Findings Citing § 200.320

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

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

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

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

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

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

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

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

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

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

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

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

Food Distribution Cluster: Noncompliance over Procurement Condition: During our testing of procurement requirements, we noted that for one of the purchases selected there was no vendor selection form. The vendor selection form identifies the price and method selected. Without the form, the procurement documentation does not exist. Criteria: The Uniform Guidance (2 CFR 200.320) and the Organization’s procurement policy require that micro-purchases may be awarded without soliciting competitive quotations if the Organization considers the price to be reasonable and small purchases require price or rate quotations to be obtained from an adequate number of qualified sources. Cause: The exception was due to a breakdown in the Organization’s procedures to ensure that all procurements are in accordance with Uniform Guidance. Effect: Improper procurement procedures can result in actions taken by oversight agencies which could impact future funding. Context: The population subject to procurement requirements included 29 procurements. The sample size of five procurements was determined. Recommendation: We recommend that the Organization review and update its procedures to ensure that all procurements are in accordance with the Uniform Guidance and its procurement policy. Views of Responsible Officials: Management agrees with the finding.

Coronavirus State and Local Fiscal Recovery Funds: Noncompliance over Procurement Condition: During our testing of procurement requirements, we noted that for one of the purchases selected there was no vendor selection form. The vendor selection form identifies the price and method selected. Without the form, the procurement documentation does not exist. Criteria: Uniform Guidance (2 CFR 200.320) and the Organization’s procurement policy require that micro-purchases may be awarded without soliciting competitive quotations if the Organization considers the price to be reasonable and small purchases require price or rate quotations to be obtained from an adequate number of qualified sources. Cause: The exception was due to a breakdown in the Organization’s procedures to ensure that all procurements are in accordance with Uniform Guidance. Effect: Improper procurement procedures can result in actions taken by oversight agencies which could impact future funding. Context: The population subject to procurement requirements included three procurements. The sample size of two procurements was determined. Recommendation: We recommend that the Organization review and update its procedures to ensure that all procurements are in accordance with the Uniform Guidance and its procurement policy. Views of Responsible Officials: Management agrees with the finding.

Finding 2025-001 – Procurement Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Drug use and addiction research programs Assistance Listing Number: 93.279 Pass-Through Entity: N/A Pass-Through Number: N/A Award Periods: May 1, 2023 – April 30, 2025 Criteria: 2 CFR section 200.320(b) outlines the acceptable formal procurement methods. Formal procurement methods are required when the value of the procurement exceeds the simplified acquisition threshold. Acceptable methods include sealed bids or proposals. Condition: The Organization did not maintain sufficient documentation to support the procurement method utilized. Questioned Costs: $252,500. Context: One of three procurement transactions selected for testing. Cause: The Organization failed to maintain necessary documentation to demonstrate compliance with the procurement method utilized for a vendor selected for testing. Effect: Potential for noncompliance with 2 CFR section 200.320(b)(1) - (2). Repeat Finding: No. Recommendation: We recommend the Organization consistently follow its established policies and procedures related to the maintaining of necessary documentation to support the method of procurement utilized. Views of Responsible Officials: There is no disagreement with the audit finding.

CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘Western PA Psych Care’ totaling $40,000. This is a repeat finding 2024-001 from the previous fiscal year. CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2CFR 200.320(c’) of the Uniform Guidance, and District Procurement Policy #626, regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $40,000 CAUSE: The District has had a long-standing relationship with Western PA Psych Care and feels that this vendor best fits the needs of the District. However, the additional procedures addressed in its Procurement Policy for Federal Programs (#626) which addresses the issue of noncompetitive procurement as outlined in Section 2 CFR 200.320(c’), were inadvertently not performed. RECOMMENDATION: I recommend that for all future purchases involving noncompetitive procurement, that the District adhere to the requirements of 1) the District’s Procurement Policy for Federal Programs (#626), and 2) Section 2 CFR 200.320(c) of the Uniform Guidance. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.

Reference Number: 2025-018 Prior Year Finding: No Federal Agency: Various State Agency: Higher Education Policy Commission (HEPC) Bluefield State University Federal Program: Research and Development Cluster Assistance Listing Number: Various Award Number and Year: Various Compliance Requirement: Procurement Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Compliance: 2 CFR 200.320 (a)(1)(iv) states that a recipient or subrecipient may establish a micro-purchase threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The recipient or subrecipient may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal agency or pass-through entity 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 is consistent with State law. Control: Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: HEPC and Bluefield State University utilized micro‑purchase procedures for purchases charged to Federal awards at amounts exceeding the Federal micro‑purchase threshold based on thresholds established in its Board approved policies. However, the entities did not complete and retain the required annual self‑certification supporting the higher thresholds utilized. Context: HEPC applied a micro‑purchase threshold of $50,000 and Bluefield State University applied a micro‑purchase threshold of $25,000. Questioned costs: None noted. Cause: HEPC’s and Bluefield State University’s internal control processes did not include a documented control activity to ensure annual self‑certification of the micro‑purchase threshold was completed, approved by appropriate authority, and retained in accordance with Uniform Guidance requirements. Effect: By applying micro‑purchase procedures to transactions exceeding the Federal micro‑purchase threshold without maintaining required self‑certification documentation, the entities increase the risk of noncompliance with Uniform Guidance procurement standards, insufficient competition or price reasonableness documentation, and the potential for unallowable or unsupported costs charged to Federal awards. Recommendation: HEPC and Bluefield State University should formally establish and document an annual self‑certification of their micro‑purchase thresholds in accordance with 2 CFR §200.320(a)(1)(iv). The self‑certification should clearly identify the approved threshold, include a written justification, and retain supporting documentation demonstrating compliance with one of the allowable criteria. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE AND REPORTABLE INSTANCE OF NONCOMPLIANCE – U.S. DEPARTMENT OF AGRICULTURE, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, CHILD NUTRITION CLUSTER – FEDERAL ALN 10.553, 10.555, AND 10.582 2025-002 Internal Control Over Compliance and Reportable Noncompliance With Federal Procurement Requirements Criteria – 2 CFR § 200.320 requires the District to establish and maintain effective internal control over compliance with procurement requirements applicable to expenditures within its child nutrition cluster federal programs. Condition – During our audit, we noted the District did not have sufficient controls in place within its child nutrition cluster to ensure compliance with federal procurement requirements related to methods of procurement, which resulted in a reportable instance of noncompliance. Questioned Costs – $28,450. Context – For one of twenty-five vendors tested, the District could not provide documentation that two or more quotations were solicited for a contract awarded within its child nutrition cluster federal programs in excess of its stated micro-purchase threshold of $10,000, as required by the Uniform Guidance. This was not a statistically valid sample. Repeat Finding – This is a current year finding. Cause – The District’s internal control procedures over procurement requirements applicable to its child nutrition cluster federal programs were not being consistently followed. Effect – Noncompliance with the procurement requirements could result in the District expending federal funds inappropriately or not obtaining competitively priced goods or services, which could be viewed as a violation of the award agreement. Recommendation – We recommend that the District review its internal control procedures for its child nutrition cluster federal programs to ensure that controls in place over compliance with federal procurement requirements are being consistently applied, including awarding contracts based on multiple quotations for the purchase of goods or services in excess of the District’s micro-purchase threshold of $10,000, as required by the Uniform Guidance. View of Responsible Official and Planned Corrective Actions – There is no disagreement with the audit finding. District management will review its procedures relating to procurement for its federal programs to ensure that multiple quotations are obtained when required and that adequate documentation is retained. The District solicited quotes and retained the necessary documentation for the noncompliant contract in fiscal year 2026. The District has separately issued a Corrective Action Plan related to this finding.

FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027X, 84.173X Other Identifying Numbers: 22611-042-ARP, 22619-042-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the Procurement and Suspension and Debarment compliance requirement. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and 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. Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented full and open competition or a documented rationale for limited competition. For 2023-2024, three vendors with disbursements totaling $175,125 were identified as being less than the simplified acquisition threshold of $150,000 but exceeding the $50,000 micropurchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors, and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. INDIANA STATE BOARD OF ACCOUNTS 18 SMITH-GREEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. Upon inquiry of the Cooperative 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, the Cooperative disclosed there were not any documented internal controls or procedures. Nine covered transactions were identified. The covered transactions, totaling $803,836, were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . INDIANA STATE BOARD OF ACCOUNTS 19 SMITH-GREEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The Cooperative noted that the American Rescue Plan (ARP) portion of the Special Education grant was new for 2023-2024. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using special education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micro-purchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the suspension and debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments are equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. INDIANA STATE BOARD OF ACCOUNTS 20 SMITH-GREEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 Cooperative. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Cooperative's management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred or otherwise excluded or disqualified prior to entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-24, FY 2024-25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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. The State of Indiana has established a more restrictive threshold of $150,000 for informal procurement methods. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Small purchase procedures require that price or rate quotations must be obtained from an adequate number of qualified sources or have documented reasoning to support a single source provider. Two vendors were identified that were paid $27,726 and $70,168, respectively, during the audit period using federal funds under the award, thereby requiring small purchase procedures for both procurements. Both vendors were selected for testing. The School Corporation was unable to provide any documentation for the vendor that was paid $70,168 that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. Additionally, the history of procurement, including the rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented for the vendor. INDIANA STATE BOARD OF ACCOUNTS 16 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that vendors and subrecipients are not suspended, debarred, or otherwise excluded from receiving federal funds. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Four covered transactions that equaled or exceeded $25,000 were identified. All four transactions totaling $4,082,816 were selected for testing. For two of the four vendors, the School Corporation did not verify the vendor's suspension and debarment status prior to entering into the covered transaction with either vendor. The amount paid to both vendors totaled $97,894. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 17 WASHINGTON COMMUNITY SCHOOLS, INC. 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) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not have adequate internal controls to ensure compliance with procurement and suspension and debarment requirements. The School Corporation was aware of the Procurement and Suspension and Debarment compliance requirement and relied on its food service management company to ensure compliance. There was not sufficient oversight by the School Corporation to ensure proper procedures were followed. INDIANA STATE BOARD OF ACCOUNTS 18 WASHINGTON COMMUNITY SCHOOLS, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The lack of an effective internal control system enabled material noncompliance to occur and remain undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could enable small purchases made by the School Corporation to be uncompetitive and could lead to contracting with vendors who are suspended or debarred from receiving federal grant funding. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that there are appropriate procurement procedures for goods and services and that contractors and subrecipients, as appropriate, are verified to not be suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2024, FY 2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Adequate internal controls were not in place over procurements made under the simplified acquisition threshold for one of two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2023-2024 totaling $289,127, but it did not provide audit evidence that methods and procedures performed for the selection of the vendor aligned with requirements related to vendors procured under the simplified acquisition threshold. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of five vendors tested during the audit period. The School Corporation made purchases with a vendor in 2023-2024 totaling $103,519 and in 2024-2025 totaling $111,613, but it did not provide audit evidence that the procurement procedures performed in relation to the award had been reviewed or approved. The School Corporation did not provide documentation that it had entered into a contract with the vendor during either year of the audit period. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. 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 18 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318(a): "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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) . . . (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. . . . (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: INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Cause Staff responsible for purchasing were not adequately trained on the School Corporation's procurement policy for obtaining bids for purchases above the simplified acquisition threshold and formal contract requirements for purchases above $50,000. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure that contractors paid under the small purchase and simplified acquisition methods were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We also recommended strengthening its policies and procedures to ensure that appropriate audit evidence is retained for audit. Views of Responsible Official For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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): 22611-056-PN01, 22611-056-ARP, 22619-056-PN01, 22619-056-ARP 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 similar finding from the immediately prior audit reports. The prior audit finding numbers were 2021-002 and 2023-003. Condition and Context Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. There were 23 vendors identified that fell within the small purchase's threshold. Of those vendors, 4 were selected for testing. For each of those 4 vendors tested that fell within the small purchases threshold, the School Corporation did not obtain an adequate number of price or rate quotations to ensure the procurements provided full and open competition. In addition, history of the procurements which would include the rationale for the method of procurement, selection of the vendor, and basis for price was not documented. INDIANA STATE BOARD OF ACCOUNTS 28 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement - Simplified Acquisition When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the threshold the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. One vendor was identified that fell within the SAT, with total purchases of $165,816. Sealed bids or competitive proposals were not obtained, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 29 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP 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. . . ." Cause A proper system of internal controls was not in place to ensure that bids were solicited before entering into a contract or that quotes were obtained. The School Corporation was unaware of the requirement to solicit bids for contracts that exceed the simplified acquisition threshold. Additionally, they were unaware of the requirement to obtain an adequate number of quotes for purchases that exceeded the small purchase threshold. 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 for procurements that fell within the small purchase threshold. 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 establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods for small purchases and simplified acquisition purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding Reference: 2025-001 – Procurement, Suspension and Debarment Federal Agency: U.S. Department of Education Federal Program: 84.027 – IDEA Compliance Requirement:Procurement, Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance and NonCompliance Criteria: The School District is required to maintain and use documented procurement procedures for procurement transactions under federal awards, and those procedures must be consistent with state/local requirements and the federal procurement standards in 2 CFR 200.317-200.327. When a noncompetitive (sole source) procurement method is used, it must be supported by circumstances and documentation consistent with the Uniform Guidance procurement methods requirements in 2 CFR 200.320 (including maintaining sufficient documentation to support the selected procurement method in the procurement file). Statement of Condition: The School District procured IDEA services through the Lincoln Intermediate Unit using a noncompetitive (sole source) approach. The School District did not retain documentation in the procurement file to support the basis for noncompetitive procurement. Statement of Cause: The School District did not consistently follow documented procurement procedures for the IDEA program and the procedures. Possible Asserted Effect: Without documentation supporting the noncompetitive procurement method, the School District is not able to demonstrate compliance with federal procurement requirements applicable to IDEA. Questioned Costs: None noted. Context: One vendor was utilized and there was not appropriate documentation maintained of procurement regarding the services. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that a process be implemented to review the services provided under the IDEA program to ensure procurement documentation is appropriately maintained. Views of Responsible Officials and Planned Corrective Actions: The School District's practice has been to utilize all IDEA funding to support the education of IDEA-qualified students through the use of the Lincoln Intermediate Unit services conducted at the Franklin Learning Center (FLC). 100% of the IDEA funds are utilized to pay for a portion of the services provided by the FLC. The FLC is the only center operating in Franklin County. To ensure compliance with this standard in the future, the Assistant to the Chief Financial and Operations Officer will provide the Director of Special Education and the Superintendent with the Sole Source Justification form by July 1st of each year. The Director of Special Education and the Superintendent will be responsible for completing the Sole Source Justification form and submitting a copy of the signed document to the Business Office. The Special Education Financial Secretary will attach the Sole Source Justification form to the purchase requisition for services from the Franklin Learning Center for the IDEA-qualified students.

Finding 2025-002 – Procurement – Noncompliance with Formal Competitive Requirements – Noncompliance & Significant Deficiency – Moving to Work Demonstration - ALN 14.881 Condition: We reviewed a sample of procurements across various price ranges, including contracts associated with the largest purchases of the fiscal year, to determine compliance with the Housing Authority’s Procurement Policy and applicable Federal Regulations. We found that large purchases of playground equipment and installation for several properties were improperly split into smaller purchases by individual property, and no formal contract was executed. The Authority obtained a single set of quotes, citing that these applied to all properties; however, the aggregate project cost exceeded the small purchase ceiling. Based on 2 CFR §200.320(b)(2), this project met the conditions that would have required a formal competitive process such as Request for Proposals (RFP). In addition, we identified instances where contemporaneous documentation was not maintained, no written justification was provided for selecting a vendor other than the lowest bidder, and fewer than the required number of quotes were obtained for purchases exceeding the micro-purchase threshold. Cause: The identified noncompliance may have been driven by a misunderstanding of requirements outlined in Federal Regulations and local policy along with unclear staff responsibilities regarding various procurement tasks. Criteria: The Code of Federal Regulations and the Housing Authority’s Procurement Policy. Effect: The practices described above may lead to higher costs, reduced transparency, and limited competition. Noncompliance in procurement undermines the integrity of the procurement process and may result in the inefficient use of federal funds, violating HUD’s procurement standards. Recommendation: The Housing Authority should review and amend operating practices to ensure alignment with Federal Regulations and its Procurement Policy, including implementing controls to properly identify and procure large purchases and prevent the improper splitting of contracts in the future. Management should strengthen oversight and accountability by clearly defining and documenting staff roles and responsibilities. Comprehensive training should be provided to all personnel involved in procurement. Questioned Costs: None Repeat Finding: Yes Was sampling statistically valid? No Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Child Nutrition Program and Procurement compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: For one of the two small purchase method procurements sampled for testing, we noted that the School Corporation did not obtain quotes from an adequate number of qualified sources. The sample item amount disbursed was $67,000 in fiscal year 2024 for food service equipment maintenance. The School Corporation also did not properly perform a suspension and debarment check on the vendor. This finding is isolated to fiscal year 2024. There were no purchases in 2025 that required a simplified acquisition or small purchase procurement other than those procured by the food service cooperative. Identification as a repeat finding, if applicable: No Recommendation: We recommend the School Corporation's management establish a system of internal controls related to ensure that the School Corporation’s procurement policy is adhered to and quotes are obtained from an adequate number of qualified sources as required for small purchase method procurements. We also recommend management perform a suspension and debarment check or have the vendor attest they are not suspended or debarred prior to entering into transactions that individually or the in aggregate exceed $25,000 and are charged to a fund that receipts federal funds. Views of Responsible Officials and Planned Corrective Actions: Management has agreed with the finding and prepared a corrective action plan.

FINDING 2025-004 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-042-ARP, 22619-042-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation is a member of the Northeast Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and the suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for the simplified acquisition threshold and 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 20 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. When the purchase value exceeds the micro-purchase threshold but is less than the simplified acquisition threshold, a small purchase occurs. Small purchases require documented, full and open competition or a documented rationale for limited competition. For 2023-2024, three vendors with disbursements totaling $175,125 were identified as being less than the simplified acquisition threshold of $150,000 but exceeding the $50,000 micropurchase threshold and were selected for testing. The Cooperative did not obtain price or rate quotes for two of the three vendors and there was no documentation detailing the history of the procurement, which must include the reason for the procurement method used. 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. Upon inquiry of the Cooperative 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, the Cooperative disclosed there were not any documented internal controls or procedures. Nine covered transactions were identified. The covered transactions totaling $803,836 were selected for testing. The Cooperative did not verify the suspension and debarment status of the tested vendors prior to payment. 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 21 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 22 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The Cooperative noted that the ARP portion of the special education grant was new for the 2023-2024 school year. The ARP funding gave opportunity for types of expenditures that do not typically get expensed using special education funding. The transactions noted within the Condition and Context were from the ARP portion of the grant, which provided property or services that exceeded the micropurchase threshold. Management of the Cooperative was unaware of the procurement requirements when property or services exceed the micro-purchase threshold. In addition, management of the Cooperative was unaware of the suspension and debarment requirements when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Without following the required methods for procurement, the Cooperative could be overpaying for services. Unverified vendors to whom payments equal to or in excess of $25,000 could be suspended, debarred, or otherwise excluded. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Cooperative's management design and implement a system of internal controls related to procurement and suspension and debarment procedures to ensure procurement requirements are met and to ensure entities are neither suspended nor debarred, or otherwise excluded or disqualified, prior to entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Criteria: 2 CFR 200.320 details various methods of procurement to be followed based on the intended dollar value and nature of the contract. While the specific required documentation may vary based on each of the various methods, all mandate specific documentation concerning procurement decisions. Condition: The Organization did not maintain sufficient documentation of its procurement decisions. During our testing of 25 procurement files, 3 were below the simplified acquisition threshold which require price quotations, the documentation did not evidence price quotations were received for the 3. Cause: The Organization has contracts with vendors that existed prior to the procurement guidelines. As a result, several of these contracts do not have sufficient documentation of procurement evaluations and decisions. Effect: Despite having a written procurement policy, if the Organization does not maintain sufficient documentation of procurement evaluations and decisions, the Organization's procurement practices will not comply with the Uniform Guidance. Questioned Costs: None Recommendation: The Organization should retain formal documentation with regard to its procurement decisions and document how the procurement decisions were made, including how these decisions align with the procurement policy. It is noted that this finding was identified in the prior year and a corrective action plan was put in place by the end of the fiscal year however, this current year finding addresses the period of time prior to the implementation of that corrective action plan. Management's Response: We agree with this finding. See corrective action plan.

Information on the federal program: Subject: Child Nutrition Cluster, Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: Child Nutrition Cluster Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Condition: The School Corporation did not have internal controls in place to ensure compliance with the procurement and suspension and debarment requirements. The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchase and simplified acquisition procurement thresholds were followed. Cause: Although the School Corporation has adopted a procurement policy that establishes purchasing requirements based on defined dollar thresholds and requires verification of vendor suspension and debarment status, the policy was not fully adhered to. Required procurement methods were not utilized for certain purchases that exceeded applicable thresholds and the required suspension and debarment verifications were not consistently performed. This condition resulted from insufficient oversight and monitoring to ensure compliance with all aspects of the School Corporation’s procurement policy. Effect: Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: 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 non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the 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. The School Corporation did not review procurements done by the food service management company to ensure that proper procurement policies were followed. The School Corporation did not ensure that the food service management company did not use suspended or debarred vendors. During the audit period, we noted two small purchases for which the School Corporation did not have evidence of obtaining multiple quotes or documented rationale for selecting the vendor. Only the final invoice, purchase order, and quote from the selected vendor were available. During fiscal year 2024, we noted that for one of the three vendors tested, the correct procurement method was not followed. Purchases from the vendor were in excess of $150,000 during the fiscal year, requiring the simplified acquisition procurement process; however, the School Corporation applied the small purchase procurement process. The purchase was for equipment at two different buildings. The School Corporation issued two requests for quotes, one for each school, and treated them as separate procurements. However, as the purchases were similar in nature, the requests for quotes were dated the same day and sent to the same vendor, this should have been treated as one procurement in aggregate. The School Corporation did not have support for public advertisement, requests for formal sealed bids, or formal documentation for the basis of award. The lack of internal controls and noncompliance were systemic issues throughout the audit period. 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 non-procurement 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. During the audit period, we noted two vendors out of three that were sampled, over the $25,000 suspension and debarment threshold for which the School Corporation did not have evidence of a suspension and debarment check. Identification as a repeat finding: No Recommendation: We recommend that the School Corporation strengthen its system of internal control by establishing and implementing policies and procedures to ensure that procurement activities for goods and services comply with applicable requirements and that contractors and subrecipients are verified as not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a 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 Assistance Listings Numbers: 10.553, 10.555 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, Other Matters Condition and Context The School Corporation had not properly designed and 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. INDIANA STATE BOARD OF ACCOUNTS 15 NORTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement Federal regulations allow for informal procurement methods when the value of the procurement for 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were tested that exceeded the small purchase threshold during the audit period. For one vendor no quotes were obtained. 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. The School Corporation entered into four covered transactions during the audit period and were unable to provide evidence they followed its policy for one of those transactions. The total purchases made from that vendor totaled $29,091. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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 STATE BOARD OF ACCOUNTS 16 NORTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 200.318 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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not implemented 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 effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 17 NORTH HARRISON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, adequate documentation was not retained for procurements that fell within the small purchase threshold. 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 a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Federal Agency: U.S. Department of Transportation Federal Program Name: Formula Grants for Rural Areas and Tribal Transit Program Assistance Listing Number: 20.509 Federal Award Identification Number and Year: 2025; FAIN not available. Pass-Through Agency: State of Vermont Agency of Transportation Pass-Through Numbers: EA#FT202201-704 EA#FT25FLEX-054 EA#FT25FLEX-954 EA#FT23FLEX-954 EA#FT25FLEX-454 EA#FT23FORM-704 EA#FT25FLEX-554 EA#FT24FORM-924 EA#FT25FLEX-854 EA#FT24FORM-934 EA#FT25FLEX-924 Award Period: July 1, 2024 through June 30, 2025 Compliance Requirement: Procurement, Suspension and Debarment Type of Finding: Material weakness in internal control over compliance; material noncompliance and modified opinion on compliance Criteria or Specific Requirement: The United States Code of Federal Regulations (CFR) Title 2, Part 200.319 indicates procurement transactions under the Federal award must be conducted in a manner that provides full and open competition. Additionally, 2 CFR Part 200.320 indicates that for any allowable method chosen, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the requirements of 2 CFR Part 200, Subpart D. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR Part 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR Part 180.300). 2 CFR Part 200.303 indicates that non-Federal entities receiving Federal awards 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: The District did not maintain documentation to support the procurement, suspension and debarment procedures performed for covered transactions in order to demonstrate compliance with 2 CFR Part 180 and 2 CFR Part 200. Questioned Costs: None. Context: Two (2) of the six (6) procurement transactions and two (2) of the five (5) suspension and debarment transactions. Cause: Procedures were not implemented to maintain documentation to support compliance with the standards of procurement, suspension and debarment contained in 2 CFR Part 180 and 2 CFR Part 200. Effect: Compliance with the requirements of the federal award could not be demonstrated. Repeat Finding: Yes, 2024-004 Recommendation: We recommend management enhance procedures and controls to ensure documentation is maintained to support all procurements and suspension and debarment verifications related to expenditures from federal award programs. Justification for noncompetitive procurements (i.e., sole source, public exigency, or consent of the awarding agency), should also be documented. Such documentation should be consolidated and maintained in a secure, accessible location. Views of Responsible Officials: Management agrees with the finding.

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 Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY24, FY25 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 2023-005. 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 $149,426 from five vendors that fell under the small purchase threshold during the audit period. Price or rate quotes were not obtained for any of the vendors nor was there any documentation detailing the history of procurement, which must include the reason for the procurement method used. INDIANA STATE BOARD OF ACCOUNTS 16 DELPHI COMMUNITY SCHOOL CORPORATION 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 four covered transactions over $25,000 identified during the audit period totaling $130,448. All four were selected for testing; however, the School Corporation did not verify that two of the four vendors totaling $70,411 were 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(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." INDIANA STATE BOARD OF ACCOUNTS 17 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 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. INDIANA STATE BOARD OF ACCOUNTS 18 DELPHI COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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.