Findings Citing § 200.318

Environmental Protection Agency, Passed through North Dakota Department of Environmental Quality Federal Financial Assistance Listing 66.468 Capitalization Grants for Drinking Water Procurement, Suspension, and Debarment Significant Deficiency in Internal Control over Compliance Criteria - Uniform Guidance and 2 CFR sections 200.318 through 200.327 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition - During the course of our engagement, it was identified that the District’s policy on procurement did not satisfy the requirements of 2 CFR sections 200.318 through 200.327 with regards to procurement levels and methods, conflicts of interest, and contract provisions. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with all of these requirements. Effect – A lack of documented policies increase the overall risk that employees are not aware of the specific requirements with of procurement, suspension, and debarment. Questioned Costs – None reported Context/Sampling – Overall procurement policy Repeat Finding from Prior Year(s) –Yes, prior year finding 2024-005 Recommendation - We recommend that management establish a written policy that addresses all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.327 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections. View of Responsible Officials - There is no disagreement with the audit finding.

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.

2025-005 — Procurement – Material Weakness in Internal Control Over Compliance and Noncompliance (Repeat of Finding 2024-005, 2023-006 and 2022-004) Federal program information: Funding agencies: U.S. Department of Interior and U.S. Department of Education Titles: Assistance to Tribally Controlled Community Colleges and Higher Education Institutional Aid ALN Number: 15.027 and 84.031 Award years: Various Criteria: According to 2 CFR Section 200.318i, 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. According to 2 CFR Section 0200.319a, all procurement transactions under the federal award must be conducted in a manner that provides full and open competition. Condition: The College did not maintain records sufficient to detail the history of each procurement transaction for the procurement contracts tested. Cause: The College did not have sufficient procedures in place to ensure that procurement records are maintained. Effect: The College is not in compliance with procurement requirements. Questioned Costs: None. Context: Procurement documents were not retained for transactions tested. Recommendation: Formally document and enforce policies and procedures that will promote adequate monitoring of the procurement and bidding process. Ensure that any contract over the College’s threshold ($150,000) follows the sealed bid requirements listed in 2 CFR Section 200.320b1. Management’s Response: The College concurs with the finding. Management will follow procedures as outlined in its policies and procedures to ensure all stages of the process adequately conducted and documented.

#2025-001 Federal Program: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555 Compliance Requirement: I. Procurement and Suspension and Debarment Type of Finding: Significant Deficiency and Compliance Criteria: An independent estimate must be completed for every procurement action equal to or above 250,000, the federal simplified acquisition threshold in effect during fiscal year 2025. This applies even when purchasing through a cooperative or interlocal contract. The independent estimate must be developed and documented before soliciting or receiving quotes from vendors through the purchasing cooperative. The documentation should include the estimated cost, the date it was prepared, who prepared it, and the basis for the estimate (e.g ., historical data, market research). It ensures compliance with federal regulations (2 CFR § 200.318(e) and 2 CFR § 200.323) to confirm that the prices offered by the cooperative are reasonable. Even though purchasing cooperatives perform competitive procurements, the member district is responsible for the independent estimate to ensure the purchasing cooperative's pricing matches the member district's expected market value for the specific purchase. Condition: During our review of procurement transactions, we noted that the District did not prepare or document an independent cost estimate for a vendor whose expenditures exceeded the simplified acquisition threshold. Cause: The District was unaware of the requirement to prepare and document an independent estimate for procurements exceeding the simplified acquisition threshold. Effect: Failure to perform and document the required independent estimates results in noncompliance with federal requirements for procurements exceeding the simplified acquisition threshold. Additionally, without an independent estimate, the District cannot demonstrate that the amount paid was fair and reasonable, increasing the risk of paying more than market value. Questioned Costs: None reported Repeat Finding: No Recommendation: We recommend that management: 1. Update procurement policies and procedures to clearly require an independent estimate for all procurements exceeding the simplified acquisition threshold. 2. Implement internal control checkpoints, such as required approvals or system prompts, to ensure that documentation is completed and retained prior to contract award. 3. Provide training to procurement and program staff on Federal procurement standards and documentation requirements. 4. Conduct periodic reviews of procurement files to ensure ongoing compliance and strengthen internal controls. Views of Responsible Official: Management concurs with the finding. The District acknowledges that an independent estimate was not documented for the procurement transaction identified. Management is committed to strengthening procurement compliance and improving internal controls to prevent recurrence.

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.

Federal Grantor: Department of Agriculture, Pass-Through: Nebraska Department of Education Program: Child Nutrition Cluster, Special Education Cluster Award No. and Year: 13898414/13897314/47600262900 and 2024, 24-6406-00-19-028-0001/24-6408-00-19-028-0001/24-6411-00-19-028-0001/24-6412-00-19-028-0001/24-6418-132-28-0001P and 2024 Federal Assistance Listing Number: 10.553/10.555/10.559/10.582, 84.027/84.173 Compliance Requirement: Procurement, Suspension, and Debarment Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition: In our testing of procurement, suspension, and debarment it was identified that the District’s procurement policy does not address the following items: Avoid acquisition of duplicative items (2 CFR 200.318) Disadvantaged Business Enterprise Program (2 CFR 200.321) Domestic preferences (2 CFR 200.322) Recovered materials, if subject to EPA requirements (2 CFR 200.323) Contract price/types (2 CFR 200.326) Cause: Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with these requirements. Effect: A lack of compliant policies increases the overall risk of non-compliance. Questioned Costs: None reported Context/Sampling: Overall procurement policy. Repeat Finding from Prior Year(s): No Recommendation: We recommend that management adopt a revised procurement policy addressing the avoidance of acquisition of duplicative items, Disadvantaged Business Enterprise Program, domestic preferences, recovered materials if subject to EPA requirements, and contract price/types. Views of Responsible Officials - There is no disagreement with the audit finding.

Finding Reference: 2025-001 - Procurement Policies and Procedures Federal Agency: U.S. Department of Agriculture Federal Program: Water and Waste Disposal System for Rural Communities - ALN 10.760 Compliance Requirement: Procurement, Suspension, and Debarment Criteria: The Uniform Guidance requires that non-federal entities must have and use documented procedures consistent with laws and regulations and the standards for the acquisition of property or services under a federal award or subaward in accordance with 2 CFR 200.318. Additionally, the non-federal entity is required to follow formal procurement methods when the value of the procurement property or service under a federal financial assistance award exceeds the simplified acquisition threshold in accordance with 2 CFR 200.320. Condition: The Authority does not have any documented procurement procedures. However, during our testing of compliance with procurement guidelines, no further deviations from federal guidelines were noted. This is a repeat report finding from the prior year (2024-002). Cause and Effect: The Authority was unacquainted with general procurement standards of the Uniform Guidance. Without documented procurement procedures, it is difficult for the Authority to ensure compliance with relevant compliance requirements. Questioned Cost: None Recommendation: The Authority should establish documented procedures related to federal procurement. Views of Responsible Officials: The Loysville Village Municipal Authority disagrees with this finding. The Authority is bound by the procurement procedures contained in the Municipal Authorities Act (Pennsylvania law) and has signed agreements with USDA governing its procurement procedures. These documents are in writing and any additional policy for this purpose would be either conflicting or superfluous.

Child Nutrition Cluster - Procurement. Information on Federal Program: U.S. Department of Agriculture Child Nutrition Cluster (National School Breakfast Program, School Lunch Program, School Lunch Program Supply Chain- COVID 19 Assistance Listing Numbers 10.553 and 10.555) passed through the New York State Education Department. Criteria: 2 CFR Section 200.318 stipulates that a non-Federal entity must use its 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 Part 200 Subpart D. Additionally, 2 CFR Section 200.214 refers to executive orders 12549 and 12689 as well as 2 CFR Part 180, which stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal assistance programs or activities. Statement of Condition: During our discussions with management, we noted that the District is not verifying the eligibility of vendors to participate in Federal assistance programs on an annual basis. They are however, checking the status of any new vendors. Statement of Cause: The District did not review compliance requirements related to procurement outlined in 2 CFR Section 200.314 and 2 CFR Part 180. Statement of Effect: The District is not in compliance with 2 CFR Section 200.214 and 2 CFR Part 180. The District is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected. Perspective Information: As part of the requirements under the Uniform Guidance, a review of vendors charged to the school lunch fund and therefore represent purchases with federal dollars was performed. Of the District’s vendors charged to the fund, none were suspended or debarred from participation in Federal assistance programs or activities. Questioned Cost: None. Repeat Finding: No Recommendation: We recommend that the District review the requirements of 2 CFR Section 200.214 and 2 CFR Part 180 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. Views of the Responsible Officials and Planned Corrective Actions: The Business Manager will review these requirements with the Sr. Account Clerk. The Sr. Account Clerk will verify that all vendors are eligible to participate in the federal assistance program on an annual basis. Specifically, a note will be entered on the vendor record in the accounting system each time a purchase order is issued, which will detail that the proper verification was performed.

Child Nutrition Cluster - Procurement. Information on Federal Program: U.S. Department of Agriculture Child Nutrition Cluster (National School Breakfast Program, School Lunch Program, School Lunch Program Supply Chain- COVID 19 Assistance Listing numbers 10.553 and 10.555) passed through the New York State Education Department. Criteria: CFR Section 200.318 stipulates that a non-Federal entity must use its 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 Part 200 Subpart D. Additionally, 2 CFR Section 200.214 refers to executive orders 12549 and 12689 as well as 2 CFR Part 180, which stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal assistance programs or activities. Statement of Condition: During our discussions with management and testing of various vendors, we noted that the District is not following its procurement procedures for the Child Nutrition program purchases and is not verifying the eligibility of vendors to participate in Federal assistance programs on an annual basis. Statement of Cause: The District did not review compliance requirements related to procurement outlined in 2 CFR Section 200.314 and 2 CFR part 180. Statement of Effect: The District is not in compliance with 2 CFR Section 200.214. The District is not performing required procedures; as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the District could be overpaying for goods and services. Questioned Costs: None Perspective Information: As part of required procurement testing, a review of vendors charged to the school lunch fund and therefore represented purchases with federal dollars was performed. Of the District’s vendors charged to the fund, none were suspended or debarred from participation in Federal assistance programs or activities. Repeat Finding: Yes Recommendation: We recommend that the District review the requirements of 2 CFR Section 200.214 and 2 CFR part 180 and ensure that their procurement procedures are being followed and that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. Views of the Responsible Officials and Planned Corrective Actions: The District will review the requirements of 2 CFR Section 200.214 and 2 CFR Part 180 and ensure procurement procedures are being followed. Further, the District will perform and document a review of the eligibility of vendors to participate in Federal assistance programs. The District is in the process of corrective action, and is working toward compliance.

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.

Finding 2025-001, Significant deficiency Identification of federal program: US DEPARTMENT OF AGRICULTURE passed through the Indiana Department of Education Child Nutrition Cluster 10.553 & 10.555, US DEPARTMENT OF EDUCATION passed through the Indiana Department of Education Chater School Facilities Incentive Grant 84.282D Criteria: According to 2CFR 200.318(i) 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. Condition: The School did not maintain records for food and construction vendors that met the acquisition thresholds for the year. Cause: The School’s procurement policies do not address the frequency of which vendors should be evaluated. In addition, the policies also do not address records retention. Potential effect: The procurement may not have been proper under the grant requirements. Questioned costs: None. Repeat Finding: Repeat of finding 2024-004. Context: A total sample of two (2) of thirteen (13) purchases related to a certain food provider were selected as a part of procurement and suspension and debarment compliance requirement testing for the Child Nutrition Cluster. Additionally, one (1) of two (2) construction projects begun during the fiscal year did not undergo a formal RFP nor were posted publicly to obtain multiple bids. Recommendation: We recommend that the School follow federal procurement guidelines for each of the different purchase thresholds for each vendor. We further recommend that the School retain any documentation created related to the procurement selection and vetting process. Views of Responsible Officials: See attached Corrective Action Plan.

Child Nutrition Cluster - Procurement Information on Federal Program: U.S Department of Agriculture Child Nutrition Cluster (National School Breakfast Program, School Lunch Program, and Special Milk Program for Children Assistance Listing numbers 10.553, 10.555, and 10.556) passed through the New York State Education Department. Criteria: CFR Section 200.318 stipulates that a non-Federal entity must use its 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 Part 200 Subpart D. Additionally, 2 CFR Section 200.214 refers to executive orders 12549 and 12689 as well as 2 CFR Part 180, which stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal assistance programs or activities. Statement of Condition: During our discussions with management and reverification of use of same vendors as previous year, we noted that the District is not verifying the eligibility of vendors to participate in Federal assistance programs on an annual basis. They are however, checking the status of any new vendors. In addition, the District does not have any procedures in place to verify purchases against the bidding documents for pricing. Statement of Cause: The District did not review compliance requirements related to procurement outlined in 2 CFR Section 200.314 and 2 CFR part 180. Statement of Effect: The District is not in compliance with 2 CFR Section 200.214 and 2 CFR Part 180. The District is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the District could be overpaying for goods and services. The District could also be overpaying for goods as the bid documentation is not being verified against the purchases made. Questioned Costs: None Perspective Information: As part of required follow up of prior year audit findings, a review of vendors charged to the school lunch fund and therefore represent purchases with federal dollars was performed. Of the District’s vendors charged to the fund, none were suspended or debarred from participation in Federal assistance programs or activities. Also as part of the required follow up of prior year audit findings, inquiries were performed to determine if bidding and procurement procedures were being followed, and they were not. Repeat Finding: Yes Recommendation: We recommend that the District review the requirements of 2 CFR Section 200.214 and 2 CFR part 180 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. The District should also implement procedures to verify their purchases against bidding documentation to ensure that they are paying the correct, bid upon price for their purchases. Views of the Responsible Officials and Planned Corrective Actions: The District will monitor vendors to ensure they are able to accept federal monies.

2025-003: Procurement Procedures (Significant Deficiency and Noncompliance) Federal Program: IDEA Special Education Federal ALN: 84.027/84.173 Criteria: Under 2 CFR §200.318-§200.320, non-federal entities must conduct all procurement transactions in a manner providing full and open competition and must follow documented procurement procedures consistent with federal standards. Additionally, 2 CFR §200.214 (previously §200.213) requires non-federal entities to verify that contractors are not suspended or debarred from doing business with the federal government. This verification may be accomplished by checking the System for Award Management (SAM.gov) or obtaining a certification from the vendor. Condition and Context: During our testing of procurement transactions, we identified two (2) contracts in which bids were not solicited as required by the District's procurement policy and Uniform Guidance. In addition, suspension and debarment checks were not performed or documented for these vendors prior to contract award. Cause: The exceptions occurred because procurement procedures were not consistently followed, and management did not perform or document required suspension/debarment verifications prior to contract execution. This may have been due to oversight or lack of staff training regarding Uniform Guidance procurement requirements. Effect or Potential Effect: Failure to solicit bids and perform suspension/debarment checks increases the risk of noncompliance with federal regulations, potential ineligible costs charged to federal programs, and diminished assurance that contracts are awarded fairly and to responsible parties. Questioned Costs: None. Identification as a Repeat Finding: No. Recommendation: We recommend that management strengthen procurement procedures to ensure compliance with Uniform Guidance requirements. Specifically: - Solicit bids or proposals in accordance with applicable competitive procurement thresholds; - Perform and document suspension and debarment checks (e.g., through SAM.gov) prior to awarding contracts; and - Provide staff training on federal procurement standards and maintain documentation supporting compliance for each federally funded procurement. Responsible Official's Response: Please see the last page of this report for the response to this finding.

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.

Suspension and Debarment Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Federal Award Number: NU50CK000556 Award Periods: January 1, 2024 – July 31, 2024 Criteria: 2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.209-6 outlines that the non-Federal entity must verify that the agency in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The organization did not document that SAM.gov was checked prior to entering into a contract with a vendor. Questioned Costs: None. Context: This condition impacted five of five transactions selected for testing. None of the entities transacted with were determined to be excluded parties per SAM.gov. Cause: Based on the timing of when the grant was received by the Organization (June 2024) and when the period of performance expired (July 2024), the Organization had extremely limited time to accomplish the program objectives. Thus, the organization did not maintain documentation that vendors were verified as not being suspended or debarred prior to entering into the transaction. Effect: The Organization could potentially entered into a transaction with an entity that has been suspended or debarred. Repeat Finding: No. Recommendation: We recommend that the organization retain documentation that Sam.gov was used to verify that a vendor was not suspended, debarred, or otherwise excluded from participating in the transaction prior to contract. To the extent practicable, the organization can engage with a third party that will verify any new and existing vendors have not been suspended or debarred on a monthly basis. Views of Responsible Officials: There is no disagreement with the audit finding.

Finding 2025-002 Significant deficiency in internal controls over compliance and noncompliance with procurement and suspension and debarment procedures meeting the requirements of the Uniform Guidance. Federal Agency: Department of Health and Human Services Program Title: Congressional Directives Assistance Listing Number: 93.493 Award Number: CE1HS47357-01-00 Award Period: September 1, 2022 - August 31, 2025 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-Federal entity that has expended federal awards to have written policies pertaining to its federal grants for procurement and that the history of each procurement is documented in accordance with 2 CFR section 200.318 to 200.320. Further, 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/Context for Evaluation The Organization received and utilized the federal award to pay for general contractor services for Phase II of a multi-phase construction project that was ongoing at the time of the award. The general contractor was selected as part of a competitive RFQ process for Phase I of the construction prior to notice of the award. A cost and price analysis was completed on the general contractor during the RFQ process. During predevelopment, the general contractor selected for Phase I was contracted for consulting work for scoping Phase II of the project. The general contractor and Organization solicited competitive bids from subcontractors and performed a cost/price analysis that was used for subcontractor selection. A stipulated sum contract was signed with the general contractor based substantially on the competitive bids received from subcontractors. As a result, the Organization ultimately elected to utilize a noncompetitive procurement method for the selection of the general contractor for Phase II of the construction project, on the basis that the procurement could only be obtained from a single source. This was determined due to the specialized nature of the building itself, as well as the accumulated knowledge that the general contractor had from Phase I of the project, and consulting on the predevelopment of Phase II. Ultimately, the Organization did not have a procurement policy in place that specifically covered the criteria and documentation requirements for a noncompetitive procurement required under the Uniform Guidance. As a result, the Organization did not have a process in place that resulted in compliance with the Uniform Guidance, including the maintenance of records to detail the history of the procurement in accordance with 2 CFR 200.318 to 1 CFR 200.320 Cause The Organization did not have a procurement policy or internal controls in place to ensure that the Organization’s procurement activities were done in accordance with the Uniform Guidance and controls were in place to retain documentation of the history of the procurement. Effect or Potential Effect The Organization entered into agreements to procure goods and services for which appropriate documentation was not retained to support the history of the procurement. Questioned Costs $0 Repeat Finding No

U.S. Department of Treasury Federal Assistance Listing #21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds 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 conditions of the federal award. 2 CFR 200.318 requires the auditee to use its own documented procurement procedures which reflect State, local and tribal laws and regulations, provided that the procurements conform to applicable Federal law and standards. 2 CFR 200.214 restricts making federal awards with certain parties that are debarred, suspended, or otherwise excluded from participating in Federal awards. Condition: The Hospital did not have a written procurement policy in place that aligned with all federal regulations. The Hospital also did not review vendors to ensure that they were not debarred, suspended, or otherwise excluded from participating in federal awards. Cause: While the Hospital did have a policy in place, the policy did not follow all federal regulations, or include policies of determining if vendors are debarred, suspended, or otherwise excluded from participating in Federal awards. Effect: Noncompliance with the Uniform Guidance could jeopardize future federal funding. Questioned Costs: None reported Context: A nonstatistical sample of 3 vendors out of 9 vendors with actual or anticipated expenditures greater than the federal micro purchase threshold were tested for procurement testing. Repeat Finding from Prior Years: No. Recommendation: The Hospital should update their procurement policy to align with all federal requirements outlined in 2 CFR 200.318. We also recommend that the Hospital reviews vendors that are used for federal awards to ensure that they are not debarred, suspended, or otherwise excluded from participating in Federal awards in accordance with 2 CFR 200.214. Views of Responsible Officials: Management agrees with the finding.

MATERIAL WEAKNESSES 2025-001 – Procurement Federal Program Information: Department of Education - 10.553,10.555,10.556, 10.5599 and 10.582 Child Nutrition Cluster 84.027 and 84.173 Special Education Cluster Criteria: The following CFR(s) apply to this finding: 2 CFR 200.318-327, 2 CFR 400.2, 2 CFR 416.1(a), 7 CFR 210, 215, 220, and 225. Condition: During audit procedures, it was identified that the District l did not require service contracts and did not follow procurement methods. Cause: The District does not have the necessary internal controls over compliance and does not appear to have the understanding or knowledge of the contract requirements for service contracts. Effect: The District is not applying proper procurement methods for their service contract. This increases the likelihood of paying service providers that have been debarred or suspended for receiving federal funds, incorrect procurement method used could result in noncompliance. Identification of Questioned Costs: None identified. Context: In the review of the expenses we identified multiple vendors that we believe should have had contracts. The District was unable to provide contracts and stated they did not have them. This is not a statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the District implement internal control processes and procedures to ensure compliance with federal procurement methods and internal policies. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued.

Procurement Federal Agency: United States Department of Education Federal Program Name: Special Education Cluster (IDEA) Assistance Listing Number: 84.027 / 84.173 Federal Award Identification Number and Year: HO27A230021 - 2023 (84.027) HO27A240021 - 2024 (84.027) H173A240024 - 2024 (84.173) H173A230024 - 2023 (84.173) Pass-Through Agency: Connecticut State Department of Education Pass-Through Number(s): 12060-SDE64370-20977-2024 12060-SDE64370-20983-2024 12060-SDE64370-20977-2025 12060-SDE64370-20983-2025 Award Period: 7/1/2023-6/30/2025 (2024 Grant) 7/1/2024-6/30/2026 (2025 Grant) Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The Board of Education must comply with procurement standards set out at 2 CFR sections 200.318 through 200.326 within Uniform Guidance. Condition: The Board of Education failed to solicit written quotations (in noncompliance with federal UG for procurements over $10,000) related to a contract paid under the grant. Under local policy, sealed bids should have been obtained for a competitive procurement over $25,000. Questioned costs: None noted. Context: The Board of Education is required to solicit competitive quotations for contracts over $10,000 paid with federal grant funds or document a non-competitive procurement justification. Cause: The contract was renewed without conducting any procurement procedures or maintaining documentation supporting a non-competitive procurement justification. Effect: Noncompliance with local procurement policy and federal procurement guidelines. Repeat Finding: No Recommendation: We recommend that the Board of Education review its procurement processes to ensure they comply with local policies and federal guidance. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding. The Board of Education will review its procurement processes to ensure they comply with local policies and federal guidance.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: PA0504L3T002211 - FY25, PA0504L3T002312 - FY25, PA0911L3T002204 - FY25, PA0911L3T002305 - FY25, PA1067L3T002200 - FY25, PA1067L3T002301 - FY25 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: - Material Weakness in Internal Controls over Procurement, Suspension and Debarment - Noncompliance Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement, suspension, and debarment. The Organization should have internal controls designed to ensure compliance with those provisions. 2 CFR section 200.318(c) and 48 CFR sections 52.203-13 and 52.303-16 requires entities to maintain standards of conduct that cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts. Condition: We noted the Organization did not have adequate internal controls designed to ensure all vendors were compliant with the Organization’s conflict of interest policy, procurement, suspension and debarment requirements and the requirements of Uniform Guidance. Questioned Costs: Known: $45,096 Context: Lack of contracts, agreements and procurement, suspension and debarment procedures when acquiring vendors for federal grant expenditures. Through our testing of 60 vendors, we identified 3 which did not follow the proper procurement, suspension and debarment practices per federal requirements. Of these 3 vendors, we identified a total of $45,096 of known questioned costs within the program tested, and furthermore $344,164 of likely questioned costs based on the population. Cause: The Organization had procured vendors without following the required procurement, suspension, and debarment procedures. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance. Recommendation: We recommend that management review the procurement, suspension, and debarment requirements for federal programs as well as the organization's policies related to these areas. Management should ensure that such practices are being followed to comply with federal requirements. We also recommend that all current vendors in use are assessed and considered for compliance with procurement, suspension and debarment practices. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding. See attached corrective action plan.

2025-004 PROCUREMENT United States Department of Agriculture Passed through Louisiana Department of Agriculture and Forestry Child Nutrition Cluster (Federal Assistance No. 10.555) Passed through Louisiana Department of Education Child Nutrition Cluster (Federal Assistance Nos. 10.553, 10.555, 10.559, and 10.582) Criteria: Non-federal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326 and use their own documented procurement procedures, which reflect applicable State and local laws and regulations provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Internal controls should be designed to ensure compliance with these federal requirements. Condition: The School Board’s current procurement process for School Food Service contracts does not include an independent review of the bid analysis prepared after the public opening of sealed bids. The bid analysis, which summarizes and evaluates the bids received, is prepared solely by a School Food Service employee and is not reviewed or approved by any other individual or department prior to being utilized by the School Board to award the contract. Although no input errors were noted through testing procedures, the School Board relied on unverified information when making award decisions intended to comply with procurement regulations. A total of 12 contracts were tested, of which 6 required bid tabulation analysis summaries to be prepared. Through testing performed, it was noted there did not appear to be a review of the bid tabulation analysis summary inputs prior to approval by the board in each of the 6 instances. Cause: Proper procedures were not implemented to ensure compliance with all procurement regulations and the established procedures were not properly executed by Child Nutrition personnel. Questioned Costs: Not applicable as no input errors were identified on the bid analysis tabulation summaries tested. Effect: While procurement purchases were ultimately determined to be in compliance with Federal procurement standards, the opportunity existed for non-compliance with Federal regulations. Recommendation: The School Board should remind Child Nutrition personnel of established procedures and establish additional internal controls to ensure that all inputs are entered into the bid analysis summary are complete and accurate. View of Responsible Official: Management agrees with the finding and will take corrective action. See corrective action plan submitted by management.

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.

Finding: 2025-003 Procurement, Suspension, and Debarment (Significant Deficiency) Federal Agency(ies): United States Department of Agriculture Federal Program(s): Partnerships for Climate-Smart Commodities Assistance Listing Number(s): 10.937 Pass-through Entity (if applicable): N/A Award Identification Number and Year: NR233A750004G045 (2023) Criteria or Specific Requirement:  2 CFR 200.320(a)(1)(iv) allows for an increased micro-purchase threshold of up to $50,000 only if the non-Federal entity self-certifies that it meets specific conditions, including internal controls, organizational risk, and procurement oversight capacity.  2 CFR 200.214 prohibits contracting with or making subawards to parties that are suspended or debarred, and entities are required to verify that contractors are not listed on the System for Award Management (SAM.gov) at the time of contact/award.  2 CFR 200.318(c)(1) requires non-Federal entities to maintain written standards of conduct covering conflicts of interest and governing the performance of employees engaged in the selection, award, and administration of contracts. Condition: Our testing identified the following exceptions: 1. CIF did not maintain a comprehensive written procurement, suspension, and debarment policy during the fiscal year under audit. A draft policy was developed during the audit planning phase and is pending approval from the Board of Directors. 2. The draft policy self-certified a micro-purchase threshold of $50,000, which is not appropriate given that CIF does not meet all criteria required under 2 CFR 200.320(a)(1)(iv), and the elevated threshold is excessive relative to the size and scope of the Organization’s operations. 3. CIF provided SAM.gov suspension and debarment checks for contractors in our sample; however, the checks were undated, and we were unable to confirm that the verification was performed at the time of contract execution. 4. CIF did not maintain a conflict of interest policy during the fiscal year under audit, as required by 2 CFR 200.318(c)(1). While a draft conflict of interest policy was included in the draft procurement policy, it was not in effect during the year under audit. Cause: These conditions occurred because the Organization did not have formalized procurement policies and procedures in place throughout the year. Effect or Potential Effect: Failure to maintain compliant procurement and conflict of interest policies and procedures increases the risk that Federal funds may be spent in a manner inconsistent with Uniform Guidance requirements. Questioned Costs: $172,572 (all contractual expenses changed to ALN #10.937) Context: We tested a statistically valid sample of contractual relationships charged to Federal awards. The deficiencies noted were consistent across the sample population, indicating a systemic issue rather than isolated exceptions. Identification as a Repeat Finding, if Applicable: Yes, repeat of Finding 2024-006Recommendation: We recommend that management: 1. Finalize and implement a comprehensive procurement, suspension, and debarment policy that incorporates all requirements of 2 CFR 200.318–200.320. 2. Amend the draft policy to adopt a micro-purchase threshold appropriate for the Organization’s size and risk profile, consistent with 2 CFR 200.320(a)(1)(iv). 3. Ensure that SAM.gov checks are performed and documented with date-stamps at the time of contract execution. 4. Adopt and enforce a formal conflict of interest policy as required by 2 CFR 200.318(c)(1), and amend the policy to require annual (written) reaffirmations from all employees and Board members.

Criteria: Under Uniform Guidance (2 CFR §200.302, §200.303, §200.305, §200.318–§200.326, and §200.430), a non-federal entity must establish, document, and maintain written policies and procedures for the management of federal awards. Effective internal control over federal awards provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the awards. Condition: The Town did not have written policies and procedures required by Uniform Guidance (2 CFR 200) for the administration of its federal programs. Specifically, the Town has not formally documented policies and procedures addressing key areas required under the Uniform Guidance, including but not limited to allowable and unallowable costs and cost principles, procurement standards, suspension and debarment, conflicts of interest, cash management, and reporting and record retention requirements. While informal processes exist, they are not sufficiently documented to ensure consistent application or compliance with federal requirements. Cause: The Town has not developed or formally adopted written federal grant management policies and procedures. Effect: Without formal written policies and procedures, there is an increased risk of noncompliance with federal program requirements. This condition exposes the Town to potential noncompliance with federal regulations, increases the risk of unallowable costs being charged to federal awards, and may affect the Town’s ability to properly administer, monitor, and report federal program activity. Additionally, the lack of documentation may impair continuity of compliance in the event of change in key personnel. Recommendation: The Town should develop, formally adopt, and implement written policies and procedures to comply with Uniform Guidance (2 CFR 200). The policies should address all major compliance areas, including but not limited to allowable and unallowable costs and cost principles, procurement standards, suspension and debarment, conflicts of interest, cash management, and reporting and record retention requirements. The Town should ensure that staff responsible for federal grant administration are properly trained to ensure adherence to these policies and that the policies are reviewed periodically and updated as needed. Views of responsible officials: See management’s responses to findings on Page 78.

Criteria: Per 2 CFR § 200.318(d), non-Federal entities must avoid the acquisition of unnecessary or duplicative items. Non-federal entities are required to maintain effective procurement procedures and internal controls to ensure goods and services procured with federal funds are necessary, reasonable, and not duplicative. Condition: While performing procedures over the Town’s federal grant program activity, we noted that the Town incurred a duplicated cost when it processed and paid the same contractor invoice twice. Cause: The Town has not established or implemented written procedures requiring staff to review previous purchases or confirm whether services have been performed before initiating new procurements. Effect: Failure to ensure that goods purchased and services procured are necessary and nonduplicative increases the risk of waste and mismanagement of federal funds. This may result in unallowable costs being charged to federal awards and could require repayment of questioned costs to the granting agency. Questioned Cost: $37,430. Recommendation: As discussed at item 2025-001, we recommend Town develop, formally adopt, and implement written policies and procedures to comply with Uniform Guidance (2 CFR 200). Views of responsible officials: See management’s responses to findings on Page 78.

Criteria: Uniform Guidance (2 CFR §200.214 and §200.318(h)) prohibits non-federal entities from contracting with or making subawards to parties that are suspended or debarred. Entities must verify vendor eligibility by: Checking SAM.gov, Obtaining a vendor certification, or Adding a clause in contracts stating the vendor is not suspended or debarred. Condition: The Town did not have adequate internal controls to ensure compliance with the suspension and debarment requirements of the Uniform Guidance when procuring goods or services using federal funds. Cause: The Town had not established written procedures or implemented controls to ensure required suspension and debarment checks were performed and documented during procurement involving federal funds. Effect: Without controls to ensure compliance with suspension and debarment requirements, the Town is at increased risk of awarding federal funds to ineligible vendors. This could result in unallowable costs, questioned costs, or potential repayment of federal funds. Recommendation: The Town should develop and implement written policies and procedures requiring documentation of suspension and debarment checks before entering into contracts funded with federal awards. Acceptable methods include maintaining SAM.gov eligibility verification screenshots, obtaining vendor certifications, or including appropriate contract language. Views of responsible officials: See management’s responses to findings on Page 78.

Federal agency: U.S. Department of Agriculture Federal program name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559 Federal Award Identification Number and Year: 202121N109942, 2025 Pass-Through Agency: Minnesota Department of Agriculture Pass-Through Number: 202121N109942 Award Period: Year ended June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Non-federal entities other than states must follow the procurement standards set out at CFR sections 200.318 through 200.326. This includes utilizing one of the five allowable procurement methods, including small purchase guidelines for items over the micro-purchase threshold and sealed bids, competitive proposals, or noncompetitive proposals when items exceed the simplified acquisition threshold. In addition, the Uniform Guidance requires that the entity maintain records sufficient to detail the history of the procurement. 2 CFR 200.303 requires that the entity have sufficient controls over compliance related to federal awards. Condition: During our testing of the District’s procurements within the Child Nutrition program, it was noted that not all procurements followed the appropriate method and history of the transaction was not sufficiently documented. Questioned Costs: ALN 10.553 and 10.555 - $220,560.64 Context: Out of thirteen procurement which were tested, we noted one of them for which the District did not retain documentation detailing the history of the procurement, including the rationale for choosing the particular vendor. This was a statistically valid sample. Cause: Controls were insufficient to ensure this process occurred. Effect: The District was not in compliance with Uniform Guidance requirements for the proper documentation of all procurement transactions. Repeat Finding: No Recommendation: We recommend the District reviews its procedures and controls over procurement to ensure that all procurements are documented such that a third party can clearly see and understand the detailed history of the procurement. Views of responsible officials: There is no disagreement with the audit finding.

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.

NONCOMPLIANCE WITH PROCUREMENT, SUSPENSION & DEBARMENT REQUIREMENTS, CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS; AL No. 21.027, YEAR ENDED JUNE 30, 2025 Criteria: Per section 13 of Treasury’s Final Rule FAQs and 2 CFR 200.214, counties must comply with the procurement standards set forth in 2 CFR 200.318, through 2 CFR 200.327, when using their SLFRF award funds to procure goods and services to carry out the objectives of their SLFRF award. In addition, 2 CFR 200.214, prohibits recipients from using SLFRF funds to enter into subawards and contracts with parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs. Condition: The city did not verify that program recipients/participants were not suspended, debarred, or otherwise excluded from participation in the program. Cause: The city does not have procurement policies and procedures in place that allows it to comply with procurement standards outlined in the Uniform Guidance. Effect: Non-compliance with program terms and conditions. Questioned Costs: None Recommendation: Management should develop procedures that will provide reasonable assurance that procurement of goods and services are made in compliance with applicable federal regulations and other procurement requirements specific to a federal award or subaward, and that no subaward, contract, or agreement for purchase of goods or services is made with any suspended or debarred party. Views of responsible officials and planned corrective action: The government agrees with this finding and will adhere to the attached corrective action plan.

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.

Findings and Questioned Costs Related to Federal Awards Finding Number: 2025‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559, 10.582 Federal Agency: U.S. Department of Agriculture Federal Award Number: 6AZ300400, 7AZ300AZ3, 7AZ310AZ1 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Procurement, Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. Subrecipients must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Condition The District did not follow Federal, State, and Board policies and regulations governing procurement. Cause The District’s review procedures over each transaction did not operate as designed. Effect The District was not in compliance with Federal, State, and Board policies and regulations governing procurement. Context The District issued requests for written quotes to multiple vendors, and awarded the quote to three vendors to avoid spending over $100,000 with one vendor. However, as the items purchased were homogenous items, and the expenses with the three vendors totaled $252,424, the District should have issued a sealed procurement. The sample was not intended to be, and was not, a statistically valid sample. Recommendation Approvers should ensure requisitions exceeding the formal procurement threshold are appropriately procured in accordance with Federal, State and Board policies and regulations. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2025‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559, 10.582 Federal Agency: U.S. Department of Agriculture Federal Award Numbers: 7AZ300AZ3, 6AZ300400, 7AZ310AZ1 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §200.318 through 200.326. Subrecipients must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200.A Condition The District did not follow Federal, State, and Board policies and regulations governing procurement. Cause The District’s review procedures over each transaction did not operate as designed. Effect The District was not in compliance with Federal, State, and Board policies and regulations governing procurement. Context The District procured supplies from a vendor that totaled $50,663. However, the District could not provide documentation showing that the District procured the supplies in accordance with Federal, State, and Board policies and regulations; specifically, that price or rate quotations were obtained from an adequate number of qualified sources. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should ensure that it maintains procurement documentation to document that expenditures are completed in compliance with Federal, State, and Board procurement policies and regulations. Views of Responsible Officials See Corrective Action Plan.

Criteria: The Uniform Guidance requires that Organization have written procurement policies in place that comply with 2 CFR 200, Sections Subparts D and E. Condition: While testing compliance with 2 CFR 200, Sections Subparts D and E we found that management had not adopted the required procurement policies under 2 CFR Sections 200.318 – 200.327. Cause: Management does not regularly expend federal dollars above the threshold requiring a Single Audit under the Uniform Guidance. As such, policies related to procurement were not adopted. Effect: Internal controls surrounding Uniform Guidance are incomplete. Recommendation: Management should review 2 CFR Sections 200.138 – 300.327 and develop written policies that comply with the compliance requirements. Questioned Costs: None Management’s Response: Management has started incorporating 2 CFR Sections 200.138 – 300.327 into their current procurement policies and will adopt the policy changes in fiscal year 2026.

Finding Type. Significant Deficiency in Internal Control over Compliance (Procurement, Suspension and Debarment). Program. Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Passed through MiLEAP; ADN - BSN Completion Grant Program; Assistance Listing Number 21.027; Award Number SLFRP0127. Criteria. Per 2 C.F.R. §200.318–§200.320 (Uniform Guidance) and the College’s established procurement policies, noncompetitive (sole-source) procurements must be appropriately justified and documented. Required documentation includes the rationale for using a sole-source method and evidence that the procurement meets allowable circumstances under federal regulations and internal policy. Condition. During our review of procurement transactions, we identified one instance of sole-source procurement for which the College did not properly document a procurement decision in accordance with 2 CFR 200.320 related to justifying the use of a noncompetitive procurement method. Specifically, the procurement files lacked written justification demonstrating why competition was not feasible and did not include evidence of required approvals in accordance with the College’s procurement policies even though the arrangement was allowable under the circumstances. Cause. The lack of documentation resulted from inconsistent adherence to procurement documentation requirements for sole-source arrangements. Personnel responsible for initiating and approving procurements did not consistently complete or retain the required justification forms or supporting documentation when noncompetitive methods were utilized. Effect. As a result of this condition, the College could not document a procurement decision for one vendor in accordance with federal regulations. Questioned Costs. No costs were questioned related to this finding. Recommendation. We recommend the College strengthen controls over sole-source procurements by requiring documented justification and formal approval prior to executing noncompetitive procurement arrangements. Management should also provide additional training to procurement and program staff to ensure consistent compliance with federal procurement requirements and internal policies. View of Responsible Officials. Management agrees with finding and has prepared a corrective action plan.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 2025 – 002 Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster (IDEA) Assistance Listing Number: 84.027/84.173 Federal Award Identification Number and Year: H027A240007, 2025 Pass-Through Agency: Arizona Department of Education Pass-Through Number(s): 25ICSGBA-511469-01A Award Period: July 1, 2024 to June 30, 2025 Type of Finding:  Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Procurement and Suspension and Debarment under 2 CFR 200.318 through 200.327. Condition: For 1 of 4 vendor procurements tested we noted the transaction exceeded $10,000 and the district did not follow the competitive procurement guidelines per the district’s policy and uniform guidance 2 CFR 200.318 through 200.327. Questioned costs: Total of $13,360. Context: For 1 of 4 vendor procurements tested we identified the vendor transactions in the aggregate exceeded the district’s competitive bidding policy of $10,000, however the district did not follow the competitive bidding procedures and procure transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. Cause: The District did not have designated procedures in place to ensure vendor transactions were procured in accordance with competitive bidding policies and 2 CFR 200.319. Effect: The lack of adequate internal controls could result in noncompliance with uniform guidance. Repeat Finding: No. Recommendation: We recommend the district add internal controls over monitoring vendor purchases throughout the fiscal year and comparing to procurement policies to ensure proper procedures are followed. Views of responsible officials: There is no disagreement with the audit finding.

Procurement and Suspension and Debarment Federal Agencies: U.S. Department of Education Federal Program Name: Special Education Grants to States Assistance Listing Number: 84.027/84.173 Pass-Through Agency: State of Connecticut Department of Education Pass-Through Number: 12060-SDE64370-20977, 12060-SDE64370-20983 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UG) requires compliance with the provisions of procurement, suspension, and debarment. Condition: There were no controls in place to review for suspension and debarment on related procurement activities. Questioned Costs: None Context: Although testing did not reveal vendors providing services that were suspended and debarred, no documentation requirement exists for the Town to verify compliance with this requirement. Cause: The Town did not properly implement a conforming policy during the fiscal year. Effect: With the absence of a compliant documentation policy, the Town is at risk for noncompliance as it relates to all federal procurement requirements. Repeat Finding: No Recommendations: We recommend that the Town review its formal procurement policies and revise with the criteria in 2 CFR sections 200.318 and 200.326. Views of Responsible Officials: Management agrees with this finding.

Assistance Listing Number(s): 21.027 Name of Federal Program or Cluster: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Name of Pass-Through Entity: Milwaukee County Department of Health and Human Services Criteria or Specific Requirement: Nonfederal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The Agency did not document procurements consistent with the standards of 2 CFR sections 200.318, 200.319, and 200.320. Cause: The Agency did not establish written policies and procedures for procurement. Effect or Potential Effect: The cost of the procurements may be disallowed. Questioned Costs: $2,000,000 Context: The Agency contracted with multiple vendors in the course of constructing a building to be used for affordable housing. Funding from this project was derived from both federal and nonfederal sources. The questioned costs represent the amount charged to this program as the required Uniform Guidance procurement procedures were not applied. Under 2 CFR 200.516(a)(3), questioned costs are those greater than $25,000 for a type of compliance requirement for a major program. Repeat Finding: No Recommendation: The Agency should establish written policies and procedures for procurement required by 2 CFR sections 200.318 through 200.326. Views of Responsible Officials: Management has established written policies and procedures for procurement. Management confirmed policies and procedures were followed and monitored during the construction of the project with supporting documentation to meet procurement requirements, however written policies and procedures were completed after year-end.

Assistance Listing Number(s): 14.239 and 21.027 Name of Federal Program or Cluster: Home Investment Partnerships Program and COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of Housing and Urban Development and Department of the Treasury Name of Pass-Through Entity: Milwaukee County Department of Health and Human Services Criteria or Specific Requirement: Subparts D and E of 2 CFR Part 200 require a nonfederal entity to establish written policies, procedures, and standards of conduct, including procedures to implement the cash management requirements of 2 CFR section 200.305, procedures that comply with the procurement standards of 2 CFR sections 200.318 through 200.326, and procedures for determining the allowability of costs in accordance with Subpart E of 2 CFR Part 200. Specifically, 2 CFR sections 200.430, 200.431, and 200.475 require written policies concerning compensation for personal services, fringe benefits, and travel costs, respectively. Condition: Policies and procedures with requirements in accordance with 2 CFR Part 200 for cash management, procurement, compensation, including fringe benefits, and travel were not maintained. Cause: The Agency is not aware of the requirements of Subparts D and E of 2 CFR Part 200 for written policies, procedures, and standards of conduct. Effect or Potential Effect: A lack of written policies, procedures, and standards of conduct may result in noncompliance with the requirements of federal programs and/or disallowed costs. Repeat Finding: No Recommendation: The Agency should become familiar with the requirements of Subparts D and E of 2 CFR Part 200 and establish appropriate written policies, procedures, and standards of conduct. Views of Responsible Officials: Management has established written policies and procedures after year end that were the policies and procedures followed during the year under audit and meets the requirements of Subparts D and E of 2 CFR Part 200.

U.S. Department of Health and Human Services Congressional Directives, 93.493 Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Grant Award Number: Affects grant award CE152520 under assistance listing 93.493 on the Schedule of Expenditures of Federal Awards. Criteria: 2 CFR Part 200.318 (Uniform Guidance) requires that a recipient of a Federal award must maintain and use its own documented procedures for procurement transactions under a Federal award, including for the acquisition of property or services. These documented procurement procedures must be consistent with State and local laws and regulations, provided that the procurements conform to applicable federal law and standards. Uniform Guidance requires that a non-federal entity obtain quotations for procurements exceeding the micro-purchase threshold of $10,000. Uniform Guidance requires that a nonfederal entity follow competitive bidding procurement methods for contracts that exceed the simplified acquisition threshold of $250,000. Condition: We noted Spokane Guilds' School & Neuromuscular Center dba Joya (the Organization) did not have documented procurement policies and procedures to conform to applicable federal law and standards and did not comply with federal procurement requirements for certain contracts. Cause: The Organization did not have adequate internal controls to determine the need to have its own procurement procedures or to follow federal procurement requirements for certain contracts. Effect: Procurements may not follow federal standards. Questioned Costs: $2,632,267 Context/Sampling: All policies were reviewed for compliance with applicable laws and federal regulations, noting no documented procurement policy was in place. A random sample of nine transactions out of a population of 43 was selected for testing which included seven unique vendors. For three vendors, contract amounts were in the $10,000 - $250,000 range and the simplified acquisition procedures should have been followed with rate quotations obtained. For one vendor, the contract amount exceeded $250,000 and a sealed bid procurement method should have been followed. Cause: The Organization did not have adequate internal controls to determine the need to have its own procurement procedures or to follow federal procurement requirements for certain contracts. Effect: Procurements may not follow federal standards. Questioned Costs: $2,632,267 Context/Sampling: All policies were reviewed for compliance with applicable laws and federal regulations, noting no document procurement policy was in place. A random sample of nine transactions out of a population of 43 was selected for testing which included seven unique vendors. For three vendors, contract amounts were in the $10,000 - $250,000 range and the simplified acquisition procedures should have been followed with rate quotations obtained. For one vendor, the contract amount exceeded $250,000 and a sealed bid procurement method should have been followed. During the year, but subsequent to the contracts being entered into, the Organization discovered that they had not appropriately followed the Uniform Guidance and undertook a process to document procurement procedures and obtained additional quotes and bids from similar vendors to document the reasonableness of vendors used. The award being tested was to build out the shelled space previously built by the Organization, and all four vendors noted above were involved in the initial design and construction of the space. Additionally, the vendor with the contract exceeding $250,000 was named in the grant application, but the Organization does not appear to have received written approval to use a noncompetitive procurement method. Repeat Finding from Prior Year: No Recommendation: We recommend that the Organization enhance internal controls to document their procurement procedures in accordance with Uniform Guidance, and ensure these policies are followed for all procurement transactions entered into. Views of Responsible Officials: The Organization agrees with this finding.

Finding 2025-002 - Procurement (Significant Deficiency) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors & Individuals with Disabilities. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Procurement CFDA Title and Number: 20.509 (5311) Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Department of Transportation Internal Control over Compliance: Procurement Criteria: 2 CFR Part 200.318(a-k) Numerous procurement regulations exist requiring federal grant awardees to develop and implement internal control policies and procedures related to procurement activities. Condition: The District made expenditures and engaged in contracts without following relevant procurement requirements. Cause: Management and leadership lacked awareness of relevant procurement regulations. Consequently, no internal control policies or procedures related to procurement existed, or policies and procedures existed but were not implemented. Effect or Potential Effect: The lack of effective internal controls over procurement activities had allowed for widespread deficiencies and noncompliant activities, which resulted in the District’s revocation of one award. Questioned Cost: None reported Context: Without proper procurement policies and procedures, the risk of compliance requirement violations is significant. The District failed to meet numerous procurement requirements early in the fiscal year and ultimately lost a significant award for bus acquisitions. Repeat of a Prior-Year Finding: Yes Recommendation: The District should design and implement internal controls related to procurement regulations that will reduce the risk that the District’s procurement activities are not in compliance with federal regulations. District's Response: The District acknowledges the weaknesses and its intention of correcting weaknesses. There has been a change in the General Manager position, to improve the operations, and training of all management, staffing and leadership. The Board has had significant membership change, with new leadership actively engaged in creating a quality internal control and policy environment. Much education and training has occurred during and after fiscal year 2024-2025, up through December 2025, and is ongoing, to meet these goals. Corrective Action Plan: The District acknowledges the weaknesses and its intention of correcting weaknesses. There has been a change in the General Manager position, to improve the operations, and training of all management, staffing and leadership. The Board has had significant membership change, with new leadership actively engaged in creating a quality internal control and policy environment. Much education and training has occurred during and after fiscal year 2024-2025, up through December 2025, and is ongoing, to meet these goals. Planned Implementation Date: December 31, 2025 Responsible Persons: District Board, Umpqua Public Transit District

In our testing of the District’s compliance with the federal rules of procurement, suspension and debarment, we noted that the District did not have polices and procedure implemented to ensure compliance with 2 CFR section 200.318 to 200.326.

Federal Program and Assistance Listing Number: Child Nutrition Cluster-ALN: 10.553, 10.555. Criteria: Federal regulations require full and open competition in procurement, equitable distribution of micro-purchase, cost/price analysis for formal contracts, and proper contract management (2 CFR 200.318-.326). Condition: Micro-purchases were not equitably distributed, cost/price analyes were not conducted prior to formal contracts, and full and open competition was restricted by unreasonable requirements. Sealed bids were not properly opened or evaluated, and contract management was insufficient. Cause: Lack of understanding of federal procurement requirements and insufficient internal controls over procurement process. Effect: Increased risk of favoritism, unallowable costs, and noncompliance with federal procurement standards. Questioned Costs: None identified. Recommendation: Provide training on federal procurement requirements, implement procedures for equitable distributions and cost/price analysis, and strengthn contract management controls. Views of Responsible Officials: The District will provide training on procurement and micro-purchases.

2025-001 Lack of Documentation for Procurement, Suspension, and Debarment Testing Federal Department: Department of Health and Human Services, Administration for Children and Families Assistance Listing #: 93.496 Compliance and Internal Controls Significant Deficiency Category of Finding – Procurement, Suspension and Debarment Criteria – Per 2 CFR 200.318(i) Esperanza is required to maintain records sufficient to detail the history of each procurement transaction, which must include the rationale for the procurement method, contract type, selection, contractor selection or rejections, and the basis for the contract price. Additionally, 2 CFR 180 requires that Esperanza obtain verification that it does not contract with entities that are suspended or debarred by the federal government. Condition – Esperanza was unable to provide documentation related to the competitive bidding process performed for one of the contractors used for this grant. We were able to determine that multiple contractors were contacted, but not see the bids provided or any documentation related to why the specific contractor was selected. Esperanza was also unable to provide documentation showing they had performed the required suspension and debarment verification process for any of the contractor used for this grant. We were able to determine on sam.gov that none of the contractors were suspended or debarred, but not obtain evidence that this process was done at the time the contracts were entered into. Cause – The organization has gone through turnover of key staff during the past several fiscal years and many of the contractors they use for this grant when through the procurement process prior to that turnover. The individuals who were responsible for obtaining this documentation left the organization during that time. Effect – Failure to perform competitive bidding as required by Uniform Guidance and Esperanza’s procurement policy could result in the organization entering a procurement transaction in a manner that did not provide full and open competition. Not performing suspension and debarment verification processes prior to entering into a contract could also result in Esperanza contracting with an entity that is suspended or debarred. Recommendation – We recommend that management implement a formal process around maintaining procurement records, and suspension and debarment verification in a central location that is accessible by relevant management and not effected by staff turnover. Assigning responsibility of maintaining these records to a single individual rather than having each program director separately responsible for their records will also improve Esperanza’s ability to meet these requirements. Management’s Response and Corrective Action – Management is in agreement with the finding. Going forward, finance staff will be responsible for maintaining and safekeeping all procurement documentation for the requisite amount of time in an accessible location in an accounting folder explicitly marked on the Esperanza United secured drive for finance staff and executive team. Responsible party for corrective action – Vivian Huelgo, President and CEO Repeat finding – No

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.

Federal Transit Cluster Assistance Listing No. 20.507 US Department of Transportation Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.318–200.326) requires non‑Federal entities to maintain documentation sufficient to detail the history of each procurement, including but not limited to: • Rationale for the procurement method • Contractor selection or rejection • Basis for contract price • Evidence of competition or sole‑source justification when applicable These requirements ensure transparency, competitiveness, and proper stewardship of Federal funds. Condition: During our testing of procurement transactions, we noted that the City did not retain adequate documentation to support procurement actions. Missing documentation included bid/quote evaluations, price analyses, and evidence of compliance with competitive procurement requirements. As a result, we could not determine whether procurement requirements were properly followed. Cause: Proper accounting policies and procedures were not in place related to review of documentation related to procurement of vendors. Effect or Potential Effect: Without adequate documentation, the government cannot demonstrate compliance with procurement standards. This increases the risk of noncompliance with Uniform Guidance and inefficient or noncompetitive purchasing practice. Questioned Costs: None Context: Of the four procurements tested, three lacked one or more required elements of procurement documentation. Identification as a Repeat Finding: This finding was not reported in the prior year. Recommendation: Policies and procedures over procurement should be modified to ensure that adequate documentation is maintained. Views of Responsible Officials and Planned Corrective Actions: Management concurs with the finding and recommendation. Management will work to ensure proper policies and procedures are established and followed.