Findings Citing § 200.320

2026-004 Procurement Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 Health Center Program Cluster Award Numbers H80CS00513 Criteria [X] Compliance Finding [] Significant Deficiency [X] Material Weakness Title 2 CFR 200.318 requires that entities receiving federal awards must have and use their documented procurement policies and these policies must be consistent with state and local laws and regulations and the standards identified in §200.317 through 200.327. Condition The Organization did not follow its documented procurement policy. Cause Management did not follow its established procurement policy, and documentation was not maintained evidencing its compliance with the policy, such as obtaining competitive bids and documenting sole-source vendor justifications. Effect The Organization may overpay for goods and services due to selecting vendors without appropriate consideration of the competitive bids and cost analysis. Questioned Costs $39,478 Context In a sample of 40 invoices, we noted six with issues related to the procurement process. Organization did not follow their established procurement policy and did not retain appropriate documentation of competitive bids. Recommendation We recommend that the Organization maintain adequate documentation supporting reports submitted to awarding agencies and update its procurement policy to align with 2 CFR 200.320(c). Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined on page 34.

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.

FINDING 2025-001 Significant Deficiency in Internal Controls over Compliance and Noncompliance – Procurement, Suspension and Debarment Federal Agency: U.S. Department of Health and Human Services Pass-through Grantor: Alabama Department of Mental Health Federal Program: Maternal and Child Health Federal Consolidated Programs ALN: 93.110 Criteria: In accordance with 2 CFR 200.320 paragraph (a)(2), informal procurement methods are required when the aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. Condition/Context: For the three selected vendors, it was determined based on vendor expenditures that the Company should have followed federal guidance for informal procurement methods for simplified acquisitions. During procurement testing, it was determined that the Company did not consistently retain documentation to support that vendors were selected in accordance with federal guidance for informal procurement methods for simplified acquisitions whereby price or rate quotations must be obtained from an adequate number of qualified vendors. Cause: Due to the infrequency of entering into contracts above the micro-purchase threshold, management followed the Company’s existing procurement policy which does not include procedures or guidance for procurement of vendors under federal awards. Effect: Grant funded contracts could be awarded to vendors that are less cost effective, which would be in violation of federal regulations and may result in early termination of the grant award, non-reimbursement of grant funding, or cessation of future funding. Questioned Costs: None. Recommendation: Management should enhance the Company’s procurement policies for grant-funded purchases to align with federal procurement guidance. Repeat Finding: No. Views of Responsible Officials: See Corrective Action Plan.

Reportable Finding Considered a Significant Deficiency – Procurement Compliance Agency: Department of Housing and Urban Development Program: Rural Capacity Building for Community Development and Affordable Housing Grants ALN# 14.265 Program Year: 2025 Criteria: 2 CFR §200.320(a)(2) requires that procurements exceeding the micro-purchase threshold use small purchase procedures, including obtaining price or rate quotations from an adequate number of qualified sources. Additionally, 2 CFR §200.318(i) requires non-federal entities to maintain documentation sufficient to detail the history of the procurement, including the rationale for the method of procurement, contractor selection, and the basis for price reasonableness. Further, 2 CFR §200.320(c) permits noncompetitive (sole-source) procurement only when specific conditions are met and requires appropriate justification and documentation. Condition: During testing of procurement for ALN 14.265, we noted that the entity procured services totaling $17,500, exceeding the micro-purchase threshold and requiring small purchase procedures. Review indicated that the procurement was conducted under small purchase procedures; however, price quotations from multiple qualified vendors or other cost analysis were not obtained. In addition, the entity’s internal policy requires at least two price quotes for procurements within this dollar range, and no such quotes were documented. Although management stated the vendor was selected due to the unique nature of the training and specialized qualifications of the provider, the procurement file does not include contemporaneous documentation supporting sole-source eligibility or a formal sole-source justification. Cause: The deficiency occurred due to inadequate internal controls over procurement processes and lack of sufficient understanding and consistent application of procurement requirements. Specifically, management did not ensure that required price quotations were obtained and documented or that sole-source procurements were properly justified and supported. Effect: As a result, the entity did not comply with federal procurement requirements or its internal policy. This increases the risk that full and open competition was not achieved and that the entity may not have obtained services at the most reasonable price. Additionally, insufficient documentation reduces transparency and accountability and may result in questioned costs or increased scrutiny by federal or pass-through entities. Questioned costs: None Perspective: Statistical sampling was not used but sampling methodology followed AICPA guidelines. Repeat finding: This is not a repeat finding. Recommendation: We recommend that management strengthen procurement controls to ensure compliance with 2 CFR 200 and internal policy. Specifically, procedures should be implemented to require and document price quotations from an adequate number of qualified vendors for all procurements above the micro-purchase threshold. For noncompetitive procurements, management should prepare and retain contemporaneous written justification demonstrating that the procurement meets one of the allowable criteria under 2 CFR §200.320(c), supported by appropriate documentation such as market research or evidence of exclusivity. In addition, management should provide training to personnel responsible for procurement to ensure proper and consistent application of procurement requirements. Management’s response (unaudited): See Corrective Action Plan

Significant Deficiency – Unsupported use of sole source procurement Agency: Department of Justice ALN# 16.582 - Crime Victim Assistance/Discretionary Grants Grant Year: 2025 Grant Numbers: 15POVC-22-GK-01804-NONF; 15POVC-25-GK-00736-NONF; 15POVC-25-GK-00728-NONF; 15POVC-23-GK-02220-NONF Agency: Department of Health and Human Services ALN# 93.592 - Family Violence Prevention and Services/Discretionary Grants Grant Year: 2025 Grant Numbers: 90EV054301C6; 90EV052301C6; 90EV056003; 90EV0459-04 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 (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. Condition: During testing of procurement transactions, two of the three tested were 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: • Management based the sole source decision on the consultant’s extensive professional experience, subject matter expertise, and prior leadership roles in nonprofit training, technical assistance, and organizational development. • Management concluded that the consultant’s depth and breadth of experience, familiarity with federal technical assistance systems, and proven effectiveness could not be easily replicated by another individual. The justification emphasized the consultant’s ability to respond immediately to complex technical assistance needs without additional onboarding, citing efficiency and continuity of service delivery as key considerations 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. 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: None. Perspective: Statistical sampling was not used, however, sampling methodology followed AICPA guidelines. Repeat Finding: Not a repeat finding. Recommendation: Strengthen procurement controls, including documentation requirements and provide training on procurement regulations to ensure all noncompetitive procurements meet 2 CFR 200.320(c) criteria. Management’s Response (unaudited): See Corrective Action Plan.

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

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: 4920-49 and 4920-51 – 2025 Award Period: January 1, 2025 – December 31, 2025 Compliance Requirement Affected: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR 200.320 Methods of Procurement state that when a nonfederal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined by 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 City 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 City was not reviewing vendors prior to entering a contract to ensure the vendor was not on the suspended or debarred vendor list maintained by the General Services Administration. Cause: The City does not have controls related to ensuring suspension and debarment are verified prior to entering a contract with vendors. Effect: The auditor noted no instances of 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: No Recommendation: We recommend the City evaluate its existing policies and procedures to determine where additional enhancements should be made or now policies created. Views of Responsible Officials: There is no disagreement with this finding.

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

Reportable Finding Considered a Significant Deficiency and Noncompliance Finding – Procurement Agency: U.S. Department of State, Bureau of Population, Refugees, and Migration (PRM) Program: U.S. Refugee Admissions Program ALN# 19.510 Grant Number: SPRMCO25CA0026, SPRMCO25CA0028, and SPRMCO24CA0337 Program Year: 2025 Criteria: The auditee must maintain and follow documented procurement policies and procedures that comply with Uniform Guidance procurement requirements. Noncompetitive procurement (sole source) may only be used when one of the circumstances in 2 CFR 200.320(c) applies and must be adequately documented. Condition: The Organization did not have a formal written procurement policy during the audit period. In addition, for the procurement selections tested that were procured through sole source methods, management did not maintain documentation demonstrating that the procurements met the criteria for noncompetitive procurement under 2 CFR 200.320(c). Cause: Management had not established formal procurement policies and procedures and did not implement controls to ensure sole source procurements were appropriately justified and documented in accordance with Uniform Guidance requirements. Effect: Without documented procurement policies and support for sole source procurements, the Organization cannot demonstrate compliance with federal procurement requirements. This increases the risk that procurements may not be conducted in a manner that promotes full and open competition. Questioned costs: None Perspective: Statistical sampling was not used; however, a nonstatistical sampling approach was applied in accordance with AICPA guidance. This appears to be a systemic issue, as the Organization lacked a formal procurement policy during the audit period. Additionally, sole source procurements tested did not include documentation demonstrating that the conditions permitting noncompetitive procurement were met. Repeat finding: This is not a repeat finding. Recommendation: Management should develop and formally adopt written procurement policies and procedures that comply with Uniform Guidance requirements. The policies should include requirements for procurement methods, documentation standards, conflict of interest considerations, and approval procedures. In addition, management should ensure that all sole source procurements are supported by documentation demonstrating that the procurement met one of the allowable circumstances for noncompetitive procurement under 2 CFR 200.320(c) and retain such documentation in the procurement file. Management’s response (unaudited): See Corrective Action Plan

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Emergency Solutions Grant Assistance Listing Number: 14.231 Award Period: January 1, 2025 to December 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: In accordance with 2 CFR §200.318(a) and §200.318(d), non-federal entities are required to maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts, and must follow documented procurement procedures that promote full and open competition. Additionally, 2 CFR §200.320 requires entities to use appropriate procurement methods based on the nature and size of each procurement and to perform cost or price analysis as applicable. Further, pursuant to 2 CFR §200.214, non-federal entities are prohibited from contracting with or making subawards to parties that are suspended or debarred and are required to verify the eligibility of vendors (e.g., through the System for Award Management (SAM)) prior to entering into transactions and periodically as appropriate. These requirements imply the need for ongoing evaluation and documentation of procurement decisions, vendor eligibility, and compliance, particularly when procurements span multiple funding periods or awards. Condition: During our review, we noted that the organization performed procurement procedures, including vendor selection, cost/price evaluation, and suspension and debarment verification, at the time of initial engagement with a vendor. However, the organization did not subsequently review, monitor, or reperform procurement procedures—including periodic suspension and debarment checks—in later years, despite continued use of the vendor across different grant awards and grant periods. Questioned Costs: None Context: The organization engages vendors to provide goods and services supported by multiple grant awards over varying grant periods. Procurement requirements, including verification that vendors are not suspended or debarred, apply at the time of vendor selection and should be periodically reassessed to ensure continued compliance with applicable regulations, particularly when funding sources, grant terms, or procurement thresholds change. Cause: This condition appears to be the result of a lack of formal policies or controls requiring periodic reassessment of vendor selection, including suspension and debarment verification, as well as insufficient awareness of ongoing procurement and eligibility requirements under federal regulations. Effect or Potential Effect of Finding: Failure to reassess procurement decisions, monitor vendor relationships, and reverify suspension and debarment status across grant periods increases the risk of noncompliance with federal procurement standards. This includes the risk of contracting with ineligible vendors, inadequate competition, or unsupported pricing. Such noncompliance may result in questioned costs, disallowed expenditures, repayment of grant funds, and increased exposure to vendor performance and compliance risks. Repeat Finding: No. Recommendation: We recommend that management implement formal procurement policies requiring periodic reassessment of vendors used in federally funded programs, particularly when new grant awards are received or grant periods change. This should include evaluating whether the original procurement method remains appropriate, performing updated cost or price analyses as necessary, and conducting and documenting periodic suspension and debarment checks (e.g., SAM verification). Additionally, management should establish oversight controls to ensure procurement compliance and vendor eligibility are maintained throughout the lifecycle of vendor relationships in accordance with 2 CFR §200.318–200.320 and §200.214. Views of Responsible Official: There is no disagreement with the audit finding.

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

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

Criteria An entity must have and use documented procurement policies consistent with Federal, State, and local laws, regulations, and standards for the acquisition of property or services required under a Federal award or subaward. The procedures must conform to the procurement standards identified in 2 CFR § 200.317 through 200.327. For purchases below the simplified acquisition threshold (SAT) but above the micro-purchase threshold, 2 CFR § 200.320(a) requires the non-Federal entity to obtain price or rate quotations from an adequate number of qualified sources. Condition The Program used federal grant funds to pay a single contractor $222,080 in the aggregate for installation services performed at individual homes. As a small purchase under 2 CFR 200.320(a), the procurement required the Program to obtain price or rate quotations from an adequate number of qualified sources. The Program did not solicit or document quotations from more than one source prior to engaging the contractor. Cause The Program was not fully educated on procurement policies when it came to grant funds, so they were not aware that bids or price comparisons were necessary for the purchases. Effect Failure to follow appropriate procurement procedures could result in excess procurement costs being disallowed or subject the entity to possible claims. Recommendation We recommend management adhere to the Federal, State, and local regulations for all procurements using Federally sourced funds by ensuring policies and procedures are documented and followed in accordance with Uniform Guidance requirements. Management's Response Management agrees with our recommendation and finding and will work to adhere to all applicable procurement policies. Questioned Costs None. Although the Program did not follow the required competitive procurement procedures for this contractor, the costs incurred were reasonable and allowable under the terms of the Federal award and applicable cost principles. The deficiency relates to noncompliance with procurement standards, not to the propriety of the costs themselves; accordingly, no costs are questioned.

Finding 2025-006 I. Procurement, Suspension and Debarment Identification of the Federal Program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2025 through December 31, 2025 Program No.: IL002-01-00025D Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): The Uniform Guidance 2 CFR section 200.303 states, “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).” The Uniform Guidance 2 CFR section 200.318, general procurement standards states “(a) Documented procurement procedures. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services.” The Uniform Guidance 2 CFR section 200.319 states that “all procurement transactions under the Federal award must be conducted in a manner that provides for full and open competition and is consistent with the standards of this section and §200.320.” The Authority’s procurement policy for an intergovernmental purchasing agreement requires an agency contract and amendments. The Authority’s internal control procedures require procurements of more than $500,000 to have Board of Commissioners’ approval. Recipients and subrecipients 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 180.220. When a recipient or subrecipient enters into a covered transaction with an entity at a lower tier, the recipient or subrecipient must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). Condition: For one of nine (11.1%) procurement transactions and one of 40 (2.5%) procurement transactions tested for internal controls over and compliance with federal procurement compliance requirements, respectively, we identified one procurement exception. Specifically, the procurement lacked Board of Commissioners approval, and no executed agreement or amendment existed for fiscal year 2025. Therefore, the Authority was unable to demonstrate compliance with Uniform Guidance procurement standards. For three of 40 (7.5%) procurement transactions tested for internal controls over and compliance with the suspension and debarment compliance requirement, the suspension and debarment check was not performed or retained on file before entering the covered transaction. Therefore, the Authority was unable to demonstrate compliance with Uniform Guidance suspension and debarment standards. Cause: The Authority’s internal controls over the review and approval of procurement transactions and the review and retention of suspension and debarment checks were not operating effectively. Effect or Potential Effect: Procurements may not be made in accordance with Uniform Guidance procurement standards. Contractors/vendors may be suspended or debarred. Questioned Costs: A total of $6,412,600 related to Assistance Listing No. 14.881, representing one procurement with a procurement exception (invoices totaling $6,412,600). Context: The one procurement and three suspension and debarment transactions totaled $8,443,452 out of 40 procurement transactions sampled for compliance totaling $38,544,823. Public Housing expenditures reported in the schedule of expenditures of federal awards were $253,935,873 for the year ended December 31, 2025, representing 21.32% of total federal expenditures under Assistance Listing No. 14.881 of $1,190,937,657. Identification as a Repeat Finding, if Applicable: The finding is a partial repeat of finding 2024-006 from the prior year. Recommendation: The Authority should follow its established internal controls over the review and approval of procurement transactions and the review and retention of suspension and debarment checks. Views of Responsible Officials: CHA Management agrees. This finding pertains to an intergovernmental contractual agreement with the Chicago Police Department, which was under renegotiation and not yet approved by the Board. Although the suspension and debarment check had been performed, it was not documented in accordance with CHA procedures. Going forward, the CHA will ensure compliance with its existing procurement process and procedures.

Finding 2025-005 Noncompliance over Procurement Significant deficiency/ Noncompliance Criteria: The Organization should establish and maintain written procurement procedures to ensure that purchases and contracts supported by federal awards are conducted in accordance with applicable federal procurement standards, including required full and open competition and required methods of procurement. The Uniform Guidance procurement standards are contained in 2 CFR Part 200, Subpart D, §§ 200.317–200.327 generally, including 2 CFR § 200.319 (Competition) and 2 CFR § 200.320 (Methods of procurement to be followed). Condition and Context: During our testing of the Organization’s procurement compliance requirements, we noted two contracts that should have been procured using competitive bidding; however, the Organization did not complete competitive bidding for these contracts. Cause: The Organization did not have sufficient procedures in place to ensure that procurement actions were consistently evaluated for required competitive procurement methods and that compliance with applicable procurement requirements was documented and reviewed prior to contract award. Effect: Failure to follow applicable competitive procurement requirements may result in noncompliance with federal procurement standards and may increase the risk that contracts are awarded without maximizing open and free competition. In addition, inadequate procurement documentation reduces management’s ability to demonstrate that procurement actions are conducted in accordance with applicable requirements. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding. Recommendation: Management should establish or strengthen procurement policies and procedures to ensure that contracts subject to competitive procurement requirements are competitively bid and that procurement actions are appropriately documented. Such procedures may include developing standardized procurement checklists, requiring supervisory review of procurement method selection and documentation prior to contract award, and providing periodic training to staff responsible for procurement. Management Response: Management concurs with this finding. See Corrective Action Plan.

2025-004 – Hearts for the Invisible Charlotte Coalition did not follow established Federal procurement procedures and maintain required procurement documentation. Federal Agency: Department of the Treasury Assistance Listing Number: 21.027 Award Period: 05/01/2023 to 04/30/2026 Type of Finding: Significant Deficiency in Internal Controls Over Compliance for Each Major Program Criteria or Specific Requirement: Under 2 CFR § 200.318(a), recipients and subrecipients must “maintain and use documented procedures for procurement transactions under a Federal award or subaward.” Additionally, 2 CFR § 200.318(i) requires that “the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction,” including: Rationale for the method of procurement, Selection of contract type, Contractor selection or rejection, and Basis for the contract price. Condition: During our audit of procurement activities under Federal award 21.027, we noted that the Organization did not follow its documented procurement procedures. Specifically:The procurement plan lacked evidence of adherence to competitive procurement methods as required under 2 CFR § 200.320. No documentation was maintained to support when or how procurement decisions were made, including missing records of contractor selection, price justification, and procurement method rationale. Context: The finding pertains to two purchases tested under Assistance Listing 21.027 for which sufficient documentation was not maintained to demonstrate compliance with the Organization’s procurement procedures and applicable Federal requirements. Cause: The Organization did not implement adequate internal controls to ensure compliance with Federal procurement standards. Procurement activities were conducted informally without sufficient oversight or documentation, and staff were not adequately trained on Uniform Guidance requirements. Effect: Failure to follow documented procurement procedures and maintain required records increases the risk of: Noncompliance with Federal regulations, Unfair or noncompetitive procurement practices, Inability to justify expenditures to Federal agencies or auditors, and Disallowed costs or questioned costs during Federal review. Repeat Finding: Yes Auditor’s Recommendation: We recommend that the Organization: Implement and enforce the updated procurement policy. Train staff on Federal procurement requirements. Implement a checklist or control mechanism to ensure all required documentation is retained for each procurement transaction. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges the finding and agrees with the recommendation. The Organization updated its procurement policy in February 2026 to align with applicable Federal procurement requirements. Management will implement and enforce the procurement methods established in the updated policy, provide training to relevant staff on Federal procurement requirements, and maintain the required supporting documentation for applicable procurement transactions going forward.

Finding 2025-005 AL No.: 21.027 Program Title: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of Treasury Pass-through Agency: Wisconsin Department of Health Services Award Number/Year: Unknown/ 2025 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR 200.318 through 200.327. Per 2 CFR 200.319, the entity is to conduct all procurement transactions in a manner providing full and open competition and the procurement method was appropriate based off of the dollar amount and conditions specified in 2 CFR 200.320 and the entity's procurement policy. Condition/Context: The County did not go out for bid for a project above the required dollar threshold in their policy therefore not providing full and open competition and did not have controls in place to ensure the policy was being followed for one of nine of the selected vendors. The sample was not statistically valid. Cause: The County did not have internal control procedures in place to ensure the procurement policy was being followed. Effect: The County could miss out on the best pricing for a project. Questioned Costs: The amount of questioned costs, if any, could not be determined. Recommendation: We recommend the County ensure all employees are aware and familiar with the County procurement policy. Management Response: Staff will be informed of the procurement policy specific to Federally funded projects requiring three bids

Subject: COVID-19 Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2025 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness Criteria: Federal regulations 2 CFR section 200.318 through 200.327 and 2 CFR 180.300 require the City to: 200 CFR.318 (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. 200 CFR.320 (b-c) states in part: 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 the following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (3) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate Finding 2025-001 (Continued) Criteria (Continued) 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.” Condition: An effective system of internal controls was not in place at the City to ensure compliance with requirements related to the Procurement and Suspension and Debarment compliance requirement. Cause: Management had not established and implemented a system of internal controls and written procedures to ensure compliance with the Procurement and Suspension and Debarment compliance requirement, including the use of formal procurement methods when required and documenting suspension and debarment verification for applicable contracts. Effect: The failure to design and implement an effective system of internal controls enabled noncompliance with the Procurement and Suspension and Debarment compliance requirement to occur and go undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could have resulted in questioned costs or the loss of federal funds to the City. Questioned Costs: There were no questioned costs identified. Context: There was one procurement selected for testing for which The City did not follow federal procurement requirements for a professional services contract totaling approximately $442,200, which exceeded the City's small purchase threshold of $10,000. The City contracted with a firm to perform the design services for the Ohio River Greenway Trail Design Project; however, a formal procurement method was not used for the purchase as required by the federal procurement requirements outlined in 2 CFR § 200.320. Additionally, for the same contract, representing the procurement selected for testing, the City did not document that it verified the contractor was not suspended or debarred from participation in federal award programs prior to awarding the contract exceeding $25,000, as required by 2 CFR § 180.300. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the City's management establish and implement written federal procurement policies to supplement its organizational policies and develop a system of internal controls and written procedures to ensure compliance with grant agreement requirements and the Procurement and Suspension and Debarment compliance requirement. We further recommend that management document the use of the appropriate procurement method and perform and retain documentation of suspension and debarment verification for all covered transactions. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Condition 2025-03 The Organization did not comply with applicable Federal procurement requirements when selecting the general contractor for construction of its new branch building. The Organization did not publicly solicit the construction contract. Instead, the Organization developed a list of potential construction companies using information obtained from Organization team members, professional consultants, members of the board of directors, volunteers, and community partners. The Organization then directly solicited proposals from five construction companies that it determined were qualified based on their experience and ability to perform a construction project of this nature. No other construction companies were given an opportunity to submit proposals because the Organization did not provide public notice of the procurement. Context The Organization entered into the construction contract prior to 2025 and the construction project was underway before the Organization received Coronavirus State and Local Fiscal Recovery Funds (SLFRF). In 2025, the Organization received approximately $1 million of SLFRF funds through a pass-through entity. Treasury's SLFRF Frequently Asked Questions (FAQ 13.7) indicates that recipients may leverage existing contracts for SLFRF activities if the existing contracts conform to the procurement standards in 2 CFR Part 200. Accordingly, the Organization's existing construction contract was required to conform to the applicable Federal procurement standards. Criteria 2 CFR Section 200.319(a) requires procurement transactions under a Federal award to be conducted in a manner providing full and open competition. For procurements exceeding the applicable simplified acquisition threshold, 2 CFR Section 200.320(b) requires the use of formal procurement methods. Under Section 200.320(b)(2), when the competitive proposal method is used, the request for proposals must be through public notice, and proposals must be solicited from multiple qualified entities. The recipient or subrecipient must also have a written method for conducting technical evaluations and making selections. Cause The Organization did not have adequate procurement policies and procedures to ensure that an existing construction contract used for SLFRF-funded activities was procured in accordance with applicable Federal procurement requirements. The Organization's procurement process relied on a limited group of construction firms identified through internal and community sources rather than providing an opportunity for other qualified firms to compete through a publicly noticed solicitation. Effect The Organization's procurement process limited competition by restricting the opportunity to compete for the construction contract to five firms identified by the Organization. The Organization did not demonstrate that the procurement provided full and open competition as required by Federal procurement requirements. Because the existing construction contract was subsequently leveraged for SLFRF-funded activities, the noncompliant procurement affected the Federal award. The Organization charged approximately $1 million of construction expenditures under the contract to the SLFRF award. Recommendation We recommend that the Organization establish and implement procedures to ensure that procurements used for Federal award activities comply with applicable Federal procurement requirements. The Organization should ensure that applicable formal procurements are publicly solicited, provide full and open competition. The Organization should also maintain documentation sufficient to demonstrate compliance with appropriate 2 CFR Sections when using existing contracts for Federal award activities. Views of Responsible Officials In 2026, procedures to ensure that future procurements associated with Federal awards comply with applicable Federal procurement requirements were developed, documented, and implemented. These procedures include requirements for public solicitation and full and open competition when applicable, as well as review of existing contracts before they are used for Federal award activities. The Organization will maintain appropriate documentation demonstrating compliance with applicable Federal procurement requirements.

FINDING 2025-003 Information on the federal program: Subject: Drinking Water State Revolving Fund – Internal Controls Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund (DWSRF) Assistance Listing Number: 66.468 Federal Award Numbers and Years (or Other Identifying Numbers): 2025 Pass-Through Entity: Indiana Financing Authority Compliance Requirement: Procurement Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: a. Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) " 2 CFR 200.318(a) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . b. Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources " Condition: An effective internal control system was not in place at the Town to ensure compliance with requirements related to the Drinking Water State Revolving Fund and Procurement compliance requirements as part of the small purchases procurement threshold. Cause: The Town was not aware that procurement policies/practices were needed for professional services, such as hiring a project engineer. Effect: The failure to obtain multiple bids placed the Town at risk of noncompliance with the grant agreement and the procurement compliance requirements. Questioned Costs: There were no questioned costs identified. Context: One contract was subject to small purchase procurement testing for calendar year 2025. The Town disbursed $147,963 to DLZ, Inc. during 2025 for engineering services related to the new water treatment plant. Based on our testing, the Town did not obtain quotes or otherwise solicit proposals from other qualified engineering firms prior to procuring these services. Identification as a repeat finding, if applicable: No. Not a repeat finding Recommendation: We recommend the Town establish and implement procedures to ensure purchases subject to small purchase procurement requirements are made in accordance with applicable procurement policies and regulations. Such procedures should include obtaining and documenting quotes for an adequate number of qualified sources prior to selecting a vendor. The Town should also retain documentation supporting the procurement process, including quotes received, vendor selection, and the basis for the award. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2025-004 Information on the federal program: Subject: Drinking Water State Revolving Fund – Internal Controls Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund (DWSRF) Assistance Listing Number: 66.468 Federal Award Numbers and Years (or Other Identifying Numbers): 2025 Pass-Through Entity: Indiana Financing Authority Compliance Requirement: Procurement Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: a. Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) " 2 CFR 200.318(a) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . b. Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources " Condition: An effective internal control system was not in place at the Town to ensure compliance with requirements related to the Drinking Water State Revolving Fund and Procurement compliance requirements as part of the Build America Buy America (BABA) requirement. Cause: The Town’s procurement review process was not designed or implemented to ensure that all applicable BABA requirements were incorporated into contracts subject to BABA. Specifically, the review process focused on the American Iron and Steel requirements and did not adequately consider the additional domestic preference requirements applicable to manufactured products and construction materials. As a result, the respective contracts did not include provisions addressing all applicable BABA requirements. Effect: The failure to include the BABA requirements within the respective contracts placed the Town at risk of noncompliance with the grant agreement and the procurement compliance requirements. Questioned Costs: There were no questioned costs identified. Context: Crowe sampled two contracts that were subject to the procurement compliance requirements. Only one of the two contracts were subject to the Build America Buy America (BABA) requirements. Crowe noted that in that contract, management included contractual provisions addressing the American Iron and Steel requirements; however, the contract did not include provisions addressing the manufactured products and construction materials requirements applicable under BABA. As a result, the procurement control did not operate effectively to ensure that all applicable BABA requirements were incorporated into the respective contracts. Additionally, management was unable to provide sufficient supporting documentation demonstrating that construction materials used in the project were produced in the United States in accordance with applicable BABA requirements. Further, the documentation provided did not allow for a determination of the portion of total project costs attributable to construction materials as compared to iron and steel. Accordingly, Crowe was unable to determine whether the project complied with the applicable BABA requirements, resulting in a material weakness finding. Identification as a repeat finding, if applicable: No. Not a repeat finding Recommendation: We recommend the Town strengthen its procurement and contract review procedures to ensure that all applicable Build America, Buy America Act (BABA) requirements are identified and incorporated into contracts prior to execution. Such procedures should include consideration of the domestic preference requirements applicable to iron and steel, manufactured products, and construction materials. Management should also establish procedures to obtain and retain sufficient supporting documentation demonstrating compliance with applicable BABA requirements, including documentation necessary to substantiate that covered materials and products were produced in the United States. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2025-003 Subject: Drinking Water State Revolving Fund – Procurement Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number and Year (or Other Identifying Number): DW24312502 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The City had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance for the acquisition of property and services. The City expended federal funds to pay five separate vendors to provide goods and services for the duration of the City's Lead Service Line Replacement project. One vendor was identified with contract amount or aggregated total of expenditures that exceeded the simplified acquisition threshold of $150,000. The vendor was tested, and the City did not have documented procurement procedures or polices used to procure engineering and design services. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF ROCHESTER 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. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF ROCHESTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort." Cause The City did not develop effective internal controls to ensure the appropriate procedures were followed when procuring with federal funding and were not aware of the need to follow federal guidelines for procurement expenditures associated with the SRF awards. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF ROCHESTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the City could be overpaying for services. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the grant agreement and the Procurement compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 20

2025 002 Reporting and Procurement U.S. Department of the Treasury: Passed through State of New Jersey Department of Community Affairs: COVID 19 Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Contract Number and Years: G2022 09 (03/02/2021 – 12/31/2026) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Repeat Finding: Yes (2024 001) Finding Type: Material Weakness, Material Noncompliance Criteria Reporting Per 2 CFR 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non Federal statutes, regulations and the terms and conditions of Federal awards, such as: expenditures/expense transactions associated with awards including grants. Further, the Uniform Guidance compliance supplement notes, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the Federal awarding agency. In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, direct grants and pass through funds are fulfilled utilizing an advanced payment method and tracking reports. The grantee shall submit quarterly financial reports, in a format to be provided by the Department, and including the number of government full time employees responding to COVID 19 as supported by this funding. The reports are prepared and submitted to allow for relevant and reliable information to be provided to the Federal government or State of New Jersey for tracking purposes. The reports are the source documents for the grantee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the grantee’s financial statements in accordance with 2 CFR 200.502, Basis for determining Federal awards expended, for the SEFA. Procurement Non Federal entities other than states, including those operating Federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non Federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro purchase method, the aggregate dollar amount does not exceed $50,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis Bacon Act)). Small purchase procedures are used for purchases that exceed the micro purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro purchases may be awarded without soliciting competitive quotations if the non Federal entity considers the price to be reasonable (2 CFR 200.320(a)(1)(ii)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR 200.320(a)(2)(i)). In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in sections 602(c) and 603(c) of the Act and Treasury’s Interim Final Rule and Final Rule. As such, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. Under the program, St. Joseph’s Health, Inc. must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Internal Control 2 CFR 200.303 requires non Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Condition and Context Reporting On a quarterly basis, St. Joseph’s Health, Inc. (the System) prepares and reports to New Jersey Department of Community Affairs (the Department) the program expenditures for Federal funding amounts on the tracking report of expenditures, which are then used to prepare the annual SEFA in conjunction with the general ledger detail at the end of the fiscal year. While expenditures per the SEFA as prepared by the System were accurate and the quarterly reporting was accepted by the State, the System’s expenditures per the report of expenditures continue to be based upon purchase order amounts, which include expenditures that were incurred subsequent to year end. Procurement Further, the System engaged multiple vendors for several projects under the G2022 09 grant that were above the $50K micro purchase threshold, but below the simplified acquisition threshold. However, the System did not obtain multiple quotes from different vendors to encourage fair competition in the market. The System’s policies and procedures to ensure compliance with the above compliance requirements did not include certain internal controls that were designed properly and operating effectively to ensure that the System properly reported costs on the report of expenditures or obtained the necessary quotes from potential bidders for procurements over the micro purchase threshold. Cause Management did not properly design adequate review procedures to ensure that expenditures reported on financial reports to the Department were reconciled to the System’s accounting records and reflected expenditures incurred. Consequently, purchase order commitments were reported in lieu of incurred expenditures, resulting in a variance of approximately $1.9 million between amounts reported on financial reports to the Department and amounts reported on the SEFA. We noted, however, that this variance did not represent any unallowable costs. Additionally, Management did not retain or obtain the required documentation indicating quotes from multiple vendors were obtained for the ongoing construction projects under the grant. Effect The System had a material variance in the amount of expenditures reported on financial reports to the Department as compared to the SEFA and did not obtain multiple quotations from vendors when making selections for various projects ongoing under the Federal program. Questioned Costs None Recommendation Reporting We recommend that the System strengthen its processes and internal controls to ensure that only allowable and incurred expenditures and not purchase order amounts, are reported on the financial reports submitted to the Department in the applicable period in which they were incurred. Procurement We recommend that the System strengthen its processes and internal controls to ensure that all procurement related transactions are supported by the appropriate bidding documentation as required by the Uniform Guidance for each respective bidding threshold. View of Responsible Official Management agrees with the auditor’s finding and will strengthen its processes and internal controls to ensure the report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period compared to the purchase order balances and all procurement transactions contain the required bidding documentation for each bidding threshold in accordance with the Uniform Guidance.

Finding 2025-003: Material Weakness - Procurement, Suspension and Debarment Federal Program: Water and Waste Disposal Systems for Rural Communities Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Repeat of Prior Year Finding 2024-003 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires non-federal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. Condition/Context: During testing for this program, one of two vendors tested did not go through the appropriate procurement process. The vendor was directly awarded the project. The sample was not a statistically valid sample. Cause: The City has not historically bid out their engineering services and has used the same vendor for all projects. Effect: The City could potentially not have selected an appropriate vendor for the project. Questioned Costs: None noted. Recommendation: The City should ensure contracts are following the procurement process for selection of vendors for federally funded projects. Program personnel should become familiar with the procurement, suspension and debarment rules for federal programs and implement process changes for future projects and retain documentation of such verifications. Views of Responsible Officials: The City will be reviewing its procurement policy to define clearer expectations for the administrative staff to follow.

2 CFR § 1000.10 provides that, except for the deviations set forth elsewhere in this Part, the Department of Treasury adopts the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards set forth at 2 CFR Part 200. 2 CFR § 200.320(a)(2)(i) defines simplified acquisitions as purchases where 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. The County did not have the proper internal controls in place to obtain sufficient quotations from qualified sources. For the State and Local Fiscal Recovery Funds (SLFRF) direct grant, one out of the two projects tested, which was for digitalization of Clerk of Courts' records in the amount of $20,804, exceeded the County's micro-purchase threshold of $10,000, but the County did not obtain and document price or rate quotations from an adequate number of qualified sources. For the State and Local Fiscal Recovery Funds passed through Ohio Department of Development, there was only one project subject to simplified acquisition testing, which was for professional engineering in the amount of $42,600. However, the County could not provide evidence that price or rate quotations were received from adequate number of qualified sources. Additionally, 31 CFR § 19.305 states that non-Federal entities are prohibited from entering into a covered transaction with parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 31 CFR § 19.120. 31 CFR § 19.200 identifies “covered transactions” as nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 31 CFR § 19.220. All nonprocurement transactions as defined in 31 CFR § 19.970 (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 31 CFR § 19.215. When a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov/content/home); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transaction, had not been suspended or debarred. Although all of the vendors tested were not suspended or debarred, the County did not have any evidence supporting that it performed a search before entering into a contract, collected certifications from the vendors, or added a clause or condition to covered transactions with the vendors to verify this information to verify this information. Failure to comply with federal procurement and suspension and debarment guidelines could result in improper spending of federal monies. The County should ensure that price or rate quotations are sought out from an adequate number of sources for procurement purchases defined as Simplified Acquisitions. In addition, the County should also develop and implement controls to verify that contractors who are taking part of a federally funded project are not suspended or debarred before entering into a contract with them.

Finding 2025-002 – I. Procurement and Suspension and Debarment Information on the Federal Program: Grantor: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Program Name: Congressional Directives Assistance Listing Numbers: 93.493 Criteria or Specific Requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Title 2, Subtitle A, Chapter II, Part 200, Subpart D 200.320 – Procurement methods – requires entities to maintain documented procurement procedures and appropriate supporting documentation for procurement methods, including noncompetitive procurements. Purchases below the simple acquisition threshold, but above the micro-purchase threshold, require price and rate quotations to be obtained from an adequate number of qualified sources. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 - 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. Condition: The Health System did not retain documentation demonstrating either (1) competitive bidding was performed or (2) the justification and circumstances supporting the use of a noncompetitive procurement method for equipment, installation and broadband services purchased under the grant. The procurement transactions reviewed exceeded the micro-purchase threshold; however, no supporting competitive procurement or sole-source documentation was available for audit inspection. The Health System has an established process to monitor vendor suspension and debarment requirements. Management’s process includes suspension and debarment evaluations on all new vendors prior to entering into any business relationship. The Health System utilized a third party to perform monthly suspension and debarment reviews; however, vendors associated with the program were not included in the listings provided to the third party for review. As a result, the Health System could not demonstrate that required suspension and debarment procedures had been performed for applicable vendors. Cause: Controls over the retention and maintenance of procurement documentation were not operating effectively to ensure that competitive procurement activities or sole-source justifications were documented and retained in accordance with Federal requirements. Controls over the identification and submission of vendors subject to suspension and debarment review were not operating effectively to ensure all applicable program vendors were included in the monthly review process performed by the third party. Effect or potential effect: Failure to maintain procurement documentation supporting competition or sole-source justification may result in noncompliance with Federal procurement requirements and limits the Health System's ability to demonstrate that contracts were awarded in accordance with Federal regulations. Failure to perform and document required suspension and debarment procedures increases the risk that the Health System could enter into a covered transaction with a suspended, debarred, or otherwise excluded party, resulting in noncompliance with Federal requirements. Questioned costs: Questioned costs totaled $2,299,513 and represent procurement transactions exceeding the micro-purchase threshold for which competitive procurement or sole-source documentation was not available for audit inspection. Although the costs are questioned due to the lack of required procurement documentation, the audit team noted the costs appear allowable. No questioned costs were noted for suspension and debarment. Audit procedures performed by the audit team determined that none of the vendors tested were suspended or debarred. Context: The population consisted of 20 procurement transactions. We selected a sample of 5 procurement transactions for testing and identified exceptions in all 5 items tested. For each transaction selected, the Health System was unable to provide documentation demonstrating that competitive bidding occurred or documentation supporting the circumstances that would allow for the use of a noncompetitive procurement method at the time the procurement occurred. The population consisted of 8 vendors associated with the Congressional Directives program. We selected a sample of 5 vendors for testing and identified exceptions for all 5 vendors. Specifically, several of the vendors selected for testing did not appear on a sample of 6 monthly vendor listings provided to the third party responsible for performing suspension and debarment reviews. As a result, the Health System could not demonstrate that the required suspension and debarment procedures had been performed for those vendors. Although these vendors were not subjected to the Health System's suspension and debarment review process, our independent verification procedures noted that none of the vendors tested were suspended or debarred. Identification as a repeat finding, if applicable: Not a repeat finding. Recommendation: The Health System should strengthen its internal controls over procurement and suspension and debarment compliance to ensure: (1) procurement files contain and retain documentation supporting competitive procurement procedures or noncompetitive procurement justifications, as applicable; and (2) all vendors subject to Federal suspension and debarment requirements are identified, included in the review process, and appropriately documented. Views of Responsible Officials: Management agrees with the findings. The Health System has established procurement policies and procedures; however, the purchases identified in the audit were not consistently processed through the established procurement review process, and the required supporting documentation was not retained. The purchases involved IT equipment, installation, and broadband services necessary for the project. Management believes the vendor selections were supportable as sole-source procurements based on technical compatibility, integration with existing IT infrastructure, continuity of implementation and support, and specialized vendor capabilities. Management determined that the associated costs were allowable. Corrective action will focus on reinforcing departmental compliance with the existing procurement policy, requiring procurement’s involvement before vendor engagement, and ensuring that competitive bidding documentation or an approved sole-source justification is retained for all federally funded purchases. Although the Health System has an established suspension and debarment screening process, certain vendors associated with the Federal program were not included in the screening population. Management will implement a documented reconciliation of federally funded vendors to the screening population, including supervisory review and resolution of any exceptions, to ensure that all applicable vendors are screened and evidence of the screening is retained. No questioned costs were identified, and subsequent to the transaction, management verified that none of the vendors tested were suspended or debarred at the time of the transactions.

2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; and • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals During testing we noted that the County Commissioner’s department did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.

Finding 2025-002 U.S. Department of Health and Human Services ALN: 93.493 Congressional Directed Spending for Construction Projects ALN: 93.526 Grants for Capital Development in Health Centers I - Procurement and Suspension and Debarment Condition: During testing of procurement transactions subject to federal compliance requirements, we noted the Organization did not consistently follow its documented procurement policy. Specifically, for the seven transactions tested, management was unable to provide documentation supporting the procurement process performed, including evidence of competitive bids, vendor selection procedures, or other records demonstrating compliance with the procurement requirements outlined in its policy. Criteria: Per 2 CFR section 200.318(a), non-Federal entities must use and follow documented procurement procedures that are consistent with applicable Federal statutes, regulations, and the terms and conditions of Federal awards. Additionally, 2 CFR section 200.320 through 200.327 require entities to maintain documentation supporting the procurement method used, including the basis for contractor selection and evidence of required competition when applicable. The Organization's procurement policy requires the solicitation and retention of competitive bids for purchases exceeding established thresholds. Cause: Management did not consistently adhere to established procurement procedures and did not maintain adequate documentation to demonstrate that required competitive procurement activities were performed. In addition, controls over the retention of procurement documentation were not operating effectively to ensure compliance with federal procurement requirements and the Organization's procurement policy. Effect: Without adequate documentation of the procurement process and competitive bidding requirements, the Organization cannot demonstrate compliance with Uniform Guidance procurement requirements. As a result, federal funds may have been expended in a manner that does not ensure full and open competition or may be subject to questioned costs by federal awarding agencies. Recommendation: We recommend that management strengthen internal controls over procurement activities by (1) ensuring procurement procedures are consistently followed for all federally funded purchases; (2) retaining documentation supporting the procurement method utilized, including competitive bids, quotes received, bid evaluations, vendor selection decisions, and contract approvals; (3) implementing a review process to verify procurement documentation is complete and maintained before expenditures are approved; and (4) providing training to personnel responsible for purchasing activities regarding Uniform Guidance procurement requirements and the Organization's procurement policy. View of Responsible Officials: Management acknowledges the finding and agrees that documentation supporting compliance with procurement requirements was not consistently retained. For the seven disbursements selected for testing, management had established longstanding relationships with the vendors utilized and, in several instances, there were a limited number of vendors capable of providing the specialized equipment and services acquired for the project. Management indicated that procurement procedures were performed during the vendor selection process, including obtaining and evaluating quotes, discussing vendor alternatives, and visiting other healthcare organizations to assess the quality and suitability of certain products before making purchasing decisions. However, many of these activities occurred several years earlier, at the outset of the construction project, and supporting documentation was not maintained in accordance with the Organization's procurement policy and federal documentation requirements. Management agrees with the finding and will implement procedures to ensure procurement activities are conducted and documented in accordance with the Organization's procurement policy and Uniform Guidance requirements. Corrective actions will include establishing a centralized procurement file, providing additional training to personnel responsible for purchasing activities, and implementing supervisory review procedures to ensure that competitive procurement and documentation requirements are consistently met and appropriately retained.

Federal Agency: U.S. Department of Transportation Federal Program Name: Enhanced Mobility of Seniors and Individuals with Disabilities Assistance Listing Number: 20.513 Federal Award Identification Number and Year: PTD0725-01 (2023); KC001184 (2024); PTD1111 (2025) Pass-Through Agency: Washington State Department of Transportation Pass-Through Number(s): PTD0725-01; KC001184; PTD1111 Award Period: July 1, 2023 through June 30, 2027; June 1, 2024 through May 1, 2029; July 1, 2025 through June 30, 2027 Type of Finding: Material Weakness in Internal Control over Compliance – Procurement, Suspension and Debarment Other Matters – Non-Compliance with Procurement, Suspension and Debarment Criteria or specific requirement: Per OMB UG 200.320(a)(2)(i), "if simplified acquisition procedures are used [for the procurement of small purchases], price or rate quotations must be obtained from an adequate number of qualified sources." Additionally, when a recipient or subrecipient enters into a covered transaction, the recipient or subrecipient must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification must happen prior to entering into the covered transaction. Condition: During testing of procurement transactions, we noted that Sound Generations did not consistently follow its documented procurement procedures. For one procurement, Sound Generations did not obtain the required number of competitive quotes prior to vendor selection. In addition, documentation supporting vendor selection and price reasonableness was not maintained. In addition, we noted that Sound Generations did not retain the documentation showing the result of verification that the selected vendor was not suspended or debarred. Questioned costs: None. Sound Generations failed to maintain documentation supporting compliance with federal procurement requirements for one transaction. Because it was not possible to reconstruct the procurement process or determine whether compliant vendor would have offered different pricing, the audit could not quantify the amount of questioned costs resulting from noncompliance. Sound Generations did not perform and document the required suspension and debarment verification procedures prior to entering the covered transaction. During audit testing for one transaction, we verified that the vendor was not suspended or debarred; however, the auditor was unable to determine the vendor's status as of the contract execution date. Accordingly, while a compliance exception exists, no questioned costs were identified. Context: A procured vendor was selected based on a prior relationship with the vendor; however, documentation was not maintained to reflect the decision for said vendor's selection. It was acknowledged that there are other qualified vendors available that should be considered for documenting vendor pricing and fair and reasonable selection moving forward. For a separate procurement for a covered transaction, the organization was unable to provide documentation demonstrating that it verified the vendor was not debarred or suspended prior to contract execution. Cause: This was overlooked by the Director of Transportation and Controller, who were responsible for reviewing to ensure procurement and suspension and debarment procedures are in place and appropriately followed. Effect: Federal funding may be used for procurements that are not the most advantageous for the Federal program, or covered transactions could be entered into with entities that are federally suspended or debarred. Repeat Finding: No. Recommendation: Management at Sound Generations should review its existing control structure and ensure that there are adequate processes and controls to ensure the correct procurement methods are used and that documentation of quotes, bids, vendor evaluations, and price analysis is appropriately maintained. We also recommend Sound Generations follow its policies and procedures and ensure suspension and debarment checks are performed on a timely basis for all covered transactions. Views of responsible officials and planned corrective actions: Please see the attached Management’s Corrective Action Plan.

Finding number: 2025-003 (Material Weakness in Internal Control over Compliance and Instance of Noncompliance) AL number: 21.027 AL title: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Federal award identification number and year: California Department of Housing and Community Development 21-HK-17231, 21-HK-17171, 21-HK-17192, 23-HK-18055, 23-HK-18064, 23-HK-18079, 23- HK-18085, 23-HK-18090, County of Los Angeles ARPA funds awarded in 2022. Name of federal agency: U.S. Department of the Treasury Name of pass-through entity: California Department of Housing and Community Development, and County of Los Angeles Repeat finding: Yes Criteria: Under 2 CFR §200.318-326, non-federal entities must adhere to procurement standards for purchases made with federal funds. Key requirements include: - Full and Open Competition: Procurement transactions must be conducted to ensure open competition and prevent practices that may unduly restrict competition (2 CFR §200.319(a)). - Documentation of Procurement History: Entities must maintain records that detail the procurement history, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price (2 CFR §200.318(i)). -Use of Non-Competitive Procurement: Non-competitive procurement is only allowed under limited circumstances, such as when the item is available from a single source, there is a public emergency, or after solicitation of multiple sources, competition is deemed inadequate (2 CFR §200.320(c)). Condition: During 2025, the organization incurred expenditures of approximately $8.90 million for the renovation of motels into permanent housing using federal funds under the SLFRF program. However: - While estimate documentation was available to support certain contracts and management obtained three bids for most of its new contracts under these awards, documentation demonstrating compliance with other federal procurement standards, including the contractor solicitation process, selection method, or the basis for the contract price, was largely unavailable. - The Mission did not document its suspension and debarment consideration for each new contractor. SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Cause: The organization did not establish or follow sufficient internal controls to ensure compliance with federal procurement requirements, including maintaining the required documentation for procurement activities. Possible effect: The lack of procurement documentation creates a significant risk that noncompliant practices occurred, such as non-competitive procurement or payments exceeding fair market value. Questioned cost: None Recommendation: Implement comprehensive procurement policies and procedures that comply with federal regulations under 2 CFR §200.318-326. Ensure all procurement transactions are documented, including evidence of competitive bidding or justification for non-competitive procurement under 2 CFR §200.320(c). Procurement documentation is required to include information on the solicitation process, considerations used by management in evaluating proposals, and the reasoning for management's final determinations. Each procurement process should be set up as a separate file, and include the suspension and debarment search results. Conduct staff training on procurement standards for federal awards, focusing on documentation, competition, and conflict of interest requirements. Incorporate review of the procurement process by the accounting team in advance of setting up new vendors. Perform periodic internal reviews to confirm compliance with procurement policies. SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management concurs with the recommendation and recognizes that procurement compliance requires both appropriate competition and sufficient contemporaneous documentation demonstrating how the procurement decision was made. The Mission will strengthen its procurement framework to ensure applicable procurement requirements are identified before purchases are initiated and that the procurement file demonstrates the method used, competition obtained, selection rationale, required approvals, conflicts review, price or cost considerations where applicable, and justification for exceptions. Management adopted a procurement policy July 2026 and plans to implement supporting procedures designed to comply with applicable federal, state, local, and award-specific requirements. By December 31, 2026, the Mission plans to issue detailed procedures and standardized procurement-file templates covering procurement method selection, applicable thresholds, independent cost or price analysis, full and open competition, solicitation and bid documentation, conflictof- interest disclosures, contractor selection or rejection, contract type, price basis, required approvals, and permitted noncompetitive procurement justifications. Vendor onboarding will require documented suspension and debarment verification for each applicable vendor and contractor before commitment of funds, with evidence retained in the procurement file. Staff with purchasing, program, grant, and accounts-payable responsibilities will complete role-based training, and completion records will be retained. Management plans to consult with California HCD regarding contractor-selection expectations for the Homekey program and incorporate applicable requirements into the policy, procedures, and contract summaries. The Chief Financial Officer or designee will conduct and document periodic sample-based compliance reviews, track exceptions to resolution, and report material or recurring issues to executive management. Management plans to complete an operating-effectiveness review of procurement transactions and address identified deficiencies before year-end.

FINDING 2025-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and 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): FY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 21 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement 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 threshold for the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Two vendors were identified that fell within the SAT, with total purchases of $1,401,188. A review of the procurement files revealed that the County did not solicit, receive, or retain sealed bids or competitive proposals for these contracts. While the project awards were documented within the Board of County Commissioners' meeting minutes, the formal competitive process, public advertisements, and underlying evaluation metrics were completely absent from the record. Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), 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 Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County's procedure to verify the vendor was not suspended or debarred was not always implemented or effective. A population of four covered transactions totaling $1,816,421 met or exceeded the $25,000 threshold and was paid using the SLFRF allocations. All four covered transactions were selected for testing, and the County failed to provide documentation to support that it performed any of the mandatory verification procedures prior to entering into the agreements or issuing payments to the contractors. 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. . . . (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. They are awarded in accordance with the following requirements: . . ." 31 CFR 19.300 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 EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the County to ensure that goods and services were properly procured and that vendors to whom payment equaled or exceeded $25,000 were not suspended or debarred. The County was unable to provide documentation to demonstrate they had properly procured and verified that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. INDIANA STATE BOARD OF ACCOUNTS 23 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured and that contractors are not 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.

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.