Findings Citing § 200.318

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.

Finding 2024-002: 93.591 - U.S. Department of Health and Human Services - Family Violence Prevention and Services/State Domestic Violence Coalitions Procurement and Suspension and Debarment, Non-Compliance Criteria: Per 2 CFR § 200.318(a), non-Federal entities must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Additionally, policies must address standards of conduct, competition, cost analysis, and methods of procurement. Condition: During the review of the Organization’s procurement procedures, it was noted that the Organization does not have an updated, written procurement policy that reflects the requirements outlined in 2 CFR § 200.318 – 200.327. The current policy on file predates the implementation of the Uniform Guidance and does not incorporate key standards such as micro-purchase thresholds, competitive bidding requirements, or conflict of interest provisions. Effect: Without an updated procurement policy that aligns with federal requirements, the Organization is at risk of noncompliant procurement practices. This could lead to unallowable costs being charged to federal awards, and potentially jeopardize future funding. Questioned Costs: None. Cause: The Organization has not reviewed or revised its procurement policy since the adoption of the Uniform Guidance, resulting in outdated internal procedures. _x000C_Recommendation: The Organization should update its procurement policy to fully align with the procurement standards outlined in 2 CFR § 200.318 through § 200.327. Staff responsible for procurement should also be trained on the updated procedures to ensure consistent and compliant practices.

Program: ALL No. 10.523 Centers of Excellence at 1890 Institutions Significant Deficiency and Noncompliance over Procurement and Suspension and Debarment Repeat Finding: Yes Condition: During our audit we noted that procurement documentation was not available to support the selection of a sole source vendor nor able to obtain documentation to support the Foundation entering into contractual agreements with vendors who were not debarred or suspended from doing business with the federal government. Criteria: In accordance with 2 CFR 200.514: (c) Internal control. (1) The compliance supplement provides guidance on internal controls over Federal programs based upon the guidance in Standards for Internal Control in the federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. Per 2 CFR 200.320 General procurement: (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: (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. Cause: Program personnel were unaware of the requirement included in Uniform Guidance related to procedures required for procurement. Effect: If procurement were not in compliance with Uniform Guidance, the Foundation would not identify the noncompliance timely. Questioned Costs: Unknown. Recommendation: We recommend that management develop and implement written procurement policies and procedures in accordance with Uniform Guidance, provide periodic training to program personnel, and establish a review process to ensure procurement activities comply with applicable federal requirements. We also recommend the Foundation follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document these procedures. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.

Finding 2024-001: Procurement US Department of the Treasury – COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Condition: During our testing of procurement for ALN 21.027, we noted that the City procured certain goods/services through the Commonwealth of Pennsylvania’s COSTARS cooperative purchasing program. For items selected for testing, totaling $184,512, the City did not conduct its own competitive procurement process. In addition, in accordance with the Uniform Guidance, a purchase price from the Commonwealth of Pennsylvania COSTARS cooperative purchasing program is considered to be only one competitive price proposal and it cannot replace a full procurement process. The City does not have implemented monitoring procedures over its use of COSTARS, including [e.g., periodic review of COSTARS procurement documentation, confirmation that COSTARS contracts were competitively awarded, and verification that applicable federal clauses are incorporated]. Documentation in the procurement files was not sufficient to clearly demonstrate how the underlying COSTARS procurement complied with the Uniform Guidance procurement standards for the specific federal award (e.g., basis for contractor selection, method of procurement relative to 2 CFR 200.320 thresholds, and required federal contract provisions). Criteria: In accordance with Uniform Guidance procurement requirements found in 2 CFR Part 200.318 through 200.327, the City is required to ensure that procurement methods used for purchases are appropriate based on the value of the procurement transaction. Cooperative purchasing arrangements (such as state contracts or COSTARS) are not prohibited by the Uniform Guidance; however, the municipality must assume responsibility for the procurement and document how the cooperative contract satisfies the federal procurement requirements applicable to the award. Cause: Procedures in place to ensure that the proper procurement process is followed were not adequate. The City has chosen to leverage the COSTARS cooperative purchasing program to improve efficiency and obtain favorable pricing. While the City has implemented monitoring over COSTARS (for example, reviewing selected COSTARS contract information and maintaining communication with the state regarding procurement practices), those procedures have not been formalized in the written procurement policy, and the related documentation is not consistently retained in the individual grant procurement files. As a result, the audit file did not contain clear, consistent evidence that the COSTARS contracts used for the tested transactions met all applicable Uniform Guidance procurement requirements. Effect: The City was not in compliance with the procurement requirements of the Uniform Guidance. In addition, without documentation demonstrating clear, consistent evidence that COSTARS contracts used for purchases met all applicable Uniform Guidance procurement requirements, there is an increased risk of noncompliance which could result in unallowable costs being charged to the Federal awards. Repeat finding: Yes, finding 2023-002 Questioned costs known and likely: $184,512 known and $124,662 likely. Recommendation: We recommend that the City establish procedures to ensure that their purchasing policy follows all Uniform Guidance procurement standards, especially regarding cooperating purchasing programs. View of Responsible Officials: Management agrees. See Corrective Action Plan.

2 CFR § 300 codified in 45 CFR part 75 gives regulatory effect to the Department of Health and Human Services. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 Payment. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B) 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. The General Health District did not have written policies as required by Uniform Guidance. The failure to implement written policies as required by Uniform Guidance could result in noncompliance with the District’s federal programs. The General Health District should adopt written policies in accordance with the Uniform Guidance.

2024-004 Procurement and Suspension and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Transportation Program: 20.205 Highway Planning and Construction Award Number and Year: 1057187; 2024 Pass-Through Agency: Minnesota Department of Transportation Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Minnesota Department of Transportation State Aid Manual provides guidance and responsibilities for project sponsors. In addition to acting as the fiscal agent, the sponsor is taking on responsibility that the project will be completed in accordance with all of the federal and state rules and regulations that apply. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the County 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. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction with the contracting party. Condition: Faribault County acted as the sponsor for a project for a local city and the Minnesota Department of Transportation. The County did not develop controls over the sponsored project to ensure compliance for procurement. This included: • The County did not maintain records to support the history of procurement. • The County did not maintain documentation that the requirements for suspension or debarment were met by (a) checking SAM.gov exclusions, (b) collecting a certification from the vendor, or (c) verifying a clause or condition was included in the contract. Questioned Costs: None. Context: In June 2024, the County approved a resolution to act as a sponsoring agent for a city project. The project expenditures were $61,458 with payments made to the city for reimbursement. Effect: Without controls in place over the sponsored project, there is an increased risk of noncompliance with applicable laws, rules, and regulations. Cause: The County was unaware of the responsibilities of a project sponsor. Recommendation: We recommend the County implement controls to ensure projects the County sponsors are completed in accordance with all the federal and state rules and regulations that apply. View of Responsible Official: Acknowledge

Department of the Treasury Federal Financial Assistance Listing/ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension, and Debarment Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria – Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement policies required. Condition – The Organization does not have a procurement policy that conforms to applicable standards under Uniform Guidance and 2 CFR sections 200.318 through 200.326. In addition, it was noted that there was no documentation to support suspension and debarment verification. Additionally, the Organization did not have proper procedures to ensure contracts include all required provisions. Cause – The Organization did not have proper procedures to ensure a procurement policy in accordance with Uniform Guidance was followed and controls were not adequately designed to ensure compliance with all the requirements for procurement, suspension, and debarment. Effect – The Organization did not comply with Uniform Guidance relating to Procurement. Questioned Costs – None reported. Context/Sampling – Overall procurement policy and two contracts out of a population of six total contracts. Repeat Finding from Prior Year(s) – No Recommendation – We recommend the Organization revise their procurement policy to follow Uniform Guidance and to follow those applicable procurement policies for applicable contracts. We also recommend the Organization review all contracts to ensure they include all required provisions as outlined by Uniform Guidance. Views of Responsible Officials – There is no disagreement with the finding.

Finding 2024-003: Procurement (Significant Deficiency) Federal Programs ALN 19.019 Criteria: Under 2 CFR 200.318, the Uniform Guidance requires that a recipient of U.S Government funds must use their own documented procurement procedures which reflect the applicable Uniform Guidance requirements to procure goods and services in order to ensure that all purchases are conducted in a manner that provides full and open competition. Condition: During our testing over procurement, we determined that ICMEC did not consistently document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: ICMEC did not follow their established internal procurement policy and that policy did not follow the requirements of the Uniform Guidance for procurement. Effect: Purchases of goods and services could be made above prevailing market rates if the prescribed procurement procedures are not adhered to, and thus, there lies the potential that ICMEC will not receive the best value for its purchases. The procurement process also allows for the evaluation of potential conflicts of interest with prospective vendors and contractors. Failure to perform the proper procurement procedures could result in disallowance of Federal expenditures based on lack of fair competition. Questioned Costs: None noted. Context: Our audit procedures consisted of testwork completed on individual expenditures charged to the Federal awards. The report in which samples were selected was generated directly from ICMEC's general ledger (accounting system). We consider our sample to be representative of the population. The condition appeared to be systemic in nature. Identification as a Repeat Finding, if Applicable: Refer to Finding 2023-003. Recommendation: We recommend that ICMEC revise their procurement policy to be align with required Uniform Guidance standards. This policy should be communicated to all employees and enforced during the upcoming year. All procurement records for purchases in excess of the threshold should include the following at a minimum: (a) basis for the contractor/goods selected or (b) justification for lack of competition when quotes or competitive bids are not obtained. Additionally, the conclusion should be clearly documented and accompany the procurement documentation. We also believe that all long-standing contractual engagements should evidence occasional re-evaluation to ensure such relationships are free of conflicts.

Finding 2024-002 Procurement - Significant Deficiency Program name: Office for Coastal Management Assistance Listing: 11.473 Federal award Identification number: 20 NFWF 339630 Federal award year: 9/1/2020 - 9/30/2024 Federal awarding agency: U.S. Department of Commerce Criteria - Per 2 CFR 200.318 (i), recipients and subrecipients must maintain records sufficient to detail the history of each procurement. These records must include: rationale for the method of procurement; selection of contract type; contractor selection or rejection, and; basis for the contract price. Additionally, 2 CFR 200.318(a) requires entities to maintain and use documented procurement procedures that are consistent with applicable laws and regulations. Condition - The Organization has a written procurement policy in place; however, it was unable to provide documentation demonstrating that procurement transactions during the audit period were conducted in accordance with that policy. Specifically, the auditee did not retain records detailing the procurement method used, contractor selection rationale, or price justification for sampled transactions. Cause - The Organization did not maintain or consistently apply documentation protocols for internal control reviews. Formal documentation practices were not in place during the audit period. Effect - Without sufficient documentation, the auditee cannot demonstrate compliance with Federal procurement standards. This increases the risk of noncompliance with Uniform Guidance requirements and may result in unallowable costs or questioned costs. Questioned costs - None identified. Perspective - The deficiency was pervasive across multiple procurement transactions. Identification of Repeat Findings - This is a repeat finding from the prior year (Finding 2023-003). As a result of the 2023 audit report, issued in February 2026, the Organization began the process of developing updated policies for compliance. In 2025, the Organization formally adopted a new procurement policy as well as procedures to ensure proper documentation will be maintained. Recommendation - We recommend that the Organization strengthen its internal controls over procurement by: Ensuring all procurement transactions are documented in accordance with 2 CFR 200.319(i). Training staff on documentation requirements. Periodically reviewing procurement files for completeness and compliance. Management response - Management agrees with this assessment and has committed to a corrective action plan. Management has also engaged with a new accounting firm to oversee the financial reporting functions at the Organization.

U.S. Department of Treasury passed through State of Utah Department of Workforce Services and through Colorado Department of Human Services 2024-002: Procurement and Suspension and Debarment Program: Coronavirus State and Local Fiscal Recovery Funds (21.027) Criteria: Recipients of federal awards must follow the procurement standards set out at 2 CFR section 200.317 through 200.326. They must use their own documented procurement procedures, which reflect applicable State laws and regulations, provided that the procedures conform to applicable Federal law and the procurement requirements identified in 2 CFR part 200. Recipients “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 section 200.318(i). Context and condition: We selected five contracts to test for compliance with procurement standards. Records for three contracts lacked documentation sufficient to detail procurement history. Cause: The Academy did not follow its procurement policy for publicly soliciting bids. Effect: A potential failure to conduct procurement transactions in a manner providing full and open competition exists. Questioned costs: No costs were questioned. Recommednation: We recommend the Academy ensure it 1) maintains documentation of the history of procurement and 2) monitors compliance with documentation requirements. Views of responsible officials: The Academy will review its procurement policies and internal controls and ensure timely action is taken when noncompliance is identified.

Criteria: Per Federal regulations for general procurement standards (2 CFR § 200.318 (i)), non‑Federal entities must maintain records sufficient to detail the history of the procurement process. These records will include but are not limited to the following: rationale for the method of procurement, selection or rejection, and the basis for the contract price. Condition: In our procurement testing for CSLFRF funding, the City was unable to provide evidence that demonstrates public notice was published according to (2 CFR § 200.320(b)) for the projects selected. Cause and Effect: Due to the City not conducting procurement for all CSLFRF expenditures through its projects, sufficient evidence was not available to demonstrate that full and open competition was provided to potential bidders, as required. Documentation supporting compliance with procurement requirements, including public notice and solicitation efforts, was not available. Recommendation: We recommend the City implement and enforce procurement policies that require formal solicitation of bids for applicable projects. Initiating a competitive bidding process helps ensure compliance with federal and state procurement standards, promotes transparency, and supports the selection of the most qualified and cost‑effective vendors. Management Response: Management concurs with the finding that procurement documentation for CSLFRF‑funded projects was insufficient to demonstrate compliance with federal procurement standards, including the requirement for public notice under 2 CFR § 200.320(b). The absence of complete records limited the City’s ability to show that full and open competition was provided. To address this issue, the City will revise and strengthen its procurement policies to require formal solicitation and complete documentation for all applicable projects. A centralized system for retaining procurement records will be implemented to ensure that evidence of public notice, solicitation efforts, bid evaluations, and contract award decisions is consistently maintained. Staff involved in procurement will receive training on federal requirements, and a pre‑award compliance checklist will be introduced to verify that all required documentation is in place before contracts are executed. Management will work with all departments involved in procurement to reinforce expectations, implement improved procedures, and ensure that required documentation is consistently retained.

Criteria: The Uniform Guidance requires written policies and procedures documenting how the organization determines and complies with the applicable compliance requirements. Condition: BREC does not currently maintain written policies and procedures for determining and documenting the applicable compliance requirements in accordance with 2 CFR 200.318-326. Questioned Costs: None. Cause: Written policies and procedures for the applicable compliance requirements have not been developed. Effect: Written policies and procedures over the applicable compliance requirements are not available to guide staff responsible for federal expenditures. Recommendation: We recommend that BREC develop written policies and procedures for determining and documenting the applicable compliance requirements under the Uniform Guidance. Repeat Finding: Yes. View of Responsible Official: A written SOP was developed for determining allowable costs and procurement requirements in accordance with the applicable CFR to guide key finance staff with responsibility for federally eligible expenditures.

ALN 14.251 and ALN 21.027 Finding #2024‐006 Financial Policies and Procedures Repeat Finding: No Condition: The Organization did not have formalized, written financial policies and procedures that address key Uniform Guidance requirements. Criteria: Under 2 CFR 200.302(b), non‐federal entities must establish and maintain effective financial management systems that provide accurate, current, and complete disclosure of the financial results of each federal award. Uniform Guidance further requires that entities implement written policies and procedures governing: · Allowable costs (2 CFR 200.302(b)(7) and 200.403–200.405), · Procurement (2 CFR 200.317–200.327), · Cash management (2 CFR 200.305), · Travel costs (2 CFR 200.475), and · Conflict of interest (2 CFR 200.318(c)(1)). Written policies serve as the framework for consistent compliance with federal requirements. Cause: The Organization had not developed or adopted written financial policies, relying instead on informal practices and staff knowledge to manage federal awards. Effect: The absence of formalized financial policies increases the risk of noncompliance with Uniform Guidance, inconsistent application of requirements, and potential misuse of federal funds. The lack of a documented framework also limits accountability and makes it difficult to train new staff or demonstrate compliance to oversight agencies. Questioned Costs: None noted. Perspective Information: This condition applied to the Organization’s overall financial management system and impacted all federal programs administered during the year ended December 31, 2024. As such, the lack of formalized financial policies represents a systemic issue and a material weakness in internal control over compliance. Recommendation: We recommend that the Organization adopt formal, written financial policies and procedures that address all Uniform Guidance requirements applicable to federal awards. These policies should be approved by management and the governing body, disseminated to staff, and reviewed periodically to ensure continued compliance. Reporting Views of Responsible Officials: The Organization agrees with the finding. The Organization will establish formalized accounting policies and procedures that adhere to the requirements of the Uniform Guidance.

Condition – The Organization did not have written policies and procedures in place that define its procurement requirements. Procurement practices were not formally documented, resulting in inconsistent application of procurement standards. Criteria – Under the Uniform Administrative Requirements (2 CFR 200.318–200.326), non-federal entities must establish and maintain written procurement policies and procedures that reflect applicable Federal, State, and local laws and regulations. These policies must address competition, methods of procurement, contract oversight, and other required elements. Effect – Without documented procurement policies and procedures, the Organization is at increased risk of noncompliance with federal procurement standards, inconsistent procurement practices, inadequate competition, and potential misuse of federal funds. Recommendation – The Organization should develop and implement written procurement policies and procedures that comply with the Uniform Guidance. Policies should clearly define procurement thresholds, required documentation, competitive bidding requirements, and approval responsibilities. Staff should be trained on the finalized procedures to ensure consistent and compliant application. Management's Response – See management's corrective action plan on pages 32-33.

Finding Number: 2024-003 AL Number and Title: Federal Transit Cluster Federal Award Identification Number / Year: OH-2020-048-00, OH-2021-014-00, OH-2021-033-00, OH-2022-021-00, OH-2023-034-00, OH-2022-003-00, OH-2022-021-00 Federal Agency: U.S. Department of Transportation Compliance Requirement: Procurement, Suspension, and Debarment Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Material Weakness and Noncompliance 2 CFR § 1200.10 states, in part, this part adopts the Office of Management and Budget (OMB) guidance in subparts A through I of 2 CFR part 180, as supplemented by this part, as the Department of Transportation policies and procedures for nonprocurement suspension and debarment. It thereby gives regulatory effect for the Department of Transportation to the OMB guidance as supplemented by this part. In addition, 2 CFR § 1201.1 indicates except as otherwise provided in this 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). This part supersedes and repeals the requirements of the Department of Transportation Common Rules (49 CFR part 18 and part 19). 2 CFR § 180.305 states that Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR § 180.135. 2 CFR § 180.200 identifies “covered transactions” as nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220 and 2 CFR § 1200.220. All nonprocurement transactions as defined in 2 CFR § 180.970 (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 2 CFR § 180.215. 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 is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov/content/home); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. In addition, the Medina County Transit Purchasing Policies and Procedures Manual III-5 Responsible Bidder section requires documentation of an excluded parties list search for contractors and subcontractors whose contract exceeds $25,000. 2 CFR § 200.318 requires the non-Federal entity to 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. In addition, the Medina County Transit Purchasing Policies and Procedures Manual I-14 Source Selection requires the Transit Director to maintain records detailing the listing of procurement, including the selection of type of contract type, reasons for selection, basis for contract price, and rationale for method of procurement. The County did not have proper internal controls in place to verify that all entities, with whom the County had entered covered transactions, had not been suspended or debarred. There were three instances in which the Federal Transit Cluster grant made total payments to vendors of more than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transactions with the vendors. In addition, for 24 of 27 procurement transactions, the County did not maintain adequate documentation to detail the full history of procurement. Failure to have appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred, and noncompliance with federal procurement requirements. The County should verify vendors are not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor prior to contracting with vendors that will be paid with federal funds. In addition, the County should maintain documentation of the history of procurements.

Criteria: Uniform Guidance 2 CFR Part 200.318 require that AEA have documented procurement procedures for procurement transactions under a Federal award or subaward. Condition: AEA follows the Weather Assistance Program Policies and Procedures Manual which has a procurement and suspension and debarment policy; however, AEA did not formally adopt a written policy that complies with the Office of Management and Budget’s (the “OMB”) requirements for procurement suspension and debarment. Cause: AEA did not formally adopt a written policy that complies with OMB requirements for procurement suspension and debarment. Effect: AEA is not in compliance with 2 CFR Part 200.317–200.327 of the Uniform Guidance. Questioned Costs: None reported. Context: Not applicable. Repeat Finding: Not applicable. Recommendation: Although there were no purchases in the audit period meeting the threshold for competitive bidding, we recommend that the AEA formally adopt a written procurement and suspension and debarment policy in accordance with the requirements. View of Responsible Officials: See management’s corrective action plan.

FINDING 2024-001 Information on the federal program: Federal Agency: Department of the Treasury Pass-Through Entity: N/A – Direct Grant Federal Program: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Noncompliance 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 awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking 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." Condition: The City did not have internal controls in place to ensure compliance with the procurement and suspension and debarment requirements. The City had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchase and simplified acquisition procurement thresholds were followed. Cause: The City had not developed a system of internal controls that would have ensured compliance with Procurement and Suspension and Debarment compliance requirements for covered transactions. Effect: Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the City. Questioned costs: There are no questioned costs. Context: For one out of three samples selected for the small purchase procurement threshold, three quotes and rationale for selecting the vendor were not documented. Small purchase procurements require three competing quotes and rationale for selection of the vendor. The procurement was for park improvement design services. The City was unaware that professional services are required to follow the federal procurement process. Per grant requirements, all grant funded expenditures require appropriate procurement, regardless of whether it is a good or service. For two out of three samples selected for suspension and debarment testing, the City did not have support that vendors procured under CSLFRF funding were not suspended or debarred. Identification as a repeat finding, if applicable: Yes, finding 2023-003 in the prior year report. Recommendation: We recommend that the City establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include ensuring proper procurement methods are followed, suspension and debarment checks are performed and documented prior to entering into the transaction. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.

FINDING 2024‐002 – Procurement, Suspension and Debarment Material Weakness in Internal Control over Compliance and Instance of Material Noncompliance Assistance Listing Number: 21.029 Federal Program Name: COVID-19 - Coronavirus Capital Projects Fund Award Year: 2024 Criteria: Uniform Guidance requires non-federal entities to establish and follow documented procurement procedures and ensure compliance with suspension and debarment requirements. 2 CFR §200.318(a): Requires entities to have and use documented procurement procedures consistent with federal standards. 2 CFR §200.318(i): Requires maintenance of records sufficient to detail the history of procurement. 2 CFR §200.214: Prohibits contracting with parties that are suspended or debarred, requiring verification. Condition and context: The Cooperative has not developed or implemented formal written procurement policies and procedures that comply with Uniform Guidance requirements. Additionally, the Cooperative has not established procedures to ensure compliance with suspension and debarment requirements. As a result, for a sample of three vendors and six procurement transactions tested, the Cooperative did not document suspension and debarment verification (e.g., SAM.gov) for vendors and contractors procured under the federal award. The absence of documented procedures also indicates that procurement activities are not being performed under a standardized framework aligned with federal requirements. Questioned costs: None. Effect: Due to the lack of formalized procurement processes and controls there is an increased risk of noncompliance with federal procurement standards. Expenditures could be paid to suspended or debarred vendors resulting in disallowed expenditures, and noncompliance with the grant agreement. Cause: This was a new grant for the Cooperative, management did not have a sufficient understanding of the procurement-related control requirements necessary to comply with the grant agreement and Uniform Guidance. As a result, procurement processes were not formally established or aligned with federal requirements. Repeat finding: No. Recommendation: We recommend the Cooperative develops and implements written procurement policies and procedures in compliance with 2 CFR §200.318–§200.327, including competitive procurement requirements, cost/price analysis, documentation, and record retention. Establish procedures to ensure compliance with suspension and debarment requirements, including performing SAM.gov verification prior to contract award and retaining documentation of verification in procurement files. Lastly, we recommend implementing monitoring controls to ensure procurement documentation and compliance requirements are consistently met. Views of responsible officials and planned corrective actions: Wabash is currently in the process of formalizing its procurement standards and internal controls. While management previously managed contractor selections through established internal practices, management recognizes the requirement for a comprehensive written procurement policy that explicitly outlines selection criteria and mandatory debarment verification procedures. To remediate the identified material weakness, Wabash will implement a formal Procurement Policy and Procedure by June 30, 2026. Contact Person(s): Jason Griffy, Network Operations Manager Justin Gephart, Chief Operating Officer

Finding #2024-001 – Procurement and Suspension and Debarment Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Passed Through Payments from the State of New Hampshire Department of Environmental Services Criteria: In accordance with 2 CFR § 200.318, non-federal entities must use their own documented procurement procedures, which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in 2 CFR § 200.318 through 200.327. Condition: During our testing of procurement transactions, we noted that the District does not have a formal, written procurement policy that incorporates the requirements of the Uniform Guidance. As a result of the District not having a formally documented procurement policy meeting the requirements of the Uniform Guidance, the District failed to verify whether parties it was entering into covered transactions with were suspended or debarred. Cause: The District’s management failed to develop and adopt a formal written procurement policy that aligns with federal regulations. There was a lack of oversight and necessary training regarding the specific administrative requirements of the Uniform Guidance for federally funded programs. Effect: The absence of a compliant procurement policy and related internal control increases the risk that federal funds could be misappropriated or paid to excluded parties. The deficiency results in non-compliance with federal statutes and may lead to questioned costs by the awarding agency. Questioned Costs: Known questioned costs of $962,807 based on all transactions tested and likely questioned costs of $135,384. Context: Of the District’s charges to the major program during the fiscal year, a sample of 6 transactions totaling $962,807 were tested out of a total population of 22 and total expenditures of $1,098,191. Repeat Finding: No Recommendation: We recommend that District management immediately draft and adopt a comprehensive written procurement policy that adheres to 2 CFR §§ 200.318 through 200.327. This policy should specifically include: • Procedures for verifying and documenting the suspension and debarment status of vendors. • Defined thresholds for micro-purchases, small purchases, and sealed bids • Requirements for conducting and documenting cost or price analyses for all procurements exceeding the Simplified Acquisition Threshold. Views of Responsible Officials: District agrees with the finding and will take the necessary steps to draft and adopt a comprehensive procurement policy which meets the requirements of the Uniform Guidance.

Assistance Listing Number(s): 10.902 Name of Federal Program or Cluster: Soil and Water Conservation Name of Federal Agency: Department of Agriculture Award Periods: Grant # NR205F48XXXXC006 and period September 30, 2020 through September 30, 2025 and Grant # FAN NR223A750022C002 and period December 21, 2023 through September 30, 2025 Assistance Listing Number(s): 10.912 Name of Federal Program or Cluster: Environmental Quality Incentives Program Name of Federal Agency: Department of Agriculture Award Periods: Grant # NR205F48XXXXC006 and period September 30, 2020 through September 30, 2025 and Grant # FAN NR223A750022C002 and period December 21, 2023 through September 30, 2025 Assistance Listing Number(s): 10.924 Name of Federal Program or Cluster: Conservation Stewardship Program Name of Federal Agency: Department of Agriculture Award Periods: Grant # NR205F48XXXXC006 and period September 30, 2020 through September 30, 2025 and Grant # FAN NR223A750022C002 and period December 21, 2023 through September 30, 2025 Criteria or Specific Requirement: Subparts D and E of 2 CFR Part 200 require a nonfederal entity to establish written policies, procedures, and standards of conduct, including procedures to implement the cash management requirements of 2 CFR section 200.305, procedures that comply with the procurement standards of 2 CFR sections 200.318 through 200.326, and procedures for determining the allowability of costs in accordance with Subpart E of 2 CFR Part 200. Specifically, 2 CFR sections 200.430, 200.431, and 200.475 require written policies. Condition: There are no written policies and procedures for allowable costs/cost principles, cash management, procurement and suspension and debarment requirements. Cause: The Organization does not have a process for reviewing their accounting policies and procedures manual on a regular basis to ensure written procedures conform to Uniform Guidance requirements. Effect or Potential Effect: A lack of written policies, procedures, and standards of conduct may result in noncompliance with the requirements of federal programs and/or disallowed costs. Repeat Finding: Yes Recommendation: We recommend the Organization’s written policies and procedures be reviewed and updated for compliance with Uniform Guidance. he organization should become familiar with the requirements of Subparts D and E of 2 CFR Part 200 and establish appropriate written policies, procedures, and standards of conduct. Views of Responsible Officials: Management agrees with the finding and they will evaluate our findings to determine an appropriate corrective action. Financial policies and procedures will be created and implemented. Annual schedule of expenditures will be created by Executive Director or Bookkeeper and reviewed by Board of Directors.

Information on Federal Programs: 93.083 – Centers for Disease Control and Prevention: Prevention of Disease, Disability, and Death through Immunization & Control of Respiratory & Related Diseases. Criteria or Specific Requirements: 2 CFR §200.303 requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the award is managed 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 (Green Book), issued by the Comptroller General of the United States, or the COSO Internal Control Integrated Framework. 2 CFR §200.318-200.320 require the non-Federal entity to have and use documented procurement procedures for the acquisition of property or services under a Federal award that are consistent with the standards for general procurement, competition, and methods of procurement. Condition: ATS’s organization-wide procurement policy does not include documented procurement procedures that address the Uniform Guidance requirements for procurement under Federal awards (for example, methods of procurement, competition requirements, and applicable thresholds) as required by 2 CFR §200.318-200.320. For the federally funded program, ATS implemented a separate written selection policy for contractors/health systems; however, this policy does not fully address all Uniform Guidance procurement elements. Cause: Management had not fully updated its written procurement policies and procedures to incorporate the specific requirements of 2 CFR §200.318-200.320 for procurements under Federal awards. As a result, internal control procedures over procurement under the Federal program were not fully documented in a manner consistent with the Uniform Guidance. Effect: Failure to have and use fully documented procurement policies and procedures compliant with the Uniform Guidance could result in noncompliance with Federal procurement requirements and increase the risk of unallowable or improperly procured costs under Federal awards. In the current year, our testing did not identify specific instances in which procurement transactions under the Federal program were noncompliant; however, the lack of fully compliant written procedures represents a significant deficiency in internal control over compliance. Perspective: ATS did not have documented procurement policies and procedures that were fully compliant with 2 CFR §200.320 for procurement under Federal awards. However, for the Federal program, ATS established a documented selection criteria policy for contractors/health systems. Under this policy, a selection subcommittee reviews, evaluates, and selects health systems based on defined criteria, and each selected application is submitted to the prime awardee for review and approval before ATS issues contracts. In a random sample of 8 procurement contracts tested, all 8 followed the documented selection process and were supported by appropriate documentation. Questioned Costs: None. Identification as a Repeat Finding: Continued Finding 2023-005. Recommendation: ATS should update and formalize its procurement policies and procedures to incorporate the requirements of 2 CFR §200.318-200.320 for all procurements under Federal awards, including: methods of procurement and thresholds, competition requirements, documentation of procurement history, and oversight responsibilities. Once updated, ATS should ensure the procurement under the Federal program is carried out in accordance with these policies and that staff are trained on the revised requirements.

2024-003 - Internal Control Over Compliance, Material Noncompliance - Procurement and Suspension and Debarment - Material weakness Federal program information: Funding Agency U.S. Department of Housing and Urban Development Program Title Indian Housing Block Grant Federal Assistance Listing Number 14.867 Condition: During testing of five procurement transactions, exceptions were identified in two instances. In one sample, verification of the vendor’s status in SAM.gov was performed after the contract award date, indicating noncompliance with pre-award suspension and debarment requirements. In another sample related to the purchase of a vehicle, the procurement file was missing evidence of comparative bidding. Criteria: In accordance with 2 CFR §§ 200.318–200.327, non-federal entities must follow documented procurement procedures for federally funded purchases exceeding the micro-purchase threshold. These procedures require full and open competition, appropriate procurement methods based on dollar thresholds, and maintenance of records sufficient to detail the history of procurement, including the method used, selection of contractor, and basis for price. Cause: The Housing Entity did not consistently follow established procurement procedures to ensure adequate competition, proper documentation of the procurement process, and timely verification of vendor eligibility. Effect: The Housing Entity was unable to demonstrate compliance with federal procurement and suspension and debarment requirements due to noncompliance with procurement procedures and untimely vendor verification, constituting a material weakness. Auditor's Recommendation: The Housing Entity should ensure SAM.gov verification is completed before awards, maintain complete procurement documentation, and provide staff training to comply with federal procurement requirements.