Findings Citing § 200.318

Criteria or Specific Requirement: 2 CFR Part 200 Sections 200.212 and 200.318(h) and per 2 CFR Section 180.300 and 48 CFR Section 52.209-6, organizations must have procedures for verifying that an entity with which hit plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Condition: There was a lack of evidenced to support that a suspension and debarment check was performed prior to entering into a covered transaction. Questioned Costs: None Context: Out of five covered transactions tested, for one vendor, documentation was not retained showing selected entity was checked for suspension and debarment prior to entering into the covered transactions. However, CLA checked the vendor in SAM.gov and noted the vendor is not federally suspended nor debarred. Cause: Inconsistent application of internal policies related to suspension and debarment, and inconsistent retention of supporting documentation. Effect: Inconsistent application of internal suspension and debarment policies could lead to the selection of vendors that are federally suspended and debarred. Repeat Finding: Recommendation: CLA recommends SFP perform suspension and debarment checks prior to entering into the covered transactions paid for with federal funding and to retain documentation evidencing that those checks were performed timely. Increased training may help reinforce the policies and requirements regarding suspension and debarment checks and documentation retention. Views of Responsible Officials: There is no disagreement with the audit finding.

FINDING 2024-003 Subject: Drinking Water State Revolving Fund - Procurement and Suspension and Debarment Federal Agency: Environmental Protection Agency Federal Programs: Drinking Water State Revolving Fund Assistance Listing Number: 66.468 Federal Award Numbers (or Other Identifying numbers): DW23150901, DW24660904 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement - Policy The City had not established a purchasing policy that reflected applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain a policy that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in evaluation of bids or proposals. Procurement The City expended federal funds to pay ten separate vendors to provide goods and services for the duration of the City's Lead Service Line Replacement project. A population of seven vendors were tested that had aggregated expenditures for the audit period that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. All seven of the vendors were tested; for four of the seven vendors, the City was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. The history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. Additionally, a population of three vendors were identified with contract amount or aggregated total of expenditures that exceeded the simplified acquisition threshold of $150,000. All three vendors were tested; for one of these vendors, the procurement method used was not appropriate as the City relied on quotes obtained, rather than a formal procurement method as required for purchases that exceed the simplified acquisition threshold. Suspension and Debarment Prior to entering into sub-awards and covered transactions with award funds, recipients are required to verify that vendors are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the agreement with the Indiana Finance Authority (IFA), the City was not required to perform testing over suspension and debarment for a majority of the vendors used; however, several drawdowns from the State Revolving Funds (SRF) program were used to reimburse the City for payments made to specific vendors. The vendors paid directly by the City were not included in IFA's procedures for checking suspension and debarment; therefore, the City was obligated to meet the requirement. The City did not maintain a set of procedures for checking suspension and debarment status of vendors for expenditures related to the SRF awards. A total of three vendors paid directly by the City exceeded the S&D threshold of $25,000 and were subject to testing. No documentation to show that suspension and debarment was verified prior to entering into the contract could be provided for any vendor. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the 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. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. 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." 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 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(d) states: "The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach." 2 CFR 200.319(c) states: "The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract." 2 CFR 200.319(d) states: "The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a 'brand name or equivalent' description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and (2) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals." Cause The City did not maintain a procurement policy that would demonstrate the appropriate procedures to be followed when procuring with federal funding and were not aware of the need to follow federal guidelines for procurement or suspension and debarment for expenditures associated with the SRF awards. Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the City could be overpaying for services, or providing federal funds to an entity that is suspended or debarred. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award and ensure that vendors paid from federal funds are neither suspended nor debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding No. 2024-001: Procurement Policy Program: AL# 59.059 – Congressional Grants Federal Grantor: U.S. Small Business Administration Criteria – Non-Federal entities must maintain documented procurement procedures that conform to applicable Federal statutes and the procurement standards identified in the Uniform Guidance, including thresholds, procurement methods, standards of conduct, and contract provisions. Citation – 2 CFR 200.319 & 2 CFR 200.320 Condition – The Organization has adopted both a grant-specific procurement policy and entity-wide procurement procedures included in its overall financial policy manual. However, neither policy is fully compliant with the federal procurement requirements. The following outlines the specific deficiencies in the policies: 1. Standard of Conduct for Conflicts of Interest (§200.318(c)): The policies do not contain written standards of conduct covering personal and organizational conflicts of interest in procurement. 2. Full and Open Competition (§200.319): While the policy in the financial manual requires three bids for purchases of $20,000 and greater, there is no overarching requirement that all procurements be conducted to provide full and open competition. 3. Procurement Methods (§200.320): The policies do not address all five procurement methods (micro-purchases, small purchases, sealed bids, competitive proposals, noncompetitive proposals). Additionally, micro-purchase and small purchase thresholds are not aligned with Uniform Guidance (the financial manual sets approval thresholds at $250 and $20,000 but does not incorporate the federal $10,000 micro-purchase threshold or $250,000 simplified acquisition threshold) 4. Noncompetitive Proposals (§200.320(f)): The policies do not identify circumstances where noncompetitive (sole-source) procurements are allowable or require documentation of justification Cause – The Organization’s procurement policies were originally designed around internal approval structures. Upon receiving federal funds for the first time in 2024, a grant specific policy was implemented to meet the grant requirements but neither policy was updated to reflect the detailed procurement requirements under Uniform Guidance. Effect – Since the procurement policies are not fully compliant with federal requirements, there is increased risk that procurements made under federal awards may not be conducted in an appropriate manner. If there were additional contracts with federal funds, this could result in potential questioned costs or disallowed expenditures. Questioned Costs – None. The finding is about deficiencies in written policies and procedures (compliance framework), not about an actual procurement transaction that violated the rules.

Finding 2024-002 Material weakness in internal controls over procurement and material noncompliance related to procurement compliance requirements. Federal Agency: U.S. Department of Treasury Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Awards Number: SLFRP0152 Award Period: 1/1/2024 – 12/31/2025 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 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 During our testing, for three out of three procurement transactions tested in excess of the micro purchase threshold, the Organization did not maintain documentation sufficient to detail the history of the procurement transaction. The Organization did not maintain contemporaneous documentation identifying the procurement method, contract type selection, contract selection, basis of contract price, and consideration of vendor suspension and debarment. For one selection over the simplified acquisition threshold, the Organization received three proposals based upon a request for proposal process. For two selections above the micro-purchase threshold there was insufficient document to determine if price or rate quotations were obtained from an adequate number of qualified sources and no noncompetitive proposal process was documented in accordance with the Organizations procurement policy. Effect/Potential Effect Procurements were entered into that did not meet the minimum Uniform Guidance procurement standards. Questioned Costs N/A Repeat Finding Not applicable Recommendation We recommend that the Organization maintain records to support that any procurement entered into with federal funds was done so in accordance with its policies and procedures for procuring goods and services with the proceeds of a federal award. We further recommend that a control is implemented to ensure that the organization does not contract with parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Views of Responsible Officials Management agrees with the finding and has provided the corrective action plan following the Single Audit Report.

FINDING 2024-002 Subject: Drinking Water State Revolving Fund - Procurement Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number and Year (or Other Identifying Number): DW23332501 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town had not established an effective internal control system related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The Town was not in compliance with the Procurement and Suspension and Debarment compliance requirement. Purchasing Policy The Town's purchasing policy did not reflect applicable state laws and regulations. In addition, the policy did not include procedures to avoid acquisition of unnecessary or duplicative items, procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured, or procedures that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals. Additionally, the Town's policy did not contain written standards of conduct covering conflicts of interest and governing the performance of its employees engaged in the selection, award, and administration of contracts. 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 customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. INDIANA STATE BOARD OF ACCOUNTS 16 TOWN OF KEWANNA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two vendors were identified that fell within the small purchase threshold. Purchases from the vendors totaled $34,414 and $92,437. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the Town did not obtain price or rate quotations for the purchases nor was full and open competition provided for the vendors. Additionally, the history of each procurement was not adequately documented, including rationale for the method of procurement, selection of vendor, and basis for price. The lack of internal controls and noncompliance were isolated to the purchasing policy and to small purchases procured during 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(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(c)(1) states: "The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity." INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF KEWANNA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318(d) states: "The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach." 2 CFR 200.319(c) states: "The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract." 2 CFR 200.319(d) states: "The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a 'brand name or equivalent' description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and (2) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals." 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 18 TOWN OF KEWANNA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause The Town was unable to provide documentation to demonstrate it had policies or procedures in place to comply with the Procurement and Suspension and Debarment compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot demonstrate it obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the Town could have overpaid for the services obtained. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management design and implement a system of internal controls to ensure that a purchasing policy is in place and that quotes are obtained for all small purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding 2024-003 Procurement, Suspension and Debarment Program: ALN 66.458 Clean Water State Revolving Fund ALN 66.468 Drinking Water State Revolving Fund Criteria: As required by the OMB Uniform Guidance (2 CFR § 200.318(a)), a non-federal entity must use its own documented procurement procedures, provided that they conform to Federal law and the standards outlined in the Uniform Guidance. Condition: The City’s procurement procedures do not conform to Uniform Guidance requirements. Effect: There is an increased risk of noncompliance with federal awards. Questioned Costs: N/A Cause: The City has not revised procurement procedures for many years. Recommendation: We recommend that the City revise their procurement procedures to conform with Minnesota statutes and Uniform Guidance.

Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number 21.027 Federal Agency: U.S. Department of Treasury Pass-through Entity: Illinois Department of Human Services Condition: The Organization does not have documented procurement policies that address all required federal standards, including conflict-of-interest disclosures, thresholds for competitive bidding, and vendor suspension/debarment checks. Criteria: 2 CFR §§200.318–200.320 require non-federal entities to use documented procurement procedures consistent with federal standards, including conflict of interest, competitive procurement thresholds, and vendor responsibility checks. Cause: Lack of awareness of Uniform Guidance procurement standards and incomplete written policies. Effect: SCC risks awarding contracts that are not allowable or are subject to disallowance under federal regulations. Questioned Costs: None noted during audit testing. Auditor’s Recommendation: The Organization should revise and implement procurement policies and procedures that meet all requirements of 2 CFR 200 and train staff accordingly.

Finding 2024-01 United States Department of Treasury Federal Assistance Listing No. 21.027 American Rescue Plan Act (ARPA) Type of Finding: Internal Control and Compliance Compliance and Material Weakness Deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our testing and review of the Organization’s procurement policy, we were unable to obtain documentation to support that the Organization entered into contractual agreements with vendors who had gone through a competitive bidding or procurement process, as required under applicable procurement standards. Criteria: The Uniform Guidance and 45 CF Part 75 require that non-Federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. The characteristics of internal controls are presented in the context of the components of internal controls discussed in the Internal Control-Integrated Framework (COSO Report), published by the Committee of Sponsoring Organizations of the Treadway Commission. The COSO Report provides a framework for organizations to design, implement, and evaluate controls that will facilitate compliance with the requirements of Federal laws, regulations, and program compliance requirements. Per 2 CFR 200.320 General procurement states: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold .(2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation;(4) The federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Per 2 CFR 200.318 General procurement states: (b) The 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 this part. Per Uniform Guidance, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov Home (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Cause: The Organization did not maintain adequate documentation or controls to ensure compliance with federal procurement requirements of the use of competitive bidding procedures. Effect: Failure to verify vendor eligibility and follow competitive procurement procedures increases the risk of noncompliance with federal regulations, including potential use of federal funds for unallowable costs. This may also expose the Organization to audit findings, questioned costs, or repayment of grant funds. Questioned Costs: $370,461 Recommendation: We recommend the Organization update and follow their documented procurement policies to identify vendors that should go through the procurement process for federal funds at time of award and to document those procedures. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the Corrective Action Plan. Auditor’s Conclusion: Finding remains as stated.

Program name: State and Local Fiscal Recover Funds Assistance Listing: 21.027 Federal award Identification number: 43210256 Federal award year: All Federal awarding agency: U.S. Department of Treasury Criteria: Under 2 CFR § 200.318(a), recipients and subrecipients must “maintain and use documented procedures for procurement transactions under a Federal award or subaward.” Additionally, 2 CFR § 200.318(i) requires that “the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction,” including:  Rationale for the method of procurement,  Selection of contract type,  Contractor selection or rejection, and  Basis for the contract price. Condition: During our audit of procurement activities under Federal award 21.027, we noted that the Organization did not follow its documented procurement procedures. Specifically:  The procurement plan lacked evidence of adherence to competitive procurement methods as required under 2 CFR § 200.320.  No documentation was maintained to support when or how procurement decisions were made, including missing records of contractor selection, price justification, and procurement method rationale. Cause: The Organization did not implement adequate internal controls to ensure compliance with federal procurement standards. Procurement activities were conducted informally without sufficient oversight or documentation, and staff were not adequately trained on Uniform Guidance requirements. Effect or Potential Effect: Failure to follow documented procurement procedures and maintain required records increases the risk of:  Noncompliance with federal regulations,  Unfair or noncompetitive procurement practices,  Inability to justify expenditures to federal agencies or auditors,  Disallowed costs or questioned costs during federal review. Repeat finding: This is not a repeat finding. Questioned costs: None identified for this transaction. However, the breakdown in controls presents a broader compliance risk. Perspective: This finding pertains to 3 purchases under AL 21.027 and reflects a broader issue in control enforcement that may affect other procurements under the same or other federal programs. -20- HEARTS FOR THE INVISIBLE CHARLOTTE COALITION SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2024 Recommendation: We recommend that the organization:  Update and enforce its procurement policies to align with 2 CFR Part 200 standards.  Train staff on federal procurement requirements.  Implement a checklist or control mechanism to ensure all required documentation is retained for each procurement transaction. Management’s response and corrective action plan (unaudited): See corrective action plan.

Program Information: U.S. Department of the Treasury COVID-19 - American Rescue Plan Act Assistance Listing #: 21.027 Award Number: SLFRP1559, SLFRP5012 Award Period: 5/19/2021-12/31/2026 Criteria: 2 CFR § 200.303 - Internal controls states, the recipient and subrecipient 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). The Tribe’s procurement policy requires that purchases above certain thresholds be supported by evidence of competitive bids or quotes to ensure fair and open competition. For revenue loss eligible use category expenditures under CSLFRF, the May 2024 OMB Compliance Supplement and Treasury Final Rule FAQ 13.15 clarify that federal procurement requirements in 2 CFR 200.318–200.327 do not apply. Condition/Context: During testing of procurement transactions charged to the program under the revenue loss eligible use category, 3 of 6 Individually Important Item procurement samples selected for review did not contain documentation of competitive bids or quotes as required by the Tribe’s procurement policy. These transactions were not subject to federal procurement requirements. [ ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: The deficiency appears to be the result of staff not consistently following the Tribe’s established procurement procedures and a lack of management oversight to ensure compliance with local procurement requirements. Effect: Failure to obtain and document competitive bids or quotes increases the risk that the Tribe may not obtain goods and services at the best value and may not provide for full and open competition, as required by its own policy. Questioned Costs: N/A - as the compliance attribute does not apply for revenue loss transactions. Repeat Finding: No. Recommendation: We recommend that management reinforce and monitor compliance with the Tribe’s procurement procedures, including obtaining and retaining documentation of competitive bids or quotes for all purchases above the micro-purchase threshold, and provide training to staff responsible for procurement. Management should also implement periodic reviews of procurement files to ensure compliance with the Tribe’s procurement requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.

2 CFR PART 200, SECTION 200.318 REQUIRES NON-FEDERAL ENTITIES TO MAINTAIN WRITTEN PROCUREMENT POLICIES AND PROCEDURES THAT CONFORM TO APPLICABLE FEDERAL LAWS, REGULATIONS, AND STANDARDS. THESE POLICIES MUST COVER METHODS OF PROCUREMENT, COMPETITION REQUIREMENTS, AND DOCUMENTATION STANDARDS. THE ORGANIZATION’S WRITTEN PROCUREMENT POLICY DID NOT CONFORM TO FEDERAL PROCUREMENT STANDARDS. CAUSE: MANAGEMENT DID NOT ESTABLISH OR ADOPT PROCUREMENT POLICIES AND PROCEDURES AS REQUIRED BY UNIFORM GUIDANCE. ALTHOUGH TESTING OF PROCUREMENT TRANSACTIONS INDICATED THAT THE ORGANIZATION FOLLOWED PRACTICES CONSISTENT WITH FEDERAL PROCUREMENT REQUIREMENTS, THE ABSENCE OF A WRITTEN POLICY REPRESENTS NONCOMPLIANCE WITH 2 CFR PART 200, SECTION 200.318.

Criteria: 2 CFR sections §200.212 and §200.318(h); 48 CFR section §52.209-6 outlines that the non-Federal entity must maintain a procurement policy and verify that agencies in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The Center does not have a procurement policy in place nor does it retain the documentation of verification of vendors not suspended or debarred prior to entering into a contract with vendors. Cause: The Center does not have a procurement policy that contains the necessary provisions stated above. Effect: Despite having a written financial purchasing policy, if the Center does not maintain sufficient documentation of procurement evaluations and decisions, the Center's procurement practices will not comply with the Uniform Guidance. Questioned Costs: None Recommendation: The Center should develop a procurement policy in accordance with Uniform Guidance requirements and retain formal documentation with regard to its procurement decisions. Views of Responsible Officials: Management agrees with the finding; see corrective action plan.

Finding # 2024-001 Type: Immaterial noncompliance Federal Agency: U.S. Department of Commerce, National Oceanic and Atmospheric Administration Assistance Listing: 11.441 Criteria/Requirement: The Organization’s procurement policies should incorporate the provisions of the procurement standards set out at 2 CFR sections 200.318 through 200.327. Cause: The Organization’s fiscal policies and procedures do not meet the required federal standards for procurement. Effect: Executed contracts using federal funds may be in violation of federal guidelines. Recommendation: The Organization's procurement policy must have documented procurement procedures, consistent with state, local, and tribal laws and regulations for the acquisition of property or services required under a federal award or subaward. The Organization should maintain records sufficient to detail the history of procurement. Management Response: Management will work on revising the Organization’s procurement policies to incorporate the necessary provisions.

Finding 2024-002 – Activities Allowed or Unallowed and Allowable Costs/ Cost Principles, and Procurement Program Name (ALN): Public Transportation Emergency Relief Program (ALN 20.527) Federal Agency: U.S. Department of Transportation Federal Grant Numbers and Years: NJ-44-X004-02 (Federal fiscal years 2012–2025) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Finding Type: Significant Deficiency and Noncompliance Repeat Finding: No Criteria: Activities Allowed or Unallowed and Allowable Costs/ Cost Principles Except where otherwise authorized by statute, cost must meet the following general criteria in order to be allowable under federal awards; (1) Be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E. (2) Be adequately documented. Procurement Non-Federal Entities Other than States 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 sections 200.318 through 200.327. 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. A non-federal entity must: (1) Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. Additionally, In accordance with federal requirements, the Port Authority shall maintain internal controls over federal programs designed to provide reasonable assurance that transactions are executed in compliance with federal statutes, regulations, and the terms and conditions of the federal award that could have a direct and material effect on a federal program. Condition: The Port Authority of New York and New Jersey (the Port Authority) used funds received from the Public Transportation Emergency Relief Program (the Program) to purchase equipment to perform maintenance and inspection of the track damaged by Superstorm Sandy, repair the damage, and allow the Port Authority to be more resilient in future events. As part of our testing over the procurement requirements for the Program, we noted for one out of eleven vendors sampled subject to the Port Authority’s procurement policies for a covered transaction, the vendor was operating and incurring expenditures under a call-in contract that did not meet certain federal procurement requirements established by the Port Authority for other federal awards, with total expenditures of $23,772 for the year ended December 31, 2024. The total amount of expenditures for vendors subject to the procurement requirements of the Program and the Port Authority’s procurement policies for a covered transaction during fiscal year 2024 was $4,263,131, and the total amount of other-than-personal service costs for the Program during fiscal year 2024 was $65,782,642. We noted that the vendor was neither suspended nor debarred from receiving federal funds, and also has other procurement contracts with the Port Authority that meet federal procurement requirements. Cause: The Port Authority used the incorrect procurement contract for this vendor that did not meet certain federal procurement requirements and the error was not detected as part of the Port Authority’s established policies and procedures. Effect: The expenditures charged by the vendor to the Program under the wrong procurement contract were not allowable, as there was no awarding contract to the vendor that met all federal procurement requirements established by the Port Authority. Questioned Costs: $23,772. In addition to the known questioned costs, we have identified $338,252 as likely questioned costs, based on amounts included in our sampled items tested and the total population of other-than-personal service costs noted above. Recommendation: We recommend that the Port Authority strengthen its policies and procedures to ensure all vendors have the appropriate contracting awards in accordance with federal procurement requirements for charging allowable expenditures under the requirements of the Program. Views of Responsible Officials Although federal funds were not received for this expenditure, PATH acknowledges an internal control deficiency regarding the recognition of grant funding for work performed under standard nonfederal engineering call-in contracts. PATH will continue to work collaboratively with the Engineering and Procurement Departments to strengthen internal communications and reinforce adherence to established protocols governing capital projects that are eligible for federal funding.

Federal Agency: United States Department of Health and Human Services Federal Assistance Listing Title and Number: Congressional Directives, 93.493 Federal Award Identification Number (FAIN) and Year: 6 CE1HS47160-01-04, 2022 Criteria: In accordance with 2 CFR §200.318(a), General Procurement Standards, the nonfederal 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 General Procurement Standards. Additionally, §200.318(i) states that the nonfederal entity must maintain records sufficient to detail the history of the procurement. These records are required to 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: During our testing of the procurement compliance requirements, we identified three procurement samples out of a total of five tested where the Organization was unable to produce documentation of compliance with the general procurement standards noted in the criteria above. Cause: The Organization personnel did not retain proper documentation supporting procurement controls. Effect: Failure to obtain and retain sufficient supporting documentation could result in an incorrect application of procurement policies and procedures. There was also no supporting documentation to ensure that the vendor selected was in compliance with the Uniform Guidance. Questioned Costs: The total amount of the procurement transaction for which the formal method of procurement was not followed was $565,107, but questioned costs are undeterminable since the difference between the vendor price selected and potential other competitive bids or prices is unknown. Context: The population consisted of five vendor contracts entered into during the period subject to procurement. All items were tested, two of which had no exceptions in testing and the other three had the exceptions identified in the condition above. This was not a statistically valid sample. Repeat Finding: N/A, This is the first year of the finding. Recommendation: We recommend management ensure that procurement regulations are followed. We also recommend management ensure all required procurement documentation is maintained in conjunction with its document retention policy. Management's Response: RUMC follows applicable federal grant guidelines and requirements, including adherence to the three-bid policy and related procurement standards. However, there were two factors that impacted our ability to provide complete supporting documentation during the audit period: (1) the departure of the project manager who was responsible for maintaining procurement records for the project, and (2) a cyber event in 2023 that resulted in the loss of certain files and supporting documentation. While these circumstances limited our ability to produce documentation evidencing compliance, management affirms that the required procurement steps were performed and that RUMC remains in adherence with federal grant requirements. To further strengthen compliance, RUMC has established a Construction Grant Committee to ensure full adherence to all grant requirements. This committee is responsible for reviewing procurement actions, verifying compliance with the three-bid requirement, ensuring proper documentation is retained, and monitoring procurement processes throughout the life of each project. These corrective actions will ensure that complete and verifiable records are consistently available to support compliance with bidding requirements going forward.

Finding 2024-003 (Material Weakness) Program: Crime Victim Assistance Federal Agency: Department of Justice (DOJ) AL #: 16.575 Federal Award Identification Number and Year: Various – See SEFA Pass-through Entity: Missouri Department of Social Services Type of Compliance Finding: I - Procurement, Suspension, & 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 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 and they must not be suspended or debarred. Condition/Context During our audit of the Organization’s fiscal year ended December 31, 2024 federal award program, we noted the Organization did not follow their documented procurement procedures for approving one contractor. Cause Management did not follow their procurement procedures for approving contractors / vendors. Effect Potential repayment of federal funds. Questioned Costs $120,489 Is the finding a repeat finding No Recommendations We recommend that Management follow their documented procurement procedures. Views of Responsible Officials / Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization’s letterhead

U.S. Department of the Treasury Finding: Procurement Policy & Procurement Action Documentation Reference Number: 2024-004 Program: 21.027 COVID-19 State and Local Fiscal Recovery Funds Program Identifying Number: SLFRP0139 Type of Finding: Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment Condition: The Land Bank did not retain supporting documentation for procurements entered during the year ended December 31, 2024. The Land Bank adopted a written procurement policy on September 11, 2024. The Land Bank entered contracts after the adoption of its new procurement policy during the period from September 11, 2024 through December 31, 2024 without performing the required procurement actions. A similar finding was reported in the 2023 audit. Context: The Land Bank represented that contractors were evaluated by analyzing City of Wilmington permit information prior to the implementation of the procurement policy in September 2024. The Land Bank did not retain documentation of this analysis to support its procurement actions. Criteria: CFR § 200.318, General Procurement Standards and § 200.320 Methods of Procurement to be Followed, of the Uniform Guidance apply to the State and Local Fiscal Recovery Funds Program and require the following: i. The Land Bank must adopt documented procurement procedures that are consistent with the applicable State, local, and federal regulations. ii. The Land Bank’s documented procurement procedures must include the following elements at a minimum: a. Micro-purposes - purchases up to $50,000 may be made without soliciting competitive price or rate quotations if the price is considered reasonable. b. Small Purchases - purchases between $50,000 and $250,000 may be made with soliciting competitive price or rate quotations from an adequate number of qualified sources. c. Formal Procedures - purchases over $250,000 must be made by sealed bid or competitive proposal. The Land Bank’s procurement policy requires the following: Method of Purchase: Selection of contracts for goods and services shall be made only on a competitive basis except as otherwise set forth herein. The following method of purchase shall be used when required by this Policy in order to achieve the highest quality and lowest cost: i. Micro-purposes ($0-$49,999) - Designated staff may procure goods and services on behalf of the Land Bank without obtaining three quotations and without approval of the Board. Vendor selection and pricing should be reviewed at least annually for convenience and cost savings. ii. Small Purchases ($50,000-$249,999) - At least three written quotations will be obtained whenever possible. The Land Bank shall solicit informal quotations utilizing sources most likely to identify the highest quality and lowest price of a particular good or service, including newspaper and magazine advertisements, internet searches, chamber of commerce recommendations, and prior experience of the Land Bank. The Land Bank shall create and maintain a written or digital record of the quotations solicited and received for such purchases. At its discretion, Land Bank staff may decide to utilize the RFP process in lieu of the quotation process for any contract even when it is not required. iii. Large Purchases ($250,000+)- A request for proposals (RFP) issued by the Land Bank shall be required. Any large purchase contract entered into by the Land Bank shall require the approval of the Board. Cause: The Land Bank did not adopt a written procurement policy until September 2024. The Land Bank did not retain evidence to support its assertion that procurement actions were performed during the year ended December 31, 2024. Questioned Costs: None Effect: The Land Bank did not comply with the Uniform Guidance requirement to adopt a procurement policy until September 2024 and did not fully document its procurement actions. Recommendation: We recommend Land Bank adhere to the adopted procurement policy and prepare and retain documentation for each procurement action.

Criteria: In accordance with 2 CFR §200.318, non-federal entities must: (1) maintain and use documented procedures for procurement transactions under a Federal award or subaward, including the acquisition of property or services; (2) maintain written standards of conduct covering conflicts of interest and governing the actions of employees engaged in the selection, award, and administration of contracts; and (3) award contracts only to responsible contractors that possess the ability to perform successfully under the terms and conditions of the proposed contract. Additionally, 2 CFR §180.300 requires non-federal entities to verify that entities with which they plan to enter into a covered transaction are not suspended, debarred, or otherwise excluded from federal programs. Entities must retain documentation that procurements have been performed in compliance with these requirements and have internal controls over compliance built into their policies and procedures. Condition: The YWCA uses an expenditure approval matrix that supplements its procurement policy. The matrix establishes approval authority and spending thresholds, which were within federal procurement guidelines. The matrix also includes the requirements to review SAM.gov to verify vendors are not on the exclusion list. However, the matrix does not fully address all the requirements of 2 CFR §200.318, such as written standards of conduct for conflicts of interest and explicit procedures for awarding contracts only to responsible contractors. Additionally, while vendors were reviewed against SAM.gov, the YWCA does not have explicit procedures requiring documentation or retention of evidence of this verification in accordance with 2 CFR §180.300. Section III – Federal Award Findings and Questioned Costs (continued) Context: During the audit, we noted the YWCA expended $265,344 under the MBDA Capital Readiness Program for expenditures related to non-payroll related third-party vendors. We confirmed that the vendors contracted were not suspended or debarred. However, evidence of the verification process was not retained. Cause: The YWCA’s small size and limited familiarity with the detailed documentation requirements 2 CFR §200.318 and §180.300 contributed to reliance on a policy that does not address all federal procurement requirements or require formal documentation. Effect: Although the vendors tested during the audit period were eligible and the procurement thresholds were consistent with federal guidelines, the absence of a fully developed procurement policy and procedures for documenting suspension and debarment verification represents both a significant deficiency in internal control and an instance of immaterial noncompliance with Uniform Guidance. These gaps increase the risk of future noncompliance, contracting with ineligible vendors, questioned costs, or loss of federal funding. Questioned costs: None Identification of a repeat finding: N/A Recommendations: We recommend that the YWCA: (1) expand its procurement policy to fully comply with 2 CFR §200.318, including formal written standards of conduct and procedures for ensuring contracts are awarded only to responsible contractors; and (2) establish and document procedures to maintain evidence that contractors and vendors are not suspended, debarred, or otherwise excluded from participation in federal programs in accordance with 2 CFR §180.300. Views of Responsible Official: The YWCA subsequently drafted a policy that aims to comply with the requirements of 2 CFR §200.318 and revised existing procedures to maintain evidence that contractors and vendors are not suspended, debarred, or otherwise excluded from participation in federal programs in accordance with 2 CFR §180.300.

2024-001 – Internal Controls over Compliance and Compliance with Procurement Standards Identification of the Federal Program - U.S. Department of the Treasury, Passed through Whitman-Walker Health System, Inc. 21.029 - COVID-19 – Coronavirus Capital Projects Fund Criteria – 2 CFR Section §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.” Per 2 CFR Section §200.319, “All procurement transactions for the acquisition of property or services under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320.” 2 CFR Section §200.324 stipulates that a non-Federal entity must perform a cost or price analysis for each procurement in excess of a minimum threshold. Additionally, 2 CFR Section §200.320(c) states in part, “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of [the defined] circumstances apply”. Condition – We noted there was insufficient documentation retained to support adherence to the required procurement policy and standards. Documentation was unable to be provided to support that cost or price analyses were performed and were conducted providing full and open competition. Additionally, for one procurement deemed noncompetitive by WWH, none of the circumstances allowing noncompetitive procurement were met. Cause – WWH did not maintain all required aspects of formal documentation as required by the applicable 2 CFR standards, was unable to provide evidence of full and open competition, and in one instance improperly elected noncompetitive procurement. Effect – We were unable to determine whether the value of procurements for goods or services that exceeded the micro-purchase threshold followed a proper formal procurement method in accordance with 2 CFR Sections §200.319, 320, and 324. Questioned costs – Not determinable Context – We selected a sample of 7 procurements by non-statistical methods, out of a population of 8 procurements. All procurements related to eligible pre-award costs. WWH was unable to provide sufficient formal procurement documentation to support full and open competition and performance of cost or price analysis for 4 out of 7 selected procurements. One of those samples was deemed noncompetitive by WWH but did not meet the circumstances allowing noncompetitive procurement. Repeat finding – This is not a repeat finding. Recommendation – We recommend WWH designate a responsible and qualified individual within the organization to oversee the procurement policy and ensure compliance. Additionally, we recommend WWH explore alternative organizational and tracking methods to ensure all procurements are properly tracked for workflow purposes and adequately maintained for retention. View of Responsible Officials - WWH has internal controls for the procurement process for federal funds and did not follow those practices as clearly with these investments. The utilization of team members with multiple responsibilities, without stronger controls, led to document retention challenges.

Finding: Item 2024-003 – Procurement Significant Deficiency Federal Program – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number – 21.027 Pass-through Grantor's Numbers – CMF 2021125, 2159FR0292, 2159FR0310, 2159FR0317, 2159FR0334, 2159FR0318 Federal Award Year – December 31, 2024 Federal Agency – U.S. Department of Treasury Pass-Through Entity – Tulsa County/City of Tulsa Criteria: Nonfederal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326, which stipulates that the organization must have a policy in place to comply with these standards. Condition/context: The Foundation had no documented policies in place over procurement of goods or services with the use of federal awards. As such, evidence was not available to document that federal procurement standards were followed as transactions took place. Cause: The Foundation and affiliates lacked a formally documented policy to prevent or detect inappropriate procurement from being entered into. Effect: The Foundation may improperly award and/or pay more than what could have been obtained for comparable goods or services for the geographic area. If instances of noncompliance with federal procurement have occurred or occur in the future, it could result in loss of grant funds, additional federal oversight of federal funding, or repayment of overspent federal monies could be requested to be paid by the Foundation. Questioned cost: Not applicable. Repeat finding: Yes, 2023-005. Recommendation: The Foundation should create a documented procurement policy that follows federal procurement policies and ensure that all affiliates establish and follow that policy. The Foundation and its affiliates should also establish formally documented controls to ensure that the procurement policies are being followed. View of responsible officials: Management's response is reported in "Corrective Action Plan" at the end of this report.

Assistance Listing Number, Federal Agency, and Program Name 59.059, U.S. Small Business Administration, Congressional Grants Federal Award Identification Number and Year - SBAHQ24I0024, 2024 Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.318(i) The entity must maintain records sufficient to detail the history of procurement. These records will include, but are not 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 200.319(a) All procurement transactions for the acquisition of property or services required under a federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320. 2 CFR 200.320(a)(2)(i) 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 nonfederal entity. Condition - The Organization did not have controls to retain documentation that the procurement process was followed to ensure more than one vendor was reviewed for pricing before selecting the vendor chosen (as required under 2 CFR 320(a)(2)(i)). Questioned Costs - The Organization charged a total of $107,795 to grant SBAHQ24I0024 during 2024 for covered transactions for which there was no supporting documentation to indicate that the services were procured under the requirements above. If Questioned Costs are not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could not be Reported - Not applicable Identification of How Questioned Costs Were Computed - The amount of the covered transactions charged against grant advances during 2024 Context - Four covered transactions with total expenditures charged to the grants totaling $107,795 were reviewed. The population subject to testing included a total of five covered transactions. Cause and Effect - The Organization's internal controls did not ensure written documentation of procurement procedures or decisions were retained, which resulted in a lack of evidence to support that the procurement policies were followed. Recommendation - The Organization should implement an internal review process of its record retention to ensure that all procurement documentation is appropriately retained in accordance with its formal policies. Views of Responsible Officials and Corrective Action Plan - Management agrees that documentation of the procurement process was not adequately retained. Management will implement controls to ensure proper support of the procurement process is retained. Although the procurement process was not fully documented, management believes its procurement policies were appropriately followed when entering these four covered transactions.

Identifying Number: 2024-006 Information on the Federal Program: ALN#21.033, U.S. Department of Treasury: COVID-19 Community Development Financial Institutions Fund Equitable Recovery Program (CDFI ERP) Criteria or Specific Requirement: The grant agreement specifies in Article VII, Miscellaneous, 7.20 “If the Recipient uses the CDFI ERP Award to procure property or services, the Recipient shall comply with the General Procurement Standards as described in the Uniform Requirements at 2 C.F.R. §§ 200.318 – 200.327.” Condition: The Credit Union did not maintain adequate records to support its adherence to suspension and debarment standards outlined under the procurement standards. The Credit Union could not support that procedures had been performed to document vendors used were not suspended or debarred. Cause: Management did not have effective controls to maintain documentation related to suspension and debarment. Effect: Failure to maintain support of procedures required by Uniform Guidance could result in deficiencies relating to accountability, transparency or improper use of federal grant funds. Questioned Costs: Not applicable. Context: This is applicable to all vendors the Credit Union paid with federal funds subject to suspension and debarment testing. Repeat finding: Not applicable. Recommendation: Management should maintain documentation of vendor due diligence related to suspension or debarment. Views of responsible individuals: Management agrees with the Finding and recommendation. See corrective action plan for further information.

FINDING 2024-003 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Numbers and Years (or Other Identifying Numbers): 92-02, 92-03, 92-04, 92-05 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. 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. The State of Indiana has established a more restrictive threshold of $150,000 for informal procurement methods. 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. Small purchase procedures require that price or rate quotations must be obtained from an adequate number of qualified sources or documented reasoning to support a single source provider. Two vendors were identified that were paid $10,500 and $59,408, respectively, during the audit period using federal funds under the award, thereby requiring small purchase procedures for both procurements. Both vendors were selected for testing. The City was unable to provide any documentation for either vendor that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. Additionally, the history of the procurement, including the rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented for either vendor. 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. (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. . . . (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." Cause The vendors in question had been utilized by the City for various services over the course of multiple years, including for several years under this award with the ongoing multi-year project. For continuity purposes, the City chose to limit competition when procuring the services. The City included the requirements for limiting competition in its purchasing policy but did not follow the established policy. Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the City could be overpaying for services by not receiving the most competitive pricing. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Criteria: The County is required to follow procurement standards set out at 2 CFR sections 200.318 through 200.327. 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 County has procurement policies in place; however, those procedures were not followed for grant disbursements. Context: A test of grant disbursements revealed the County did not follow competitive bid requirements for the grant disbursements. Effect: The County risks overpayment by not following competitive bid process. Cause: The County did not have specific procedures in place to ensure all required disbursements follow the competitive bid process. Questioned Costs: The County may have received a lower bid, but the difference would be immaterial to the federal program and below the questioned cost threshold. Recommendation: We recommend the County implement procedures to strictly comply with the requirements of 2 CFR sections 200.318 through 200.327, as it related to federal procurement requirements. Response: The County is aware that its policy on procurement was not followed in this situation and has taken steps to correct the situation for future purchases related to this program.

Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Federal Agency: U.S. Department of the Treasury Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), ALN No. 21.027 Compliance Requirement: Procurement Repeat Finding: No Condition: During our testing of one covered transaction, we noted that management was not able to provide supporting documentation that procurement procedures were performed prior to the start of the procurement contracts including the reason for the vendor being considered a sole-source vendor. Questioned Costs: None Context: For one of two vendors tested, in the population of two, for procurement, management was not able to provide the required supporting documentation showing that the procurement policy was followed. The City confirmed that they deemed the covered transaction as a sole source procurement activity, however, did not keep documentation supporting that analysis. Criteria: Per 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements (Uniform Guidance), Section 200.318 General Procurement Standards, the non-Federal entity must maintain records sufficient to detail the history of procurement and this procurement activity must be supported with a procurement policy. 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. Cause: There was a lack of personnel within the finance department of the City and grants administration was missing supervision by key personnel. Effect: The finding indicates that there should be process improvements in how the procurement policy is followed and tracked throughout the procurement process to provide evidence the compliance requirements are being met. Recommendation: We understand that the City has a procurement policy in place; however, we recommend that the City has procedures in place to ensure that all procurement and contractual documentation is maintained and able to be located.

U.S. Department of Treasury - direct funding COVID 19 - Coronavirus State and Local Fiscal Recovery Funds - 21.027 Criteria or Specific Requirement: Procurement and Significant Deficiency In accordance with 2 CFR 200.318, recipients and subrecipients must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including acquisition of property and services. These documented procurement procedures must be consistent with State, local and tribal laws and regulations and the standards identified in 2 CFR 200.317 through 2 CFR 200.327. Condition: During our test work over the Coronavirus State and Local Fiscal Recovery grant, we noted the Unified Government did not perform procurement procedures on two of its vendor contracts. Cause: The vendors identified were granted a non-competitive procurement under national emergency conditions due to the effects of COVID-19. However, the vendor was utilized again after the national emergency period and the Unified Government's procurement policy should have been followed at this time, but was not. Effect: Federal funds could be paid to entities outside of the Unified Government's procurement policy. Questioned Costs - $15,000 - This represents the total purchase for the two vendors which did not follow the Unified Government's formal procurement procedures. These charges were included in the direct award received from the U.S. Department of Treasury. Context: For 21.027, there were 50 vendors receiving a total of $10,862,254 subject to procurement requirements. Of those 50, a sample of thirteen vendors receiving a total of $1,523,729 were selected for testing. Two of the thirteen vendors selected for testing did not undergo the Unified Government's formal procurement procedures. The sample was not intended to be, and was not, a statistically valid sample. Identification of Prior Year Finding: 2023-011 Recommendation: We recommend that the Unified Government communicate to all departments that purchases using federal funds follow the procurement policy procedures prior to purchase and the procurement department provide training on the requirements to properly document that the procedures are completed. View of Responsible Official and Planned Corrective Actions: We agree with the finding. See management corrective action plan.

Compliance Requirement Procurement Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Program Port Security Grant Program ALN# 97.056 Federal Agency Department of Homeland Security – Direct Award Federal Award Year 2020, 2021, 2022 and 2023 Grant Number EMW-2020-PU-00079 – IJ#1, IJ#3, IJ #4 EMW-2021-PU-00030 – IJ#1, IJ#3 EMW-2022-PU-00022 – IJ#1, IJ#2, EMW-2023-PU-00164 – IJ#1, IJ#2, IJ#3, IJ#4 EMW-2024-PU-05541 – IJ#4 Questioned Costs $463,460 Criteria - Federal rules require grant recipients to follow strict purchasing standards. This includes seeking fair and open competition when buying goods or services, obtaining bids or quotes once purchases reach certain dollar thresholds, and verifying that vendors are not suspended or barred from receiving federal funds through the SAM.gov system. Federal rules set strict procurement standards that the District must follow: • 2 CFR 200.318 – Requires non-federal entities to maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts. • 2 CFR 200.319 – Requires full and open competition in all procurement transactions. • 2 CFR 200.320 – Establishes methods of procurement, including micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals. • 2 CFR 200.323 – Requires cost or price analysis for procurements above the Simplified Acquisition Threshold. • 2 CFR 200.213 – Requires checks for suspension and debarment (SAM.gov).Under Louisiana law, political subdivisions such as ports are also subject to state purchasing thresholds: (a) $0 – $9,999: Purchases may be made directly but must be reasonable and properly documented. (b) $10,000 – $60,000: At least three (3) telephone or written quotations are required, with documentation kept on file. (c) Over $60,000: A formal advertised public bid process is required in compliance with Louisiana Public Bid Law. For professional services, the District is required to follow competitive selection processes consistent with their policies, Louisiana state law and federal guidance, ensuring fair opportunity, transparency, and reasonable pricing. Condition - The District failed to comply with federal procurement standards in multiple areas, indicating a pervasive breakdown in procurement controls and noncompliance with 2 CFR 200.318–.327. a) The District did not obtain competitive bids for the camera purchases and installation, resulting in questioned costs of $234,217 b) For professional services contracts funded by the PSGP, relating the IT services, engineering and consulting services, and GIS implantation services, the District did not maintain records documenting requests for price quotes or maintain records demonstrating the reasonableness of costs. Resulting in questioned costs of $305,657. c) For all ten (10) vendors tested under the Port Security Grant Program, the District did not retain documentation demonstrating that SAM.gov suspension and debarment verifications were performed prior to award or payment. Cause - The District failed to enforce federally required procurement standards and did not maintain sufficient documentation to demonstrate compliance. This deficiency reflects a significant weakness in procurement oversight and a lack of management attention to ensuring adherence with federal regulations governing competition, cost reasonableness, and vendor selection. Effect - Because the District did not obtain the required bids, quotes, or suspension and debarment checks, it cannot demonstrate compliance with federal procurement standards. This failure increases the risk of waste, favoritism, or contracting with ineligible vendors, and resulted in questioned costs as calculated by the auditor.Recommendation - The District must consistently apply written procurement policies that require competitive bids or price quotes for all purchases and professional services. Documentation of price reasonableness must be retained for every procurement action to ensure compliance with 2 CFR 200.318–.327 The District must document SAM.gov suspension and debarment verification for all vendors and contractors prior to contract execution or payment. This documentation must be maintained in the procurement file. The District must consult with FEMA regarding the allowability of identified questioned costs.

2024-004 U.S. Department of Treasury Passed-Through Burleigh County COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing No. 21.027 2024 Award Year Procurement and Suspension & Debarment Material Weakness in Internal Controls 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 and suspension & debarment, it was identified that the District did not include Buy America provisions in three contracts. 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 all of these requirements. Effect – Failure to properly procure services may result in noncompliance with the provisions of applicable requirements of federal programs. Questioned Costs – None reported Context/Sampling – Three out of three vendors were selected for testing. Repeat Finding from Prior Year(s) – No Recommendation – Management should implement written policy procedures to ensure they are properly procuring services that comply with the provisions of applicable requirements of federal programs. Views of Responsible Officials – There is no disagreement with the finding. The District is in the process of reviewing its procurement practices and intends to implement a formal policy in alignment with state and federal requirements. Coordination with Burleigh County will continue to ensure compliance and proper documentation of procurement activities.

2024-005 U.S. Department of Treasury Passed-Through Burleigh County COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing No. 21.027 2024 Award Year Procurement and Suspension & Debarment Material Weakness in Internal Controls 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 and suspension & debarment, it was identified that the District did not have a written policy on procurement that satisfied the requirements of 2 CFR sections 200.318 through 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 all of these requirements. Effect – A lack of documented policies increases the overall risk that employees are not aware of the specific requirements with contracting and awarding contracts to lower tier entities. Questioned Costs – None reported Context/Sampling – N/A Repeat Finding from Prior Year(s) – No 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 200.326 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections. Views of Responsible Officials – There is no disagreement with the finding. The District is in the process of reviewing its procurement practices and intends to implement a formal policy in alignment with state and federal requirements. Coordination with Burleigh County will continue to ensure compliance and proper documentation of procurement activities.

2024 – 004 Procurement, Suspension and Debarment Federal Agency: U.S. Department of the Interior Federal Program Name: Outdoor Recreation Acquisition, Development, and Planning Assistance Listing Number: 15.916 Federal Award Identification Number and Year: P23AP01170 - 2023 Pass-Through Agency: Wisconsin Department of Natural Resources Pass-Through Number(s): 55-01943 Award Period: September 1, 2023 – September 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matter Criteria or specific requirement: 2 CFR 200.318 requires grant recipients and subrecipients to have documented procurement procedures. These documented procedures must be consistent with the regulations and standards identified in Section 200.317-200.327. The grant recipient or subrecipient must also maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. No employee, officer, agent, or board member with a real or apparent conflict of interest may participate in the selection, award, or administration of a contract supported by the Federal award. Criteria or specific requirement (continued): When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov | Home (click on Search Record, then click on Advanced Search-Exclusions) (Note: The OMB guidance at 2 CFR part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: The City has established a simplified acquisition threshold for public construction but not for "nonpublic works items". The current policy only requires three or more quotes for all other purchases other than the public construction purchases but with no established threshold. The City entered into procurement transactions that exceeded the covered transaction threshold and did not maintain documentation of a search for suspension and debarment nor did it receive a certification from the entity or include a clause regarding suspension and debarment status in the contract with the entity in accordance with 2 CFR section 180.220. Questioned costs: None Context: The City’s current financial policies lack the necessary requirements related to procurement of items other than construction over the simplified acquisition threshold. Supporting documentation of the search for suspension and debarment was requested for the four procurement transactions that exceeded the covered transaction threshold in 2024. No deviations were expected. The city had no support or documentation for suspension and debarment status for these transactions. Cause: The city does not receive frequent federal awards at a level which triggers needing a single audit and was unfamiliar with documentation requirements surrounding procurement procedures. The City did not adopt or modify policies and implement internal controls to address the procurement, conflict of interest and suspension and debarment requirements of the Uniform Guidance. Effect: Contracts for non-construction related procurements and those over the simplified acquisition threshold may not be in compliance with the Uniform Guidance. The potential exists that the city could award contracts to vendors who are suspended or debarred by the federal government resulting in noncompliance. Repeat Finding: No Recommendation: City personnel should familiarize themselves with the documentation requirements of the CFR related to procurement. City policies and procedures should be modified to help ensure documentation is maintained on all compliance requirements. The written policies should be expanded to clearly address all five procurement methods allowed under Uniform Guidance. The city should also adopt a written conflict of interest policy. We also recommend that the City review and update policies and procedures to help ensure that all federal grants with covered transactions have vendors reviewed for suspension and debarment status prior to entering into the transaction and that documentation of the status is maintained with the procurement history of each transaction that it is required for. Views of responsible officials: There is no disagreement with the audit finding.

Criteria or specific requirement: 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 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. This procurement process must be documented with proper supporting documentation. Condition: The County did not have proper procurement documentation available for the contracts tested in the audit. Questioned costs: None Context: Five of the five contracts tested did not have the proper supporting documentation to demonstrate that procurement procedures were followed in accordance with the County’s procurement policy. Cause: The contracts were in process before the funding was assigned to the projects and there was turnover at the County. Effect: Failure to document the procurement process exposes the County to the risk that the County’s procurement policy was not followed before the contracts were awarded. Repeat Finding: Yes, repeat of prior year finding 2023-003. Recommendation: CLA recommends the County follow their internal procurement policy procedures and keep documentation of such procedures to ensure compliance with the federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.

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 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 Organization was not able to provide a procurement policy for the year ended December 31, 2024. Cause: The Organization does not have internal controls in place surrounding procurement policies and procedures. Effect: The lack of internal controls surrounding the procurement policies and procedures could lead to potential funding issues in the future. Questioned Costs: None. Recommendation: We recommend that management prepare a procurement policy that aligns with the Uniform Guidance and continue to implement additional control processes in order to ensure proper controls are in place and followed.

The City did not have adequate internal controls in place to ensure compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Water and Waste Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture, Rural Utilities Service Federal Award/Contract Number: 089123264 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background During fiscal year 2024, the City spent $1,000,515 in the Water and Waste Disposal System for Rural Communities program funds. The program’s objective is to provide funds to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. The City used this funding for a water main improvement project. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations also require recipients to follow their own documented procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. When using federal funds to procure goods and services, governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Description of Condition The District paid an engineer $155,805 in 2024 for a water main improvement project. Our audit found the City did not have adequate controls to ensure it complied with procurement requirements. Specifically, the City did not establish written procurement procedures and did not follow the most restrictive requirements when using federal funds to procure an engineering firm. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition The City does not regularly receive federal grant audits. Staff were unaware they needed a written procurement procedure. Additionally, the City has experienced turnover in the public works department, including roles responsible for procuring architect and engineering services for the project. Additionally, staff said they worked closely with U.S. Department of Agriculture and submitted the contract for the engineer, which received approval; however, the documentation provided only indicated approval of the contract and not the procurement of the engineer. Effect of Condition Without written procurement procedures, the City is at greater risk of not complying with the most restrictive procurement methods when procuring contractors paid all or in part with federal funds. Additionally, the City cannot ensure it allowed for full and open competition and selected the most qualified contractor. Further, the City cannot ensure it complied with federal procurement requirements. Recommendation We recommend the City establish procurement procedures to conform with federal procurement requirements. Additionally, we recommend the City strengthen its internal controls over its procurement of architectural and engineering services to ensure compliance with federal requirements. City’s Response The City of Royal City is committed to meeting all federal grant requirements and thanks SAO for providing guidance regarding this matter. We will proceed with developing written procurement procedures for purchases, services and public works contracts. It is our goal to ensure all stipulations are met for solicitation and award of Architectural and Engineering Services and Public Works contracts as required by state and federal granting agencies. Auditor’s Remarks We thank the City for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and requirements for maintaining records sufficient to detail the history of procurement. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non-federal entities.

Finding Reference: 2024-002 – No written procurement policy Federal Agency: Environmental Protection Agency Federal Program: Capitalization Grants for Clean Water State Revolving Funds – ALN 66.458 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Compliance and Material Weakness in Internal Control over Compliance Criteria: General procurement standards of the Uniform Guidance under 2 CFR 200.318 require that the non-federal must maintain and use documented procurement procedures that are consistent with applicable state and local regulations, and conform to standards identified in the Uniform Guidance. Statement of Condition: The Authority does not have a formal procurement policy that complies with the federal requirements. However, during our testing of compliance with procurement guidelines, no further deviations from federal guidelines were noted. Statement of Causes: The Authority was unacquainted with the general procurement standards of the Uniform Guidance. Possible Asserted Effects: Without a documented federal procurement procedure, it is difficult for the Authority to ensure compliance with relevant compliance requirements. Questioned Costs: None noted Context: Per review of the general procurement standards of the Uniform Guidance and related compliance supplement, non-federal entities are required to have their own documented procurement procedures. Per review of the Authority's policies and procedures, no such policies exist related to federal procurement requirements. Repeat Finding: Not Applicable Recommendations: The Authority should establish a documented procedure that relates to federal procurement. Views of responsible officials and planned corrective actions: The audit findings were communicated to the Authority and expecting the Authority to enter into other federal programs in the future, the Authority has decided to implement its own written procurement policy. The process and implementation are further discussed in the corrective action plan.

FINDING 2024-001 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number or Year (or Other Identifying Number): Interim Financing Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The City did not have an effective system of internal controls over federal award requirements, including procurement and suspension and debarment. The City failed to properly design and implement internal controls, such as appropriate segregation of duties, to ensure compliance and detect or correct noncompliance in a timely manner. 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 non-federal 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. Procurement - Small Purchases During the audit period, the City had six vendors with purchases under the $150,000 threshold that were considered simplified acquisition procurements and over the $10,000 threshold that was considered micro-purchase procurements. All six vendors were selected for testing, and for five of those vendors, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total dollar amount spent with these five vendors during 2024 was $246,055. Procurement - Simplified Acquisitions During the audit period, the City had three vendors with purchases over the $150,000 threshold that were considered simplified acquisition procurements. All three vendors were selected for testing, and for two of those vendors, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total dollar amount spent with these two vendors during 2024 was $2,654,999. Procurement - Policy Per Uniform Guidance, 2 CFR 200.318(a), a non-federal entity that receives federal funds must have and use documented procurement procedures that conform to applicable federal, state, and local laws and regulations. Additionally, state law, such as Indiana Code 5-22, prescribes specific procedures for purchasing supplies and services based on various dollar thresholds. The City did not provide a purchasing policy for review that included the applicable federal regulation, such as procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or services to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Suspension and Debarment Prior to entering into subawards and covered transactions, recipients are required to verify that such contracts 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 Excluded Parties List System (ELPS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City failed to verify that vendors were not suspended or debarred prior to entering into covered transactions exceeding $25,000. Of the eight vendors tested, no documentation was provided to show that a check was performed against the EPLS or through other acceptable verification methods. The lack of internal controls and noncompliance was determined to be a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 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(b) states in part: "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. . . . (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.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City's management was not aware of federal compliance requirements related to procurement and suspension and debarment. The City had not established or implemented the necessary internal controls and written policies to ensure purchases and contracts were administered in accordance with federal and state regulations. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that the services obtained provided full and open competition or the basis of the price. In addition, the City cannot ensure the vendors paid were eligible to participate in federal programs. Any program funds the City used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal statues, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2 CFR 1000.10 gives regulatory effect to the U.S. Department of Treasury for 2 CFR § 200.318 through 200.327 which describe specific procedures non-Federal entities must follow when entering into procurement transactions using Federal funds. 2 CFR § 200.320(b) provides formal procurement methods are required when the value of the procurement transaction under a Federal award exceeds the simplified acquisition threshold of the recipient or subrecipient. Formal procurement methods are competitive and require public notice. 2 CFR § 200.320(b) outlines two formal methods of procurement that are used for procurement transactions above the simplified acquisition threshold, which are (1) sealed bids and (2) competitive proposals. Further, 2 CFR § 200.318(i) indicates the non-Federal entity must maintain records sufficient to detail the history of procurement transaction. These records must 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. Due to inadequate controls over the procurement process, for one out of three (33%) vendors examined during testing of the Coronavirus State and Local Fiscal Recovery Funds, the Village did not obtain sealed bids or competitive proposals before contracting with Arcadis G & M of Ohio to provide engineering services. Expenditures for these services funded with Coronavirus State and Local Fiscal Recovery Funds during 2024 totaled $403,969. Failure to obtain proposals from a variety of vendors may result in the Village not utilizing the most qualified vendor as well as further noncompliance with federal requirements. The Village should adopt procedures to help ensure records are maintained to document the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition (if applicable).

Internal Controls over Compliance and Compliance with Procurement Standards Information on the Federal Program: Federal Agency: U.S. Department of Treasury Assistance Listing Number: 21.029 Assistance Listing Name: COVID-19 - Coronavirus Capital Projects Fund Pass-through Award: Pass-through Entity Award Number Award Period District of Columbia CPFFN0167 November 21, 2023 through December 31, 2026 Criteria: 2 CFR Section §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.” Per 2 CFR Section §200.319, “All procurement transactions for the acquisition of property or services under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320.” 2 CFR Section §200.324 stipulates that a non-Federal entity must perform a cost or price analysis for each procurement in excess of a minimum threshold. Additionally, 2 CFR Section §200.320(c) states in part, “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of [the defined] circumstances apply”. Condition: We noted there was insufficient documentation retained to support adherence to the required procurement policy and standards. Documentation was unable to be provided to support that cost or price analyses were performed and were conducted providing full and open competition. Additionally, for one procurement deemed noncompetitive by WWHS, none of the circumstances allowing noncompetitive procurement were met. Cause: WWHS’ internal controls over procurement did not fully operate as designed for the year ended December 31, 2024. WWHS did not maintain all required aspects of formal documentation as required by the applicable 2 CFR standards, was unable to provide evidence of full and open competition, and in one instance improperly elected noncompetitive procurement. Effect: We were unable to determine whether the value of procurements for goods or services that exceeded the micro-purchase threshold followed a proper formal procurement method in accordance with 2 CFR Sections §200.319, 320, and 324. Failure to perform procurement procedures in accordance with WWHS’ documented policies and General Procurement Standards as outlined in the 2 CFR Part 200 could result in the procurement being disallowed. Questioned costs: Not determinable Context: We selected a sample of 6 procurements by non-statistical methods, out of a population of 11 procurements. All procurements are related to eligible pre-award costs. WWHS was unable to provide sufficient formal procurement documentation to support full and open competition and performance of cost or price analysis for 4 out of 6 selected procurements. One of those samples was deemed noncompetitive by WWHS but did not meet the circumstances allowing noncompetitive procurement. The prevalence of these findings is detailed in the condition section above. Repeat finding: This is not a repeat finding. Recommendation: We recommend management refine their procurement tracking method by clarifying established policies and procedures to create more consistency throughout all WWHS purchase transactions. We also recommend management ensure all required procurement documentation is maintained in conjunction with its document retention policy and that a standardized checklist is used for all purchase transactions. Finally, we recommend management train personnel involved in procurement transactions, including reviewer and approver, to adhere to the documented procurement procedures. View of Responsible Officials: The procurement referenced in this finding was completed in 2021 and was connected to the buildout of a new facility that was opened in 2023. The federal award used to ultimately fund the project was obtained in 2024, and thus the expenditures retroactively applied to the award. Management concurs with this finding and will ensure proper adherence to the procurement policy.

Federal Agency: U.S. Department of Transportation Federal Program Title: Formula Grants for Rural Area and Tribal Transit Program AL Number: 20.509 Federal Award Identification Number and Year: MN-2023-045-00 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Number(s): 1054531 Award Period: 1/1/2024-12/31/2024 Type of Finding: • Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: 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 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. Non-federal entities should also follow any state procurement requirements as well. Condition: During our testing we noted the Organization did not apply any procurement procedures for four small purchases and two proposals as they did not perform nor retain adequate documentation in accordance with Uniform Guidance and state requirements. Questioned costs: Unknown Context: Six out of six procurement selections did not have any procurement procedures followed for a total of $192,756 charged to the grant. This was not a statistically valid sample. Cause: Vendors in place had been procured in prior years, before current management assumed operations. Current management was unable to verify if the policies were followed. Effect: Potential effect of noncompliance with Uniform Guidance and state requirements when procuring goods and services for expenditures over federal awards. Repeat finding: This is a repeat finding. Recommendation: The Organization should review 2 CFR sections 200.318 through 200.326 and state requirements for procurement. The Organization should ensure documents are retained to support whether procurement policies were followed for vendors procured in years past. Views of responsible officials and planned corrective actions: There are no disagreements with the audit finding. The Organization will review the procurement standards as well as ensure documents are retained to support whether procurement policies were followed.

Failure to Conduct Competitive Procurement Procedures Criteria Per 2 CFR §§ 200.318–200.327, non-federal entities must conduct all procurement transactions in a manner providing full and open competition. Sole source procurement may only be used when one of the circumstances outlined in 2 CFR § 200.320(c) applies and is adequately documented in the procurement file. Condition The Organization procured services from contractors identified in the approved grant budget prior to award. However, no evidence was provided to demonstrate that a competitive procurement process was conducted in accordance with the Uniform Guidance. There was no documentation of a sole source justification or other exception permitting noncompetitive procurement. Cause The Organization did not conduct competitive procurement or maintain a documented sole source justification for 4 out of 7 contracts reviewed. Listing the contractor in the grant budget prior to award does not satisfy federal procurement requirements outlined in the Uniform Guidance. Effect Failure to conduct competitive procurement increases the risk of noncompliance with the Uniform Guidance and the possibility that funds are not used appropriately, potentially resulting in questioned costs. Questioned Costs No questioned costs were identified as a result of our procedures. Context/Sampling Seven procurement transactions were tested under the program. In four instances, the Organization did not follow federal procurement requirements. No evidence of competitive bidding or documented sole source justification was provided for these transactions. Recommendation We recommend that the Organization implement procedures to ensure compliance with the procurement standards in 2 CFR §§ 200.318–200.327 for all federally funded purchases, including those where a contractor is named in the grant budget. For future procurements, the Organization should either conduct a competitive bidding process or document and obtain approval for a sole source procurement as allowed under 2 CFR § 200.320(c). Management’s Corrective Action Planned Management accepts the recommendation and will ensure compliance with the procurement standards in 2 CFR §§ 200.318–200.327 for all federally funded purchases by either conducting a competitive bidding process or documenting and obtaining approval for a sole source procurement as allowed under 2CFR §200.320(c).

Significant deficiency in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: U.S. Department of Commerce ‐ The National Telecommunications and Information Administration Program Title: Public Wireless Supply Chain Innovation Fund Grant Program Assistance Listing Number: 11.038 Project Number: 06-60-IF008 Award Period: December 1, 2023 - November 30, 2025 Criteria Requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), Subpart D ‐ Post Federal Award Requirements, Section 200.318 through 200.326 Internal Controls, require that a nonfederal entity establish a written procurement policy which conforms. Among other requirements, the written procurement policy must identify formal and informal procurement actions to be taken based on the size of the procurement covering both goods and services. Cause Open Networking Foundation’s written procurement policy did not cover all requirements outlined in the Uniform Guidance procurement standards. Missing elements of the written procurement policy consisted of: - Micro purchase threshold is not explicitly defined, although it is mentioned that cost and price analysis shall be made and documented in connection with every procurement action above $2,500. - The policy does not have clear provisions for maintaining detailed procurement records related to services. Such records should include the rationale for the procurement method, the selection of contract type, the contractor selection or rejection process, and the basis for the contract price. - The simplified acquisition threshold is not defined and does not incorporate all relevant elements including sealed bids method. Effect or Potential Effect The absence of a policy that fully conforms to the Uniform Guidance could result in noncompliance issues including the lack of records sufficient to detail the history of a procurement transaction. Questioned Costs Not applicable. Repeat Finding No Recommendation We recommend Open Networking Foundation implement measures to ensure that its procurement policy conforms to procurement standards outlined in 2 CFR Part 200. Management should ensure procurement transactions are documented in such detail to evidence the method of procurement use and vendor verification for suspension and debarment. Views of Responsible Officials Management concurs with the finding and has provided the accompanying management corrective action plan.

2024-002 The District did not have adequate controls and did not comply with federal suspension, debarment and procurement requirements. Assistance Listing Number and Title: 97.044 – Assistance to Firefighters Grant Federal Grantor Name: Department of Homeland Security Federal Award/Contract Number: EMW-20023-FG-04692; EMW-20023-FG-04692 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $ 0 Prior Year Audit Finding: N/A Background During fiscal year 2024, the District spent $772,976 in federal funds from the Assistance to Firefighters Grant program. This program provides funding to protect the health and safety of the public and firefighting staff against fire and fire-related hazards. Federal regulations require recipients to establish, document and maintain internal controls that ensure compliance with program requirements. These controls include understanding the program requirements and monitoring the effectiveness of established controls. Suspension and debarment Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District enters into contracts or purchases goods and services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The District may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The District must verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods. When using federal funds to purchase goods or services, governments must apply the most restrictive of either federal requirements, state laws or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated purchase cost. The District must maintain documentation showing the procurement process it performed. Additionally, federal regulations also require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees and officers involved in selecting, awarding and administering contracts procured with federal funds. Description of Condition Suspension and Debarment Our audit found the District did not have internal controls to verify the two contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Procurement Our audit found the District’s internal controls were ineffective for ensuring it complied with federal procurement requirements. Although the District has an established procurement policy, it does not conform with federal requirements. Specifically, it does not include methods and thresholds for formal bids, small purchases and piggybacking or cooperative purchases. Further, the District does not have a standards of conduct policy covering conflicts of interest for employees or agents who award contracts, as federal regulations require. Additionally, the District did not retain documentation to show it procured a fire apparatus totaling $514,000 and cannot demonstrate it followed the most restrictive of federal, state or local procurement requirements for this purchase. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Suspension and Debarment District staff were unaware of the federal requirements for suspension and debarment. Procurement Management and staff were unaware the District’s documented procurement procedures did not conform to federal procurement standards and did not know they should update them. They also did not know the District should have documented procedures covering standards of conduct. Further, current staff were unable to locate documentation to demonstrate compliance with procurement requirements as staff who no longer work for the District purchased the fire apparatus. Effect of Condition Suspension and Debarment The District did not obtain a written certification from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify the contractors it paid $740,000 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the District increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the District made to an ineligible party would be unallowable, and the awarding agency could potentially recover them. The District subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Procurement Without written policies and procedures that conform to federal procurement standards, the District is at an increased risk of not complying with the most restrictive of federal, state or local procurement methods and standards of conduct requirements when using federal funds. Without effective internal controls and retention of documents, the District cannot show it complied with federal procurement standards, allowed for full and open competition, and received the best price or selected the most qualified contractor. Recommendation Suspension and Debarment We recommend the District establish internal controls to verify all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs and maintain documentation demonstrating compliance with this requirement. Procurement We recommend the District establish internal controls to comply with federal procurement requirements, including establishing written procurement and standards of conduct procedures that conform to federal procurement standards in Uniform Guidance (2 CFR 200.318-327), and retaining all procurement documentation to demonstrate compliance for purchases. District’s Response 1. Develop and Implement Comprehensive Procurement and Public Works Policies: The District will immediately develop and adopt robust written procurement and public works policies and procedures. These policies will ensure compliance with both federal regulations and Washington state law (RCW). The policies will include detailed procedures for: Vendor and Subcontractor Vetting: Incorporating explicit steps for checking potential vendors against the federal System for Award Management (SAM) database to ensure they are not suspended or debarred. This process will apply to all federally funded procurements, as well as any other procurements exceeding the federal threshold of $25,000 paid with federal funds. Competitive Bidding: Establishing clear thresholds for purchases and public works projects requiring minimal, informal, or formal competitive bidding, in line with state guidelines. Public Works Requirements: Mandating compliance with prevailing wage requirements and incorporating bonding and retainage rules for all public works projects. Documentation: Requiring detailed record-keeping for all procurement activities, including bids, vendor evaluations, and justification for contract awards. Contract Clauses: Including a standard contract clause affirming vendor understanding and compliance with federal debarment and suspension requirements. Policy Approval: Submitting the draft policies for review and adoption by the district’s governing body. Assigned to: Fire Chief and Administrative Assistant. 2. Conduct Staff Training: All relevant staff, particularly the Fire Chief and Administrative Assistant, will undergo mandatory training on the new policies and procedures. Training will cover the correct application of procurement rules, the importance of federal suspension and debarment checks, and proper documentation procedures. Assigned to: Fire Chief. 3. Implement Management Review and Oversight: The Fire Chief will conduct and document a review of all procurement and public works transactions to ensure compliance with the newly adopted policies before any contract is finalized, or a purchase order is issued. Assigned to: Fire Chief. 4. Establish Periodic Compliance Self-Assessment: The District will perform annual self-assessments of its procurement process to identify and correct any control weaknesses and ensure ongoing compliance with federal and state regulations. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Port of Woodland January 1, 2024 through December 31, 2024 2024-001 The Port did not have adequate internal controls and did not comply with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: COVID 19 - 21.029 – Coronavirus Capital Projects Fund Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: S21-96401-023 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the COVID-19 Coronavirus Capital Projects Fund is to fund multi-purpose community centers and broadband-related infrastructure projects designed to deliver reliable internet service that meets or exceeds 100/100 Mbps symmetrical speeds. In 2024, the Port expended $1,327,754 related to broadband-related infrastructure. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Suspension and Debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Port enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The Port may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Port must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. These procedures must reflect the most restrictive of applicable federal, state or local thresholds and methods. When using federal funds to procure goods and services, governments must apply the more restrictive requirements of federal, state or local laws by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. The Port must maintain documentation showing the procurement process it performed. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees and officers involved in selecting, awarding and administering contracts procured with federal funds. Finally, federal regulations require nonfederal entities to incorporate the Build America, Buy America Act (BABAA) preference requirements in all applicable contracts and purchase orders for work performed or products supplied under a federal award with an infrastructure project. Nonfederal entities can meet this requirement by including the BABAA domestic preference provisions in the agreement or obtaining a BABAA waiver. Description of Condition Suspension and Debarment Although the Port has a process to verify the suspension and debarment status for contractors it pays more than $25,000, our audit found the Port did not follow this process and did not verify all five contractors were not suspended or debarred before purchasing from them. Procurement Our audit found the Port’s internal controls were ineffective for ensuring it complied with federal procurement requirements. Although the Port has an established procurement policy, it does not conform with federal requirements. Specifically, it does not include methods and thresholds for purchases, the correct thresholds for public works projects, and requirements included in 2 CFR § 200.321-327. Further, the Port does not have a standards of conduct policy covering conflicts of interest for employees or agents who award contracts, as federal regulations require. Additionally, the Port did not have a process to ensure it followed the most restrictive of federal, state or local procurement requirements when procuring a professional service firm for about $19,750. Finally, the Port did not have a process in place to ensure it included the BABAA preference requirements in all applicable contracts for work performed or products supplied to the infrastructure project. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Since the District does not regularly manage federal funds, staff were unaware of the applicable federal requirements. In addition, the project was funded by multiple sources that each had their own requirements, which further added to the complexity of ensuring compliance. Effect of Condition Suspension and Debarment The Port did not obtain written certification from the contractors, insert a clause into the contract or retain evidence that it checked for exclusion records at SAM.gov to verify contractors it paid $1,226,616 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the Port increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the Port made to an ineligible party would be unallowable, and the federal agency could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Procurement Without written policies and procedures that conform to federal procurement standards, the Port increases its risk of not complying with standards of conduct requirements when using federal funds. Additionally, without effective internal controls, the Port cannot demonstrate it complied with federal procurement standards, allowed for full and open competition, received the best price or selected the most qualified contractor, and that federal funds were spent on American products. Recommendation Suspension and Debarment We recommend the Port strengthen its internal controls to verify all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs and maintain documentation demonstrating compliance with this requirement. Procurement We recommend the Port update and maintain internal controls to comply with federal procurement requirements, including establishing written procurements and standards of conduct procedures that conform to federal procurement standards in Uniform Guidance (2 CFR 200.318-327). We also recommend the Port establish internal controls to ensure that contracts include the BABAA under a federal award with an infrastructure project, include the BABAA domestic preference provisions in the agreement, or obtain a BABAA waiver. Port’s Response The Port of Woodland thanks the Washington State Auditor’s Office (SAO) for a thorough review of our financial statements and compliance with federal procurement requirements related to the port’s capital infrastructure program. The Port respects the findings of SAO and will implement the recommendations, including improving adequate internal controls related to procurement policies, implementing processes where necessary, and training staff designed to comply with Title 2 U.S Code of Federal Regulations (CFR) Part 180, Part 184, Part 200, and other guidance accepted as best practice for compliance audits. Concerning SAO’s findings related to 2 CFR Part 180, verification of suspension and debarment status of contractors, the Port can state with confidence that none of the contractors were suspended or debarred from participating in federal programs for the duration of their contract with the Port. The Port concurs that it was unable to produce a time-stamped verification that these checks occurred before contract award. The Port will implement new procedures that conform to the Port’s existing policy to verify suspension and debarment status of all applicable contractors in the future. This includes performing verification, modifying future contract language, and retaining evidence of verification. Regarding SAO’s recommendations, designed to ensure the Port complies with federal procurement requirements, the Port intends to review 2 CFR Parts 184 and 200 and modify existing policies and procedures to conform with federal procurement standards. The Port is currently restructuring staffing and work functions, which will provide staff with greater clarity on their specific roles and responsibilities. This will also allow the Port to ensure staff have sufficient training to carry out those responsibilities in accordance with the updated internal controls, including compliance with the Build America, Buy America Act. Auditor’s Remarks We thank the Port for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the Port’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement. Title 2 CFR Part 184, Buy America Preferences for Infrastructure Projects, describes the requirements to purchase iron, steel, manufactured products, and construction materials incorporated into an applicable infrastructure project produced in the United States.

Assistance Listing Number: 10.728 Name of Federal Program: Inflation Reduction Act Hazardous Fuels Transportation Assistance Name of Federal Agency: Department of Agriculture Award Period: January 1, 2024 – December 31, 2024 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal award must establish and maintain written policies and procedures addressing areas including, but not limited to, cash management (§200.302(b)(6)), allowability of costs (§200.302(b)(7)), procurement (§200.318-.326), compensation (§200.430(a)(1)), and fringe benefits (§200.431). Condition: ALC has not implemented all policies and procedures required by 2CFR Part 200, such as cash management, allowability of costs, procurement, compensation, and fringe benefits. Cause: ALC has not detailed its policies to conform with the requirements of the Uniform Guidance. Procurement policies and procedures have not been designed and implemented that adhere to Uniform Guidance requirements. Effect or Potential Effect: Without documented and implemented policies and procedures, ALC increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs Context: Policies and procedures were inspected for compliance with the requirements of the Uniform Guidance. Repeat Finding: No Recommendation: ALC should develop, formally adopt, and implement all Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and will implement procurement policies and procedures.

2024-001 The District did not have adequate internal controls for ensuring compliance with federal procurement and suspension and debarment requirements, and it did not comply with federal suspension and debarment requirements. Assistance Listing Number and Title: 10.902 – Soil and Water Conservation Federal Grantor Name: U.S Department of Agriculture Federal Award/Contract Number: NR230546XXXXG001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Soil and Conservation program is to provide conservation technical assistance to private landowners, conservation districts, tribes, and other organizations through a national network of professional conservationists and assist them in conserving, improving, and sustaining natural resources and the environment. In 2024, the District spent $2,812,023 in program funds for lake treatment. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement Federal regulations require recipients to establish and follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Suspension and Debarment Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District enters into contracts or purchases goods and services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors have not been suspended, debarred or otherwise excluded from participating in federal programs. The District may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The District must verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Procurement Our audit found the District did not have adequate internal controls for ensuring compliance with federal procurement requirements. Specifically, the District did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. Suspension and Debarment Our audit found the District did not have internal controls to verify the contractor it paid more than $25,000 in federal funds was not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition District staff were not aware of the federal procurement and suspension and debarment requirements. The District does not typically receive large federal grants and this is its first single audit. Staff responsible for complying with these requirements did not dedicate necessary time and resources to understanding the requirements. Effect of Condition Procurement Without written policies and procedures that conform to federal procurement standards, the District is at an increased risk of not complying with the most restrictive of federal, state or local procurement methods and standards of conduct requirements when using federal funds. Although the District did not have written policies or procedures over procurement in place, it received guidance from the federal grantor and did comply with procurement requirements for the competitive solicitation and selection of the contractor hired for lake treatment. Suspension and Debarment The District did not obtain a written certification from the contractor, insert a clause into the contract or check for exclusion records at SAM.gov to verify one contractor it paid $2,760,992 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the District increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the District made to an ineligible party would be unallowable, and the awarding agency could potentially recover them. The District subsequently verified the contractor was not suspended or debarred. Therefore, we are not questioning costs. Recommendation Procurement We recommend the District establish written procurement procedures that conform to federal procurement requirements. Suspension and Debarment We recommend the District strengthen its internal controls to verify all contractors it pays 25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs and maintain documentation demonstrating compliance with this requirement. District’s Response The Columbia Basin Conservation District appreciates the opportunity to respond to the Washington State Auditor’s Office (SAO) findings and recommendations. We extend our sincere thanks to the audit staff for their professionalism, patience, and guidance throughout the audit process. The District agrees with the findings and recommendations. We recognize the importance of maintaining strong internal controls and ensuring full compliance with federal requirements. This audit provided valuable insight into areas where improvements were needed, and we have taken proactive steps to address the identified deficiencies. Auditor’s Remarks We appreciate the District’s commitment to resolving the issue and the District’s helpfulness and professionalism during the audit. We will review the status of the issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Non-procurement), establishes non-procurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.

2 CFR §1201.1 states, in part, the Department of Transportation adopts the Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200). 2 CFR §200.318(h) states, in part, the non-Federal entity must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. The Village’s LPA Federal Local-Let Project Agreement between the Village and Ohio Department of Transportation (ODOT), section 7.8, states before awarding a contract to the selected contractor, the LPA shall verify that the contractor is not subject to a finding for recovery under ORC Section 9.24, that the contractor has taken the appropriate remedial steps required under ORC Section 9.24, or that the contractor otherwise qualifies under the exceptions to this section. Findings for recovery can be viewed on the Auditor of State’s website at https://ohioauditor.gov/findings.html. If the LPA fails to verify, ODOT may immediately terminate this Agreement and release all Federal funding commitments. The Village had one contract subject to bid for the Highway Planning and Construction program. The Village did not verify the contractor was not subject to a finding for recovery, that the contractor has taken the appropriate remedial steps, or that the contractor otherwise qualifies under the exceptions prior to entering into the contract. This error was caused by a failure in controls related to the Terms and Conditions of the grant agreement. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are unqualified to receive the funding. The Village should ensure that it checks the Ohio Auditor of State’s website for any Findings for Recovery related to the potential vendors prior to entering into a contract.

Finding: Finding Type: Material Weakness Title and Federal Assistance Listing Number of Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: In accordance with 2 CFR 200.320, non-federal entities must conduct all procurement transactions in a manner providing full and open competition. For purchases exceeding the micro-purchase threshold of $10,000, the entity must obtain price or rate quotations from an adequate number of qualified sources, unless the purchase qualifies as a sole-source procurement under 2 CFR 200.320(c). Additionally, 2 CFR 200.303 requires the non-federal entity to establish and maintain effective internal control over compliance with federal statutes, regulations, and the terms and conditions of the federal award. Furthermore, 2 CFR 200.318(b) and 200.324 require that written contracts be executed with contractors, including all required Federal provisions to safeguard Federal funds. Condition: We examined 60 transactions during our testing of procurement transactions under the Coronavirus State and Local Fiscal Recovery Funds. We noted that a competitive bidding process was not used in 42 of 60 transactions tested. In all 42 instances, Historic South did not provide evidence that multiple bids or quotes were solicited. The documentation and explanation provided by Historic South was not deemed to be adequate justification to qualify for the use of sole-source procurement under 2 CFR 200.320(c). Additionally, all 60 procurement transactions tested did not have a fully executed, signed contract with the respective contractors. The award/contracting process and methods used to render and pay services did not meet the expected level of formal contractual agreements in place. Cause: In early 2024, Historic South made revisions to the procurement process in order to maximize efficiency and improve overall project outcomes. These revisions were made based on the challenges of securing bids on all potential projects, the need to expend the awarded dollars in a timely fashion and a verbal agreed-upon understanding with the Ohio Department of Health. The requirement to obtain multiple bids was replaced with a strategic invitation approach based on a preferred vendor pool. The result was that Historic South did not have a procedure in place to ensure that procurement transactions were conducted in compliance with Uniform Guidance. Specifically, the procurement policy lacked provisions to enforce competitive procurement practices for purchases above the micro-purchase threshold. Additionally, the process Historic South used to make awards to contractors did not meet the expected standards required for formal contract execution prior to project initiation or payment. - 29 - Historic South Initiative Schedule of Findings and Questioned Costs - continued Year Ended December 31, 2024 Section III – Federal Program Audit Findings and Questioned Costs - continued Effect: Failure to obtain competitive bids or quotes increases the risk of paying higher prices for goods/services, or unfair contracting practices. Additionally, the lack of competitive procurement represents noncompliance with Uniform Guidance, which may lead to questioned costs and potential disallowance by the granting agency. Furthermore, the lack of formally signed contracts increases the risk of misuse of federal funds and an inability to enforce contractual obligations or resolve disputes. While our testing did not identify any instances of misspent or improperly used federal funds, the control deficiencies represent a material weakness in internal control over compliance. Questioned Costs: $1,555,114 These costs are considered questioned due to lack of compliance with Uniform Guidance. The amount represents the total bid/contract amount of the 42 transactions tested, that did not meet the competitive bidding requirements. Recommendation: We recommend that Historic South implement and enforce formal procurement procedures that comply with the requirements of 2 CFR 200.317-200.327. These procedures should include obtaining competitive bids and/or maintaining documentation for any alternative bidding process used and approval requirements. Additionally, Historic South should require that fully executed, signed contracts be obtained prior to the start of work or payment to contractors. Staff responsible for procurement should be trained on federal procurement standards to ensure compliance. Views of Responsible Official and Planned Corrective Action: Prospectively, Historic South will review best practices related to the contract awarding process and formal contracting arrangements for construction work. In addition, Historic South will implement policies of: 1. Requiring the solicitation of multiple bids for all construction work in excess of $10,000 2. Establishing criteria for awarding all construction work 3. Implementing formal contracting processes for all construction work

Finding Reference: 2024-003 – No written procurement policy Federal Agency: U.S. Department of Treasury Pass-Through Entity: Commonwealth Financing Authority Federal Program: Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Compliance Requirement: Procurement, suspension and debarment Type of Finding: Compliance and Material Weakness in Internal Control over Compliance Criteria: General procurement standards of the Uniform Guidance under 2 CFR 200.318 require that the non-federal must maintain and use documented procurement procedures that are consistent with applicable state and local regulations, and conform to standards identified in the Uniform Guidance. Condition: The Borough does not have a formal procurement policy that complies with the federal requirements. However, during our testing of compliance with procurement guidelines, no further deviations from federal guidelines were noted. Cause: The Borough was unacquainted with the general procurement standards of the Uniform Guidance. Possible Asserted Effects: Without a documented federal procurement procedure, it is difficult for the Borough to ensure compliance with relevant compliance requirements. Questioned Costs: None noted Context: Per review of the general procurement standards of the Uniform Guidance and related compliance supplement, non-federal entities are required to have their own documented procurement procedures. Per review of the Borough’s policies and procedures, no such policies exist related to federal procurement requirements. Repeat Finding: Not Applicable Recommendations: The Borough should establish a documented procedure that relates to federal procurement. Views of responsible officials and planned corrective actions: The audit findings were communicated to the Borough and expecting the Borough to enter into other federal programs in the future, the Borough has decided to implement its own written procurement policy. The process and implementation are further detailed on the separate corrective action plan.

Criteria or Specific Requirement – 2 CFR Section 200.318 requires recipients of federal grants to maintain and use documented procedures for procurement transactions under a Federal award. Conditions – During 2024, the Organization did not have a written procurement policy. Context – The Organization exceeded the single audit threshold for the first time in 2024, primarily due to a one-time coronavirus grant. We looked up selected vendors on the SAM.gov website and verified they were not suspended or debarred. Cause – Management was not aware of the requirement to have a written procurement policy. Effect or Potential Effect – Not having a written procurement policy could result in inappropriate expenditure of Federal grant proceeds. Recommendation – We recommend that the Organization develop and implement a written procurement policy. Views of Responsible Officials and Planned Corrective Actions – Management acknowledges the finding and appreciates the auditor’s recommendation. The Organization exceeded the Single Audit threshold for the first time in 2024 due to a one-time coronavirus-related grant. As a result, management was not fully aware of the federal procurement documentation requirements applicable to these funds. To address this matter, management has implemented procedures to ensure that procurement documentation supporting compliance with federal regulations is maintained for all federal expenditures. These procedures include staff training on federal grant compliance requirements, enhanced oversight of procurement activities, and the use of standardized documentation and retention practices. Management believes these corrective actions will mitigate the risk of future noncompliance and strengthen overall federal grant administration.

Criteria or Specific Requirement – 2CFR Section 200.318(i) requires an Organization to maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type, contractor selection or rejection, and the basis for the contract price. Conditions – During 2024, the Organization did not maintain documentation related to how they chose a contractor for construction projects such as how they chose contractors to get bids from, how many bids were obtained, detailed bid information, and what factors they considered in choosing a contractor. No documentation exists showing considerations of price, contingencies, length of contract, and perceived risks. Context – The Organization exceeded the single audit threshold for the first time in 2024, primarily due to a one-time coronavirus grant. Cause – Management was not aware of the requirement to maintain procurement documentation. Effect or Potential Effect – The absence of procurement documentation increases the risk of non-compliance with federal regulations and limits the ability to demonstrate that federal regulations were followed. Recommendation – We recommend maintaining documentation supporting the compliance with federal regulations for all expenditures of federal funds. Views of Responsible Officials and Planned Corrective Actions – Management acknowledges the finding and appreciates the auditor’s recommendation. The Organization exceeded the Single Audit threshold for the first time in 2024 due to a one-time coronavirus-related grant. As a result, management was not fully aware of the federal procurement documentation requirements applicable to these funds. To address this matter, management has implemented procedures to ensure that procurement documentation supporting compliance with federal regulations is maintained for all federal expenditures. These procedures include staff training on federal grant compliance requirements, enhanced oversight of procurement activities, and the use of standardized documentation and retention practices. Management believes these corrective actions will mitigate the risk of future noncompliance and strengthen overall federal grant administration.

Finding 2024-001 – Noncompliance with Procurement Standards – Professional Services Federal Program: Coronavirus State and Local Fiscal Recovery Funds (Covid-19), ALN #21.027 Criteria: Uniform Guidance requires non-federal entities to maintain documented procurement procedures that ensure full and open competition (2 CFR §200.318). For procurements within the small purchase threshold, nonfederal entities are required to obtain price or rate quotations from an adequate number of qualified sources (2 CFR §200.320). Professional service contracts are subject to these requirements. Condition: The auditee did not follow established procurement policies and the procurement standards set forth in 2 CFR §200.317–§200.327 when engaging legal counsel. Specifically, the auditee procured legal services with total costs between $10,000 and $250,000 without obtaining and documenting required price or rate quotations or performing a documented evaluation of qualified firms. Cause: The auditee did not document a noncompetitive procurement justification or otherwise comply with the small purchase procurement requirements because it was not aware that professional legal services were subject to standards under Uniform Guidance. Additionally, at the time the legal services were engaged, management did not anticipate that the related expenditures would be subject to a Single Audit. Effect: Failure to follow required procurement procedures increases the risk of noncompliance with federal regulations and may result in questioned costs if the expenditures are determined to be unallowable. Context: The audit finding represents an isolated instance. The amount of the audit finding was $22,672 out of the total of $4,605,256 for the program and was discovered using a valid judgmentally selected sample size. Recommendation: We recommend the auditee strengthen internal controls over procurement by ensuring all professional service contracts within the $10,000 to $250,000 threshold comply with federal procurement standards, including obtaining and documenting price or rate quotations from qualified sources and documenting justification for any noncompetitive procurements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and plans to reinforce procurement requirements, and implement review procedures to ensure compliance with procurement thresholds and documentation requirements prior to contract execution.