of reports. Additionally, the Ministry recruited a Senior Financial Analyst in February to oversee the monitoring, preparation, and timely submission of financial reports. Condition 2-1. Items 1-2 Effective FY2025, the Accounting Division is now required to prepare drawdown request forms using the detailed expenditure report (journal listing). Each request is submitted to the Finance Secretary only after approval by Accounting Management. Condition 2-2. Items 1-21 A financial reporting tool was recently established to support the timely preparation and submission of reports. Additionally, the Ministry recruited a Senior Financial Analyst in February to oversee the monitoring, preparation, and timely submission of financial reports. Condition 2-3. Items 1-2 Effective FY2025, the Accounting Division is now required to prepare drawdown request forms using the detailed expenditure report (journal listing). Each request is submitted to the Finance Secretary only after approval by Accounting Management. However, the Ministry disagrees with the finding on the SF-425 not containing the SPG code since the latter is not a required US field. SPG code is internal to the MOF. Grant number D22AP00180 is also established in the FMIS as part of the setup of SPG 10450101. Auditor’s Response: Condition 2-3: We acknowledge management’s disagreement; the finding does not cite omission of SPG codes from the SF-425 form. Rather, we are stating that inclusion of SPG codes could have facilitated our verification of the completeness and accuracy of the amounts reported therein. Accordingly, based on the evidence available at the time of audit conclusion, the finding remains unchanged.

Finding No.: 2024-016 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact of Free Association, As Amended Area: Subrecipient Monitoring Questioned Costs: $6,795,269 Criteria: Article VIII, Section 1(a)(i) of the Fiscal Procedures Agreement (FPA) states that fiscal control and accounting procedures of RepMar, as well as its Sub-Grantees, shall be sufficient to: (a) permit the preparation of reports required by the FPA and the 2023 Amended Compact; and (b) permit the tracing of funds to a level of expenditures adequate to establish that such funds have been used in compliance with the provisions of the 2023 Amended Compact, and applicable agreements. Furthermore, Article VIII, Section 1(n)(i) of the FPA states that RepMar shall ensure that: (a) every Sub-Grant includes any clauses required by the 2023 Amended Compact, the Grant terms and condition, and the FPA; (b) Sub-Grantees are aware of requirements imposed upon them by the 2023 Amended Compact, the Grants terms and conditions and the FPA; and (c) Sub-Grantees can meet the financial management requirements of the FPA. 2 CFR 200.332(c) states that a pass-through entity (PTE) must evaluate each subrecipient’s fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring tool. When evaluating a subrecipient's risk, a PTE should consider the following: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency). 2 CFR 200.332(e) states that a PTE must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The PTE is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a PTE must: (1) Review financial and performance reports; (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the PTE with information on their plan for corrective action and any assistance needed to resolve the situation; (3) Issue a management decision for audit findings related to the subaward, in accordance with 2 CFR §200.521; and (4) Resolve audit findings that are specifically related to the subaward. 2 CFR 200.303(a) states that a recipient of a Federal award 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 1: RepMar did not evaluate and document each subrecipient’s fraud risk and risk of noncompliance prior to issuing subawards. In addition, RepMar did not design and implement risk‑based subrecipient monitoring procedures. As a result, RepMar lacked a defined process to identify subrecipient risk and did not tailor monitoring activities to provide reasonable assurance that subawards were administered in compliance with applicable Federal requirements. Condition 2: For 12 (or 100%) subawards tested out of 22 issued during the audit period, no documented evidence was made available to demonstrate that the Ministry of Finance, Banking and Postal Services (MOFBPS) effectively evaluated and monitored subrecipients and their activities. Consequently, we were unable to ascertain whether MOFBPS monitored subrecipient compliance with subaward agreements, Compact Agreement, grant awards, and the Fiscal Procedures Agreement (FPA). Item # Subrecipient Fund # BRV/ MOA # Sub-Grant Amount Questioned Cost 1 College of the Marshall Islands 10401, 10402, 10406, 10409 BRV-23-0227 $ 2,000,328 $ 2,000,328 2 National Training Council 10402 BRV-23-5304 18,819 18,819 3 Kora in Okrane (KIO) 10402 BRV-23-2962 15,000 15,000 4 Assumption Schools 10401 BRV-23-7258 100,000 100,000 5 Marshall Islands Scholarship 10401 BRV-25-7100 750,000 750,000 6 National Training Council 10401 BRV-23-7253 250,000 250,000 7 College of the Marshall Islands 10401 BRV-23-7180 200,000 200,000 8 Kwajalein Atoll Joint Utilities Resources 10412 BRV-23-0226 938,930 938,930 9 KalGov-Local Council Management 10412 BRV-23-3559 150,000 150,000 10 Jabro Private School 10406 BRV-23-3148 15,475 15,475 11 Father Hacker High School 10406 BRV-23-3151 12,690 12,690 12 Gem School 10406 BRV-23-3149 23,327 23,327 $ 4,474,569 $ 4,474,569 Condition 3: For 10 (or 71%) of 14 payments to subrecipients tested, aggregating $944,078 of $5,684,200 in total transactions, the following deficiencies were noted: Item # Subrecipient Fund # Payment Basis Payment Amount Questioned Cost 1 Women United Together Marshall Islands 10402 4th quarter $ 16,250 $ 16,250 2 National Training Council 10402 70% initial payment 24,742 24,742 3 KORA IN OKRANE (KIO) 10412 1st Quarter 3,750 - 4 KALGOV- Local Council Management 10412 2nd quarter 37,500 - 5 KALGOV- Local Council Management 10412 3rd quarter 37,500 - 6 KALGOV- Local Council Management 10412 4th quarter 37,500 - 7 National Training Council 10401 4th quarter 62,500 - 8 College of the Marshall Islands 10401 4th quarter 50,000 - 9 Ebeye Seventh Day Adventist 10406 1st half 33,460 33,460 10 Queen of Peace 10406 1st half 17,626 17,626 $ 320,828 $ 92,078 For item #s 1 through 6, RepMar did not ensure that costs were expended by the subrecipients prior to payment. Further, for item # 3, no expenditure documentation was provided. Accordingly, the reimbursement timing requirement under 2 CFR §200.305(b)(1) was not met. No additional questioned costs are reported for item #s 3 through 6 as these same subrecipients were previously tested under Condition 2 above and the full-related disbursed amounts were already reported as questioned costs. Accordingly, the amounts are not repeated under this condition. For items #s 7 through 10, RepMar did not implement procedures to minimize the time elapsing between the transfer of Federal funds to subrecipients and the subrecipients’ disbursement of such funds for program purposes. Accordingly, the requirement under 2 CFR §200.305(b)(1) was not met. No additional questioned costs are reported for item #s 7 and 8 as these same subrecipients were previously tested under Condition 2 and the full-related disbursed amounts were already reported as questioned costs. Accordingly, the amounts are not repeated under this condition. Condition 4: Subrecipient schedule provided by MOFBPS was incomplete. Grant assistance under award nos. D23AF000740, D24AF00030, D24AF00071, and D24AF00369 aggregating $2,228,622 was sub-granted to a subrecipient that was not included in the monitoring schedule. Further the sub-grant was prohibited by the grant award terms and conditions. Accordingly, questioned cost of $2,228,622 results. Cause: RepMar lacks comprehensive internal control policies and procedures governing subrecipient evaluation and monitoring for compliance with underlying grant awards, memoranda of agreement, and Compact provisions. Effect or Potential Effect: RepMar is in noncompliance with applicable subrecipient monitoring requirements. The reportable questioned cost is $6,795,269. Identification as a Repeat Finding: 2023-019 Recommendation: RepMar should comply with the applicable provisions of the Fiscal Procedures Agreement (FPA) and Federal subrecipient monitoring requirements and should develop, document, and implement effective subrecipient monitoring policies and procedures. Furthermore, the Ministry of Finance, Banking and Postal Services (MOFBPS) should enforce compliance with subaward agreements, including ensuring that subrecipients obtain and timely submit Single Audit reports, as applicable. Views of Responsible Officials: Condition 1. On July 31, the newly developed pre-award risk assessment tool was rolled out to all subrecipients and ministries with oversight, effective FY2027. Conditions 2-3: On July 29, July 31 and August 5, 2026, training was conducted on Majuro and Ebeye to introduce new and enhanced tools to strengthen subrecipient monitoring. Views of Responsible Officials, continued: It covered the following topics: 1. Audit findings related to subrecipient arrangements. 2. Grants Management Manual with emphasis on its scope and the Management Decision Letter (MDL). 3. Unique Entity Identifier (UEI), which is mandatory. 4. Memorandum of Agreement and the significance of each section. 5. MOA circulation process. 6. Procurement Code 2023 7. Reporting and Required Supporting Documents: - Pre-award Risk Assessment - Site Visit Checklist - Enhanced SubGrant Forms and Review Checklist (SG1/Subgrant Objectives and Budget Proposal and SG2/Performance and Financial Evaluation) - SG Forms supporting documentation (salaries & wages, fuel purchase, food purchase, vehicle rental, housing allowance, travel, etc.) 8. Conflict of Interest In September 2026, officers from the Compliance and SOE Monitoring Unit will start going out to conduct the pre-award risk assessment. Results of the assessment will determine whether the entity can sign an MOA with the MOF or not as well as the entity's risk rating, which will determine the frequency of site visits to be conducted by Compliance beginning FY2027. Condition 4 Effective 3rd quarter of FY2025, all transactions charged to the Enewetak grant go through the national procurement and payment process.

Finding No.: 2024-017 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact of Free Association, As Amended Area: Special Tests and Provisions – Annual Performance Evaluation Area: Special Tests and Provisions – Infrastructure Maintenance Fund Contribution Questioned Costs: $0 Criteria: Education Sector, Supplemental Education Grant, and Ebeye Special Needs grants special terms and conditions state that in furtherance of the progress made under JEMFAC Resolution 2015-MT-2, all personnel funded from the grants are required to undergo an annual performance evaluation and such evaluation shall be maintained as part of the personnel files and made available when requested for purposes of grant oversight or audits. Article IX Terms and Conditions of Infrastructure Assistance, Section 9(a) of the 2023 Fiscal Procedures Agreement states that the Government of the Republic of the Marshall Islands shall make annual contributions to the Infrastructure Maintenance Fund, which starts with 5 percent of $50 million in Fiscal Year 2024 and increases thereafter. Such contributions should be made from local funds. The annual contribution is 5 percent of the annual Section 261(a) grants, as set forth in Section 266 of the 2023 Amended Compact. 2 CFR 200.303(a) states that a recipient of a Federal award 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 1: Documentation was not available to substantiate that Public School System performed and documented annual evaluations for all personnel funded from the Education Sector, Supplemental Education Grant, and Ebeye Special Needs as required by grant terms and conditions. Condition 2: RepMar did not budget and transfer the required Infrastructure Maintenance Fund contribution during FY2024. Audit procedures confirmed that to date such contribution has yet to be made. Cause: RepMar lacks comprehensive internal control policies and procedures governing oversight and monitoring of grant terms and conditions to facilitate compliance. Effect or Potential Effect: RepMar is in noncompliance with applicable special tests and provisions requirements. For Condition 1 above, we were unable to execute appropriate audit procedures. For Condition 2 above, the condition relates to unpaid local contribution. Accordingly, questioned cost is undeterminable. Identification as a Repeat Finding: 2023-021 Recommendation: RepMar should establish adequate internal control policies and procedures to facilitate oversight, monitoring, and compliance with grant special terms and conditions. Views of Responsible Officials: Condition 1 Public School System management concurs with the finding. While annual performance evaluations were completed for many grant-funded employees, PSS did not consistently maintain sufficient documentation to demonstrate that all required evaluations had been completed in accordance with the grant requirements. Beginning in FY2027, PSS has implemented the Orange HR Management System, which provides an electronic process for completing, approving, and storing employee performance evaluations. This system creates a centralized electronic record and audit trail, making it easier to monitor compliance and retrieve documentation for audit purposes. In addition, the Finance and Audit Compliance Specialist will conduct periodic compliance reviews to verify that all required evaluations are completed and properly documented before the close of each fiscal year. Condition 2 FY2024 Appropriation was a continuation of FY2023 and did not reflect the new Compact yet since negotiations were still ongoing at the time. The $2.5million matching was clarified with the US DOI team in March 2026, to be appropriated in FY2027. The MOF has not drawn down against this grant.

Finding No.: 2024-018 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster (IDEA) Federal Award No.: H027A220011-22A, H027A220011-23A, H027A220011-24A Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $338,289 Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with activities allowed or unallowed and allowable cost/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. 34 CFR §300.202(a)(2) states that a Local Educational Agency (LEA) must use IDEA Part B funds only to pay the excess costs of providing special education and related services for children with disabilities. Excess costs are those costs for the education of an elementary school or secondary school student with a disability that are in excess of the average annual per student expenditure in an LEA during the preceding school year. Appendix A to 34 CFR Part 300 provides detailed guidance for calculating the average per pupil expenditures and the minimum average amounts that the LEA must spend before using IDEA funds. Furthermore, 2 CFR §200.303(a) states that a recipient of a Federal award 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 1: Of the 51 payroll transactions tested, aggregating $26,011 of $1,575,769 in total payroll program expenditures we noted the following: 1. For 35 (or 69%) representing 26 employees, the employment contracts were not available for examination. As a result, we were unable to determine whether the salaries charged to the grant during the year were allowable and necessary. Section 19 of the employment contracts available for examination states that the Republic of the Marshall Islands is not obligated to provide continued employment after the current contract term ends. Item # Employee # Expenditure Amount Questioned Cost 1 4203689 $ 1,245 $ 1,245 2 4234191 8,179 8,179 3 4204796 15,378 15,378 4 4253491 12,912 12,912 5 4241920 15,105 15,105 6 4210451 14,288 14,288 7 4232073 7,868 7,868 Item # Employee # Expenditure Amount Questioned Cost 8 4234362 8,120 8,120 9 4245585 15,664 15,664 10 4207667 29,874 29,874 11 4242073 7,933 7,933 12 4222746 7,868 7,868 13 4223509 17,676 17,676 14 4220351 8,292 8,292 15 4218541 9,031 9,031 16 4238120 7,934 7,934 17 4209657 24,132 24,132 18 4241470 7,934 7,934 19 4207438 16,219 16,219 20 4234035 15,105 15,105 21 4249967 4,354 4,354 22 4241373 3,183 3,183 23 4219227 25,142 25,142 24 4235558 6,734 6,734 25 4216083 22,023 22,023 26 4200409 25,674 25,674 $ 337,867 $ 337,867 2. For 4 (or 8%), leave hours were not supported by an approved leave form: Item # Employee # PPE Leave Hours Expenditure Amount Questioned Cost 1 4239915 12/30/2023 48 $ 157 $ 157 2 4248388 01/13/2024 32 154 154 3 4239915 05/04/2024 8 26 26 4 4062594 09/07/2024 8 85 85 $ 422 $ 422 Condition 2: Excess cost requirements under IDEA Part B are not met, as the entity did not perform or document the required excess cost calculation prior to charging expenditures to the program. Cause: RepMar did not effectively maintain documentation to support expenditures charged to federal programs and did not effectively monitor the validity and allowability of expenditures, including obtaining and retaining sufficient documentation to support payroll transactions. In addition, Public School System (PSS) did not establish and implement effective internal controls to facilitate compliance with IDEA Part B program‑specific requirements. Specifically, program personnel were not aware of the excess cost requirement under Appendix A to 34 CFR Part 300 and, as a result, did not perform or document the required excess cost calculation prior to charging expenditures to the program. Effect or Potential Effect: RepMar is in noncompliance with activities allowed or unallowed and allowable cost/cost principles requirements. The reportable questioned cost is $338,289. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: Responsible personnel should strengthen monitoring controls so that expenditures are verified for validity and allowability. In addition, PSS management should establish and implement procedures to facilitate compliance with IDEA Part B requirements, including the preparation and documentation of the excess cost calculation in accordance with Appendix A to 34 CFR Part 300 prior to charging expenditures to the program. Views of Responsible Officials: Condition 1-1. Due to structural damages to the Payroll office, files were transferred from there to the warehouse for storage. After numerous attempts to recover the files, the payroll staff were not able to do so within the given time period. Effective October 2025, the Payroll team has been attaching new employee contracts to the payslips in Bisan. PSC's HRMIS already stored the scanned PAFs of employees. The PSS has now acquired the Orange Human Resource Management System, which will also make contracts available electronically. Condition 1-2. PSS Response: PSS Management acknowledges the finding. While leave requests were generally submitted and recorded, we recognize that approved leave forms were not consistently maintained to support all leave hours charged during the audit period. To address this finding, beginning in FY2027, PSS will implement the Orange Human Resource Management System, which will transition the leave request process from a paper-based system to an electronic system. This will create a complete electronic audit trail for all leave requests submitted by PSS employees on islands with internet access. As internet connectivity continues to expand through solar power and Starlink installations, additional schools and offices will transition to the electronic system, with full implementation across all PSS locations targeted by the end of FY2028. In addition, the Finance and Audit Compliance Specialist will conduct periodic compliance reviews to verify that leave requests are properly approved, documented, and retained in accordance with PSS policies and applicable grant requirements. Any deficiencies identified during these reviews will be communicated promptly to management so that corrective action can be taken. MOF response: Additionally, effective FY2025, the Ministry of Finance requires all ministries to submit leave forms for all annual and sick leave taken, regardless of the number of hours & days. The Ministry of Finance issued a clarifying memorandum on July 29, 2025. Condition 2. These costs were incurred to cover the retirees' annual leave lump-sum payments. Related cost calculation of the excess will be submitted to the grantor for approval moving forward.

Finding No.: 2024-019 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster (IDEA) Federal Award No.: H027A220011-22A, H027A220011-23A, H027A220011-24A Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: Section 200.313(d) of the Uniform Guidance states that procedures for managing equipment, whether acquired in whole or in part with grant funds, must meet the following requirements: a. Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property; b. 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; c. A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program; d. Regular maintenance procedures shall be developed to keep the property in good condition; and e. If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. Additionally, the carrying amount of long-lived assets and the estimated useful lives of assets should be periodically re-assessed and adjusted, as appropriate, based on actual experience and relevant factors and circumstances. Furthermore, 2 CFR §200.303(a) states that a recipient of a Federal award 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: 1. RepMar, through Public School System (PSS) lacks adequate internal control policies and procedures over compliance with the applicable federal property rules and regulations. 2. RepMar, through PSS, does not maintain capital asset records that meet the criteria above. 3. RepMar, through PSS, has not conducted a physical inventory of program equipment, whether acquired in whole or in part with program funds. Therefore, as of September 30, 2024, the required biannual physical inventory and reconciliation of program property records was not performed. 4. As capital asset records are not effectively maintained by PSS, RepMar is unable to demonstrate that adequate controls have been implemented to safeguard capital assets from loss, damage, or theft and to ensure such occurrences are appropriately investigated. 5. RepMar, through PSS, has not established policies and procedures governing property maintenance. We were unable to assess the overall cumulative monetary value of these deficiencies. Furthermore, RepMar, through PSS, was unable to provide program capital outlay information for the past three years. Cause: RepMar lacks adequate entity-wide internal control policies and procedures to satisfy compliance with federal property rules and regulations and lacks effective procedures governing equipment management. Effect or Potential Effect: RepMar is in noncompliance with applicable equipment and real property management requirements. Questioned costs, if any, which may result from inadequate property records, maintenance procedures, and the lack of physical inventory and reconciliation are not determinable. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: RepMar, through PSS, should implement adequate internal control policies and procedures to facilitate compliance with applicable property rules and regulations. PSS should conduct a physical inventory of program equipment and reconcile the results with property records and should develop adequate maintenance procedures in order to keep equipment in good condition. In addition, RepMar through PSS, should consider coordinating with other RepMar ministries and agencies to offer training on property management requirements to all personnel responsible for capital assets. Views of Responsible Officials: Conditions 1-5 Repeat Finding - same response for Finding No. 2027-007, 2024-012, and 2024-025

Finding No.: 2024-020 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster (IDEA) Federal Award No.: H027A220011-22A, H027A220011-23A, H027A220011-24A Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: The Individuals with Disabilities Education Act (IDEA) Part B requires States to maintain a specified level of financial support for special education and related services for children with disabilities as a condition of receiving Federal funds. Specifically, IDEA section 612(a)(18) and 34 CFR 300.163 require a State to demonstrate Maintenance of State Financial Support (MFS) by ensuring that the level of State financial support for special education and related services for the most recent State Fiscal Year is equal to or greater than the level provided in the preceding State Fiscal Year. The requirement may be met on either a total or per capita basis. In addition, pursuant to IDEA section 618(a)(3), the State must report State fiscal data for the applicable fiscal years and certify the accuracy of the reported amounts through the State budget office or an authorized representative. Only State‑funded amounts that are allowable under IDEA may be included in the level of effort calculation, and the categories of expenditures used must be applied consistently from year to year. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award 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: Public School System did not maintain sufficient documentation to support the completeness and accuracy of the Maintenance of State Financial Support (MFS) calculation. Specifically, locally funded personnel salary information provided by program personnel could not be reconciled to the subsidiary ledger or to the MFS amount reported in the IDEA Part B application. Ministry of Finance, Banking and Postal Services (MOFBPS) does not utilize a Special Purpose Grant code to track and summarize special education program expenditures, resulting in reliance on manually prepared personnel listings. As a result, supporting amounts could not be independently traced to underlying accounting records or distinguished by funding sources. In addition, the personnel listing provided for examination lacked sufficient detail, including information related to employee turnover (resignations, replacements, and related hire and termination dates), and did not include adequate identifiers to determine whether payroll costs were charged exclusively to State funding sources. Cause: PSS lacks adequate internal controls, formalized procedures, and documentation standards to facilitate compliance with IDEA Maintenance of State Financial Support (MFS) requirements. Specifically, management did not establish processes to maintain consistent and accurate personnel records in sufficient detail to support allowability and funding source determinations. Additionally, responsibilities for tracking employee turnover, verifying payroll charges to State funds, and reviewing the completeness and accuracy of MFS calculations were not clearly defined or consistently performed, resulting in insufficient oversight and documentation to support reported MFS amounts. Effect or Potential Effect: RepMar is in noncompliance with IDEA Part B MFS requirements. Lack of adequate documentation limits program management’s ability to verify that only allowable local funded expenditures are included in the MFS calculation and that expenditure categories are applied consistently across fiscal years. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS management should strengthen internal controls and implement formalized policies and procedures to facilitate accurate, complete, and supportable Maintenance of State Financial Support (MFS) calculations. At a minimum, PSS should: • Establish written procedures defining roles and responsibilities for preparing, reviewing, and approving the MFS calculation. • Maintain detailed personnel records, including employee identifiers, funding source designations, hire and termination dates, and documentation of employee turnover. • Implement tracking controls (e.g., SPG) to identify, summarize, and distinguish local funded special education expenditures from Federal expenditure. • Verify that only allowable State funded expenditures are included and that expenditure categories are applied consistently across fiscal years. Views of Responsible Officials: PSS response: Management concurs with the finding. At the time of the FY2024 audit, the Public School System (PSS) calculated the Maintenance of State Financial Support (MFS) using the gross salaries of locally funded Special Education administrative staff and teachers. While management believes that only allowable State-funded salary expenditures were included in the calculation, the supporting documentation and reconciliation to the underlying accounting records were not maintained in sufficient detail to fully support the reported MFS amount. The Ministry of Finance has implemented a Special Purpose Grant (SPG) code to improve the identification and reporting of all expenditures. Management will also develop and implement written procedures defining the responsibilities for preparing, reviewing, and approving the annual MFS calculation. These procedures will require the retention of supporting payroll reports, reconciliation to the accounting records, and documentation identifying the employees included in the calculation, their funding sources, and any personnel changes that occurred during the fiscal year. Beginning in FY2027, the Finance and Audit Compliance Specialist will conduct periodic compliance reviews to verify that the MFS calculation is adequately supported, reconciled to the accounting records, and prepared in accordance with IDEA requirements before submission. Any deficiencies identified during these reviews will be communicated promptly to management for corrective action. Management expects these corrective actions to be fully implemented by the end of FY2027.

Finding No.: 2024-021 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster (IDEA) Federal Award No.: H027A220011-22A, H027A220011-23A, H027A220011-24A Area: Period of Performance Questioned Costs: $0 Criteria: 2 CFR 200.303(a) states that a recipient of a Federal award 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: RepMar lacks adequate internal controls, as required by 2 CFR 200.303(a), to provide reasonable assurance that costs charged to Federal awards are incurred within the approved period of performance. Cause: Adequate internal controls have not been implemented, as required. Effect or Potential Effect: The lack of adequate internal controls over period-of-performance requirements increases the risk that expenditures may be charged to the Federal award outside the period of performance and not be timely detected. No questioned cost is reported because the condition relates to inadequacies in internal control policies and procedures. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: RepMar should implement adequate internal controls over compliance with period of performance requirements. Views of Responsible Officials: The Bisan system includes functionality to control expenditures within a specified funding period, typically the Budget Period or Period of Performance. These are the Start Date, End Date and Closing Date in each SPG code setup. The Ministry utilizes this feature to help ensure compliance with funding requirements. The Ministry acknowledges, however, that the process still requires human input and oversight. As a result, there remains a risk that expenditures may be processed or incurred outside the approved funding period due to human error. The Ministry will reinforce and continue to strengthen its review and monitoring procedures to minimize this risk and ensure expenditures are charged to the appropriate funding period.

Finding No.: 2024-022 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster (IDEA) Federal Award No.: H027A220011-22A, H027A220011-23A, H027A220011-24A Area: Procurement and Suspension and Debarment Questioned Costs: $48,663 Criteria: Section 200.317 of 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards states that, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. RepMar enacted Procurement Code Act, 2023, which took effect on October 1, 2023. RepMar’s new Procurement Code states the following: (a) Section 118 - Unless otherwise provided for in Section 119, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 119(b) - A contract may be awarded for a supply, service, or construction item without competition when, under regulations, the Chief Procurement Officer, the head of a Procurement Entity, or a designee of either officer above the head of a Procurement Entity, or a designee of either officer above the level of the Procurement Officer determines in writing that there is only one source for the required supply, service, or construction item. (c) Section 119(c) - Any procurement not exceeding $50,000, or a lesser amount established by regulation, may be made in accordance with small purchase procedures promulgated in accordance with the Regulation. Ministry of Finance, Banking and Postal Services has declared that if small purchase procedures are used, price or rate quotations shall be obtained from three sources. Section 123 of the new Procurement Code stipulates that debarred, suspended, or sanctioned parties are ineligible to participate in solicitations or contract awards. Section 151 stipulates that regulations shall be issued to implement its provisions. 2 CFR 200.214 states that recipients and subrecipients are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. 2 CFR 180.300 states that when an entity enters into a covered transaction with another person at the next lower tier, the entity must verify that the person with whom the entity intends to do business is not excluded or disqualified by doing the following: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award 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 1: To date, Regulations have not been issued as required by Section 151 of the Procurement Code. Despite the absence of finalized implementing guidance, procurement officials applied the new Procurement Code thresholds in practice without adequate supporting regulations, documented procedures, or formally approved guidance to facilitate consistent and compliant implementation. Condition 2: For 9 (or 53%) of 17 procurement transactions tested, aggregating $61,863 of $261,862 in total transactions subject to procurement requirements, supporting procurement documentation was not sufficient to substantiate compliance with applicable procurement requirements as follows: Item # Fund# Encumbrance # Expenditure Amount Questioned Cost 1 10305 23/00001413 TRAVELMISS $ 1,818 $ 1,818 2 10305 23/00001507 BRV 21,000 21,000 3 10305 ‪23/00001676‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬ 1,999 1,999 4 10305 23/00002745‬ TRAVELMISS 3,734 3,734 5 10305 23/00002923 TRAVELMISS 3,871 3,871 6 10305 23/00003339 TRAVELMISS 3,224 3,224 7 10305 23/00004864 BRV 2,868 2,868 8 10305 ‪23/00002184‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 7,597 7,597 9 10305 23/00003157 TRAVELMISS 2,552 2,552 $ 48,663 $ 48,663 Condition 3: Documented evidence of compliance with Section 123 of the RMI Procurement Code, 2 CFR 200.214 and 2 CFR 180.300 regarding debarred, suspended, or otherwise excluded parties was not available. Cause: RepMar did not enforce adequate internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Further, RepMar lacks policies and procedures requiring verification of the status of an entity with which RepMar intends to enter into a covered transaction. Effect or Potential Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $48,663. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection, and verification of whether an entity or person with whom RepMar intends to do business is not excluded or disqualified. Views of Responsible Officials: Condition 1. The Ministry disagrees with this finding. The revised procurement threshold of $25,000 to $50,000 became effective upon adoption of the Procurement Code of 2023 on October 1, 2023, as provided under Section 119(c) Small Purchases. A Regulation is not necessary to support this change. All other provisions of the Procurement Code remained in force and continue to govern procurement activities. Furthermore, an amended Procurement Code was endorsed by Cabinet in March 2026 and will be introduced to Parliament during the August session. Upon its adoption, the corresponding Regulation will be formally issued. Condition 2. Except for items #1 & #8, the Ministry of Finance agrees with the finding and will ensure that vendor selection and the justification for the selected vendor are clearly documented in all TMVs and BRVs to demonstrate compliance with procurement requirements. Condition 3. Same response as Finding No.: 2024-014 - Condition 3 Auditor’s Response: Condition 1: We acknowledge management’s disagreement; however, Section 151 of the Procurement Code requires adoption of Procurement Regulations, which has not occurred to date. Condition 2: We acknowledge management’s disagreement; however, supporting documentation was not provided by the agreed-upon deadline. Accordingly, based on the evidence available at the time of audit conclusion, the finding remains unchanged.

Finding No.: 2024-023 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $204,064 Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with activities allowed or unallowed and allowable costs/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award 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 1: Of 15 payroll transactions tested, aggregating $11,918 of $462,101 in total payroll program expenditures, we noted the following: For 3 (or 20%), overtime hours charged to the program were not adequately supported or lacked justification demonstrating that the overtime costs were allocable to the grant. Accordingly, the unsupported overtime hours were identified as questioned costs. Item # Employee # PPE OT hours Expenditure Amount Questioned Cost 1 4245375 10/21/2023 11.42 $ 99 $ 99 2 4240743 12/16/2023 10 94 94 3 4091127 12/30/2023 5 51 51 $ 244 $ 244 Condition 2: For 27 (or 60%) of 45 non-payroll transactions tested, aggregating $856,345 of $1,341,003 in total non-payroll program expenditures, the following deficiencies were noted: Item # SPG # Encumbrance # COVID Non-COVID Expenditure Total Questioned Cost 1 10134502 23/00005119 BRV $ - $ 43,800 $ 43,800 $ 43,800 2 10134502 23/00005408 BRV - 15,000 15,000 15,000 3 11180109 23/00009318 BRV 15,000 - 15,000 15,000 4 10136601 23/00001683 BRV - 2,669 2,669 2,669 5 10135501 23/00006639 BRV - 5,000 5,000 5,000 6 11180104 23/00009318 BRV - 5,000 5,000 5,000 7 10580201 ‪23/00002218PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ - 1,936 1,936 1,936 8 10136401 ‪23/00000509PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ - 356 356 356 9 10131401 ‪22/00003795PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ - 788 788 788 10 10131401 22/00003795 PORDER - 788 788 788 11 10131501 ‪23/00002672PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ - 788 788 788 12 10131501 ‪23/00002672PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ - 244 244 244 13 10290101 ‪22/00001901PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ - 80 80 80 14 10132501 ‪23/00001563PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ - 740 740 740 15 10132501 23/00001563‬ PORDER - 50 50 50 16 10132401 ‪23/00001532PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ - 160 160 160 17 10610201 ‪23/00004146‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 27,000 - 27,000 27,000 18 10610201 23/00000651‬ PORDER 5,500 - 5,500 5,500 19 10610201 22/00003593 PORDER 33,950 - 33,950 33,950 20 10610201 23/00001148 PORDER 23,995 - 23,995 23,995 21 10610201 23/00000597‬ PORDER 2,904 - 2,904 2,904 22 10610201 23/00000981‬ PORDER 559 - 559 559 23 10610201 23/00002757‬ PORDER 420 - 420 420 24 10610201 23/00004140‬ PORDER 1,500 - 1,500 1,500 25 10610201 ‪23/00002042‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 4,000 - 4,000 4,000 26 10610201 23/00000579‬ PORDER 663 - 663 663 27 10480101 22/00001519 BRV - 10,930 10,930 10,930 $ 115,491 $ 88,329 $ 203,820 $ 203,820 Item # 1 pertains to Ministry of Health and Human Services (MOHHS) utility expenditures for which there was inadequate documentation to support cost allocation to the program. Items #s 2 through 6 pertain to MOHHS communication expenditures for which there was inadequate documentation to support cost allocation to the program. Item # 7 pertains to MOHHS food expenditures for which there was inadequate documentation to support cost allocation to the program. Items #s 8 through 12 pertain to MOHHS advertising expenditures for which there was inadequate documentation to support cost allocation to the program. Items #s 13 through 16 pertain to fuel expenditures for which there was inadequate documentation to support cost allocation to the program. Items #s 17 through 26 pertain to communication, motor vehicle, food, office and computer supplies, other supplies and materials, fuel, equipment and tools, and other charges and expenditures for the Marshall Islands Police Department. We are unable to ascertain relevance to the program. Items # 27 pertains to prior year contractual services for which no supporting contract was made available for examination. Cause: RepMar lacks adequate internal control over compliance with applicable allowed and unallowed activity requirements, as well as obtaining and retaining sufficient documentation to support all transactions. Effect or Potential Effect: RepMar is in noncompliance with activities allowed or unallowed and allowable cost/cost principles requirements. The reportable questioned cost is $115,735 (COVID) and $88,329 (Non-COVID). Identification as a Repeat Finding: 2023-012 Recommendation: RepMar management should strengthen monitoring controls so that expenditures are verified for validity and allowability. Views of Responsible Officials: Condition 1 All pay slips claiming OT will include supporting OT approval including justification that are allocable to grants. Condition 2 Item 1. Utilities are paid out of the de minimis rate of 10% for Federal grants. $43,800 for utilities is included in the budget breakdown of the grant. Items #1 to #27. Except for items #1, #7 to #27, the Ministry of Finance agrees with the finding and will ensure that all invoices or billings are attached to support payment accuracy and demonstrate compliance with procurement requirements. Auditor’s Response: Condition 2, item #s 1, and 7 through 27: We acknowledge management’s disagreement; however, supporting documentation was not provided by the agreed-upon deadline. Accordingly, based on the evidence available at the time of audit conclusion, the finding remains unchanged.

Finding No.: 2024-024 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Area: Cash Management Questioned Costs: $0 Criteria: 2 CFR 200.303(a) states that a recipient of a Federal award 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: RepMar does not have effective cash management monitoring procedures, to provide reasonable assurance that expenditures charged to Federal awards under the reimbursement method are incurred prior to the drawdown of Federal funds, in accordance with 2 CFR § 200.303(a). Cause: RepMar did not implement effective monitoring and oversight controls to verify that reimbursement requests were supported by allowable expenditures incurred prior to the drawdown of Federal funds. Effect or Potential Effect: RepMar may not timely detect and prevent reimbursement requests that do not comply with Federal cash management requirements. No questioned costs are reported because the condition relates to inadequacies in internal control policies and procedures. Identification as a Repeat Finding: 2023-013 Recommendation: RepMar should strengthen controls over cash management to ensure that Federal funds are drawn only after allowable expenditures have been incurred and reimbursement requests are adequately supported and reviewed. Views of Responsible Officials: The fiscal officers of the MOF Budget Division have strengthened their review of expenditures prior to disbursements and started to conduct weekly evaluation and monitoring of draw downs.

Finding No.: 2024-025 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: Section 200.313(d) of the Uniform Guidance states that procedures for managing equipment, whether acquired in whole or in part with grant funds, must meet the following requirements: a. Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property; b. 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; c. A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program; d. Regular maintenance procedures shall be developed to keep the property in good condition; and e. If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. Additionally, the carrying amount of long-lived assets and the estimated useful lives of assets should be periodically re-assessed and adjusted, as appropriate, based on actual experience and relevant factors and circumstances. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award 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: 1. RepMar, through Ministry of Health and Human Services (MOHHS) lacks adequate internal control policies and procedures over compliance with the applicable federal property rules and regulations. 2. RepMar, through MOHHS, does not maintain capital asset records that meet the criteria above. 3. RepMar, through MOHHS, has not conducted a physical inventory of program equipment, whether acquired in whole or in part with program funds. Therefore, as of September 30, 2024, the required biannual physical inventory and reconciliation of program property records was not performed. 4. As capital asset records are not effectively maintained by PSS, RepMar is unable to demonstrate that adequate controls have been implemented to safeguard capital assets from loss, damage, or theft and to ensure such occurrences are appropriately investigated. 5. RepMar, through MOHHS, has not established policies and procedures governing property maintenance. We were unable to assess the overall cumulative monetary value of these deficiencies. Furthermore, RepMar, through MOHHS, was unable to provide program capital outlay information for the past three years. Cause: RepMar lacks adequate entity-wide internal control policies and procedures to satisfy compliance with federal property rules and regulations and lacks effective procedures governing equipment management. Effect or Potential Effect: RepMar is in noncompliance with applicable equipment and real property management requirements. Questioned costs, if any, which may result from inadequate property records, maintenance procedures, and the lack of physical inventory and reconciliation are not determinable. Identification as a Repeat Finding: 2023-014 Recommendation: RepMar, through MOHHS, should implement adequate internal control policies and procedures to facilitate compliance with applicable property rules and regulations. MOHHS should conduct a physical inventory of program equipment and reconcile the results with property records and should develop adequate maintenance procedures in order to keep equipment in good condition. In addition, RepMar through MOHHS, should consider coordinating with other RepMar ministries and agencies to offer training on property management requirements to all personnel responsible for capital assets. Views of Responsible Officials: Conditions 1-5 Repeat Finding, same response for Finding Nos. 2024-007, 2024-012, and 2024-019

Finding No.: 2024-026 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Area: Period of Performance Questioned Costs: $25,916 Criteria: Grant agreements stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award 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: For 6 (or 24%) of 25 transactions tested aggregating $359,848 of $544,405 in non-payroll expenditures, costs were incurred outside of the period of performance: Item # Voucher # Cost Incurred Date Period Ending Date Expenditure Amount Questioned Cost 1 ‪23/00018308‬PV‬‬‬‬‬‬‬‬‬‬‬‬‬ 8/1/2024 to 8/30/2024 7/31/2024 $ 5,076 $ 5,076 2 ‪23/00007770‬INVOICE‬‬‬‬‬‬‬‬‬‬‬‬‬ 9/24/2024 to 9/26/2024 7/31/2024 3,000 3,000 3 ‪23/00006090‬PINVOICE‬‬‬‬‬‬‬‬‬‬‬‬ 8/7/2024 7/31/2024 788 788 4 ‪23/00007033‬INVOICE‬‬‬‬‬‬‬‬‬‬‬ 9/12/2024 7/31/2024 150 150 5 ‪23/00007702‬INVOICE‬‬‬‬‬‬‬‬‬‬‬‬ 10/7/2024 7/31/2024 201 201 6 ‪23/00005895‬JOURNAL/‬‬‪23/00017983‬PV‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 02/21/2024 to 8/20/2024 7/31/2024 151,979 16,701 $ 161,194 $ 25,916 Item # 6 questioned cost is prorated for the 20 days outside of the period of performance. Cause: RepMar did not establish and enforce adequate internal control policies and procedures to ensure that expenditures charged to Federal awards comply with applicable period of performance requirements. Effect or Potential Effect: RepMar is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $25,916. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: In accordance with 2 CFR 200.303(a), RepMar should implement adequate internal controls policies and procedures over period of performance requirements. Such controls should clearly define procedures for identifying grant award start and end dates, periodic supervisory reviews of expenditures for allowability and timing, and ongoing monitoring activities to verify compliance. Views of Responsible Officials: The Ministry disagrees with the findings. The Bisan system includes functionality to control expenditures within a specified funding period, typically the Budget Period or Period of Performance. These are the Start Date, End Date (last day for obligations) and Closing Date (last day to liquidate encumbrances) in each SPG code setup. The Ministry utilizes this feature to help ensure compliance with funding requirements. Auditor’s Response: We acknowledge management’s disagreement; however, the expenditures identified were outside of the period of performance based on the substantive audit procedures performed. Accordingly, based on the evidence available at the time of audit conclusion, the finding remains unchanged.

Finding No.: 2024-027 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Area: Procurement and Suspension and Debarment Questioned Costs: $228,374 Criteria: Section 200.317 of 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards states that, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. RepMar enacted Procurement Code Act, 2023, which took effect on October 1, 2023. RepMar’s new Procurement Code states the following: (a) Section 118 - Unless otherwise provided for in Section 119, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 119(b) - A contract may be awarded for a supply, service, or construction item without competition when, under regulations, the Chief Procurement Officer, the head of a Procurement Entity, or a designee of either officer above the head of a Procurement Entity, or a designee of either officer above the level of the Procurement Officer determines in writing that there is only one source for the required supply, service, or construction item. (c) Section 119(c) - Any procurement not exceeding $50,000, or a lesser amount established by regulation, may be made in accordance with small purchase procedures promulgated in accordance with the Regulation. Ministry of Finance, Banking and Postal Services has declared that if small purchase procedures are used, price or rate quotations shall be obtained from three sources. Section 123 of the new Procurement Code stipulates that debarred, suspended, or sanctioned parties are ineligible to participate in solicitations or contract awards. Section 151 stipulates that regulations shall be issued to implement its provisions. 2 CFR 200.214 states that recipients and subrecipients are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. 2 CFR 180.300 states that when an entity enters into a covered transaction with another person at the next lower tier, the entity must verify that the person with whom the entity intends to do business is not excluded or disqualified by doing the following: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award 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 1: To date, Regulations have not been issued as required by Section 151 of the Procurement Code. Despite the absence of finalized implementing guidance, procurement officials applied the new Procurement Code thresholds in practice without adequate supporting regulations, documented procedures, or formally approved guidance to facilitate consistent and compliant implementation. Condition 2: Of 17 procurement transactions tested, aggregating $482,746 of $1,093,787 in total non-payroll program transactions subject to procurement requirements, the following exceptions were noted: 1. For 9 (or 53%), supporting procurement files were not sufficient to substantiate compliance with applicable procurement requirements. Item # SPG # Encumbrance # Expenditure Amount Questioned Cost 1 10610201 ‪23/00001148‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬ $ 23,995 $ 23,995 2 10131501 23/00001404 BRV 47,670 47,670 3 10290101 23/00001406 BRV 45,504 45,504 4 10131501 23/00001439 BRV 22,638 22,638 5 10610201 ‪23/00004146‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 27,000 27,000 6 10136401 23/00000668 TRAVELMISS 597 597 7 10580101 ‪23/00002788‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 2,568 2,568 8 10610201 ‪23/00004349‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 11,298 11,298 9 10320101 ‪23/00000067‬PORDER‬‬‬‬‬‬‬‬‬‬‬‬‬‬ 5,450 5,450 $ 186,720 $ 186,720 2. For 1 (or 6%), although the selection method was indicated as “Competitive” and management represented that the original contract was competitively procured in 2019, no documentation was provided to demonstrate that the 2024 contract representing a new five-year project period under a new grant was procured through a new competitive process or that a formal sole source or noncompetitive justification was obtained. The apparent noncompetitive procurement was not supported by documented justification and approval. SPG # Encumbrance # Expenditure Amount Questioned Cost 11180105 23/00007686 BRV $ 41,654 $ 41,654 Condition 3: Documented evidence of compliance with Section 123 of the RMI Procurement Code, 2 CFR 200.214 and 2 CFR 180.300 regarding debarred, suspended, or otherwise excluded parties was not available. Cause: RepMar did not enforce adequate internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Further, RepMar lacks policies and procedures requiring verification of the status of an entity with which RepMar intends to enter into a covered transaction. Effect or Potential Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $228,374. Identification as a Repeat Finding: 2023-017 Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection, and verification of whether an entity or person with whom RepMar intends to do business is not excluded or disqualified. Views of Responsible Officials: Condition 1: The Ministry disagrees with this finding. The revised procurement threshold of $25,000 to $50,000 became effective upon adoption of the Procurement Code of 2023 on October 1, 2023, as provided under Section 119(c) Small Purchases. A Regulation is not necessary to support this change. All other provisions of the Procurement Code remain in force and continue to govern procurement activities. Furthermore, an amended Procurement Code was endorsed by Cabinet in March 2026 and will be introduced to Parliament during the August session. Upon its adoption, the corresponding Regulation will be formally issued. Condition 2, #1: Except for items #1, #5, #6, #7, #8 & #9, the Ministry of Finance agrees with the finding and will ensure that vendor selection and the justification for the selected vendor are clearly documented in BRVs and TMV to demonstrate compliance with procurement requirements. Condition 2, #2: The Ministry agrees with the finding. Competitive bidding should be undertaken when a multi-year contract expires. Condition 3: At the start of a new fiscal year, the MOF Compliance team will perform an annual screening of all Funder/Client (Supplier) in Bisan against the SAM.gov list of debarred/suspended entities. Auditor’s Response: Condition 1: We acknowledge management’s disagreement; however, Section 151 of the Procurement Code requires adoption of Procurement Regulations, which has not occurred to date. Condition 2, item #s 1, and 5 through 9: We acknowledge management’s disagreement; however, supporting documentation was not provided by the agreed-upon deadline. Accordingly, based on the evidence available at the time of audit conclusion, the finding remains unchanged.

Finding No.: 2024-028 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Area: Reporting Questioned Costs: $0 Criteria: Grant agreements stipulate the type and frequency of reports to be submitted. Furthermore, timely, accurate and complete reporting should be facilitated by an internal control framework conducive to effective monitoring, preparation and independent review of required reports. Lastly, financial reports should reconcile with underlying accounting records. 2 CFR 200.303(a) states that a recipient of a Federal award 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 1: There are no policies and procedures to monitor the due dates of required reports and track the status of report submissions. It does not appear that RepMar has developed means to monitor compliance with reporting requirements. Condition 2: RepMar uses the ELC Cooperative Agreement Management Platform (CAMP) portal to report financial progress to the Federal Grantor. RepMar was unable to provide evidence that such reporting occurred during the audit period. Furthermore, no evidence was provided indicating that the financial information reported thereon agreed to RepMar’s underlying accounting records. Cause: RepMar lacks adequate internal control policies and procedures governing effective monitoring, preparation and independent review of required reports. Moreover, RepMar lacks adequate internal control policies and procedures over retention of reports submitted to grantors and the underlying accounting records. Effect or Potential Effect: Sufficient appropriate audit evidence supporting compliance with applicable reporting requirements were not obtained which results in report modification. No questioned cost is reported as the condition relates to inadequacy of internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and the underlying accounting records. Identification as a Repeat Finding: 2023-018 Views of Responsible Officials: Condition 1: ELC Program Leads complete and submit Work Plan Progress Reports through the ELC CAMP as required by the grant. To monitor compliance, ELC will notify the Ministry of Finance of submitted reports and provide MOF with view-only access to relevant files and supporting documentation as needed. Condition 2: The ELC Program Leads completes the required financial reports in ELC CAMP using information provided by the MOF Fiscal Officer and submits the reports through ELC CAMP and GrantSolutions. ELC will notify MOF of each submission to support compliance monitoring. To strengthen the process, MOF and MOHHS will establish a formal reporting process. MOHHS will maintain a tracking tool with required reports, reporting periods, due dates, and submission status, and share it with MOF. MOF will have access to ELC CAMP and the MOHHS GrantSolutions account to retrieve reports as needed.

2024-001 – Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Number: S351A220007 Award Period: October 1, 2023 to September 30, 2024 Criteria or Specific Requirement – The Uniform Guidance in 2 CFR 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 statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP). (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3).” Condition – In evaluating the Center’s compliance with the requirements of Activities Allowed or Unallowed and Allowable Costs Cost Principles, our test work identified one instance out of a sample of sixty payroll transactions, totaling $66,904.92, in which an employee was not paid according to his (her) contract. For the one exception, the employee was underpaid a total of $0.24. Cause – The Center did not adhere to their internal process to ensure approved salary information was accurately applied. Effect or Potential Effect – Without adequate internal controls in place to ensure costs are properly verified and applied, the Center could inaccurately charge expenditures to the federal program. Questioned Costs – N/A Context – This is a condition based on testing of the Center’s compliance. Based on tested samples, we noted a total underpayment of $0.24. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding – This is a repeat finding from prior year. This was reported as finding 2023-001 in the 2023 report. Recommendation - We recommend management of the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system is approved, supported by salary documentation in the personnel files, and accurately applied. Views of Responsible Officials – After performing a detailed analysis, the Center’s management identified that the likely net underpayment amounted to $1.32. The likely underpayment was determined by management through examination of the total salary charged to the federal program. The Center’s management agrees with the finding and will strengthen the internal process surrounding the activities allowed or unallowed and allowable costs and will ensure adequate documentation is in place and approved salary rates are consistently and properly applied. See the Center’s corrective action for more details.

2024-001 – Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Number: S351A220007 Award Period: October 1, 2023 to September 30, 2024 Criteria or Specific Requirement – The Uniform Guidance in 2 CFR 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 statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP). (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3).” Condition – In evaluating the Center’s compliance with the requirements of Activities Allowed or Unallowed and Allowable Costs Cost Principles, our test work identified one instance out of a sample of sixty payroll transactions, totaling $66,904.92, in which an employee was not paid according to his (her) contract. For the one exception, the employee was underpaid a total of $0.24. Cause – The Center did not adhere to their internal process to ensure approved salary information was accurately applied. Effect or Potential Effect – Without adequate internal controls in place to ensure costs are properly verified and applied, the Center could inaccurately charge expenditures to the federal program. Questioned Costs – N/A Context – This is a condition based on testing of the Center’s compliance. Based on tested samples, we noted a total underpayment of $0.24. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding – This is a repeat finding from prior year. This was reported as finding 2023-001 in the 2023 report. Recommendation - We recommend management of the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system is approved, supported by salary documentation in the personnel files, and accurately applied. Views of Responsible Officials – After performing a detailed analysis, the Center’s management identified that the likely net underpayment amounted to $1.32. The likely underpayment was determined by management through examination of the total salary charged to the federal program. The Center’s management agrees with the finding and will strengthen the internal process surrounding the activities allowed or unallowed and allowable costs and will ensure adequate documentation is in place and approved salary rates are consistently and properly applied. See the Center’s corrective action for more details.

Federal Agency: U.S. Department of Education Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Recurring: No Compliance Requirement: Special tests and Provisions - Enrollment Program Information: Student Financial Aid Cluster (ALN 84.007, 84.003, 84.063, 84.268) Criteria: CFR section 685.309 and 690.83(b)(2) requires Colleges to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure accurate reporting of enrollment status changes. Condition: Out of 40 students sampled from the College’s roster files, 3 out of 40 did not have updated enrollment statuses reported to NSLDS. Cause: The financial aid office does not have an effective system in place to ensure all official student status changes are reported accurately. Effect: Failure to report status changes timely is noncompliance with Federal regulation and could result in loss of future funding. Questioned Cost: None Recommendations: The College should implement monitoring procedures which will promptly notify the financial aid office of any student status changes. A system of monitoring procedures and/or controls will ensure the College is reporting any status changes accurately. The College should implement a review process to ensure all status changes are addressed by the financial aid office. View of Responsible Officials: The College’s management will address the matter identified as described in the corrective action plan.

Federal Agency: U.S. Department of Education Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Recurring: No Compliance Requirement: Special tests and Provisions - Enrollment Program Information: Student Financial Aid Cluster (ALN 84.007, 84.003, 84.063, 84.268) Criteria: CFR section 685.309 and 690.83(b)(2) requires Colleges to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure accurate reporting of enrollment status changes. Condition: Out of 40 students sampled from the College’s roster files, 3 out of 40 did not have updated enrollment statuses reported to NSLDS. Cause: The financial aid office does not have an effective system in place to ensure all official student status changes are reported accurately. Effect: Failure to report status changes timely is noncompliance with Federal regulation and could result in loss of future funding. Questioned Cost: None Recommendations: The College should implement monitoring procedures which will promptly notify the financial aid office of any student status changes. A system of monitoring procedures and/or controls will ensure the College is reporting any status changes accurately. The College should implement a review process to ensure all status changes are addressed by the financial aid office. View of Responsible Officials: The College’s management will address the matter identified as described in the corrective action plan.

Federal Agency: U.S. Department of Education Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Recurring: No Compliance Requirement: Special tests and Provisions - Enrollment Program Information: Student Financial Aid Cluster (ALN 84.007, 84.003, 84.063, 84.268) Criteria: CFR section 685.309 and 690.83(b)(2) requires Colleges to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure accurate reporting of enrollment status changes. Condition: Out of 40 students sampled from the College’s roster files, 3 out of 40 did not have updated enrollment statuses reported to NSLDS. Cause: The financial aid office does not have an effective system in place to ensure all official student status changes are reported accurately. Effect: Failure to report status changes timely is noncompliance with Federal regulation and could result in loss of future funding. Questioned Cost: None Recommendations: The College should implement monitoring procedures which will promptly notify the financial aid office of any student status changes. A system of monitoring procedures and/or controls will ensure the College is reporting any status changes accurately. The College should implement a review process to ensure all status changes are addressed by the financial aid office. View of Responsible Officials: The College’s management will address the matter identified as described in the corrective action plan.

Federal Agency: U.S. Department of Education Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Recurring: No Compliance Requirement: Special tests and Provisions - Enrollment Program Information: Student Financial Aid Cluster (ALN 84.007, 84.003, 84.063, 84.268) Criteria: CFR section 685.309 and 690.83(b)(2) requires Colleges to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure accurate reporting of enrollment status changes. Condition: Out of 40 students sampled from the College’s roster files, 3 out of 40 did not have updated enrollment statuses reported to NSLDS. Cause: The financial aid office does not have an effective system in place to ensure all official student status changes are reported accurately. Effect: Failure to report status changes timely is noncompliance with Federal regulation and could result in loss of future funding. Questioned Cost: None Recommendations: The College should implement monitoring procedures which will promptly notify the financial aid office of any student status changes. A system of monitoring procedures and/or controls will ensure the College is reporting any status changes accurately. The College should implement a review process to ensure all status changes are addressed by the financial aid office. View of Responsible Officials: The College’s management will address the matter identified as described in the corrective action plan.

PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.

PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.

PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.

PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.

Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Numbers: Multiple Award Period: September 1, 2023 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The 2 CFR Section 200.303 require that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal Statues, regulations, and the term and conditions of the federal awards. Condition: During our testing of Common Origination and Disbursement (COD), Return of Title IV Funds (R2T4) and National Student Loan Data System (NSLDS), we noted there was a review process implemented; however, there was no process in place to retain the review being performed as to provide evidence to ensure the controls are being performed effectively. Questioned Costs: None. Context: During our testing, it was noted the University does not have a process in place to ensure controls are being performed effectively. Cause: The University did not have a process in place to ensure controls implemented are being performed effectively Effect: There is no way to determine who was involved in the process should an error be present. Repeat Finding: No Recommendation: We recommend the University reevaluate its procedures and review policies surrounding controls implemented for Title IV Aid. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Numbers: Multiple Award Period: September 1, 2023 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The 2 CFR Section 200.303 require that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal Statues, regulations, and the term and conditions of the federal awards. Condition: During our testing of Common Origination and Disbursement (COD), Return of Title IV Funds (R2T4) and National Student Loan Data System (NSLDS), we noted there was a review process implemented; however, there was no process in place to retain the review being performed as to provide evidence to ensure the controls are being performed effectively. Questioned Costs: None. Context: During our testing, it was noted the University does not have a process in place to ensure controls are being performed effectively. Cause: The University did not have a process in place to ensure controls implemented are being performed effectively Effect: There is no way to determine who was involved in the process should an error be present. Repeat Finding: No Recommendation: We recommend the University reevaluate its procedures and review policies surrounding controls implemented for Title IV Aid. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Numbers: Multiple Award Period: September 1, 2023 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The 2 CFR Section 200.303 require that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal Statues, regulations, and the term and conditions of the federal awards. Condition: During our testing of Common Origination and Disbursement (COD), Return of Title IV Funds (R2T4) and National Student Loan Data System (NSLDS), we noted there was a review process implemented; however, there was no process in place to retain the review being performed as to provide evidence to ensure the controls are being performed effectively. Questioned Costs: None. Context: During our testing, it was noted the University does not have a process in place to ensure controls are being performed effectively. Cause: The University did not have a process in place to ensure controls implemented are being performed effectively Effect: There is no way to determine who was involved in the process should an error be present. Repeat Finding: No Recommendation: We recommend the University reevaluate its procedures and review policies surrounding controls implemented for Title IV Aid. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Numbers: Multiple Award Period: September 1, 2023 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The 2 CFR Section 200.303 require that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal Statues, regulations, and the term and conditions of the federal awards. Condition: During our testing of Common Origination and Disbursement (COD), Return of Title IV Funds (R2T4) and National Student Loan Data System (NSLDS), we noted there was a review process implemented; however, there was no process in place to retain the review being performed as to provide evidence to ensure the controls are being performed effectively. Questioned Costs: None. Context: During our testing, it was noted the University does not have a process in place to ensure controls are being performed effectively. Cause: The University did not have a process in place to ensure controls implemented are being performed effectively Effect: There is no way to determine who was involved in the process should an error be present. Repeat Finding: No Recommendation: We recommend the University reevaluate its procedures and review policies surrounding controls implemented for Title IV Aid. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Numbers: Multiple Award Period: September 1, 2023 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The 2 CFR Section 200.303 require that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal Statues, regulations, and the term and conditions of the federal awards. Condition: During our testing of Common Origination and Disbursement (COD), Return of Title IV Funds (R2T4) and National Student Loan Data System (NSLDS), we noted there was a review process implemented; however, there was no process in place to retain the review being performed as to provide evidence to ensure the controls are being performed effectively. Questioned Costs: None. Context: During our testing, it was noted the University does not have a process in place to ensure controls are being performed effectively. Cause: The University did not have a process in place to ensure controls implemented are being performed effectively Effect: There is no way to determine who was involved in the process should an error be present. Repeat Finding: No Recommendation: We recommend the University reevaluate its procedures and review policies surrounding controls implemented for Title IV Aid. Views of Responsible Officials: There is no disagreement with the audit finding.