Findings Citing § 200.320

FINDING 2025-005 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-151-PN01, 23611-151-PN01, 24611-151-PN01, 22611-151-ARP, 23619-151-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. 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 customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. The School Corporation procured goods totaling $60,002 from four vendors that fell under the small purchase threshold during the audit period. The School Corporation did not provide adequate documentation detailing the history of procurement, which must include the reason for the procurement method used, for all four vendors. Price or rate quotes were not obtained for three of the vendors as required. The School Corporation obtained three quotes for one vendor; however, the highest quote was selected without a documented reason. Suspension and Debarment Prior to entering into subawards and covered transactions, recipients are required to verify that 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 (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the SAM exclusions list, collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. There was one covered transaction over $25,000 identified during the audit period which was selected for testing. The School Corporation did not verify that the vendor was not suspended, debarred, or otherwise excluded from participation in federal assistance programs. INDIANA STATE BOARD OF ACCOUNTS 22 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— INDIANA STATE BOARD OF ACCOUNTS 23 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not designed or implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect Material noncompliance with the grant agreement and compliance requirements could cause federal expenditures to be unallowable which the funding agency could potentially recover. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Federal Agency: US Department of Agriculture (USDA) Program Name: SNAP Cluster: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program ALN #: 10.561 Award Number (Federal Award Year): IDHS SNAP FCSDQ03623 (2024-2025) Questioned Costs: None 2025-004. Finding: Internal Controls over Procurement The University of Illinois Urbana-Champaign did not have sufficient rationale documented for the noncompetitive procurement method selected within their iBuy procurement system at the time of approval of the purchase to allow a reviewer to determine the appropriateness of the procurement method. Condition: The University of Illinois Urbana-Champaign’s internal controls over small purchases include review and approval of a purchase requisition form that documents the procurement method selected. Prior to June 15, 2025, when a noncompetitive procurement method was selected, a radio button within the iBuy system allowed for selection of one of several circumstances where noncompetitive procurement is permitted by 2 CFR 200.320, including that the procurement can only be fulfilled by a single source. When this selection was made, additional information supporting this rationale should have been available to the reviewer to determine that this noncompetitive procurement method was appropriate. Out of four small purchase procurement transactions tested prior to June 15, 2025, for one transaction (25%), there was not sufficient evidence to support that documentation of the noncompetitive procurement method selected was provided at the time of review and approval. Based on additional information provided to us during our testing, there were no indications that the noncompetitive method selected was inappropriate. This transaction was selected from the period prior to the iBuy enhancement. Subsequent to June 15, 2025, the purchase requisition form in the iBuy system was enhanced to require users to complete mandatory fields within the purchase requisition form when a noncompetitive procurement method is selected and provide detailed written justification. The sample was not intended to be, and was not, a statistically valid sample. Criteria: Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure procurement procedures are properly followed and support is properly maintained as required by 2 CFR 200.318. Cause: University officials stated a single e-procurement system is used to collect and capture procurement-related information. University officials further stated the electronic system required selection of the relevant procurement method in the form of a radio button but did not require additional information in the central procurement file. Rather, this information was maintained by the requesting unit. Effect: If the procurement purchase requisition forms do not include sufficient supporting documentation of the rationale for the noncompetitive method of procurement selected, the University could approve payments of federal funds to vendors that do not meet federal regulations. (Finding Code No. 2025-004, 2024-004) Recommendation: We recommend the University of Illinois Urbana-Champaign review current processes within the iBuy system for noncompetitive procurement transactions to ensure sufficient documentation is included to support the rationale for the noncompetitive method of procurement selected. University Response: While the University accepts the finding, we note that corrective action was implemented on June 15, 2025. No exceptions related to the iBuy central procurement file were found after implementation.

FINDING 2025-005 Subject: Special Education Cluster (IDEA)- Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-148-PN01, 23611-148-PN01, 24611-148-PN01, 25611-148-PN01, 22611-148-ARP, 22619-148-PN01, 23619-148-PN01, 24619-148-PN01, 25619-148-PN01, 22619-148-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 28 GRIFFITH PUBLIC SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation 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 related to the Procurement and Suspension and Debarment compliance requirement. Procurement - Micro-Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the micro-purchase threshold, which is set at $10,000. Micro-purchases may be awarded without soliciting competitive price rate quotations. Three vendors determined to fall under the micro-purchase threshold were selected for testing. One claim from one of the vendors selected for testing did not have proper supporting documentation maintained by the School Corporation to determine if the proper procurement method was followed. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. One vendor provided contracted services paid with special education grant funds during the audit period totaling $269,948. Upon inquiry of the School Corporation, it was determined that the School Corporation did not verify that the contractor was not suspended or debarred or otherwise excluded. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (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 29 GRIFFITH PUBLIC SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (1) Micro-purchases — (i) Distribution. The acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (See the definition of micro-purchase in § 200.1). To the maximum extent practicable, the non-Federal entity 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 non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micropurchases if procedures are documented and approved by the non-Federal entity. (iii) Micro-purchase thresholds. The non-Federal entity 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 micropurchase threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal laws or regulations. Non-Federal entities may establish a threshold higher than the Federal threshold established in the Federal Acquisition Regulations (FAR) in accordance with paragraphs (a)(1)(iv) and (v) of this section. INDIANA STATE BOARD OF ACCOUNTS 30 GRIFFITH PUBLIC SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, (C) For public institutions, a higher threshold consistent with State law. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to affect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to, and vendors to whom payments equal to, or in excess of $25,000, were not verified to not be suspended, debarred, or otherwise excluded. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 31 GRIFFITH PUBLIC SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are 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.

FINDING 2025-004 Subject: Special Education Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: COVID-19 - Special Education Grants to States Assistance Listings Number: 84.027X Federal Award Number and Year (or Other Identifying Number): 22611-019-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Other Matters Condition and Context Procurement Small purchases, procurements between $50,000 and $150,000, require three quotes to be obtained and a contract awarded. There was one disbursement tested for $52,598 for small purchase procurement, and, while the appropriate number of quotes were obtained, a contract was not awarded for the transaction as required by Indiana Code 5-22-8-3. Suspension and Debarment Prior to entering into subawards and covered transactions with the Special Education Cluster (IDEA) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the System for Award Management (SAM) Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. It was determined that the School Corporation had a process in place to verify that vendors were not suspended or debarred, but the process was not operating effectively. For the one vendor tested also related to the transaction noted above, documentation of the SAM.gov search could not be provided. INDIANA STATE BOARD OF ACCOUNTS 20 OAK HILL UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were isolated to the transaction and award number noted above. 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 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 21 OAK HILL UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3 states: "(a) This section applies only if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). (b) A purchasing agent may purchase supplies under this section by inviting quotes from at least three (3) persons known to deal in the lines or classes of supplies to be purchased. (c) The purchasing agent shall mail an invitation to quote to the persons described in subsection (b) at least seven (7) days before the time fixed for receiving quotes. (d) If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. (e) The purchasing agent may reject all quotes. (f) If the purchasing agent does not receive a quote from a responsible and responsive offeror, the purchasing agent may purchase the supplies under IC 5-22-10-10." 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 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 The School Corporation was not aware of the Indiana Code requirement to enter into a contract for the equipment purchase. The School Corporation was aware of the requirements to check for suspension and debarment, but due to newer personnel at the School Corporation they were not able to locate the records or verify that the suspension and debarment verification was performed. INDIANA STATE BOARD OF ACCOUNTS 22 OAK HILL UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to design and implement an effective internal control system enabled noncompliance to remain undetected. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation amend its procurement policy and system of internal controls to ensure that procurement requirements meet the stricter federal and/or state requirements. Additionally, the internal control system effectiveness should be improved to ensure all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into contracts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-005 – Procurement, Suspension and Debarment (Partially Repeated from Prior Year Finding 2024-002) Federal Program: Continuum of Care Program Federal Identifying Number: Direct funding grants - IL0395L5T102214, IL0395L5T102315, IL0184L5T102316, IL0184L5T102417, IL1790H5T102200, IL1791H5T102200, IL1792H5T102200; Passed- through grants -IL1759D5T102201, IL1878D5T102300, IL1759D5T102202, and 8567-D Federal Assistance Listing Number: 14.267 Passed Through: All Chicago Making Homeless History and Aids Foundation of Chicago Federal Agency: U.S. Department of Housing and Urban Development Criteria/Specific Requirement: A. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.318(a) General Procurement Standards states the following, “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.” B. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.319 Competition states the following, “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.” C. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 180.300 states a participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified 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. D. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 Internal Controls states the following, “The 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.” Condition: For fourteen (14) out of fourteen (14) procurement and suspension and debarment transactions tested we noted the following: 1) The Inner Voice, Inc. did not complete the appropriate procurement process; 2) The Inner Voice, Inc. did not maintain appropriate documentation to support the procurement method utilized (if any); and 3) The Inner Voice, Inc. did not provide or maintain documentation that suspension and debarment searches were performed. Questioned Costs: None. Context: The Inner Voice, Inc. expended a total of $5,207,762 of federal awards in fiscal year 2025. The Inner Voice, Inc. expended a total of $3,992,341 of federal awards in fiscal year 2025 under the Continuum of Care program. The procurement, suspension and debarment transactions we selected for testing totaled $1,180,252 or 29.6% percent of program expenditures. Effect: The Inner Voice, Inc. is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 as it relates to procurement, suspension and debarment requirements. Additionally, the effect of noncompliance can result in questioned costs. Cause: 1. The Inner Voice, Inc.’s procurement policy provides limited guidance on procurement methods, documentation of procurement process, and references to Uniform Guidance procurement categories and definitions. Additionally, policy does not include processes pertaining to suspension and debarment checks. 2. Where policies are in place, they are not being followed. Recommendation: We recommend that The Inner Voice, Inc.: a. Enhance policies and procedures surrounding procurement, suspension and debarment. b. Communicate and reinforce its policies and procedures to ensure compliance with applicable requirements. Management’s Response: See Corrective Action Plan.

Federal program: AL 21.027, COVID-19 Coronavirus State and Local Fiscal Recovery Funds; Federal agency: U.S. Department of Treasury; Award year: 2025; Criteria: Per the 2025 Office of Management and Budget (OMB) Compliance Supplement, part 4, requirement I., Procurement and Suspension and Debarment, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. Per Uniform Guidance section 2 CFR 200.319(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 section 200.320. Per section 2 CFR 200.320(a)(2)(i): …If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources...; Condition: Procurement methods did not always follow Uniform Guidance requirements. Contracts were directly awarded to vendors without full and open competition or obtaining price or rate quotations from an adequate number of qualified sources.; Cause: The cause appears to be attributable to lack of staff training and knowledge regarding federal grant procurement requirements and which contracts support federal awards. Program staff did not appear to be aware that all federal grant contracts are required to comply with a competitive bid process, and instead applied federal funding to contracts that were directly awarded.; Effect or potential effect: Not conducting open competition or solicitation of quotations or bids could result in higher grant program costs by missing the opportunity to select the best available vendor source in the market.; Questioned costs: No known or estimated questioned costs identified.; Context: Out of a population of 100 contracts above the micro purchase threshold of $10,000 and below the simplified acquisition threshold of $250,000, two of thirteen contracts selected for testing did not follow required Uniform Guidance procurement procedures.; Repeat finding: No.; Recommendation: The County should provide training to staff regarding Uniform Guidance rules of procurement and how to identify which contracts support federal award programs.; Views of responsible officials: The County understands and concurs with the finding.

FINDING 2025-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. 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 customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. The School Corporation procured goods and services totaling $5,967,079 from three vendors that exceeded the simplified acquisition threshold during the audit period. The School Corporation did not follow procurement requirements for one of the three vendors. Multiple quotes were obtained for the purchase of cafeteria equipment totaling $361,575; however, the procurement method used should have been the bidding process. Additionally, the School Corporation did not obtain a contract for the purchase. The School Corporation made three small purchases totaling $35,045 that were selected for testing. The School Corporation did not obtain price or rate quotes as required. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. INDIANA STATE BOARD OF ACCOUNTS 25 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions, recipients are required to verify that 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 (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the SAM exclusions list, collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. There were three covered transactions over $25,000 during the audit period, which totaled $5,967,079. The School Corporation did not verify that one of the three covered transactions, totaling $361,575, was not suspended, debarred, or otherwise excluded from participation in federal assistance programs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 26 SCHOOL CITY OF EAST CHICAGO 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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not designed or implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect Material noncompliance with the grant agreement and compliance requirements could cause federal expenditures to be unallowable which the funding agency could potentially recover. INDIANA STATE BOARD OF ACCOUNTS 27 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Reference Number: 2025-001 United States Department of Agriculture Federal Assistance Listing Number & Program Name: 10.553 & 10.555 Child Nutrition Cluster Description: Procurement Criteria: 2 CFR 200.320 Methods of Procurement state that if the Sealed Bids method is used - 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 to all the material terms and conditions of the invitation and is the lowest in price. The Organization’s procurement policy also states that purchases ranging from >$100,000 require a minimum of three written bids. Condition: During our testing of procurement transactions, we totaled purchases by vendor and one vendor above $100,000 purchases had no price quotes as required by the Organization’s procurement policy. Cause: The Organization did not follow their Federal Funds Procurement policy related to the appropriate methods of procurement. Effect: Obtaining price quotes or proposals from an adequate number of vendors allows the Organization to use federal funds in the most fiscally responsible way. The lack of quotes and proposals may cause the Organization to overpay for supplies or services. Identification of a Repeat Finding: This is a repeat finding. Auditors’ Recommendation: We recommend the Organization review their procurement policy and adhere to current policy for going out for the minimum amount of bids on required vendors. Corrective Action Plan: See attachment for Organization’s corrective action plan.

FINDING 2025-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Number and Year (or Other Identifying Number): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context The School Corporation did not have effective internal controls in place to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. The School Corporation did not have adequate procedures in place to ensure that the requirements for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. INDIANA STATE BOARD OF ACCOUNTS 17 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For the audit period, the School Corporation self-certified a micro-purchase threshold of $50,000. Any purchase above this threshold but below the $150,000 simplified acquisition threshold would be considered a small purchase. During fiscal year 2023-2024 , the School Corporation had one vendor with disbursements totaling $60,757, which exceeded the School Corporation established small purchase threshold of $50,000. The School Corporation did not provide supporting documentation that an adequate number of price or rate quotes were obtained from qualified sources for the purchases. The lack of effective internal controls and noncompliance were isolated to the one vendor noted above. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation and inspection of supporting documentation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, it was identified that the School Corporation did not have policies or procedures in place to verify if vendors were suspended or debarred or otherwise excluded from participation in federal awards. In 2023-2024, for one covered transaction totaling $60,757, there was no evidence provided that the School Corporation verified the vendor's suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were isolated to the one vendor noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 18 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or INDIANA STATE BOARD OF ACCOUNTS 19 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (c) Adding a clause or condition to the covered transaction with that person." Cause An effective system of internal controls was not designed and implemented by management of the School Corporation. The School Corporation had outlined a process for handling small purchase vendor related transactions, but that process was not followed, nor was supporting evidence maintained for the items described in the Condition and Context. Also, the School Corporation had designed a process for determining whether a vendor is suspended or debarred, but that process was not completed. Effect As a result of not designing and implementing an effective system of internal controls and following the School Corporation's policies and procedures, goods that fell within the small purchase threshold were not properly procured, and vendors to whom payments equal to or in excess of $25,000 were made were not verified to be not suspended, debarred, or otherwise excluded. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement an effective internal control system and follow through with the policies and procedures related to small purchase vendor procurement and suspension and debarment compliance requirements that they designed through an action plan to correct the prior audit period finding. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Procurement and Suspension and Debarment Finding Number: 2025-002 Assistance Listing Number and Title: AL # 84.027 Special Education Cluster Federal Award Identification Number / Year: 2025 Federal Agency: U.S. Department of Education Compliance Requirement: Procurement and Suspension and Debarment Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.320(a) through 2 CFR § 200.320(c) which describes three types of procurement methods: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. • 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. • 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. • 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. Additionally, District Policy: PROCUREMENT - FEDERAL GRANTS/FUNDS, describes both formal and informal procurement methods, including noncompetitive procurement. The District did not have the proper internal controls in place to identify and select the proper procurement method for two out of two procurements (100%) entered into by the District using Special Education Cluster (IDEA) funds. The District erroneously identified two procurements totaling $24,000 as single source, a type of noncompetitive procurement. Given the facts and circumstances surrounding these procurements, small purchase procurement method should have been utilized. Due to the deficient internal control structure, the appropriate procurement method was not utilized for two procurements in the Special Education Cluster (IDEA) program during fiscal year 2025. Failing to have the appropriate controls in place may result in noncompliance with federal requirements. Prior to entering into covered transactions, the District should follow its policies and procedures to ensure the correct procurement method is used.

Finding 2025-001 Federal Program: Congressional Directives Assistance Listing Number: 93.493 Compliance Requirement: Procurement Criteria or Specific Requirement: Title 2 CFR §200.318 through §200.326 requires non-Federal entities to use documented procurement procedures that provide for full and open competition and are consistent with applicable Federal standards. Specifically, 2 CFR §200.320 requires procurement transactions for construction in excess of the simplified acquisition threshold to be conducted using competitive proposals or sealed bids, unless conditions exist to justify noncompetitive procurement. Additionally, the Agency’s internal procurement policy requires competitive bidding for construction projects exceeding established dollar thresholds unless an approved exception is documented. Condition: During our audit of procurement transactions charged to the Federal program, we noted that the Agency did not obtain competitive bids for a construction project funded in part with Federal award funds. The project was awarded to a contractor without evidence that competitive proposals were solicited, evaluated, or documented. Furthermore, the Agency did not maintain documentation supporting a noncompetitive procurement justification or evidence of advance written approval as required by Uniform Guidance and internal policy. Cause: The condition appears to have resulted from inadequate internal controls over procurement compliance, including insufficient review of procurement documentation prior to contract execution and limited understanding of Uniform Guidance procurement requirements by personnel responsible for project oversight. Additionally, there has been turnover in senior leadership positions since receipt of the award and since the project began. Effect and Questioned Costs: The failure to follow Uniform Guidance procurement requirements increases the risk that Federal funds may not be used in a manner that ensures full and open competition, reasonableness of cost, and compliance with federal regulations. This condition exposes the Agency to potential disallowance of costs, repayment of federal funds, and increased scrutiny from the Federal awarding agency or pass-through entity. No questioned costs were identified as a result of this finding. Was the finding a repeat of a finding in the immediately prior year? No Recommendation: We recommend that the Agency strengthen internal controls over procurement by: 1. Ensuring all construction procurements funded by Federal awards comply with the competitive procurement requirements of 2 CFR Part 200. 2. Requiring documented evidence of bid solicitation, evaluation, and selection prior to contract award. 3. Establishing procedures to ensure noncompetitive procurements are supported by written justification and receive required approvals in advance. 4. Providing periodic training to personnel involved in procurement and project management on Uniform Guidance requirements. Management Response: The procurement of construction services funded through this award was done in early 2023 and preceded Dimock’s updated procurement policy which calls for competitive bidding. It also preceded changes in procurement leadership. Subsequent procurement for services have since been subject to competitive bidding by Dimock consistent with CFR 200.318-200.326.

2025-002 Procurement Supporting Documentation CFDA No: 93.434 Program Name: Preschool Development Grants Award Number: 25FPDGCN-510841-01A Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-Through Grantor: Arizona Department of Education Compliance Requirement: L. Procurement, Suspension and Debarment Questioned Costs: $29,281 Summary of Finding: Material weakness in internal controls over compliance which resulted in a qualified opinion on federal program compliance. Repeat Finding? No Condition Heartwood could not provide documentation for the selection of two vendors within the Simplified Acquisition Threshold, which totaled $29,281. The population of vendors who met applicable thresholds was tested and totaled four vendors. 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. Specifically, 2 CFR 200.318(i) states “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.” Cause Heartwood did not retain price or rate quotations from an adequate number of qualified sources or document justification for the use of sole source vendors. 2 CFR 200.320(a)(2)(i) states: “Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate.” Effect The inability of Heartwood to retain procurement documentation impairs the ability to demonstrate compliance with federal requirements, increases the risk of unallowable or unreasonable costs, and may result in repayment/disallowance of the related expenditures. Recommendation Primarily, Heartwood should enforce their written procurement and documentation procedures which are prepared as part of grant award acceptance. Then, Heartwood should ensure every purchase is supported, and retained in a central file. At a minimum, the school should: Establish checklist for every purchase (paper or electronic), retained centrally, that includes:  Requisition/need justification and funding source, in this instance Preschool Development Grant (PDG)  Evidence of price reasonableness:  quotes from an adequate number of qualified sources (or documented attempts)  Basis for vendor selection  Approvals (who approved, when)  Contract/purchase order, invoice, and proof of receipt/performance  Required contract provisions (when applicable)  In the case of sole source procurements, justification dcumentation for the use of the vendor.  Suspension/debarment verification (SAM check) when required by the school’s policy/pass-through requirements Centralize record retention  Store all procurement documentation in a single shared location (e.g., secured drive) by grant year and vendor, with a naming convention.  Assign a specific role (grant manager/business office) responsible for completeness before payment.

2025-004 Improve Procurement Process for Child Nutrition Cluster Federal Agency: U.S. Department of Education Cluster/Program: Child Nutrition Cluster AL Number(s): 10.553/10.555/10.559/10.582 Award Year: 2025 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Uniform Guidance (2 CFR § 200.318–200.320) requires recipients of federal funds to follow their own documented procurement procedures, which must conform to applicable federal and state laws and promote full and open competition. For small purchases, Uniform Guidance and School policy require obtaining price or rate quotations from an adequate number of qualified sources, which per School policies is at least three. Additionally, proper contract documentation must be maintained for vendor relationships. Condition and Context Of the three vendors tested for procurement transactions under the Child Nutrition Cluster program, sufficient support could not be provided for one small purchase selection. School policy requires at least three quotes for small purchases; however, only two quotes were consistently obtained from vendors throughout the year. Each month, only two vendors provided quotes and the lowest-priced vendor was selected to supply produce. Further, no contracts were in place with the vendor supplying the produce. Effect or Potential Effect Noncompliance with policies and procedures regarding required number of quotes and maintaining formal contracts with vendors increases the risk of noncompliance with federal procurement requirements, lack of competition, and unallowable costs. Questioned Costs Due to the condition noted above, we were unable to determine if costs of $241,737 charged to the grant were allowable. Cause The School Department did not implement adequate controls to ensure compliance with its procurement policy for obtaining sufficient quotes and did not formalize vendor relationships with contracts as required. Recommendation The School Department should strengthen its procurement controls by ensuring that the required number of quotes are obtained and documented for all small purchases, in compliance with School policy and Uniform Guidance. The School should also implement procedures to ensure that contracts are in place with all vendors providing goods and services to the program. Views of Responsible Official and Planned Corrective Action Management’s views and Corrective Action Plan are included at the end of this report after the summary Schedule of Prior Year Findings.

2025-003 Improve Controls and Documentation Over Procurement Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster AL Number(s): 84.027/84.173 Award Year: 2025 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Uniform Guidance (2 CFR § 200.320) permits noncompetitive (sole source) procurements only when specific conditions are met, such as when the item is available from a single source, and requires documentation justifying the sole source determination. All procurement transactions must be conducted in a manner providing full and open competition, to the maximum extent practicable. Condition and Context Of the two vendors tested for procurement transactions under the Special Education Cluster, support could not be provided for one vendor to justify that they were the only vendor capable of providing the product and that the purchase therefore met the requirements for a sole source procurement. Effect or Potential Effect Lack of documentation to support justification for sole source procurement increases the risk of noncompliance with Uniform Guidance, limits transparency, and could allow for inappropriate procurement practices. Questioned Costs Not determinable. Cause The School Department did not have controls to ensure that sole source procurement transactions are properly documented in accordance with federal requirements. Recommendation The School Department should enhance its procurement controls to ensure all sole source purchases are fully documented with justification in accordance with Uniform Guidance, and maintain supporting records for all federal procurement transactions. Views of Responsible Official and Planned Corrective Action Management’s views and Corrective Action Plan are included at the end of this report after the summary Schedule of Prior Year Findings.

Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Indian School Equalization 15.042 A23AV00813 N/A Administrative Cost Grants for Indian Schools 15.046 A23AV00813 N/A Special Education Cluster (IDEA) 84.027 A24AV00760 N/A Federal Agency(ies): U.S. Department of Interior Pass‐Through Agency(ies): Bureau of Indian Education Type of Finding: Noncompliance, Significant Deficiency Compliance Requirements: Procurement and Suspension and Debarment Criteria Non‐federal entities are prohibited from contracting with or making sub awards under covered transactions to parties that are suspended or debarred. “Covered transactions” include those procurement contracts for goods and services awarded under a non‐procurement transaction that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR §180.220. Additionally, the School should adhere to procurement methods outlined in 2 CFR §200.320. Condition The School’s internal controls over procurement of goods and services were not adequate. Cause The School has procures in place to perform procurement, suspension, and debarment in accordance with federal regulations and guidelines, however, they were not followed. Effect The School was not in compliance with federal regulations and guidelines related to suspension and debarment or procurement. Context - The School did not maintain documentation that a review to determine that vendors with whom the School spent greater than $25,000 were not suspended and debarred. The deficiency applied to two vendors with the Special Education Cluster (IDEA) and one vendor with the Administrative Cost Grants for Indian Schools. - For three non‐cooperative‐purchase vendors paid in excess of the small purchase threshold ($10,000), the School did not prepare and maintain documentation for at least 3 written quotes from qualified sources. The deficiency applied to two vendors with the Administrative Cost Grant, and one vendor with the Special Education Cluster (IDEA). -For all eight vendors procured via sole source reviewed, the School did not prepare and maintain documentation in accordance with School policy that there was only one sole source and that the determination was reasonable. Additionally, the School did not present the procurement to the Board for approval as a sole source for all eight vendors. The deficiency applied to five vendors procured through funding from the Administrative Cost Grant for Indian Schools, two vendors procured through funding from the Indian School Equalization Program, and one vendor which was procured through various sources of federal funding. -For the first of three vendors reviewed with whom the School had purchases exceeding $50,000 during the fiscal year, the School did not perform a sealed procurement. For the second of three vendors reviewed with whom the School had purchases exceeding $50,000 during the fiscal year, the School did not retain evidence that a sealed procurement was performed. Finally, for the third of three vendors reviewed with whom the School had purchases exceeding $50,000, the School did not maintain evidence that bids were solicited from an adequate known suppliers, were opened at the prescribed time and place, and that the award was made to the lowest responsive/responsible bidder. All three deficiencies applied to the Special Education Cluster (IDEA). The sample was not intended to be, and was not, a statistically valid sample. Recommendation The School should review documented policies and implement them in school procedures to ensure compliance with federal procurement requirements. Views of Responsible Officials See Corrective Action Plan.

Procurement Noncompliance Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Procurement, Suspension, and Debarment). Program. Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027; Award Number SLFRP0127: Reconnect Age Expansion - Financial Aid Compliance Funds passed through Michigan Department of Lifelong Education, Advancement, and Potential. Criteria. Uniform Guidance at 2 CFR §200.320 requires non-Federal entities to use one of the approved procurement methods: micro-purchase, small purchase procedures, sealed bids, competitive proposals, or noncompetitive (sole source) procurement. Noncompetitive (sole source) procurement is allowable only under specific circumstances, including: (a) The item is available only from a single source; (b) A public exigency or emergency does not permit delay; (c) The Federal awarding agency or pass-through entity authorizes a sole source in writing; or (d) Competition is determined inadequate after soliciting multiple sources. Entities must maintain documentation supporting the chosen procurement method and justification. Condition. During our testing of four procurement transactions charged to the federal award, we noted that the College procured goods/services totaling $18,750 from a single vendor using a sole source justification. The College did not obtain the required quotes for the purchase. Our review of the documentation determined that the rationale provided for sole source procurement did not meet the criteria outlined in Uniform Guidance. As a result, the College did not follow required competitive procurement procedures. Cause. Internal controls over procurement documentation were not adequately followed to ensure compliance with Uniform Guidance requirements. The College did not obtain sufficient evidence to demonstrate that the vendor was the only available provider or that any other sole source condition was met. Effect. Because competitive procurement procedures were not used, the College may not have obtained the best price or ensured full and open competition. Questioned Costs. $18,750. Recommendation. We recommend that the College strengthen internal controls to ensure personnel verify and document that sole source criteria under 2 CFR §200.320 are fully met before awarding a procurement without competition. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.

Finding 2025-001 Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 93.493: • Congressional Directives • U.S. Department of Health and Human Services • Federal award identification number – CE146487 • Federal award year – 7/1/2024 – 6/30/2025 • Pass-through entity – The Board of Regents of the University of Oklahoma Health Sciences Center • Pass-through entity identifying numbers: H79FG000747 and H79FG001034 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. 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 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. In addition, during our testing over suspension and debarment, we observed management did not retain support for internal control documentation for all vendors, evidencing that the vendors were searched for suspension and debarment upon entering into a contract supported with federal funds. 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. Questioned costs: $1,385,165 – Assistance Listing Number 93.493 Federal award identification number – CE146487 Pass-through entity identifying numbers: H79FG000747 and H79FG001034 Questioned costs were computed as all procurements selected for testing. Questioned costs for each award are as follows: • CE146487: $60,874 • H79FG000747: $119,479 • H79FG001034: $1,204,812 Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we selected five vendors for testing with total expenditures of $1,385,165 from a population of procurements totaling $1,425,361, subject to formal procurement procedures. 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 for any of the five procurements selected for testing. For suspension and debarment, we selected five vendors for testing totaling $1,385,165. Management was unable to provide documentation that internal controls were executed for any of the vendors selected for testing. 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 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 awarding a contract supported by federal funding and retain evidence supporting such procedures. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. 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 will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, which includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award, and administer procurement contracts. This policy will include procedures to ensure proper procurement for 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 to demonstrate compliance with 2 CFR section 200.318 through 200.327.

Finding 2025-002 Use of Sole-Sourced Justification for Procurement Federal Agency: United States Department of Justice Federal Program: Edward Bryne Memorial Justice Assistance Grant Program Assistance Listing Number: 16.738 Award Identification Numbers: 2019-YA-BX-K002; 15PBJA-22-GK-01566-JAGJ; 15PBJA-22-GK- 04999-BSCI Criteria or Specific Requirement: Under Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.320(f) “Methods of procurement to be followed”, procurements by noncompetitive proposals (i.e. sole-sourced justification) may be used only when one or more of the following circumstances apply:  The item is available only from a single source;  The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;  The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or  After solicitation of a number of sources, competition is determined inadequate. Condition: During our testwork performed over procurement, we determined that the Association did not have adequate justification to permit sole sourced procurements. Cause: The Association does not have adequate internal controls in place to ensure that solesourced procurements meet one of the applicable circumstances identified above. Effect or Potential Effect: The Association could enter into contractual arrangements whereby they are not receiving the best value for the organization and/or in which there exists conflicts of interest. Ultimately, transparency with respect to these transactions could be compromised if the proper procurement actions are not followed. Questioned Costs: None noted. Context: 3 of 4 samples selected for testing disclosed instances of consultants hired under the solesourced justification method of procurement. Although the expenses were properly supported, the rationale for sole-sourced selections did not appear to qualify for sole source exemption. Identification as a Repeat Finding, if Applicable: This is not a repeat finding. Recommendation: We recommend that the Association limit its use of sole-sourced justification based on the above-noted requirements. In cases where sole-sourced is appropriate, we recommend that the actions (or lack of actions) be properly and fully documented. The importance in maintaining a record of each procurement action is to support the Association's due diligence process. We also believe this process helps identify any actual or potential conflicts of interest with prospective vendors and contractors.

Federal Agency: U.S. Department of Housing and Urban Development and U.S. Department of Health and Human Services Federal Program Name: Continuum of Care Program Center for Substance Abuse Treatment - Certified Community Behavioral Health Clinic Assistance Listing Number: 14.267 93.696 Direct Federal Award Program: PA0029L3T002316 - Tioga Arms PA0568L3T002308 - Shelton Court 22TI85374A – Certified Community Behavioral Health Clinic Type of Finding: - Significant Deficiency in Internal Control over Compliance - Other Matters Criteria: Federal regulations at 2 CFR Part 200 require non-Federal entities to follow documented procurement procedures that comply with applicable federal statutes and procurement standards. Under 2 CFR 200.320(a)(2), small purchase procedures must include obtaining price or rate quotations from an adequate number of qualified sources for purchases exceeding the micro-purchase threshold but not exceeding the simplified acquisition threshold. Additionally, 2 CFR 200.319 requires procurement transactions to be conducted in a manner providing full and open competition. Condition: As part of our audit procedures over the Organization’s procurement policy and the small purchase requirements under 2 CFR 200.320(a)(2), we sampled a total of five vendors who incurred costs exceeding $10,000 for each of the two major programs. For two of the five vendors selected, management was unable to provide written documentation demonstrating that price or rate quotations were obtained from an adequate number of qualified sources (generally 2-3 quotes) for purchases above the micro-purchase threshold ($10,000) and below the Simplified Acquisition Threshold ($250,000). This documentation should have included the names of suppliers contacted, prices quoted, and the justification for vendor selection. Questioned Costs: None identified. Context: The Organization is responsible for administering federal funds under the Continuum of Care (CoC) Certified Community Behavioral Health Clinic programs and must adhere to the procurement standards outlined in 2 CFR Part 200. As part of the single audit process, procurement transactions were reviewed to verify that the organization implemented appropriate procurement methods based on total vendor expenditures and maintained all required supporting documentation for purchases exceeding the micro-purchase threshold. Cause: Management’s procedures did not consistently ensure that the required procurement documentation was obtained and retained, and there were limited controls in place to monitor vendor expenditures in the aggregate to help determine the appropriate procurement method. Effect: Controls over the procurement process are not in place to determine that all procurement transactions are conducted in a manner providing full and open competition, in accordance with 2 CFR 200.319. Repeat Finding: N/A: Not a repeat finding Recommendation: We recommend management update its policies and procedures over procurement to ensure compliance with 2 CFR Part 200. This includes requiring and retaining documentation supporting the use of small purchase procedures, obtaining price or rate quotations from an adequate number of qualified sources, and monitoring vendor expenditures on an aggregate basis to ensure the appropriate procurement method is applied. Management should also provide training for staff responsible for procurement activities to promote consistent compliance with federal requirements. View of Responsible Officials and Planned Corrective Action: Please refer to Gaudenzia, Inc. and Gaudenzia Foundation, Inc.’s Corrective Action Plan.

FINDING 2025-004 FEDERAL PROGRAM CHILD CARE AND DEVELOPMENT BLOCK GRANT (93.575) FEDERAL AGENCY U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES COMPLIANCE PROCUREMENT TYPE OF FINDING SIGNIFICANT DEFICIENCY- INSTANCE OF NON COMPLIANCE CONDITIONS During our disbursements test, we identified six (6) purchases that were awarded based on a single quote, without following standard competitive procurement procedures. Each purchase was accompanied by a certification indicating that the purchase was urgently needed, but it was not documented what this urgency consisted of. CRITERIA According to 2 CFR §200.319(a), all procurement transactions must be conducted in a manner providing full and open competition. Additionally, 2 CFR §200.320(a)(2) requires that small purchase procedures obtain quotes from an adequate number of qualified sources unless an exception applies. CAUSE The Program does not have proper internal control over procurement and non compliance with policies and procedures for acquisitions and with the funds delegation agreement. EFFECT The lack of competition increases the risk that goods or services may not have been acquired at the most reasonable cost, and non-compliance with regulatory requirements. RECOMMENDATION We recommend that management strengthen internal controls over procurement to ensure compliance with 2 CFR Part 200. Specifically: 1. Require the solicitation and documentation of multiple quotes for all applicable purchases. 2. Document and approve exceptions in cases where only a single quote is obtained, with justification. 3. Monitor compliance regularly to ensure all procurement activities follow federal regulations and internal policies. QUESTIONED COST: None PRIOR YEAR Not Applicable MANAGEMENT RESPONSE We concur with the finding RESPONSIBLE OFFICIALS Mrs. María Ortiz Martinez, Finance Department Director

Finding Reference: 2025-003 – I. Procurement, Suspension and Debarment Federal Program Information Federal Agencies: Department of Health and Human Services Department of Justice Awards: Assistance Listing 93.078 – Strengthening Emergency Care Delivery in the United States Healthcare System through Health Information and Promotion Assistance Listing 16.753 – Congressionally Recommended Awards Award Periods: September 30, 2023 – September 29, 2025 July 1, 2024 – September 30, 2026 Description: Incomplete Federal Requirements within Procurement Policies Criteria In accordance with Title 2 U.S. Code of Federal Regulations, Part 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).” Part 200.320 Methods of procurement to be followed states the following: “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” regarding the methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Condition As part of our testing over the operating effectiveness of internal controls over the Procurement, Suspension and Debarment assertion for our major programs, we noted that the Corporation did not have a procurement policy that conforms to all applicable standards contained in the Uniform Guidance, when purchasing goods or services with the federal funds. Cause The Corporation did not comply and maintain a procurement policy that conforms to the provisions required by the Uniform Guidance upon receiving such federal funds related to their federal programs. Effect or potential effect Purchasing of goods and/or servicing with the major federal programs may not be in compliance with the Uniform Guidance. Questioned costs None. Identification of a repeat finding This is a repeat finding of Finding 2024-006. Context Management has not established a procurement policy in line with the applicable standards contained in the Uniform Guidance based on review of the existing policy and discussions with management, however, no other instances of noncompliance with procurement standards identified in 2 CFR part 200 were noted as the amount of purchases exceeding the micro-purchase threshold was not direct and material to these programs and therefore no further testing over procurement was performed. Recommendation The Corporation should update its procurement policy to include the provisions required by the Uniform Guidance for purchasing goods and/or services with federal funds. View of responsible officials There is no disagreement with the audit finding.

2025-001 Improve Procurement Process Federal Agency: U.S. Department of Education Cluster/Program: Child Nutrition Cluster AL Number(s): 10.553/10.555 Award Year: 2025 Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster AL Number(s): 84.027/84.173 Award Year: 2025 Compliance Requirement: Procurement Type of Finding - Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Uniform Guidance (2 CFR § 200.318–200.320) requires recipients of federal funds to follow their own documented procurement procedures, which must conform to applicable federal and state laws and promote full and open competition. For large purchases, Uniform Guidance and Massachusetts General Law (MGL) require obtaining competitive proposal or sealed bids. Additionally, proper contract documentation must be maintained for vendor relationships. Condition and Context The primary vendor tested for procurement under the Child Nutrition Cluster program did not have a signed contract or proof of the competitive procurement process for fiscal year 2025. Further, the Special Education Cluster did not have quotes for vendors tested or recent sole source letters on file. Effect or Potential Effect Noncompliance with policies and procedures regarding required procurement practices with vendors increases the risk of noncompliance with federal procurement requirements, lack of competition, and unallowable costs. Questioned Costs: None. Cause The District did not implement adequate controls to ensure compliance with procurement policies for obtaining sufficient quotes or competitive bids and did not formalize vendor relationships with contracts as required. Recommendation The District should strengthen its procurement controls by ensuring that the Uniform Guidance and MGL procurement practices are followed. Views of Responsible Official and Planned Corrective Action Management’s views and Corrective Action Plan are included at the end of this report.

Material Weakness in Internal Control over Compliance and Material Noncompliance - Child Nutrition Cluster Criteria: Federal regulations require non-federal entities to follow specific procurement standards when making purchases with federal award funds: • 2 CFR 200.320 requires the use of specific procurement methods (micro-purchase, small purchase, sealed bids, competitive proposals, etc.) based on the value of the transaction. • 2 CFR 200.318 requires the District to maintain oversight that ensures contractors perform in accordance with terms, conditions, and specifications. • 2 CFR 200.319 requires full and open competition and prohibits practices that restrict competition. • 2 CFR 200.324 requires cost or price analysis for certain procurements. • 2 CFR 200.213 requires verification that contractors are not suspended or debarred Condition: During testing of procurement transactions charged to the Child Nutrition Cluster, we noted that the District did not consistently follow the federal procurement standards required by 2 CFR 200.318-327. Specifically: The District did not obtain the required number of price or rate quotations for purchases exceeding the micro-purchase threshold. • For procurements that exceeded the simplified acquisition threshold, the District did not maintain documentation supporting full and open competition. • In several cases, the District was unable to provide evidence that vendors were verified against the SAM.gov exclusion list prior to contract award. • Procurement files did not contain required elements such as cost/price analysis, written procurement method selection, or justification for sole-source procurements. The transactions identified totaled approximately $50,000, which represents a material portion of federal expenditures tested under this major program. Cause: The District did not employ adequate internal controls to ensure that all federally funded procurements consistently followed the federal procurement standards. Staff turnover and insufficient training regarding federal procurement requirements also contributed to the deficiencies. Recommendation: We recommend that the School District design and follow internal controls to ensure proper procurement procedures are followed to comply with Uniform Guidance standards. Effect: Failure to follow federal procurement requirements increases the risk of: • Noncompliance with the Uniform Guidance, • Potential favoritism or lack of competition, • Unallowable costs being charged to federal programs, and • Federal funds being used inefficiently or in a manner inconsistent with federal regulations. The nature and extent of the exceptions identified represent a material weakness in internal control and material noncompliance with procurement requirements. Views of Responsible Official and Planned Corrective Action: See corrective action plan included in this report package.

Finding 2025-001 – Procurement (Material Weakness) Repeat Finding: No Federal Agency – National Science Foundation; National Institute of Health Research and Development Cluster Social, Behavioral, and Economic Sciences – Passed through New York University: 47.075, Mathematical and Physical Sciences – Passed through Loyola University of Chicago: 47.049, Biological Sciences: 47.074, Allergy and Infectious Disease Research: 93.855 Federal Award Years: Year Ended May 31, 2025 Condition The College's procurement policy does not reflect all applicable state and local laws and federal regulations. For two out of three (67%) small purchase procurements, there was not sufficient evidence to support that documentation of the noncompetitive procurement method selected was provided at the time of purchase. Criteria Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327. 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. In accordance with 2 CFR sections 200.319 and 200.320(f), price quotations should be obtained from an adequate number of qualified sources for procurements that meet the small purchase procurement threshold or require documentation in support of the rationale to limit competition in those cases where competition was limited. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure the College has a procurement policy that meets the all applicable state and local laws and regulations. Questioned Costs There were no questioned costs related to this finding. Cause The College does not have a procurement policy that follows the procurement standards set out at 2 CFR sections 200.318 through 200.327. Context Two out of three vendors tested. Expenditures totaled $100,553. Effect Lack of a documented procurement policy that meets applicable state and local laws and federal regulations can result in improper procurement of goods and services which can lead to loss of future funding. Recommendation We recommend the College implement a procurement policy that conforms to federal regulations. We also recommend that the College implement policies and procedures around documentation of noncompetitive bidding. Views of Responsible Officials We agree with this finding. See corrective action plan.

CFDA Number: 93.224 Federal Program or Cluster: Health Center Program Cluster Grantor Agency: U.S. Department of Health and Human Services Federal Award Identification: H8FCS41177 Compliance Requirements: Procurement and Suspension or Debarment Type of Finding: Material Weakness in Internal Control over Compliance Questioned Costs: None Criteria: The Organization's Financial Policies and Procedures Manual, under Requisitioning, Purchasing, and Receiving Policies & Procedures, states: "If the purchase order is for any goods or service that will be paid for directly from Federal dollars then the purchasing follows Office of Management and Budget Circular 2 CFR CHAPTER I, CHAPTER II, PART 200, ET AL. guidelines. One of the following methods will be used when purchasing goods or services with federal dollars: Micro-purchase for items up to $10,000, small purchase for items up to $150,000, sealed bids for items over $150,000, competitive proposal, or non-competitive proposal. All procurements directly attributable to the federal award will be conducted in a manner providing full and open competition and will only include costs allowable, consistent with Federal Cost Principles 45 CFR Part 75 Subpart E: Cost Principles." 45 CFR Part 75, Section 75.329 Procurement procedures, states: "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: Organization staff and management appear to be applying their procurement policies that require bids for all purchases in general that exceed $25,000, but not the additional policies and procedures that apply to purchases that will be paid from Federal dollars, that apply for procurements greater than $10,000 but less than $150,000. Cause: Organization staff and management do not appear to be knowledgeable of the Organization's procurement policies and procedures. Effect or Potential Effect: The Organization could make procurements that do not comply with the requirements of 45 CFR Part 75 Section 75.329 and 2 CFR Part 200, Section 200.320 Procurement methods. Context: We requested documentation to support that the Organization followed its procurement policies and procedures, we were told that no individual items were purchased with federal grant funds during the year that exceeded their $25,000 requirement for a bid. None of the transactions for the procurements we selected for testing occurred within the period of performance for the federal awards. Repeat finding? No Recommendation: We recommend that the Organization provide grants management training to all its financial staff and management covering the Uniform Guidance/OMB Guidance for Federal Financial Assistance, as well as the Organization's Financial Policies and Procedures Manual. We also recommend that the Organization develop and implement policies and procedures that proper monitoring of its procurements is being done to ensure the Organization's policies and procedures are being followed. Views of Responsible Officials: We agree with the finding. We have never received proper training. See Corrective Action Plan for Reference 2025-006.

Federal Agency: Department of the Interior Federal Program Name: Boston Harbor Islands Partnership - World's End Carriage Road Restoration Assistance Listing Number: 15.947 Federal Award Identification Number and Year: N/A Pass-Through Agency: National Park Service Pass-Through Number(s): P24AC02282 - 2023 Award Period: 10/01/2023 – 09/30/2025 Type of Finding: - Significant Deficiency in Internal Control over Compliance - Other Matter Criteria or specific requirement: Procurement methods used must be in compliance with conditions specified in 2 CFR section 200.320. Condition: For the acquisition of small purchases of which the aggregate dollar amount is higher than the micro-purchase threshold ($10,000) but does not exceed the simplified acquisition threshold ($250,000), price or rate quotations must be obtained from an adequate number of qualified sources. Questioned costs: None. Context: Documentation over price or rate quotations was not maintained for 2 (of 5) testing selections. Cause: Documentation over price or rate quotations was not maintained, which prohibited the auditors from successfully perform testing over these transactions. Effect: Noncompliance with Uniform Guidance procurement requirements. Repeat Finding: N/A. Recommendation: We recommend documentation over price or rate quotations be maintained for all vendors with procurements that could potentially exceed the micro-purchase threshold ($10,000), rather than only those with an original purchase price exceeding $10,000, as the procurement policy is currently written. Views of responsible officials: There is no disagreement with the audit finding.

Federal Program: 93.493 – Congressional Directives, U.S. Department of Health and Human Services, FAIN CE152180 passed through the Health Resources & Services Administration Criteria or Specific Requirement: Procurement, Suspension & Debarment, 2 CFR 200.320 Condition: The Company paid funds to a vendor that qualified under sole source procurement requirements. In the vendor’s contract with the Company, the vendor confirmed it was not suspended or debarred. The Company did not document its process for determining sole source procurement or document its search to confirm the vendor was not suspended or debarred. Cause: The Company does not have policies in place that comply with federal procurement, suspension and debarment requirements. Effect: The Company’s internal controls did not ensure proper documentation that the vendor materially complied with the federal procurement requirements. Questioned Costs: None Context: Federal procurement standards require entities that receive federal awards to have specific policies that comply with 2 CFR Section 200.318-320. The requirements specify that policies must establish thresholds and procedures for micro-purchases, simplified acquisitions, and formal purchases. When vendors are selected, federal funds are prohibited from going to certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in federal awards (2 CFR 200.214). The Company did not have policies in place to ensure compliance with these federal procurement guidelines. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: The Company has policies for vendor qualification in place surrounding critical vendors. We recommend considering all vendors that are awarded contracts to be paid with federal awards critical or otherwise amending the Company’s contracting review process or critical vendor policy to incorporate specific procedures when federal funds are used. These procedures should include a documented search of Sam.gov for suspension and debarment of the vendor. The Company should establish procurement thresholds and specific procedures for those thresholds as outlined in 2 CFR Section 200.318-320. Views of Responsible Officials and Planned Corrective Actions – Management agrees with the finding. See attached corrective action plan.

Finding 2024-003: Significant Deficiency - Internal Control Over Procurement, Suspension and Debarment 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 2023-003 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires nonfederal 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. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During our testing for this program in the prior year, we noted that the City did not have a written procurement policy to conform with Uniform Guidance requirements. The City contracted with a third-party administrator who provided the services related to procurement for this grant program. No additional contracts were procured with federal funds in 2024. Cause: The City was made aware of the requirement of requiring a procurement policy but has not implemented a policy at this time. Effect: Without an adequate policy in place, procurement procedures may not adhere to requirements of federal awards. Questioned Costs: None noted. Recommendation: Program personnel should become familiar with the procurement, suspension and debarment rules for Federal programs and implement a formal written policy to conform with Uniform Guidance requirements. Views of Responsible Officials: Management agrees with the finding and will make efforts to implement a formal procurement policy.

2024-004 – Procurement Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0135 – 2021 Pass-Through Agency: Wisconsin Department of Administration Pass-Through Number(s): ARPA-NIF-072 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: 2 CFR 200.320 Methods of Procurement state that if the small purchases method is used, price or rate quotations must be obtained from an adequate number of qualified sources. The City should have internal controls designed to ensure compliance with those provisions. Condition: The City did not follow controls related to ensuring procurement policies were followed. Questioned Costs: None Context: During our testing, it was noted on one of the two items tested that the City was not following the requirements under the adopted procurement policies. Cause: The City did not follow the requirements under the adopted procurement policies. Effect: The County is not in compliance with procurement requirements. Contracts for construction, non- construction related procurements, and those over the simplified acquisition threshold may not be in compliance with the Uniform Guidance. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2023-004. Recommendation: We recommend the City design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. Views of Responsible Officials: There is no disagreement with the audit finding.

2024-004 – Procurement Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0135 – 2021 Pass-Through Agency: Wisconsin Department of Administration Pass-Through Number(s): ARPA-NIF-072 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: 2 CFR 200.320 Methods of Procurement state that if the small purchases method is used, price or rate quotations must be obtained from an adequate number of qualified sources. The City should have internal controls designed to ensure compliance with those provisions. Condition: The City did not follow controls related to ensuring procurement policies were followed. Questioned Costs: None Context: During our testing, it was noted on one of the two items tested that the City was not following the requirements under the adopted procurement policies. Cause: The City did not follow the requirements under the adopted procurement policies. Effect: The County is not in compliance with procurement requirements. Contracts for construction, non- construction related procurements, and those over the simplified acquisition threshold may not be in compliance with the Uniform Guidance. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2023-004. Recommendation: We recommend the City design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. Views of Responsible Officials: There is no disagreement with the audit finding.

Finding No. 2024-003 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 Federal Award Notification Number and Year: 4896-13 - 2024 Award Period: January 1, 2024 – December 31, 2024 Compliance Requirement Affected: Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters 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 ocntrols over these compliance requirements provides an opportunity for noncompliance. Repeat Finding: No 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.

Federal Program AL# 93.526 - Health Center Infrastructure Support - Significant Deficiency in internal control over federal award program and Noncompliance - Procurement Criteria - According to the Center’s procurement policy they will adhere to the procurement standards and requirements of 45 CFR Part 75, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” Condition - During our testing of procurement transactions, we noted that the Center did not follow the Small Purchase Procedures or the Simplified Acquisition Method as required for procurements within the applicable threshold established in its own procurement policy. Specifically, transactions falling within this cost range were processed without the appropriate level of competition or documentation required under the Center’s procedures and 2 CFR § 200.320(b). Questioned Costs - 562735 Context- During our testing of procurement transactions, the Center did not provide adequate documentation to demonstrate that proper procurement procedures were followed in accordance with 2 CFR § 200.320. Specifically, the documentation provided did not clearly support the method of procurement used, nor did it include evidence of efforts to ensure full and open competition, justification for non-competitive purchases, or verification of cost or price reasonableness where applicable. As a result, we were unable to verify compliance with the federal procurement standards required for recipients of federal awards. Potential Effect - As a result of not following the prescribed procurement procedures, the Center increases the risk of noncompliance with federal regulations, specifically 2 CFR § 200.320. This may lead to unallowable costs being charged to the federal program, reduced assurance that goods and services were procured at fair and reasonable prices, and potential disallowance of expenditures during a federal review or audit. Additionally, failure to maintain appropriate procurement documentation may impair transparency and weaken internal controls over federal funds. Cause - The personnel responsible for procurement did not adhere to the Center’s established procurement procedures. Instead of evaluating purchases based on their aggregate cost, as required by both internal policy and federal guideline, they assessed each transaction individually. This practice resulted in the improper application of procurement methods for transactions that cumulatively exceeded the applicable thresholds. Recommendation - We recommend that management reinforce adherence to the Center’s procurement policy by providing periodic training to all staff involved in the purchasing process, with a focus on the appropriate application of procurement methods in accordance with 2 CFR § 200.320. Additionally, management should implement a formal review and oversight mechanism to ensure that all procurement transactions exceeding established thresholds are properly evaluated on an aggregate basis, fully documented, and compliant with both internal policies and federal regulations. Views of Responsible Officials and Planned Corrective Actions - Management concurs with the finding. The Center acknowledges that procurement activities were evaluated on a per-transaction basis rather than in aggregate, as required under both its internal procurement policy and 2 CFR § 200.320. To address this issue, the Center will conduct training for all relevant staff on the proper application of procurement thresholds and documentation requirements.

Reference Number: 2024-001 Program Name: 14.267 Continuum of Care Description: Procurement Criteria: 2 CFR 200.320 Methods of Procurement state that if the small purchases method is used, price or rate quotations must be obtained from an adequate number of qualified sources (at least 2). The Organization’s procurement policy also states that purchases ranging from $2,500-$24,999 require a minimum of three written bids. Condition: During our testing of procurement transactions, we sampled two purchases over $2,500 and neither of them had price quotes as required by the Organization’s procurement policy. Questioned Costs: Immaterial. Cause: The Organization did not follow their Federal Funds Procurement policy related to the appropriate methods of procurement. Effect: Obtaining price quotes or proposals from an adequate number of vendors allows the Organization to use federal funds in the most fiscally responsible way. The lack of quotes and proposals may cause the Organization to overpay for supplies or services. Identification of a Repeat Finding: This is not repeat finding. Auditors’ Recommendation: We recommend the Organization review their procurement policy and either amend it to coincide with increased thresholds or adhere to current policy. Views of Responsible Officials: See attachment for the Organization’s corrective action plan.

Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that 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. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.

Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that 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. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.

Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that 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. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.

Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that 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. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.

Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that 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. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.

Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that 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. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.

Criteria or Specific Requirement – Under 2 CFR §200.320(a), micro-purchase procedures may be used for procurements up to the micro-purchase threshold (currently $10,000). Purchases must be distributed equitably among qualified suppliers when practical, and the price must be reasonable. Entities must follow their internal controls and maintain documentation supporting the rationale for the purchase and vendor selection. Conditions – Bids for some vendors was not performed. Context – During our testing of procurement, we sampled nine expenditures. Of the nine selections three selections did not have required bids. Cause – The Association lacks formal procedures to ensure micro-purchase requirements are met, and staff were not aware of the requirement to document price reasonableness or distribute purchases equitably among vendors. Effect – Higher than necessary costs may be have expensed.Recommendation – We recommend that management revise policies to ensure proper vendor compliance in the future. Views of Responsible Officials and Planned Corrective Actions – Procurement Policy was updated and documentation will be maintained to support vendor verification in the future.

Finding 2024-002 Procurement and Suspension and Debarment Federal Grantor: United States Department of Health and Human Services Assistance Listing No.: 93.817 Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Criteria or specific requirement (including statutory, regulatory, or other citation): 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-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. “ Section V.A.1.a.ii of the procurement policy of Fairview Health Services requires that for procurements by small purchase ($10,000–$249,000), where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from three qualified sources. If three separate qualified sources cannot be obtained the reason needs to be formally documented. Condition: For one procurement transaction tested, we noted that Fairview Health Services did not complete a sole-source justification form timely to support the vendor that was selected. Cause: Management does not have sufficient internal controls in place to ensure that Fairview Health Services’ procurement policies are followed for all procurement transactions prior to entering the procurement. Effect or potential effect: Fairview Health Services entered into a procurement that did not go through a competitive solicitation process. Questioned costs: None Context: Total Federal expenditures subject to procurement for HPP were $616,107 for the year ended December 31, 2024. Total expenditures related to the procurement at issue were $29,041. Total Federal expenditures were $1,656,727 for the year ended December 31, 2024. Identification as a repeat finding, if applicable: The finding is not a repeat finding from the prior year. Recommendation: Management should review its policies and procedures to ensure all procurement transactions are in accordance with Fairview Health Services’ procurement policies and have the appropriate supporting documentation. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding. Fairview updated its internal control processes to better retain and document sole source procurement justification before entering vendor agreements. A standard form for sole source justification will be implemented to enhance documentation.

Finding 2024-003 Procurement and Suspension and Debarment Identification of the federal program: Federal Grantor: United States Department of Health and Human Services Assistance Listing No.: 93.817 Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Criteria or specific requirement (including statutory, regulatory, or other citation): 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-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. “ Section V.A.1.a.ii of the procurement policy of Fairview Health Services requires that for procurements by small purchase ($10,000-$249,000), where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from three qualified sources. If three separate qualified sources cannot be obtained the reason needs to be formally documented. Condition: The data used in evaluating the vendors for suspension and debarment was not reviewed and approved. Cause: Management does not have internal controls in place to require the review and approval of the data used in evaluation of vendors for suspension and debarment. Effect or potential effect: Suspension and debarment results may not be accurate. As a result, federal funds may be used to pay a contractor that is suspended or debarred. Questioned costs: None Context: Total Federal expenditures subject to suspension and debarment were $947,686, representing 57% of total federal expenditures of $1,656,727 for the year ended December 31, 2024. Identification as a repeat finding, if applicable: The finding is not a repeat finding from the prior year. Recommendation: Management should implement internal controls over the review and approval of the data used in suspension and debarment analysis. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding. Starting June 2025, the monthly suspension and debarment file will be reviewed. A signed statement confirming its accuracy will be included post-review. The accounts payable standard work document will be updated accordingly.

Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations 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. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.

Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations 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. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.

Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations 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. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.

Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations 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. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.

Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations 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. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.

Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations 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. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.

Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations 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. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.

Finding 2024-001 Procurement and Suspension and Debarment (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): § 200.318 (i) General procurement standards, states that 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. Furthermore: §200.320 (f) Methods of procurement to be followed, states that procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when certain requirements have been met. Additionally, §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award states that non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations 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. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person. Condition: During our audit, we noted that while FASEB has formal procurement policies under §200.318(i) and §200.320(f), it did not provide sufficient records detailing the procurement history or justification for noncompetitive selections in our sample. Additionally, FASEB lacks formal policies on suspension and debarment, and SAM exclusion screening documentation was not provided for the sampled contracts and vendors. Cause: FASEB’s procedures did not provide for the formalization and retention of procurement records and vendor screenings consistent with the expectations outlined in 2 CFR 200. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to. Finally, FASEB could inadvertently enter into a contractual relationship with an entity that is suspended, debarred or otherwise included on the US Federal sanction list. Questioned Costs: N/A. Context: Our audit work in this area consisted of internal control testwork over a random sample of expenditures. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We then recommend that FASEB develop and adhere to formal policies (as applicable) related to § 200.318 (i) General procurement standards, §200.320 (f) Methods of procurement to be followed, as well as §200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award. All procurement actions and SAM exclusion screenings should be clearly documented in writing and maintained in the vendor or contractor files.