Findings Citing § 200.313

Reference Number: 2023-004 Federal Agency: U.S. Department of Transportation Federal Program: Public Transportation Emergency Relief Program Cluster Program: Not Applicable ALN Number: 20.527 Contract Number: Various Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency-Non-Compliance (1) CRITERIA Equipment and Real Property Management - As stated in Uniform Grant Guidance - §200.313 Requirements for Equipment and Real Property Management: • 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 section 200.313(d)(1)). • 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 section 200.313(d)(2)). (2) CONDITION/PERSPECTIVE The MTA has Equipment and Real Property management procedures in place. MTA has corporate policies and procedures regarding Equipment and Real Property management. We tested the Public Transportation Emergency Relief Program’s Equipment and Real Property management compliance. Based on our review of the Equipment and Real Property for this program, we noted of sixty samples selected, eight (8) equipment samples related to New York City Transit Authority were transferred to the City of New York Police Department. The eight piece of equipment related to police radios and were included in MTA Biannual report as out-of service and fully depreciated. Therefore, we were not able to verify existence of these piece of equipment. (3) CAUSE MTA did not ensure that all out-of-service equipment was properly adjusted in the MTA Bi-Annual report and a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. (4) EFFECT MTA may be considered non-compliant related to Equipment and Real Property management compliance related to 2 CFR section 200.313(d)(2). (5) REPEAT FINDING No (6) RECOMMENDATION We recommend that the MTA ensure all equipment in service should be properly accounted and reported in MTA’s Bi-Annual report and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). (7) QUESTIONED COST None. (8) VIEWS OF RESPONSIBLE OFFICIAL MTA is acknowledging the finding. The assets are fully depreciated. We will remove the assets from the Biennial listing from PSR and write them off from the accounting system. Also, see “Corrective Action Plan”.

Finding 2023-002 – Equipment and real property management Program Name (ALN): Public Transportation Emergency Relief Program (ALN 20.527) Federal Agency: U.S. Department of Transportation Federal Grant Numbers and Years: NJ-44-X004 (April 1, 2014 – November 5, 2023) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Prior Year Finding: Not applicable Finding Type: Material weakness and material noncompliance 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 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 Section 200.313(d)(1)). A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years as required by 2 CFR Section 200.313(d)(2). In addition, under 2 CFR section 200.303(a), a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Port Authority of New York and New Jersey (the Port Authority) used the Public Transportation Emergency Relief Program to purchase equipment to perform maintenance and inspection of the track damaged by Superstorm Sandy, repair the damage, and allow the Port Authority to be more resilient in future events. We noted the Port Authority did not perform a physical inventory of the equipment within the required two-year period. Further, during our physical observation of fifteen pieces of equipment, we noted for four items, the serial numbers included on the equipment’s tag did not match the serial number included in the Port Authority’s property records. Cause: In discussing these conditions with the Port Authority’s management, they stated inadequate staffing resources due to staff turnover contributed to the finding. Effect: Failure to perform an inventory at least once every two years and maintaining accurate property records may prohibit the Port Authority from properly safeguarding and maintaining equipment in accordance with federal requirements. Questioned Costs: None. Recommendation: We recommend that the Port Authority strengthen its processes to ensure a physical inventory of equipment acquired with federal funds is performed at least once during each two-year period. Views of Responsible Officials: The Port Authority acknowledges an internal control deficiency in performing a physical equipment inventory of equipment as required under CFR 200 for the Public Transportation Emergency Relief Program 2013 49 U.S.C. 5324 (Grant award NJ-44-X004 PATH-H.) PATH successfully performed a physical inventory of equipment in 2018, the first year it was required. In 2020, the performance of a physical inventory coincided with the COVID-19 pandemic which facilitated the retirement of key personnel in PATH who were responsible for performing the physical inventory of the equipment that was federally funded. This staff transition led to a loss of PATH system expertise necessary to pick up the process previously developed, resulting in the inadvertent lapse in performing the physical inventory in 2020 and 2022. To mitigate this deficiency PATH has performed a physical inventory in 2024 and updated its procedures as they relate to performing the physical inventory of equipment and to have staffing redundancies in place to account for staff turnover. In addition, PATH updated its equipment inventory log to reflect the correct serial numbers on the four pieces of equipment that KPMG identified.

Type of Finding: Significant Deficiency in Compliance and Internal Control over Compliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020, through September 27, 2025 Criteria or specific requirement: 2 CFR 200.313(d)(2) states that a physical inventory of property must be taken and the results reconciled with the property record at least once every two years. Condition: During testing, it was noted that a physical inventory and reconciliation with the property records had not been performed. Questioned costs: None. Context: A sample of 4 was made from a population of 4 pieces of equipment purchased with funds from the major program (entire population). Of the 4 sampled, all belonged to a population of assets that had not been part of a formal physical inventory and property reconciliation. Cause: The Organization does not currently have procedures in place to perform a formal inventory count and reconciliation with the property records at least once every two years. Effect: Without periodic equipment counts, the Organization is in noncompliance with federal regulations around Equipment and Real Property Management. In addition, there is an increased risk of errors and inaccuracies in the inventory records and an increased risk of fraud or theft going undetected. Repeat Finding: No. Recommendation: CLA recommends that the Organization adopt policies and procedures that include performing a formal inventory count and reconciliation back to the property records at least once every two years, in compliance with 2 CFR 200.313(d)(2). The inventory count should be documented and signed by the individual performing the count as a form of attestation to the amounts recorded. Views of responsible officials: There is no disagreement with the audit finding.

Program Information: Assistance Listing #: 15.022 U.S. Department of the Interior Tribal Self-Governance/Indian Reservation Roads Program Award Numbers: GT-OSGT107-10/A16AP00068 Award Periods: 1/1/2011 – 12/31/2023 Criteria: Internal control is a process, effected by an entity’s…[governing body], management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance: (Internal Control – Integrated Framework, Committee of Sponsoring Organizations of the Treadway Commission, © May 2013, p.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 sales price of the property (2 CFR section 200.313(d)(1)). 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 section 200.313(d)(2)). 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 section 200.313(d)(3)). Condition/Context: Management completed a physical inventory in 2022-2023, but was not able to provide support showing management review and approval. [ ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: Turnover in key personnel, lack of internal controls, and the inability to provide supporting documentation. Effect: Without review and approval of the physical inventory listing, it is possible the reconciliation to property records may not occur. Questioned Costs: None. Repeat Finding: No. Recommendation: We recommend that physical inventory is taken, that the results are reconciled with the property records at least once every 2 years, and that documentation of this process is stored for review at a later date. View of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.

Program Information: Assistance Listing #: 15.022 U.S. Department of the Interior Tribal Self-Governance/Indian Reservation Roads Program Award Numbers: GT-OSGT107-10/A16AP00068 Award Periods: 1/1/2011 – 12/31/2023 Criteria: Internal control is a process, effected by an entity’s…[governing body], management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance: (Internal Control – Integrated Framework, Committee of Sponsoring Organizations of the Treadway Commission, © May 2013, p.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 sales price of the property (2 CFR section 200.313(d)(1)). 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 section 200.313(d)(2)). 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 section 200.313(d)(3)). Condition/Context: Management completed a physical inventory in 2022-2023, but was not able to provide support showing management review and approval. [ ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: Turnover in key personnel, lack of internal controls, and the inability to provide supporting documentation. Effect: Without review and approval of the physical inventory listing, it is possible the reconciliation to property records may not occur. Questioned Costs: None. Repeat Finding: No. Recommendation: We recommend that physical inventory is taken, that the results are reconciled with the property records at least once every 2 years, and that documentation of this process is stored for review at a later date. View of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.

Criteria: 2 CFR 200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that organizations who manage the federal award: • Understand and comply with the federal statutes, regulations, and terms and conditions of the award; • Evaluate and monitor compliance; • Take prompt action when instances of noncompliance is identified. 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). Additionally, the Uniform Guidance requires non-federal entities to develop written procedures related to the following areas: 1. Cash Management 2 CFR 200.302(b)(6) states that the financial management system of each non-Federal entity must provide for the written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. 2. Allowability of Costs 2 CFR 200.302(b)(7) states that the financial management system of each non-Federal entity must provide for the Written procedures for determining the allowability of costs in accordance with Subpart E (Cost Principles) of this part and the terms and conditions of the Federal award. 3. Conflict of Interest 2 CFR 200.318(c)(1) states that the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial, or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. In addition, the organizations should ensure that existing written procedures are in compliance with: a. Equipment Management Requirements 2 CFR 200.313(b) states that “A state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures b. General Procurement Standards 2 CFR 200.317 to 200.326 discusses that contracts must be established and managed in accordance with the procurement requirements in 2 CFR Part 200. Grantees must have written procurement policies and procedures that demonstrate a fair and reliable process, with standards of conduct addressing conflicts of interest, for obtaining grant-funded goods and services. Condition The Foundation does not have documented policies and procedures concerning the following key compliances areas which are required by the Uniform Guidance: • Cash Management • Allowability of Cost • Conflict of Interest • Equipment and Real Property Management • Procurement, Suspension & Debarment Cause This is attributed to the insufficient resources or staffing to develop and formalize the policies and procedures. Effect The absence of formal policies and procedures in the key compliance areas could result in non-compliance with federal regulations, which may lead to unnecessary sanctions. Additionally, without formal written policies and procedures, it is difficult to ensure consistent practices across the organization. Questioned Costs None Recommendation The Foundation should develop and implement formal written policies and procedures for the specific areas required by the Uniform Guidance. These policies and procedures must clearly delineate the requirements of the Uniform Guidance. Personnel responsible for these areas should receive adequate training and apply the policies effectively. Regular reviews should be conducted to update the policies and procedures as needed.   Views of Responsible Officials and Planned Corrective Action We understand how crucial it is to have strong policies and procedures in place. Here’s how we plan to move forward: 1. Review of Existing Policies and Procedures: We’re currently taking a close look at our existing policies and procedures to ensure they align with the Uniform Guidance. This will help us identify any gaps and make necessary updates so that we’re fully compliant. 2. Development of New Policies: Alongside this review, we will create clear and comprehensive written policies in key areas, such as: • Cash Management: Setting up procedures that comply with 2 CFR 200.305 to ensure timely payments. eCFR :: 2 CFR 200.305 -- Federal payment. • Allowability of Costs: Crafting guidelines that follow Subpart E—Cost Principles, so we can confidently determine which expenses are allowable. https://www.ecfr.gov/current/title-48/chapter-7/subchapter-E/part-731/subpart-731.7/section-731.770. • Conflict of Interest: Establishing standards of conduct that address potential conflicts and promote transparency. • Equipment and Real Property Management: Developing policies for managing equipment acquired under federal awards in line with 2 CFR 200.313(b). eCFR :: 2 CFR 200.313 -- Equipment. • Procurement Procedures: Creating clear procurement guidelines that align with 2 CFR 200.318 through 200.326 to ensure fairness and oversight. eCFR :: 2 CFR 200.318 -- General procurement standards. 3. Training and Communication: The Finance Department will be responsible for training all staff involved in managing federal awards. Training sessions will ensure that everyone understands the requirements and their roles in maintaining compliance. This training will be completed by December 31, 2024. Personnel responsible: Eduardo Cedeno, Director of Finance Anticipated completion date: December 31, 2024

Federal Agency - United States Department of Housing and Urban Development Federal Programs - Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii - (14.228) Federal Award Years - 2023 State Agency - Not applicable Reference - 2023-002 Capital Asset Records - Material Weakness and Noncompliance Criteria - Management is responsible for maintaining capital asset records that are accurate. Code of Federal Regulations (CFR) §200.313(d) Equipment states, at a minimum, the following must be met: 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 - The capital asset records are insufficient as they do not include the source of funding, acquisition date, or the cost of the property as well as certain other information required by Federal regulations. Additionally, no physical inventory has occurred nor is there a control system that has been implemented over these assets. Cause - The Town has not maintained capital asset records or engaged a third party expert. Effect of Condition - The Town is not in compliance with CFR §200.313(d). Additionally, capital assets have been excluded from these financial statements. Statistical Sampling - The sample was not intended to be, and was not, a statistically valid sample. Recommendation - We recommend the Town invest in capital asset software to maintain the capital assets and have a physical inventory performed. Questioned Costs - None. Perspective - No other material omissions were noted in the financial statements. This is an isolated issue.

FINDING 2023-003 Subject: Water and Waste Disposal System for Rural Communities - Equipment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal System for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): CY 2023 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The Town had not designed or implemented adequate internal controls and procedures to ensure that equipment purchased from the grant was included in the Town's capital asset listing. A physical inventory of equipment was not performed at least once within the last two years. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF LAFONTAINE 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. . . ." Cause The Town was not aware of the compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot ensure the required assets are included in the capital asset listing. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF LAFONTAINE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the Town design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties, to ensure capital assets purchased from the grant are included in the Town's capital asset ledger and that a physical inventory is performed 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.

Finding 2023-003 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Federal Agency: U.S. Small Business Administration Federal Program: Congressional Grants, ALN No. 59.059, Award SBAHQ2210040, Award Period 9/1/2022 – 3/31/2023 Compliance Requirement: Equipment and Real Property Management Repeat Finding: No Condition: The Organization did not separately identify and track capital asset activity funded with federal grants. Questioned Costs: None Context: For the one sampled capital asset purchase, funded with this federal grant, no identifying or tracking method was used on the capital asset listing. Criteria: Per 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements (Uniform Guidance), Section 200.313 Equipment, "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 section 200.313(d)(1))." Cause: The grantor did not communicate this requirement in the grant award document. Effect: The identification of federally-funded capital assets allows for an organization to manage the asset throughout its useful life until disposition, when the federal grantor may be owed a portion of the proceeds of sale. Recommendation: We recommend a policy be developed that would include procedures for identifying and tracking capital assets funded with federal grants. This could include identification in a capital asset listing or using a tracking mechanism.

Finding 2023-001 Assistance Listing: 93.889 Regional Healthcare System Coordinate for Disaster Preparedness Condition: The Center did not perform a physical inventory of the equipment provided to any member hospitals within the past two years. Criteria: 2 CFR 200.313 addresses requirements and conditions regarding equipment acquired under a Federal award. 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. Cause: Due to organizational turnover in fiscal year 2022 and again in fiscal year 2023, no physical inventory was completed during these years. Effect: The Center did not perform adequate procedures to ensure proper equipment management was taking place at member hospitals. Repeat finding: This is not a repeat finding. Questioned costs: None Recommendation: We recommend that The Center develop a policy and procedure to ensure that all member hospitals are visited at least once every two years for a physical equipment inspection. Views of responsible officials: Management concurs with this recommendation. See also corrective action plan.

Finding No. 2023-002: Equipment and Real Property Management Policy U.S. Department of Housing and Urban Development, CFDA 14.231, Emergency Solutions Grant Type of Finding: Significant Deficiency in Internal Controls over Compliance Compliance Requirement: Non-compliance Criteria: Per 2 CFR 200.313 the entity must use its own documented procedures surrounding the acquisition, safekeeping, maintenance, and disposal of all equipment and real property acquired with federal awards. Condition: When testing and evaluating the Organization’s compliance with documented policy surrounding the equipment and real property management, it was determined that the Organization does not have a documented policy. Additionally, although there is a listing of property and equipment this is not regularly reviewed or maintained. Cause: Program administrative staff are not familiar with equipment and real property management requirements of Federal grants and contracts. Effect/Context: As a result, the entity could inadvertently engage in an equipment or property transaction for which the appropriate standards were not followed. Questions Costs: None Repeat Finding from Prior Year: No Recommendation: Coachella Valley Rescue Mission should document and implement policy and procedures to comply with the standards surrounding equipment and real property management standards. Management’s Views and Corrective Action Plan: See the accompanying Management’s Views and Corrective Action Plan, which are considered part of this report.

Federal Agency - United States Department of Agriculture Federal Programs - Water and Waste Disposal Systems for Rural Communities - (10.760) Federal Award Years - 2019 State Agency - Not applicable Reference - 2023-002 Capital Asset Records - Material Weakness and Noncompliance Criteria - Management is responsible for maintaining capital asset records that are accurate. Code of Federal Regulations (CFR) §200.313(d) Equipment states, at a minimum, the following must be met: 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 - The capital asset records are insufficient as they do not include the source of funding, acquisition date, or the cost of the property as well as certain other information required by Federal regulations. Additionally, no physical inventory has occurred nor is there a control system that has been implemented over these assets. Cause - The Town has not maintained capital asset records or engaged a third party export. Effect of Condition - The Town is not in compliance with CFR §200.313(d). Additionally, capital assets have been excluded from these financial statements. Repeat Finding - This is a repeat finding of item 2022-002 as reported for the year ended December 31, 2022. Recommendation - We recommend the Town invest in capital asset software to maintain the capital assets and have a physical inventory performed. Questioned Costs - None. Perspective - No other material omissions were noted in the financial statements. This is an isolated issue. View’s of Responsible Officials and Planned Corrective Actions - Management will look at investing in a capital asset software and having a physical inventory performed.

FINDING 2023-001 Subject: CDBG - Entitlement Grants Cluster - Equipment and Real Property Management Federal Agency: Department of Housing and Urban Development Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Year (or Other Identifying Numbers): B-18-MC-18-0001, B-19-MC-18-0001, B-20-MC-18-0001, B-21-MC-18-0001, B-22-MC-18-0001, B-23-MC-18-0001 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context Community Development Block Grants/Entitlement Grants (CDBG) may be used to acquire real and personal property, supplies, and equipment. Equipment purchased with CDBG funds requires management, among other things, to maintain property records, complete a physical inventory, safeguard against loss, and properly maintain the equipment. A property record or capital asset listing, which would include the following attributes, is to be maintained for assets purchased.  A description of the property.  A serial number or other identification number.  The source of funding for the property (including the federal award identification number FAIN).  Who holds title.  The acquisition date.  Cost of the property.  Percentage of federal participation in the project costs for the federal award under which the property was acquired.  The location.  Use and condition of the property. Although the City maintained property records, adequate property records for assets purchased with CDBG award funds was not maintained. The one asset purchased with CDBG funds, totaling $222,333, was added to the property records, but did not include the source of funding for the property, who holds title, percentage of federal participation, and condition of the property. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 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 A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The City did not add an improvement as they were unaware that this should be added to the property records. In addition, the property records did not include all the necessary fields as the City did not know the additional information was needed. 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 required elements of the property record were documented for assets acquired with CDBG award funds nor were all assets added to the property records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure property records are maintained for all assets purchased and that all required elements are included within the property records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Criteria - Management is responsible for maintaining capital asset records that are accurate. Code of Federal Regulations (CFR) §200.313(d) Equipment states, at a minimum, the following must be met: 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 - The capital asset records are insufficient as they do not include the source of funding, acquisition date, or the cost of the property as well as certain other information required by Federal regulations. Additionally, no physical inventory has occurred nor is there a control system that has been implemented over these assets. Cause - The Town has not maintained capital asset records or engaged a third party expert. Effect of Condition - The Town is not in compliance with CFR §200.313(d). Additionally, capital assets have been excluded from these financial statements. Statistical Sampling - The sample was not intended to be, and was not, a statistically valid sample. Recommendation - We recommend the Town invest in capital asset software to maintain the capital assets and have a physical inventory performed. Questioned Costs - None. Perspective - No other material omissions were noted in the financial statements. This is an isolated issue.

FINDING 2023-004 Subject: Water and Waste Disposal Systems for Rural Communities - Equipment and Real Property Management Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. A property record or capital asset listing, which would include the information listed below, is to be maintained for assets purchased that exceed the Town's capitalization threshold. In addition, a physical inventory of all capital assets should be completed at least every two years. Capital Asset Listing Information  A description of the property.  A serial number or other identification number.  The source of funding for the property (including the federal award identification number (FAIN)).  Who holds title.  The acquisition date.  Cost of the property.  Percentage of federal participation in the project costs for the federal award under which the property was acquired.  The location.  Use and condition of the property. The Town purchased one asset, totaling $477,750, which exceeded the Town's capitalization threshold. The asset was determined not to have been recorded in property records, nor was the asset on the inventory listing. Additionally, the Town did not complete a capital asset inventory every two years as required. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 22 TOWN OF FRANKTON 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. . . ." Cause A proper system of internal controls was not designed by the management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Clerk-Treasurer was new to the position as of January 1, 2024. The former Clerk-Treasurer was not knowledgeable on the compliance requirements of the federal award. The Town contracted with outside engineers to manage the compliance requirement, and there was no documentation that an inventory of capital assets had been completed. Additionally, the provided capital asset listing did not include the asset in question. Lastly, the capital asset listing included items that were under the capital asset threshold in the Town's Capital Asset Policy. INDIANA STATE BOARD OF ACCOUNTS 23 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, a capital asset purchased with federal funds was not properly recorded in a capital asset ledger, and a physical inventory was not performed. Noncompliance with the provisions of federal regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure capital assets purchased with federal funds are included on a capital asset ledger and that a physical inventory is performed 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.

FINDING 2023-001 Subject: Airport Improvement Program - Equipment and Real Property Management Federal Agency: Department of Transportation Federal Program: Airport Improvement Program, COVID-19 Airports Programs, and Infrastructure Investment and Jobs Act Programs Assistance Listings Number: 20.106 Federal Award Number and Year (or Other Identifying Number): 3-18-0082-050 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 TERRE HAUTE REGIONAL AIRPORT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Detailed capital asset records are to be maintained by the entity. The records should contain the equipment description (including serial number or other identification number), 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, location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. The Authority provided a capital asset list that only included the asset description and value amount. The listing did not include all the requirements as stated above. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over 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. . . ." Cause The Authority was unaware that they needed to maintain detailed capital asset records with requirements as stated above. Effect Without the proper implementation of an effectively designed system of internal controls, the Authority cannot ensure that all capital assets are being included in the records of the Authority. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 14 TERRE HAUTE REGIONAL AIRPORT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the Authority's management strengthen its system of internal controls to ensure that they maintain detailed capital asset records that include all the requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Reference Number: 2023-002 Federal Agency: U.S. Department of Homeland Security Federal Program: Rail and Transit Security Grant Program ALN Number: 97.075 Contract Number: FE2019-RA-00004; FE2020-RA-00005; FE2021-RA-00004; FE2022-RA-00006 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency-Non-Compliance (1) CRITERIA Equipment and Real Property Management - As stated in Uniform Grant Guidance - §200.313 Requirements for Equipment and Real Property Management: • 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 section 200.313(d)(1)). • 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 section 200.313(d)(2)). (2) CONDITION/PERSPECTIVE The MTA has Equipment and Real Property management procedures in place. MTA has corporate policies and procedures regarding Equipment and Real Property management. We tested the Rail and Transit Security Grant Program’s Equipment and Real Property management compliance. Based on our review of the Equipment and Real Property for this program, we noted that the physical inventory of the program property was not taken in the last two years, as required by 2 CFR section 200.313(d)(2). (3) CAUSE MTA did not ensure that the physical inventory of the program property was completed and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). (4) EFFECT MTA may be considered non-compliant related to Equipment and Real Property management compliance as required by 2 CFR section 200.313(d)(2). (5) REPEAT FINDING No (6) RECOMMENDATION We recommend that MTA ensure that the physical inventory of the property must be taken and the results reconciled with the property records at least once every two years as required by 2 CFR section 200.313(d)(2). (7) QUESTIONED COST None. (8) VIEWS OF RESPONSIBLE OFFICIAL The MTA Office of Security is acknowledging the finding. The MTA Office of Security is implementing an update on our procedures for equipment inventory management. We will be working with the Office of Security’s Director of Quality Assurance along with MTAHQ Audit, to help us review all equipment inventory listings and physical inventory inspection of federally funded purchased equipment. We will be implementing an internal agreement between MTA Office of Security and the MTA Agency awarded federal funds under grant programs managed by HQ Office of Security. This agreement will include all terms and conditions applicable to the specific grant award. Also, see “Corrective Action Plan”.

Reference Number: 2023-004 Federal Agency: U.S. Department of Transportation Federal Program: Public Transportation Emergency Relief Program Cluster Program: Not Applicable ALN Number: 20.527 Contract Number: Various Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency-Non-Compliance (1) CRITERIA Equipment and Real Property Management - As stated in Uniform Grant Guidance - §200.313 Requirements for Equipment and Real Property Management: • 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 section 200.313(d)(1)). • 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 section 200.313(d)(2)). (2) CONDITION/PERSPECTIVE The MTA has Equipment and Real Property management procedures in place. MTA has corporate policies and procedures regarding Equipment and Real Property management. We tested the Public Transportation Emergency Relief Program’s Equipment and Real Property management compliance. Based on our review of the Equipment and Real Property for this program, we noted of sixty samples selected, eight (8) equipment samples related to New York City Transit Authority were transferred to the City of New York Police Department. The eight piece of equipment related to police radios and were included in MTA Biannual report as out-of service and fully depreciated. Therefore, we were not able to verify existence of these piece of equipment. (3) CAUSE MTA did not ensure that all out-of-service equipment was properly adjusted in the MTA Bi-Annual report and a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. (4) EFFECT MTA may be considered non-compliant related to Equipment and Real Property management compliance related to 2 CFR section 200.313(d)(2). (5) REPEAT FINDING No (6) RECOMMENDATION We recommend that the MTA ensure all equipment in service should be properly accounted and reported in MTA’s Bi-Annual report and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). (7) QUESTIONED COST None. (8) VIEWS OF RESPONSIBLE OFFICIAL MTA is acknowledging the finding. The assets are fully depreciated. We will remove the assets from the Biennial listing from PSR and write them off from the accounting system. Also, see “Corrective Action Plan”.

Finding 2023-002 – Equipment and real property management Program Name (ALN): Public Transportation Emergency Relief Program (ALN 20.527) Federal Agency: U.S. Department of Transportation Federal Grant Numbers and Years: NJ-44-X004 (April 1, 2014 – November 5, 2023) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Prior Year Finding: Not applicable Finding Type: Material weakness and material noncompliance 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 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 Section 200.313(d)(1)). A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years as required by 2 CFR Section 200.313(d)(2). In addition, under 2 CFR section 200.303(a), a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Port Authority of New York and New Jersey (the Port Authority) used the Public Transportation Emergency Relief Program to purchase equipment to perform maintenance and inspection of the track damaged by Superstorm Sandy, repair the damage, and allow the Port Authority to be more resilient in future events. We noted the Port Authority did not perform a physical inventory of the equipment within the required two-year period. Further, during our physical observation of fifteen pieces of equipment, we noted for four items, the serial numbers included on the equipment’s tag did not match the serial number included in the Port Authority’s property records. Cause: In discussing these conditions with the Port Authority’s management, they stated inadequate staffing resources due to staff turnover contributed to the finding. Effect: Failure to perform an inventory at least once every two years and maintaining accurate property records may prohibit the Port Authority from properly safeguarding and maintaining equipment in accordance with federal requirements. Questioned Costs: None. Recommendation: We recommend that the Port Authority strengthen its processes to ensure a physical inventory of equipment acquired with federal funds is performed at least once during each two-year period. Views of Responsible Officials: The Port Authority acknowledges an internal control deficiency in performing a physical equipment inventory of equipment as required under CFR 200 for the Public Transportation Emergency Relief Program 2013 49 U.S.C. 5324 (Grant award NJ-44-X004 PATH-H.) PATH successfully performed a physical inventory of equipment in 2018, the first year it was required. In 2020, the performance of a physical inventory coincided with the COVID-19 pandemic which facilitated the retirement of key personnel in PATH who were responsible for performing the physical inventory of the equipment that was federally funded. This staff transition led to a loss of PATH system expertise necessary to pick up the process previously developed, resulting in the inadvertent lapse in performing the physical inventory in 2020 and 2022. To mitigate this deficiency PATH has performed a physical inventory in 2024 and updated its procedures as they relate to performing the physical inventory of equipment and to have staffing redundancies in place to account for staff turnover. In addition, PATH updated its equipment inventory log to reflect the correct serial numbers on the four pieces of equipment that KPMG identified.

Type of Finding: Significant Deficiency in Compliance and Internal Control over Compliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020, through September 27, 2025 Criteria or specific requirement: 2 CFR 200.313(d)(2) states that a physical inventory of property must be taken and the results reconciled with the property record at least once every two years. Condition: During testing, it was noted that a physical inventory and reconciliation with the property records had not been performed. Questioned costs: None. Context: A sample of 4 was made from a population of 4 pieces of equipment purchased with funds from the major program (entire population). Of the 4 sampled, all belonged to a population of assets that had not been part of a formal physical inventory and property reconciliation. Cause: The Organization does not currently have procedures in place to perform a formal inventory count and reconciliation with the property records at least once every two years. Effect: Without periodic equipment counts, the Organization is in noncompliance with federal regulations around Equipment and Real Property Management. In addition, there is an increased risk of errors and inaccuracies in the inventory records and an increased risk of fraud or theft going undetected. Repeat Finding: No. Recommendation: CLA recommends that the Organization adopt policies and procedures that include performing a formal inventory count and reconciliation back to the property records at least once every two years, in compliance with 2 CFR 200.313(d)(2). The inventory count should be documented and signed by the individual performing the count as a form of attestation to the amounts recorded. Views of responsible officials: There is no disagreement with the audit finding.

Program Information: Assistance Listing #: 15.022 U.S. Department of the Interior Tribal Self-Governance/Indian Reservation Roads Program Award Numbers: GT-OSGT107-10/A16AP00068 Award Periods: 1/1/2011 – 12/31/2023 Criteria: Internal control is a process, effected by an entity’s…[governing body], management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance: (Internal Control – Integrated Framework, Committee of Sponsoring Organizations of the Treadway Commission, © May 2013, p.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 sales price of the property (2 CFR section 200.313(d)(1)). 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 section 200.313(d)(2)). 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 section 200.313(d)(3)). Condition/Context: Management completed a physical inventory in 2022-2023, but was not able to provide support showing management review and approval. [ ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: Turnover in key personnel, lack of internal controls, and the inability to provide supporting documentation. Effect: Without review and approval of the physical inventory listing, it is possible the reconciliation to property records may not occur. Questioned Costs: None. Repeat Finding: No. Recommendation: We recommend that physical inventory is taken, that the results are reconciled with the property records at least once every 2 years, and that documentation of this process is stored for review at a later date. View of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.

Program Information: Assistance Listing #: 15.022 U.S. Department of the Interior Tribal Self-Governance/Indian Reservation Roads Program Award Numbers: GT-OSGT107-10/A16AP00068 Award Periods: 1/1/2011 – 12/31/2023 Criteria: Internal control is a process, effected by an entity’s…[governing body], management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance: (Internal Control – Integrated Framework, Committee of Sponsoring Organizations of the Treadway Commission, © May 2013, p.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 sales price of the property (2 CFR section 200.313(d)(1)). 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 section 200.313(d)(2)). 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 section 200.313(d)(3)). Condition/Context: Management completed a physical inventory in 2022-2023, but was not able to provide support showing management review and approval. [ ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: Turnover in key personnel, lack of internal controls, and the inability to provide supporting documentation. Effect: Without review and approval of the physical inventory listing, it is possible the reconciliation to property records may not occur. Questioned Costs: None. Repeat Finding: No. Recommendation: We recommend that physical inventory is taken, that the results are reconciled with the property records at least once every 2 years, and that documentation of this process is stored for review at a later date. View of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.

Criteria: 2 CFR 200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that organizations who manage the federal award: • Understand and comply with the federal statutes, regulations, and terms and conditions of the award; • Evaluate and monitor compliance; • Take prompt action when instances of noncompliance is identified. 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). Additionally, the Uniform Guidance requires non-federal entities to develop written procedures related to the following areas: 1. Cash Management 2 CFR 200.302(b)(6) states that the financial management system of each non-Federal entity must provide for the written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. 2. Allowability of Costs 2 CFR 200.302(b)(7) states that the financial management system of each non-Federal entity must provide for the Written procedures for determining the allowability of costs in accordance with Subpart E (Cost Principles) of this part and the terms and conditions of the Federal award. 3. Conflict of Interest 2 CFR 200.318(c)(1) states that the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial, or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. In addition, the organizations should ensure that existing written procedures are in compliance with: a. Equipment Management Requirements 2 CFR 200.313(b) states that “A state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures b. General Procurement Standards 2 CFR 200.317 to 200.326 discusses that contracts must be established and managed in accordance with the procurement requirements in 2 CFR Part 200. Grantees must have written procurement policies and procedures that demonstrate a fair and reliable process, with standards of conduct addressing conflicts of interest, for obtaining grant-funded goods and services. Condition The Foundation does not have documented policies and procedures concerning the following key compliances areas which are required by the Uniform Guidance: • Cash Management • Allowability of Cost • Conflict of Interest • Equipment and Real Property Management • Procurement, Suspension & Debarment Cause This is attributed to the insufficient resources or staffing to develop and formalize the policies and procedures. Effect The absence of formal policies and procedures in the key compliance areas could result in non-compliance with federal regulations, which may lead to unnecessary sanctions. Additionally, without formal written policies and procedures, it is difficult to ensure consistent practices across the organization. Questioned Costs None Recommendation The Foundation should develop and implement formal written policies and procedures for the specific areas required by the Uniform Guidance. These policies and procedures must clearly delineate the requirements of the Uniform Guidance. Personnel responsible for these areas should receive adequate training and apply the policies effectively. Regular reviews should be conducted to update the policies and procedures as needed.   Views of Responsible Officials and Planned Corrective Action We understand how crucial it is to have strong policies and procedures in place. Here’s how we plan to move forward: 1. Review of Existing Policies and Procedures: We’re currently taking a close look at our existing policies and procedures to ensure they align with the Uniform Guidance. This will help us identify any gaps and make necessary updates so that we’re fully compliant. 2. Development of New Policies: Alongside this review, we will create clear and comprehensive written policies in key areas, such as: • Cash Management: Setting up procedures that comply with 2 CFR 200.305 to ensure timely payments. eCFR :: 2 CFR 200.305 -- Federal payment. • Allowability of Costs: Crafting guidelines that follow Subpart E—Cost Principles, so we can confidently determine which expenses are allowable. https://www.ecfr.gov/current/title-48/chapter-7/subchapter-E/part-731/subpart-731.7/section-731.770. • Conflict of Interest: Establishing standards of conduct that address potential conflicts and promote transparency. • Equipment and Real Property Management: Developing policies for managing equipment acquired under federal awards in line with 2 CFR 200.313(b). eCFR :: 2 CFR 200.313 -- Equipment. • Procurement Procedures: Creating clear procurement guidelines that align with 2 CFR 200.318 through 200.326 to ensure fairness and oversight. eCFR :: 2 CFR 200.318 -- General procurement standards. 3. Training and Communication: The Finance Department will be responsible for training all staff involved in managing federal awards. Training sessions will ensure that everyone understands the requirements and their roles in maintaining compliance. This training will be completed by December 31, 2024. Personnel responsible: Eduardo Cedeno, Director of Finance Anticipated completion date: December 31, 2024

Federal Agency - United States Department of Housing and Urban Development Federal Programs - Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii - (14.228) Federal Award Years - 2023 State Agency - Not applicable Reference - 2023-002 Capital Asset Records - Material Weakness and Noncompliance Criteria - Management is responsible for maintaining capital asset records that are accurate. Code of Federal Regulations (CFR) §200.313(d) Equipment states, at a minimum, the following must be met: 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 - The capital asset records are insufficient as they do not include the source of funding, acquisition date, or the cost of the property as well as certain other information required by Federal regulations. Additionally, no physical inventory has occurred nor is there a control system that has been implemented over these assets. Cause - The Town has not maintained capital asset records or engaged a third party expert. Effect of Condition - The Town is not in compliance with CFR §200.313(d). Additionally, capital assets have been excluded from these financial statements. Statistical Sampling - The sample was not intended to be, and was not, a statistically valid sample. Recommendation - We recommend the Town invest in capital asset software to maintain the capital assets and have a physical inventory performed. Questioned Costs - None. Perspective - No other material omissions were noted in the financial statements. This is an isolated issue.

FINDING 2023-003 Subject: Water and Waste Disposal System for Rural Communities - Equipment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal System for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): CY 2023 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The Town had not designed or implemented adequate internal controls and procedures to ensure that equipment purchased from the grant was included in the Town's capital asset listing. A physical inventory of equipment was not performed at least once within the last two years. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF LAFONTAINE 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. . . ." Cause The Town was not aware of the compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot ensure the required assets are included in the capital asset listing. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF LAFONTAINE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the Town design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties, to ensure capital assets purchased from the grant are included in the Town's capital asset ledger and that a physical inventory is performed 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.

Finding 2023-003 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Federal Agency: U.S. Small Business Administration Federal Program: Congressional Grants, ALN No. 59.059, Award SBAHQ2210040, Award Period 9/1/2022 – 3/31/2023 Compliance Requirement: Equipment and Real Property Management Repeat Finding: No Condition: The Organization did not separately identify and track capital asset activity funded with federal grants. Questioned Costs: None Context: For the one sampled capital asset purchase, funded with this federal grant, no identifying or tracking method was used on the capital asset listing. Criteria: Per 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements (Uniform Guidance), Section 200.313 Equipment, "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 section 200.313(d)(1))." Cause: The grantor did not communicate this requirement in the grant award document. Effect: The identification of federally-funded capital assets allows for an organization to manage the asset throughout its useful life until disposition, when the federal grantor may be owed a portion of the proceeds of sale. Recommendation: We recommend a policy be developed that would include procedures for identifying and tracking capital assets funded with federal grants. This could include identification in a capital asset listing or using a tracking mechanism.

Finding 2023-003 Information on the federal program: Subject: Water and Waste Disposal Systems for Rural Communities – Equipment and Real Property Management Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Federal Award Number: N/A Pass-Through Entity: N/A Compliance Requirements: Equipment and Real Property Management Audit Finding: Material Weakness, Noncompliance, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.313(d)(1) states in part: "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property" Condition: An effective internal control system was not in place at the District to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. Cause: Management had not established a system of internal control that would have ensured proper procedures are followed to comply with the Equipment and Real Property Management compliance requirements. Effect: The failure to establish an effective internal control system enabled noncompliance to go undetected and the proper tracking of assets acquired with federal funds was not taking place. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the District. Questioned Costs: There were no questioned costs identified. Context: The District did not maintain an updated asset listing that reflects the construction in process balance related to the project funded with federal funds. There was approximately $10.9 million of disbursements from federal funds related to the project as of December 31, 2023. Identification as a repeat finding, if applicable: No Recommendation: We recommend that the District’s management establish controls related to the grant agreement and the Equipment and Real Property compliance requirement to ensure that assets being purchased with federal funds are added to the capital asset listing and all required information is maintained on the capital asset listing. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

2023 002 Physical Inventory Observation Federal Program Information: Funding agency: U.S. Department of Health and Human Services Title: Head Start Cluster AL number: 93.600 Award year and number: 10CH011884 03 12/01/2022 11/30/2023 10HE00046301C5 04/01/2021 03/31/2023 10HE00046301C6 04/01/2021 03/31/2023 Criteria or Specific Requirement: Under 2 CFR section 200.313(4)(2), a physical inventory of property must be taken at least once every two years. The results should be reconciled with the general ledger. Condition: Mid Columbia Children's Council, Inc. did not maintain documentation of the physical inventory it performed during the fiscal year ended November 30, 2022. Questioned Costs: None Effect: The capital asset listing and corresponding financial statement balances may be misstated or incomplete. Without taking a physical inventory, Mid Columbia Children's Council, Inc. may be overstating or understating capital assets in its financial statements. Cause: Mid Columbia Children's Council, Inc. has experienced turnover in upper management, records from previous leadership could not be located. Auditor's Recommendation: Mid Columbia Children's Council, Inc. should maintain its documentation of an entity wide physical inventory of its capital assets performed every two years. Once completed, the listing should be reconciled to the general ledger control totals and the control totals adjusted to the balances supported by the physical inventory results. Mid Columbia Children's Council, Inc. should also implement procedures to retain adequate supporting documentation and ensure the proper recording of additions, deletions, and depreciation on a timely basis. View of Responsible Officials: Management agrees with the finding and has developed and begun implementation of a corrective action plan.

2023-001: Internal Controls over Compliance and Compliance with Equipment and Real Property Management: Criteria or Specific Requirement – 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must 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 Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number 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 – During our testing of equipment and property inventory compliance, we identified six pieces of equipment totaling approximately $188,505 was not performed within the past two-years. Cause – Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal Funds. Effect or Potential Effect – The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment can result in noncompliance and potential loss of equipment procured with the Federal funds. Questioned Costs – Not applicable as there were no questioned costs related to noncompliance. Context – This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted the equipment inventory population consists of approximately 2,800 items totaling approximately $85.5 million. Repeat Finding - This is a repeat finding from prior year. This was reported as finding 2022-001 in the 2022 report. Recommendation – We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions – Management agrees with this finding. Management is continuing several procedures to ensure equipment inventories are performed timely, incuding the review of inventory deficiency reports.

2023-001: Internal Controls over Compliance and Compliance with Equipment and Real Property Management: Criteria or Specific Requirement – 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must 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 Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number 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 – During our testing of equipment and property inventory compliance, we identified six pieces of equipment totaling approximately $188,505 was not performed within the past two-years. Cause – Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal Funds. Effect or Potential Effect – The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment can result in noncompliance and potential loss of equipment procured with the Federal funds. Questioned Costs – Not applicable as there were no questioned costs related to noncompliance. Context – This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted the equipment inventory population consists of approximately 2,800 items totaling approximately $85.5 million. Repeat Finding - This is a repeat finding from prior year. This was reported as finding 2022-001 in the 2022 report. Recommendation – We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions – Management agrees with this finding. Management is continuing several procedures to ensure equipment inventories are performed timely, incuding the review of inventory deficiency reports.

2023-001: Internal Controls over Compliance and Compliance with Equipment and Real Property Management: Criteria or Specific Requirement – 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must 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 Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number 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 – During our testing of equipment and property inventory compliance, we identified six pieces of equipment totaling approximately $188,505 was not performed within the past two-years. Cause – Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal Funds. Effect or Potential Effect – The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment can result in noncompliance and potential loss of equipment procured with the Federal funds. Questioned Costs – Not applicable as there were no questioned costs related to noncompliance. Context – This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted the equipment inventory population consists of approximately 2,800 items totaling approximately $85.5 million. Repeat Finding - This is a repeat finding from prior year. This was reported as finding 2022-001 in the 2022 report. Recommendation – We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions – Management agrees with this finding. Management is continuing several procedures to ensure equipment inventories are performed timely, incuding the review of inventory deficiency reports.

2023-001: Internal Controls over Compliance and Compliance with Equipment and Real Property Management: Criteria or Specific Requirement – 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must 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 Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number 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 – During our testing of equipment and property inventory compliance, we identified six pieces of equipment totaling approximately $188,505 was not performed within the past two-years. Cause – Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal Funds. Effect or Potential Effect – The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment can result in noncompliance and potential loss of equipment procured with the Federal funds. Questioned Costs – Not applicable as there were no questioned costs related to noncompliance. Context – This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted the equipment inventory population consists of approximately 2,800 items totaling approximately $85.5 million. Repeat Finding - This is a repeat finding from prior year. This was reported as finding 2022-001 in the 2022 report. Recommendation – We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions – Management agrees with this finding. Management is continuing several procedures to ensure equipment inventories are performed timely, incuding the review of inventory deficiency reports.

2023-001: Internal Controls over Compliance and Compliance with Equipment and Real Property Management: Criteria or Specific Requirement – 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must 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 Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number 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 – During our testing of equipment and property inventory compliance, we identified six pieces of equipment totaling approximately $188,505 was not performed within the past two-years. Cause – Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal Funds. Effect or Potential Effect – The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment can result in noncompliance and potential loss of equipment procured with the Federal funds. Questioned Costs – Not applicable as there were no questioned costs related to noncompliance. Context – This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted the equipment inventory population consists of approximately 2,800 items totaling approximately $85.5 million. Repeat Finding - This is a repeat finding from prior year. This was reported as finding 2022-001 in the 2022 report. Recommendation – We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions – Management agrees with this finding. Management is continuing several procedures to ensure equipment inventories are performed timely, incuding the review of inventory deficiency reports.

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: Various Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance; Material Noncompliance (Modified Opinion) Criteria or specific requirement: Under 2 CFR 200.313 equipment acquired under a Federal award must be properly managed and proper records must be maintained. These records must contain information pertaining to Federal awards including description of property, serial number or other identification number, source of funding, title, acquisition date and cost of property, condition, ultimate disposition date including disposal, sales price and inventory. A physical inventory of the property must be taken and reconciled at least every two years, control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property, adequate maintenance procedures must be developed to keep the property in good conditions. Per 2 CFR Section 200.303(a) 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). Condition: The County did not maintain accurate and updated equipment inventory listings for equipment purchased with Federal funds in accordance with 2 CFR 200.313. Questioned costs: None Context: The County’s equipment inventory listing of equipment purchased with grant funds was not maintained in a manner that complied with 2 CFR 200.313 during the year. An inventory listing that complied with 2 CFR 200.313 was prepared once it was requested during the audit. Additionally, for one of eight equipment items selected for testing from the inventory listing, the equipment serial number did not agree with the equipment inventory listing for that equipment’s location. Cause: The County did not have formal policies and procedures in place to manage and maintain equipment inventor records in compliance with 2 CFR 200.313. Effect: The County was not in compliance with the equipment compliance requirements of the program. Repeat Finding: No Recommendation: We recommend the County expand upon their capital asset inventory policies and procedures that are used for financial statement purposes to ensure that all equipment purchased with Federal funds are properly managed and maintained throughout the year to ensure all information, including the serial number and equipment location, is accurate and updated. We also recommend that the program personnel responsible for equipment records certify accuracy of the equipment records throughout the year. Views of responsible officials: Management agrees with the finding. See corrective action plan.

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: Various Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance; Material Noncompliance (Modified Opinion) Criteria or specific requirement: Under 2 CFR 200.313 equipment acquired under a Federal award must be properly managed and proper records must be maintained. These records must contain information pertaining to Federal awards including description of property, serial number or other identification number, source of funding, title, acquisition date and cost of property, condition, ultimate disposition date including disposal, sales price and inventory. A physical inventory of the property must be taken and reconciled at least every two years, control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property, adequate maintenance procedures must be developed to keep the property in good conditions. Per 2 CFR Section 200.303(a) 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). Condition: The County did not maintain accurate and updated equipment inventory listings for equipment purchased with Federal funds in accordance with 2 CFR 200.313. Questioned costs: None Context: The County’s equipment inventory listing of equipment purchased with grant funds was not maintained in a manner that complied with 2 CFR 200.313 during the year. An inventory listing that complied with 2 CFR 200.313 was prepared once it was requested during the audit. Additionally, for one of eight equipment items selected for testing from the inventory listing, the equipment serial number did not agree with the equipment inventory listing for that equipment’s location. Cause: The County did not have formal policies and procedures in place to manage and maintain equipment inventor records in compliance with 2 CFR 200.313. Effect: The County was not in compliance with the equipment compliance requirements of the program. Repeat Finding: No Recommendation: We recommend the County expand upon their capital asset inventory policies and procedures that are used for financial statement purposes to ensure that all equipment purchased with Federal funds are properly managed and maintained throughout the year to ensure all information, including the serial number and equipment location, is accurate and updated. We also recommend that the program personnel responsible for equipment records certify accuracy of the equipment records throughout the year. Views of responsible officials: Management agrees with the finding. See corrective action plan.

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: Various Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance; Material Noncompliance (Modified Opinion) Criteria or specific requirement: Under 2 CFR 200.313 equipment acquired under a Federal award must be properly managed and proper records must be maintained. These records must contain information pertaining to Federal awards including description of property, serial number or other identification number, source of funding, title, acquisition date and cost of property, condition, ultimate disposition date including disposal, sales price and inventory. A physical inventory of the property must be taken and reconciled at least every two years, control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property, adequate maintenance procedures must be developed to keep the property in good conditions. Per 2 CFR Section 200.303(a) 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). Condition: The County did not maintain accurate and updated equipment inventory listings for equipment purchased with Federal funds in accordance with 2 CFR 200.313. Questioned costs: None Context: The County’s equipment inventory listing of equipment purchased with grant funds was not maintained in a manner that complied with 2 CFR 200.313 during the year. An inventory listing that complied with 2 CFR 200.313 was prepared once it was requested during the audit. Additionally, for one of eight equipment items selected for testing from the inventory listing, the equipment serial number did not agree with the equipment inventory listing for that equipment’s location. Cause: The County did not have formal policies and procedures in place to manage and maintain equipment inventor records in compliance with 2 CFR 200.313. Effect: The County was not in compliance with the equipment compliance requirements of the program. Repeat Finding: No Recommendation: We recommend the County expand upon their capital asset inventory policies and procedures that are used for financial statement purposes to ensure that all equipment purchased with Federal funds are properly managed and maintained throughout the year to ensure all information, including the serial number and equipment location, is accurate and updated. We also recommend that the program personnel responsible for equipment records certify accuracy of the equipment records throughout the year. Views of responsible officials: Management agrees with the finding. See corrective action plan.

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: Various Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance; Material Noncompliance (Modified Opinion) Criteria or specific requirement: Under 2 CFR 200.313 equipment acquired under a Federal award must be properly managed and proper records must be maintained. These records must contain information pertaining to Federal awards including description of property, serial number or other identification number, source of funding, title, acquisition date and cost of property, condition, ultimate disposition date including disposal, sales price and inventory. A physical inventory of the property must be taken and reconciled at least every two years, control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property, adequate maintenance procedures must be developed to keep the property in good conditions. Per 2 CFR Section 200.303(a) 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). Condition: The County did not maintain accurate and updated equipment inventory listings for equipment purchased with Federal funds in accordance with 2 CFR 200.313. Questioned costs: None Context: The County’s equipment inventory listing of equipment purchased with grant funds was not maintained in a manner that complied with 2 CFR 200.313 during the year. An inventory listing that complied with 2 CFR 200.313 was prepared once it was requested during the audit. Additionally, for one of eight equipment items selected for testing from the inventory listing, the equipment serial number did not agree with the equipment inventory listing for that equipment’s location. Cause: The County did not have formal policies and procedures in place to manage and maintain equipment inventor records in compliance with 2 CFR 200.313. Effect: The County was not in compliance with the equipment compliance requirements of the program. Repeat Finding: No Recommendation: We recommend the County expand upon their capital asset inventory policies and procedures that are used for financial statement purposes to ensure that all equipment purchased with Federal funds are properly managed and maintained throughout the year to ensure all information, including the serial number and equipment location, is accurate and updated. We also recommend that the program personnel responsible for equipment records certify accuracy of the equipment records throughout the year. Views of responsible officials: Management agrees with the finding. See corrective action plan.

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: Various Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance; Material Noncompliance (Modified Opinion) Criteria or specific requirement: Under 2 CFR 200.313 equipment acquired under a Federal award must be properly managed and proper records must be maintained. These records must contain information pertaining to Federal awards including description of property, serial number or other identification number, source of funding, title, acquisition date and cost of property, condition, ultimate disposition date including disposal, sales price and inventory. A physical inventory of the property must be taken and reconciled at least every two years, control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property, adequate maintenance procedures must be developed to keep the property in good conditions. Per 2 CFR Section 200.303(a) 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). Condition: The County did not maintain accurate and updated equipment inventory listings for equipment purchased with Federal funds in accordance with 2 CFR 200.313. Questioned costs: None Context: The County’s equipment inventory listing of equipment purchased with grant funds was not maintained in a manner that complied with 2 CFR 200.313 during the year. An inventory listing that complied with 2 CFR 200.313 was prepared once it was requested during the audit. Additionally, for one of eight equipment items selected for testing from the inventory listing, the equipment serial number did not agree with the equipment inventory listing for that equipment’s location. Cause: The County did not have formal policies and procedures in place to manage and maintain equipment inventor records in compliance with 2 CFR 200.313. Effect: The County was not in compliance with the equipment compliance requirements of the program. Repeat Finding: No Recommendation: We recommend the County expand upon their capital asset inventory policies and procedures that are used for financial statement purposes to ensure that all equipment purchased with Federal funds are properly managed and maintained throughout the year to ensure all information, including the serial number and equipment location, is accurate and updated. We also recommend that the program personnel responsible for equipment records certify accuracy of the equipment records throughout the year. Views of responsible officials: Management agrees with the finding. See corrective action plan.

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: Various Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance; Material Noncompliance (Modified Opinion) Criteria or specific requirement: Under 2 CFR 200.313 equipment acquired under a Federal award must be properly managed and proper records must be maintained. These records must contain information pertaining to Federal awards including description of property, serial number or other identification number, source of funding, title, acquisition date and cost of property, condition, ultimate disposition date including disposal, sales price and inventory. A physical inventory of the property must be taken and reconciled at least every two years, control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property, adequate maintenance procedures must be developed to keep the property in good conditions. Per 2 CFR Section 200.303(a) 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). Condition: The County did not maintain accurate and updated equipment inventory listings for equipment purchased with Federal funds in accordance with 2 CFR 200.313. Questioned costs: None Context: The County’s equipment inventory listing of equipment purchased with grant funds was not maintained in a manner that complied with 2 CFR 200.313 during the year. An inventory listing that complied with 2 CFR 200.313 was prepared once it was requested during the audit. Additionally, for one of eight equipment items selected for testing from the inventory listing, the equipment serial number did not agree with the equipment inventory listing for that equipment’s location. Cause: The County did not have formal policies and procedures in place to manage and maintain equipment inventor records in compliance with 2 CFR 200.313. Effect: The County was not in compliance with the equipment compliance requirements of the program. Repeat Finding: No Recommendation: We recommend the County expand upon their capital asset inventory policies and procedures that are used for financial statement purposes to ensure that all equipment purchased with Federal funds are properly managed and maintained throughout the year to ensure all information, including the serial number and equipment location, is accurate and updated. We also recommend that the program personnel responsible for equipment records certify accuracy of the equipment records throughout the year. Views of responsible officials: Management agrees with the finding. See corrective action plan.

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: Various Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance; Material Noncompliance (Modified Opinion) Criteria or specific requirement: Under 2 CFR 200.313 equipment acquired under a Federal award must be properly managed and proper records must be maintained. These records must contain information pertaining to Federal awards including description of property, serial number or other identification number, source of funding, title, acquisition date and cost of property, condition, ultimate disposition date including disposal, sales price and inventory. A physical inventory of the property must be taken and reconciled at least every two years, control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property, adequate maintenance procedures must be developed to keep the property in good conditions. Per 2 CFR Section 200.303(a) 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). Condition: The County did not maintain accurate and updated equipment inventory listings for equipment purchased with Federal funds in accordance with 2 CFR 200.313. Questioned costs: None Context: The County’s equipment inventory listing of equipment purchased with grant funds was not maintained in a manner that complied with 2 CFR 200.313 during the year. An inventory listing that complied with 2 CFR 200.313 was prepared once it was requested during the audit. Additionally, for one of eight equipment items selected for testing from the inventory listing, the equipment serial number did not agree with the equipment inventory listing for that equipment’s location. Cause: The County did not have formal policies and procedures in place to manage and maintain equipment inventor records in compliance with 2 CFR 200.313. Effect: The County was not in compliance with the equipment compliance requirements of the program. Repeat Finding: No Recommendation: We recommend the County expand upon their capital asset inventory policies and procedures that are used for financial statement purposes to ensure that all equipment purchased with Federal funds are properly managed and maintained throughout the year to ensure all information, including the serial number and equipment location, is accurate and updated. We also recommend that the program personnel responsible for equipment records certify accuracy of the equipment records throughout the year. Views of responsible officials: Management agrees with the finding. See corrective action plan.

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: Various Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance; Material Noncompliance (Modified Opinion) Criteria or specific requirement: Under 2 CFR 200.313 equipment acquired under a Federal award must be properly managed and proper records must be maintained. These records must contain information pertaining to Federal awards including description of property, serial number or other identification number, source of funding, title, acquisition date and cost of property, condition, ultimate disposition date including disposal, sales price and inventory. A physical inventory of the property must be taken and reconciled at least every two years, control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property, adequate maintenance procedures must be developed to keep the property in good conditions. Per 2 CFR Section 200.303(a) 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). Condition: The County did not maintain accurate and updated equipment inventory listings for equipment purchased with Federal funds in accordance with 2 CFR 200.313. Questioned costs: None Context: The County’s equipment inventory listing of equipment purchased with grant funds was not maintained in a manner that complied with 2 CFR 200.313 during the year. An inventory listing that complied with 2 CFR 200.313 was prepared once it was requested during the audit. Additionally, for one of eight equipment items selected for testing from the inventory listing, the equipment serial number did not agree with the equipment inventory listing for that equipment’s location. Cause: The County did not have formal policies and procedures in place to manage and maintain equipment inventor records in compliance with 2 CFR 200.313. Effect: The County was not in compliance with the equipment compliance requirements of the program. Repeat Finding: No Recommendation: We recommend the County expand upon their capital asset inventory policies and procedures that are used for financial statement purposes to ensure that all equipment purchased with Federal funds are properly managed and maintained throughout the year to ensure all information, including the serial number and equipment location, is accurate and updated. We also recommend that the program personnel responsible for equipment records certify accuracy of the equipment records throughout the year. Views of responsible officials: Management agrees with the finding. See corrective action plan.

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: Various Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance; Material Noncompliance (Modified Opinion) Criteria or specific requirement: Under 2 CFR 200.313 equipment acquired under a Federal award must be properly managed and proper records must be maintained. These records must contain information pertaining to Federal awards including description of property, serial number or other identification number, source of funding, title, acquisition date and cost of property, condition, ultimate disposition date including disposal, sales price and inventory. A physical inventory of the property must be taken and reconciled at least every two years, control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property, adequate maintenance procedures must be developed to keep the property in good conditions. Per 2 CFR Section 200.303(a) 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). Condition: The County did not maintain accurate and updated equipment inventory listings for equipment purchased with Federal funds in accordance with 2 CFR 200.313. Questioned costs: None Context: The County’s equipment inventory listing of equipment purchased with grant funds was not maintained in a manner that complied with 2 CFR 200.313 during the year. An inventory listing that complied with 2 CFR 200.313 was prepared once it was requested during the audit. Additionally, for one of eight equipment items selected for testing from the inventory listing, the equipment serial number did not agree with the equipment inventory listing for that equipment’s location. Cause: The County did not have formal policies and procedures in place to manage and maintain equipment inventor records in compliance with 2 CFR 200.313. Effect: The County was not in compliance with the equipment compliance requirements of the program. Repeat Finding: No Recommendation: We recommend the County expand upon their capital asset inventory policies and procedures that are used for financial statement purposes to ensure that all equipment purchased with Federal funds are properly managed and maintained throughout the year to ensure all information, including the serial number and equipment location, is accurate and updated. We also recommend that the program personnel responsible for equipment records certify accuracy of the equipment records throughout the year. Views of responsible officials: Management agrees with the finding. See corrective action plan.

Finding 2023-001: Equipment and Real Property Management Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0023-21 FR-AMT-0028-22 69A36523504100AMTDC Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.313 Equipment requires that: 1. Equipment must be used in the program or project for which it was acquired as long as needed, whether 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 two 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)).  Section II – Federal Awards Findings and Questioned Costs (continued) 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: 6. Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings (2 CFR 200.303(d)). 7. Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition We subjected 60 equipment assets to testing; these assets had a value of approximately $94.8 million. Of the $94.8 million, approximately $8.0 million were equipment assets purchased in previous years and were subject to our inventory observation testing and the remaining $86.8 million were equipment assets subject to both our purchases and inventory observation testing. Total acquisition cost of equipment assets within scope purchased during the year approximated $279.6 million. Net book value of all equipment purchased to date under grants within scope as of September 30, 2023 approximated $558.0 million. The following exceptions to the criteria were observed during the performance of the audit procedures: 1. For three of the equipment samples reviewed (approximately $0.3 million), it was observed that the assets did not have a unique asset identifier in the originally provided equipment population or did not have an asset identifier on the equipment. 2. For five of the equipment samples reviewed (approximately $0.5 million), it was observed that the condition data or location field in the asset records was blank. 3. During our procedures performed for two assets (approximately $1.1 million), we identified that no inventory had occurred for the assets, even though they had been placed in service over two years prior and would have required an inventory prior to our observation. As this came to our attention after the inventory was required and during our observation procedures, we investigated further and could not obtain alternative evidence to support that an inventory had occurred within the two-year period. 4. One of the equipment samples selected could not be located (approximately $0.05 million), as such we could not verify existence of the asset. 5. This is a repeat finding that has occurred over the last several audit periods. As such, Amtrak has not taken sufficient actions when instances of noncompliance are identified through audit findings to make necessary updates to their internal controls. Questioned Costs This finding resulted in a total of $0.05 million of likely questioned costs for Assistance Listing 20.315 – National Railroad Passenger Corporation Grant: FR-AMT-0028-22 This amount represents the amount per the purchase order for the asset in sub bullet #4 above that could not be located. Context We selected 60 equipment items for internal control and compliance testing of the above attributes. See condition section above for equipment amounts in both sample size and population. Effect Amtrak is not in compliance with the 2 CFR 200.313. Additionally, when assets are not accurately identified, it could lead to logistical inefficiencies as well as the difficulty in locating and identifying equipment timely. This may also put assets at greater risk of being lost, stolen, or not properly maintained. Cause The nature of much of Amtrak’s equipment is composed of moving assets that are on the tracks and operating up and down the corridors or around the yards or moving from location to location in a geographical region to achieve daily operational objectives. Furthermore, Amtrak resources are deployed such that managers and supervisors oversee geographical regions and equipment that are located throughout various routes that often connect through multiple states with many unmanned and less traveled stations. Asset locations, including changes on short notice for where the asset will be used, and frequent inspections occur in order to keep the equipment operating safely; however, the system of record is not always updated or updated in a timely manner to reflect the location and condition of the asset in the records upon a change in asset custody. Amtrak’s equipment policy, which is inconsistent with Uniform Guidance, currently requires that the condition field be confirmed and updated as part of the two-year inventory observation requirement. Section II – Federal Awards Findings and Questioned Costs (continued) In reviewing management’s controls, the key controls identified by management are not designed such that consistent and timely proactive monitoring and/or review occurs to ensure that an inventory occurs no less than once every two years. There is an identified control that stipulates “On a monthly basis, Capital Accounting will identify all equipment that has not been observed within 2 years and communicate to the Asset Management Team for action to be taken.” This control as designed is not preventive and may not identify the non-compliance risk until after non-compliance occurs. For the instances where the unique identifier did not exist on the asset or match the asset records, this was caused by a clerical/human error in recording the asset details in the system in addition to a lack of review control to verify the accuracy of the data recording. Identification as a Repeat Finding This finding is a repeat finding of 2022-001. Recommendation We recommend that Amtrak continue to work toward a full integration or reconciliation between Amtrak’s fixed asset system of record and the different equipment-tracking systems. We recommend that management consider redesigning one of its key controls to help ensure that the monitoring of the observations is occurring on a preventive basis to help identify any exposure to non-compliance before it occurs. For example, Amtrak should consider an automated system report that would flag an asset proactively when a 2-year inventory deadline is approaching. During the observation process, management should ensure there is a review control within the process to validate that the asset is accurately tagged and such identifying information matches the equipment-tracking system. Additionally, this review control should also be performed when the asset is first logged into the equipment-tracking system. In the interim, until such processes are fully implemented, Amtrak should enhance the current control procedures surrounding the asset documentation and ensure that field personnel are aware of and are consistently and carefully updating the asset records such that clerical/human errors are minimized and that the asset records contain the necessary asset details in order to properly track equipment by federal requirements. This would include enhancing the asset chain of custody recordkeeping so that such changes are identified and reported timely. Additionally, management should consider requiring the serial number and model number to be documented in the system of record at set up in addition to the asset tag number. This will help ensure that the equipment has a unique ID number that can help it be identified and matched to the system record should an asset number not get added timely. Finally, as it relates to condition #4 above, management should investigate the root cause of the asset that could not be located and determine if additional control changes or modifications need to be made in order to prevent reoccurrence. Views of Responsible Officials Amtrak agrees with the recommendation to redesign key controls to help ensure that the monitoring of the observations happens on a preventive basis to help identify any exposure to non-compliance before it occurs. Since being created in 2022, Amtrak’s Enterprise Asset Management and Disposition team (EAMDT) has completed, with support from an outside consulting firm, a baseline assessment, as well as corrective action plans to specifically address noncompliance identified in the audit finding. Early in FY2024, Amtrak completed Phase 2 of this engagement to execute and implement a sub-set of these corrective action plans. Through this effort, EAMDT has prepared an updated Equipment Control Policy, developed standard operating procedures for equipment management, and developed a one-hour eLearning course that provides an overview of the importance for good equipment management practices and highlights the necessity for adhering to Single Audit compliance requirements of 2 CFR Part 200. The deliverables of this effort are to help ensure that assets are not capitalized without a complete record, which would include a unique asset identifier, as well as the condition and location of the assets. Additionally, EAMDT has developed reporting and analytics that enable both EAMDT and field personnel to be more proactive in managing the soon-to-be and out of compliance assets to both bring assets back into compliance, as well as to ensure an inventory is done and recorded within the two-year period. Lastly, EAMDT is working closely with Amtrak’s Digital Technology Department on the installation of location tracking technology on yard equipment and Engineering Maintenance of Way equipment, as well as developing an application that can be used on employee’s mobile devices to help ensure timely equipment assessments are completed.

Finding 2023-001: Equipment and Real Property Management Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0023-21 FR-AMT-0028-22 69A36523504100AMTDC Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.313 Equipment requires that: 1. Equipment must be used in the program or project for which it was acquired as long as needed, whether 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 two 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)).  Section II – Federal Awards Findings and Questioned Costs (continued) 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: 6. Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings (2 CFR 200.303(d)). 7. Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition We subjected 60 equipment assets to testing; these assets had a value of approximately $94.8 million. Of the $94.8 million, approximately $8.0 million were equipment assets purchased in previous years and were subject to our inventory observation testing and the remaining $86.8 million were equipment assets subject to both our purchases and inventory observation testing. Total acquisition cost of equipment assets within scope purchased during the year approximated $279.6 million. Net book value of all equipment purchased to date under grants within scope as of September 30, 2023 approximated $558.0 million. The following exceptions to the criteria were observed during the performance of the audit procedures: 1. For three of the equipment samples reviewed (approximately $0.3 million), it was observed that the assets did not have a unique asset identifier in the originally provided equipment population or did not have an asset identifier on the equipment. 2. For five of the equipment samples reviewed (approximately $0.5 million), it was observed that the condition data or location field in the asset records was blank. 3. During our procedures performed for two assets (approximately $1.1 million), we identified that no inventory had occurred for the assets, even though they had been placed in service over two years prior and would have required an inventory prior to our observation. As this came to our attention after the inventory was required and during our observation procedures, we investigated further and could not obtain alternative evidence to support that an inventory had occurred within the two-year period. 4. One of the equipment samples selected could not be located (approximately $0.05 million), as such we could not verify existence of the asset. 5. This is a repeat finding that has occurred over the last several audit periods. As such, Amtrak has not taken sufficient actions when instances of noncompliance are identified through audit findings to make necessary updates to their internal controls. Questioned Costs This finding resulted in a total of $0.05 million of likely questioned costs for Assistance Listing 20.315 – National Railroad Passenger Corporation Grant: FR-AMT-0028-22 This amount represents the amount per the purchase order for the asset in sub bullet #4 above that could not be located. Context We selected 60 equipment items for internal control and compliance testing of the above attributes. See condition section above for equipment amounts in both sample size and population. Effect Amtrak is not in compliance with the 2 CFR 200.313. Additionally, when assets are not accurately identified, it could lead to logistical inefficiencies as well as the difficulty in locating and identifying equipment timely. This may also put assets at greater risk of being lost, stolen, or not properly maintained. Cause The nature of much of Amtrak’s equipment is composed of moving assets that are on the tracks and operating up and down the corridors or around the yards or moving from location to location in a geographical region to achieve daily operational objectives. Furthermore, Amtrak resources are deployed such that managers and supervisors oversee geographical regions and equipment that are located throughout various routes that often connect through multiple states with many unmanned and less traveled stations. Asset locations, including changes on short notice for where the asset will be used, and frequent inspections occur in order to keep the equipment operating safely; however, the system of record is not always updated or updated in a timely manner to reflect the location and condition of the asset in the records upon a change in asset custody. Amtrak’s equipment policy, which is inconsistent with Uniform Guidance, currently requires that the condition field be confirmed and updated as part of the two-year inventory observation requirement. Section II – Federal Awards Findings and Questioned Costs (continued) In reviewing management’s controls, the key controls identified by management are not designed such that consistent and timely proactive monitoring and/or review occurs to ensure that an inventory occurs no less than once every two years. There is an identified control that stipulates “On a monthly basis, Capital Accounting will identify all equipment that has not been observed within 2 years and communicate to the Asset Management Team for action to be taken.” This control as designed is not preventive and may not identify the non-compliance risk until after non-compliance occurs. For the instances where the unique identifier did not exist on the asset or match the asset records, this was caused by a clerical/human error in recording the asset details in the system in addition to a lack of review control to verify the accuracy of the data recording. Identification as a Repeat Finding This finding is a repeat finding of 2022-001. Recommendation We recommend that Amtrak continue to work toward a full integration or reconciliation between Amtrak’s fixed asset system of record and the different equipment-tracking systems. We recommend that management consider redesigning one of its key controls to help ensure that the monitoring of the observations is occurring on a preventive basis to help identify any exposure to non-compliance before it occurs. For example, Amtrak should consider an automated system report that would flag an asset proactively when a 2-year inventory deadline is approaching. During the observation process, management should ensure there is a review control within the process to validate that the asset is accurately tagged and such identifying information matches the equipment-tracking system. Additionally, this review control should also be performed when the asset is first logged into the equipment-tracking system. In the interim, until such processes are fully implemented, Amtrak should enhance the current control procedures surrounding the asset documentation and ensure that field personnel are aware of and are consistently and carefully updating the asset records such that clerical/human errors are minimized and that the asset records contain the necessary asset details in order to properly track equipment by federal requirements. This would include enhancing the asset chain of custody recordkeeping so that such changes are identified and reported timely. Additionally, management should consider requiring the serial number and model number to be documented in the system of record at set up in addition to the asset tag number. This will help ensure that the equipment has a unique ID number that can help it be identified and matched to the system record should an asset number not get added timely. Finally, as it relates to condition #4 above, management should investigate the root cause of the asset that could not be located and determine if additional control changes or modifications need to be made in order to prevent reoccurrence. Views of Responsible Officials Amtrak agrees with the recommendation to redesign key controls to help ensure that the monitoring of the observations happens on a preventive basis to help identify any exposure to non-compliance before it occurs. Since being created in 2022, Amtrak’s Enterprise Asset Management and Disposition team (EAMDT) has completed, with support from an outside consulting firm, a baseline assessment, as well as corrective action plans to specifically address noncompliance identified in the audit finding. Early in FY2024, Amtrak completed Phase 2 of this engagement to execute and implement a sub-set of these corrective action plans. Through this effort, EAMDT has prepared an updated Equipment Control Policy, developed standard operating procedures for equipment management, and developed a one-hour eLearning course that provides an overview of the importance for good equipment management practices and highlights the necessity for adhering to Single Audit compliance requirements of 2 CFR Part 200. The deliverables of this effort are to help ensure that assets are not capitalized without a complete record, which would include a unique asset identifier, as well as the condition and location of the assets. Additionally, EAMDT has developed reporting and analytics that enable both EAMDT and field personnel to be more proactive in managing the soon-to-be and out of compliance assets to both bring assets back into compliance, as well as to ensure an inventory is done and recorded within the two-year period. Lastly, EAMDT is working closely with Amtrak’s Digital Technology Department on the installation of location tracking technology on yard equipment and Engineering Maintenance of Way equipment, as well as developing an application that can be used on employee’s mobile devices to help ensure timely equipment assessments are completed.

Finding 2023-002: Preparation and Maintenance of Equipment Population Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0026-22 FR-AMT-0028-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.1 provides the following definition of Equipment: - 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. The code of federal regulations – 2 CFR 200.313 Equipment 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 sales price of the property (2 CFR 200.313(d)(1)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: - Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The following exceptions to the criteria were observed during the performance of the audit procedures as it relates to completeness and accuracy of equipment population: 1. In reviewing the equipment population provided to EY as part of the audit for FY23, we noted the Company mapped FY23 equipment activity relating to FR-AMT-0020-20, FR-AMT-0022-21 and FR-AMT-0026-22 grants to older funding sources. Per inquiry of management, FY23 Overhauled equipment activity was originally mapped incorrectly to prior year grant awards and fund source years. 2. Population contained an asset that could not be observed as the nature of the purchased equipment was a combination of tools with each individually costing less than $5,000. 3. Population contained an asset that had been replaced in 2021, and as such should not have been included in the equipment listing. Questioned Costs None. Context Population of single audit equipment records is manually prepared each period where funding sources are assigned to each asset based on the unique asset identifier. The data source used by the Capital Accounting team did not take into consideration overhaul activity during the FY23 period that was undertaken over equipment assets acquired in 2014-2016 fiscal years. (Condition 1) One of the 60 selections made for testing could not be observed, as the underlying equipment maintenance systems did not have a record of this item due to the fact that items purchased consisted of tools that were individually less than $5,000 and as such did not meet the definition of Equipment as defined by 2 CFR 200.1. The population provided to EY incorrectly included an exception as described in the Condition section above, indicating that following internal control was not functioning as designed: “Monthly, Lead Accountant, Capital Accounting exports equipment data from PP into an Excel spreadsheet (the Equipment Spreadsheet) and manually determines the eligibility of the equipment. The determination is subsequently reviewed by the Senior Manager, Capital Accounting.” (Condition 2) In the initial population provided, we noted that one of the assets had been retired and replaced in 2021 and should have not been included within the population. This was an error that was not corrected during timely updates of the maintenance records. (Condition 3) Effect Amtrak’s control procedures in place as it relates to the preparation of equipment population were not designed in such a manner that would timely identify the conditions noted. Cause The exception from the criteria noted is attributed to the following cause: 1. Highly manual process required to reconcile data between multiple systems in order to maintain a complete and accurate record for each equipment asset. 2. Internal control procedures as designed are not detailed enough to review equipment purchases to be able to determine eligibility of the asset to be classified as equipment under 2 CFR equipment valuation thresholds. Identification as a Repeat Finding Not a repeat finding. Recommendation To address the Condition identified above, we recommend Amtrak to continue integration of the systems in such a way that appropriate funding source would be tagged to each asset automatically and that required property records would automatically be consolidated into one system of record and updated in that system. Ensure that adequate IT interface and business process application controls over the completeness, accuracy, validity, confidentiality, and availability of transactions and data during application processing (input, processing, output, etc.) are in place. Additionally, management should consider breaking out large purchase orders containing multiple items of equipment and tools under one purchase request, by creating separate level 2 WBSE codes in order to distinguish between different types of items being acquired, in order to be able to provide more appropriate classification.  Views of Responsible Officials Amtrak agrees with the finding related to the equipment population and believes that strengthening procedures around the preparation and review of the population is needed to prevent errors in future populations. Amtrak recognizes that remediation of this finding will require enhancing documentation around the preparation of the population and documenting a set of procedures to follow for reviewing the population. Some of these efforts have already been enacted while others will be developed and implemented prior to September 30, 2024.

Finding 2023-002: Preparation and Maintenance of Equipment Population Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0026-22 FR-AMT-0028-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.1 provides the following definition of Equipment: - 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. The code of federal regulations – 2 CFR 200.313 Equipment 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 sales price of the property (2 CFR 200.313(d)(1)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: - Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The following exceptions to the criteria were observed during the performance of the audit procedures as it relates to completeness and accuracy of equipment population: 1. In reviewing the equipment population provided to EY as part of the audit for FY23, we noted the Company mapped FY23 equipment activity relating to FR-AMT-0020-20, FR-AMT-0022-21 and FR-AMT-0026-22 grants to older funding sources. Per inquiry of management, FY23 Overhauled equipment activity was originally mapped incorrectly to prior year grant awards and fund source years. 2. Population contained an asset that could not be observed as the nature of the purchased equipment was a combination of tools with each individually costing less than $5,000. 3. Population contained an asset that had been replaced in 2021, and as such should not have been included in the equipment listing. Questioned Costs None. Context Population of single audit equipment records is manually prepared each period where funding sources are assigned to each asset based on the unique asset identifier. The data source used by the Capital Accounting team did not take into consideration overhaul activity during the FY23 period that was undertaken over equipment assets acquired in 2014-2016 fiscal years. (Condition 1) One of the 60 selections made for testing could not be observed, as the underlying equipment maintenance systems did not have a record of this item due to the fact that items purchased consisted of tools that were individually less than $5,000 and as such did not meet the definition of Equipment as defined by 2 CFR 200.1. The population provided to EY incorrectly included an exception as described in the Condition section above, indicating that following internal control was not functioning as designed: “Monthly, Lead Accountant, Capital Accounting exports equipment data from PP into an Excel spreadsheet (the Equipment Spreadsheet) and manually determines the eligibility of the equipment. The determination is subsequently reviewed by the Senior Manager, Capital Accounting.” (Condition 2) In the initial population provided, we noted that one of the assets had been retired and replaced in 2021 and should have not been included within the population. This was an error that was not corrected during timely updates of the maintenance records. (Condition 3) Effect Amtrak’s control procedures in place as it relates to the preparation of equipment population were not designed in such a manner that would timely identify the conditions noted. Cause The exception from the criteria noted is attributed to the following cause: 1. Highly manual process required to reconcile data between multiple systems in order to maintain a complete and accurate record for each equipment asset. 2. Internal control procedures as designed are not detailed enough to review equipment purchases to be able to determine eligibility of the asset to be classified as equipment under 2 CFR equipment valuation thresholds. Identification as a Repeat Finding Not a repeat finding. Recommendation To address the Condition identified above, we recommend Amtrak to continue integration of the systems in such a way that appropriate funding source would be tagged to each asset automatically and that required property records would automatically be consolidated into one system of record and updated in that system. Ensure that adequate IT interface and business process application controls over the completeness, accuracy, validity, confidentiality, and availability of transactions and data during application processing (input, processing, output, etc.) are in place. Additionally, management should consider breaking out large purchase orders containing multiple items of equipment and tools under one purchase request, by creating separate level 2 WBSE codes in order to distinguish between different types of items being acquired, in order to be able to provide more appropriate classification.  Views of Responsible Officials Amtrak agrees with the finding related to the equipment population and believes that strengthening procedures around the preparation and review of the population is needed to prevent errors in future populations. Amtrak recognizes that remediation of this finding will require enhancing documentation around the preparation of the population and documenting a set of procedures to follow for reviewing the population. Some of these efforts have already been enacted while others will be developed and implemented prior to September 30, 2024.

FINDING 2023-025 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Equipment and Real Property Management - Inaccurate Inventory of Equipment See Schedule of Findings and Questioned Costs for chart/table. Condition DNR did not properly account for its capitalized equipment acquired with federal funds. We noted DNR did not assign an equipment identification tag and record the capital equipment in its inventory system for 1 of 6 sampled equipment acquisitions. Criteria Federal regulation 2 CFR 200.313(b) requires the state agency to manage equipment acquired under a federal award by the state in accordance with state laws and procedures. The FMG (Part II, Chapter 21, Section 110) and DNR policy require DNR to tag all equipment and to maintain in its records the tag numbers of all capital assets. Cause DNR informed us the equipment was not tagged or included in its inventory system because of an oversight.   Effect Insufficient capital asset records could increase the risk that equipment may be missing, lost, or stolen. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR properly account for its capitalized equipment acquisitions. Management Views DNR agrees with the finding.

FINDING 2023-025 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Equipment and Real Property Management - Inaccurate Inventory of Equipment See Schedule of Findings and Questioned Costs for chart/table. Condition DNR did not properly account for its capitalized equipment acquired with federal funds. We noted DNR did not assign an equipment identification tag and record the capital equipment in its inventory system for 1 of 6 sampled equipment acquisitions. Criteria Federal regulation 2 CFR 200.313(b) requires the state agency to manage equipment acquired under a federal award by the state in accordance with state laws and procedures. The FMG (Part II, Chapter 21, Section 110) and DNR policy require DNR to tag all equipment and to maintain in its records the tag numbers of all capital assets. Cause DNR informed us the equipment was not tagged or included in its inventory system because of an oversight.   Effect Insufficient capital asset records could increase the risk that equipment may be missing, lost, or stolen. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR properly account for its capitalized equipment acquisitions. Management Views DNR agrees with the finding.

FINDING 2023-025 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Equipment and Real Property Management - Inaccurate Inventory of Equipment See Schedule of Findings and Questioned Costs for chart/table. Condition DNR did not properly account for its capitalized equipment acquired with federal funds. We noted DNR did not assign an equipment identification tag and record the capital equipment in its inventory system for 1 of 6 sampled equipment acquisitions. Criteria Federal regulation 2 CFR 200.313(b) requires the state agency to manage equipment acquired under a federal award by the state in accordance with state laws and procedures. The FMG (Part II, Chapter 21, Section 110) and DNR policy require DNR to tag all equipment and to maintain in its records the tag numbers of all capital assets. Cause DNR informed us the equipment was not tagged or included in its inventory system because of an oversight.   Effect Insufficient capital asset records could increase the risk that equipment may be missing, lost, or stolen. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR properly account for its capitalized equipment acquisitions. Management Views DNR agrees with the finding.

FINDING 2023-025 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Equipment and Real Property Management - Inaccurate Inventory of Equipment See Schedule of Findings and Questioned Costs for chart/table. Condition DNR did not properly account for its capitalized equipment acquired with federal funds. We noted DNR did not assign an equipment identification tag and record the capital equipment in its inventory system for 1 of 6 sampled equipment acquisitions. Criteria Federal regulation 2 CFR 200.313(b) requires the state agency to manage equipment acquired under a federal award by the state in accordance with state laws and procedures. The FMG (Part II, Chapter 21, Section 110) and DNR policy require DNR to tag all equipment and to maintain in its records the tag numbers of all capital assets. Cause DNR informed us the equipment was not tagged or included in its inventory system because of an oversight.   Effect Insufficient capital asset records could increase the risk that equipment may be missing, lost, or stolen. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR properly account for its capitalized equipment acquisitions. Management Views DNR agrees with the finding.