Findings Citing § 200.313

Finding Number: 2025-001 Assistance Listing Number and Title: AL#84.425U, Education Stabilization Fund Federal Award Identification Number / Year: 2024 Federal Agency: U.S. Department of Education Compliance Requirement: Equipment and Real Property Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Significant Deficiency 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313(d)(1) which provides that property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. The District purchased equipment in the amount of $14,797 using their American Rescue Plan Elementary and Secondary School Emergency Education Relief (AL#84.425U) federal funding without adding this asset to their capital asset listing due to a failure in adequately designed controls. The failure to properly record assets can lead to difficulties maintaining accountability for the related assets. The Treasurer should monitor transactions and ensure that all capital additions are properly documented in the capital asset records.

FINDING 2025-010 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed a system of internal controls to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation prepared a fixed asset report that contained all inventory and assets purchased that exceeded the School Corporation's capitalization threshold through June 30, 2025. The School Corporation did not have any policies or procedures in place to ensure the listing was complete and contained all the required information nor was there any documentation that a physical inventory was completed every two years as required by Indiana Code. The School Corporation had the following required information missing from the details of capital assets: source of funding for the property, acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, use and condition of the property, and disposition data. In addition, assets were not properly safeguarded and maintained. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 39 GRIFFITH PUBLIC SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause The vendor the School Corporation contracts with did not complete the fixed asset detail report due to being behind schedule. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, not all assets purchased, in whole or in part with federal dollars, were added to the capital asset listing. In addition, the assets added to the capital asset listing did not include all required information. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 40 GRIFFITH PUBLIC SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties, to ensure an asset inventory is performed at least every two years. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Information on the federal program: Subject: Education Stabilization Fund – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers: S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: For the 4 sample items tested, the acquisitions were not reported on the capital asset listing for the School Corporation as of June 30, 2025. For 3 of the sample items, the School Corporation expended $8,378,388 on building renovations which were charged to the ESSER III (84.425U) and ESSER II (84.425D) grant awards in the current audit period and prior audit period. For the other sample item, the School Corporation expended $17,513 for playground equipment that was charged to the ESSER III grant in the current period. Additionally, we noted the School Corporation’s capital asset listing did not contain all the required information, including the source of funding for the property, outlined in the criteria above. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2023-003. Recommendation: We recommend the School Corporation update the capital asset listing at least annually to include all equipment and real property acquisitions and review for potential capital asset dispositions. Additionally, we recommend the School Corporation update the capital asset listing to include all the required information, including the source of funding for the property, outlined in the criteria above. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2025-008 Subject: COVID-19 - Education Stabilization Fund - Condition of Records Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U, 84.425W Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Equipment and Real Property Management; Matching, Level of Effort, Earmarking; Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding numbers were 2023-007 and 2023-009 over the compliance requirements Equipment and Real Property Management and Special Tests and Provisions - Wage Rate Requirements, respectively. Condition and Context The School Corporation received reimbursements totaling $30,316,384 from the COVID-19 - Education Stabilization Fund (ESF) federal awards during the audit period. The reimbursements were associated with three separate federal awards, each of which was required to be accounted for in a separate fund within the School Corporation's financial management system. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the Indiana Department of Education (IDOE). The School Corporation was responsible for maintaining detailed disbursement ledgers for each grant fund to support the amounts claimed for reimbursement. As is typical with reimbursement-based grants, the ending cash and investment balances of each grant fund were expected to reflect overdrawn balances until the subsequent reimbursements were received from the IDOE. The $30,316,384 received in ESF funds during the audit period was based on 28 reimbursement requests for expenditures incurred between June 1, 2023 through December 13, 2024. Based on our review of grant fund records and inquiry with management, we identified the following deficiencies:  The detailed disbursement ledger for the period of June 1, 2023 through December 13, 2024, excluding June 2024 for Grant #S425U210013 as no reimbursement request was submitted, reflected total expenditures of $23,051,334. This resulted in $7,265,050 in reimbursements that were not adequately supported by detailed records. INDIANA STATE BOARD OF ACCOUNTS 33 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)  A review of the submitted reimbursement requests indicated that $1,069,865 was reimbursed for indirect costs; however, a disbursement from the grant funds to other operating funds was not recorded within the School Corporations records.  Of the 28 reimbursement requests submitted, only 5 were supported by detailed disbursement ledgers that agreed with the dates and amounts claimed. The remaining 23 reimbursement requests could not be directly reconciled to the supporting documentation provided. Upon further inquiry with management, additional records were provided; however, these records lacked sufficient detail, such as fund number, fund name, check numbers, dates, and vendor names to be useable.  Reimbursements received were not posted to each grant fund properly. This resulted in the ARP EESER III fund receipts to be understated by $4,297,935 and the ESSER II and GEER PD funds receipts to be overstated by $4,174,376 and $123,560, respectively.  Since this is a reimbursement-based grant, the ending cash and investment balances of each grant fund should either be zero or overdrawn while awaiting reimbursement. However, as of June 30, 2025, the ESSER II and Geer PD funds reported positive cash and investment balances of $5,047,932 and $404,653, respectively. Due to the deficiencies noted above, the School Corporation was unable to provide sufficient appropriate evidence for us to determine populations, and, therefore, audit and base an opinion on the compliance requirements subject to audit that were determined to have a direct and material effect on the program. As a result, the $30,316,384 in reimbursements received during the audit period were considered questioned costs. The lack of internal controls and noncompliance were material and systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302 states in part: "(a) . . . the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. See also § 200.450. INDIANA STATE BOARD OF ACCOUNTS 34 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability, for all funds, property, and assets. The non- Federal entity must adequately safeguard all assets and ensure that they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." 2 CFR 200.1 states in part: ". . . Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 35 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages— (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls— (ii) Certified payroll requirements— INDIANA STATE BOARD OF ACCOUNTS 36 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II to Part 200 states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation experienced turnover in key personnel over the federal program, which contributed to the lack of appropriate supporting records. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs We identified $30,316,384 in known questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change and that all reimbursement requests are properly supported by detail records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025 – 047. Equipment and Real Property Management Federal Agency: Department of Health and Human Services Federal Program Title: Public Health Emergency Preparedness and Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Assistance Listing: 93.069 and 93.354 Federal Grant ID Number: Various Pass-Through Entity: Not applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR § 200.303 requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. 2 CFR § 200.313(d)(1) requires property records 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 (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. Condition: The Department was not in compliance with several equipment and real property requirements. Cause: The Department’s processes did not ensure that assets transferred during the transition from the Department of Health and Environmental Control (DHEC) to the Department of Public Health (DPH) were properly associated with the applicable federal funding source or grant information within the asset management system. Effect: Incomplete property records increase the risk that equipment purchased with federal funds may not be properly tracked, monitored, or reported in accordance with federal regulations. Questioned Costs: None, as this finding relates to equipment record keeping, rather than unallowable expenditures. Context: During follow-up procedures related to equipment and real property management, the Department provided an asset history listing for review. However, the listing did not clearly identify assets purchased with federal funds. Additionally, assets transferred from DHEC to DPH in the South Carolina Enterprise Information System (SCEIS) were not associated with a federal funding source or specific grant. As a result, the Department was unable to demonstrate that equipment purchased with federal funds was being tracked in accordance with federal requirements. In addition, since assets were not listed under federal grants, we were unable to obtain a population to test whether assets bought with federal grants were accounted for in the Department’s annual physical inventory. This is a repeat finding from the fiscal year 2023 Single Audit. The Office stated on its Summary Schedule of Prior Year Audit Findings that this issue was “Fully Corrected with Previously Reported Corrective Action Implemented”. Due to this issue repeating for fiscal year 2023, this issue has not been fully corrected. Prior Year Single Audit Report Finding Number: 2023-026 Recommendation: We recommend the Department strengthen procedures to ensure equipment purchased with federal funds is properly tracked and associated with the applicable federal funding source within the asset management system and property records should include all elements required by federal regulations. Views of responsible officials and planned corrective actions: See management’s response on page 213.

Research and Development Cluster—Physical Inventory Requirements for Federal Equipment Background: During FY 2024-25, UW institutions expended approximately $900 million in federal funding as part of the Research and Development Cluster. UW-Madison expended the majority of the funding and used a portion of it, and similar funding from prior years, to purchase equipment needed for research activities. Such equipment is known as federal equipment. In report 23-4, we found that during FY 2021 22 UW Madison had not conducted physical inventories of all federal equipment within a two year period due to a physical inventory backlog that occurred during the public health emergency (Finding 2022-700). In report 23-4, we recommended that UW Madison conduct physical inventories as required by federal regulations. Criteria: When UW-Madison purchases federal equipment, it must maintain comprehensive records of each item, periodically conduct a physical inventory of the equipment, and potentially reimburse the federal agency that originally funded the purchase with any proceeds from the disposal of the federal equipment no longer needed for research activities. Under 2 CFR s. 200.313 (d) (2), UW Madison is required to complete biennially a physical inventory of all federal equipment and reconcile the results with its records. UW System Policy 334, Accountability for Capital Equipment requires biennial physical inventories of federal equipment. UW-Madison Procedure 3008.6, Physical Inventory Procedure identifies how it completes the inventory. To comply with these policies and procedures, UW-Madison assigned central accounting staff the responsibility for tracking federal equipment and scheduling inventories. Staff within various UW-Madison departments are responsible for safekeeping the equipment, locating items during physical inventories, and authorizing disposal when specific equipment is no longer useful. Under 2 CFR s. 200.313 (e), UW Madison is required to potentially provide repayment to the federal agency that originally funded the equipment purchase when federal equipment is no longer needed for research activities. Condition: UW-Madison did not perform a physical inventory of all federal equipment during the period from July 1, 2023, through June 30, 2025. Based on UW Madison equipment records, UW Madison needed to conduct a physical inventory during FY 2023-24 and FY 2024-25 of 7,265 federal equipment items purchased prior to July 1, 2023. UW Madison performed a physical inventory of 4,088 federal equipment items (56.3 percent) during the period, but did not perform a physical inventory of 3,177 federal equipment items (43.7 percent). Context: Based on available data as of June 30, 2025, UW Madison reported actively managing federal equipment with an acquisition value totaling $429.5 million. We discussed UW Madison’s procedures with the central accounting staff responsible for scheduling physical inventories of UW-Madison departments, obtained documentation of physical inventories UW Madison performed, and conducted other testing of UW Madison’s management of federal equipment. Questioned Costs: None. Effect: UW Madison did not comply with federal requirements to complete biennially a physical inventory of all federal equipment. Without completion of regular physical inventories of all federal equipment, UW Madison is at increased risk of theft or loss of equipment, it cannot be assured that federal equipment records were accurately maintained, and it may not be aware of all equipment disposals or losses, which may result in failure to reimburse the federal agency that originally funded the equipment purchase with any proceeds from disposal of the federal equipment. Cause: The majority of the federal equipment for which UW Madison did not complete an inventory were last inventoried in early 2023. UW Madison central accounting staff indicated that it annually selects the departments to conduct a physical inventory of federal equipment, including by prioritizing those departments with more federal equipment. UW Madison reported that it eliminated its physical inventory backlog in June 2024. However, we found UW-Madison did not conduct physical inventories during FY 2024-25 at a sufficient number of departments to ensure that all those departments that last inventoried federal equipment during FY 2022-23 were included in the scheduled physical inventories during FY 2024-25. UW Madison central accounting staff annually select approximately 40 to 45 of the 136 departments that have federal equipment, and during FY 2024-25 it selected 43 departments. We found that all 43 departments selected for a physical inventory during FY 2024-25 completed physical inventories. However, based on its process, UW Madison central accounting staff acknowledged that not all departments will be scheduled for an inventory within a two year period and therefore not all federal equipment will be inventoried. UW-Madison central accounting staff stated that selecting a larger number of departments annually could not be accommodated by its three staff assigned to these activities due, in part, to the time needed to review each department’s results and follow up with each department to ensure timely completion of the physical inventory. Finally, UW-Madison did not perform an annual review of its federal equipment listing to identify federal equipment that has not been inventoried within the last two year period. Doing so would assist it in assessing whether a sufficient number of departments conducted physical inventories during the prior two years to meet federal requirements. Recommendation: We recommend that the University of Wisconsin-Madison ensure that it conducts a complete physical inventory of all federal equipment within a two year period by: -conducting a physical inventory by September 30, 2026, of all federal equipment last inventoried before June 2023; -updating its procedures to require inventories be conducted at a sufficient number of departments to complete a review of at least one half of federal equipment annually; and -developing written procedures to require an annual review of the federal equipment listing to identify any federal equipment that did not have a physical inventory within the last two years, documenting the annual review, and completing any required physical inventories by the end of each fiscal year. Finding 2025-701: Research and Development Cluster—Physical Inventory Requirements for Federal Equipment Research and Development Cluster (various Assistance Listing numbers) Award Numbers Award Years Various Various Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the University of Wisconsin-Madison: The University of Wisconsin-Madison agrees with the audit finding and recommendations.

Information on the federal program: Subject: Education Stabilization Fund (ESF) Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425U, 84.425W Federal Award Numbers and Years (Or Other Identifying Numbers): S425U210013, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR section 200.313 states in part: (a) Title. Subject to the requirements and conditions set forth in this section, title to equipment acquired under a Federal award will vest upon acquisition in the non-Federal entity. Unless a statute specifically authorizes the Federal agency to vest title in the non-Federal entity without further responsibility to the Federal Government, and the Federal agency elects to do so, the title must be a conditional title. Title must vest in the non-Federal entity subject to the following conditions: (1) Use the equipment for the authorized purposes of the project during the period of performance, or until the property is no longer needed for the purposes of the project. (2) Not encumber the property without approval of the Federal awarding agency or pass-through entity. (3) Use and dispose of the property in accordance with paragraphs (b), (c), and (e) of this section. (d) Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: There were nine equipment purchases made during the audit period and charged to the ESF grants which totaled $564,248 in the aggregate. During testing of equipment purchases, the following items were noted: • The School Corporation provided a capital asset listing that had not been updated since 2020. As a result, none of the equipment items selected for testing that were purchased with ESF funds were included on the listing. Additionally, the listing did not include required elements under 2 CFR §200.313(d), including documentation of the federal funding source and the condition of the property. • The School Corporation did not perform a physical inventory of equipment at least once every two years as required by 2 CFR §200.313(d)(2). As such, management was unable to demonstrate that federally funded equipment was being periodically verified and reconciled to property records. Identification as a repeat finding, if applicable: No. Recommendation: We recommend the School Corporation implement and enforce procedures to ensure federally funded equipment is properly recorded, maintained, and inventoried in accordance with 2 CFR §200.313, including updating the capital asset listing to include all required elements and performing physical inventories at least once every two years. Views of Responsible Officials and Planned Corrective Actions: For the views of the responsible officials, refer to the Corrective Action Plan that is part of this report.

Equipment Property Management Federal Program: Congressional Directives (ALN 93.493) Federal Agency: Department of Health and Human Services Federal Award Number: 1CE1HS52890-01-00 Federal Award Year: September 30, 2023 through June 30, 2026 Criteria or Requirement Per 2 CFR section 200.313, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. Per 2 CFR 200.303, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition and Context For 2 out of 9 purchase transactions, equipment exceeding the capitalization threshold per 2 CFR section 200.1 was not capitalized. Therefore, a property record did not exist for federally funded equipment purchased in the amount of $937,768. The total program expenditures were $2,112,657 for which $1,640,656 were capital equipment purchases and $472,001 were non-capital purchases. Further, $67,919 of the $702,888 that was capitalized, the property record did not properly identify the asset’s federal award program. Cause and Potential Effect The University's internal controls for determining and documenting whether an equipment acquisition was a capital asset for which a property record should be created in the system with the required information was not operating effectively. Accordingly, the University acquired federally funded equipment, and a property record was not created. Questioned Cost There were no questioned costs associated with the finding. Statistically Valid Sample The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding is a Repeat of a Finding in the Immediately Prior Audit Yes – prior year finding 2024-003. Recommendation We recommend the University enhances the precision of the controls over equipment purchases to ensure that a property record is created within the system containing the required information, inclusive of the federal award, for all federally funded equipment. View of Responsible Officials Management of the University takes no exception to this reported finding. We have implemented the remedial actions as outlined in our Corrective Action Plan.

2025-001 Finding: Equipment Federal Program: Research and Development Cluster, Various Assistance Listing Numbers, Various Agencies, Award Year 2025 Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.313(d)) requires non-federal entities to maintain effective control and accountability for all federally funded equipment, including procedures to ensure assets exist, are used for authorized purposes, and are properly disposed of when no longer needed. Uniform Guidance further contemplates periodic physical inventories of equipment and reconciliation to property records at least once every two years. Policies and procedures should address all federal awards, regardless of awarding agency. Condition: Out of a sample of 25 assets, five assets with acquisition dates between 1990 and 2016, had been disposed but not removed from the asset subledger. In addition, a full inventory of federally funded assets was not completed within a two year timeframe and key data was not reconciled. Our sampling methodology was not, and was not intended to be, statistically valid. Questioned Costs: $52,511.60 - Costs relate to multiple awards within the Research and Development Cluster. Cause: The Organization's fixed asset monitoring policy is primarily designed to comply with National Institute of Health requirements and has not been expanded to fully incorporate Uniform Guidance requirements applicable to all federal awards. Controls were not operating as designed to identify and remove assets from the subledger when disposed. Effect: As a result, the Organization’s fixed asset records were not fully accurate or complete for certain federally funded assets, increasing the risk that assets disposed of in prior years remain recorded in the subledger and that federally funded equipment is not consistently tracked in accordance with Uniform Guidance. Identification as a repeat finding: Not a repeat finding Recommendation: We recommend that the Organization expands and formalizes its fixed asset monitoring policy to fully align with Uniform Guidance requirements, including (1) Performing and documenting a physical inventory of federally funded equipment at least once every two years, with reconciliation to the fixed asset subledger. (2) Ensuring timely communication and documentation of asset disposals to Finance for record updates. Views of Responsible Officials: The Organization agrees with the finding. See separate auditee document for planned corrective action.

2025-001 – Federal Equipment Inventory Cluster: Research and development Sponsoring Agency: Various Award Name: All awards for 3 campuses with federal equipment expenditures in the Schedules of Expenditures of Federal Awards (SEFA) Award Number: Various Assistance Listing Title: All awards for 3 campuses with federal equipment expenditures in the SEFA Assistance Listing Number: All awards for 3 campuses with federal equipment expenditures in the SEFA Award Year: 2024-2025 Pass-through entity: All pass-through awards for 3 campuses with equipment expenditures in the SEFA Criteria 2 CFR 200.313(d) requires that a physical inventory of equipment acquired in whole or in part under a Federal award must be conducted and the results reconciled with the property records at least once every two years and the recipient is responsible for maintaining and updating property records when there is a change in the status of the property. Condition Through our testing of federal equipment and real property management across four campuses, we identified deficiencies related to (1) the timeliness of required physical inventory procedures and (2) the completeness and accuracy of federal equipment listings. More specifically, our testing identified the following: Campus 1 This campus has a control by which all custodians are responsible for the completion of their federal equipment inventory on a 2-year rolling basis. Through discussion with the campus, the last equipment inventory observation for federal equipment was performed in July 2022 and covered half of the campus assets acquired through December 2021. As such, a physical inventory at this campus has not been completed over existing or newly acquired equipment in approximately 3.5 years, which is outside the two-year requirement. Through our federal equipment observation procedures, we selected 25 assets from the federal equipment listing to observe and also selected 25 pieces of equipment from the floor to trace back to the equipment listing. We noted the following: • For 2 equipment selections from the federal equipment listing, we were unable to verify the asset we selected was the asset viewed, as there was no tag, serial # or other identifying information we could validate to the equipment listing. • 1 equipment selection from the federal equipment listing was located but not in working condition and should have been disposed of. • 3 equipment selections were on the federal equipment listing, but were unable to be located or were previously disposed of and incorrectly on the equipment listing. • 1 equipment selection from the “floor” was federally funded, but not included in the list of federal assets. Campus 2 In order to comply with the federal biennial inventory requirement, this campus has a policy that every two years by 10/31, Equipment Certification Forms for each custodial code need to be submitted verifying the existence of the assets assigned to the custodian. We selected 25 custodial codes to review the two most recent Equipment Certification Forms to verify a physical inventory of federal assets was performed within two years. Through our testing, we noted the following: • 5 Equipment Inventory Certification Forms due by 10/31/25 were completed timely, however, the previous inventories for these custodial codes were each completed in October or November 2019 and thus 2 cycles elapsed between inventories, which is not in compliance with the federal biennial inventory requirement. • 5 Equipment Inventory Certification Forms due 10/31/25 were late (14 days, 10 days, 1 day, 81 days, and 3 days late, respectively). For 2 of the 5, the previous inventory was last completed in October 2019 and thus 2 cycles elapsed between inventories. Campus 3 This campus completes a full equipment inventory of the campus every 2 years. Based on the current cycle, all federal equipment was required to be inventoried between 7/1/22 and 6/30/24. Any inventories completed by 6/30/24 are considered timely and within the 2-year period, assuming the financial unit appropriately completed an inventory in the previous period covering 7/1/20 to 6/30/22. Each individual asset is "validated" in the equipment management system and dates of validation are noted upon inventory completion. In order to test the equipment validation control, 25 individual federal assets were selected for testing to 1) determine whether the asset was verified between 7/1/22 and 6/30/24; and 2) to review the date of the previous inventory to confirm the asset was inventoried within a two-year period. Through our testing, we noted the following: • 3 federal equipment selections were not validated during the most recent inventory cycle with the last validation being completed during the FY18 cycle (2 selections) and the FY22 cycle (1 selection) • 3 federal equipment selections were validated in the current cycle, however, they were not validated during the previous cycle and as such, more than two years elapsed between inventories. • 1 federal equipment selection was not validated in either the current or previous inventory cycle Additionally, through our federal equipment observation procedures, 2 out of 25 federal equipment selections were unable to be located. Cause • Campus 1 – Through discussion with the campus, no federal equipment inventory counts were performed since July 2022 due to lack of personnel. The equipment inventories not being performed timely were also the cause of the federal equipment listing not being complete and accurate. • Campus 2 - The 2019 inventories were due in 2021 (during COVID-19) and the University received a letter dated March 17, 2021 from the Department of Health and Human Services that stated: “We fully acknowledge the concerns detailed in your letter and hereby approve your request to delay the physical inventory of property for one fiscal year. The University of California should plan to resume the biennial physical inventory process in Fiscal Year 2022.” Those not completed in the subsequent inventory were overlooked. These custodial codes continued with no Equipment Certification Forms being submitted as the next due date overlapped with a significant system implementation, and the campus was not as diligent in following up with the custodians. Three of the four late submissions in 2025 were due to oversight of the deadline and the submission that was 81 days late was due to a new asset representative not realizing a certification had to be submitted until a follow-up notification was received. • Campus 3 - Assets not validated in the most recent cycle were missed due to resource constraints. Assets not inventoried in the previous cycle (and thus not within the two-year period) were due to being overlooked once inventories resumed after the COVID-19 pandemic period and not revisited timely due to resource constraints. The assets not located during the federal equipment observations procedures were assumed to have been disposed and the asset listing not appropriately updated. Effect Failure to complete physical inventories within the required two-year timeframe increases the risk that federal equipment records are incomplete or inaccurate and that discrepancies are not identified and corrected in a timely manner. Questioned Costs None noted. Recommendation We recommend that each campus review and, where necessary, update its federal equipment inventory policies and procedures to help ensure that (1) physical inventories are completed within the required two-year timeframe and (2) federal equipment listings are maintained in a complete and accurate manner in accordance with 2 CFR 200.313. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings.

Federal Agency: Federal Government Federal Program Name: Research & Development, Agriculture Extension at 1890 Land-grant Institutions, and Higher Education Institutional Aid Assistance Listing Number: Multiple Federal Award Identification Number and Year: Multiple Award Period: July 1, 2024 to June 30, 2025 Type of Finding: - Material Weakness in Internal Control over Compliance Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Questioned costs: None. Context: During inquiries with management, the University had been unable to fill a staffing position to help implement correct action of tracking equipment purchased with Federal funds. Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat Finding: Yes, 2024-002 Recommendation: We recommend the University ensures that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Questioned Cost $ – Finding No. 2025-010: Equipment (Material Weakness) State Agency: Department of Land and Natural Resources Federal Agency: Department of Defense AL Number and Title: 12.107 – Readiness and Environmental Protection Integration Award Number and Award Year: N62742-22-2-0002 2022 Repeat Finding? No Condition During our audit, we examined all 16 acquisitions of equipment and real property in the current year. Of the 16 acquisitions, 15 were not properly entered into the State’s Fixed Asset Inventory System (FAIS). Criteria Pursuant to 2 CFR 200.313(b), the State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. The State’s procedures require division-designated individuals to be knowledgeable about submitting Form 17A – Detail Inventory of Property along with supporting evidence, such as purchase orders with proper approvals and final billings and invoices to the State Procurement Office to enter into FAIS in the quarter the asset is placed in service. Effect Failure to record equipment properly reflects noncompliance with State procedures and Federal requirements. Cause and View of Responsible Officials The department did not submit Form 17A timely due to delays and errors in preparation of the forms. Recommendation We recommend that the State department develop internal control procedures to ensure that items are entered into the FAIS accurately and in the proper period.

FINDING 2025-003 – Equipment Management: Significant Deficiency in Internal Control Over Compliance (SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS - SECTION III - FINDING 2025-003 FOR INCLUDED TABLE) Criteria – 2 CFR section 200.313(d)2: A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. Condition/Context – During our audit we requested the results of the most recent physical inventory of federally purchases equipment. The most recent physical inventory had been completed during the fiscal year ending June 30, 2020. Effect – Management may not have full knowledge of the current location, existence and condition of federally purchased equipment. Cause – University of San Diego does not currently have a protocol in place to initiate the physical inventory on the required basis. Repeat Finding – No. Recommendation – We recommend the University of San Diego implement a process to trigger the process of a physical inventory of equipment every other year. Views of Responsible Officials– Management concurs with this finding and has established new responsibilities at individual employee levels to allow for additional oversight over the process. The process of completing the inventory has also been added to the annual fiscal close process documentation.

Program: Epidemiology and Laboratory Capacity for Infectious Disease Federal Financial Assistance Listing Number: 93.323 Federal Grantor: U.S. Department of Health and Human Services Award No. and Year: Multiple Compliance Requirements: Equipment and Real Property Management Type of Finding: Material Weakness in Internal Control Over Compliance and Material Instance of Noncompliance Criteria: In accordance with 2 CFR section 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: Property records were not maintained in accordance with Uniform Guidance for all property and equipment purchased. As a result, we were unable to (1) test whether differences between the physical inventory and equipment records were resolved and (2) sample equipment from the property records and physically inspect the equipment and determine whether the equipment is appropriately safeguarded and maintained. Cause: The HCA department did not have adequate internal controls to ensure its property records included all the requirements under Uniform Guidance or properly identify all property and equipment purchased with federal funds. Effect: Property records were not adequately maintained. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used. We examined the Agency’s property records in total. Repeat Finding from Prior Years: Yes. Recommendation: We recommend the HCA department enhance internal controls to ensure its property records include all the requirements under Uniform Guidance and properly identify all property and equipment purchased with federal funds. Views of Responsible Officials: See separately issued Corrective Action Plan.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Research & Development Assistance Listing Number: 93.859 Federal Award Identification Number and Year: 5P20GM109097 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: - Significant Deficiency in Internal Control over Compliance - Other Matters Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: Oklahoma State University Center for Health Sciences (OSU CHS) did not properly maintain physical inventory of property purchased with federal funds. Questioned costs: None. Context: During our testing, we identified 1 out of 40 equipment items sampled that were purchased with federal funds did not have documentation of a completed physical inventory and could not be physically observed, as the equipment was reported to be misplaced. Cause: OSU CHS did not have effective controls in place to ensure that equipment purchased with federal funds was subject to a timely physical inventory and appropriately tracked, including procedures to ensure equipment could be located for observation. Effect: As a result, OSU CHS was unable to demonstrate the existence and proper safeguarding of equipment purchased with federal funds, increasing the risk that equipment may not be properly monitored, safeguarded, or used in accordance with federal requirements. Repeat Finding: No Recommendation: We recommend that OSU CHS implement and consistently perform procedures to ensure that all equipment purchased with federal funds is subject to a physical inventory at least once every two years, with results properly documented and reconciled to equipment records. We further recommend that OSU CHS strengthen controls over tracking equipment locations to ensure that federally funded equipment can be readily identified and physically located when required. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agencies: 11 – Department of Commerce, 12 – Department of Defense, 15 – Department of the Interior, 16 – Department of Justice, 43 – National Aeronautics and Space Administration, 47 – National Science Foundation, 81 – Department of Energy, 84 – Department of Education, 93 – Department of Health and Human Services Federal Program Title: R&D Cluster and Congressional Directives Assistance Listing Number: R&D and 93.493 Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: In accordance with 2 CFR §200.313(d), non-Federal entities must maintain effective control and accountability for all equipment acquired under a Federal award. Property records must be maintained and include, at a minimum, a description of the equipment (including a serial number or other identification number), source of funding (including the Federal award identification number), who holds title, acquisition date, cost of the equipment, percentage of Federal participation in the cost, location, use and condition of the equipment, and any ultimate disposition data, including the date of disposal and sales price or the method used to determine current fair market value. Additionally, 2 CFR §200.313(d)(2) requires a physical inventory of equipment to be taken and the results reconciled with the property records at least once every two years. 2 CFR §200.313(d)(3) further requires non-Federal entities to establish adequate safeguards to prevent loss, damage, or theft of equipment. Condition/Context: During our testing of Equipment and Real Property Management, we selected a sample of 11 equipment items, consisting of 6 items from the R&D Cluster and 5 items from the Congressional Directives program. The following exceptions were noted: • For 2 of the 6 R&D equipment items, the UEC did not perform a physical inventory within the last two years. • For 1 of the 6 R&D equipment items and 1 of the 5 Congressional Directives equipment items, the UEC did not maintain property records containing the information required under Federal equipment management requirements. • For 1 of the 6 R&D equipment items, we were unable to physically inspect the equipment, as photographs or other evidence of existence were not provided by the UEC. • For 1 of the 6 R&D equipment items, while initial property records (invoice support demonstrating review and confirmation that the equipment was received) were available, we were unable to confirm that ongoing control systems were in place to safeguard the equipment after initial acquisition. Questioned Costs: $77,610. Effect: Without complete property records, timely physical inventories, and adequate safeguarding controls, the UEC is unable to demonstrate compliance with Federal equipment management requirements, increasing the risk of loss, misuse, or improper disposition of equipment purchased with Federal funds. Cause: The UEC’s internal controls over equipment tracking, inventory, and safeguarding were not designed or implemented to consistently ensure compliance with Federal equipment management requirements across Federal programs. Repeat Finding: No. Recommendation: We recommend the UEC establish and implement equipment management procedures to ensure property records are complete, physical inventories are performed at least biennially, and adequate safeguards are maintained for all equipment acquired with Federal funds. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding.

Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes or $5,000 (2 CFR 200.1_Equipment). Title to equipment acquired by a non-Federal entity under grants and cooperative agreements vests in the non-Federal entity subject to certain obligations and conditions (2 CFR 200.313(a)). Non-Federal Entities Other than States Non-Federal entities other than States must follow 2 CFR 200.313(c) through (e) which require that: 1. Equipment, including replacement equipment, be used in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award or, when appropriate, under other Federal awards; however, the non-Federal entity must not encumber the equipment without prior approval of the Federal awarding agency (2 CFR 200.313(c) and (e)). 2. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). 3. A physical inventory of the property must be taken and the results reconciled with the property records at least once every 2 years (2 CFR 200.313(d)(2)). 4. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR 200.313(d)(3)). 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). 6. If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return (2 CFR 200.313(d)(5)). 7. When original or replacement equipment acquired under a Federal award is no longer needed for a Federal program (whether the original project or program or other activities currently or previously supported by the Federal government), the non-Federal entity must request disposition instructions from the Federal awarding agency if required by the terms and conditions of the award. Items of equipment with a current per-unit fair market value of $5,000 or less may be retained, sold, or otherwise disposed of with no further obligation to the Federal awarding agency. If the Federal awarding agency fails to provide requested disposition instructions within 120 days, items of equipment with a current per-unit fair market value in excess of $5,000 may be retained or sold. The Federal awarding agency is entitled to the Federal interest in the equipment, which is the amount calculated by multiplying the current market value or sale proceeds by the Federal agency’s participation in total project costs (2 CFR 200.313(e)). While testing equipment acquisitions acquired using ESSER funds, one instance was noted in which equipment purchased was not fully added to the District records. Without proper controls over equipment requirements, there is an increased risk that the District is not in compliance with applicable federal regulations. Additionally, noncompliance could result in federal funding being reduced or taken away, or other sanctions imposed by the federal grantor agency. The District should establish (or perform existing) controls to include the required clauses of 2 CFR 200.313 to ensure equipment is being properly safeguarded and tracked.

Assistance Listing Number 84.425 Education Stabilization Fund Department of Education Passed Through North Dakota Department of Public Instruction Passed Through Turtle Mountain Band of Chippewa Indians Equipment/Real Property Management Criteria 2 CFR sections 200.313(c) and (e) includes a requirement for the non-federal entity to not encumber the equipment without prior approval of the federal awarding agency. 2 CFR section 200.311 includes a requirement for the non-federal entity, with prior approval by the ED or passthrough entity, may also use ESF funds to purchase real property, perform construction or minor remodeling, and for improvements to land, buildings, or equipment. Condition The District did not obtain prior approval for equipment acquisition or construction projects. This condition was noted for the following expenditures: Check 241010 Dated 12/27/2024 for $104,931.00 Check 240640 Dated 11/14/2024 for $147,398.90 Check 239597 Dated 8/30/2024 for $121,240.00 Context Per discussion with the District staff and review of program expenditures, there were 22 capital asset acquisitions during the year, we tested three of them for prior state approval. All three of these purchases were made without prior state approval. Cause The District did not properly submit for prior approval for equipment acquisition or construction until after the expenditure had been incurred and in some instances there were no submissions for prior approval. Effect The District may have purchased capital items that were not allowed by the State. Questioned Costs Undeterminable. Repeat Finding See prior year finding 2024-004. Recommendation We recommend the District to review all compliance requirements of federal programs to ensure they have procedures to ensure compliance with those requirements and for the requests for acquisition to be made timely and for the appropriate expenditure amount. Management’s Response See corrective action plan.

Criteria In accordance with 2 CFR 200.313(c)(1), non-Federal entities must maintain accurate equipment records for all federally acquired equipment. At a minimum, the equipment records must include: • A description of the equipment • A serial number or other identification number • The source of funding for the equipment, including the Federal Award Identification Number (FAIN) • Who holds title • The acquisition date and cost • The location, use, and condition of the equipment • Any ultimate disposition data, including date of disposal and sales price, if applicable In accordance with 2 CFR 200.313(d)(2) requires entities to verify the existence, current utilization, and continued need for federally funded equipment through physical inventories conducted at least once every two years and to reconcile those results with the equipment records. In accordance with 2 CFR 200.303, it is emphasized that entities maintain complete and accurate equipment listings to demonstrate proper safeguarding, tracking, and continued use of equipment acquired under Federal awards Furthermore, in accordance with 2 CFR 200.303(a), non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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). Conditions Found We noted that the College does not maintain a complete and accurate equipment listing for federally acquired equipment. Specifically, the equipment listing did not consistently or correctly include all required data elements outlined in 2 CFR 200.313(c). Data elements that were missing from the listing included serial number, the source of funding for the equipment, including the FAIN, and the location. The data element that was incorrectly maintained on the equipment listing was acquisition date and cost as one instance was identified where the cost of acquiring an item on the equipment listing did not agree to the College’s system of record. Additionally, we noted the College does not have a process in place to reconcile the results of the bi-annual inventory count to the property record listing in order to reflect any changes or discrepancies resulting from the count. Cause The condition resulted from the absence of formally documented policies and procedures governing the maintenance and periodic review of the federally acquired equipment listing and the requirement of reconciling the federally acquired equipment to the property record listing after conducting a bi-annual physical inventory count. Also, the College has not implemented controls to ensure that required equipment information is consistently recorded, updated, and reviewed in accordance with Federal regulations. Possible Asserted Effect Failure to maintain a complete and accurate equipment listing can result in federally acquired equipment not being properly tracked, safeguarded, or used in accordance with Federal award requirements. The lack of accurate equipment records increases the risk of noncompliance with Federal statutes, regulations, and the terms and conditions of Federal awards. Additionally, the inability to locate equipment, inaccurate equipment records and undetected loss or misuse of federally funded equipment. Moreover, the absence of formal policies could result in federal noncompliance. Questioned Costs No questioned costs were identified. Statistical Sampling The sample was not intended to be and was not a statistically valid sample. Repeat Finding The conditions found do not constitute a repeat finding from the prior year. Recommendation We recommend that the College establish and implement formal policies and procedures to ensure that a complete and accurate equipment listing for federally acquired equipment is maintained in accordance with 2 CFR 200.303 and 313. This should include ensuring that all required data elements are recorded, that the listing is periodically reviewed and updated, and that results of physical inventories are reconciled to the equipment records to support compliance with Federal award requirements. Views of Responsible Officials The College acknowledges that the federally acquired equipment listing did not include all required data elements outlined in 2 CFR 200.313(c) and did not reconcile it against the bi-annual physical inventory completed. To mitigate the risk of incomplete equipment records for federally acquired equipment, the College is formalizing policies and procedures to ensure required data elements are recorded and maintained, implementing a periodic review process to update the equipment listing, and establishing a reconciliation process to compare bi-annual physical inventory results to the property records and promptly resolve any discrepancies. These corrective actions are being implemented in fiscal year 2026.

FINDING 2025-006 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-006. Condition and Context The School Corporation had not properly designed a system of internal controls to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation did not have any policies or procedures in place to ensure a detailed capital asset listing was completed for the audit period and that the listing contained all the required information. During the audit period, the School Corporation purchased equipment totaling $11,495,065 with COVID-19 - Education Stabilization Fund funds. However, the purchased equipment was not included on a capital asset listing or physical inventory. Due to the lack of a detailed capital asset listing, the equipment was not adequately safeguarded or maintained. The School Corporation should include the following required information in the detailed capital asset listing for each capital asset purchased with federal funds: a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, and use and condition of the property. A capital asset listing is to be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The lack of internal controls and noncompliance were systemic issues throughout the audit period for the ESSER II and ESSER III grants. INDIANA STATE BOARD OF ACCOUNTS 26 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause The School Corporation did not have policies or procedures in place to complete an inventory or maintain a fixed asset detail report. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, not all assets purchased with federal dollars were added to a capital asset listing. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 27 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure asset records include all the necessary information, new assets are properly added, and any discrepancies are reconciled. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Equipment and Real Property Management Federal Program and Specific Federal Award Identification CFDA Title and Number 84.031 Higher Education Institution Aid Federal Award Year June 30, 2025 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria Per Uniform Guidance § 200.313, institutions are required to conduct a physical inventory of equipment acquired with federal funds at least once every two years and reconcile the results with property records. Conditions and Contexts The University did not provide evidence that a physical inventory of federally funded equipment was performed at least once every two years. Cause The University did not have adequate procedures in place to ensure that required physical inventories were performed and documented. Questioned Costs For the purposes of this condition, I have not questioned any costs. Effect The University may not be adequately safeguarding federally funded equipment, increasing the risk of loss, theft, or misuse. Repeat Finding No. Recommendation The University should implement procedures to ensure that physical inventories of equipment are conducted at least biennially and properly documented. Inventory results should be reconciled to equipment records, and discrepancies should be investigated and resolved. Management’s Response The University acknowledges the finding regarding the absence of documented evidence that a physical inventory of federally funded equipment was performed within the required two year period. We recognize that maintaining proper inventory controls is essential to safeguarding federal property in accordance with Uniform Guidance §200.313. Corrective Actions 1. Implementation of a Biennial Inventory Schedule: The University has established a formal schedule to ensure that physical inventories of federally funded equipment are conducted at least once every two years and are documented consistently. 2. Centralized Inventory Documentation: A computerized inventory tracking system has been implemented to store all inventory records, reconciliation reports, and supporting documentation to ensure availability for audit. 3. Reconciliation Procedures: Equipment inventory results will be reconciled to the University’s fixed asset and property records, with any discrepancies documented, investigated, and resolved. 4. Staff Training and Oversight: Staff responsible for property management will receive updated training on federal inventory requirements, documentation standards, and reconciliation procedures. Supervisory review has been added to ensure ongoing compliance. The University believes these actions will strengthen internal controls over equipment management and ensure compliance with federal regulations moving forward.

2025-004 – Equipment and Real Property Management Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Rural Health Outreach and Rural Network Development Program Assistance listing numbers: 93.912 Award year: 7/1/2024 – 6/30/2025 Criteria: According to 2 CFR 200.313, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. Additionally, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition: During our audit, we noted that a complete listing of property, furniture, and equipment is not maintained in the accounting system. Additionally, SFRC did not perform a physical inventory of its property and equipment during fiscal year 2025 and there is no evidence supporting when the last physical inventory of property and equipment occurred as of June 30, 2025. Context: N/A Questioned Costs: None Cause: When the fixed asset module of the accounting system was implemented, fully depreciated items were not imported into the fixed asset module. Additionally, SFRC’s P&P Manual does not contain formal policies related to property, furniture, and equipment. Effect: The asset listing in the fixed asset module of the accounting system is not complete. Without an entity-wide physical inventory, there is an increased risk that individual items of property and equipment no longer exist, are damaged or impaired, or are being used by another program/location. Auditor’s Recommendation: SFRC should create policies and procedures over property, furniture, and equipment and add this information to its Accounting & Financial Management Policies and Procedures Manual. SFRC should also obtain the detailed asset listing from the audit and import this information into its fixed asset module so that the listing is complete going forward. Lastly, SFRC should perform a physical inventory of its property, furniture, and equipment and reconcile the result of this inventory to its fixed asset module. Management’s Response: Management reviewed existing accounting staffing structure, revised position descriptions, and have advertised to fill two of three open positions; Accounts Payable Specialist and Controller. Management feels with these revised position descriptions, more focus on accounting operations, procedures, and property and equipment management.

Finding No. 2025-044 Prior Year Finding: 2024-044 Federal Awarding Agency: U.S. Department of the Interior Impact: Material Weakness AL Number and Title: 15.605, 15.611 Fish and Wildlife Cluster (FWC) Federal Award Number: Multiple Applicable Compliance Requirement: Equipment and Real Property Management Condition: Auditors could not obtain sufficient appropriate evidence to verify compliance with FWC’s equipment and real property management requirements. Context: DFG is responsible for ensuring equipment, real property, and capital improvements, acquired with FWC funds, are used for an authorized purpose, sufficiently tracked, and appropriately disposed of in accordance with federal regulations. DFG began efforts in FY 25 to address equipment and real property management weaknesses found in the prior year audit. However, at the end of FY 25, corrective action was incomplete. In FY 25, DFG did not maintain sufficient evidence to demonstrate compliance with equipment and real property management requirements. DFG equipment and real property records did not reliably catalog the universe of equipment, real property, and capital improvements funded with FWC grant monies. Equipment records were incomplete and not trackable by funding source in the accounting system. As a result, the audit was unable to determine the extent of equipment purchased with FWC funds. Real property records had not been reconciled since 2019 and could not be matched with DFG site visit logs. The audit could not identify the FWC assets to be monitored and the extent of site visits conducted during the audit period, and whether the site visits included monitoring for authorized uses. Cause: DFG management attributed the deficiencies to a lack of department-wide procedures, staff turnover, and insufficient training. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the State is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the federal award. Title 2 CFR 200.311 and Title 50 CFR 80.134 requires the State to use real property for the purpose authorized in the grant for as long as it is needed for that purpose. When real property is no longer needed for the originally authorized purpose, property must be disposed of in accordance with federal requirements. Title 2 CFR 200.313 requires the State to use, manage and dispose of equipment acquired under a federal award in accordance with State laws and procedures. Such equipment must be used for the project or program for which it was acquired and for as long as needed. The State agency must maintain equipment property records, perform physical inventory of equipment, develop a control system, and perform regular maintenance of equipment. Title 50 CFR 80.133 requires the State to maintain acquired or completed capital improvements under FWC grants to ensure that each capital improvement continues to serve its authorized purpose during its useful life. Effect: The lack of department-wide procedures increased the risk that FWC funded assets were not used for authorized purposes and properly disposed of when no longer needed. Inadequate equipment tracking increased the risk of loss or theft. Further, noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: Indeterminate Recommendation: DFG’s commissioner should continue efforts to ensure procedures are developed and training is implemented so that FWC funded equipment, real property, and capital improvements are fully identified and are managed in compliance with federal requirements. Views of Responsible Officials: Management agrees with this finding.

1. FINDING NUMBER: 2025 - 003 2. THIS FINDING IS: New Repeat from Prior yearX Year originally reported? 2024 3. Federal Program Name and Year:Elementary and Secondary School Emergency Relief (ESSER) - 2024 and 2025 4. Project No.: 2024-4998-HL, 2024-4998-E3, 2025-4998-C3, 2025-4998-E2 5. AL No.: 84.425D, 84.425U, 84.425W 6. Passed Through: Illinois State Board of Education 7. Federal Agency: U.S. Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation): Per 2 CFR 200.313(d)(2), "A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years." 9. Condition: The District was unable to demonstrate that a physical inventory was performed over the past two years. This is considered a material weakness in internal control over compliance and an instance of noncompliance over equipment and real property management. This is a repeat of finding 2024-003. 10. Questioned Costs: None 11. Context: The District has contracted with an outside vendor to perform the annual inventory but that inventory is not scheduled to take place until summer 2026. 12. Effect: Failure to perform an inventory of equipment purchased by the District could result in the inability to detect a potential loss of assets and noncompliance with federal regulations regarding the proper disposal of equipment purchased with federal funding. 13. Cause: The District did not timely engage its third party contractor to complete the capital asset inventory in time for the 2025 audit. 14. Recommendation: In addition to the District ensuring that the upcoming capital asset inventory is completed timely, we recommend that the District enact procedures to ensure future inventory updates are scheduled in a timely manner. 15. Management's response: A comprehensive physical inventory and asset verification is officially scheduled for completion during the Summer of 2026. This initiative will reconcile existing records with physical counts to ensure accurate financial reporting.

2025-002. Equipment and Real Property Management United States Department of Education, passed through New York State Department of Education: Education Stabilization Fund COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years. Condition: The District did not include the capital expenditures for the “Early Childhood Educational Center (ECEC) Door Project”, “ECEC Roof Project”, “Front Vestibule Project”, and “Playground Equipment & Rubber Surfacing of Upper Play Area” that were paid with ARP ESSER 3 funds, in its current year’s capital assets inventory record. Additionally, certain items included as additions on the capital assets appraisal inventory report, such as classrooms equipment purchased with ARP ESSER 3 funds, did not match the amounts of expenditures in the District’s financial accounting application. Cause: The District did not have adequate procedures in place to identify capital-type expenditures paid with federal grant funds, which were recorded on the District’s books as purchased services, as capitalizable assets that should be added to the capital assets inventory report and tracked. Effect: Failure to include capital assets acquired with federal awards in the District’s capital assets inventory records could lead to improper or non-compliant procedures for assets inventory management and the subsequent disposal of those capital assets. Questioned Costs: None reported. Context: The District utilized federal grant awards to pay for permissible capital improvements which have been installed in instructional buildings that are leased by the District, the District recorded those expenditures as purchased services as per the pass-through entity, New York State Education Department’s guidance. The leasehold improvements incurred and acquired as of June 30, 2024 were omitted from but subsequently added to the District’s capital assets inventory reports; however, the leasehold improvements incurred and acquired during the 2024-2025 fiscal year were not included in annual capital assets inventory report. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should revise its existing procedures for compiling annual capital assets additions information to ensure equipment and capital-type expenditures purchased with federal funds are considered and evaluated for inclusion in the District’s annual capital assets inventory records. Views of Responsible Officials of Auditee: Management acknowledges the finding. The District’s Assistant Superintendent for Human Resources and Manager of Fixed Assets will review and update the existing District policy and procedures relating to the recording and tracking of capital assets purchased with federal funds.

2025-003. Special Tests and Provisions United States Department of Education, passed through New York State Department of Education: Education Stabilization Fund COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. Subrecipients that use ESF funds for minor remodeling, renovation or construction contracts that are over $2,000 and use laborers and mechanics must meet Davis-Bacon prevailing wage compliance requirements, described in 2 CFR Part 200, Appendix XI - Compliance Supplement, Part 4, 20.001 Wage Rate Requirements Cross-Cutting Section. Condition: The District did not have formal contracts with the contractors for some of the construction projects funded with ARP ESSER 3 funds. Although the contractors indicated in their submitted proposals that their quoted price was based on prevailing wages, there was no legally-enforceable contractual language requiring the contractors and their subcontractors to comply with the federal Wage Rate Requirements clauses and DOL regulations. Cause: The District did not have procedures in place to ensure that capital construction projects have fully-executed contracts that include language requiring contractors to comply with federal Wage Rate Requirements, such as providing certified weekly payroll reports to support their invoices for payments. Effect: The lack of written contracts with Wage Rate Requirements clauses could expose the District to financial consequences if those contractors or their subcontractors are subsequently found to have violated the Wage Rate Requirements when performing their services for the District. Questioned Costs: None reported. Context: The District utilized ARP ESSER 3 funds to pay for its “Early Childhood Educational Center (ECEC) Door Project”, “ECEC Roof Project”, “Front Vestibule Project”, and “Playground Equipment & Rubber Surfacing of Upper Play Area”. The proposals submitted by contractors for the four projects stated that their quoted prices were based on prevailing wage rates, the District approved the proposals and issued purchase orders to the contractors; only one project has a fully executed agreement by the District and the contractor. However, neither the signed agreement for the one project nor the purchase orders issued for the other three projects contained requirements for the contractor to submit certified weekly payrolls as proof of compliance with the federal Wage Rate Requirements. Certified payrolls completed by the contractors and their subcontractors sometimes did not accompany the invoices submitted for payments, the District eventually requested and received all required certified payrolls from the contractors. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should review and revise its existing procedures for reviewing and approving capital construction projects to ensure that fully-executed contracts are obtained, and that such contracts contain clauses related to the compliance with the federal Wage Rate Requirements. Views of Responsible Officials of Auditee: Management acknowledges this finding. The District will review and update the existing procedures relating to capital-type construction projects.

Finding Number: 2025‐002 Repeat Finding: Yes, 2024‐002 Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Number: 84.425U Federal Agency: U.S Department of Education Federal Award Number: S425U210038 Pass‐Through Agency: Arizona Department of Education Questioned Costs: n/a Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Equipment and Real Property Management Criteria District management is responsible for establishing and maintaining internal control over the District’s accounting records and financial reporting in order to meet financial reporting objectives of the District. CFR 200.313 requires a physical inventory, of property purchased with federal funds, must be completed and reconciled with the property records every two years. The Uniform System of Financial Records (USFR) prescribes required procedures in the areas of capital assets including an inventory at least every three years. Condition The District lacked adequate controls over capital assets purchased with federal funds. Cause District and federal policies and internal controls in place were not always operating effectively or were not always followed. Effect The District was not in compliance with CFR 200.313. Context During our review of the District’s capital assets, we noted that the District has not performed a physical inventory and reconciliation over stewardship and capital assets since fiscal year 2017. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should appoint an individual to ensure that a physical inventory of property purchased with federal funds is conducted and reconciled back to the property records every two years. Views of Responsible Officials See Corrective Action Plan.

Inadequate Internal Controls over Grant-Funded Equipment Maintenance and Inventory and Noncompliance with Biennial Inventory Count Requirement Name of Federal agency: U.S. Department of the Interior Name of applicable pass-through entity: State of Alaska, Department of Community and Economic Development Federal program: National Petroleum Reserve – Alaska Assistance listing number: 15.439 Federal Award Number(s): Various Federal award period: July 1, 2024 - June 30, 2025 Criteria: According to 2 CFR 200.313(d)(2), a physical inventory of the property must be taken and the results reconciled with property records at least once every two years and 2 CFR 200.313(d)(4) states that adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Condition Found: The Borough was unable to provide sufficient and appropriate evidence, including complete documentation, to demonstrate compliance with the biennial physical inventory requirement for grant funded equipment under the Equipment and Real Property Management compliance requirements. Specifically, no documentation was available to support whether a physical inventory was conducted in FY2024, and the FY2025 inventory was incomplete. Additionally, there was not a control designed to ensure equipment maintenance was performed as scheduled. Cause: While the Borough had an established general policy regarding physical inventory counts and equipment maintenance, the policy lacked sufficient detail to ensure consistent implementation. Specifically, the policy did not clearly define roles and responsibilities for conducting inventory counts, establish procedures for performing the inventory counts and the timing of such counts, or identify the individuals responsible for reviewing and approving inventory results and maintenance logs. In addition, organizational changes during FY2024, including the separation of the Administration and Finance departments, contributed to a breakdown in the continuity of inventory management functions. Staff turnover and a lack of training for new employees further contributed to the insufficient execution of required inventory management procedures. Possible Asserted Effect: Failure to establish effective internal controls over the biennial inventory count and maintenance requirements increases the risk that grant-funded equipment may be lost, misappropriated, or not properly accounted for, which could result in questioned costs, inaccurate financial reporting, and noncompliance with federal award requirements. Questioned Costs: None Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the Borough establish internal controls to ensure biennial inventory counts for grant-funded equipment are properly conducted, documented, and formally reconciled with the property records and to ensure equipment is kept in good condition. Views of Responsible Officials: Management concurs with the finding. In response, management will continue to implement additional controls to strengthen compliance with equipment and real property management requirements, including improvements to inventory procedures, documentation practices, and oversight. The Department of Finance will work in coordination with the Department of Administration to provide training to all relevant departments on federal guidelines and compliance requirements related to assets purchased with federal grant funds. Management will continue to monitor these controls and take further corrective action, as necessary, to ensure ongoing compliance with applicable federal requirements.

Management is responsible for maintaining controls over capital assets in accordance with 2 CFR 200.313 including updating capital asset schedules for assets purchased with Federal award monies.

2025-003– Significant Deficiency in Internal Controls over Equipment and Real Property Management; Noncompliance with Equipment and Real Property Management Condition: A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). Criteria: Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property (2 CFR 200.313(d)(1)). Cause: Procedures within the Organization were inadequate to ensure that required elements are regularly updated on its vehicle listing, and that the physical inventory count and reconciliation is documented. Effect: Federal interest in property are lost or inadequately tracked. Recommendation: We recommend the Organization track all Federally-required elements along with its own internal data points (such as bus number and depreciation system number) in one consolidated listing. Further, we recommend that a policy be instituted whereby a physical inventory and related reconciliation is performed annually on June 30, with the results being documented, reviewed, and approved by appropriate personnel.. Views of Responsible Officials and Planned Corrective Actions: The Organization will update its property records to include all required information. Additionally, the Organization plans to document its performance of a physical inventory count and related reconciliation on an annual basis. Repeat Finding: Yes, 2024-003

2025-002 - Equipment/Real Property Management Federal Program Information: Department of Education – Special Education Cluster (IDEA) CFDA – 84.027/84.173 Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303 Internal Controls; 2 CFR 200.313(d)(1)(2)(3). Condition: During audit procedures, it was identified that the Supervisory Union did not have internal controls in place to ensure that all appropriate equipment and real property management requirements were in place. Cause: Unknown Effect: The Supervisory Union may not be consistently following all appropriate equipment and real property management standards and procedures. There was an instance where the asset purchased equipment did not have a property record and was not recorded in the asset list. Identification of Questioned Costs: None identified. Context: Of the one, and only equipment purchase identified during FY25, there was no property record and it was not recorded on the asset list. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Supervisory Union implements controls to ensure that it follows all appropriate equipment and real property management standards and procedures. We also recommend that the Supervisory Union review its equipment and property policy to ensure that it is updated and complete.

Federal Agency: U.S. Department of Education Federal Program Name: Charter Schools Assistance Listing Number: 84.282 Federal Award Identification Number and Year: S282A230008-2025 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number(s): 2025-678022-DPI-WCSPWC1-360 Award Period: 7/01/2024-6/30/2025 Type of Finding: Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria or specific requirement: 2 CFR Part 200.313 requires property and equipment purchased with federal funding to be safeguarded and maintained, and for the organization to maintain property records that include information such as the source of funding, percentage of federal agency participation in the cost, use, and condition. Condition: All equipment and real property that was acquired with federal funding had no policy in place to safeguard and maintain them, and property records that did not include the necessary information. Questioned costs: None Context: Four purchases of equipment and real property (three buses and a fence) were made with federal funding. There was no policy to properly safeguard and maintain them, and property records did not include all necessary information. Cause: Management Oversight Effect: The effect of not having an policy for safeguarding, maintaining, and recording property and equipment purchased with federal funding would be noncompliance with 2 CFR 200.313. Repeat finding: No Recommendation: It is recommended that the School establish a policy and procedure for safeguarding and maintaining real property and equipment purchased with federal funding, and develop property records that include all required information. Views of responsible officials: There is no disagreement with the audit finding. Management will work with their staff to adopt the relevant policies.

Information on the federal program: Subject: Education Stabilization Fund – Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425U Federal Award Numbers: S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: In our testing of four equipment selections, we noted the School Corporation did not add the capital asset to the capital asset listing. During the testing of equipment acquisitions, it was noted the School Corporation had not updated the capital asset ledger as of June 30, 2025 for equipment acquisitions made during the period under audit. Additionally, the capital asset ledger does not include required information, such as designation of federal funding, date acquired, capital asset categorization and useful life. Identification as a repeat finding: Yes, Finding 2023-004 Recommendation: We recommend that the School Corporation's management establish a system of internal controls related to the grant agreement and Equipment and Real Property Management compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING REFERENCE NUMBER 2025-005 FEDERAL PROGRAMS (ALN – 84.027) SPECIAL EDUCATION – GRANTS TO STATES (IDEA, PART B) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.173) SPECIAL EDUCATION – PRESCHOOL GRANTS (IDEA PRESCHOOL) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.425R) COVID-19 EDUCATION STABILIZATION FUND: CORONAVIRUS RESPONSE AND RELIEF SUPPLEMENTAL APPROPRIATIONS ACT, 2021 – EMERGENCY ASSISTANCE FOR NON-PUBLIC SCHOOLS (CRRSA EANS) (ALN – 84.425U) COVID-19 EDUCATION STABILIZATION FUND: AMERICAN RESCUE PLAN – ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ARP ESSER) (ALN – 84.938A) HURRICANE EDUCATION RECOVERY – IMMEDIATE AID TO RESTART SCHOOL OPERATIONS (RESTART) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS H027A220003 (07/01/2023 – 09/30/2023); H027A230003 (07/01/2023 – 09/30/2024); H027A240003 (07/01/2024 – 09/30/2025); H173A230002 (07/01/2023 – 09/30/2024); H173A240002 (07/01/2024 – 09/30/2025); S425R210053 (06/28/2021 – 03/31/2025); S425U210029 (03/24/2021 – 03/28/2026); S938A180002 (04/26/2018 – 09/30/2025) COMPLIANCE REQUIREMENT EQUIPMENT AND REAL PROPERTY MANAGEMENT TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR Section 200.313, establishes that procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. STATEMENT OF CONDITION As part of our procedures on equipment requirements, we requested an inventory of equipment from the PRDE as of June 30, 2025. No inventory was taken since 2019. The PRDE provided a list of all additions made during the fiscal year. In the list of additions provided to us, we found that a total amount of $10,356,037.76, classified as programs and licenses, should not be capitalized as equipment because they have a useful life of less than one year. We selected a sample of forty (40) units for the IDEA Cluster, to determine that the items were properly safeguarded and the usage was in accordance with the regulations. We found the following deficiencies: 1. Eight (8) items do not have the assigned person updated. 2. One (1) was not physically observed because is a program license software. 3. Two (2) items don’t have the location updated and no transfer documentation was provided. 4. Two (2) items the description does not agree with the property observed. We selected a sample of forty (40) items for the Education Stabilization Fund Programs, to determine that the items were properly recorded, identified, safeguarded and the usage was in accordance with the regulations. We found the following deficiencies: 1. Seven (7) items do not have the assigned person updated. 2 One (1) item does not have the location updated and no transfer documentation was provided. 3 One (1) item does not have the assigned person and location updated and no transfer documentation was provided. 4 One (1) item does not have the assigned person updated, in addition the property is not in use because it is damaged and no updated in the records was performed to reflect the condition of the property. 5 One (1) of the selected items represents the acquisition of eighty-two (82) air conditioning units for several classrooms and only one (1) property number was assigned to the purchase, therefore all units have the same property number. 6 One (1) of the selected items could not be shown at the location because the custodian is on sick leave. As an alternative procedure, a photograph of the computer/laptop was sent to us as evidence, but it does not show the tag or serial number for validation. We were able to observe that the equipment exists and is in good condition. We selected a sample of forty (40) items for the Restart Program, to determine that the items were properly recorded, identified, safeguarded and the usage was in accordance with the regulations. We found the following deficiencies: 1. Seven (7) items do not have the assigned person updated. 2. Twelve (12) items included in the assigned person the name of the public or private school as the custodian. 3. Five (5) items do not have the location updated and no transfer documentation was provided. From these items, four (4) were servers and backup batteries that were purchased through a memorandum of understanding between the PRDE and the Puerto Rico Police Department. The equipment was not in school or in custody of a person from the PRDE, instead it is in custody of a Sargeant of the Puerto Rico Police Department. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systemic deficiency. Each school Principal conducted an equipment count, but it was not reviewed, and not all schools did so. No inventory has been conducted since 2019. The identified deficiencies constitute a systemic problem. Items purchased during fiscal year under audit did not properly identify the custodian, location, description, and no proper tracking of transfer of equipment is maintained in the PRDE. The sampling was a statistically valid sample. STATEMENT OF CAUSE PRDE has not been able to work with the inventory and update it as of June 30, 2025. In addition, the Property Department does not have procedures in place in order to identify incomplete records, unidentified dispositions, or transferred equipment. POSSIBLE ASSERTED EFFECT It was not possible to validate that the PRDE complies with the requirements established by the Federal regulation related to the maintenance of records of equipment acquired with Federal funds. In addition, deficiencies were noted in the usage and proper safeguard of the equipment purchased. IDENTIFICATION OF REPEAT FINDING This is a repeat finding (Finding Reference Number 2024-006). RECOMMENDATIONS We recommend that the PRDE carry out an inventory and reconcile it with the records maintained by the PRDE. In addition, internal controls must be implemented to ensure that only equipment that is necessary for the operation of the programs is purchased. In addition, the use of this equipment must be monitored, so that its installation and use are followed up, as well as the transfer of equipment and changes to the property records.

Finding No: 2025-004 – Improvement required over the equipment and real property management for which the physical inventory observation over property has not been performed Federal Programs ALN 20.106, Airport Improvement Program Name of Federal Agency U.S. Department of Transportation - Federal Aviation Administration Category Internal Control/Compliance; Significant Deficiency Compliance Requirement Equipment and Real Property Management Criteria 2 CFR 200.313 (d) (1) establishes that property records must be maintained and should include a description of the property, a serial number or other identification number, the source of funding for the property, who holds the title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. 2 CFR 200.313 (d) (2) establishes that a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. 2 CFR 200.313 (d) (3) establishes that a control system must be developed to ensure adequate safeguard to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. 2 CFR 200.313 (d) (4) establishes that adequate maintenance procedures must be developed to keep the property in good condition. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 95 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-004 – Improvement required over the equipment and real property management for which the physical inventory observation over property has not been performed – (continued) Criteria – (continued) 2 CFR 200.313 (d) (5) establishes that if the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Property Division Manual No. 500 Section .12 (A) (1) establishes that the General Services Manager together with the Property Division Supervisor will be responsible to take an annual physical inventory. Also, will be responsible for maintaining files to evidence the annual physical inventory taking. Property Division Manual No. 500 Section .12 (A) (4) establishes that Property Division Supervisor will be responsible for investigating and determining the changes that correspond to the founded differences as a result of inventory. Property Division Manual No. 500 Section .16 (1) establishes that all equipment acquired with federal funds will be properly identified and made reference of sourced funds, percentage of federal participation and number of agreement or grant, as apply. Condition While obtaining our understanding of the policies and procedures in place at the Authority’s office in relation to the management of property and equipment, management represented to us that the required physical inventory has not been performed by the Authority’s Property Division personnel during the last seven years as required. Cause The Authority’s lack of personnel has been the principal cause for not taking the physical inventory of property and equipment, as required by federal regulations. Also, due to the early retirement program established under Act No. 80 of August 3, 2020 – “Law for Incentivized Retirement Program and Justice for Our Servants” (Act No. 80), a total of 127 eligible employees of the Authority took advantage of the benefits from the incentivized program under said act. In addition, some personnel have simply resigned from their occupied position and left the Authority willingly. The significant reduction in experienced personnel, particularly in key financial functions, occurred prior to the completion of fiscal year-end closing procedures. The Authority did not have an adequate succession or transition plan to ensure continuity of operations and effective internal control during this workforce reduction. Consequently, the Authority experienced disruption in the Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 96 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-004 – Improvement required over the equipment and real property management for which the physical inventory observation over property has not been performed – (continued) Cause – (continued) performance of key financial reporting processes and became increasingly reliant on external consultants to complete certain closing entries and procedures. Effect The lack of a periodic physical inventory procedures does not allow the Authority the timely identification of issues related to federally acquired property and equipment in order to take needed actions to prevent or correct inadequate condition. The Authority is exposed to the risk of possible unauthorized use, misappropriation and disposition of property without being noticed due to the lack of internal controls and proper supporting accounting records. Such condition exposed the Authority not to take any action to recover any suffered loss as reconciliation of physical assets to accounting records could not be made. Context This finding was present in the prior year single audit report as finding 2024-004 and 2023-004. Corrective action plan from the prior year single audit report (issued September 29, 2025) stated that during fiscal year 2025‐2026 the Human Resources area will conduct an analysis and evaluation of all vacant positions to determine which ones can be hired. Once this analysis is completed, management will obtain the required approval to hire additional personnel to address the physical inventory observation and counting. Therefore, the condition is still present as of June 30, 2025. Identification of repeat finding This is a repeat finding from the immediate previous audit, Finding 2024-004. Questioned costs Could not be determined. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-004 – Improvement required over the equipment and real property management for which the physical inventory observation over property has not been performed – (continued) Recommendation We recommend management to appoint personnel to perform this task. Such personnel might come from contracting outsourced third-party providers or hiring new or training current personnel to assist in the capital assets inventory taking procedures. In addition, we recommend that management enforce the procedures to be followed by the Property Division to mitigate the risks of misappropriation. This could be denominated as a special project to be included as part of the subsequent fiscal year budget and be contracted with a third party as the benefits overweight the risk of loss. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan provided on pages 108-114.

Finding No.: 2025-003- Equipment – Material weakness and material non-compliance Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2024 – June 30, 2025 Criteria Institutions with federally acquired research and development equipment must adhere to specific guidelines outlined in 2 CFR 200.313. This regulation mandates that entities conduct bi-annual inventory counts of federally acquired equipment to ensure accurate tracking and accountability. It requires maintaining detailed records of all equipment, including acquisition date, cost, location, and current status, to reflect any changes or discrepancies following each inventory count. Additionally, the regulation specifies procedures for the appropriate disposal of federally acquired equipment that is no longer needed or has reached the end of its useful life. Entities must request disposal instructions from the federal awarding agency and ensure that disposal methods comply with federal regulations, including obtaining necessary approvals and documenting the disposal process. Furthermore, in accordance with 2 CFR 200.303(a), non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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). Conditions Found During our testing over equipment, we identified that the College did not conduct an inventory count in the fiscal year under audit or the preceding fiscal year. During our testing over equipment dispositions, we noted that the College maintains a listing of equipment disposals, this listing did not include the date of disposition. Additionally, management was unable to provide documentation demonstrating that during the disposition of equipment the College requested disposition instructions from the federal awarding agency, when required by the terms and conditions of the award and was unable to provide supporting documentation of the individual disposals. Cause The cause of this condition was that the College did not follow its internal policies to conduct a physical inventory count, which contributed to the inability to track the specific timing of equipment retirements. Furthermore, the College lacked formally written policies and procedures governing the disposal of federally acquired equipment to ensure the disposal process, including obtaining necessary approvals, is documented and executed in compliance with Uniform Guidance. Possible Asserted Effect Improper disposal practices and the failure to perform a physical inventory count compromise the integrity of inventory management. Moreover, the absence of formal policies could result in federal noncompliance. Questioned Costs No questioned costs were identified. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding The conditions found constitute a repeat finding from the prior year. Recommendation We recommend that management perform a thorough physical inventory audit to locate all equipment and update the master equipment listing with accurate details, including current locations and statuses. Additionally, we recommend the institution review and regularly circulate formal policies and procedures for the appropriate disposal of non-functional or obsolete equipment. This should include obtaining necessary approvals and documenting the disposal process as per federal guidelines and federal awarding agency instructions. Views of Responsible Officials Recommendation accepted. Please refer to corrective action plan.

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBERS 84.425D AND 84.425U PASS-THROUGH NUMBER 5440 AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 2025-002. Equipment and Real Property Management Criteria or specific requirement: Proper records should be maintained for equipment acquired with federal awards as specified in Office of Management and Budget (OMB) 2 CFR part 200.313(d)(1). Specifically, the property records must include a serial number or another identification number and the source of the funding for the property (including the federal award identification number). Condition: During our examination of property records for equipment acquired under the Education Stabilization Fund program, we noted the capital asset listing did not include items purchased during the 2025 fiscal year nor serial numbers and/or identification tag numbers. A similar finding was issued in the prior year audit. Cause: Lack of internal controls and management oversight over property records. Effect or potential effect: Items purchased with Education Stabilization funds could not be identified for sighting and the asset listing was incomplete. Context: A test of three assets from the capital asset listing and one capital outlay purchase during the fiscal year. Identification as a repeat finding: Yes Recommendation: Internal controls should be implemented to ensure property records include all required information. Views of responsible officials: The School has since implemented an improved inventory control system that conducts inventory and records all information into APSCN as required.

Reference Number: Prior Year Finding: 2025-009 N/A Federal Agency: U.S. Department of Transportation Federal Program: Airport Improvement Program, Infrastructure Investments and Jobs Act Programs, and COVID-19 Airports Programs Assistance Listing Number: 20.106 Award Number and Year: 3-33-0011-124-2021, 2021 3-33-0011-137-2022, 2022 3-33-0011-138-2022, 2022 3-33-0011-139-2022, 2022 3-33-0011-140-2023, 2023 3-33-0011-142-2023, 2023 3-33-0011-143-2024, 2024 3-33-0011-134-2025, 2025 3-33-0011-144-2025, 2025 3-33-0011-146-2025, 2025 3-33-0011-147-2025, 2025 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 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. (2 CFR 200.313(d)(2)). Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City performed an annual physical inventory of equipment acquired under the Federal program; however, the annual physical inventory was incomplete. Context: During testing, we selected a sample of five assets from the federal financial records which document equipment acquired under the Federal program. One of five assets selected for testing from the federal financial records was not included in the annual inventory list. Cause: The City's procedures and controls were not sufficient to ensure that all equipment acquired under the Federal program was accurately recorded and included in the annual inventory list and reconciled to the results of the physical inventory. CITY OF MANCHESTER, NEW HAMPSHIRE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED JUNE 30, 2025 (23) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Effect: The equipment records may not be complete or accurately reflect the existence, location, or condition of all assets acquired under the Federal program, and the City may not timely identify missing, obsolete, or improperly recorded equipment. Questioned costs: None. Recommendation: We recommend the City strengthen procedures and internal controls to ensure that all equipment acquired under the Federal program is accurately recorded and included in the annual inventory list, and that the annual physical inventory is reconciled to the equipment records. Views of Responsible Officials: There is no disagreement with the finding.

2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education Workforce for 2 C.F.R. § 200.313(d)(1), which requires that 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. 2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education Workforce for 2 C.F.R. §200.313(d)(2), which states, 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. Due to a failure of internal controls and lack of review of District policy, the District did not maintain property records for assets acquired under the Education Stabilization Fund – Elementary and Secondary Education that identify all of the property record elements noted per 2 C.F.R. § 200.313(d)(1). Additionally, there was no indication that a physical inventory of the property acquired under the Education Stabilization Fund – Elementary and Secondary Education had been performed within the preceding two years. Failure to maintain property records and perform physical inspections over equipment and real property acquired with federal funds may result in asset misappropriation and a loss of future federal funding. To ensure proper oversight and accountability for equipment and real property, the District should review its policy and verify that property records are maintained in accordance with 2 C.F.R. § 200.313(d). Additionally, physical inventories should be conducted, and the results must be reconciled with the property records at least once every two years.

Compliance Requirement F. Equipment and Real Property Finding Type Significant Deficiency in Internal Control Over Compliance and Compliance Finding Federal Agency U.S. Department of Health and Human Services Federal Program Title Administration for Children & Families - Head Start Assistance Listing Number 93.600 Criteria: 2 CFR 200.313(d)requires that property records must be maintained for equipment acquired under a federal award that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two (2) years. Condition: During testing it was noted that a physical inventory of all assets with federal interest under the Head Start program was taken. However, the physical inventory taken was not compared to the detailed inventory listing. Cause: The Agency did not properly delete all additions in the current year to the tangible property schedule, which resulted in a lack of accurate and proper property records. Effect: Failure to compare the physical inventory observation to the detailed listing could result in an inaccurate listing of tangible property and noncompliance with the grant agreement by not including items acquired, or including items disposed of, during the year. Questioned Costs: None Identification as a Repeat Finding: N/A - this was not reported as a finding in the prior audit report. Recommendation: We recommend the Organization follow its capital asset management policy to ensure all tangible property is adequately accounted for and properly safeguarded. We also recommend that the Organization include all of the information required by the Uniform Guidance in one central tracking spreadsheet or database to ensure all assets additions are added and assets disposed of are removed. View of Responsible Officials: The Organization agrees with this audit finding.

Compliance Requirement F. Equipment and Real Property Finding Type Significant Deficiency in Internal Control Over Compliance and Compliance Finding Federal Agency U.S. Department of Health and Human Services Federal Program Title Administration for Children & Families - Head Start Assistance Listing Number 93.600 Criteria: 2 CFR 200.313(e) requires (e) when equipment acquired under a federal award is no longer needed for the original project, program, or for other activities currently or previously supported by a federal agency, the recipient or subrecipient must request disposition instructions from the Federal agency or pass-through entity if required by the terms and conditions of the Federal award. Condition: During the year ended June 30, 2025, the client moved several Head Start program classrooms to new locations. Tangible equipment purchased with federal program funds was abandoned and left at the former classroom location. This equipment was not sold. The Organization did not request formal disposition instruction from the federal awarding agency. Cause: Lack of formal policies and training regarding disposition of equipment acquired using federal grant funds. Effect: Failure to take appropriate disposition actions may result in the Federal agency to direct the recipient to take appropriate disposition actions. Questioned Costs: None Identification as a Repeat Finding: N/A - this was not reported as a finding in the prior audit report. Recommendation: We recommend that the Organization implement and document a formal process in connection with disposition of equipment to be in compliance with federal requirements. View of Responsible Officials: The Organization agrees with this audit finding.

2 CFR § 3474.1(b) gives regulatory effect to the Department of Education for 2 CFR § 200.313(d)(1), which requires that property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. 2 CFR § 200.313(d)(2) requires that physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. 2 CFR § 200.313(d)(3) requires that a control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Due to internal control deficiencies over equipment and inventory, a bus purchased for $95,908 in 2022 from the Education Stabilization Fund grant, Assistance Listing #84.425U was excluded from the fixed asset listing. In addition, the School District’s internal policies did not require a physical inventory to be performed within the required two-year period. As such, School District did not perform the required physical inventory. Exclusion of assets from official listings could result in further noncompliance upon disposition of the asset. Failure to perform required physical inventory could result in equipment being damaged, misappropriated or lost. The School District should implement procedures to help ensure that all equipment purchased from Federal funds is properly recorded and tracked by the fund used to purchase the equipment. In addition, the fixed asset listing should include the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property. The School District should design and implement procedures to help ensure that physical inventory is performed once every two years, at a minimum. This will help to mitigate the risk of noncompliance for tracking and subsequent disposition of the asset.

Federal Program: ALN 93.600 Head Start Category: Compliance/internal control significant deficiency Compliance Requirement: Equipment and real property management Criteria: 2 CFR §200.313 (d) establishes that in the management requirements of equipment that regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient or subrecipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) 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 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. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. As established by BGCPR's capitalization policy, all items with a unit cost exceeding $5,000 must be capitalized. As per 2 CFR §200.1 equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost that equals or exceeds the lesser of the capitalization level established by the recipient or subrecipient for financial statement purposes, or $5,000 on June 30, 2025. Condition: BGCPR real and personal property records are not complete and did not follow the program requirements. BGCPR’s fixed asset records include assets acquired using multiple funding sources (federal, state, and private). However, the BGCPR has not implemented a mechanism to clearly identify and distinguish equipment acquired with federal funds within the fixed asset system. As a result, property records for federally funded equipment are incomplete and do not include all data elements required under 2 CFR §200.313(d)(1), including Federal Award Identification Number (FAIN), percentage of federal participation, and information related to location, use, condition, and disposition. In addition, certain equipment acquisitions that exceeded BGCPR’s capitalization threshold were not capitalized in the fixed asset records. Cause: BGCPR did not maintain essential details, such as acquisition costs, funding sources, or the federal award identification numbers. In addition, management did not consistently apply its capitalization policy. Effect or potential effect: As a result of this condition, BGCPR: • Is not in compliance with 2 CFR §200.313(d)(1); • May incur questioned or disallowed costs related to federally funded equipment • Cannot readily identify federally funded equipment for monitoring, reporting, or physical inventory purposes • Is exposed to an increased risk of loss, misuse, or inaccurate reporting of federally funded equipment, which may affect current and future federal funding. Questioned costs: Amount is below the threshold to be considered a questioned cost. Context: Upon testing a sample of twenty one (21) assets, we noted that two (2) equipment acquisitions exceeding the capitalization threshold were not capitalized, four assets lacked an Asset ID identification or tag number, and one asset lacked a serial number. Identification as a repeat finding: As of June 30, 2024, finding 2024-007 was identified under this condition. This finding is still valid for the year ended June 30, 2025. Recommendation: BGCPR must identify all properties acquired with Federal funds and maintain adequate accounting records in accordance with Federal regulations. The program must maintain an automated accounting and record keeping system adequate for effective oversight. Management should strengthen its fixed asset tracking system to ensure compliance with 2 CFR §200.313(d)(1) by: • Implementing a method to clearly identify and track equipment acquired with federal funds within the fixed asset register; • Updating property records to include all required data elements (e.g., FAIN, percentage of federal participation, location, condition, and disposition data) for federally funded equipment; • Establishing formal policies and procedures for recording, monitoring, and disposing of equipment acquired with federal funds; • Performing periodic reviews and physical inventories to ensure completeness and accuracy of federally funded equipment records. Views of officials responsible: BGCPR recognizes that it must keep and improve the asset capitalization processes and policies, particularly within the accounting system of record. It acknowledges the need to strengthen these processes to ensure accurate and compliant management of equipment acquisitions. To address this, during fiscal year 2025-26, BGCPR implemented a system capable of recording, classifying, and monitoring all capital assets in alignment with the criteria established under federal regulation 2 CFR §200. This improvement is essential to ensure that all asset capitalization activities meet regulatory standards and support greater financial transparency and accountability. As a corrective measure, BGCPR will take the following actions: a. A property and inventory coordinator was hired and is responsible for overseeing all aspects of property control and asset management. b. Full Implementation Property software to accurately all property of by BGCPR. The system includes information such as asset identification number, acquisition date, funding source, cost, useful life, depreciation, location, and other relevant details, serving as a support tool for the property records maintained in the accounting system. c. Prepare an updated Property Control Manual, which is pending final approval by senior management. Implement procedures for timely recording of acquisitions, transfers, disposals, and impairments to ensure that asset records remain current and accurate. d. Perfom and complete physical inventory for all Units and Central Office. e. All inventory counts have been entered into the system. f. All property acquired have been recorded in the property software. g. Currently we are in the process of valuation of the physical inventory to reconcile with the accounting records by December 31, 2026. h. Training was provided to personnel involved in asset management and inventory activities to ensure consistent application of established procedures. i. Perform periodic monitoring reviews by finance, compliance, or internal audits to validate adherence to property control policies and inventory requirements. Anticipated Completion Date: December 31, 2026

Finding 2025-107 Federal Program Name Research and Development Cluster (R&D) (COVID-19) Federal Awarding Agency Various State Agency University of Montana - Missoula (university) ALN # Various Grant # Various Compliance Requirement F. Equipment and Real Property Management Type of Finding Material Weakness and Material Noncompliance Questioned Costs No questioned costs identified Criteria: Federal regulation, 2 CFR 200.313 (b) states that, “A State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures.” However, 2 CFR 200.313(d) adds additional specific requirements where equipment is acquired utilizing a federal award. Federal regulation, 2 CFR 200.313(d)(2) states, “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.” MOM policy 335 (V)(A)(3) requires all major equipment to be identified in the manner that promotes easy identification and requires property tags to be placed on plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303 requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The university’s internal controls were insufficient to ensure a complete physical inventory was performed during the biennium or that equipment purchased with federal funds was properly tagged, as required by federal regulations and state policy. Context: During the audit period, 434 of 1,147 grant assets were not inventoried. The university tracked inventory completion by university department using a checklist; however, 47 university departments were omitted from the tracking spreadsheet. As a result of those omissions, 676 grant assets were not tracked through the university’s tracking spreadsheet. These assets would be at risk of not being inventoried as a result. In the prior audit, inventory had not been completed for 109 university departments. We performed testing on a random nonstatistical sample of 11 capital assets, drawn from 159 capital assets purchased above the $10,000 capitalization threshold with grant funds during the audit period, we found that 1 asset (a drone) was not affixed with a property tag as required by state policy. University staff affixed a tag to the drone after it was observed during audit fieldwork. In the prior audit, 4 of 8 sampled items lacked tags. Repeat Finding: This issue was first reported in the 2020–2021 Single Audit (2021-034). The prior audit (2023-077) also noted untagged equipment and an incomplete physical inventory. We noted improvements from the prior periods during this audit as in the prior audit 109 university departments did not have an inventory completed for them compared to 46 university departments with no inventory completed this period. Additionally, we noted 50% of the assets reviewed in the prior audit had no asset tag affixed, compared to 9% this audit period. Effect: The university is noncompliant with federal requirements to use and manage equipment under a federal award in accordance with state laws and procedures. Incomplete inventories and untagged assets leave equipment susceptible to misuse or theft. Cause: University staff attributed the issue to employee turnover, which disrupted the complete transition of inventory tracking information. Near the end of fiscal year 2024, the university hired a dedicated capital asset accountant but was unable to completely address the backlog of uninventoried items before the audit period was over, though substantial progress was made. Recommendation: We recommend the University of Montana - Missoula: A. Continue to use enhanced internal controls to ensure compliance with federal and state requirements governing equipment for the Research and Development Program; B. Perform a complete physical inventory of capital assets at least every two years; and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2025-106 Federal Program Name Research and Development Cluster (R&D) Federal Awarding Agency Various (COVID-19) State Agency Montana State University - Bozeman (university) ALN # Various Grant # Various Compliance Requirement F. Equipment and Real Property Management Type of Finding Material Weakness and Material Noncompliance Questioned Costs No questioned costs identified Criteria: Federal regulation, 2 CFR 200.313(b) directs a state to, “use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures.” However, 2 CFR 200.313(d) adds additional specific requirements where equipment is acquired utilizing a federal award. Federal regulation, 2 CFR 200.313(d)(1) states that, “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 Federal Agency 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. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property.” Federal regulation, 2 CFR 200.313(d)(2) states that, “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.” MOM policy 335 (V)(A)(3) requires all major equipment to be identified in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The university did not complete a full physical inventory of equipment during the audit period as required by federal regulations. As a result, the university’s controls were not effective in updating asset locations on property records or ensuring all assets were properly tagged. Context: The university holds approximately 4,755 capital assets across all funding sources; however, only 3,545 (approximately 75%) were inventoried during the audit period. This is an improvement from the prior audit (22-02), during which only 1,055 of 4,551 assets (approximately 23%) were inventoried, but a full inventory was still not completed. We performed testing on a random nonstatistical sample of 10 out of a population of 266 assets, found that 7 were not located at the address listed on the property record, and 1 was not tagged during the audit period. Repeat Finding: This is a repeat finding from the prior single audit (2023-076). As mentioned above in the context section, significant progress has been made on the inventorying of equipment as 75% of equipment was inventoried this period compared to 23% in the prior period. Effect: The university is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Inaccurate property records and incomplete asset tagging leave capital assets inadequately safeguarded and susceptible to theft. Cause: The university attributed the incomplete inventory to a COVID-19-related backlog and insufficient personnel resources to inventory capital assets, tag equipment, and update property records. Recommendation: We recommend Montana State University - Bozeman: A. Continue enhancing internal controls to ensure compliance with federal and state requirements governing equipment for the Research and Development Program; B. Perform a complete physical inventory of capital assets at least every two years; and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2025-072 Federal Program Name Education Stabilization Fund (ESF) (COVID 19) Federal Awarding Agency U.S. Department of Education State Agency Office of Public Instruction (office) ALN # 84.425D and 84.425U Grant # S425D200006, S425U210006, S425D210006 Compliance Requirement F. Equipment and Real Property Management M. Subrecipient Monitoring N. Special Tests and Provisions Type of Finding Material Weakness and Material Noncompliance Questioned Costs No questioned costs identified Criteria: Federal regulation 2 CFR 200.313(c)(1) requires prior approval from the federal government or the pass-through entity (the office), before equipment is purchased. Federal regulation, 2 CFR 200.439(b)(1) requires capital expenditures to be pre-approved by the federal government or pass-through entity. Federal regulation, 2 CFR 176.190(a) requires laborers and mechanics employed by contractors and subcontractors on projects funded directly with federal funds to be paid prevailing wages. Federal regulation, 2 CFR 200.332(e) requires the office to monitor the activities of subrecipients (schools) to ensure the subrecipient complies with federal statutes, regulations, and the terms and conditions of the subaward. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The office receives ESF funds under the Elementary and Secondary School Emergency Relief (ESSER) portion of the grant. The office reimbursed Local Education Agencies (LEAs), which are generally schools or school districts, that included equipment and construction costs. The office did not have adequate controls to ensure compliance with federal regulations, such as preapproval for equipment and construction projects or that schools paid the prevailing wage rate. Additionally, monitoring tools used to ensure subrecipients complied with federal regulations were not always obtained or reviewed adequately to ensure they were fully completed. Context: In fiscal years 2024 and 2025, the office paid over $230 million to schools based on reimbursement requests. We designed a randomly selected a non-statistical sample of 60 items to test controls and 40 items to test allowability out of 3,062 LEA cash requests. We tested the first 20 items and found one or more exceptions for the different required attributes tested. Associated expenditures for these exceptions ranged from approximately $6,000 to over $420,000. Attributes tested included existence of preapproval form for equipment or construction projects, actual approval of the items, acknowledgment of prevailing wage requirements, and existence and completion of a self-assessment tool used to monitor subrecipients. As part of our testing of subrecipients, we also noted three schools with Single Audit reports that contained prevailing wage rate findings in their 2024 audit reports. Based on this error rate, we concluded there was a material weakness and material noncompliance and did not test the remaining sample items. Because we did not identify any equipment or construction that was unallowable per grant regulations, we did not question any costs. Repeat Finding: Recommendation part C of Single Audit finding 2023-032 from the audit for the two fiscal years ended June 30, 2023, is related to the monitoring of subrecipients for compliance with construction and equipment requirements. Effect: Controls were not adequate to ensure the office complied with federal regulations related to subrecipient monitoring or that schools complied with federal regulations. The office is not in compliance with federal regulations. Cause: The office required schools to complete various forms, such as a self-assessment form to ensure compliance with all ESSER federal requirements and a preapproval form if they used ESSER funds for large equipment items or construction items. While these required schools to certify they were aware of and followed prevailing wage rate requirements, it was not adequate to ensure they did. Additionally, while most schools received the self-assessment form, staff did not adequately review it or follow up to ensure all questions were answered. Because the ESSER grant program has ended, no staff members who worked on this portion of the grant were available to explain why the forms were not approved or why the self-assessments were not fully completed. Recommendation: We recommend the Office of Public Instruction: A. Enhance internal controls over monitoring to ensure subrecipients are complying with all requirements, including that construction and equipment purchases are preapproved and federal regulations related to the prevailing wage rate are followed. B. Monitor subrecipients’ compliance with construction and equipment requirements, including reviewing wage certifications for construction projects, as required by federal regulations. Views of Responsible Officials: The office concurs with the recommendation. For additional information regarding the office’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2025-031 Federal Program Name Formula Grants for Rural Areas and Tribal Transit Program (COVID-19) Federal Awarding Agency U.S. Department of Transportation State Agency Montana Department of Transportation (department) ALN # 20.509 Grant # MT-2018-011, MT-2020-003, MT-2020-013, MT-2022-019, MT-2022-022, MT-2023-004, MT-2023-005, MT-2023-011, MT-2024-009, MT-2024-012, MT-2024-015, MT-2024-018, MT-2025-005, MT-2025-006 Compliance Requirement F. Equipment and Real Property Management Type of Finding Material Weakness and Material Noncompliance Questioned Costs No questioned costs identified Criteria: Federal regulation, 2 CFR 200.313(e), requires grant recipients to request disposition instructions from the federal awarding agency when equipment acquired under a federal award is no longer needed for its original purpose. Federal regulation, 2 CFR 200.313(d)(2), requires a physical inventory of equipment acquired under a federal award, with results reconciled against property records, at least every two years. Federal regulation, 2 CFR 200.313(d)(4), requires regular maintenance procedures to ensure equipment acquired under a federal award remains in proper working condition. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The department's controls were insufficient to ensure equipment inventory was conducted completely and accurately. As a result, not all subrecipient equipment was disposed of as required by federal regulation, and the department's equipment records were inaccurate. Context: The department conducts a physical inventory of all subrecipient vehicles acquired with federal awards every two years. During the audit period, the department reconciled inventory results with property records and identified discrepancies but did not follow up to determine what happened to missing vehicles and did not update property records to reflect the inventory results. The department also conducted safety inspections during the physical inventory but did not confirm that vehicles with critical safety failures were repaired before returned to service. Subrecipients are required to report quarterly to the department on vehicle use; if a vehicle was not used, the subrecipient must explain why. We followed up on five vehicles at two subrecipients that were not located during the physical inventory. Each vehicle originally cost between $50,000 and $135,000. Quarterly reports showed all five vehicles were reported as not in operation for 10 to 13 consecutive quarters, yet none were listed as disposed of in property records. One subrecipient reported that the vehicles had been scrapped for parts. The department's controls did not detect the need for disposal and therefore never provided disposal instructions. Effect: The department's equipment property records are inaccurate. There is also a risk that proceeds from the disposal of federally funded vehicles are owed to the Federal Transit Administration but have not been remitted. Cause: The department was short-staffed during the audit period, causing vehicle disposals to become backlogged. With fewer resources to proactively detect when disposals were needed, the department relied on subrecipients to request disposal instructions themselves. Recommendation: We recommend the Montana Department of Transportation: A. Strengthen internal controls to detect when subrecipients have disposed of or are no longer actively using equipment acquired under the Formula Grants for Rural Areas federal program. B. Provide disposal instructions to subrecipients for all equipment acquired under the Formula Grants for Rural Areas federal program when it is no longer used for the program, as required by federal regulation. C. Update property records to reflect the results of equipment inventories, as required by federal regulation. Views of Responsible Officials: The department concurs with this recommendation. For additional information regarding the department’s planned corrective action see the Corrective Action Plan starting on page D-1.

FINDING 2025-021 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context A property record or capital asset listing would include the following for each asset: a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, and use and condition of the property is to be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The School Corporation did not have policies or procedures in place to ensure that a detailed capital asset listing was complete for the audit period. During the audit period, the School Corporation purchased equipment totaling $1,547,749 with ESSER funds. None of the equipment purchased was included on a capital asset listing or physical inventory. Since none of the equipment purchased was included on a capital asset listing, it was determined that the equipment was not adequately safeguarded or maintained. INDIANA STATE BOARD OF ACCOUNTS 66 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. This is isolated to the ESSER II and ESSER III grants. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to affect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, assets purchased with federal dollars were not properly added to the School Corporation's asset listing. In addition, assets on the listing did not denote whether federal funds were used to acquire or dispose of the asset, nor were any discrepancies in the records reconciled. INDIANA STATE BOARD OF ACCOUNTS 67 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation The School Corporation should establish and implement formal policies and procedures to ensure a complete and accurate capital asset listing is maintained. This should include documenting all required asset information, performing regular physical inventories, and reconciling purchases, especially those funded by federal awards, to the capital asset records. This will help ensure compliance with federal requirements and improve the reliability of the School Corporation's asset management practices. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding 2025-009 – Equipment and Real Property Management: Lack of Documentation Supporting Physical Inventory Counts – Significant Deficiency in Internal Control Over Compliance; Agencies – Department of Health and Human Services, National Science Foundation, National Aeronautics and Space Administration, Department of Agriculture; Assistance Listing Numbers (ALN) - 93.859, 47.083, 47.050, 93.310, 43.008, 10.699, 47.078; Program Name - Research and Development Cluster; Award Year / Award Number – FY 2025, 2024, 2023, 2022, 2021, 2020 / Awards ANTHC- 23-U-396186; 5U24GM146576-02; 2049596; 2243258; ICER 2040729, Subaward 15660316; FIAN 2220560; ICER 1928230; Subaward 1558528; ICER 2052107; 2127346; 2309480; 80NSSC20M0070; 80NSSXC20M0070; 80NSSC24M0179, 24-MIRO-0054;1333MF4P0220; 18-JV-11261944-100; 2325081; 2419971, subaward 24-S37; Criteria or Specific Requirement – 2 CFR 200.313 requires recipients of federal awards to maintain property records for equipment acquired under federal awards, perform a physical inventory of equipment at least once every two years, and reconcile the results of the physical inventory to the property records.; Condition – The inventory count control could not be verified because management was unable to provide documentation showing that inventory counts were completed within the required two-year period.; Cause – Management did not have sufficient documentation retention policies and procedures to ensure physical inventory counts of federally funded equipment were documented, reconciled to property records, and retained in accordance with federal equipment management requirements.; Effect or Potential Effect – Without documented physical inventory counts and reconciliations, management may not identify missing, inaccurate, or unsupported equipment records timely.; Questioned Costs - None reported.; Context – During testing of three equipment samples totaling $334,957, management stated that physical inventory counts had been performed; however, APU did not provide documentation showing that the counts occurred within the required two-year period or that the results were reconciled to the property records. Detailed asset records were maintained for the items tested, and we were able to verify that the assets remained in service. However, due to the lack of retained inventory count and reconciliation documentation, we could not verify that the physical inventory control operated as designed for the three samples selected.; Repeat Finding – This is not a repeat finding.; Recommendation - Management should ensure physical inventory counts of equipment are performed and documented at least once every two years, and that documentation of the inventory counts and related reconciliations is retained to demonstrate compliance with federal equipment management requirements.; Views of Responsible Officials – Management concurs with the finding and is implementing procedures to document, reconcile, and retain required physical inventory records.

2025-004 – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Department of Education, National Science Foundation Federal Assistance Listing Number: 84.031, 84.184X, 47.074, 47.076 Federal Program Name: Higher Education Institutional Aid, Mental Health Service Professional Demonstration Grant, Research and Development Cluster Federal Award Number: Various Award Year: 2024-25, 2023-24, 2022-23 Criteria – Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) for real property and equipment management. 2 CFR 200.313(d)(1) requires that property records must be maintained that include, among other things, description of the property, source of funding for the property and percentage of Federal participation in the project costs for the Federal award under which the property was acquired. 2 CFR 200.313(d)(2) states that a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition/context – Based on a walkthrough of the control environment, the University is not maintaining comprehensive property records that include all the required elements for purchases of assets with federal funds. In addition, the University did not perform a physical inventory for those purchases in the last two years. Questioned costs – None. Cause/effect – This occurred because of lack of controls and an antiquated equipment tracking system. The University is unable to satisfy the requirement that they maintain proper records for equipment and adequately safeguards and maintains equipment. Repeat finding – Yes, 2024-004 Recommendation – We recommend the University update their equipment tracking system to allow the University to identify assets purchased with federal money. In addition, we recommend the University perform a physical inventory of its fixed asset at least once every two years. Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and recognizes the need to strengthen its processes surrounding the identification, tracking, and monitoring of federally funded equipment.