Findings Citing § 200.317

Statement of Condition: During the review of low rent disbursements, it was noted there was no review of contractors to ensure they were not debarred from working on federal projects. Criteria: I. PROCURMENT: 2 CFR section 200.317 requires a PHA to ensure non-federal entities are not prohibited from contracting with parties that are suspended or debarred. Perspective Information: The Commission did not have effective internal controls over procurement, suspension and debarment for the federal program. Questioned Costs: Unknown. Effect: The Commission is not in compliance with the requirements as outlined in the Procurement, Suspension and Debarment section above. Cause: Lack of controls over grant requirements. Recommendation: The Commission should implement policies and procedures to ensure all federal compliances are followed pertaining to Procurement, Suspension and Debarment. Management’s Response: Management will implement policies and procedures to ensure the Commission is in compliance with all grant requirements pertaining to the Public Housing Capital Grant.

Internal Control over Compliance or Compliance Findings Criteria: Uniform Guidance §200.318 (General Procurement Standards) requires recipients and subrecipients to maintain and follow documented procurement procedures for transactions under a Federal award or subaward. These procedures must be consistent with applicable State, local, or tribal laws and regulations, as well as the standards set forth in 2 CFR §§200.317–200.327. Documentation must include, at a minimum, the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for contract pricing. In addition, recipients must ensure vendors are not suspended or debarred from participation in federal programs. Condition: Although the Organization followed procurement requirements in practice, including appropriate procurement methods, documentation of vendor selection, and verification that vendors were not suspended or debarred, it did not have formal, written procurement and suspension/debarment policies in place during the audit period. Cause: The Organization relied on established operating practices and staff knowledge to ensure compliance with federal procurement requirements. As a result, these practices were not formally documented in written policies aligned with 2 CFR Part 200. Effect: While no instances of noncompliance or questioned costs were identified, the absence of formal written policies increases the risk that procurement and suspension/debarment procedures may not be applied consistently in the future or adequately demonstrated during audits or monitoring reviews. Recommendation: We recommend that the Organization formally document its existing procurement and suspension/debarment practices in written policies that comply with 2 CFR Part 200. Views of Responsible Officials: Management agrees with the finding. The Organization notes that all federal procurement and suspension/debarment requirements were followed during the audit period and has formalized these practices in written policies for future federal awards.

Finding 2025-002 – Significant Deficiency Award No.: 21.027 Federal Grantor: U.S. Department of Treasury, Passed-through the County of Butte, Pass-through Grantor’s Number X25534. Compliance Requirement: Procurement, Suspension and Debarment. Condition: The Agency’s procurement policy does not adequately document procurement requirements under the Uniform Guidance or contract provisions under Appendix II to Part 200 of the Uniform Guidance. Criteria: Uniform Guidance, Section 200.318(a) indicates “the recipient or subrecipient must maintain and use documenting procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327”. Required contracting provisions are documented in Appendix II to Part 200 – Contract Provisions for Non-federal Entity Contracts Under Federal Awards. Cause: The Agency’s procurement policy needs to be updated to document the requirements of the Uniform Guidance. Effect: The Agency’s procurement policy does not comply with the requirements of the Uniform Guidance, which could result in procurements that do not comply with the Uniform Guidance and the awarding agency disallowing the federal award and requesting the return of the award. Context: The Agency’s procurement policy complies with many requirements of the Uniform Guidance, but the policy does not comply with certain required provisions, including the thresholds for micro purchases, simplified acquisition threshold and full public procurements and the requirements for sole sourcing procurements under section 200.320. The procurements tested were found to comply with procurement requirements under Uniform Guidance even though the policy did not include all of the required provisions. Recommendation: The Agency should update its procurement policy to reference Uniform Guidance §§ 200.317 through 200.327 and should reference contracting provisions under Appendix II to Part 200 to be in compliance with Uniform Guidance prior to procurements being made under future federal awards. Views of Responsible Officials and Planned Corrective Actions: Management’s response and planned corrective action is included in the Corrective Action Plan included at the end of the report.

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: 395-0096-25-21 & 395-0096-25-22 – Year Ended December 31, 2025 Award Period: January 1, 2025 – December 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: § 200.318 “General procurement standards” states that recipients or subrecipients must maintain and use documented procedures for procurement transactions under a federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327. The recipient or subrecipient must also 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. Condition: The Commission had not established written procurement or conflict of interest policies. Questioned costs: None Context: Although the Commission followed procurement, suspension and debarment processes to verify vendors met compliance requirements, no documented process or policies were maintained by the Commission. Cause: The lack of written policy and internal control structure does not include a process for ensuring procurement, suspension and debarment requirements are met for all required vendors. Effect: The Commission may contract with or make subawards under covered transactions that do not follow proper procurement processes or to parties that are suspended or debarred. Repeat Finding: No Recommendation: We recommend that the Commission update their current procurement and conflict of interest policies and implement a system of internal controls over procurement, suspension and debarment that will ensure compliance. Views of responsible officials: Management agrees with the finding.

Finding 2025-001 – Procurement and Suspension and Debarment Identification of the federal program: U.S. Department of Health and Human Services U.S. Department of Defense Research and Development Cluster Assistance Listing Number: 93.351 – Research Infrastructure Programs Federal Award Numbers Award Period Pass-Through Entity, if Applicable P51OD011133-26 5/1/2024-4/30/2025 N/A P51OD011133-27 5/1/2025-4/30/2026 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 200.318 General procurement standards. (i) Procurement records. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. 200.319 Competition. (a) All procurement transactions under the Federal award must be conducted in a manner that provides full and open competition and is consistent with the standards of this section and § 200.320. 200.320 Procurement Methods There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319. (a) Informal procurement methods for small purchases. These procurement methods expedite the completion of transactions, minimize administrative burdens, and reduce costs. Informal procurement methods may be used when the value of the procurement transaction under the Federal award does not exceed the simplified acquisition threshold as defined in § 200.1. Recipients and subrecipients may also establish a lower threshold. Informal procurement methods include: (1) Micro-purchases — (i) Distribution. The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold defined in § 200.1. To the extent practicable, the recipient or subrecipient should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the recipient or subrecipient considers the price reasonable based on research, experience, purchase history, or other information; and maintains documents to support its conclusion. Purchase cards may be used as a method of payment for micro-purchases. (iii) Micro-purchase thresholds. The recipient or subrecipient is responsible for determining and documenting an appropriate micro-purchase threshold based on internal controls, an evaluation of risk, and its documented procurement procedures. The micro-purchase threshold used by the recipient or subrecipient must be authorized or not prohibited under State, local, or tribal laws or regulations. (2) Simplified acquisitions — (i) Simplified acquisition procedures. The aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate. (ii) Simplified acquisition thresholds. The recipient or subrecipient is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk, and its documented procurement procedures, which may be lower than, but must not exceed, the threshold established in the FAR. (b) Formal procurement methods. Formal procurement methods are required when the value of the procurement transaction under a Federal award exceeds the simplified acquisition threshold of the recipient or subrecipient. Formal procurement methods are competitive and require public notice. The following formal methods of procurement are used for procurement transactions above the simplified acquisition threshold determined by the recipient or subrecipient in accordance with paragraph (a)(2)(ii) of this section: (1) Sealed bids. This is a procurement method in which bids are publicly solicited through an invitation and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid conforms with all the material terms and conditions of the invitation and is the lowest in price. The sealed bids procurement method is preferred for procuring construction services. (i) For sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders have been identified as willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm-fixed-price contract, and the selection of the successful bidder can be made principally based on price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them with sufficient response time prior to the date set for opening the bids. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate. For local governments, the invitation for bids must be publicly advertised. (B) The invitation for bids must define the items or services with specific information, including any required specifications, for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids. For local governments, the bids must be opened publicly. (D) A firm-fixed-price contract is awarded in writing to the lowest responsive bid and responsible bidder. When specified in the invitation for bids, factors such as discounts, transportation cost, and life-cycle costs must be considered in determining which bid is the lowest. Payment discounts must only be used to determine the low bid when the recipient or subrecipient determines they are a valid factor based on prior experience. (E) The recipient or subrecipient must document and provide a justification for all bids it rejects. (2) Proposals. This is a procurement method used when conditions are not appropriate for using sealed bids. This procurement method may result in either a fixed-price or cost-reimbursement contract. They are awarded in accordance with the following requirements: (i) Requests for proposals require public notice, and all evaluation factors and their relative importance must be identified. Proposals must be solicited from multiple qualified entities. To the maximum extent practicable, any proposals submitted in response to the public notice must be considered. (ii) The recipient or subrecipient must have written procedures for conducting technical evaluations and making selections. (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the recipient or subrecipient considering price and other factors; and (iv) The recipient or subrecipient may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby the offeror’s qualifications are evaluated, and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where the price is not used as a selection factor, can only be used to procure architectural/engineering (A/E) professional services. The method may not be used to purchase other services provided by A/E firms that are a potential source to perform the proposed effort. (c) Noncompetitive procurement. There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. 200.324 Contract cost and price. (a) The recipient or subrecipient must perform a cost or price analysis for every procurement transaction, including contract modifications, in excess of the simplified acquisition threshold. The method and degree of analysis conducted depend on the facts surrounding the particular procurement transaction. For example, the recipient or subrecipient should consider potential workforce impacts in their analysis if the procurement transaction will displace public sector employees. However, as a starting point, the recipient or subrecipient must make independent estimates before receiving bids or proposals. (b) Costs or prices based on estimated costs for contracts under the Federal award are allowable only to the extent that the costs incurred or cost estimates included in negotiated prices would be allowable for the recipient or subrecipient under subpart E of this part. The recipient or subrecipient may reference its own cost principles as long as they comply with subpart E of this part. (c) The recipient or subrecipient must not use the “cost plus a percentage of cost” and “percentage of construction costs” methods of contracting. Condition Texas Biomed did not comply with procurement requirements per the Uniform Guidance. Specifically, Texas Biomed did not comply with informal procurement methods for small purchases and noncompetitive procurement requirements. Texas Biomed also did not comply with its own procurement policy in relation to procurements of small purchases and noncompetitive procurements. Additionally, Texas Biomed did not maintain records for certain procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, the basis for the contract price, and the performance of a cost or price analysis, when required. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed complied with federal procurement requirements and Texas Biomed’s procurement policy and also maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements, including a cost or price analysis, when required. Effect or potential effect Texas Biomed did not comply with the general procurement standards, methods of procurement, and cost or price analysis requirements, according to the Uniform Guidance. Questioned costs $211,839 in total for 3 procurements as follows: $38,000 – Assistance Listing Number 93.351, Award Identification Number – P51OD011133-26 Procurement Date of January 28, 2025 $162,986 – Assistance Listing Number 93.351, Award Identification Number – P51OD011133-27, Procurement Date of May 22, 2025 $10,853 – Assistance Listing Number 93.351, Award Identification Number – P51OD011133-27, Procurement Date of May 22, 2025 Per 2 CFR 200.1, questioned cost means an amount, expended or received from a Federal award, that in the auditor’s judgment: (1) Is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award; (2) At the time of the audit, lacked adequate documentation to support compliance; or (3) Appeared unreasonable and did not reflect the actions a prudent person would take in the circumstances. Questioned costs were computed as the value of the individual procurements tested that were not compliant with the Uniform Guidance or that lacked adequate documentation to support compliance regarding the history of the procurement, including the rationale of the procurement and the performance of a cost or price analysis, when required. None of the questioned costs were related to procurements that appeared unreasonable. Context EY issued a material weakness for Texas Biomed related to internal control over procurement in the prior year. Based upon the implementation date for the corrective action of September 2025 through November 2025, provided by management, the finding related to this internal control had not been remediated for the full period under audit. As such, we did not test the operating effectiveness of this control and are issuing a material weakness consistent with the prior year finding. EY tested 13 procurements over the micro-purchase threshold of $10,000, with expenditures totaling $1,383,894 from a population of 53 procurements over the micro-purchase threshold of $10,000 ($15,000 effective October 1, 2025), with expenditures totaling $4,752,988 during the year ended December 31, 2025. For 1 procurement with expenditures in the amount of $162,986, related to a purchase order dated May 22, 2025 for $660,754, for animal food, Texas Biomed did not perform a cost or price analysis prior to the procurement. Since the total purchase order for this procurement exceeded $250,000, the simplified acquisition threshold, a cost or price analysis was required. EY observed that a cost analysis was performed for this same vendor for animal food on October 22, 2025. For 1 procurement with expenditures in the amount of $38,000, related to a purchase order dated January 28, 2025 for the same amount, for lab services, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, at the time of the procurement. Subsequently, Texas Biomed prepared sole source documentation for the procurement during the audit. For 1 procurement with expenditures in the amount of $10,853, related to a purchase order dated May 22, 2025 for $232,000, for fuel, Texas Biomed did not document sole source justification at the time of the procurement but instead utilized outdated sole source justification prepared over a year earlier under a separate procurement. We consider the expenditures related to these procurements to be questioned costs due to Texas Biomed not adhering to federal procurement requirements per the Uniform Guidance and also Texas Biomed’s procurement policy. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2023-002 and 2024-002. Recommendation Texas Biomed should comply with federal procurement requirements, as well as Texas Biomed’s procurement policy with regards to obtaining quotes for small purchases and documentation of sole source justification at the time of the procurement, as applicable. Texas Biomed should re-evaluate and document sole source justifications for vendors retained from year to year each time a new procurement is made from that vendor. Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, the basis for the contract price, and the performance of a cost or price analysis, when required. Views of responsible officials Management agrees with the finding and implemented corrective action as of November 2025. The instances of noncompliance noted above occurred prior to November 2025. For the procurement with expenditures of $162,986 for animal food, a cost analysis was performed on October 22, 2025 and provided during the audit. This was a sole source procurement, but it should be noted that the cost analysis showed the supplier Texas Biomed used was 55% lower in cost than another supplier of similar, though not identical, animal food. For the procurement with expenditures of $38,000 for lab services, sole source documentation was prepared during the audit explaining that this is the only lab found to provide the services needed, accept Texas Biomed’s samples, and provide the results needed timely. For the procurement with expenditures of $10,853 for fuel, sole source documentation was updated July 1, 2025.

Procurement Federal agency: U.S. Department of Health and Human Services Federal program title: Health Center Program Cluster Assistance Listing Number: 93.224/93.527 Award Period: 6/1/24-5/31/25; 6/1/25-5/31/26 Criteria: CFR § 200.320 (methods of procurement to be followed) indicates that the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and CFR § 200.317, 200.318, and 200.319 for any of the approved procurement methods used for the acquisition of property or services required under a Federal award or subaward. Condition: There was no documentation available to support that the Organization followed its procurement policies and procedures related to transactions selected for testing. Questioned Costs: $209,640 Context: Five of five transactions selected for procurement testing did not have documentation to support that policies and procedures were followed. Cause: Unknown. Effect: Potential use of federal funds in a manner that is not most efficient or economical. Repeat Finding: No. Recommendation: We recommend the Organization consistently follow its established policies and procedures related to the maintaining of necessary documentation to support the method of procurement utilized. The Organization may also consider qualifying multiple vendors for particular goods/services and then utilizing an approved vendors list. Views of Responsible Officials: There is no disagreement with the audit finding.

FINDING 2025-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2021 Pass-Through Entity: Morgan County, Indiana Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 TOWN OF MOORESVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The Town spent COVID-19 Coronavirus State and Local Fiscal Recovery Fund (SLFRF) award dollars from two sources during the audit period. One source was a direct allocation from the Department of the Treasury (Treasury). The other source was a pass-through from Morgan County, Indiana. Direct Treasury funds that are spent under the revenue loss eligible use category are not subject to the federal procurement requirements set forth in 2 CFR § 200.318-200.327. Because the Town classified all its direct Treasury funds spent during the audit period as revenue loss, federal procurement rules do not apply to those expenditures. However, procurement requirements do apply to the SLFRF funds the Town spent as a subrecipient of Morgan County, Indiana. Procurement - Policy Award funds may be used to procure goods and services necessary to carry out the purpose of the award. The Town must follow its own documented procurement policies and procedures, which must reflect applicable state and federal laws and regulations. The Town did not have a procurement policy or procedures that complied with state or federal laws and regulations for the procurement of goods or services with federal funds. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases are typically for those purchases $50,000 or under, and small purchase procedures are for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, the price or rate quotations must be obtained from an adequate number of qualified sources. The Town had one vendor that qualified for and was tested under the small purchase procedures. The Town paid this vendor $92,463 during the audit period for a sanitation project but did not obtain the required price or rate quotations. The ineffective internal controls and noncompliance were isolated to the procurement policy and the small purchase identified above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 14 TOWN OF MOORESVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause Management was unaware of this grant requirement relating to the federal procurement policy and obtaining quotes for federal small purchases. Effect The failure to establish an effective system of internal controls and retain and provide appropriate supporting documentation prevented the determination of the Town's compliance with the compliance requirement listed above. The failure to design and implement an effective system of internal controls enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of future federal funds to the Town. INDIANA STATE BOARD OF ACCOUNTS 15 TOWN OF MOORESVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a system of internal controls to ensure that they are in compliance with the grant agreement the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding: 2025-005 – Procurement ALN and Title: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of Treasury Passthrough Entity: State of Nevada Governor’s Finance Office Budget Division Type of Finding: Significant Deficiency Criteria: Per 2 CFR §200.318(a), non-federal entities must: “Use their own documented procurement procedures which reflect applicable State, local, and Tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part.” Additionally, 2 CFR §200.318(b) requires non-federal entities to maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications of contracts or purchase orders. Condition: The Foundation did not maintain a formal written procurement policy governing purchases made with federal funds during the fiscal year ended December 31, 2025. Cause: Management had not established and formally documented procurement procedures designed to ensure compliance with Uniform Guidance procurement standards Effect: Without a documented procurement policy, the Foundation is at increased risk of noncompliance with federal procurement requirements, including inadequate competition, inconsistent purchasing practices, and insufficient documentation supporting procurement decisions. Questioned Costs: Unknown. Identification of a repeat finding: Not applicable. Context: The Foundation did not have written policies surrounding procurement so formal control procedures were not documented. However, procurement procedures were followed. Recommendation: We recommend the Foundation adopt a formal written procurement policy that complies with Uniform Guidance requirements under 2 CFR §200.317–§200.327. The policy should address procurement methods, competition requirements, conflict of interest standards, documentation requirements, contractor oversight, and suspension and debarment procedures. View of Responsible Management agrees with this recommendation. See prepared corrective action plan Officials: for details.

Finding 2025-002 Type of Finding: Significant deficiency in control with Federal program requirements (Procurement and Suspension and Debarment) Repeat Finding: No Criteria: Under 2 CFR 200.303, nonfederal entities must establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Uniform Guidance further requires that, upon implementing the procurement standards, a nonfederal entity must have written procurement policies and procedures that reflect the procurement requirements in 2 CFR 200.317–.326, including methods of procurement, competition, and required contract provisions. In addition, for procurement transactions, nonfederal entities must ensure that contractors are not suspended or debarred or otherwise excluded from participation in federal assistance programs, typically by checking the System for Award Management (SAM.gov) or obtaining appropriate certifications, when procurement and suspension and debarment are applicable compliance requirements. Condition: For the year ended December 31, 2025, the Leadville Sanitation District did not have written procurement policies and procedures that incorporated the applicable Uniform Guidance procurement standards. In addition, for a sample of transactions subject to procurement tested under major federal programs, the District was unable to provide documentation demonstrating that it had verified vendors were not suspended or debarred when such verification was required. Upon further testing, we were able to verify that none of the vendors were suspended or debarred. Cause: The condition resulted from management not being aware that formalization and documentation of procurement policies and procedures in accordance with the Uniform Guidance and not implementing a consistent process for documenting suspension and debarment checks for covered transactions were required. Potential Effect: The lack of written procurement policies and procedures and the absence of documentation supporting suspension and debarment checks increase the risk that procurement transactions under federal programs may not comply with the Uniform Guidance procurement standards and suspension and debarment requirements. This could result in noncompliance with federal program requirements, potential disallowance of costs, or other remedial actions by federal agencies or pass-through entities. Questioned Costs: None. Recommendation: We recommend that the District (1) develop and formally adopt written procurement policies and procedures that align with the requirements of 2 CFR 200.317–.326, including provisions addressing procurement methods, competition, conflicts of interest, required contract clauses, and documentation requirements; and (2) implement and document procedures to verify and retain evidence that all contractors for covered transactions are not suspended or debarred, such as maintaining SAM.gov search results or equivalent documentation in the procurement files. We also recommend that management provide periodic training to staff involved in the procurement process regarding federal procurement and suspension and debarment requirements. Views of Responsible Officials: Management concurs with the finding and will implement controls to ensure that written procurement policies and procedures are developed and followed and that required suspension and debarment checks are documented for all covered procurement transactions under federal programs

FINDING 2025-001 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement 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): BAN-2 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-002. Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system that would likely be effective in preventing, or detecting and correcting, noncompliance. The purchasing policy provided by the City for review did not include the applicable federal regulations, such as procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in § 200.317 through 200.327." Cause The City did not fully implement the corrective measures stated in the City's corrective action plan prepared in response to this same finding included in the immediately prior audit report. Effect Without a proper system of internal controls in place that operated effectively, the City did not properly follow its corrective action plan and did not update its purchasing policy to reflect the required federal procurement standards. As a result, noncompliance identified in the immediately prior audit remained uncorrected throughout the current audit period. INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 the City update its purchasing policy to incorporate all appropriate federal regulations to ensure compliance with the procurement standards applicable to federal awards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: Assistance to Firefighters Grant - Procurement and Suspension and Debarment Federal Agency: Department of Homeland Security Federal Program: Assistance to Firefighters Grant Assistance Listings Number: 97.044 Federal Award Number and Year (or Other Identifying Number): EMW-2023-FG-06299 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations require recipients of federal awards to maintain documented procedures for procurement under a federal award. These procedures must comply with State, local, and tribal laws, along with applicable provisions under 2 CFR 200.317 through 2 CFR 200.327. These requirements include the avoiding of acquisition of unnecessary or duplicative items, a clear and accurate description of technical requirements for the items or services to be procured, the requirements for solicitations to identify any and all requirements which offerors must fill and other factors to be used in evaluating bids or proposals, and a policy prohibiting the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals. The City did not present a procurement policy containing these required provisions for the audit. INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF KENDALLVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, when the value of the procurement for property or service exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Federal regulations require a firm-fixed-price contract to be awarded in writing to the lowest responsible and responsive bidder. The City solicited bids for Air-Paks funded through the Assistance to Firefighters Grant. After awarding the bid, the City did not enter into a formal written contract with the vendor. Suspension and Debarment Prior to entering into covered transactions with federal award funds, recipients are required to verify that vendors are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have policies or procedures in place to verify that vendors were not suspended or debarred before entering into covered transactions. During the audit period, the City entered into one covered transaction for Air-Paks, utilizing $837,350 of federal award monies, which met the $25,000 threshold for verification. However, the City did not verify the vendor's suspension or debarment status prior to payment because no process existed to ensure contractors were not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . . INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF KENDALLVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (ii) If sealed bids are used, the following requirements apply: . . . (D) A firm-fixed-price contract will be made in writing to the lowest responsive and responsible bidder. When specified in bidding documents, factors such as discounts, transportation cost, and life-cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City did not implement effective internal controls to safeguard their procurement policy. The City's procurement policy was destroyed in a storm, and no backup copies were available. Also, the City was not aware that a formal written contract was needed for procurements exceeding the SAT threshold or the Procurement and Suspension and Debarment compliance requirement when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, the City is at risk of noncompliance with the Procurement and Suspension and Debarment compliance requirement, including the potential for a loss of federal funds awarded to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City design and implement a proper system of internal controls, including policies and procedures, to ensure the City complies with the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF KENDALLVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

U.S Department of Health and Human Services Federal Financial Assistance Listing #93.493 Congressional Directives Procurement, Suspension & Debarment Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria: 2 CFR 200. 303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards to Uniform Guidance standards in sections 2 CFR 200.317 through 200.327. Additionally, 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Condition: Testing of the federal program identified the following: 􀁸 The Hospital’s formally documented procurement policy was missing the required elements detailed under Uniform Guidance. 􀁸 Instances where the Hospital did not follow the procurement process, and/or retain documentation for reasoning of selection of vendor. Cause: The Hospital was not aware of the federal procurement requirements and did not have an established policy. Contract provisions were not evaluated compared to Uniform Guidance contract requirements and documentation was not retained to support procurement and selection of vendors. Effect: The Hospital was not in compliance with the procurement standards for their purchases and are not in compliance with the requirement to have a written policy in accordance with Uniform Guidance. Questioned Costs: None reported. Context: A nonstatistical sample of 4 out of 14 vendors were selected for testing. Repeat Finding from Prior Years: No Recommendation: We recommend the Hospital update their procurement policy to ensure it includes all the required elements in accordance with Uniform Guidance. In addition, we suggest that management implement procedures and control processes related to the review of procurement to ensure the procurement methods are being followed and documentation is retained to support compliance. Views of Responsible Officials: Management agrees with the finding.

Department of Treasury, State of Iowa Department of Management, Federal Financial Assistance Listing 21.029, 526659, 2025 COVID-19 Coronavirus Capital Projects Fund Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform to the procurement standards in sections 200.317 through 200.327. Condition: Testing of the federal program identified the following: --One instance where the Cooperative did complete price comparisons; however, the memo documenting the procurement did not reference the price comparison. The procurement file did not obtain all required components of the procurement process including rationale for selecting the vendor or the procurement method used. --One instance where the Cooperative did not follow the procurement process as detailed in the procurement policy and no documentation was retained to support the rationale for selection of vendor. Cause: The Cooperative followed parts of the procurement policy in place, however, not all components were documented and retained within the procurement file. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the Cooperative would be noncompliant with the compliance requirements outlined above. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 3 out of 6 vendors were selected for testing. Repeat Finding from Prior Year: Yes, finding 2024-002 Recommendation: We recommend that management implement procedures and control processes related to the review of contracts to ensure the procurement methods are being followed and documentation is retained to support the method of procurement. Views of Responsible Officials: Management agrees with the finding.

Finding 2025-001 Internal control deficiency and noncompliance over procurement and suspension and debarment and special tests and provisions. Identification of the federal program: Assistance Listing Number 93.493: • Congressional Directives • U.S. Department of Health and Human Services • Federal award identification number – CE147096 • Federal award year – September 1, 2022 to August 31, 2025 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. 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). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) 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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324 Contract cost and price. (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300 What must I do before I enter into a covered transaction with another person at the next lower tier? When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) checking SAM Exclusions; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. The Health Resources and Services Administration (HRSA) project guidance requires the following: • Federal Interest – Real Property – For all construction projects, regardless of award amount, you are required to file a Notice of Federal Interest (NFI). The NFI requires prior written approval in order for the property owner to mortgage, sell, transfer, or use the property for a purpose inconsistent with the award. A notarized NFI must be filed against the property deed prior to construction in the appropriate public records office of the jurisdiction in which the property is located and once filed, a copy must be provided to the appropriate HRSA Grants Management Specialist. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. During our testing over suspension and debarment, we observed management did not have documented suspension and debarment procedures and did not have internal controls in place to ensure vendors were searched for suspension and debarment at the time of vendor selection. During our testing over special tests and provisions, we observed management did not file an NFI against the property deed prior to construction in the appropriate public records office of the jurisdiction in which the property is located and provide to the appropriate HRSA Grants Management Specialist. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Special tests and provisions were not supported by internal controls in that an NFI was not filed against the property deed prior to construction in the appropriate public records office of the jurisdiction in which the property is located. Questioned costs: $1,154,000 – Assistance Listing Number 93.493 – Congressional Directives – Federal award identification number – CE147096 Questioned costs were computed as the entire population of procurement transactions subject to small purchase, formal procurement, suspension and debarment, and special tests and provisions compliance requirements. Questioned costs means a cost that is questioned by the auditor because of an audit finding: (1) which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds or (2) where the costs, at the time of the audit, are not supported by adequate documentation. Context: During our testing over procurements, we obtained a listing of expenditures that included $1,154,000 of procurement transactions subject to small purchase, formal procurement, suspension and debarment, and special tests and provisions compliance requirements. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of vendor selection. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Management should develop and implement internal controls over special tests and procedures to ensure that an NFI is filed against the property deed prior to construction in the appropriate public records office of the jurisdiction in which the property is located and provide to the appropriate HRSA Grants Management Specialist. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company implemented the procurement policy it created on September 30, 2025, in response to prior audit findings 2024-001 and 2024-003, which occurred after the end of the federal award year for this program, that addresses this finding. This procurement policy complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest and governs the actions of its employees who select, award and administer procurement contracts. This policy includes procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised in accordance with 2 CFR section 200.318 through 200.327. While the Company did not perform a check of each vendor against the SAM Exclusions prior to selecting a vendor, the Company has procedures in place to ensure the vendors are approved by Corporate purchasing and in good standing, which limits the risk of conflict of interest between employees and vendors, and limits contracting with a vendor who is suspended or debarred from federal related contracting. Further, the Company confirmed the vendors that were contracted with related to this finding were not included on the SAM Exclusions listing. The Company has now filed the Notice of Federal Interest (“NFI”), and provided the NFI to the appropriate HRSA Grants Management Specialist. The Company also updated its procurement policy to ensure that, regardless of the award amount, it files an NFI against the property deed prior to construction of any project in the appropriate public records office of the jurisdiction in which the property is located and provides a copy to the appropriate HRSA Grants Management Specialist.

Finding 2025-002 – Policies and Procedures Require Review and Update – ALN 14.871 Housing Choice Voucher Program, ALN 14.850 Low Rent Public Housing, ALN 14.872 Capital Fund Program – Significant Deficiency Condition & Cause: The Housing Authority has not adequately reviewed and updated several policies and procedures necessary to provide current guidance to employees and ensure compliance with applicable federal requirements and generally accepted internal control practices. Specifically, we noted: 1. The capitalization policy establishes a $500 threshold for capitalization and tracking of nonexpendable equipment. The threshold has contributed to difficulty maintaining an accurate inventory of equipment, including appliances. 2. The investment policy was adopted in December 2009 and has not been updated to reflect current requirements and practices. 3. The Housing Authority does not have a comprehensive financial policies and procedures manual addressing the flow of financial documents, internal controls over Housing Authority assets, authorization procedures, financial reporting responsibilities, and segregation of duties. 4. The Housing Authority does not have a formal conflict-of-interest policy applicable to Board members and employees. 5. The procurement policy was last revised April 23, 2024. The policy states that Board of Commissioners approval is not required for any procurement action. The current policy also establishes informal procurement thresholds of up to $40,000, with requirements for three quotations for purchases between $10,000 and $40,000 and sealed bids for purchases exceeding $40,000. The conditions appear to have resulted from an inadequate process for periodically reviewing and updating policies to reflect changes in federal requirements, HUD guidance, and the Housing Authority's current operations. Criteria: 2 CFR §200.303(a) requires a recipient or subrecipient to establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. 2 CFR §200.303(c) further requires management to evaluate and monitor compliance and §200.303(d) requires prompt action when instances of noncompliance are identified. With respect to procurement, 2 CFR §200.318(a) requires the recipient or subrecipient to maintain and use documented procurement procedures that are consistent with applicable State, local, and tribal laws and regulations and the Federal procurement standards contained in 2 CFR §§200.317–200.327. 2 CFR §200.318(c)(1) also requires written standards of conduct covering conflicts of interest for employees involved in the selection, award, and administration of contracts. HUD's Public Housing Procurement Handbook 7460.8 states that PHAs are required to establish and follow a written procurement policy consistent with 2 CFR §§200.317–200.327. The Handbook also addresses the authority and responsibility of the PHA Board for approving the procurement policy and delegating procurement authority. The Housing Authority's own Board-approved procurement policy establishes procurement thresholds and procedures that are required to be followed unless properly amended by the Board. Accordingly, the Housing Authority is required to maintain policies that are consistent with applicable Federal requirements and to administer procurements in accordance with its approved policies. Effect: Outdated or incomplete policies increase the risk that employees will not have adequate guidance to perform their responsibilities consistently and that the Housing Authority will not comply with applicable federal, HUD, state, and local requirements. In particular, the absence of comprehensive financial policies and procedures and an updated procurement policy increases the risk of unauthorized transactions, inadequate competition, unsupported procurements, conflicts of interest, inadequate segregation of duties, and inconsistent treatment of Housing Authority transactions. Recommendation: We recommend that the Housing Authority conduct a comprehensive review of all financial, procurement, investment, capitalization, conflict-of-interest, and other significant administrative policies at least annually and whenever applicable federal or HUD requirements change. Specifically, the Housing Authority should: • Revise the capitalization policy and establish a threshold that is practical to administer while maintaining adequate control over material nonexpendable equipment; • Update the investment policy to reflect current requirements and investment practices; • Develop and formally adopt a comprehensive financial policies and procedures manual; • Develop and implement a formal conflict-of-interest policy applicable to Board members, employees, and other applicable parties; • Revise the procurement policy to reflect current federal and HUD requirements, including HUD Handbook 7460.8, Rev. 3 and applicable provisions of 2 CFR Part 200; • Establish clear Board approval requirements for significant procurement contracts and other material commitments; and • Establish a formal process for management and the Board to periodically review and approve policy updates. Questioned Costs: None Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Criteria Title 2 CFR §200.318(a), requires a non-Federal entity to maintain and use documented procurement procedures that conform to the procurement standards contained in 2 CFR §§200.317 through 200.327. Condition The Organization did not maintain documented procurement procedures that incorporated the procurement standards required by Uniform Guidance. During the year ended December 31, 2025, HUD funds were used to reimburse costs associated with a mixed-finance capital construction project. The general contractor for the project was selected prior to the commitment of HUD funding for the project. The grant agreement disclosed a contractor was already selected Cause Management had not previously administered federal funding for a capital construction project subject to Uniform Guidance procurement standards and accordingly had not developed formal written procurement procedures conforming to 2 CFR §§200.317 through 200.327. In addition, the general contractor was selected prior to the commitment of HUD funding to the project. Effect The absence of documented procurement procedures increases the risk that procurements funded in whole or in part with federal awards may not comply with applicable federal procurement requirements. This condition represents a significant deficiency in internal control over compliance and noncompliance with the Procurement and Suspension and Debarment compliance requirement. Questioned Costs None ($0). Context This finding relates to the Economic Development Initiative major program (ALN 14.251). This is the first year the program was audited as a major program and therefore is not a repeat finding. Recommendations We recommend the Organization develop, formally adopt, and implement written procurement procedures that conform to the requirements of 2 CFR §§200.317 through 200.327 and apply those procedures to all procurement activity funded in whole or in part by federal awards. Views of Responsible Officials Management agrees with the finding and will develop and implement written procurement procedures consistent with Uniform Guidance requirements.

Criteria: The Uniform Guidance procurement standards are located in 2 CFR, Subpart D, Sections 200.317 through 200.327. All organizations are required to follow specific procurement standards when making major purchases with federal funds, including purchases of supplies, property, equipment, real property, and services. Procurement and Suspension and Debarment compliance requires that (1) recipients establish and follow written procurement procedures that conform to applicable federal statutes and procurement requirements identified in 2 CFR part 200 and (2) contracts and subawards under covered transactions not be made with parties listed on the General Services Administration's System for Award Management (SAM) Exclusions (debarred, suspended, otherwise excluded, or declared ineligible) Condition: Management has an established procurement policy. However, during our testing of a non-statistical sample of three procurements for the year ended December 31, 2025, we identified the following exceptions: • For one procurement tested, management did not document a formal cost/price analysis, and a competitive bid was not obtained. • For another procurement tested, the contract was a covered contract over $25,000; however, management did not document review of whether the contractor was suspended or debarred. Sikich performed a search of SAM (or the applicable exclusion listing) and noted the contractor was not listed as suspended or debarred; however, management did not retain documentation evidencing its verification procedures. Cause: The condition appears to have resulted from insufficient controls to ensure procurement files include required documentation supporting (1) the basis for vendor selection (including competitive procurement support and cost/price analysis, where applicable) and (2) verification that contractors on covered transactions are not suspended or debarred prior to contract execution. Effect: The lack of required procurement documentation increases the risk that procurements are not made in accordance with procurement requirements and the Organization’s procurement policy. In addition, lack of documented verification of suspension and debarment status increases the risk the Organization could enter into covered transactions with ineligible contractors, which could result in unallowable costs and noncompliance with federal requirements. Questioned Costs: None identified. Although management did not document its suspension and debarment review for the covered contract tested, Sikich’s search noted the contractor was not suspended or debarred. In addition, no specific dollar disallowance was identified from the procurement documentation exceptions based on procedures performed. Perspective: The finding was identified during testing of the Organization’s major program for the year ended December 31, 2025. We tested a non-statistical sample of three procurements and identified two exceptions Recommendation: We recommend that management strengthen internal controls over procurement and suspension/debarment compliance and implement a standardized procurement file checklist to document key requirements for each procurement, including the procurement method, evidence of competition (as applicable), and documented cost/price analysis, where required. We also recommend that management require retention of documentation evidencing verification that contractors are not suspended or debarred for covered transactions (for example, a dated SAM Exclusions search result or equivalent evidence) prior to contract execution.

Section II – Financial Statement Findings None reported. Section III – Federal Program Audit Findings and Questioned Costs Finding Number: 2025-001 Finding: Finding Type: Material Weakness Title and Federal Assistance Listing Number of Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: In accordance with 2 CFR 200.320, non-federal entities must conduct all procurement transactions in a manner providing full and open competition. For purchases exceeding the micro-purchase threshold of $10,000, the entity must obtain price or rate quotations from an adequate number of qualified sources, unless the purchase qualifies as a sole-source procurement under 2 CFR 200.320(c). Additionally, 2 CFR 200.303 requires the non-federal entity to establish and maintain effective internal control over compliance with federal statutes, regulations, and the terms and conditions of the federal award. Furthermore, 2 CFR 200.318(b) and 200.324 require that written contracts be executed with contractors, including all required Federal provisions to safeguard Federal funds. Condition: We examined 60 transactions during our testing of procurement transactions under the Coronavirus State and Local Fiscal Recovery Funds. We noted that a competitive bidding process was not used in 32 of 60 transactions tested. In all 32 instances, Historic South did not provide evidence that multiple bids or quotes were solicited. The documentation and explanation provided by Historic South was not deemed to be adequate justification to qualify for the use of sole-source procurement under 2 CFR 200.320(c). Additionally, all 60 procurement transactions tested did not have a fully executed, signed contract with the respective contractors. The award/contracting process and methods used to render and pay services did not meet the expected level of formal contractual agreements in place. Cause: In early 2024, Historic South made revisions to the procurement process in order to maximize efficiency and improve overall project outcomes. These revisions were made based on the challenges of securing bids on all potential projects, the need to expend the awarded dollars in a timely fashion and a verbal agreed-upon understanding with the Ohio Department of Health. The requirement to obtain multiple bids was replaced with a strategic invitation approach based on a preferred vendor pool. The result was that Historic South did not have a procedure in place to ensure that procurement transactions were conducted in compliance with Uniform Guidance. Specifically, the procurement policy lacked provisions to enforce competitive procurement practices for purchases above the micro-purchase threshold. Additionally, the process Historic South used to make awards to contractors did not meet the expected standards required for formal contract execution prior to project initiation or payment. - 29 - Historic South Initiative Schedule of Findings and Questioned Costs - continued Year Ended December 31, 2025 Section III – Federal Program Audit Findings and Questioned Costs - continued Effect: Failure to obtain competitive bids or quotes increases the risk of paying higher prices for goods/services, or unfair contracting practices. Additionally, the lack of competitive procurement represents noncompliance with Uniform Guidance, which may lead to questioned costs and potential disallowance by the granting agency. Furthermore, the lack of formally signed contracts increases the risk of misuse of federal funds and an inability to enforce contractual obligations or resolve disputes. While our testing did not identify any instances of misspent or improperly used federal funds, the control deficiencies represent a material weakness in internal control over compliance. Questioned Costs: $1,000,798 These costs are considered questioned due to lack of compliance with Uniform Guidance. The amount represents the total bid/contract amount of the 32 transactions tested that did not meet the competitive bidding requirements. Recommendation: We recommend that Historic South implement and enforce formal procurement procedures that comply with the requirements of 2 CFR 200.317-200.327. These procedures should include obtaining competitive bids and/or maintaining documentation for any alternative bidding process used and approval requirements. Additionally, Historic South should require that fully executed, signed contracts be obtained prior to the start of work or payment to contractors. Staff responsible for procurement should be trained on federal procurement standards to ensure compliance. Views of Responsible Official and Planned Corrective Action: Historic South acknowledges this finding is the same as reported in 2024. Although the corrective actions identified in the prior year’s audit were implemented, they were not fully in place during most of the period covered by the current audit. As a result, the transactions tested during the 2025 audit occurred before the corrective measures became effective. Corrective measures implemented include policies and procedures designed to strengthen its procurement and contracting processes. These include: 1. Requiring the solicitation of multiple bids for all construction work in excess of $10,000 2. Establishing criteria for awarding all construction work 3. Implementing formal contracting processes for all construction work Management believes these corrective actions address the deficiencies identified and expects them to be fully effective for construction activities occurring after implementation.

Finding: 2025-002 Procurement, Suspension and Debarment Federal Agency(ies): United States Department of Defense Federal Program(s): Research and Development Cluster Assistance Listing Number(s): 12.300, 12.330 Pass-through Entity (if applicable): Direct awards and pass-through awards from RTI International and Greensight, Inc. Award Identification Number and Year: Various Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with 2 CFR 200.317 through 2 CFR 200.327, non-Federal entities are required to maintain documentation sufficient to detail the history of procurement transactions. Such documentation should include, as applicable, the rationale for the method of procurement, contractor selection, basis for contract price, and the basis for any sole-source procurement. Additionally, pursuant to 2 CFR 180 and 2 CFR 200.214, non-Federal entities are prohibited from contracting with or making subawards to parties that are suspended or debarred and should maintain documentation demonstrating that applicable vendors were screened prior to contracting or payment. Condition: As part of our testing of vendor expenditures charged to Federal awards within the Research and Development Cluster, we selected a statistical sample of procurement transactions and noted deficiencies in RoboNation's procurement and suspension and debarment documentation. Specifically, we noted instances in which RoboNation did not consistently document the rationale supporting its selection of vendors charged to Federal awards. In addition, for procurements utilizing a sole-source or noncompetitive procurement methodology, RoboNation did not consistently document which of the allowable exceptions under 2 CFR 200.320 justified the use of noncompetitive procurement. With respect to suspension and debarment requirements, we noted that RoboNation did not consistently maintain evidence that vendors were screened against the System for Award Management (SAM.gov) database prior to contracting or payment. We also identified instances in which SAM.gov screening reports were either undated or dated after execution of the vendor agreement and related payment activity. Cause: RoboNation's policies and procedures for procurement documentation and suspension and debarment compliance were not operating effectively. Specifically, controls were not sufficient to ensure that procurement files contained required support for vendor selection and sole-source procurements, nor were controls adequate to ensure that SAM.gov screenings were completed and documented prior to engaging vendors charged to Federal awards. Effect or Potential Effect: The lack of adequate procurement and suspension and debarment documentation increases the risk that procurement transactions may not comply with Uniform Guidance requirements and that vendors could be selected without sufficient support for the procurement method utilized. Additionally, the lack of timely and documented SAM.gov screenings increases the risk that Federal funds could be expended on vendors that are suspended or debarred from participation in Federally funded programs. Questioned Costs: $437,591 Context: As part of our testing of the Procurement, Suspension, and Debarment compliance requirements for the Research and Development Cluster, we selected a statistical sample of vendor transactions charged to Federal awards during the year ended December 31, 2025. Identification as a Repeat Finding, if Applicable: Yes, repeat of 2024-003. Recommendation: We recommend that management strengthen controls over procurement and suspension and debarment compliance by implementing procedures requiring procurement files to contain documentation supporting vendor selection, the procurement method utilized, and, when applicable, the specific basis for sole-source procurement under Uniform Guidance. In addition, management should establish procedures to ensure that SAM.gov screenings are performed and documented prior to contract execution or payment and that evidence of such screenings is retained within the procurement file.

Finding 2025-010 – Procurement (Material Weakness and Noncompliance) Identification of the Federal Program: Coronavirus State and Local Fiscal Recovery Funds, ALN 21.027, Department of the Treasury (CRF); Highway Planning and Construction, ALN 20.205, Department of Transportation (HPC). Criteria: 2 CFR 200.317-327 establishes procurement standards for nonfederal entities. This includes different requirements based on the amount of purchases made from the vendor during the year. Specifically, the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a federal award or subaward, including for acquisition of property or services. Per the City’s Fiscal Policy and Procedures Manual, the small purchase method has a lower threshold of $15,000. All contracts and purchases over $15,000 must be bid. 2 CFR Part 180 requires nonfederal entities to verify that an entity they are entering into a contract with is not suspended or debarred or otherwise excluded. Condition: We selected seven vendors for the two grant programs to test compliance and controls over procurement. Of those seven, it was noted that for five vendors the City did not document the appropriate procurement procedures took place and three were not verified as not being suspended or debarred. Cause: On HPC, the City contracted or accumulated costs for two vendors over the small purchase threshold and did not provide documentation of bid procedures. Also, documentation was not provided that the City ensured the vendor was not suspended or debarred prior to contracting with them. On CRF, the City contracted two vendors over the small purchase threshold and did not provide documentation of bid procedures. And finally, one vendor was disclosed as part of a cooperative purchase agreement but documentation to support the City’s participation in that agreement was not provided. In 4 instances, The City followed state bid law which allows exemptions of certain professional services from requiring a bid. The federal regulations only allow specific circumstances in which a vendor does not have to be competitively procured. These vendors did not meet that criteria. Effect: The City did not have appropriate documentation to support compliance with the procurement, suspension, and debarment requirements. Questioned Costs: HPC - $383,445; CRF - $1,538,000 Recommendation: We recommend the City reinforce its procurement policies for purchases with federal funding through regular training and clear communication to all relevant staff members. Additionally, implementing a periodic review process to ensure compliance with this policy can help prevent future occurrences. Views of Responsible Officials: The City agrees with the finding. See Management’s View and Corrective Action Plan included at the end of the report.

All Funding Sources Significant Deficiency Procurement Criteria An entity must have and use documented procurement policies consistent with Federal, State, and local laws, regulations, and standards for the acquisition of property or services required under a Federal award or subaward. The procedures must conform to the procurement standards identified in CFR § 200.317 through 200.327. Condition The Center maintains specific grant manuals and guidelines as its written policies; however, previous audit identified errors in misapplying grant guidelines among funding sources. A recommendation was made in previous audit to develop a policy that would cover all procurements using Federally sourced funds. A draft policy was developed, but was not approved during the year ended September 30, 2025. Cause The entity has continued to reference specific grant manuals and guidelines as its written procurement policy. Effect Failure to follow appropriate procurement procedures could result in excess procurement costs being disallowed and subject the entity to possible claims. Recommendation We recommend management present the draft to the board, so it can be voted on and put into place. Management's Response Management agrees with our recommendation and the policy was voted on subsequent to year end and put into place.

Finding 2025-001 – Procurement, Non-compliance (Significant Deficiency) Federal programs: Covid-19 Coronavirus State and Local Fiscal Recovery Funds Criteria: 2 CFR § 200.318(a) requires that the recipient or subrecipient must maintain and use documented procurement procedures for procurement transactions under federal awards. These procedures must be consistent with applicable laws and the procurement standards in Sections 200.317 through 200.327. Condition: During our testing of procurement transactions, we noted that the Authority does not have formal, written procurement policies and procedures governing the acquisition of goods and services with federal award funds. Context: Procurement, Suspension and Debarment was identified as a direct and material compliance requirement for the major program. As such, the Uniform Guidance requires the auditee to both design and implement internal controls over compliance, including formal, documented procurement policies. Cause: Management has not developed or implemented formal written policies to address procurement requirements under the Uniform Guidance. Effect: The absence of documented procedures increases the risk that procurement activities are not conducted in accordance with Uniform Guidance requirements. Questioned Costs: None Repeat finding: No Recommendation: We recommend that management develop and implement formal, written procurement policies and procedures that comply with 2 CFR Sections 200.317 through 200.327, which address procurement methods, competition requirements, and documentation standards, and are consistently applied to all procurement transactions under federal awards. Views of Responsible Officials: Management agrees with the finding and the auditors’ recommendation. See Corrective Action Plan at the end of the report.

Department of Treasury, State of Indiana Office of Community and Rural Affairs, Federal Financial Assistance Listing 21.029, AL192-23-NLC-23-103, AL192-23-NLC-25-104 A, AL192-23-NLC-25-104 B Coronavirus Capital Projects Fund Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards to Uniform Guidance standards in sections 2 CFR 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parties that are debarred, suspended, or excluded from ineligible participation in Federal assistance programs or activities. Condition: Testing of the federal program identified the following: • The Entity’s formally documented procurement policy was missing the required elements detailed under Uniform Guidance • Four instances where the Entity did not follow the procurement process and did not have any formal documentation in place with the vendors. • Four instances where the Entity entered into a contract with a vendor over $25,000 and there was no review performed to ensure the vendor was not suspended or debarred. Cause: The Entity was not aware of the federal procurement requirements. Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Contracts entered were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the Entity would be noncompliant with the compliance requirements outlined above. Additionally, the Entity may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 out of 10 vendors were selected for testing. Repeat Finding form Prior Year: No Recommendation: We recommend the Entity update their procurement policy to ensure it includes all the required elements in accordance with Uniform Guidance. In addition, we suggest that management implement procedures and control processes related to the review of procurement to ensure the procurement methods are being followed and documentation is retained to support compliance. Also, management should ensure vendors are not suspended or debarred from doing business with the federal government prior to entering into a procurement transaction. Views of Responsible Officials: Management agrees with the finding.

Assistance Listing, Federal Agency, and Program Name 93.493, U.S. Department of Health and Human Services, Congressional Directives Federal Award Identification Number and Year CE1HS52674 & CE1HS53568 2025 Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria The Corporation is required to maintain and follow written procurement procedures that comply with Uniform Guidance procurement standards, including the requirements in 2 CFR 200.317-200.327 regarding procurement methods and documentation of the history of procurement transactions. The Corporation is also required to comply with suspension and debarment requirements, including verification procedures required under 2 CFR 200.212, 2 CFR 200.318(h), 2 CFR 180.300, and 48 CFR 52.209-6. The requirements state that procurements paid with federal funds are supported by documentation showing the method of procurement, the basis for contractor selection, and compliance with suspension and debarment requirements. Condition The Corporation’s procurement and suspension/debarment policies and procedures were not in conformance with Uniform Guidance requirements. In addition, procurement records for the items tested did not contain sufficient documentation to support the procurement method used, the basis for contract selection, or compliance with suspension and debarment requirements. Questioned Costs $1,350,000 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed The questioned costs represent activity reported on the SEFA incurred under contracts not in compliance with federal procurement standards. Context For both contracts tested, no records were available to support the procurement method, contractor selection, or performance of required suspension/debarment verification procedures. Based on the items tested, the issue was not an isolated documentation exception but reflected a control and compliance deficiency affecting the compliance areas of procurement and suspension/debarment. Cause and Effect The Corporation did not have sufficiently developed procurement, suspension, and debarment policies and procedures aligned to Uniform Guidance requirements. As a result, compliance procedures over these areas were not adequately established or performed. Without Uniform Guidance-compliant procurement policies, required procurement history documentation, and evidence of suspension/debarment verification, the Corporation cannot demonstrate that contracts charged to the federal award were procured in accordance with federal requirements. This increases the risk of noncompliance with procurement and suspension/debarment requirements and resulted in material noncompliance over the major program. Recommendation The Corporation should update and formally adopt written procurement, suspension, and debarment policies and procedures to conform to Uniform Guidance requirements and should implement procedures to ensure those policies are consistently followed and documented for all federally funded procurements. Views of Responsible Officials and Planned Corrective Actions The Corporation concurs with the finding. The Corporation will update and formally adopt written procurement, suspension, and debarment policies and procedures to conform to Uniform Guidance requirements and implement procedures to ensure those policies are consistently followed and documented for all federally funded procurements.

Non-compliance with Federal Award Requirement Identification of Federal Program 20.205 - Highway Construction and Planning; U.S. Department of Transportation; Passed-through State of Mississippi Department of Transportation Criteria 2 CFR 200.318(a) requires non-Federal entities to maintain and use documented procurement procedures that are consistent with applicable Federal statutes, regulations, and the standards identified in 2 CFR 200.317 through 200.327 as well as maintaining written standards of conduct covering conflicts of interest and governing the actions of employees engaged in the selection, award, and administration of contracts supported by Federal funds. Condition For the year under audit, the City did not have documentation of adopted procurement policies and procedures that addressed procurement standards or a written standard of conduct governing employees engaged in contract administration as required by Uniform Guidance. Cause Management had not established or adopted formal policies and procedures to ensure compliance with the procurement requirements of Uniform Guidance. Effect Without documented procurement policies and written standards of conduct, the City is at increased risk of noncompliance with Federal procurement requirements. Questioned Costs No questioned costs resulted from this matter. Repeat Finding This is not a repeat finding. Recommendation We recommend management development, approve, and implement written procurement policies and procedures and adopt a written standard of conduct addressing conflicts of interest and ethical expectations for employees and officials involved in the procurement process. Views of Responsible Officials Managment contends they have followed state procurement law and has since adopted a formal policy stipulating compliance with State of Mississippi procurement and Federal procurement requirements. A written standard of conduct for employees engaged in contract selection, award, and administration is in process and expected to be formally adopted in the near future.

2025-002 PROCUREMENT (repeat comment) Type: Material weakness in internal control over compliance/noncompliance Program: ALN 93.696 Certified Community Behavioral Health Clinics Expansion Grants (CCBHC) Criteria: Per 2 CFR section 200.318, the non-Federal entity, “…must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327.” Condition: During testing, it was noted that the CMHSP had not followed procurement requirements for the contract entered into for project evaluation and coordination services. This is the same contract that produced a material finding in the prior year single audit. Cause/Effect: Management oversight. Questioned Cost: $150,000 – the amount paid during the fiscal year pursuant to contract in question. Recommendation: We recommend that the CMHSP review/update policies and procedures to ensure that all federal requirements for procurements are followed for future contracts entered into with federal funds. Management’s Resp: Management is in agreement with this recommendation. Also, the grantor was notified of this finding and has notified the CMHSP that there is no elevated level of risk moving forward through the remainder of the grant cycle.

FINDING 2025-002 Internal Control over Compliance and Compliance with Procurement, Suspension and Debarment (Significant Deficiency and Noncompliance) Federal Agency: Various Federal Agencies Federal Program: Research and Development Cluster Assistance Listing Numbers: 47.076, 93.243, and 47.010 (Direct Awards) Criteria: Uniform Guidance requires recipients and subrecipients to maintain and use documented procurement procedures for procurement transactions under a Federal award or subaward, and such procedures must be consistent with the procurement standards in 2 CFR § 200.317 through 200.327. In addition, 2 CFR § 200.320(a)(1)(ii) provides that micro-purchases may be awarded without soliciting competitive price or rate quotations only if the recipient or subrecipient considers the price reasonable based on research, experience, purchase history, or other information and maintains documentation to support its conclusion. Condition: During the audit, we tested five (5) vendors classified as micro-purchases. For each selected vendor, the University was unable to provide documentation evidencing that a cost or price reasonableness review was performed prior to vendor selection or contract execution. Specifically, the procurement files did not include pricing comparisons, competing quotes, market research, purchase history, documented experience, or other support demonstrating how the contract price was determined to be reasonable. Effect or Potential Effect: Without documented evidence of price reasonableness, the University cannot demonstrate that micro-purchase awards were made in accordance with Uniform Guidance procurement requirements. This increases the risk that federally-funded procurement transactions may not be supported by adequate documentation to demonstrate that prices paid were reasonable, and that procurement decisions may not be consistently supported, reviewed, and retained in accordance with federal requirements. Context: This is a condition based on testing the University’s compliance with specific requirements. The prevalence of this finding is detailed in the condition above. The samples were selected using a non-statistical method. Cause: The University did not consistently maintain documentation within its procurement files to evidence that price reasonableness was considered and supported prior to vendor selection or contract execution for micro-purchase transactions. Questioned Costs: No questioned costs were identified. The finding relates to insufficient documentation supporting the price reasonableness determination of certain procurements. Recommendation: We recommend that the University strengthen its procurement procedures for federally-funded micro-purchases to require documentation of price reasonableness prior to approval of the purchase or execution of the contract. We further recommend that the University require such documentation to be retained in a consistent manner and that procurement personnel review the documentation for completeness before approval. Views of Responsible Official: Management’s corrective action plan, including immediate remediation steps and enhancements to internal controls over Procurement, Suspension and Debarment, is presented in the Corrective Action Plan section of this report.

Criteria: Pursuant to 2 CFR § 200.318, non-Federal entities must maintain documented procurement procedures that conform to applicable State, local, and organizational laws and regulations, as well as the standards identified in 2 CFR § 200.317 through § 200.327. Condition: The Center adopted a written procurement policy in July 2025. However, because the policy was not in effect for the majority of the audit period, the required procurement procedures (such as micro_x0002_purchase thresholds, mail purchase price/rate quotations, or formal competitive proposals) for vendor selections were not consistently performed or documented throughout the fiscal year. Effect of Condition and Questioned Costs: Because written procurement policies and control procedures were not in place for the full year, the Center cannot ensure that goods and services purchased with federal funds are acquired in a manner providing full and open competition, or that prices paid are reasonable. ● Sample Testing: Out of seven transactions tested, we identified seven transactions totaling $409,114 for which required procurement procedures were not performed or documented. ● Questioned Costs: Known questioned costs total $409,114 [exceeds the $25,000 threshold under 2 CFR § 200.516(a)(3)]. Cause: Management did not formally adopt written internal policies and procedures for procurement under federal awards until July 2025. Consequently, for most of the fiscal year, staff responsible for purchasing operated without formal guideless or training regarding federal compliance requirements. Recommendation: We recommend that management consistently enforce the written procurement policy adopted in July 21025 to ensure ongoing compliance with 2 CFR § 200.317 through § 200.327. Additionally, management should ensure all personnel involved in federal purchasing are trained on these requirements and implement controls to retain supporting documentation (such as vendor quotes, price comparisons, or sole-source justifications) for all federal procurements. View of Responsible Officials and Planned Corrective Action: The Center agrees with the finding. Management formally adopted a Uniform Guidance compliant procurement policy in July 2025, and training with provided to all staff. See the separate Corrective Action Plan for full details

Finding 2025-001: Reportable finding considered a significant deficiency - Noncompliance with Internal Procurement Authorization Controls Program name: Child and Adult Care Food Program Assistance Listing: 10.558 Federal awarding agency: U.S. Department of Agriculture (USDA) Pass-through entity: Maryland State Department of Education, District of Columbia Education Office Award identification number: 012-2024/2025-3539-000 Award Years: 2024/2025 Criteria: Under 2 CFR 200.318(a), non-federal entities must establish and maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. As required under 2 CFR Subpart D (§§200.317–200.327), organizations must follow written procurement procedures that reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards in the Uniform Guidance. The Organization’s internal procurement policy includes specific thresholds for contract approvals and designates levels of review and signature authority based on the contract value. Adherence to these internal controls is essential to ensure compliance with federal procurement requirements and appropriate stewardship of federal funds. Condition: During our testing of procurement activity, we noted that procurement contracts were executed (in September/October of 2024) by an individual who did not have the delegated authority to approve or sign the agreement, as required by the Organization’s internal procurement policy. The contracts exceeded the individual’s approval threshold. The policy’s required internal approval levels were not followed prior to execution. Cause: This issue appears to have resulted from a breakdown in adherence to established internal control procedures, possibly due to a lack of training or oversight. The Organization’s procurement policy was in place and compliant with 2 CFR requirements, but it was not enforced in practice. Effect: Noncompliance with internal procurement approval controls increases the risk of unauthorized or inappropriate spending, lack of transparency, and potential ineligibility of costs charged to federal programs. While the transaction itself may ultimately be allowable, failure to follow established approval protocols constitutes a significant deficiency in internal control over compliance. Repeat finding: This is a repeat finding. See 2024-004 in prior year report. Questioned costs: None identified, as the expenditure appeared otherwise allowable. However, the control deficiency presents a risk for future noncompliance. Perspective: We selected two procurement transactions from a population of four procurement transactions from this program. The issue reflects a control failure affecting procurement activity across federally funded programs and may result in future questioned costs if not corrected. Recommendation: We recommend that the Organization follow up with the relevant parties to ensure proper reporting requirements are met on a timely basis. Management’s response and corrective action plan (unaudited): See corrective action plan

Procurement and Suspension and Debarment Federal Agency: U.S. Environmental Protection Agency Federal Program Title: Drinking Water State Revolving Fund (DWSRF) ALN: 66.468 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2521902915 September 1, 2024 - August 31, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: "Per 2 CFR §200.303(a), Texas Commission on Environmental Quality (TCEQ) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR §200.318, the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327. Per 2 CFR §200.214, recipients and subrecipients are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Condition: Audit procedures included a review of five procurements conducted during the fiscal year to assess whether TCEQ adhered to required procurement procedures and performed vendor eligibility verifications prior to entering into covered transactions. For one procurement, totaling $16,175, the required procurement processes were not followed, and the necessary vendor compliance checks, including verification of suspension and debarment status, were not completed before executing the transaction. Questioned costs: None. Context: See “Condition.” Cause: The procurement was initiated directly by the program area without notifying or coordinating with the Procurement and Contracts Section. Program staff proceeded with the purchase under the assumption that procurement involvement was unnecessary because the selected vendor was the sole provider of the required item. As a result, established procurement procedures and vendor compliance verification processes were not followed. Effect: Failure to follow procurement procedures and complete proper vendor compliance checks prior to entering into a covered transaction may lead to entering contracts with suspended or debarred vendors that could result in noncompliance and questioned costs. Repeat Finding: No Recommendation: TCEQ should provide targeted training to program staff on federal procurement requirements, including the necessity of coordinating all purchases through the P&C Section and completing required vendor compliance checks. Training should emphasize procedures for sole‑source or limited‑source procurements and reinforce staff responsibilities under 2 CFR procurement and internal control standards. Regular refresher sessions and documented guidance will help ensure consistent understanding and adherence to required procurement practices across all program areas. Views of responsible officials: The Financial Administration Division (FAD) will implement the audit’s recommendations. FAD will reinforce the guidance provided through continuous training, documentation, and improved internal controls.

Assistance Listing, Federal Agency, and Program Name - 93.088, U.S. Department of Health and Human Services, Advancing System Improvements for Key Issues in Women's Health 93.323, U.S. Department of Health and Human Services, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) 93.592, U.S. Department of Health and Human Services, Family Violence Prevention and Services/Discretionary and COVID - 19 Family Violence Prevention and Services/Discretionary 93.837, U.S. Department of Health and Human Services, Cardiovascular Disease Research (Research and Development Cluster) Federal Award Identification Number and Year - 93.088 ASTWH220110 (2023 and 2024) 93.323 - 32680012K (2024) 93.592 - 90EV0516 (2021); 90EV0530 (2023); ; 90EV0544 (2024) 93.837 - U01HL146245 (2024) Pass through Entity - 93.088 N/A 93.323 - Illinois Department of Public Health 93.592 - N/A 93.837 - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2024-001 Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(a), the nonfederal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§200.317 through 200.327. The LLC has established in its internal procurement policies and procedures that a minimum of 3 quotes must be obtained for purchases made under informal, simplified acquisition procedures. Per 2 CFR 200.318(i), the nonfederal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition - Controls were not sufficient to ensure that the history of procurement decisions was documented, as required by 2 CFR 200. Additionally, controls were not sufficient to ensure checks for suspension and debarment were documented before entering into covered transactions with third parties. Questioned Costs - unknown If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported We are unable to predictably quantify, had federal procurement standards been followed, which portion of activity presented on the SEFA under these contracts would be in question. Identification of How Questioned Costs Were Computed N/A Context - 93.088 - Management was unable to provide evidence that three out of three contractors tested was checked for suspension and debarment in advance of entering into a covered transaction. 93.323 - Management was unable to provide evidence that three out of three contractors tested was checked for suspension and debarment in advance of entering into a covered transaction. 93.592 - Management was unable to provide evidence that four out of four contractors tested was checked for suspension and debarment in advance of entering into a covered transaction. 93.837 - Of the four contracts tested, management was unable to produce records sufficient to detail the history of procurement for one contract. Additionally, for that same contractor, management was unable to provide evidence that the third party was checked for suspension and debarment in advance of entering into a covered transaction. Because we were able to confirm via a check of the Excluded Parties Listing that the contractors noted above were not suspended or debarred, no questioned costs related to this noncompliance were identified. Cause and Effect - Newly revised procurement policies and procedures implemented during the last month of the fiscal period under audit were not in place during the time of the contract acquisitions noted above, and therefore a lack of internally established procurement documentation practices resulted in material noncompliance with federal procurement standards. Recommendation - We recommend that management continue to follow and formalize its procurement policies and procedures to demonstrate how the LLC will achieve compliance with federal procurement standards identified in §§200.317 through 200.327. Additionally, we recommend management retain documented evidence that its policies and procedures were followed to ensure compliance with federal procurement standards. Views of Responsible Officials and Corrective Action Plan - Management will continue to strengthen internal controls through the revised Procurement Policy, enhanced documentation requirements, and clarified approval procedures. A centralized tracking database has been implemented to document sanctions, suspension, and debarment checks, as well as other required verifications based on the nature of each purchase or service. These procedures are required prior to entering into covered transactions and are monitored through dual staff reviews. Management believes that ongoing monitoring and consistent enforcement of these procedures will ensure compliance and prevent recurrence.

Congressional Directives ALN 93.493 U.S. Department of Health and Human Services Award Year: September 1, 2024 to August 31, 2025 Criteria or specific requirement – Procurement, Suspension and Debarment (2 CFR 200.317 – 200.327; 2 CFR 180.220) Condition – The District is required to have procedures to ensure vendors are not suspended or debarred prior to charging services to the grant, as well as required to follow their own documented procurement procedures which should conform to the Uniform Guidance procurement standards. Cause – The District did not follow compliant procurement procedures prior to charging services to the grant. Effect or potential effect – The District’s procurement policy does not include required suspension and debarment procedures. In addition, the District did not provide for full and open competition in procuring services with grant funds. Questioned costs – $312,535 – Questioned costs represent expenses for the tested vendors in which price or rate quotations from an adequate number of qualified sources were not obtained. Context – Out of a population of three vendors with expenses directly charged to the grant that were above the micro-purchase threshold, two contracts were selected for testing. Our sampling method was not and was not meant to be statistically valid. The District did not obtain price or rate quotations from an adequate number of qualified sources for either of the vendors selected for testing. Identification as a repeat finding – N/A Recommendation – Contracts directly charged to a federal award should be reviewed to ensure compliance with the Uniform Guidance. Views of responsible officials and planned corrective actions – The District has reviewed the applicable requirements of the Office of Management and Budget Uniform Guidance for procurement standards, specifically those related to the requirement for procedures to be documented regarding suspension and debarment and noncompetitive procurement. The District acknowledges that their procurement policy does not currently conform to the Uniform Guidance procurement standards, and formal procurement methods were not utilized for certain grant expenses. At the time of procurement, the District operated under the understanding that engagement of a vendor holding a General Services Administration (GSA) contract was consistent with and would satisfy applicable procurement requirements. Upon further review, the District recognizes that this assumption did not, in itself, meet all Uniform Guidance requirements, particularly with respect to documentation and justification of procurement methods. To ensure compliance with Uniform Guidance going forward, the District will implement corrective actions. The District will update the current procurement policy to ensure compliance with the Uniform Guidance. The District will provide formal training to existing grant Program Managers on Uniform Guidance procurement standards. Additionally, for any new grant opportunities, the grant committee will receive training on Uniform Guidance procurement standards prior to the completion of grant applications. For both existing and future grants, any proposed contracts or purchases exceeding $3,000 will be subject to review by the grant Program Manager (or the Grant Committee lead, if a Program Manager has not yet been assigned) to ensure that the appropriate procurement method is utilized, all required documentation is obtained and retained, and compliance with all applicable procurement standards is verified prior to purchase or execution of any contract. Responsible Official – Ana Zavala, Chief Financial Officer Planned Corrective Actions – These corrective actions will be implemented immediately, with training completed by May 31, 2026. Criteria or specific requirement – Procurement, Suspension and Debarment (2 CFR 200.317 – 200.327; 2 CFR 180.220)

Criteria: Code of Federal Regulations, CFR 200.318-322, requires the non-Federal entity to have and use documented procurement procedures consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “formal purchases,” those where the aggregate dollar amount is higher than the simplified acquisition threshold, sealed bids are publicly solicited through an invitation and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid conforms with all the material terms and conditions of the invitation and is the lowest in price. Condition: During our testing, we noted one contract that did not include documentation demonstrating that competitive bids were obtained. Additionally, there was no evidence that due diligence was performed to substantiate the vendor’s designation as a sole source, nor was there documentation indicating that no other vendors could meet the district’s needs. Context: The matter was found in one of the two samples we reviewed. Questioned Cost: There is no questioned cost associated with this non-compliance. Cause: District relied on a letter from the vendor, believing that this was a sole source. Effect: This resulted in one contract totaling $632,765 being awarded without competitive bidding documentation. Recommendation: We recommend that the District comply with 2 CFR, section 200.318-322, which requires that an LEA maintain the documented procedures for procurement transactions under a federal award. Views of Responsible Officials: We agree with the auditor’s comments, and the following actions have or will be taken to ensure the procurement of goods and services for the nutrition services department follows all applicable steps according to Title 2, Code of Federal Regulations (2 CFR) sections 200.317-200.327; Title7, Code of Federal Regulations (7 CFR), parts 210 and 220; and all applicable state and local rules: 1. During the school year 2024/2025, changes were made to staff to allow for additional oversight. A Procurement Specialist reporting directly to the Director of Purchasing was added to staff in lieu of a Buyer that had previously reported to the Director of Nutrition Services. This move allowed for an additional step to ensure proper procurement is happening. 2. All purchasing methods, including Micropurchase, Simplified Acquisition, and Formal, will be followed in accordance with all applicable regulations, in line with RUSD’s written procurement procedures. 3. Any noncompetitive procurement will only occur if the conditions outlined in applicable regulations are met and sufficient evidence and documentation is received and retained, including participating in performing due diligence to ascertain whether a single source document is accurate from any given vendor. 4. In addition, documented annual training will take place for all staff involved in the procurement process. This procedure includes a review and annual update of procurement procedures, if applicable, and an acknowledgement of the nutrition services code of conduct in regards to purchasing.

National Endowment for the Arts Federal Financial Assistance Listing 45.025, Affects all grant awards included under Federal Financial Assistance Listing 45.025 on the Schedule Promotion of the Arts Partnership Agreements Procurement, Suspension, and Debarment Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform to procurement standards in sections 200.317 through 200.327. Condition: The Organization has documented procurement procedures that conform to applicable federal standards regarding testing vendors for suspension and debarment; however, the procedures were not followed for two vendors selected for testing. Cause: The Organization's internal control process did not identify the two vendors for whom the suspension and debarment verification was not performed. Effect: Payments could be made to recipients who were suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 transactions out of 14 total transactions were selected for testing. Two vendors did not have support showing the search for suspension and debarment was performed which accounted for $155,100 of $716,818 of federal awards. Repeat Finding from Prior Year(s): No Recommendation: We recommend the Organization enhance internal control procedures to ensure all suspension and debarment verification procedures are performed prior to entering into the transactions. Views of Responsible Officials: Management agrees with the finding. The Organization takes compliance with federal procurement requirements seriously and has already implemented additional internal controls to address this.

Assistance Listing Number, Federal Agency, and Program Name - 10.553 and 10.555, U.S. Department of Agriculture, Child Nutrition Cluster Federal Award Identification Number and Year - 241960, 251960, 241970, and 251970 Pass through Entity - Michigan Department of Education Finding Type - Significant deficiency Repeat Finding - No Criteria - The School District is required to have processes that comply with applicable procurement rules in the Uniform Guidance, including initial identification of those requirements and subsequent compliance per 2 CFR 200.317 through 200.327, as well as contain required contract provisions for cost reimbursable contracts per the provisions in 7 CFR 210.21(f), 7 CFR 210.21(d)(3), and 7 CFR 220.16(d)(3). Condition The School District's internal controls did not effectively identify all of the required components necessary in formal solicitation documents for food service/cost reimbursable contracts and when using a third party entity (e.g., consortium) and did not utilize competitive procurement methods. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context- It was noted that the School District was not required to competitively bid any purchases during fiscal year 2025. Cause and Effect - Conducting solicitations or entering into contracts that do not follow the appropriate competitive procurement guidelines could result in the School District having an unallowable contract under the provisions of the grant and/or questioned costs. Recommendation - The School District should examine its processes and controls surrounding competitive procurement methods for the food service program to verify inclusions of the requirements under the Uniform Guidance. Views of Responsible Officials and Corrective Action Plan - As a result of a rotational School Nutrition Programs Procurement Review, as administered by the Office of School Nutrition Services within the Michigan Department of Education (MDE), general procurement findings were identified in the food service program. To address, the School District is revising its food service procurement documents to explicitly include all required contract provisions under the Uniform Guidance. The School District is also incorporating recent interpretations and guidance from the U.S. Department of Agriculture (USDA), as communicated through MDE, particularly regarding cooperative purchasing and pricing structures for federal compliance. These actions are intended to strengthen the procurement controls to ensure all future food service contracts meet the compliance requirements of the Uniform Guidance and USDA regulations.

Finding 2025-001 Lack of Internal Control over Procurement Federal Agency: U.S. Department of Education Federal Program: Research and Development Cluster ALN: 84.351 Award Numbers: S351A210129 Award Years: 2021-2026 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: When procuring goods and services for a grant’s purposes, grantees must follow their own procurement procedures, but only to the extent that those procedures meet the minimum requirements for procurement specified in 2 CFR Part 200.317. Procurement procedures for the district are outlined in Board Policy 3311 Bids, which requires the District to perform and document one of five methods of procurement based on the purchase amount for all costs charged to federal grants, when required by law, or whenever it appears to be in the best interest of the district to do so. Condition and context: During our testing of allowable costs, management was unable to provide adequate supporting documentation to demonstrate that proper procurement procedures were followed in one purchase. Cause: The District failed to maintain adequate documentation that procurement procedures were performed in accordance with Board Policy. Effect: Failure to perform and document procurement procedures could result in noncompliance with federal grant requirements and fail to ensure that District funds are spent in the best interest of the District. Additionally, failure to follow procurement policies could cause unauthorized transactions or unauthorized contracts as the School Board would not have the opportunity to review bids/quotes and select the best option based on relevant criteria. Questioned Costs: None. Repeat Finding: This finding was a financial statement finding in prior year. Recommendation: We recommend that the District follow Board Policies related to bids and document procurement procedures, including written documentation of sole source procurement or exemptions. Management’s Response: Management concurs with the finding. See Corrective Action Plan.

Assistance Listing, Federal Agency, and Program Name 84.027, 84.173, U.S. Department of Education, Special Education Cluster Federal Award Identification Number and Year 240450, 250450, 240460, and 250460 Pass through Entity Oakland County ISD Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria The School District is required to have processes that comply with applicable procurement rules in the Uniform Guidance, including initial identification of those requirements and subsequent compliance per 2 CFR 200.317 through 200.327. Additionally, under Uniform Guidance (2 CFR §180.220), the School District is required to verify that the vendor they chose was not suspended or debarred Condition The School District's internal controls did not effectively identify the required formal solicitation. The School District did not utilize the appropriate competitive procurement methods and did not retain suspended or debarred verification documentation. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context The School District has one vendor that represents all non payroll related expenditures charged to the grant. The School District was required to competitively bid out this contracted service during fiscal year 2025 as it exceeded the federal bid threshold. The School District did not bid the service and no documentation was maintained to support that the School District verified the vendor was not suspended or debarred. As of the audit testing date, the vendor was not suspended or debarred. Cause and Effect The School District accepted continued services with the current vendor, which was over the federal bid threshold, without conducting a formal bid process. The absence of a formal internal review of contracts over the bid threshold and the lack of review of suspended or debarred verification documentation, resulting in the School District being out of compliance for the two compliance requirements referenced. Recommendation The School District should institute controls to ensure that it is in compliance with both the procurement standards for competitive bids and the requirements related to suspension and debarment, including maintaining adequate related documentation. Views of Responsible Officials and Corrective Action Plan The School District will ensure that the proper procurement methods are adhered to, prior to executing future contracts. This includes also reviewing to ensure that vendors are not suspended or debarred, prior to awarding the contract. To accomplish this, the School District will use their grant budget process as a control for identifying the population of applicable expenditures that will be subject to procurement compliance requirements for federal programs.

Finding 2025-002: Procurement (50000) Assistance Listing # 10.553, 10.555 U.S. Department of Agriculture Passed Through: California Department of Education (pass through numbers 13526, 13523, 13391, 15655) Child Nutrition Cluster Repeat Finding? No Criteria: Code of Federal Regulations, CFR 200.320, requires the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR section 200.320((b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c)). Condition: During our testing of procurement, we sampled two contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtained prior to selecting the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with Public Contract Code and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in two of two vendors tested. Questioned Cost/Effect: This resulted in roughly $138,594 dollars awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. Views of Responsible Officials: The District corrected this procedure for fiscal year 2025-26 and has the process in place going forward for each fiscal year.

Finding Number: 2025-001 Procurement Policy Federal Program: 20.205 Highway Planning and Construction Criteria: Per 2 CFR 200.317–200.327, non-Federal entities are required to follow procurement standards that ensure full and open competition, proper documentation and compliance with the Uniform Guidance. Entities must update their written procurement policies to align with the most current Uniform Guidance requirements. Condition: During the audit procedures, it was identified the entity’s written procurement policy has not been updated to reflect the current requirements under 2 CFR 200. Cause: Management has not updated the written procurement policy since 2011 and was not aware of recent revisions to 2 CFR 200 procurement standards. Effect: An outdated policy increases the risk of noncompliance with federal procurement regulations. While our sample testing of procurement transactions did not identify instances of noncompliance, the absence of an updated policy could result in future procurement actions that do not comply with federal requirements. Questioned Costs: None. Recommendation: We recommend that management update its procurement policy to include all current requirements under 2 CFR 200 and implement a process to periodically review and revise the policy to remain compliant with future federal regulation changes. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the entity

FINDING 2025-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of six claims were determined to require small purchase procedures. Of the six claims, totaling $334,605, four were selected for testing. For two of the four claims selected, the School Corporation did not obtain an adequate number of price or rate quotations. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was absent for these two vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry, the School Corporation indicated that all service contracts contain a provision regarding suspension and debarment and that the contracts were reviewed and signed by a knowledgeable member of the School Corporation. A population of four covered transactions for goods or services totaling $306,482, all of which equaled or exceeded the $25,000 threshold paid from the Child Nutrition funds during the audit period, was identified and selected for testing. For two of the four selected transactions, the School Corporation did not verify that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in federal assistance programs or activities prior to issuing payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 18 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or INDIANA STATE BOARD OF ACCOUNTS 19 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not have adequate internal controls to ensure compliance with procurement and suspension and debarment requirements. The Food Service Director was unaware of specific federal requirements regarding procurement thresholds for small purchases and the mandatory verification of vendor suspension and debarment status for transactions exceeding $25,000. The Director relied solely on the Food Service Center to ensure compliance. In addition, the School Corporation utilized additional vendors outside of the center's management scope without independently verifying their compliance status. Effect The lack of an effective internal control system enabled material noncompliance to occur and remain undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could enable small purchases made by the School Corporation to be uncompetitive and could lead to contracting with vendors who are suspended or debarred from receiving federal grant funding. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are verified to not be suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Federal program information: Funding agency: U.S. Department of Treasury ALN Title: Coronavirus State and Local Fiscal Recovery Funds ALN number: 21.027 Award period and number: 7/23/2021 – 12/31/2024; SLFRP4454 Criteria or Specific Requirement: Uniform Guidance, 2 CFR Section 200.318(a) requires the City to have documented procurement procedures. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327. Uniform Guidance, 2 CFR Section 200.318(c)(1), requires non-federal entities to maintain written standards of conduct covering conflicts of interest for employees engaged in the selection, award, and administration of contracts. 2 CFR 200.321 requires affirmative steps to assure that minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms are included in procurement opportunities. 2 CFR 200.318(i) requires recipients or subrecipients to maintain records sufficient to detail the history of each procurement, including rationale for selection, method, and price. Condition: Based on review of the City’s procurement policy (Public Contracting Rules), we noted that the policy does not incorporate all procurement requirements established in 2 CFR sections 200.317 through 200.326, as required by the Uniform Guidance for recipients of federal awards. Specifically, we observed the following areas of noncompliance or omissions: . The policy does not contain all written standards of conduct related to conflicts of interest as required by 2 CFR 200.318(c)(1); . The policy does not explicitly include requirements for taking affirmative steps to ensure that small, minority, women-owned, veteran-owned, and labor surplus area firms are solicited and considered in procurement opportunities, as required by 2 CFR 200.321(b); . The policy lacks explicit provisions to ensure that sufficient procurement records are maintained to detail the history of procurement transactions, as required by 2 CFR 200.318(i). Due to this, there is an increased risk that procurements funded by federal awards may not be conducted in full compliance with Uniform Guidance. Cause and Effect: The City’s procurement policy has not been fully updated to reflect all applicable procurement requirements of the Uniform Guidance. Procurements conducted under federal awards are at increased risk of noncompliance with Uniform Guidance requirements, which could result in findings, questioned costs, or potential repayment of federal funds. Furthermore, there is an increased risk that opportunities for small, minority, and women-owned businesses are not equitably considered and that procurement records may not be sufficient for federal review. Questioned Costs: None. Recommendation: We recommend that the City update its procurement policy and procedures to address the missing requirements under 2 CFR 200.317 through 200.326, specifically ensuring coverage of standards of conduct for conflicts of interest, affirmative steps for inclusion of targeted businesses, and comprehensive procurement recordkeeping. The City should ensure staff are trained on these updated requirements and monitor compliance for all federally funded procurements. Views of Responsible Officials: The City agrees with the findings as specified above. The procurement policy will be updated to reflect these changes.

FINDING 2025-001 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-ARP, 23611-043-PN01, 24611-043-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 15 RIVER FOREST COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with procurement requirements. The Cooperative did not have procedures in place to ensure compliance with procurements in excess of the SAT threshold. During 2023-2024, the Cooperative had three vendors which exceeded the SAT and all three vendors were tested. The Cooperative did not obtain sealed bids or competitive proposals, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. The total dollar amount spent with all three vendors was $1,417,349. The lack of internal controls and noncompliance were systemic issues limited to 2023-2024. Criteria 2 CFR 200.303 states in part: "The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control-Integrated Framework' issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 16 RIVER FOREST COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause The Cooperative noted they were unaware of the procurement requirements of expenditures exceeding the SAT. They stated they have used the same vendors to provide professional services for several years but only recently started using federal grant award funds for the services. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the vendors paid with federal award funds by the Cooperative are procured using the required methods. Without following the required methods for procurement, the Cooperative could be overpaying for services. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require that appropriate procurement methods are used by the Cooperative for vendors that exceed the SAT. Appropriate documentation should be maintained to ensure the procurement methods are being followed and compliance with procurement methods are being followed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 23/24, FY 24/25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. During the audit period, a total of four vendors were determined to require small purchase procedures, and all four vendors were selected for testing. For two of the four vendors, the School Corporation could not provide the procurement history or the rationale for the method of procurement, selection of vendors, and basis for price. The total dollar amount spent with these two vendors was $165,131. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 14 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During review of the School Corporation's procedures, officials stated that the Food Service Director verified that vendors were not suspended or debarred by including a clause in the vendor contract or by collecting a certification from the vendor prior to entering into a covered transaction. We identified ten transactions during the audit period that equaled or exceeded $25,000 and were therefore determined to be covered transactions. All ten transactions, totaling $767,259, were selected for testing. The School Corporation was unable to provide documentation that the vendor's suspension and debarment status was verified for four of these transactions, which comprised the same two vendors for both years of the audit period. The total dollar amount spent with these two vendors was $268,962. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 15 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation's corrective action plan from the prior audit stated that the Food Service Director was the individual responsible for implementing the corrective action measures and that those measures would be implemented in June 2024. The Food Service Director resigned, however, in May 2024. Therefore, the new Food Service Director was unaware of the compliance issues and the need to implement the corrective action measures during the current audit period. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of preventing, or detecting and correcting, noncompliance. As a result, the School Corporation did not comply with the small purchase procurement requirements or the suspension and debarment requirements of the federal award. By not properly completing the procurement process, the School Corporation could have overpaid for the goods or services that were procured. Additionally, the School Corporation could have made payment to a vendor that was suspended or debarred. Payments to such vendors are unallowable. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure expenditures made from federal awards are in compliance with the procurement and suspension and debarment compliance requirements. The School Corporation's system of internal controls should be designed to ensure that the appropriate procurement method is utilized and that documentation is retained to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Additionally, the system should be designed to ensure that vendors are not suspended or debarred, or otherwise excluded, prior to the School Corporation entering into a covered transaction. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025-001 U.S. Department of Education, Assistance Listing #84.027/84.173 Special Education Cluster (IDEA) Program and U.S. Department of Treasury, Assistance Listing #21.027 Coronavirus State and Local Fiscal Recovery Funds (SLRF) Program for the period of July 1, 2024, through June 30, 2025 Criteria: Uniform Guidance section 2 CFR §200.317-200.327 Procurement Standards, requires purchases exceeding the micro-purchase threshold of $10,000 to follow small purchase procedures, which require obtaining price or rate quotations from an adequate number of qualified sources (§200.320) prior to entering into a contract. In addition, 2 CFR Part 180 and 2 CFR §200.214 require non-federal entities to verify if contractors are suspended or debarred (e.g., Sam.gov check or certification) and include appropriate contract clauses in applicable contracts. Condition: The School Department did not obtain price or rate quotations for two projects that exceeded the micro-purchase threshold. Additionally, the Department did not perform, or document required suspension and debarment procedures for the contractor (e.g., verification against SAM.gov, obtaining certifications, or including contract clauses). The City did not perform, or document required suspension and debarment procedures for the contractor (e.g., verification against SAM.gov, obtaining certifications, or including contract clauses) for three of the six contracts tested. Cause: School staff were not aware the projects would be funded with federal funds and did not ensure compliance with federal requirements for competitive pricing and suspension/debarment verification. City staff were not aware projects covered under the SLRF definition of “revenue replacement”, which excludes most procurement requirements, are still required to follow 2 CFR Part 180 and 2 CFR §200.214. Effect: Failure to obtain competitive quotes and verify contractor eligibility to receive Federal funds increases the risk of noncompliance, inefficient use of federal funds, and potential disallowance of costs. Known Questioned Costs: $61,891 for #84.027/84.173; $51,750 for #21.027 Likely Questioned Costs: $12,799 for #21.027 Recommendation: We recommend training staff on procurement and suspension/debarment requirements and implementing a pre-award compliance checklist. We also recommend increasing communication between grant personnel and facilities management personnel so all parties are aware which projects will be funded with federal funds.

Assistance Listing Number, Federal Agency, and Program Name - ALN 66.202, U.S. Environmental Protection Agency - Congressionally Mandated Projects Federal Award Identification Number and Year - CG-00E03697-0, 2024 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.319(d), the recipient is required to maintain a written procurement policy that adheres to procurement standards and requirements specified in 2 CFR 200.317 through 2 CFR 200.327. Per 2 CFR 200.305, the recipient is required to maintain a written cash management policy that addresses the requirements of the aforementioned code section. Condition - The Village did not have written policies for cash management or procurement that adhered to the requirements of the Uniform Guidance. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - While the Village has written policies in place to address procurement and cash management, the policies do not address the requirements of 2 CFR 200.317 through 2 CFR 200.327 and of 2 CFR 200.305, respectively. Cause and Effect - The Village was not in compliance with grant requirements related to procurement and cash management, nor did it have proper controls in place to ensure these policies had the required elements. The absence of these requirements in the Village's policies increases the potential for further noncompliance because the Village's procedures may not adequately address relevant compliance requirements. Recommendation - We recommend that the Village create and put in place a procurement policy that addresses the requirements of 2 CFR 200.317 through 2 CFR 200.327 and a cash management policy that addresses the requirements of 2 CFR 200.305. Views of Responsible Officials and Planned Corrective Actions - The Village is currently reviewing existing policies to determine the best course of action and updating them for compliance. Some updates may require voter approval, as certain provisions are in the village charter.

FINDING 2025-002 Subject: Teacher and School Leader Incentive Grants - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Teacher and School Leader Incentive Grants Assistance Listings Number: 84.374 Federal Award Numbers and Years (or Other Identifying Numbers): Year 2-3, Year 3-4 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Other Matters Condition and Context An effective internal control system was not designed, nor implemented, at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 16 METROPOLITAN SCHOOL DISTRICT OF DECATUR TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000. The School Corporation entered into two contracts which exceeded the $150,000 simplified acquisition threshold but did not implement a formal bid process that provided full and open competition. Accordingly, the School Corporation did not maintain documentation to support the rationale for the method of procurement, basis for contractor selection, or basis for the contract price. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The School Corporation did not have documentation to show that vendors were verified for suspension and debarment status prior to entering into the transaction. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . ." INDIANA STATE BOARD OF ACCOUNTS 17 METROPOLITAN SCHOOL DISTRICT OF DECATUR TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: ". . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation had not implemented its system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Procurement Suspension and Debarment compliance requirement. The School Corporation did not adhere to its procurement procedures for the two vendors awarded contracts that exceeded the $150,000 threshold. Additionally, the School Corporation did not document its process to ensure compliance with the suspension and debarment status of these two vendors. Effect Without the proper design or implementation of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. This could result in the School Corporation overpaying for goods or services or paying a contractor who has been suspended or debarred, which would be unallowable. INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF DECATUR TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation implement its system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded from receiving federal funding prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 15 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $150,000 per Indiana Code. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases of $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases were followed. The School Corporation did not obtain price or rate quotes from multiple vendors for its audit period expenditures with each of the three vendors tested in the small purchases category. Documentation detailing the history of procurement, including rationale to limit competition at the time of the expenditure(s) was not provided for audit. Suspension and Debarment Nonfederal entities and contractors are subject to nonprocurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that entity, or adding a clause or condition to the covered transaction with that entity. The School Corporation had not designed or implemented adequate policies or procedures to ensure that applicable vendors who received federal funds over certain thresholds were not suspended or debarred from participating in federal awards programs. There were three vendors subject to suspension and debarment requirements during the audit period that were not procured through the School Corporation's affiliated Educational Services Center for cooperative purchasing. The School Corporation did not perform procedures to ensure the vendors were not suspended, debarred, or otherwise excluded from or ineligible for participation in federal assistance programs or activities for one of these three vendors. The lack of internal controls was a systemic issue throughout the audit period. Noncompliance was isolated to small purchases for procurement and one vendor noted for suspension and debarment. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . . (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small Purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or INDIANA STATE BOARD OF ACCOUNTS 17 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented an effective system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The Food Service Director indicated that some of these purchases may have been emergency situations but was unaware of the need to document the rationale at the time of the transaction if competition was limited for small purchases procurements. Effect The lack of an internal control system enabled material noncompliance to occur and remain undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could enable small purchases made by the School Corporation to be uncompetitive and could lead to contracting with vendors who are suspended or debarred from receiving federal grant funding. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation's management strengthen its system of internal controls over small purchase requirements to ensure that an adequate number of price or rate quotes are obtained before purchase. Additionally, if procurements are made in emergency or extenuating circumstances, documentation at the time of the transaction must be retained for audit to justify limiting competition. We also recommended that vendors with a single or aggregate transaction amounts of $25,000 per fiscal year are verified for suspension and debarment prior to entering into the transaction and/or contract. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

CRITERIA THE UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE), SPECIFICALLY 2 CFR §200.317–200.327, REQUIRE NON-FEDERAL ENTITIES TO FOLLOW DOCUMENTED PROCUREMENT PROCEDURES THAT ENSURE FULL AND OPEN COMPETITION. WHEN USING COOPERATIVE OR COLLABORATIVE PROCUREMENT ARRANGEMENTS, THE DISTRICT MUST ENSURE THAT PURCHASES ARE MADE WITHIN THE VALID TERM OF THE UNDERLYING CONTRACT AND THAT CONTRACT EXTENSIONS OR RENEWALS ARE PERMITTED UNDER THE ORIGINAL PROCUREMENT AND PROPERLY EXECUTED. CONDITION THE DISTRICT CONTINUED TO PROCURE GOODS AND/OR SERVICES FROM A VENDOR THAT WAS ORIGINALLY AWARDED THROUGH A COLLABORATIVE PROCUREMENT AFTER THE EXPIRATION OF THE ORIGINAL BID TERM. THE CONTINUED USE OF THE VENDOR WAS NOT SUPPORTED BY A VALID CONTRACT EXTENSION OR REBID IN ACCORDANCE WITH PROCUREMENT REQUIREMENTS APPLICABLE TO FEDERAL AWARDS. AS A RESULT, PURCHASES CHARGED TO THE FEDERAL PROGRAM WERE MADE OUTSIDE THE ALLOWABLE TERM OF THE COMPETITIVELY PROCURED AGREEMENT. CAUSE MANAGEMENT DID NOT IMPLEMENT ADEQUATE PROCEDURES TO MONITOR THE EXPIRATION DATES AND ALLOWABLE TERMS OF COLLABORATIVE PROCUREMENT AGREEMENTS USED FOR FEDERAL EXPENDITURES. ADDITIONALLY, THE DISTRICT RELIED ON HISTORICAL PURCHASING PRACTICES WITHOUT VERIFYING ONGOING COMPLIANCE WITH UNIFORM GUIDANCE PROCUREMENT REQUIREMENTS. EFFECT THE DISTRICT DID NOT COMPLY WITH FEDERAL PROCUREMENT REQUIREMENTS, RESULTING IN EXPENDITURES THAT MAY NOT HAVE BEEN MADE UNDER FULL AND OPEN COMPETITION AS REQUIRED. THIS NONCOMPLIANCE INCREASES THE RISK THAT FEDERAL FUNDS WERE EXPENDED IN A MANNER INCONSISTENT WITH FEDERAL REGULATIONS. QUESTIONED COSTS NONE IDENTIFIED. THE PRICING WAS CONSISTENT WITH THE PRIOR CONTRACT TERMS. REPEAT FINDING NO. RECOMMENDATION WE RECOMMEND THAT MANAGEMENT STRENGTHEN PROCUREMENT CONTROLS BY: • IMPLEMENTING PROCEDURES TO TRACK CONTRACT AND BID EXPIRATION DATES, INCLUDING COLLABORATIVE PROCUREMENT AGREEMENTS; • ENSURING THAT ALL PROCUREMENTS CHARGED TO FEDERAL AWARDS ARE SUPPORTED BY VALID CONTRACTS WITHIN APPROVED TERMS; AND • PROVIDING TRAINING TO STAFF RESPONSIBLE FOR PROCUREMENT AND ACCOUNTS PAYABLE ON FEDERAL PROCUREMENT REQUIREMENTS.

FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027x Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-ARP, 23611-043-PN01, 24611-043-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation was a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 19 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. During 2023-2024, the Cooperative had three vendors which exceeded the SAT, and all three vendors were tested. The Cooperative did not obtain sealed bids or competitive proposals, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. The total dollar amount spent with all three vendors was $1,417,349. 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 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . . (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: INDIANA STATE BOARD OF ACCOUNTS 20 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause The Cooperative noted they were unaware of the procurement requirements of expenditures exceeding the SAT. They stated they have used the same vendors to provide professional services for several years but only recently started using federal grant award funds for the services. Effect Without the proper implementation of an effectively designed system of internal controls, the Cooperative cannot ensure the vendors paid with federal award funds are procured using the required methods. Without following the required methods for procurement, the Cooperative could be overpaying for services. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Cooperative should develop written policies and procedures which would require that appropriate procurement methods are used for vendors that exceed the SAT. Appropriate documentation should be maintained to ensure the procurement methods are being followed and compliance with procurement methods are being followed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025-005 – Significant Deficiency in Internal Controls over Compliance and Noncompliance – Procurement US Department of Agriculture / Oregon Department of Human Services / Farmers Market Fund Federal Assistance Listing Number: 10.565, 10.568, 10.569, 10.182 Federal Program Name: Food Distribution Cluster and Local Food Purchase Agreements Criteria – 2 CFR §200.317 to 327 – Procurement Standards. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §200.317 through §200.327. Condition/context – The Organization’s procurement policy that complied with Federal regulations was implemented in October 2024. Procurements before this date did not have sufficient documentation as to the significant history of procurements that would show compliance with the policy. We observed that the Organization awarded contracts to vendors but did not have a procurement policy that matched Federal procurement standards. Questioned costs – None reported. Cause/effect – The Organization did not have policies or controls throughout the whole year to ensure compliance with Federal regulations regarding procurements. Documentation as to the significant history of procurements, including from vendors, was not available to show compliance with procurement standards. Repeat finding – Yes, prior year finding 2024-005. Recommendation – The Organization should develop a procurement policy that matches Federal procurement standards and internal controls to ensure the policy is followed. The Organization should also retain documentation as to the significant history of procurements to show that the procurement policy was followed. Views of responsible officials and planned corrective actions – Oregon Food Bank acknowledges this repeat finding and agrees with the auditors' assessment. Ben Ardell, Director of Finance, is the party responsible. Since the prior audit period, management has taken steps to review and revise OFB’s procurement policy and procedures, in alignment with federal procurement standards. Finance will continue implementing the corrective actions and establishing the internal controls to ensure adherence to the policy, retaining documentation of the procurement process to demonstrate compliance. These recent and planned improvements will enhance transparency, strengthen accountability, and reduce compliance risk, ensuring a more efficient and well-documented procurement process that supports the organization’s long-term financial integrity and operational effectiveness. The anticipated completion date remains June 30, 2026.