Findings Citing § 200.320

Criteria: Under 2 CFR 200.320(c), noncompetitive (sole-source) procurement is only permitted when at least one of the following federally allowable circumstances exists: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold; (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. Statement of Condition: During testing of two procurement transactions, one transaction totaling $31,848 was procured using a noncompetitive (sole-source) method without documentation supporting any of the allowable criteria under 2 CFR 200.320(c). Cause: The auditee indicated the following reasons for using a noncompetitive (sole-source) procurement method: the selected vendor was already working on the project under a different scope through AD Miller, and management believed bringing in a second scaffolding/shoring subcontractor could create a conflict of interest or increase risk; the vendor had previously been evaluated and priced by the general contractor (GC) partner and was recommended as the best market option available, based on prior use and the GC partner’s experience; because the GC partner had used this vendor before and recommended continuing with them, project staff believed this constituted sufficient justification to proceed without competitive procurement. However, while these operational considerations explain the decision, they do not meet the specific federally allowable justifications for noncompetitive procurement under 2 CFR 200.320(c). This indicates a lack of understanding of federal sole-source rules and insufficient procurement controls to ensure federal criteria are evaluated and documented prior to vendor selection. Effect or Potential Effect: The absence of federally required justification increases the risk of unfair vendor selection, creates the appearance of partiality, and exposes federal funds to risk of disallowance. Questioned Costs: $- Recommendation: Strengthen procurement controls, including documentation requirements and training to ensure all noncompetitive procurements meet 2 CFR 200.320(c) criteria. Management Response: See corrective action plan.

Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Blood Diseases and Resources Research Assistance Listing Number: 93.839 Award Period: 3/1/2022 – 12/31/2028 Type of Finding: - Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: 2 CFR Section 200.320(a)(2) states that when simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Condition: During our testing of procurement, we noted that the organization has a process to review quotes from more than one vendor before entering into a transaction with a vendor. However, we noted one instance of the simplified acquisition procurement method being used with no price or rate quotations obtained from qualified sources retained on file prior to the transaction being entered. Questioned costs: $11,868.60 Context: We noted 1 of the 5 tested purchases was acquired using the simplified acquisition procurement method being used with no price or rate quotations obtained from qualified sources. Cause: Per discussion with management, The Organization did obtain price or rate quotations from more than one qualified source for a purchase made using the simplified acquisition procurement method. However, the documentation was not retained to provide evidence that this took place before entering into a transaction with that vendor. Effect: $11,868.60 purchase with no justification for procurement method chosen. Repeat finding: No Recommendation: We recommend that the Organization follows all procurement method requirements for purchases over the $10,000 micro-purchase threshold. Views of responsible officials: There is no disagreement with the audit finding.

Finding No. 2025-003 Federal Agency: U.S. Department of Environmental Protection Agency Federal Program Name: Capitalization Grants for Drinking Water State Revolving Funds Assistance Listing Number: 66.468 Pass Through Entity: Wisconsin Department of Administration Federal Award Notification Number and Year: 4896-13 - 2025 Award Period: January 1, 2025 – December 31, 2025 Compliance Requirement Affected: Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or Specific Requirement: 2 CFR 200.320 Methods of Procurement state that 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. Condition: During our testing, we noted the Village did not have adequate internal controls designed to ensure vendors were not suspended or debarred. Questioned Costs: None Context: During our testing, it was noted that the Village was not reviewing vendors prior to entering into a contract with a vendor to ensure the vendor was not on the suspended or debarred vendor list maintained by the General Services Administration. Cause: The Village does not have controls related to ensuring suspension and debarment are verified prior to entering into contract with vendors. Effect: The auditor noted no instances noncompliance with the provisions of procurement, suspension, and debarment; however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance. Repeat Finding: Yes, repeat finding of 2024-003. Recommendation: We recommend the Village evaluate its existing policies and procedures to determine where additional enhancements should be made or new policies created. Views of Responsible Officials: There is no disagreement with the finding.

Procurement, Suspension, and Debarment and Written Policies Required by the Uniform Grant Guidance Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Procurement, Suspension, and Debarment). Program. COVID-19 Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; ALN 21.027; Passed through the City of Toledo, Ohio; Award Number 2021-16100-5WAYMANPALNEI. Criteria. Recipients of federal awards are required to ensure that federal procurement standards are followed for any purchases over the federal micropurchase threshold. 2 CFR 200.320 requires that these purchases must adhere to one of the allowable procurement methods (sealed bids, competitive proposals, noncompetitive procurement) and maintain documentation of this procurement decision. In addition, the Uniform Guidance requires a non-federal entity that has expended federal awards for a grant awarded on or after December 26, 2014 to have written policies pertaining to Procurement (including bidding and a conflict of interest policy) (§200.318). Condition. For one of the two vendors tested, the YMCA was unable to provide documentation to support that competitive bidding was performed in accordance with the YMCA's policies and procedures. Although the YMCA has processes in place to cover these areas, we noted during review of procurement policies, that management has two procurement policies, one for general competitive bids and one for federal funds. We noted that while the federal funds procurements thresholds are in line to what is required by 2 CFR 200.318, the policy was not being followed consistently. Cause. The YMCA does not have the proper internal controls in place to ensure that the appropriate procedures are being followed for procurement in accordance with the requirements of the Uniform Guidance. This condition appears to be the result of a time lag in identifying the requirement and developing a plan for consistency in its procurement policy. Effect. As a result of this condition, one vendor was paid with federal funding for which appropriate procurement records were not maintained in accordance with federal procurement standards. The YMCA did not fully comply with the Uniform Guidance applicable to the above noted grant. Questioned Costs. $129,673. Questioned costs represent the total known expenditures incurred under the contract for which the exception was identified. Recommendation. We recommend that the YMCA review its written policies and procedures over federal awards with employees responsible for grant compliance to ensure that they are being followed consistently. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.

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

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

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

Assistance Listing: 66.957 Greenhouse Gas Reduction Fund: National Clean Investment Fund and 66.959 Greenhouse Gas Reduction Fund: Solar for All Finding No. 2025-002: Significant Deficiency in Controls Over Procurement Documentation and Approvals Condition: During testing of procurement transactions for the Solar for All (SFA) and Greenhouse Gas Reduction Fund: National Clean Investment Fund (GGRF) programs, documentation supporting required procurement approvals was not consistently maintained. Specifically, for one (1) of two (2) procurements tested under the SFA program ($130,000), required pre-approval by the Finance Department was not documented. For both procurements tested under the GGRF National Clean Investment Fund program ($36,094), written evidence of approval was not available; management indicated that approvals had been obtained verbally. Criteria: Non-federal entities are required to maintain effective internal controls over procurement to ensure compliance with Uniform Guidance (2 CFR 200.318–200.320). This includes ensuring that procurements are properly authorized in accordance with established policies, retaining sufficient documentation to support procurement decisions and approvals, and maintaining a clear audit trail demonstrating adherence to applicable requirements. Cause: These conditions appear to be attributable to inadequate documentation retention practices and the absence of formalized procedures requiring written evidence of procurement approvals. Additionally, reliance on verbal approvals and challenges associated with system transitions contributed to gaps in the retention of supporting documentation. Effect or Potential Effect: The lack of documented procurement approvals increases the risk of noncompliance with federal procurement requirements and weakens the audit trail supporting that purchases were appropriately authorized. As a result, there is an increased risk of questioned costs and reduced transparency and accountability over the use of federal funds. Questioned Costs: None Perspective Information: The exceptions identified appear to be primarily related to documentation and consistency in evidencing procurement approval controls rather than an indication that approvals were not obtained in all cases. Management indicated that certain approvals were performed verbally; however, these were not consistently supported by written documentation. Strengthening documentation practices and formalizing approval procedures will enhance transparency, support compliance with Uniform Guidance requirements, and improve the organization’s ability to demonstrate that procurement activities are appropriately authorized. Addressing these matters will also promote a more consistent and auditable control environment over federally funded procurements. Identification of Repeat Finding: Not applicable since this is a new finding. Recommendation: We recommend that management strengthen procurement controls by requiring documented, written approval for all procurements prior to execution and establishing standardized approval workflows and documentation requirements. Management should also maintain a centralized repository for procurement records to support accessibility and retention, and enhance data backup and migration procedures to mitigate the risk of loss of supporting documentation during system changes. Views of Responsible Officials: Management agrees with the finding. While procurement approvals were obtained, documentation was not consistently retained due to reliance on verbal approvals and limitations associated with a system transition. Management has implemented corrective actions to strengthen controls, including requiring documented, written approval for all procurements and establishing a centralized repository for procurement documentation. Standardized approval workflows will be used to ensure approvals are properly evidenced and retained. Additionally, data retention and backup procedures have been enhanced to prevent future loss of documentation. Management will incorporate these controls into formal policies and procedures and monitor compliance to ensure consistent application across programs.

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

Assistance Listing, Federal Agency, and Program Name - 21.027, U.S. Department of Treasury, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - SLFRP 2640 and N/A, 2024 Pass through Entity - Oakland County, Michigan Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The Township should have a process in place to ensure all vendors that are used on projects funded with federal grant money follow the federal procurement standards. Condition - For two projects procured during the year ended December 31, 2025, the Township did not obtain competitive bids or quotes for the project, as required by 2 CFR 200.320. Questioned Costs - $83,444 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - Amounts paid to two vendors who were not procured through required methods Context - Of the seven procurements selected for testing, five were properly procured; however, one required competitive bids, and another required multiple quotes that were not obtained. Cause and Effect - The Township's processes and internal control structure did not ensure that proper procurement procedures were followed for all applicable vendors. The effect was that certain vendors were contracted without having been selected through the required means, either competitive bids or quotes, depending on contract amount. Recommendation - We recommend the Township implement and document processes and controls to ensure that all vendors used on projects funded with federal grant follow the procurement rules, as required by the federal government. Views of Responsible Officials and Corrective Action Plan - The Township will implement processes and procedures to ensure that vendors used on projects funded with federal grants follow the procurement rules as required by the federal standards.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Supplemental Nutrition Assistance Program Cluster Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 232MN101S2514 – 2025 Passed Through Entity: Minnesota Department of Human Services Pass Through Number: H55250010 & H58260061 Compliance Requirement: Procurement Award Period: 2025 Type of Finding: Material Weakness in Internal Control Over Compliance; Other Matters Criteria or specific requirement: The County must follow Uniform Guidance Subsection 200.320 Methods of Procurement for all applicable procurements over the County’s micro-purchase threshold. For purchases over the County's micro-purchase threshold of $10,000 but not exceeding the simplified acquisition threshold of $250,000, the County should follow small purchase procedures. 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 County. 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. Condition: There was no support showing open competition, cost analysis, or review and approval of selection tested. Questioned costs: None Context: One out of one selection tested had the above noted issues. Cause: The department did not follow the department's procurement policies during the year. Effect: The contracts selected did not go through open competition, cost analysis, or review and approval for the selection tested. Repeat finding: Yes – 2024-004. Recommendation: We recommend the County follow their federal purchasing policy in all their federal programs and retain documentation of that process occurring. As necessary, the County may need to add internal controls that are specific to each program to ensure this properly occurs. Views of responsible officials: There is no disagreement with the finding.

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

Federal Agency: Environmental Protection Agency Federal Program Name: Water Pollution Control Assistance Listing Numbers: 66.419 Federal Award Identification Number: 98339418 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 10/1/2023 - 12/30/2025 Compliance Requirement: Procurement Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter Criteria or specific requirement: Compliance: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §200.318 through §200.327. 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. Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR §200.320(b)). Control: Per 2 CFR §200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: For two of five procurements selected for testing, the Commission was unable to provide documentation (completed requisition form) to demonstrate compliance with their procurement policy. Questioned costs: Undetermined. Cause: Controls were not operating effectively to ensure that the Commission’s procurement policies were followed for procurements entered into where expenses were charged to the federal program. Effect: The Commission was unable to provide documentation to support compliance with Federal requirements. Repeat Finding: No. Recommendation: We recommend that the Commission ensure that it follows its procurement policies for all goods and services charged to the program and that documentation be readily available for audit. Views of responsible officials: To prevent future noncompliance the Commission will 1)clarify vendor coverage on existing agreements, 2) strengthen controls over procurement threshold, 3) monitor cumulative spending by vendor, and 4) reinforce training and communication.

Finding 2025-003: Procurement, Suspension and Debarment Federal Program Name: National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award Nos.: 69A36525520030AMTDC 69A36525520040AMTDC 69A36524520000AMTDC 69A36524520010AMTDC FR-AMT-0028-22 FR-AMT-0027-22 Federal Agency: Department of Transportation, Federal Railroad Administration Federal Program Name: Railroad Development Assistance Listing No. 20.314 Federal Award No.: 69A36524400010MEGDC Federal Agency: Department of Transportation, Federal Railroad Administration Federal Program Name: Railroad Rehabilitation and Improvement Financing Program Assistance Listing No. 20.316 Federal Award No.: RRIF_2016_0040 Federal Agency: Department of Transportation, Federal Railroad Administration Federal Program Name: Federal-State Partnership for Intercity Passenger Rail Assistance Listing No. 20.326 Federal Award Nos.: 69A36525421260FSPDC 69A36525521430FSPDC 69A36525421100FSPDC Federal Agency: Department of Transportation, Federal Railroad Administration Criteria 1. The code of federal regulations - 2 CFR 200.318 General procurement standards state that: (h) Responsible contractors. The recipient or subrecipient must award contracts only to responsible contractors that possess the ability to perform successfully under the terms and conditions of a proposed contract. The recipient or subrecipient must consider contractor integrity, public policy compliance, property classification of employees, past performance record, and financial and technical resources when conducting a procurement transaction. (i) Procurement records. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. 2. Section 10 of the Annual Grant Agreements and Section 500 of the IIJA Supplemental Grant Agreements (Assistance Listing No. 20.315) state: The Recipient will ensure persons or entities that perform any part of the work under this Agreement, including Subrecipients, as defined in 2 C.F.R. § 200.1, or Contractors, as defined in 2 C.F.R. § 200.1, will comply with applicable federal requirements and federal guidance, and the applicable requirements of this Agreement. Recipient agrees that flowing down such requirements does not relieve it of any obligation to comply with the requirements itself. For each of the Recipient’s subawards or contracts to perform all or part of the work under this Agreement: (a) The Recipient must include applicable grant regulations in the subaward or contract and ensure compliance with these provisions, including applicable provisions of 2 C.F.R. § 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, and DOT’s implementing regulations at 2 C.F.R. § 1201. (b) The Recipient must include applicable federal statutory and regulatory requirements in the subaward or contract and ensure compliance with these requirements, including applicable limitations on use of federal funds. 3. Additionally, the code of federal regulations - 2 CFR 200 Appendix II Contract Provisions for Non-Federal Entity Contracts Under Federal Awards states that: In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. H) Debarment and Suspension – A contract award must not be made to parties listed on the government wide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 and 12689. SAM Exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. 4. The code of federal regulations or 2 CFR 200.320 (c) Procurement Methods states that: (c) Noncompetitive procurement. There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: 2) The procurement transaction can only be fulfilled by a single source; Condition The following exceptions to the criteria were observed during the performance of the audit procedures: 1. Required flow-down provisions were not incorporated into the legal agreements related to both of EY's legal expense selections as part of its testing of the procurement, suspension and debarment compliance requirement. 2. Amtrak failed to comply with the key compliance requirement related to suspension and debarment which includes a review of sam.gov to verify the legal firms were not present in the suspension and debarment list prior to the procurement. 3. Amtrak lacked adequate documentation to support the sole source justification of the legal firm related to one of EY's legal expense selections as part of its testing of the procurement, suspension and debarment compliance requirement. Cause Amtrak’s inappropriate interpretation of the annual and IIJA supplemental grant agreements involved the treatment of the procurement of legal counsel as exempt from the 2 CFR procurement, suspension and debarment process requirements. Effect or Potential Effect Noncompliance with Section 10 of the Annual Grant Agreements, Section 500 of the IIJA Supplemental Grant Agreements, 2 CFR 200.318, 2 CFR 200 Appendix II and 2 CFR 200.320. Additionally, Amtrak is at risk of doing business with contractors that are suspended/debarred. Amtrak is also at risk of facing increased costs and increased reliance due to the lack of competitive procurement. Questioned Costs Total questioned costs of $1.3 million were identified. Of this amount, approximately $3,500 relates to two EY selections identified as part of procurement, suspension, and debarment testing involving two legal firms. The remaining questioned costs represent legal expenses associated with the two legal firms that are also included on the SEFA. Assistance Listing No. 20.315 69A36522503710AMTDC $ 150,928 69A365255200340AMTDC 40,449 69A36525520040AMTDC 9,964 Assistance Listing No. 20.315 Total $ 201,341 Assistance Listing No. 20.314 69A36524400010MEGDC 135,247 Assistance Listing No. 20.316 RRIF_2016_0040 84,659 Assistance Listing No. 20.326 69A36525521430FSPDC $ 461,261 69A36525421100FSPDC 254,394 69A36525421260FSPDC 197,655 Assistance Listing No. 20.326 Total $ 913,310 Total Questioned Costs $ 1,334,557 Context EY randomly selected 40 procurement transactions as part of the testing of the procurement, suspension and debarment compliance requirement. EY identified exceptions related to its two legal expenditure selections as noted in the Condition section above. Identification as a Repeat Finding Not a repeat finding. Recommendation EY recommends that Amtrak include legal expenses within their procurement, suspension and debarment policy as outlined within each of the grant agreements. Views of Responsible Officials Amtrak understands the need to comply with procurement requirements for grants and retain documentation of the compliance. Amtrak will change its approach for allocating grant funding and its review of legal contracts to address the issue identified in this finding.

Criteria: Entities may follow informal procurement methods for small purchases less than $15,000 (or $50,000 if self-certified as the micro-purchase threshold). Otherwise, entities must follow formal procurement methods except under very specific circumstances in which the recipient may use a noncompetitive procurement method (2 CFR 200.320). Formal procurement methods are competitive and require public notice. These methods may include sealed bids or proposals. Condition: Management did not document formal procurement methods used for expenditures over $15,000. Cause: Management has previously worked with several universities and research institutions and established a working relationship with them in years not subject federal audit requirements. Management believes these institutions to be fair and reasonable in cost. Effect: Contracts engaged by management did not promote fair competition and may have resulted in excessive costs. Questioned Costs: Federal award purchases beyond the micro-purchase threshold totaled $261,772. Recommendation: We recommend that management follow and document formal procurement methods for all federal award purchases over $15,000, which may include self-certifying a micro-purchase threshold up to $50,000.

Reference Number: 2025-004 Compliance Requirement: Procurement and Suspension/Debarment Type of Finding: Internal Control and Compliance Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance AL Number(s) and Title(s): 84.027 – Special Education Cluster Federal Awarding Agency: U.S. Department of Education Federal Award Number: None Pass-through Entity: Alabama Department of Education Pass-through Award Number: A250254 Questioned Costs: $264,966.68 The Institute failed to comply with Federal procurement standards and the Code of Alabama 1975. The U. S. Code of Federal Regulations Title 2, Part 200.318(a), of the Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states “the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations.” Part 200.318(i), states “The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction.” Section 200.320 describes the methods of procurement to be followed. This guidance includes procedures for small purchases. Small purchases are purchases higher than the micro-purchase threshold but not exceeding the simplified acquisition threshold. During the 2025 fiscal year, the thresholds were $10,000 and $250,000, respectively. When small purchase procedures are used, price or rate quotations should be obtained from an adequate number of sources. Article 5 of the Code of Alabama 1975, Section 41-4-124(b), states that all educational or eleemosynary institutions are subject to the article except as it relates to the purchase of professional services and the oversight and authority of the Chief Procurement Officer. It further states that those entities should maintain procurement offices and personnel and adopt rules as may be necessary to comply with the article. The Institute’s procurement policy references the Code of Alabama 1975, Section 41-16-50, which no longer applies to the Institute due to passage of Act 2021-296, now codified at Code of Alabama 1975, Section 41-4-110, et seq. Since the Institute has not updated their procurement policies and procedures to comply with current State law and regulations, the Institute did not have adequate policies and procedures in place to ensure compliance with the U.S. Code of Federal Regulations Title 2, Part 200.318 and 200.320. Additionally, the Institute’s procurement policy states the bid threshold is $15,000.00. Therefore, small purchase procedures can only be used for purchases between the micro-purchase threshold ($10,000) and the threshold set by the Institute ($15,000). Furthermore, 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. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity 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, (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). The Institute failed to adopt rules as necessary to comply with Code of Alabama 1975, Section 41-4-124(b). Due to a lack of properly designed and implemented procurement policies and procedures, the Institute awarded three contracts during the fiscal year without obtaining price or rate quotations from an adequate number of sources. These purchases totaled $188,631.68. The Institute also purchased $76,335.00 in visual aid equipment without bidding the award in accordance with Institute policies. As a result, the Institute did not comply with Uniform Guidance procurement requirements or the Code of Alabama 1975 for these purchases. It was also noted that the Institute failed to verify that vendors were not suspended or debarred before entering into a covered transaction. As a result, procurements could be improperly entered into with vendors that are suspended or debarred. Recommendation The Institute should implement policies and procedures to ensure compliance with the Uniform Guidance and the Code of Alabama 1975 requirements related to procurement transactions and to ensure proper suspension and debarment verifications are performed and that documentation of the suspension and debarment status is retained. Views of Responsible Officials of the Auditee Management agrees that the Institute' s procurement policy was not updated for the passage of Act 2021-296 and will take corrective actions.

Finding 2025-001 Program Name: Research and Development Cluster Federal Department/Agency: Various Assistance Listing Number: Various assistance listing numbers Federal Award Year: October 1, 2024 – September 30, 2025 Compliance Requirements: Procurement Criteria Per 2 CFR 200.320, an organization is required to follow simplified acquisition procedures if the aggregate dollar amount of a procurement transaction is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate. Condition 40 procurement transactions were selected from all procurement transactions and Brown Health’s records were inspected for compliance with Brown Health’s procurement policy, which satisfied the requirements set forth within 2 CFR 200.320. Of the 40 transactions selected, 21 were transactions between the micro-purchase threshold and the simplified acquisition threshold. For 9 of the 21 procurement transactions selected, evidence could not be located to support that the procurement policy was followed. Specifically, evidence could not be located to support that Brown Health had obtained multiple price or rate quotations for each transaction or had documented its rationale for a sole sourced purchase. Cause As a result of turnover during the fiscal year, internal controls were not operating effectively regarding the retention of procurement documentation evidencing that the procurement policy was followed. Specifically, evidence of the gathering of multiple quotations or sole source justification was not routinely retained. Possible Asserted Effect Absent procurement controls operating effectively, Brown Health could initiate procurement transactions above the micro-purchase threshold without following the requisite protocols, which could result in noncompliance with Federal regulations. Questioned costs None. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This is not a repeat finding. Recommendation We recommend that Brown Health management strengthen its internal controls over the procurement process to ensure compliance with Federal regulations. Specifically, Brown Health should revise its procurement review procedures to require the retention of evidence of obtaining multiple price quotations or sole source justification. View of Responsible Officials Brown Health management concurs with this finding. Based on the review, the underlying procurement procedures were generally performed in accordance with established policy; however, supporting documentation was not consistently retained to evidence compliance. We have already initiated re-training at the department level and will be performing a detailed review of current purchase history to ensure appropriate documentation is retained. For fiscal year 2026, we will be reviewing all federal grant activity to ensure the appropriate documentation is maintained and/or sole source documentation is prepared including a lookback analysis of expenditures to date that did not retain the proper documentation. Additionally, we will review automated control enhancements within our ERP system where possible to assist in recognizing compliance rules in advance of spend. We will report our results to the granting agency by October 31, 2026.

2025-001 Finding Type Material Weakness, Noncompliance – Procurement Federal Program COVID-19 Coronavirus State and Local Fiscal Recovery Funds, ALN #21.027 Criteria Pursuant to 2 CFR §200.320, federal funds must be managed in a manner that ensures full and open competition. The procurement method used for each transaction must be appropriate based on the dollar amount and conditions. Condition During our testing, we noted that the Organization did not obtain price quotes prior to selecting vendors whose expenditures exceeded the micro-purchase threshold. Cause This issue originated in the prior year and impacted various current year expenditures as well. The Organization has the proper procurement policies in place. However, due to a short timeframe for the project, an individual within the Organization’s management did not comply with the policy in an attempt to expedite the project’s completion. The Organization’s internal controls failed to detect and correct the noncompliance. The individual in management who made this decision is no longer employed at the Organization; therefore, documentation on the matter is insufficient and current management is unaware of the communications that occurred with the grantor concerning the timing of gathering price quotes and the necessity to expedite the process. Effect The Organization incurred expenditures of $159,595 that were not in compliance with procurement standards. Questioned Costs Known questioned costs - $159,595 Questioned costs were identified by the Organization as instances of noncompliance prior to the commencement of audit testing. We performed audit testing over a sample of 25 procurement transactions and did not identify any additional instances of noncompliance beyond those reported by the Organization. Identification of a Repeat Finding This is a repeat finding from the prior year’s audit, finding number 2024-001. Recommendation We recommend that the Organization designate an additional responsible party who has knowledge of federal procurement requirements review all projects to ensure compliance. Additionally, all correspondence with the grantor regarding deviations from these requirements should be maintained, including evidence of grantor pre-approval. Response As noted in the corrective action plan, management agrees with this finding.

Criteria 2 CFR 200.303 requires that 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 and the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)." Uniform Guidance 2 CFR Section 200.320 (a)(2) states regarding the applicability of simplified acquisition procedures: "The aggregate dollar amount of the procurement transaction is higher than the micro_x0002_purchase threshold but does not exceed the simplified acquisition threshold. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate." AIHEC's procurement policy requires that for procurement by small purchase ($10,000 - $249,000), where the aggregate dollar amount is higher than the micro-purchase threshold, price or rate quotations must be obtained from three qualified sources. If three separate qualified sources cannot be obtained the reason needs to be formally documented. Condition/Context During our testing of procurement transactions, we noted that AIHEC did not provide supporting procurement documentation for certain sampled transactions. In addition, for procurements identified as sole-source, AIHEC did not provide approved sole-source justification documentation. As a result, we were unable to verify compliance with the applicable federal procurement requirements. Cause Management does not have sufficient internal controls in place to ensure that AIHEC's procurement policies are followed for all procurement transactions prior to entering the procurement. Effect AIHEC entered into a procurement that did not go through a competitive solicitation process. Recommendation Management should review its policies and procedures to ensure all procurement transactions are in accordance with AIHEC's procurement policies and have the appropriate supporting documentation.

Finding No.: 2025-015 Identification of Federal Program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) AL Program: 14.850 Public Housing Operating Fund Federal Award No.: GQ00100000125D, GQ00100000225D, GQ00100000325D, GQ00100000425D Area: Procurement and Suspension and Debarment Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR 200.214 states: Recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. GHURA Procurement Policy, Chapter VII further states: For all purchases above the Petty Cash/Micro Purchase threshold, GHURA shall prepare an Independent Cost Estimate (ICE) prior to solicitation. The level of detail shall be commensurate with the cost and complexity of the item to be purchased. 2 CFR 200.319(a) states: All procurement transactions under the Federal award must be conducted in a manner that provides full and open competition and is consistent with the standards of this section and § 200.320. GHURA Procurement Policy, Chapter IV, Sealed Bids, Section D further states: Noncompetitive–contracts: If only one responsive bid is received from a responsible bidder, award shall not be made unless the price can be determined to be reasonable, based on a cost or price analysis and that GHURA obtains HUD approval for contracts exceeding the Simplified Acquisition Threshold or the GHURA's small purchase limit, whichever is less. Finding No.: 2025-015, continued Condition: For twenty-one (72%) of twenty-nine items examined, aggregating $236,001 of $1,508,875, in total expenditures of $1,543,721 subjected to procurement, suspension and debarment tests, deficiencies were noted, as follows: Item # Project No. Purchase Order No. Expenditures Questioned Costs 1 GQ001000003 PO250839 $ 55,700 $ 55,700 2 GQ001000001 PO250018 46,020 46,020 3 GQ001000002 PO250047 33,600 33,600 4 GQ001000001, GQ001000002 GQ001000003, GQ001000004 PO250373 26,371 26,371 5 GQ001000001 PO251763 12,316 12,316 6 GQ001000003 PO251249 2,761 2,761 7 GQ001000002 PO251207 2,730 2,730 8 GQ001000004 PO250955 2,562 2,562 9 GQ001000004 PO250153 2,365 2,365 10 GQ001000003 PO250104 2,123 2,123 11 GQ001000004 PO250572 1,230 1,230 12 GQ001000004 PO250156 1,100 1,100 13 GQ001000002 PO250111 914 914 14 GQ001000002 PO251224 672 672 15 GQ001000004 PO251679 651 651 16 GQ001000002 PO250753 560 560 17 GQ001000004 PO251266 542 542 18 GQ001000004 BPA250133 7,240 7,240 19 GQ001000002 BPA250008 3,500 3,500 20 GQ001000003 BPA250203 3,333 3,333 21 GQ001000002 BPA250025 500 500 $ 206,790 $ 206,790 For item #s 1 through 4, there was no documentation on file to support that GHURA performed procedures to ensure contracting parties are not debarred, suspended, or excluded from receiving or participating in federal awards. For item #s 1 through 21, there was no documentation on file to support that GHURA performed Independent Cost Estimate (ICE) procedures prior to solicitation. For item # 8, there was no documentation on file to support that GHURA conducted the continued procurement of services beyond the contract extension in a manner that ensured adequate competition or proper justification. Finding No.: 2025-015, continued Condition, continued: For item # 16 and item #s 20 and 21, there was no documentation (e.g. solicitations) on file to support the procurement transactions being conducted in a manner that provided for full and open competition. Specifically, there was no evidence of solicitations being issued or documentation on file to justify the use of noncompetitive procurement. For item #s 19 through 21, there was no documentation (e.g. solicitations) on file to support the procurement transactions being conducted in a manner that provided for full and open competition. Specifically, the procurement file lacks evidence of minimum solicitation to support fair competition and does not demonstrate that blanket purchase orders for towing and advertisement services were awarded equally among multiple vendors. Cause: GHURA did not have adequate monitoring controls in place to ensure compliance with applicable procurement, suspension and debarment requirements. Specifically, policies and procedures were not established or enforced to ensure verification and documentation that contracting parties were not suspended or debarred. In addition, procurement personnel did not follow required policies and procedures requiring minimum solicitation and justification for noncompetitive procurement, and management review did not detect or prevent these deficiencies. Effect or potential effect: GHURA is in noncompliance with applicable procurement, suspension and debarment requirements. Questioned costs: $206,790 Recommendation: 1. Responsible management should establish and consistently enforce formal procedures requiring the retention of documented verification of eligibility (e.g., SAM.gov checks) and applicable certifications within the procurement file. Additionally, management should ensure that, prior to the execution of contracts, all agreements include the required suspension and debarment clause to demonstrate compliance with suspension and debarment requirements. 2. Establish controls to ensure required documentation (Independent Cost Estimates, proper justification, etc.) is prepared, documented, and maintained in the procurement file prior to solicitation for all applicable procurements. Finding No.: 2025-015, continued Views of Responsible Officials: Management partially concurs with the finding. Refer to Management’s position as outlined in the Corrective Action Plan. Conclusion: Management submitted additional information on June 28, 2026; however, due to time constraints, we were unable to sufficiently corroborate and evaluate the documentation provided. Accordingly, the finding remains, as there was insufficient evidence to support a determination of compliance as of the audit date.

The District did not procure services in accordance to the simplified acquisition method as noted in 2 CFR Section 200.320

Background During fiscal year 2025, the District spent $1,598,841 in federal funds from the School Safely National Activities program. The program’s objective is to improve students' safety and well-being during and after the school day. The District used program funding to retain 4.5 counseling positions at risk of being cut and added three new positions to support the Assistant Director. 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. Time and effort The District is responsible for ensuring it supports all payroll costs it charges to the program with adequate time-and-effort documentation, as required by federal regulations and the awarding agency. Depending on the number and types of activities employees perform, time-and-effort documentation can be a semiannual certification or monthly personnel activity report, such as a detailed time sheet. Time-and-effort documentation must also be signed and dated after employees complete the work. Procurement 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 bid process, depending on the estimated cost of the procurement activity. The District must maintain documentation showing the procurement process it performed. District policy requires the District to solicit sealed bids for procurement of services more than $250,000. Description of Condition Time and effort The District’s internal controls were ineffective for ensuring it supported all salaries and benefits it charged to the program with appropriate time-and-effort documentation, as federal regulations and OSPI require. Specifically, the District did not obtain time-and-effort documentation to support payroll costs moved to the program through the payroll reallocation it performed at fiscal year-end. Procurement Our audit found the District did not have adequate controls to ensure it complied with procurement requirements. Specifically, the District did not follow its policy when procuring mental health consulting services more than $250,000. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Time and effort District staff believed there was adequate supporting documentation for payroll costs it moved to the program, which included an email from the grantor approving reallocation of costs for time spent working on the program. The District did not have time-and-effort records to demonstrate the payroll costs allocated to the program at year-end were specifically for program-related work. Procurement District staff did not believe the mental health service contracts were subject to competitive procurement requirements. Effect of Condition Time and effort The District did not obtain time-and-effort documentation for three employees whose payroll costs totaling $284,101 it reallocated and charged to the program. Without adequate time-and-effort documentation, the District cannot demonstrate compliance with the awarding agency’s documentation requirements to support costs charged to federal programs. Further, the District cannot assure federal grantors that payroll costs it charged to the program were accurate and valid. During the audit, the District obtained and provided signed time-and-effort records to support the payroll costs it charged to the program. Additionally, the District received grantor communication that these payroll costs would be allowable to charge to the grant. Therefore, we are not questioning these costs. Procurement We found the District did not comply with procurement requirements for all five contracts we tested that were subject to procurement. The District paid these contractors a total of $766,000 in federal program funds. Without effective internal controls, the District cannot demonstrate it complied with federal procurement standards and its own policy and allowed for full and open competition. Recommendation Time and effort We recommend the District strengthen and follow internal controls to ensure it complies with federal and OSPI requirements for obtaining time-and-effort documentation timely. Procurement We recommend the District strengthen internal controls to ensure it complies with its policy and federal regulations for procuring services and that it maintains documentation to demonstrate such. District’s Response Time and effort: Thank you for the opportunity to respond to Audit Finding 2025-002 related to time-and-effort documentation and procurement requirements under the School Safety National Activities Program (Assistance Listing 84.184). Tacoma School District recognizes the importance of maintaining strong internal controls to ensure all costs charged to federal programs comply with applicable requirements. Although the district was able to provide alternative documentation supporting the work activities of the three affected employees, and no questioned costs were identified, we agree that enhancements to our compliance procedures are appropriate and necessary. The U.S. Department of Education award was originally established as a five-year continuation grant; however, the grant was discontinued two years prior to the anticipated end of the performance period. Due to these unforeseen circumstances, the district was required to reevaluate program needs within a shortened timeline and revise the spending plan to appropriately utilize remaining grant funds over a three-year period rather than the originally planned five-year period. As part of this process, the district consulted with the federal grantor and received approval to modify the program plan by reallocating salary costs for employees who were already performing work activities fully aligned with the federal grant objectives, but whose salaries had previously been supported by other district funding sources. The district maintains an established process for completing time-and-effort certifications based on employee position allocations. Following approval from the Department of Education program supervisor, the district proceeded with payroll adjustments consistent with allowable grant activities and within available grant funding levels. During subsequent review, it was identified that sufficient time-and-effort documentation had not been obtained contemporaneously with the payroll adjustments. This represented an isolated incident that occurred during year-end processing and was outside the district’s standard operating procedures. Corrective actions were implemented immediately upon identification of the control weakness and prior to the conclusion of the audit. Time-and-effort certifications were subsequently obtained for the affected employees. In addition, the district has enhanced its payroll adjustment procedures involving federal funds by incorporating an additional checklist item within the approval routing process to ensure required time-and-effort certifications are obtained and documented before payroll adjustments are finalized. In addition, the district accepts and agrees with the State Auditor’s Office that compliance with Federal procurement requirements is essential. The district recognizes the importance of maintaining procurement files that clearly and transparently document the rationale, analysis, and decision-making process supporting procurement actions, particularly when utilizing a noncompetitive procurement method under Federal regulations. In this regard, the district would like to clarify that the contracts referenced were procured under emergency circumstances using a non-competitive procurement process. The procurement documentation provided did not identify these vendors as sole source contractors; rather, the non-competitive procurement approach was utilized due to the urgent need to ensure continuity and availability of mental health services during emergency situation. The district did provide documentation supporting the procurement action identified within the audit finding; however, the district acknowledges the documentation retained within the procurement file was not adequate in clearly addressing and articulating the rationale for waiving competition in a coherent and logical manner that fully demonstrated the district’s process and justification. At the time of procurement, the district believed the documentation maintained was sufficient to support the procurement method utilized. The district selected the noncompetitive procurement method pursuant to 2 CFR 200.320(a)(3), which permits noncompetitive procurement when “the public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation.” The district’s determination was based upon the urgent student mental health conditions identified within the Washington State Governor’s Proclamation 21-05 regarding the Children’s Mental Health Crisis. The district determined that the immediate need to provide critical mental health services and student supports would not permit the delay associated with conducting a traditional competitive solicitation process during the emergency conditions identified by the State. The Governor’s proclamation can be found here: Governor’s Proclamation 21-05 – Children’s Mental Health Crisis The district recognizes the need to strengthen internal controls and procurement documentation practices to ensure procurement files clearly relay the rationale and supporting analysis in a precise, transparent, and easily understandable manner for any future reviewer. The following corrective actions will be taken: • Provide targeted staff training related to Federal procurement requirements, including noncompetitive procurement standards under 2 CFR 200.320. • Provide additional training focused on internal controls, procurement documentation requirements, and drafting clear procurement justifications. • Update the district’s sole source/noncompetitive procurement documentation form to specifically incorporate and address the five allowable rationale methods identified under 2 CFR 200.320. • Implement additional internal review procedures to ensure procurement files contain sufficient written justification and support documentation prior to approval and execution. The district is committed to continuous improvement of its procurement practices and ensuring compliance with Federal, state, and District procurement requirements moving forward. Auditor’s Remarks We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. The Governor’s Proclamation was terminated in October 2022 and, therefore, not effective during the audit period. We reaffirm our finding and will review the status of the District’s corrective action during our next regular 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, Subpart E, Cost Principles, establishes requirements for determining allowable costs and supporting costs allocated to federal programs. Office of Superintendent of Public Instruction Bulletin 039-24, Time and Effort (T&E) Reporting establishes requirements for documenting time-and-effort, including fixed schedule systems. 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.

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

2025-001: Procurement Noncompliance - Child Nutrition Cluster Condition: During fiscal year 2025, the District did not consistently follow federal procurement requirements under 2 CFR 200.320 and 7 CFR Part 210. Specifically: Aggregate and individual purchases exceeded the $3,500 micro-purchase threshold without use of small purchase or formal procurement procedures. Formal procurement of a prime food vendor did not follow required procedures, including issuance of a written solicitation, public advertisement, cost/price analysis, and documentation of contract terms. Cause: Inadequate oversight of procurement thresholds and incomplete understanding of federal formal procurement requirements. Effect: Noncompliance with federal procurement requirements, increasing the risk of unallowable costs and reduced transparency in vendor selection. Recommendation: The District should continue to implement and monitor updated procurement procedures, including use of centralized tracking, pre-approval of purchases, and adherence to formal solicitation processes. Management Response: The District agrees with the finding. Corrective action was initiated in April 2025, including adoption of revised procurement procedures, implementation of a centralized tracking system, and initiation of a formal bid process for recurring food purchases.

CONDITION: Before the District became aware of the prior year finding, the District used local exemptions in procuring some of the costs related to its ESSER program for the year ended June 30, 2025. CRITERIA: The South Carolina Department of Education (“SDE”) had issued a memorandum (“Memorandum”) in August 2023 notifying school districts that local exemptions could not be used in procurement activities related to federal programs. If a school district wanted to use noncompetitive procurements, they would need to (a) meet the exceptions noted in this Memorandum and as more fully detailed in Office of Management and Budget (“OMB”) 2 CFR 200.320 or (b) request and receive an approved waiver from the SDE on the “Request for Noncompetitive Procurement Approval” form. CONTEXT AND EFFECT: The OMB 2025 compliance supplement did not list in the compliance matrix a requirement to test the “Procurement and Suspension and Debarment” compliance requirement for this program. However, the SDE required that this compliance requirement be tested. The District followed its approved procurement code which allowed the use of local exemptions for certain federal procurement activities. The District had received other communications from SDE staff that made them believe that following their procurement code was sufficient in procuring activities for this federal program. For the year ended June 30, 2025, the District’s auditors tested approximately $1,987,000 in key items related to the ESSER program and noted two procurements totaling approximately $291,000 where the District used a local exemption. The District’s auditors tested a random sample of approximately $18,000 of other ESSER expenditures and noted no exceptions where the District used local exemptions. The actual known or likely questioned costs is not determinable – as it would be less than the total noncompetitive procurements. CAUSE: The District was not fully aware that using its local exemptions as provided for in its procurement code was not allowable for federal purchases in this program until November 2024. Once the District became aware, the District implemented procedures to no longer use local exemptions for federal procurements. RECOMMENDATION: We recommend that the District ensure that procurements related to federal programs do not use local exemptions and that these procurements provide for full and open competition. RESPONSE: The District agrees with this finding and will adhere to the corrective action plan on page 127 in this audit report.

CONDITION: The District used a local exemption in procuring one of its costs related to its ESSER program for the year ended June 30, 2025. CRITERIA: The South Carolina Department of Education (“SDE”) had issued a memorandum (“Memorandum”) in August 2023 notifying school districts that local exemptions could not be used in procurement activities related to federal programs. If a school district wanted to use noncompetitive procurements, they would need to (a) meet the exceptions noted in this Memorandum and as more fully detailed in Office of Management and Budget (“OMB”) 2 CFR 200.320 or (b) request and receive an approved waiver from the SDE on the “Request for Noncompetitive Procurement Approval” form. CONTEXT AND EFFECT: The OMB 2025 compliance supplement did not list in the compliance matrix a requirement to test the “Procurement and Suspension and Debarment” compliance requirement for this program. However, the SDE required that this compliance requirement be tested. For the year ended June 30, 2025, the District’s auditors tested approximately $390,000 in key items related to the ESSER program and noted one procurement for approximately $26,000 where the District used a local exemption. The District’s auditors tested a random sample of approximately $1,000 of other ESSER expenditures and noted no exceptions where the District used local exemptions. The actual known or likely questioned costs is not determinable – as it would be less than the total noncompetitive procurement. CAUSE: The District inadvertently used its local exemption for this federal purchase in this program. RECOMMENDATION: Even though the ESSER program is over, we would remind the District that procurements related to any federal programs should not use local exemptions – as these procurements should provide for full and open competition. RESPONSE: The District agrees with this finding and will adhere to the corrective action plan on page 123 in this audit report.

2025 – 004 Procurement, Suspension & Debarment Federal Agency: U.S. Department of Education Federal Program Name: Special Education (IDEA Cluster) Assistance Listing Number: 84.027, 84.173 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number: 2024-591029-DPI-FLOW-341, 2025-591029-DPI-PRESCH-347 Type of Finding: Material Weakness in Internal Control Over Compliance and Other Matter Condition: During our testing of small purchase procurement transactions greater than $500 it was noted they were not supported by an adequate number of quotes (at least two). In addition, during our testing of suspension and debarment, we identified two vendor contracts that were entered into that did not include language related to suspension and debarment. Criteria or Specific Requirement: 2 CFR 200.320 Methods of Procurement state that if the small purchases method is used, price or rate quotations must be obtained from an adequate number of qualified sources (at least 2). Any response to publicized requests for proposals must be considered to the maximum extent practical. Additionally, 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. Question Costs: None Effect: Obtaining price quotes and proposals from an adequate number of vendors allows the District to use federal funds in the most fiscally responsible way. The lack of price quotes or proposals may cause the District to overpay for supplies or services. The lack of documentation related to suspension and debarment could result in the District doing business with a suspended or debarred vendor. Cause: The District did not follow their Federal Funds Procurement Policy and District controls did not properly document procurement, suspension and debarment requirements in accordance with Uniform Guidance. Recommendation: We recommend the District review their policies and procedures related to Uniform Guidance and the District’s Federal Funds Procurement Policy. We also recommend the District evaluate current procedures and controls, including segregation of duties, to ensure that policies are consistently followed and properly documented in accordance with District policies. Views of Responsible Officials: There is no disagreement with the finding.

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

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

Procurement Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Federal Award Number: NU50CK000556 Award Periods: January 1, 2024 – July 31, 2024 Criteria: 2 CFR section 200.320 outlines the acceptable methods of procurement. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require that price or rate quotations be obtained from an adequate number of qualified sources as determined by the non- Federal entity. Furthermore, the Organization's procurement policies require the maintaining of records sufficient to detail the history of procurement including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: The Organization did not follow the procedures outlined within its internal policies related to the use of the simplified acquisition method of procurement, including maintaining the necessary documentation to show that price or rate quotations were obtained from an adequate number of qualified sources. Questioned Costs: $252,323. Context: This condition impacted four of five transactions selected for testing. Questioned costs are in accordance with the purpose of the grant, however occurred as a result of a lack of documentation. Cause: The timing of when grant was received (June 2024) and when the period of performance expired (July 2024), was just that the Organization had a limited amount of time to accomplish the program objectives. Thus, the organization used recurring vendors and did not follow the procurement policies and procedures outlined within their internal policies. Effect: The Organization could potentially use federal funds in a manner which is not the most efficient or economical. Repeat Finding: No. Recommendation: We recommend the Organization follow its established policies and procedures related to maintaining necessary documentation to support the method of procurement utilized. Views of Responsible Officials: There is no disagreement with the audit finding.

Finding 2025-002 Significant deficiency in internal controls over compliance and noncompliance with procurement and suspension and debarment procedures meeting the requirements of the Uniform Guidance. Federal Agency: Department of Health and Human Services Program Title: Congressional Directives Assistance Listing Number: 93.493 Award Number: CE1HS47357-01-00 Award Period: September 1, 2022 - August 31, 2025 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-Federal entity that has expended federal awards to have written policies pertaining to its federal grants for procurement and that the history of each procurement is documented in accordance with 2 CFR section 200.318 to 200.320. Further, the regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Condition/Context for Evaluation The Organization received and utilized the federal award to pay for general contractor services for Phase II of a multi-phase construction project that was ongoing at the time of the award. The general contractor was selected as part of a competitive RFQ process for Phase I of the construction prior to notice of the award. A cost and price analysis was completed on the general contractor during the RFQ process. During predevelopment, the general contractor selected for Phase I was contracted for consulting work for scoping Phase II of the project. The general contractor and Organization solicited competitive bids from subcontractors and performed a cost/price analysis that was used for subcontractor selection. A stipulated sum contract was signed with the general contractor based substantially on the competitive bids received from subcontractors. As a result, the Organization ultimately elected to utilize a noncompetitive procurement method for the selection of the general contractor for Phase II of the construction project, on the basis that the procurement could only be obtained from a single source. This was determined due to the specialized nature of the building itself, as well as the accumulated knowledge that the general contractor had from Phase I of the project, and consulting on the predevelopment of Phase II. Ultimately, the Organization did not have a procurement policy in place that specifically covered the criteria and documentation requirements for a noncompetitive procurement required under the Uniform Guidance. As a result, the Organization did not have a process in place that resulted in compliance with the Uniform Guidance, including the maintenance of records to detail the history of the procurement in accordance with 2 CFR 200.318 to 1 CFR 200.320 Cause The Organization did not have a procurement policy or internal controls in place to ensure that the Organization’s procurement activities were done in accordance with the Uniform Guidance and controls were in place to retain documentation of the history of the procurement. Effect or Potential Effect The Organization entered into agreements to procure goods and services for which appropriate documentation was not retained to support the history of the procurement. Questioned Costs $0 Repeat Finding No

Reference Number: 2025-005 Program Name: Special Education Cluster Description: Procurement, Suspension & Debarment Condition: The District increased its micro-purchase threshold to $50,000 in 2021. However, the District did not complete or retain the required annual self-certification which support the increased threshold. Criteria: Under 2 CFR 200.320(a)(1)(iv), the District may increase their micro-purchase threshold above the federal default limit only if they annually self-certify that they meet the criteria for a higher threshold. Cause: The District believed that the adoption of an internal procurement policy satisfied the requirement. Effect: Procurements up to $50,000 were made using an unsupported micro-purchase threshold. While no unallowable vendors were identified during the audit, the procurement process did not comply with federal requirements. Questioned Costs: Not applicable per above. Identification of a Repeat Finding: This is not a repeat finding. Auditors’ Recommendation: We recommend the District: • Prepare and maintain the required self-certification • Have this self-certification approved at the annual meeting Views of Responsible Officials: See attachment for the District’s corrective action plan.

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

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

Finding 2025-001: Procurement (50000) Repeat Finding? No Program Identification: Federal Agency: U.S. Department of Education Pass-through Entity: California Department of Education Program Name: Individuals with Disabilities Education Act (IDEA) (AL No. 84.027, 84.173) Criteria: Code of Federal Regulations, CFR 200.320(b), mandates formal bidding methods are required for purchases over the simplified acquisition threshold, currently $250,000, requiring public solicitation, detailed specifications, written awards to the lowest responsible bidder and transparent evaluation. Condition: During our testing of procurement, we sampled one contract that would require “formal procurement methods” when awarding a contract. The district could not provide documentation that would demonstrate that formal procurement methods were followed when awarding the contract. Context: Deficiency was isolated to the one contract tested. Questioned Costs: $553,091 in awarded contracts. Cause: Lack of oversight resulted in a contract being awarded without following the required formal procurement method. Effect: This resulted in roughly $553,091 awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train employees and implement the required federal procurement procedures to ensure compliance. In addition, we recommend that the District adopt a board policy that addresses procedures related to federal procurement. Views of Responsible Officials: During the 2025-26 fiscal year, the District implemented changes to reclassify certain contracts from federal funding sources to state funding. The District utilized the SELPA Master Contract for applicable vendors to ensure proper contracting and compliance. Federal funds will continue to be used to support Instructional Aides (IAs). These actions were taken to improve alignment with funding requirements and strengthen fiscal compliance.

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

2025-005 Procurement – Child Nutrition Cluster Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556 Pass-Through Agency: Wisconsin Department of Instruction Pass Through Numbers: 2025-445138-DPI-SB-546, 2025-445138-DPI-NSL-547, 2025-445138- DPI-SMP-548 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Material Weakness in Internal control over Compliance, Material noncompliance (Qualified Opinion) Criteria or specific requirement: 2 CFR 200.320 Methods of Procurement state that if the small purchases method is used, price or rate quotations must be obtained from an adequate number of qualified sources (at least 2). Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical. Condition: During our testing of procurement transactions of the program we noted that the small purchases were not supported by an adequate number of quotes (at least two) to ensure the District is prudent with the monies used towards the program. Additionally supporting documentation regarding the bidding completed by the District’s purchasing cooperative was not obtained for vendor meeting formal procurement threshold per district purchasing policy. Questioned Costs: None Context: During audit testing of procurement transactions of the program we noted that the small purchases were not supported by an adequate number of quotes (at least two) to ensure the District is prudent used towards the program. In our sample of two transactions subject to small purchase requirements we noted that the District did not retain documentation of an adequate number of price quotes for the one of the two transactions selected for testing. In our sample of one vendor subject to formal procurement threshold we noted that the supporting documentation regarding the bidding completed by the District’s purchasing cooperative was not obtained. Section III – Findings and Questioned Costs – Major Federal and State Programs (Continued) Cause: The District did not follow their Federal Funds Procurement policy related to the appropriate methods of procurement. Effect: Obtaining price quotes or proposals from an adequate number of vendors allows the District to use federal funds in the most fiscally responsible way. The lack of quotes and proposals may cause the District to over pay for supplies or services. Repeat Finding: 2024-005 Recommendation: We recommend the District review their policies and procedures related to Uniform Guidance and the District's Purchasing Policy. We also recommend the District evaluate current procedures and controls to ensure that policies are consistently followed and properly documented in accordance with District policies. Views of Responsible Officials: There is no disagreement with the finding.

2025-006 Procurement, Suspension & Debarment – Special Education Cluster (IDEA) Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster (IDEA) Assistance Listing Number: 84.027, 84.173 Pass-Through Agency: Wisconsin Department of Instruction Pass Through Numbers: 2025-445138-DPI-ES3-342, 2025-445138-DPI-FLOW-341, 2025-445138-DPI-PRESCH-347 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Material Weakness in Internal control over Compliance, Material noncompliance (Qualified Opinion) Criteria or specific requirement: 2 CFR 200.320 Methods of Procurement state that if the small purchases method is used, price or rate quotations must be obtained from an adequate number of qualified sources (at least 2). Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical. Additionally 2 CFR 200.214 requires non-Federal entities to follow suspension and debarment regulations outlined in 2 CFR part 180. When a non-Federal entity enters into a covered transactions with an entity at a lower tier, the non-Federal entity must verify that the entity, as described in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: During our testing of procurement transactions of the program, we noted that the District was not consistently following the procurement policy, specifically related to small purchases threshold. These purchases were not supported by an adequate number of quotes (at least two) or proposals to ensure the District is prudent with the monies used towards the program. Additionally, we noted the District does not have procedures in place for verifying that vendors are not debarred, suspended or otherwise excluded. Questioned Costs: None Section III – Findings and Questioned Costs – Major Federal and State Programs (Continued) Context: During our testing of procurement transactions of the program, we noted the District was not consistently following the procurement policy, specifically related to small purchases threshold. In our sample of 3 vendors subject to procurement requirements, we noted the District did not obtain and/or retain documentation for an adequate number of price quotes for two vendors. In our testing of suspension and debarment, we noted that the District did not retain documentation related to suspension and debarment for all four vendors that were selected for testing. Cause: The District did not follow their Federal Funds Procurement policy related to the appropriate methods of procurement. Effect: Obtaining price quotes or proposals from an adequate number of vendors allows the District to use federal funds in the most fiscally responsible way. The lack of quotes and proposals may cause the District to over pay for supplies or services. Additionally, the District could contract with a vendor that has been suspended or debarred from receiving Federal funds. Repeat Finding: No Recommendation: We recommend the District review their policies and procedures related to Uniform Guidance and the District's Purchasing Policy. We also recommend the District evaluate current procedures and controls to ensure that policies are consistently followed and properly documented in accordance with District policies. Views of Responsible Officials: There is no disagreement with the finding.

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

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

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

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

Federal Agency: Department of Health and Human Services Federal Program Name: Healthy Start Communities Assistance Listing Number: 93.926 Federal Award Identification Number and Year: H4900052 Award Period: 5/1/24-3/31/25 and 4/1/25-3/31/26 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 2 CFR section 200.320 outlines the acceptable methods of procurement. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require that price or rate quotations be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Furthermore, the Organization's procurement policies require the maintaining of records sufficient to detail the history of procurement including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: CLA identified vendors with expenditures charged to the program over $10k which did not have documentation to support the level of procurement utilized. Questioned costs: None Context: This condition impacted six vendors selected for testing. Each of the vendors provided services that are in accordance with the grant project, however finding results from lack of documentation. Cause: The entity implemented an updated procurement policy during the year and did not consider vendors which had been procured in prior years. Effect: The Organization could potentially use federal funds in a manner which is not the most efficient or economical. Repeat Finding: Yes. Recommendation: We recommend the organization follow its newly established procurement policy related to the maintaining of necessary documentation to support the method of procurement utilized. The Organization may also consider qualifying multiple vendors for particular goods/service and then utilizing an approved vendors list. Views of responsible officials: There is no disagreement with the audit finding.

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

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

Finding Reference Number: 2025-001 Procurement Title and CFDA Number of Federal Program: Child Nutrition Cluster - School Breakfast Program [10.553] and National School Lunch Program [10.555] Federal Agency: U.S. Department of Agriculture (USDA) Pass-through Entity: Illinois State Board of Education. Criteria: Under 2 CFR 200.318(a), non-Federal entities must maintain and use documented procurement procedures that are consistent with applicable laws and regulations. Additionally, 2 CFR 200.319(a) requires that all procurement transactions be conducted to provide full and open competition. Statement of Condition: During our audit, we noted that the organization did not follow its documented procurement policies for a vendor. Specifically, procurements were made without proper competitive bidding or justification for sole-source selection, and documentation supporting contractor selection and price reasonableness was missing. Cause: Although the Organization has a formal procurement policy outlining requirements for competitive quotes and single-source justifications in accordance with 2 CFR §200.320, these procedures were not followed for the transactions tested. Effect or Potential Effect: Failure to obtain competitive quotes or document single-source justifications increases the risk of noncompliance with federal procurement requirements and may result in unallowable costs being charged to the federal program. Questioned costs - None identified. Reportable Views of Responsible Officials: See Corrective Action Plan Context: One out of two (100% of population) procurements tested (50%) were noncompliant. This issue appears to be systemic, not isolated. Identification of Repeat Findings - This is not a repeat finding. Recommendation: We recommend the Organization ensure that its procurement policy is fully implemented. Staff should be trained and held accountable for obtaining competitive price or rate quotations for all purchases exceeding the micro-purchase threshold, or for documenting appropriate single-source justifications when applicable.

Finding Reference Number: 2025-001 Procurement. Title and CFDA Number of Federal Program: Child Nutrition Cluster [10.553/10.555/10.559/10.582] Award Number: 25N1199/24L1603 Type of Finding: Federal Award Finding Finding Resolution Status: In Process. Criteria: Under 2 CFR 200.318(a), non-Federal entities must maintain and use documented procurement procedures that are consistent with applicable laws and regulations. Additionally, 2 CFR 200.319(a) requires that all procurement transactions be conducted to provide full and open competition. Statement of Condition: During our audit, we noted that the organization did not follow its documented procurement policies for a vendor. Specifically, procurements were made without proper competitive price quotes or justification for sole-source selection, and documentation supporting contractor selection and price reasonableness was missing. Cause: Although the Organization has a formal procurement policy outlining requirements for competitive quotes and single-source justifications in accordance with 2 CFR §200.320, these procedures were not followed for the transactions tested. Effect or Potential Effect: Failure to obtain competitive quotes or document single-source justifications increases the risk of noncompliance with federal procurement requirements and may result in unallowable costs being charged to the federal program. Questioned costs - None identified. Reportable Views of Responsible Officials: See Corrective Action Plan Identification of Repeat Findings - This is not a repeat finding. Recommendation: We recommend the Organization ensure that its procurement policy is fully implemented. Staff should be trained and held accountable for obtaining competitive price or rate quotations for all purchases exceeding the micro-purchase threshold, or for documenting appropriate single-source justifications when applicable.

FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027x Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-ARP, 23611-043-PN01, 24611-043-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation was a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 19 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. During 2023-2024, the Cooperative had three vendors which exceeded the SAT, and all three vendors were tested. The Cooperative did not obtain sealed bids or competitive proposals, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. The total dollar amount spent with all three vendors was $1,417,349. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . . (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: INDIANA STATE BOARD OF ACCOUNTS 20 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause The Cooperative noted they were unaware of the procurement requirements of expenditures exceeding the SAT. They stated they have used the same vendors to provide professional services for several years but only recently started using federal grant award funds for the services. Effect Without the proper implementation of an effectively designed system of internal controls, the Cooperative cannot ensure the vendors paid with federal award funds are procured using the required methods. Without following the required methods for procurement, the Cooperative could be overpaying for services. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Cooperative should develop written policies and procedures which would require that appropriate procurement methods are used for vendors that exceed the SAT. Appropriate documentation should be maintained to ensure the procurement methods are being followed and compliance with procurement methods are being followed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Information on the Federal Program U.S. Department of Education – Passed-through New Jersey Department of Education: Education Stabilization Fund (ESF): ESSER III Assistance Listing No. 84.425 3/13/2020 – 9/30/2024 ESSER III – Summer Learning and Enrichment Assistance Listing No. 84.425 3/13/2020 – 9/30/2024 ESSER II – Homeless Assistance Listing No. 84.425 4/23/2021 – 9/30/2023 Criteria or Specific Requirement Per 2 CFR § 200.320 under Part 200 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards dictates when the value of procurement for property or services exceed the simplified acquisition threshold or a lower threshold established by a non-Federal entity (State of New Jersey), formal procurement methods are required. Condition The School District did not provide evidence that it was in complete compliance with formal procurement methods. Questioned Costs Undetermined. Context Purchases made by the School District in excess of the procurement threshold established by a non-Federal entity (State of New Jersey) did not have supporting documentation available to verify complete compliance with formal procurement methods. Effect or Potential Effect The School District was not in compliance with 2 CFR § 200.320 under Part 200 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Cause Unknown. Identification as a Repeat Finding See Finding 2024-003. Recommendation That the School District retain evidence that it complied with formal procurement methods as noted in 2 CFR § 200.320 under Part 200 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. View of Responsible Officials and Planned Corrective Action The responsible officials agree with the finding and will address the matter as part of their corrective action plan.

Finding 2025-001 Material Weakness in Internal Control over Compliance and Other Matters, and Material Noncompliance Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number(s): 10.553, 10.555, 10.559 Compliance Requirement: Procurement Award Period: 2024-2025 Criteria or Specific Requirement: 2 CFR 200.320 requires that procurement meet specified conditions, and a proper procurement method used, when a recipient of grant funds expends over a certain dollar amount. When the amount expended is at or above the Simplified Acquisition Threshold of $250,000, approved procurement methods include sealed bid, competitive proposal, or non-competitive proposal (sole source). An independent estimate and a cost/price analysis must be completed to support the procurement. Condition: A procurement transaction was executed with Southwest Equipment Inc., DBA, through the Buy Board cooperative purchasing program. The total purchase amount exceeded the simplified acquisition threshold of $250,000. It was noted that no independent cost estimate or cost-priced analysis was conducted prior to the procurement for federally funded transactions, and the vendor was not properly procured under an approved method. Cause: The processes and controls in place relating to procurement did not properly address the requirements for thresholds set by 2 CFR 200.320. Effect: Although the expense was allowable, federal funds were expended without the appropriate procurement requirements being met. Internal controls over compliance failed, resulting in an instance of material noncompliance. Questioned Cost: $519,736 Effect: The District will have to correct the reporting and allowance of expenditures related to the incorrect procurement. Repeat Finding: The finding is not a repeat finding. Recommendation: The District should reevaluate the existing process and related control to ensure that the proper procurement methods and conditions are met in accordance with 2 CFR 200.320. View of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.