Findings Citing § 200.328

U.S. Department of Environmental Protection Agency Passed through State Department of Natural Resources and Conservation FFAL# 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Reporting Material Non-compliance Material Weakness in Internal Control Criteria: • 2 CFR §200.303 requires non-federal entities to establish and maintain effective internal control over federal awards. • 2 CFR §200.328 requires recipients to submit accurate financial reports and maintain records that support the data reported. Condition: The District does not have documented internal controls over the preparation and review of federal financial reports. During our testing, we noted: • For one quarterly report, the District used an incorrect reporting period. • For both sampled reports, the District did not maintain the required supporting documentation in the reporting package to substantiate the amounts reported to the cognizant agency. Cause: The District has not implemented documented internal controls over the reporting process and did not ensure that supporting documentation was retained for amounts reported. Effect: Failure to maintain accurate reporting and supporting documentation increases the risk of noncompliance with Uniform Guidance and may result in questioned costs or misreporting to the cognizant agency. Questioned Costs: None to report. Context/Sampling: A nonstatistical sample of two reports were selected for testing. Repeat Finding from Prior Years: No. Recommendation: We recommend the District: • Develop and implement documented internal controls over the reporting process, including review procedures to ensure accuracy of reporting periods. • Maintain complete supporting documentation in the reporting package for all amounts reported to the cognizant agency. • Provide training to staff responsible for preparing and reviewing reports to ensure compliance with Uniform Guidance requirements. Views of Responsible Officials: Agree.

FINDING NUMBER 2024-002 REQUIREMENT REPORTING TYPE OF FINDING MATERIAL WEAKNESS FEDERAL PROGRAM 14.871 – SECTION 8 HOUSING CHOICE VOUCHERS CONDITION The Municipality did not submit or file the required FASS PH financial report for the fiscal year ended June 30, 2024. At the completion of the audit, the report remained outstanding and had not been uploaded to the FASS PH system, resulting in noncompliance with HUD’s reporting requirements. CRITERIA Entities administering the Section 8 Housing Choice Voucher Program (AL 14.871) must submit annual financial information to the U.S. Department of Housing and Urban Development (HUD) through the Financial Assessment Subsystem – Public Housing (FASS PH). This requirement is established under: • 2 CFR 200.327–200.328 (Uniform Guidance reporting requirements) • HUD Uniform Financial Reporting Standards (UFRS) • HUD Public Housing Assessment System (PHAS) – FASS PH requirements • Applicable HUD notices and guidance for FY 2024 These regulations require timely submission of complete and accurate financial data to allow HUD to evaluate the financial condition and compliance performance of the Municipality’s Housing Choice Voucher Program. CAUSE The failure to submit the FASS PH report resulted from insufficient internal controls over the financial reporting process. Contributing factors included: • Lack of a formal monitoring process to track HUD reporting deadlines • Inadequate supervisory review of required submissions • Limited staff knowledge of HUD’s UFRS and FASS PH reporting procedures EFFECT Non-compliance may result in HUD administrative actions, negative impact on the municipality’s financial assessment score, delays or interruptions in federal funding and potential for increased oversight or monitoring by HUD. QUESTIONED COST None RECOMMENDATION The municipality should establish and document formal internal controls to ensure timely preparation and submission of the FASS PH report. Assign responsibility to specific personnel and implement a compliance calendar for HUD reporting deadlines. Provide training to financial staff on HUD reporting requirements, UFRS, and the FASS PH system. Implement a supervisory review process to verify completeness and accuracy before submission. Submit the outstanding FASS PH report as soon as possible, if HUD still permits late filing. PRIOR YEAR FINDING None VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION The Municipality of Comerío made a contract with an auditing firm to work on the reports and submission of the FASS-PH financial report compliance for the years in which the reports were not submitted. Furthermore, instructions were given for the HUD Coordinator to monitor the delivery of reports by the contracted auditing firm and to ensure that the contract for this service is finalized. Personnel in charge: Brenda L. Reyes Rivera, HUD Coordinator Compliance period: April 30, 2026

State Agency: Illinois Governor’s Office of Management and Budget (GOMB) Federal Agency: U.S. Department of the Treasury (TREAS) Program Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds ALN and Program Expenditures: 21.027 ($230,448,761) Award Numbers: Various - see table of award numbers Federal Award Year: Various - see table of award numbers Questioned Costs: None Compliance Requirement: Reporting Finding 2024-003: Failure to Accurately Prepare Performance Reports for the COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Program Condition Found: GOMB did not prepare accurate federal project and expenditure reports (Paperwork Reduction Act (PRA) 1505-0271) for the COVID-19 – Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program. The State was required to prepare quarterly federal project and expenditure reports (PRA 1505-0271) for the CSLFRF program. To assist the State agencies, GOMB prepared these reports. According to the U.S. Treasury’s SLFRF Compliance and Reporting Guidance, expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. During our testing of two quarterly PRA 1505-0271 reports submitted during State fiscal year ended June 30, 2024, we noted that GOMB did not consistently apply cash or accrual basis for reporting and noted the following errors on the cash basis: "See Table in the Audit Report" Supervisory review procedures of the PRA 1505-0271 reports have not been designed to operate at an appropriate level of precision to ensure the financial reports are accurately prepared. Criteria or Requirement: 2 CFR 200.328 requires grantees to submit PRA 1505-0271 reports with the frequency required by the terms and conditions of the federal award. The State and Local Fiscal Recovery Funds: Project and Expenditure Report User Guide requires grantees to submit quarterly reports with current financial information, including current period and cumulative obligations and expenditures. In addition, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure financial information reported in required financial reports is complete and accurate prior to submission. Cause: In discussing these conditions with GOMB officials, management stated the reporting errors were a result of inaccurate information submitted to GOMB by other State agencies which were not detected. Possible Asserted Effect: Failure to prepare complete and accurate financial reports prevents the U.S. Treasury from effectively monitoring the CSLFRF program. Repeat Finding: A similar finding was reported in the prior year audit as finding code 2023-003. (Finding Code 2024-003, 2023-003) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend GOMB implement more precise review procedures to ensure the reports submitted to the U.S. Treasury are complete, accurate, and agree or reconcile to its financial records. Views of GOMB Officials: GOMB agrees with the recommendation. GOMB will continue to work with the State agencies to produce accurate financial reporting for the CSLFRF program.

State Agency: Illinois Department on Aging (IDOA) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Aging Cluster ALN and Program Expenditures: 93.044/93.045/93.053 ($68,210,944) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: Reporting Finding 2024-050: Failure to Accurately Prepare Financial Reports for the Aging Cluster Condition Found: IDOA did not prepare accurate federal financial status reports for the Aging Cluster (Aging) program. IDOA is required to prepare semi-annual federal financial status reports (SF-425) for each open grant of the Aging program. During our testing of seven SF-425 reports submitted during state fiscal year 2024, we noted the following errors in the Older Americans Act Title III FFY21 grant (#2101ILOACM) SF-425 report for the semi-annual period ended September 30, 2023: "See Table in the Audit Report" We further noted the supervisory review procedures performed for this report were not designed to operate at an appropriate level of precision to ensure financial reports are accurately prepared. Additionally, IDOA does not perform analytical procedures to identify potential errors or unusual fluctuations in reported amounts. Criteria or Requirement: According to 2 CFR 200.328, Aging Cluster program grantees are required to submit SF-425 and Administration on Aging (AoA) Title III supplemental forms on a semi-annual basis. Reports are due within 30 days for the periods ending March 31 and September 30 and are based on the accrual basis. In addition, 2 CFR 200.303 requires non-Federal entities to, among other things, establish and maintain 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. Effective internal controls should include procedures to ensure information reported in required financial reports is accurate. Cause: In discussing these conditions with IDOA officials, they stated IDOA’s records were not updated for an error identified during the preparation and supervisory review of the report. Possible Asserted Effect: Failure to accurately prepare financial reports prevents the USDHHS from effectively monitoring the Aging program. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2024-050) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDOA review the process and procedures in place to prepare financial status reports required for the Aging program and implement the additional procedures necessary to ensure the reports are complete, accurate, and agree or reconcile to its financial records. Views of IDOA Officials: The Department agrees with this finding. The SF-425 reports are prepared by Department staff, reviewed by an outside contractor, entered into the payment management system, submitted and reviewed again before being certified. Although the adjustment has now been made and staff have been reminded to promptly enter and save adjustments or corrections in the working files at the time of the auditors’ review the spreadsheet was incorrect.

Finding 2024-011: Material Weakness and Material Noncompliance Finding, Reporting – Special Reporting Assistance Listing Program Title and Number: Coronavirus State and Local Fiscal Recovery Funds (ALN# 21.027) Federal Agency: U.S. Department of Treasury Pass-through Entity: N/A Award year: 2023-2024 Criteria or specific requirement: Generally, recipients must submit one initial Interim Report, quarterly or annual Project and Expenditure reports which include subaward reporting, and in some cases annual Recovery Plan reports. The Project and Expenditure Reports are due quarterly and/or annually based on 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information. Cities were required to submit quarterly Project and Expenditure Reports which cover one calendar quarter and must be submitted to Treasury by the last day of the month following the end of the period covered. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Condition: None of the quarterly Project and Expenditure Reports were submitted as required, and instead the City elected to submit an annual Project and Expenditure Report that was submitted past the deadline for the fourth quarterly report. Cause: Grant management and reporting is not fully centralized within the City and there was turnover in the grant administrator position. The City did not have sufficient internal controls in place to ensure the reports were filed. Effect: Failure to file timely reports resulted in non-compliance with the Reporting requirements of the program. This could also result in the Federal government cancelling funding of the program or denying eligible expenditures. Context: There were four Project and Expenditure Reports required to be submitted during the audit period. Of the four quarterly Project and Expenditure reports required, none were submitted. The City elected to submit an annual Project and Expenditure Report, which was submitted 13 days after the deadline for the fourth quarterly report. Questioned Cost: None Repeating Finding: 2023-006 Recommendation We recommend that the City implement controls to ensure all reports are prepared, reviewed and submitted by the due date to the requisite agency, as well as contact the grantor about whether or not the delinquent reports should still be filed. Views of Responsible Officials: Management agrees with the finding.

The Department of Emergency and Military Affairs’ Emergency Management Division (Division) did not retain adequate documentation supporting reimbursement requests, matching requirements, and financial reports, risking the Division receiving monies it was not entitled to Assistance Listings number(s) and name(s): 97.042 Emergency Management Performance Grants Award number(s) and year(s): EMF-2021-EP-0016-S01 October 1, 2020 through September 30, 2023 EMF-2021-EP-0018-S01 October 1, 2020 through June 30, 2025 EMF-2022-EP-0009-S01 October 1, 2021 through September 30, 2025 EMF-2023-EP-0008-S01 October 1, 2022 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Compliance requirement(s): Cash management, matching, and reporting Questioned costs: Unknown Condition Contrary to federal regulations, the Division did not retain adequate documentation supporting reimbursement requests, matching requirements, and financial reports as follows: X Cash management For 4 of 5 requests for reimbursement we tested, the Division did not retain adequate documentation to support the amounts requested for reimbursement from the federal agency. The Division used documentation provided by its subrecipients to calculate the amount to both reimburse the subrecipient and request from the federal government. However, while the Division provided documentation of the invoices paid under their requests for reimbursement, they were unable to indicate which invoice applied to the respective request for reimbursement. X Matching The Division was unable to demonstrate through its reimbursement requests or other supporting documentation how it used nonfederal funds for at least 50% of the total project cost. X Reporting The Division did not retain documentation supporting 3 of 3 Federal Financial Reports (FFR) we tested, as follows: y For the 2023 quarter 4 FFR, the Division could only provide an unapproved draft copy and could not demonstrate that it submitted the FFR to the federal agency. y For the 2024 quarter 1 FFR and the annual FFR, the Division did not retain underlying general ledger data or other records to support costs reported, including indirect costs calculated from an approved indirect cost rate agreement. Effect The Division’s failure to retain adequate documentation supporting reimbursement requests, matching requirements, and financial reports resulted in our being unable to determine whether the reimbursements were appropriate, matching requirements were met, and the reports were complete and accurate. There is also an increased risk that Division could receive federal monies to which it is not entitled. Also, if matching requirements are not met, the Division may be required to return program monies to the federal agency in accordance with federal requirements.1 Further, the federal agency is unable to rely on the financial reports to monitor the Division’s program administration, including its compliance with program requirements and ability to prevent and detect fraud, and evaluate the program’s success. Finally, the Division is at risk that this finding applies to other federal programs it administers. Cause The Division reported that turnover of staff who previously prepared documentation to support reimbursement requests, matching requirements, and financial reports and submitted the reimbursement requests and financial reports resulted in the Division’s inability to locate the supporting documentation for the reports, including the applicable indirect cost agreement, or explain how to reconcile a large number of invoices that were provided to the reimbursement requests tested. The Division also did not have formal policies and procedures requiring an independent review to ensure the accuracy and completeness of the information included in the reports, and the retention of all documentation supporting data included in its reports. Consequently, only 2 of the 3 reports we tested were reviewed and approved prior to submitting the reports to the federal agency. 1 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient takes appropriate and timely corrective action (2 CFR §200.513(c)). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521). Criteria Federal regulation requires the Division to retain all public records, including financial records and supporting documentation, related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §200.334). In addition, federal regulation requires the Division to submit its quarterly reports no later than 30 days after the reporting period (2 CFR §200.328). Federal regulation also requires the Division to use the reimbursement method to administer the program, whereby the Division is reimbursed with federal program monies only after it spends its own monies for authorized program purposes and requests reimbursement from the federal grantor (2 CFR §200.305[B][3]). Also, the program’s grant agreement requires the Division to match 50% of the approved project costs from nonfederal sources. Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the Division 1. Retain documentation for all reimbursement requests, matching requirements, and financial reports, such as the underlying general ledger data, approved indirect cost rate agreements, or information provided by its subrecipients for a period of 3 years from the date the program’s final report is submitted to the federal agency. 2. Review the reports identified above to ensure they were accurate. If any inaccuracies are identified, work with the federal grantor to correct these reports. 3. Develop and implement written policies and procedures over the preparation of reimbursement requests and financial reports, and the monitoring of the Division’s matching requirements as well as the retention of these records. The Division should train responsible staff on these policies and to perform an independent review of these documents to ensure accuracy and completeness prior to submission to the federal agency. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements over reimbursement requests, matching requirements, and financial reports. Views of responsible officials State management concurs with this finding. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials regarding these recommendations. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.

SIGNIFICANT DEFICIENCY 2024-002 - Reporting Federal Program Information: Department of Education ALN 84.425 – Elementary and Secondary School Emergency Relief ALN 21.027 – Coronavirus Local Fiscal Recovery Fund Criteria: The following CFRs apply to this finding: 2 CFR section 200.328 and 2 CFR section 200.329 Condition: During audit procedures, it was identified that the School could not provide copies of the Annual Performance Report/Annual Performance and Expenditure Report filed for the period under audit. Cause: The School did not have the necessary internal controls over reporting and did not complete and submit or did not appropriately maintain copies of the reports submitted. Effect: Reports may not have been completed and submitted within the 90 day allotted time after the end of the reporting period. Identification of Questioned Costs: None identified Context: The ESSER Performance report was due on April 12, 2024 for the period ending 6/30/23. Information was gathered and notes were made on the report form. No copy of the submitted report was maintained in the client file and client was unable to obtain a copy from the online submission program. A copy of the Coronavirus annual performance report was not maintained in the client files and client was unable to access the a copy of the report online. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the School familiarize themselves with federal Reporting Requirements and implement internal control processes and procedures to ensure that they are following the criteria above. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the Limestone Community School and the Town of Limestone, Maine.

Finding Number: 2024-010 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2024 Federal Agency: U.S. Department of Education Compliance Requirement: Reporting Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2023-010 Noncompliance and Material Weakness- Final Expenditure Reporting 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.328 which provides the Federal awarding agency may solicit only the standard, OMB-approved government wide data elements for collection of financial information. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Ohio Department of Education Grants Manual requires, at the end of the grant period, that entities submit a final expenditure report (FER). A FER must be submitted to show how grant funds were expended during the grant period. The amounts by object code submitted by the District in the Final Expenditure Report for the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER, AL # 84.425U), grant year 2024, varied from the underlying system data. Expenditures on the Final Expenditure report, object code 500 were under-reported $9,080, and object code 600 were under-reported $29,346. This variance was due to improper monitoring. The failure to properly report expenditures to the grantor can result in corrective action taken by the grantor and obfuscates the true nature of the grant’s use. The Treasurer should review the annual Final Expenditure Reports and verify the correct information is provided to the grantor. This information should be reconciled to the underlying system reports. Material Weakness and Noncompliance documented in Federal Finding 2024-008 in Section 3 above pertaining to ESSER funding contributed to the reporting error.

FINDING REFERENCE NUMBER 2024-022 (See Finding Reference Number 2024-003) FEDERAL PROGRAM (ALN – 10.542) PANDEMIC EBT FOOD BENEFITS (P-EBT) U.S. DEPARTMENT OF AGRICULTURE AWARD NUMBERS 2301PR456S9032 (Federal Award Years: 10/1/2022 through 3/31/2024) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ELIGIBILITY // REPORTING TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. In accordance with the approved State Plan, no summer 2023 P-EBT benefits may be issued to children who did not attend an NSLP-participating school at the end of the school year immediately preceding the summer. STATEMENT OF CONDITION As part of our internal control procedures for the financial management system regarding reporting requirements, we found the following deficiencies regarding the only report submitted during the fiscal year of September 30, 2023: • The amount reported as total Federal share of outlays (line 10.g.), was $35,356,789, and the amount of $879,121 (line 10.h) as total unliquidated obligations. The accounting system (PRIFA) reported total expenditures in the amount of $36,235,910, which is the sum of lines 10.g and 10.h. No unliquidated obligations are included in the database of PRIFA. • In addition, we noted an expenditure dated October 31, 2023, in the database for $92,157 that was not reported. This amount was not included as unliquidated obligation in the report of September and no other report was submitted that included this expenditure. • We have no administrative expenses recorded in the database; however, the reports provided listed $307,733 as administrative expenses. In relation to the allowable activities, we obtained a list of all participants that received the benefits. We noted that the information provided from SAIC system does not agree with the reports provided by Service EBT Provider. We noted that the lists of emissions from June 2023 through October 2023 totalized $36,181,839, in accordance with a list from SAIC. Emissions from the Service EBT Provider and accounting records presented expenditures in the amount of $36,328,067, a total difference of $146,228. This difference represents 1,052 participants that are not in the list provided from SAIC, but whose benefits were issued according to the reports from the Service EBT Provider. In relation to the evaluation of the eligibility requirements, we noted that 27 participants were duplicated in the lists from SAIC. In addition, we were unable to verify if the participant attended a private school that participated in the NSLP, because no evidence of the lists from the Puerto Rico Department of Education was provided. QUESTIONED COSTS $146,228. This amount is the total amount of benefits issued for 1,052 participants whose information was not provided. PERSPECTIVE INFORMATION These deficiencies are a systemic problem that is related to lack of proper training and segregation of duties when reporting (preparer and reviewer not being the same person). No proper internal controls are in place to ensure that all data used to issue the benefits is safeguarded and properly reconciled with accounting records. STATEMENT OF CAUSE ADSEF did not establish and implement adequate internal controls to ensure the accuracy, completeness, and supervisory review of financial information used in the preparation of Federal reports. In addition, financial data reported to the Federal agency was not consistently reconciled to the supporting accounting records and database prior to submission. Furthermore, no proper records are maintained of the data used to issue the benefits and how the reconciliation process from the SAIC system and benefits processed by the Service EBT Provider is made. POSSIBLE ASSERTED EFFECT The discrepancies between reported amounts and supporting records, along with lack of supervisory review, create a risk that Federal reports are inaccurate, incomplete, or unsupported, resulting in noncompliance with Federal reporting requirements. We were unable to verify the complete lists of beneficiaries of the P-EBT. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-001/2023-029. RECOMMENDATIONS We recommend that management establish an internal control process that includes having more than one person review the reports submitted to the Federal government. In addition, we recommend proper internal controls that require a structured process of compiling, reviewing and safeguarding all required data for benefits issued.

FINDING REFERENCE NUMBER 2024-023 (See Finding Reference Number 2024-004) FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 231PR426S7003/4; 241PR426S7003/4 (Federal Award Years: 10/1/2022 through 9/30/2024) 2022G996117; 2023996117 (Federal Award Years: 10/1/2021 through 9/30/2023) 2401PRTANF1 (Federal Award Years: 10/1/2023 through 9/30/2026) 2301PRTABD; 2401PRTABD (Federal Award Years: 10/1/2022 through 9/30/2026) 2201PRLIEA; 2301PRLIEA; 2401PRLIEA (Federal Award Years: 10/1/2021 through 9/30/2025) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process: i. There is no written procedure that outlines the process for applying this formula for distributing administrative expenses. ii. There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire. iii. Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2023-2024 fiscal year were observed, in which these three options represented between 25% and 18% for local offices and 38% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs. QUESTIONED COSTS None. PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program. STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs. POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-004/2023-032. RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.

FINDING REFERENCE NUMBER 2024-024 (See Finding Reference Number 2024-005) FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 231PR426S7003/4 (Federal Award Years: 10/01/2022 through 09/30/2023); 241PR426S7003/4 (Federal Award Years: 10/01/2023 through 09/30/2024) 2023996117 (Federal Award Years: 10/01/2022 through 09/30/2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. … (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we requested evidence of the indirect costs transactions. ADSEF is allowed to claim 16.80% of indirect costs. As part of our audit procedures over the Nutrition Assistance for Puerto Rico and TANF program, we selected some transactions to evaluate the compliance with the indirect cost’s claims. The TANF program reported three (3) transactions related to indirect costs in the amount of $569,998.55, and for the Nutrition Assistance for Puerto Rico three (3) transactions were reported in the amount of $4,815,418.41. We requested evidence of one (1) transaction for the TANF program and one (1) for the Nutrition Assistance for Puerto Rico, no evidence of class object was provided in order to ascertain that only allowable expenditure transactions were considered in the calculation and claim of indirect costs. QUESTIONED COSTS None. PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. ADSEF does not have an internal control process that allows for proper authorization and monitoring of the claims made for indirect costs. STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for claiming and documenting indirect costs claims. The process of recording indirect costs is based on an excel spreadsheet, no detail of costs indicating the class object and transactions considered are maintained. POSSIBLE ASSERTED EFFECT Indirect costs calculation may include unallowable costs and not be detected timely. ADSEF cannot provide proper audit evidence of the amounts claimed as indirect costs. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-005/2023-033. RECOMMENDATIONS We recommend that management establish internal control processes to reconcile PRIFAS and the various sources of information used for reporting. Additionally, maintain clear records of indirect costs claimed and awarded.

FINDING REFERENCE NUMBER 2024-041 FEDERAL PROGRAM (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2301PRLIEA (Federal Award Year: 10/1/2022 – 9/30/2024) 2401PRLIEA (Federal Award Year: 10/1/2023 – 9/30/2025) 2301PRLIEE (Federal Award Year: 10/1/2022 – 9/30/2024) 2301PRLIEI (Federal Award Year: 10/1/2022 – 9/30/2024) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – PERFORMANCE TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR § 200.302, Financial Management, establishes that: (a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450.) (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. … (6) Written procedures to implement the requirements of § 200.305 and (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. LlHEAP Performance Data Form (OMB No 0970-0449) – State grant recipients must submit this report by January 3lst regarding the prior Federal fiscal year. The first section of the report is the Grant recipient Survey that collects and reports data on sources and uses of LIHEAP funds. The Grant recipient Survey includes Section III: Estimated Sources of Funds and Section IV: Estimated Use of LIHEAP Funds. Note: that these are referencing obligated not expended funding. The rest of the report is regarding performance metrics, mostly related to home energy burden targeting and reduction, as well as the continuity of home energy service. The Grantee Survey obligation amounts should be compared with the Carryover and Reallotment and FFR-425 reports. This reconciliation is needed to make sure the obligated balances for the program year being tested are accurate. Annual Report on Households Assisted by LIHEAP (OMB No. 0970-0060) https://omb.report/icr/202211-0970-005 – As part of the application for block grant funds each year, a report is required for the preceding fiscal year of (1) the number and income levels of the households assisted for each component and any type of LHEAP assistance (heating, cooling, crisis, and weatherization); and (2) the number of households served that contained young children, elderly, or persons with disabilities, or any vulnerable household for each component. Quarterly Performance and Management Report (OMB No. 0970-0589) https://omb.report/icr/202205-0970-017/doc/121847100 – Grant recipients must submit data and information about LIHEAP during the current FY, including success, challenges, needs and innovations. The quarterly reports focus on assisted households, performance management, obligation of funding, changes made due to anticipated increase in energy bills, collaboration with other utility programs, training and technical assistance needs. STATEMENT OF CONDITION As part of our audit procedures over the financial reporting requirements for LIHEAP program, we selected three reports submitted during our fiscal year. We noted that the administrative expenditures do not reconcile with the accounting information from PRIFAS. In addition, there are no written procedures describing internal controls over this requirement. We requested the LIHEAP Performance Data (OMB No 0970-0449), but no evidence of the report was provided. We obtained a copy of the Annual Report on Households Assisted by LlHEAP (OMB No. 0970-0060), but no supporting documentation regarding the information reported was provided. We requested two quarterly reports for the Quarterly Performance and Management Report (OMB No. 0970-0589) for the 2301LIEA grant, but no documentation was provided. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency. In relation to Special and Performance Reports, there are no proper controls over the data reported and the supporting information. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the SF– 425 reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual. In relation to the Special and Performance Reports, the lack of written procedures and proper safeguarding of documentation does not allow for demonstrating compliance with the requirements of these reports. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. We were unable to evaluate internal controls and compliance over the Special and Performance Reports. ADSEF might not comply with the requirements of the program and not report it on time to the regulatory agencies. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-021/2023-051. RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. In addition, in relation to the Special and Performance Reports create internal controls that provide for obtaining information, preparing reports, and filing evidence of reports.

FINDING REFERENCE NUMBER 2024-044 (See Finding Reference Number 2024-016) FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES (ALN – 93.667) SOCIAL SERVICES BLOCK GRANT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBER 2203PRFPSS (Federal Award Years: 10/1/2021 through 9/30/2023); 2202PRFPCV (Federal Award Years: 10/1/2021 through 9/30/2023) 2211PRSOSR (Federal Award Years: 10/1/2021 through 9/30/2023) ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In addition, the SF-425 Federal Financial Report requires the reporting of financial activities related to Federal awards. The accounting basis used for reporting expenditures (whether cash or accrual) must align with the accounting system employed by the recipient organization. The 2 CFR § 200.302 (b), establish that the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): … (6) written procedures to implement the requirements of § 200.305 and (7) written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. The 2 CFR section 200.328(c) establishes that the recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected the Grant Awards 2203PRFPSS and 2202PRFPCV, which closes in the audit period from July 2023 to June 2024, to validate the recorded amounts. Upon evaluating the report for the Grant Award 2203PRFPSS, we found the following deficiencies: 1) The accounting basis should be Cash Basis instead of Accrual Basis, according to the accounting system used. Additionally, they provided a Procedures Manual for the Finance and Budget Divisions, approved in 2009 and delivered in Word format, which states that the accounting basis is “accrual”, even though their current system operates on a cash basis and no conversion to accrual basis was made. 2) The total Federal expenditure reported on line (e) does not match the database provided by the PRDF. 3) The matching expenditure on line (j) does not match the database provided by the PRDF. 4) The report was not submitted within the established deadline, December 31, 2023 and they submitted the report on July 8, 2024. 5) During the internal control’s interviews, we found that there is no designated person responsible for reviewing the information entered by the preparer. As part of our audit procedures over internal controls and compliance for reporting requirements, we selected the Grant Award 2211PRSOSR, which closes in the audit period from July 1, 2023 to June 30, 2024, to validate the recorded amounts. Upon evaluating the report, we found the following deficiencies: 1) The accounting basis should be Cash Basis instead of Accrual Basis, according to the accounting system used. Additionally, they provided a Procedures Manual for the Finance and Budget Divisions, approved in 2009 and delivered in Word format, which states that the accounting basis is “accrual”, even though their current system operates on a cash basis and no conversion to accrual basis was made. 2) The total Federal expenditure reported on line (e) does not match the database provided by the PRDF. 3) The report was not submitted within the established deadline, December 31, 2023 and they submitted the report on June 10, 2024. 4) During the internal control’s interviews, we found that there is no designated person responsible for reviewing the information entered by the preparer. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, training, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA. STATEMENT OF CAUSE ADFAN does not have internal controls to effectively review the process and comply with the reporting requirements. The absence of effective internal controls at ADFAN to review processes and ensure compliance with reporting requirements can be attributed to inadequate organizational structure and insufficiently defined roles and responsibilities. There is no designated individual or team responsible for overseeing the accuracy and completeness of financial data entered reports. As mentioned above in the condition, this responsibility falls under one person and does not have segregation of duties. This gap in accountability stems from a lack of internal review and insufficient oversight mechanisms, which restrains the organization's ability to ensure that reports are fully aligned with the required compliance standards. Additionally, there is a lack of training or resources dedicated to maintaining and monitoring compliance which contributes to the failure in reporting requirements. POSSIBLE ASSERTED EFFECT ADFAN does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports for the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers is 2023-023/2023-054. RECOMMENDATIONS We recommend that ADFAN ensures the SF-425 is completed using the appropriate accounting basis consistent with the organization’s financial system. Additionally, ADFAN should establish and implement internal control procedures that include formal review process to verify the accuracy and completeness of the reported information and designate responsible personnel for the review and approval of reports prior to submission to ensure compliance with Federal reporting requirements.

FINDING REFERENCE NUMBER 2024-046 (See Finding Reference Number 2024-018) FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2022G996117 (Federal Award Year: 10/1/2021 – 9/30/2022) 2023G996117 (Federal Award Year: 10/1/2022 – 9/30/2023) 2022G9922PT (Federal Award Years: 10/1/2022 through 9/30/2025) 2301PRTABD (Federal Award Years: 10/1/2023 through 9/30/2026) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – FINANCIAL REPORTING TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA The 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. … (6) Written procedures to implement the requirements of § 200.305 and (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. STATEMENT OF CONDITION As part of our audit procedures over the reporting requirements for the Temporary Assistance for Needy Families (TANF) and Payment to Territories – Adult (PTTA) programs, we reviewed two ACF-196TR reports submitted during the fiscal year under audit. Our review disclosed deficiencies related to the accuracy, support, reconciliation, and timeliness of reported expenditures. Specifically, we noted the following: • Administrative expenditures for both TANF and PTTA are recorded under the same accounting account number and Assistance Listing Number associated with TANF. As a result, the PRIFA accounting system does not segregate administrative expenditures by federal award or Assistance Listing Number, limiting the ability to identify and track expenditures attributable to each program. • Amounts reported in the ACF-196TR reports could not be reconciled to the PRIFA accounting records, particularly for administrative expenditures. Upon request, management was unable to provide supporting schedules, reconciliations, or documentation demonstrating how the reported amounts were derived. Supporting information was prepared only after it was requested during the audit. • For grant award 2023G996117, reported expenditures in the quarterly report of September 30, 2023, that did not agree with the underlying accounting records. We identified differences of $7,266.40 in Line 6A (Work-Related Activities and Expenses), $1,745,668.00 in Line 5A (Basic Assistance), $1,645,366.55 in Line 6J (Administration), $2,007,611.62 in Line 3 (Transfer to SSBG), and $103,052.41 in Line 10 (Total Expenditures). In addition, the report was submitted after the applicable due date. • For grant award 2401PRTANF, reported expenditures in the June 30, 2024 quarterly report that also differed from the accounting records. We identified differences of $12,312.07 in Line 6A (Work-Related Activities and Expenses), $1,898,639.95 in Line 6J (Administration), $3,786,696.14 in Line 3 (Transfer to SSBG), and $1,902,297.08 in Line 10 (Total Expenditures). Furthermore, the report maintained by ADSEF did not contain evidence of the submission date; therefore, we were unable to determine whether the report was submitted within the required timeframe. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statements and SEFA. In addition, the financial management system should provide to account separately the administrative expenditures incurred among all Federal programs administered. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the ACF-196TR reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. PRIFAS accounting data base as configured, does not provide for the administrative expenditures incurred from the TANF and Payment to Territories – Adult programs to be segregated. ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers is 2023-025/2023-056. RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. Additionally, work with the Puerto Rico Department of the Treasury to provide accounting records to segregate the administrative expenditures of both programs.

Assistance Listing Number: 93.558 Name of Federal Program or Cluster: Temporary Assistance for Needy Families (TANF) Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entity: Virginia Department of Social Services Pass-Through Entity Identifying Number: BEN-21-029 Award Period: July 1, 2023 through June 30, 2024 Criteria or Specific Requirement: Title 2 CFR §200.302(b) requires non-federal entities to maintain effective control and accountability over all funds and to provide accurate, current, and complete disclosure of the financial results of each federally sponsored project or program. In addition, 2 CFR §200.328 requires financial reports to be supported by the entity’s accounting records and to be accurate and complete. Condition: The organization prepared various required financial reporting line items using budgeted amounts rather than actual expenditures recorded in the underlying accounting records. As a result, reported amounts did not agree to the general ledger and supporting accounting documentation. The variances were identified across multiple reporting line items and were not supported by reconciliations to actual expenditures. Cause: The condition occurred due to deficiencies in internal controls over financial reporting. Specifically, UCM relied on budgeted amounts rather than actual expenditures recorded in the accounting system when preparing required financial reports. In addition, formal written procedures do not clearly require that reported amounts be reconciled to the underlying accounting records prior to submission, and there was insufficient review and oversight to ensure that financial reports were prepared using actual data from the general ledger. Effect or Potential Effect: Because financial reports were not prepared using actual expenditures recorded in the accounting records, reported amounts may be inaccurate or incomplete. The use of budgeted amounts rather than actual financial data increases the risk that expenditures reported to the federal awarding agency or pass-through entity are misstated and not supported by the organization’s accounting records. As a result, UCM may be out of compliance with federal reporting requirements and federal agencies may rely on inaccurate financial information for monitoring and funding decisions. Recommendation: UCM should strengthen its internal controls over federal financial reporting by establishing and documenting procedures requiring that all reports submitted to federal awarding agencies or pass-through entities be prepared using actual expenditures recorded in the accounting system. These procedures should include a reconciliation of reported amounts to the general ledger and supporting documentation prior to submission, as well as an independent review process to ensure reported information is accurate, complete, and compliant with Uniform Guidance requirements. Views of Responsible Officials: Management acknowledges the finding and will work to implement appropriate corrective actions to address the deficiency and improve compliance going forward.

FINDING 2024-006 Subject: Title I Grants to Local Educational Agencies Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A210014, S010A220014, S010A230014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children; Special Tests and Provisions - Annual Report Card, High School Graduation Rate; Special Tests and Provisions - Assessment Testing Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 39 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report for control activities - activities allowed or unallowed; allowable costs/cost principles; cash management; reporting; matching, level of effort, earmarking; and special tests and provisions - participation in private school children. The prior audit finding numbers were 2022-005, 2022-006, 2022-008, and 2022-009. Condition and Context Internal control is generally defined as a process affected by an entity's oversight body, management, and other personnel that provides reasonable assurance that the entity will achieve its objectives. For federal awards, nonfederal entities, such as the School Corporation, are required to establish and maintain internal control over federal awards to provide reasonable assurance that the entity will comply with applicable federal statutes, regulations, and the terms and conditions of its awards. Internal control is not a single event but an ongoing process that operates through five integrated components: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. Each component must function effectively, and the components must operate together in an integrated manner, for an internal control system to be effective. Deficiencies in the internal control system were identified across the five components and are described below. Control Environment - Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children; Special Tests and Provisions - Annual Report Card, High School Graduation Rate; Special Tests and Provisions - Assessment Testing The School Corporation had not established a strong foundation for an effective internal control system. There was no demonstrated emphasis on the importance of internal controls or on compliance with federal program requirements. Risk Assessment - Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children; Special Tests and Provisions - Annual Report Card, High School Graduation Rate; Special Tests and Provisions - Assessment Testing The School Corporation had not defined objectives necessary to identify risks or determine risk tolerances. Management did not identify, analyze, or respond to risks that could affect the achievement of objectives, including risks arising from significant changes to operations or the potential for fraud. Control Activities The School Corporation did not maintain sufficient financial records for its Title I programs. Although separate funds were established, expenditures were not accurately recorded, preventing the auditors from properly testing compliance with the federal requirements for the Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children compliance requirements. Notable errors included payroll mapping errors, as well as unsupported reimbursement requests. INDIANA STATE BOARD OF ACCOUNTS 40 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Expenditures as reported on the Schedule of Expenditures of Federal Awards are based on reimbursements received during the audit period. To determine the specific expenditures associated with each reimbursement request the corresponding ledger activity or other applicable supporting documentation was requested. Based on the documentation provided, or lack thereof, it was determined that reimbursement requests were not prepared using expenditures recorded in the Title I funds. Instead, other undocumented or inconsistently retained records were used, and the amounts in those records did not align with the reimbursement requests submitted or the related fund activity. Of the 13 reimbursement claims submitted:  There were 5 reimbursement requests totaling $854,889 filed in fiscal year 2022-2023 that had no supporting documentation, and the amounts requested did not agree with the disbursement activity recorded in the grant program funds.  There were 8 reimbursement requests totaling $496,155 and received in 2023-2024 that had supporting documentation; however, the documentation agreed with reimbursement request amount in only 4 instances. For the other 4 reimbursement requests where documentation was provided, discrepancies totaling $15,982 were identified between the documentation and the amounts requested. Additionally, the documentation used to support 2023-2024 reimbursement requests did not correspond to the ledger activity recorded in the Title I program funds; instead, the School Corporation relied on separate individual payroll reports that were not tied to the program's financial records. Due to the lack of adequate documentation, we were unable to determine the validity of expenditures claimed for reimbursement, and, therefore, could not determine a population of expenditures to verify for compliance testing. This resulted in questioned costs totaling $1,351,044. Additional issues included:  The former Chief Financial Officer did not direct the payroll clerk to allocate salaries and benefits for Title I personnel to the appropriate funds. As a result, salary and benefit costs were charged to the Title I funds for employees who did not work on the program, while costs for employees who did work on the program were charged to non-Title I funds.  Receipt activity recorded in the Title I program funds did not always reflect actual Title I grant receipts. For example, receipts totaling $63,901 for the Supportive Effective Instruction State Grants program (formerly Improving Teacher Quality State Grants), Assistance Listings Number 84.367, were incorrectly recorded in the Title I fund.  A separate fund was not created for the 2022-2023 grant project year as required by the pass-through entity; instead, an existing project year fund was used.  Transfers totaling $993,763 in 2022-2023 and $73,107 in 2023-2024 were made into the Title I program funds from other funds or between Title I project years without adequate supporting documentation explaining the composition of the transfer amounts.  Transfers totaling $650,150 in 2022-2023 were made out of the Title I program funds to other funds or other Title I project years, without sufficient supporting documentation identifying the nature of the transferred amounts. INDIANA STATE BOARD OF ACCOUNTS 41 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Information and Communication - Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children; Special Tests and Provisions - Annual Report Card, High School Graduation Rate; Special Tests and Provisions - Assessment Testing The School Corporation had not established adequate communication methods or practices to ensure that reliable information was identified, captured, and communicated to the appropriate internal and external parties. Monitoring - Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Participation of Private School Children; Special Tests and Provisions - Annual Report Card, High School Graduation Rate; Special Tests and Provisions - Assessment Testing The School Corporation did not perform ongoing or periodic evaluations to determine whether internal controls were operating effectively or to identify needed improvement. In addition, the School Corporation did not have a process in place to track or to follow-up on corrective actions written in response to audit findings. Due to the number and severity of the issues identified with the program's financial records and supporting documentation, we were unable to perform the procedures necessary to test the program for compliance. 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 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following (see also §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . INDIANA STATE BOARD OF ACCOUNTS 42 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. See § 200.303. . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause The School Corporation had not implemented an effective system of internal controls. Changes in key financial personnel, along with insufficient employee training, contributed to processes and procedures not being properly developed or consistently followed. Additionally, employees' salaries and benefits associated with the Title I programs were not mapped to the proper funds in the accounting software. Finally, reimbursement requests were completed based upon documentation, other than the ledger, that was not always retained or when retained did not agree with the amounts requested. Transfers in and out of Title I program funds did not contain sufficient supporting documentation to determine the specific purposes of the transfers Effect Because the five components of internal control were not properly designed or implemented, the School Corporation's internal control system could not be effective. As a result, general and fraud-related risks, as well as risks arising from significant operational changes, could negatively impact the School Corporation. Existing internal control deficiencies may continue undetected, and additional weaknesses may exist without being identified. Additionally, because the School Corporation did not establish an effective system of internal controls to ensure that the required documentation was obtained and retained, we were unable to obtain sufficient appropriate audit evidence to determine whether the School Corporation complied with the applicable federal program compliance requirements. This lack of documentation created a scope limitation for the audit and increased the risk that noncompliance, if present, may not have been detected. The inability to demonstrate compliance with federal requirements may affect the School Corporation's ability to support current program expenditures and may place eligibility for future federal funding at risk. Finally, salary and benefit expenditures were recorded to the Title I grant program funds for employees who were not involved with the program and expenditures for those involved with the program were recorded to non-Title I funds. Reimbursement requests could not be reconciled to the detailed ledger of expenditures. As such, a complete and accurate population of expenditures, that reconciled to the Schedule of Expenditures of Federal Awards or the financial statement could not be determined. INDIANA STATE BOARD OF ACCOUNTS 43 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs Questioned costs in the amount of $1,351,044 were identified as detailed in the Condition and Context. Recommendation We recommended the School Corporation design and implement a system of internal controls, which would include policies and procedures related to the five components of internal control. Management should define clear objectives, identify and assess risks, and develop policies and procedures to address those risks. Regular monitoring should be conducted to ensure internal controls are operating effectively and deficiencies are addressed promptly. We also recommended that the School Corporation ensure employees' salaries and benefits are properly mapped within the accounting system. Additionally, we recommended that all documentation to support a reimbursement request be attached to the reimbursement request and reconciled to the ledger at the time of request. We also recommended that any necessary transfers contain sufficient supporting documentation. Finally, we recommended that the School Corporation maintain complete and accurate records for all grant funds and project years. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-008 Subject: Special Education Cluster (IDEA) 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): 22611-138-PN01, 23611-138-PN01, 24611-138-PN01, 22611-138-ARP, 22619-138-PN01, 23619-138-PN01, 24619-138-PN01, 22619-138-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Period of Performance; Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding numbers were 2022-010, 2022-011, and 2022-012. Condition and Context Internal control is generally defined as a process affected by an entity's oversight body, management, and other personnel that provides reasonable assurance that the entity will achieve its objectives. For federal awards, nonfederal entities, such as the School Corporation, are required to establish and maintain internal control over federal awards to provide reasonable assurance that the entity will comply with applicable federal statutes, regulations, and the terms and conditions of its awards. INDIANA STATE BOARD OF ACCOUNTS 47 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Internal control is not a single event but an ongoing process that operates through five integrated components: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. Each component must function effectively, and the components must operate together in an integrated manner, for an internal control system to be effective. Deficiencies in the internal control system were identified across the five components and are described below. Control Environment The School Corporation had not established a strong foundation for an effective internal control system. There was no demonstrated emphasis on the importance of internal controls or on compliance with federal program requirements. Risk Assessment The School Corporation had not defined objectives necessary to identify risks or determine risk tolerances. Management did not identify, analyze, or respond to risks that could affect the achievement of objectives, including risks arising from significant changes to operations or the potential for fraud. Control Activities The School Corporation receives federal funding through the Special Education Cluster (IDEA), including the Special Education Grants to States and Special Education Preschool Grants programs, administered by the Indiana Department of Education. These funds are subject to federal requirements regarding activities allowed or unallowed; allowable costs/cost principles; cash management; matching, level of effort, earmarking; period of performance; reporting; and financial documentation. The School Corporation did not maintain sufficient financial records for its special education programs. Although separate funds were established expenditures were not accurately recorded, preventing the auditors from properly testing compliance with the federal requirements for the Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking; Period of Performance; and Reporting compliance requirements. Notable errors included payroll and fund mapping errors, as well as unsupported reimbursement requests. Salaries and benefits for special education staff were incorrectly mapped, resulting in expenditures being charged to the wrong funds. Additionally, program reimbursement requests were not based upon ledger expenditures and relied on documentation that was either missing or inconsistent with the amounts claimed. Due to insufficient documentation, most expenditures claimed for reimbursement could not be verified, resulting in questioned costs totaling $1,694,906. Of the 23 claims for reimbursement filed:  There were 11 reimbursements totaling $1,289,892 that lacked supporting documentation and the amount claimed did not agree with the ledger disbursement activity.  There were 11 reimbursements totaling $404,904 that either agreed with the grant fund ledger activity or documentation was retained to support the amount claimed for reimbursement. INDIANA STATE BOARD OF ACCOUNTS 48 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)  There was 1 reimbursement totaling $110 that differed from the amount claimed by $1,837, with the amount claimed being less than the supporting documentation. Additional issues included:  Receipt activity within the funds was not always reflective of the program grant money received. Special education program receipts totaling $47,913 were receipted to nonspecial education grant funds.  A separate fund was not created to identify and record financial activity for each grant project year as required by the pass-through entity. Specifically, separate funds were not created for the Special Education Preschool grant for project years 2022 and 2023.  Transfers between funds were made to address deficit fund balances, either due to financial activity being misallocated or errors discovered in transaction recording. However, supporting documentation for these corrections was not kept. In fiscal year 2022-2023, a total of $222,602 was moved into program funds from other sources or between various special education grant project year funds, while $6,653 was transferred in during 2023-2024. Conversely, funds totaling $699,655 in 2022-2023 and $722,283 in 2023-2024 were transferred out of program grant funds to other accounts or between special education grant project year funds. Information and Communication The School Corporation had not established adequate communication methods or practices to ensure that reliable information was identified, captured, and communicated to the appropriate internal and external parties. Monitoring The School Corporation did not perform ongoing or periodic evaluations to determine whether internal controls were operating effectively or to identify needed improvement. In addition, the School Corporation did not have a process in place to track or to follow-up on corrective actions written in response to audit findings. Due to the number and severity of the issues identified with the program's financial records and supporting documentation, we were unable to perform the procedures necessary to test the program for compliance. 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 49 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following (see also §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. See § 200.303. . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause The School Corporation had not implemented an effective system of internal controls. Changes in key financial personnel, along with insufficient employee training, contributed to processes and procedures not being properly developed or consistently followed. Additionally, employees' salaries and benefits associated with the special education programs were not mapped to the proper funds in the accounting software. Finally, reimbursement requests were completed based on documentation, other than the ledger, that was not always retained or when retained did not agree with the amounts being requested. Effect Because the five components of internal control were not properly designed or implemented, the School Corporation's internal control system could not be effective. As a result, general and fraud-related risks, as well as risks arising from significant operational changes, could negatively impact the School Corporation. Existing internal control deficiencies may continue undetected, and additional weaknesses may exist without being identified. INDIANA STATE BOARD OF ACCOUNTS 50 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, because the School Corporation did not establish an effective system of internal controls to ensure that the required documentation was obtained and retained, we were unable to obtain sufficient appropriate audit evidence to determine whether the School Corporation complied with the applicable federal program compliance requirements. This lack of documentation created a scope limitation for the audit and increased the risk that noncompliance, if present, may not have been detected. The inability to demonstrate compliance with federal requirements may affect the School Corporation's ability to support current program expenditures and may place eligibility for future federal funding at risk. Finally, salary and benefit expenditures were recorded to the special education grant program funds for employees who were not involved with the program and expenditures for those involved with the program were recorded to nonspecial education funds. Reimbursement requests could not be reconciled to the detailed ledger of expenditures. As such, a complete and accurate population of expenditures, that reconciled to the Schedule of Expenditures of Federal Awards or the financial statement could not be determined. Questioned Costs Questioned costs in the amount of $1,694,906 were identified as detailed in the Condition and Context. Recommendation We recommended the School Corporation design and implement a system of internal controls, which would include policies and procedures related to the five components of internal control. Management should define clear objectives, identify and assess risks, and develop policies and procedures to address those risks. Regular monitoring should be conducted to ensure internal controls are operating effectively and deficiencies are addressed promptly. We also recommended that the School Corporation ensure employees' salaries and benefits are properly mapped within the accounting system. Additionally, we recommended that all documentation to support a reimbursement request be attached to the reimbursement request and reconciled to the ledger at the time of request. We also recommended that any necessary transfers contain sufficient supporting documentation. Finally, we recommended that the School Corporation maintain complete and accurate records for all grant funds and project years. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-009 Subject: COVID-19 - Education Stabilization Fund Federal Agency: Department of Education Federal Programs: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Equipment and Real Property Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Wage Rate Requirements; Special Tests and Provisions - Participation of Private School Children Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report for activities allowed or unallowed, allowable costs/cost principles, cash management, equipment and real property management, and reporting. The prior audit finding numbers were 2022-013, 2022-014, 2022-015, and 2022-016. Condition and Context Internal control is generally defined as a process affected by an entity's oversight body, management, and other personnel that provides reasonable assurance that the entity will achieve its objectives. For federal awards, nonfederal entities, such as the School Corporation, are required to establish and maintain internal control over federal awards to provide reasonable assurance that the entity will comply with applicable federal statutes, regulations, and the terms and conditions of its awards. Internal control is not a single event but an ongoing process that operates through five integrated components: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. Each component must function effectively, and the components must operate together in an integrated manner, for an internal control system to be effective. Deficiencies in the internal control system were identified across the five components and are described below. Control Environment The School Corporation had not established a strong foundation for an effective internal control system. There was no demonstrated emphasis on the importance of internal controls or on compliance with federal program requirements. Risk Assessment The School Corporation had not defined objectives necessary to identify risks or determine risk tolerances. Management did not identify, analyze, or respond to risks that could affect the achievement of objectives, including risks arising from significant changes to operations or the potential for fraud. INDIANA STATE BOARD OF ACCOUNTS 52 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Control Activities The School Corporation did not maintain sufficient financial records for its COVID-19 - Education Stabilization Fund program. Although separate funds were established, expenditures were not accurately recorded, preventing the auditors from properly testing compliance with the federal requirements for Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Equipment and Real Property Management; Matching, Level of Effort, Earmarking; Reporting; Special Tests and Provisions - Wage Rate Requirements; and Special Tests and Provision - Participation of Private School Children compliance requirements. Notable errors included expenditures recorded to the grant funds in the amount of $1,623,704 more than the grant amount awarded, as well as unsupported reimbursement requests. The School Corporation attempted to identify expenditures that they no longer wanted to be considered costs under the grant program to correct the overspending. However, instead of reclassifying the expenditures to the proper funds, monies were transferred into the grant funds from other School Corporation funds. The documentation to support the expenditures to be reallocated was not complete as $296,202 of the transfer amount could not be associated with specific expenditure transactions. Additionally, $839,096 in transactions identified to be reclassified were associated with the prior fiscal year 2021-2022 financial activity. After considering transactions recorded in the fund during 2022-2023 and 2023-2024 that were reallocated to other funds the remaining expenditures in the grant program funds were $138,134 less than the total grant funds claimed for reimbursement during the audit period. Due to insufficient documentation, expenditures claimed for reimbursement could not be verified, resulting in questioned costs totaling $1,654,481. Information and Communication The School Corporation had not established adequate communication methods or practices to ensure that reliable information was identified, captured, and communicated to the appropriate internal and external parties. Monitoring The School Corporation did not perform ongoing or periodic evaluations to determine whether internal controls were operating effectively or to identify needed improvement. In addition, the School Corporation did not have a process in place to track or to follow-up on corrective actions written in response to audit findings. Due to the number and severity of the issues identified with the program's financial records and supporting documentation, we were unable to perform the procedures necessary to test the program for compliance. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 53 SCOTT COUNTY SCHOOL DISTRICT 2 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 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following (see also §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. See § 200.303. . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause The School Corporation had not implemented an effective system of internal controls. Changes in key financial personnel, along with insufficient employee training, contributed to processes and procedures not being properly developed or consistently followed. Additionally, expenditures were not properly reviewed to determine if costs were properly recorded to grant funds. Finally, reimbursement requests were completed based on documentation, other than the ledger, that was not always retained or when retained did not agree with the amounts being requested. INDIANA STATE BOARD OF ACCOUNTS 54 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Because the five components of internal control were not properly designed or implemented, the School Corporation's internal control system could not be effective. As a result, general and fraud-related risks, as well as risks arising from significant operational changes, could negatively impact the School Corporation. Existing internal control deficiencies may continue undetected, and additional weaknesses may exist without being identified. Additionally, because the School Corporation did not establish an effective system of internal controls to ensure that the required documentation was obtained and retained, we were unable to obtain sufficient appropriate audit evidence to determine whether the School Corporation complied with the applicable federal program compliance requirements. This lack of documentation created a scope limitation for the audit and increased the risk that noncompliance, if present, may not have been detected. The inability to demonstrate compliance with federal requirements may affect the School Corporation's ability to support current program expenditures and may place eligibility for future federal funding at risk. Finally, reimbursement requests could not be reconciled to the detailed ledger of expenditures. As such, a complete and accurate population of expenditures, that reconciled to the Schedule of Expenditures of Federal Awards or the financial statement could not be determined. Questioned Costs Questioned costs in the amount of $1,654,481 were identified as detailed in the Condition and Context. Recommendation We recommended the School Corporation design and implement a system of internal controls, which would include policies and procedures related to the five components of internal control. Management should define clear objectives, identify and assess risks, and develop policies and procedures to address those risks. Regular monitoring should be conducted to ensure internal controls are operating effectively and deficiencies are addressed promptly. We also recommended that the School Corporation review expenditures and financial ledger reports to ensure activity is recorded to the correct fund. Additionally, we recommended that all documentation to support a reimbursement request be attached to the reimbursement request and reconciled to the ledger at the time of request. Finally, we recommended that the School Corporation maintain complete and accurate records for all grant funds and project years. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2024-005: U.S. Department of Health and Human Services Health Center Program Cluster- Health Center Program, Assistance Listing No. 93.224 Compliance Requirements: Reporting Type of Finding - Significant Deficiency in Internal Control over Compliance Condition - Federal Financial Reports (SF-425) were submitted after the required 90 day reporting deadline, indicating that controls over the timely submission of required federal reports were not operating effectively. Criteria - Title 2 CFR §200.328 requires non-Federal entities to submit required financial reports no later than 90 calendar days after the end of the reporting period, unless otherwise specified in the terms and conditions of the federal award. Cause - Controls and procedures designed to ensure timely preparation, review, and submission of required federal financial reports were not consistently followed, resulting in delayed submission of SF-425 reports. Effect - Failure to submit SF-425 reports timely increases the risk of noncompliance with federal reporting requirements and may result in delayed monitoring, enforcement actions, or other adverse consequences by the awarding agency. Context - In our sample of the yearly report needing to be filed, the submission was submitted 41 days late. Recommendation - We recommend that the Center strengthen internal controls over federal financial reporting by implementing procedures to monitor reporting deadlines, including maintaining a formal tracking mechanism or compliance calendar for SF-425 due dates, assigning clear responsibility for report preparation and submission, and performing supervisory review to ensure SF-425 reports are submitted in accordance with federal requirements. Management Response to Findings - Management concurs with the finding.

Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.

Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.

Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.

Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.

Section III – Federal Award Findings and Questioned Costs Finding #2023-001: Program Title: Early Head Start Childcare Partnership Assistance Listing: 93.600 Contract Grant Number:06-HP000201-03 Federal Award Years: July 1, 2022 to June 30, 2023 Federal Agency: U.S. Department of Health and Human Services Allowable Costs and Reporting Type of Finding: Questioned Cost and Other Noncompliance Criteria: The 2 CFR part 200 establishes costs principles for determining costs applicable to Federal Award and requires costs be adequately documented. In addition, 2 CFR section 200.328 establishes financial information be reported in accordance with terms and conditions of the federal award. This award is subject to the requirements set forth in 45 CFR Part 75, which defines unliquidated obligations as obligations incurred for direct and indirect expenses incurred but not yet paid or charged to the award and does not include a future commitment of funds for which an obligation or expense has not been incurred. Condition: Based on procedures performed, we identified expenditures recorded for future program expenses totaling $160,597 not yet obligated or incurred. As a result, amounts unspent were improperly reported as unliquidated obligations on the federal financial report for the budget period ended June 30, 2023. Questioned Costs: Based on review of accounting records and reconciliation of unused federal funds prepared by Family Service, we identified questioned costs totaling $160,597 for the Early Head Start program. Cause: Lack of documentation to support costs were obligated or incurred for direct or indirect program expense for Early Head Start prior to the end of the budget period. In addition, Family Service did not request an extension for additional time to use unspent funds on future program expenses. Effect: Noncompliance with Allowable Costs and Reporting compliance requirements of the Uniform Guidance and terms and conditions of the federal award. Repeat Finding: No Recommendation: We recommend Family Service improve procedures for tracking, reporting, and use of obligated and/or unspent funds to ensure compliance with the compliance requirements and terms and conditions of the federal award. Views of responsible officials: Management agrees with the recommendations to improve tracking and reporting of obligated and/or use of unspent funds to conform with the compliance requirements and terms and conditions of the federal award. Unfortunately, the advanced funds drawn for building remodeling and maintenance were unspent because of serious delays due to systemic problems with obtaining certificates of occupancy and permits in a timely manner.

Finding Number: 2023-004 Federal Program: Airport Improvement Program Federal Award Identification Number and Year: All Airport Improvement Program awards, 2020, 2021, 2022, 2023 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). Until the grant is completed and closed, recipients are responsible for submitting formal reports as follows: A signed/dated SF-270 (non-construction projects) or SF-271 or equivalent (construction projects) and SF- 425 annually, due 90 days after the end of each federal fiscal year in which this grant is open (due December 31 of each year this grant is open). Condition: The Airport did not file the required reports within the timeframes above. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Standard Forms 425 and Standard Forms 271 for the reporting period ended September 30, 2023 were filed on January 19, 2024. Cause and Effect: The Airport did not prepare or submit the required forms by December 31, 2023. The SF-425 and SF-271 reports for the period ending September 30, 2023 were submitted 19 days after the due date. Recommendation: The Airport should implement controls and processes to ensure that the required reports are submitted timely. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Finding Number: 2023-004 Federal Program: Airport Improvement Program Federal Award Identification Number and Year: All Airport Improvement Program awards, 2020, 2021, 2022, 2023 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). Until the grant is completed and closed, recipients are responsible for submitting formal reports as follows: A signed/dated SF-270 (non-construction projects) or SF-271 or equivalent (construction projects) and SF- 425 annually, due 90 days after the end of each federal fiscal year in which this grant is open (due December 31 of each year this grant is open). Condition: The Airport did not file the required reports within the timeframes above. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Standard Forms 425 and Standard Forms 271 for the reporting period ended September 30, 2023 were filed on January 19, 2024. Cause and Effect: The Airport did not prepare or submit the required forms by December 31, 2023. The SF-425 and SF-271 reports for the period ending September 30, 2023 were submitted 19 days after the due date. Recommendation: The Airport should implement controls and processes to ensure that the required reports are submitted timely. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Finding Number: 2023-004 Federal Program: Airport Improvement Program Federal Award Identification Number and Year: All Airport Improvement Program awards, 2020, 2021, 2022, 2023 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). Until the grant is completed and closed, recipients are responsible for submitting formal reports as follows: A signed/dated SF-270 (non-construction projects) or SF-271 or equivalent (construction projects) and SF- 425 annually, due 90 days after the end of each federal fiscal year in which this grant is open (due December 31 of each year this grant is open). Condition: The Airport did not file the required reports within the timeframes above. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Standard Forms 425 and Standard Forms 271 for the reporting period ended September 30, 2023 were filed on January 19, 2024. Cause and Effect: The Airport did not prepare or submit the required forms by December 31, 2023. The SF-425 and SF-271 reports for the period ending September 30, 2023 were submitted 19 days after the due date. Recommendation: The Airport should implement controls and processes to ensure that the required reports are submitted timely. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Finding Number: 2023-004 Federal Program: Airport Improvement Program Federal Award Identification Number and Year: All Airport Improvement Program awards, 2020, 2021, 2022, 2023 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). Until the grant is completed and closed, recipients are responsible for submitting formal reports as follows: A signed/dated SF-270 (non-construction projects) or SF-271 or equivalent (construction projects) and SF- 425 annually, due 90 days after the end of each federal fiscal year in which this grant is open (due December 31 of each year this grant is open). Condition: The Airport did not file the required reports within the timeframes above. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Standard Forms 425 and Standard Forms 271 for the reporting period ended September 30, 2023 were filed on January 19, 2024. Cause and Effect: The Airport did not prepare or submit the required forms by December 31, 2023. The SF-425 and SF-271 reports for the period ending September 30, 2023 were submitted 19 days after the due date. Recommendation: The Airport should implement controls and processes to ensure that the required reports are submitted timely. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Finding Number: 2023-004 Federal Program: Airport Improvement Program Federal Award Identification Number and Year: All Airport Improvement Program awards, 2020, 2021, 2022, 2023 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). Until the grant is completed and closed, recipients are responsible for submitting formal reports as follows: A signed/dated SF-270 (non-construction projects) or SF-271 or equivalent (construction projects) and SF- 425 annually, due 90 days after the end of each federal fiscal year in which this grant is open (due December 31 of each year this grant is open). Condition: The Airport did not file the required reports within the timeframes above. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Standard Forms 425 and Standard Forms 271 for the reporting period ended September 30, 2023 were filed on January 19, 2024. Cause and Effect: The Airport did not prepare or submit the required forms by December 31, 2023. The SF-425 and SF-271 reports for the period ending September 30, 2023 were submitted 19 days after the due date. Recommendation: The Airport should implement controls and processes to ensure that the required reports are submitted timely. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Finding Number: 2023-004 Federal Program: Airport Improvement Program Federal Award Identification Number and Year: All Airport Improvement Program awards, 2020, 2021, 2022, 2023 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). Until the grant is completed and closed, recipients are responsible for submitting formal reports as follows: A signed/dated SF-270 (non-construction projects) or SF-271 or equivalent (construction projects) and SF- 425 annually, due 90 days after the end of each federal fiscal year in which this grant is open (due December 31 of each year this grant is open). Condition: The Airport did not file the required reports within the timeframes above. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Standard Forms 425 and Standard Forms 271 for the reporting period ended September 30, 2023 were filed on January 19, 2024. Cause and Effect: The Airport did not prepare or submit the required forms by December 31, 2023. The SF-425 and SF-271 reports for the period ending September 30, 2023 were submitted 19 days after the due date. Recommendation: The Airport should implement controls and processes to ensure that the required reports are submitted timely. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Finding Number: 2023-004 Federal Program: Airport Improvement Program Federal Award Identification Number and Year: All Airport Improvement Program awards, 2020, 2021, 2022, 2023 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). Until the grant is completed and closed, recipients are responsible for submitting formal reports as follows: A signed/dated SF-270 (non-construction projects) or SF-271 or equivalent (construction projects) and SF- 425 annually, due 90 days after the end of each federal fiscal year in which this grant is open (due December 31 of each year this grant is open). Condition: The Airport did not file the required reports within the timeframes above. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Standard Forms 425 and Standard Forms 271 for the reporting period ended September 30, 2023 were filed on January 19, 2024. Cause and Effect: The Airport did not prepare or submit the required forms by December 31, 2023. The SF-425 and SF-271 reports for the period ending September 30, 2023 were submitted 19 days after the due date. Recommendation: The Airport should implement controls and processes to ensure that the required reports are submitted timely. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Finding Number: 2023-004 Federal Program: Airport Improvement Program Federal Award Identification Number and Year: All Airport Improvement Program awards, 2020, 2021, 2022, 2023 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). Until the grant is completed and closed, recipients are responsible for submitting formal reports as follows: A signed/dated SF-270 (non-construction projects) or SF-271 or equivalent (construction projects) and SF- 425 annually, due 90 days after the end of each federal fiscal year in which this grant is open (due December 31 of each year this grant is open). Condition: The Airport did not file the required reports within the timeframes above. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Standard Forms 425 and Standard Forms 271 for the reporting period ended September 30, 2023 were filed on January 19, 2024. Cause and Effect: The Airport did not prepare or submit the required forms by December 31, 2023. The SF-425 and SF-271 reports for the period ending September 30, 2023 were submitted 19 days after the due date. Recommendation: The Airport should implement controls and processes to ensure that the required reports are submitted timely. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Reporting Fiscal year ending :2023 Federal Program: Head Start 93.600 Questioned Costs: None Condition: During our audit, we noted that the Head Start program did not submit the required semi-annual form 425 and form 429 reports within the specified deadlines. The reports for the were submitted 10 and 15 days late, respectively. Criteria: According to 2 CFR Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), specifically 2 CFR § 200.328, recipients of federal awards must submit performance and financial reports to the federal awarding agency in a timely manner. The specific reporting deadlines are outlined in the award terms and conditions. Cause:The delay in submitting the reports was due to insufficient internal controls over the reporting process. Specifically, there was a lack of adequate staff training on the reporting requirements and no established procedures to ensure timely submission. Effect: Non-compliance with reporting requirements can result in delayed funding, reduced confidence from the federal awarding agency, and potential negative impacts on program operations. Continued noncompliance may also lead to more severe consequences such as the suspension of funding. Recommendation: We recommend that the Head Start program management take the requirements: Implement a formalized reporting schedule with clearly defined deadlines, establish a review process to verify the accuracy and timeliness of reports before submission and assign specific staff members to oversee compliance with reporting requirements. View of Responsible Officals: We will take the necessary steps to get clear deadlines from the awarding agency on the reporting dates for Head Start and update our formal reporting schedule with those dates. The Head Start Fund Accountant will work with the Administrative Assistant/Facilities Manager in gathering the necessary information earlier in the year for the yearly property reporting (SF-429). The Head Start Fund Accountant will email copies of these reports to the Director of Head Start to ensure compliance.

Reporting Fiscal year ending :2023 Federal Program: Head Start 93.600 Questioned Costs: None Condition: During our audit, we noted that the Head Start program did not submit the required semi-annual form 425 and form 429 reports within the specified deadlines. The reports for the were submitted 10 and 15 days late, respectively. Criteria: According to 2 CFR Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), specifically 2 CFR § 200.328, recipients of federal awards must submit performance and financial reports to the federal awarding agency in a timely manner. The specific reporting deadlines are outlined in the award terms and conditions. Cause:The delay in submitting the reports was due to insufficient internal controls over the reporting process. Specifically, there was a lack of adequate staff training on the reporting requirements and no established procedures to ensure timely submission. Effect: Non-compliance with reporting requirements can result in delayed funding, reduced confidence from the federal awarding agency, and potential negative impacts on program operations. Continued noncompliance may also lead to more severe consequences such as the suspension of funding. Recommendation: We recommend that the Head Start program management take the requirements: Implement a formalized reporting schedule with clearly defined deadlines, establish a review process to verify the accuracy and timeliness of reports before submission and assign specific staff members to oversee compliance with reporting requirements. View of Responsible Officals: We will take the necessary steps to get clear deadlines from the awarding agency on the reporting dates for Head Start and update our formal reporting schedule with those dates. The Head Start Fund Accountant will work with the Administrative Assistant/Facilities Manager in gathering the necessary information earlier in the year for the yearly property reporting (SF-429). The Head Start Fund Accountant will email copies of these reports to the Director of Head Start to ensure compliance.

Information on the Federal Program: Assistance Listing Number 21.027 – Coronavirus State and Local Fiscal Recovery Funds. Compliance Requirement: Reporting. Type of Finding: Significant deficiency in internal control over major federal programs. Criteria: The Uniform Guidance at 2 CFR 200.328 requires certain recipients of Coronavirus State and Local Fiscal Recovery Funds to submit quarterly and annual project and expenditure reports to the U.S. Department of the Treasury including, but not limited to, total obligations of funds, total expenditures of funds, and total number of projects. Condition: We noted that multiple quarterly reports did not accurately report total expenditures as of the date of the reporting period. Cause: Tracking spreadsheets were not appropriately updated to capture all expenditures of federal funds. Effect or Potential Effect: The County has a significant deficiency in internal control with respect to reporting of federal expenditures. Recommendation: Controls should require a secondary review and reconciliation of quarterly and annual reports to the County’s general ledger prior to submission by the grant director.

Section III – Federal Award Findings and Questioned Costs 2023-001: Compliance with Reporting Requirements (Repeat Finding) Federal Agency: Department of Health and Human Services (“HHS”), Health Resources and Services Administration (“HRSA”) Assistance Listing Program Title: Congressional Directives Federal Award Project Title: Community Project Funding/ Congressionally Directed Spending ‐ Construction Assistance Listing Number: 93.493 Federal Award Identification Number: CE146567 Criteria In accordance with 2 CFR 200.328 and the notice of award (“NoA”), there are financial and other reporting requirements that the entity must complete and submit to HHS. The NoA has the following financial and other reporting requirements that were subject to testing: 1. Within 90 days of project completion, a final report is required to be submitted. The project was completed on July 28, 2023 and the final report was required to be submitted by October 26, 2023; 2. A semi-annual progress report is required to be submitted every May and December until the project is completed. The first semi-annual progress report was due December 14, 2023 and; 3. The recipient must submit an annual Federal Financial Report (“FFR”), due October 30, 2023 for the annual period August 1, 2022 to July 31, 2023. Condition The conditions of the noncompliance identified are as follows: 4. The final report, due by October 26, 2023, was not submitted to HHS until August 13, 2024. 2. As the final report was not yet completed, the December semi-annual report was required to be submitted. The semi-annual report was submitted December 21, 2023, which was past the stated deadline of December 14, 2023. 3. The FFR submitted on October 24, 2023 for the period ended July 31, 2023 included $0 of federal expenditures when $749,892 of federal expenditures were incurred through the period ended July 31, 2023 based on our review of the underlying expenditure detail. Questioned Costs None Cause Management did not have an adequate understanding of the reporting requirements of the award and the control was not designed to ensure that reports were completed and submitted to the agency in a timely manner. Effect The late submission of the final report and the December 2023 semi-annual report and the submission of inaccurate financial data in the annual FFR causes Flushing to be out of compliance with specific grant reporting requirements. Recommendation We recommend Flushing enhance its control around the monitoring of grant reporting requirements, including evaluating report due dates, confirming reporting requirements with the granting agency as appropriate, and performing reviews prior to submission to ensure all reports are being completed accurately and submitted in a timely manner. Management’s Views and Corrective Action Plan Management’s Views and Corrective Action Plan is included at the end of this report.

Finding Number 2023-002 Assistance Listing #21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Reporting Immaterial Noncompliance Criteria: In accordance with 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information, grantees are required to file quarterly Project and Expenditure Reports listing significant projects, significant payments to subrecipients, subawards, and expenditure awards greater than $50,000. Condition: The Tribe incorrectly listed some project vendors as a subrecipients on the Project and Expenditure reports. Cause: Treasury guidance for reporting subrecipients versus contractors was in transition during the reporting periods for the year. Effect: The Tribe reported subrecipients on the Project and Expenditures Reports, but did not have any subrecipients of Coronavirus State and Local Fiscal Recovery Funds (SLFRF). Recommendation: Update reporting to ensure payments are reported as project vendors rather than subrecipients. Management's Response: Management recognizes that the error exists and has not been able to correct the report due to US Treasury’s portal not accepting prior period revisions. Treasury has changed its guidance on SLFRF multiple times over the past several years which has created an increased risk in filing errors for all reporting for these funds..

Finding Number: 2023-003 Federal Program: CDBG – Entitlement Grants Cluster Federal Award Identification Number and Year: B-22-MC-39-0001, 2022; B-20-MW-39-0001, 2020 Assistance Listing Number (ALN): 14.218 Federal Awarding Agency: Department of Housing and Urban Development Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). The Quarterly Cash on Hand report must be submitted to the respective field office within 30 days after the end of the reporting period. Condition: The City did not file the required reports within the timeframes above. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: The City submitted its Quarter 3 financial reports due July 30, 2023 on August 4, 2023. Cause and Effect: The City did not submit the required financial reports within the required timeframe. Recommendation: The City should implement controls and processes to ensure that the required reports are submitted timely. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Finding Number: 2023-003 Federal Program: CDBG – Entitlement Grants Cluster Federal Award Identification Number and Year: B-22-MC-39-0001, 2022; B-20-MW-39-0001, 2020 Assistance Listing Number (ALN): 14.218 Federal Awarding Agency: Department of Housing and Urban Development Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). The Quarterly Cash on Hand report must be submitted to the respective field office within 30 days after the end of the reporting period. Condition: The City did not file the required reports within the timeframes above. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: The City submitted its Quarter 3 financial reports due July 30, 2023 on August 4, 2023. Cause and Effect: The City did not submit the required financial reports within the required timeframe. Recommendation: The City should implement controls and processes to ensure that the required reports are submitted timely. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Finding Number: 2023-002 Federal Program: Staffing for Adequate Fire and Emergency Response 2020 Federal Award Identification Number and Year: EMW-2020-FF-00837, 2021 Assistance Listing Number (ALN): 97.083 Federal Awarding Agency: Federal Emergency Management Agency Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). Programmatic reports must be submitted through the Federal Emergency Management Agency’s (FEMA) GO portal no later than January 30 (for the period of July 1 – December 31) and no later than July 30 (for the period of January 1 – June 30). (FEMA Grant Programs Directorate Information Bulletin Number 468, dated April 4, 2022). Condition: The City did not file the required reports within the timeframes above. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: The City submitted its programmatic report due July 30, 2023 on December 1, 2023. The City submitted its programmatic report due January 30, 2024 on March 30, 2024. Cause and Effect: The City did not submit the required programmatic reports within the required timeframes. Recommendation: The City should implement controls and processes to ensure that the required reports are submitted timely. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

2 CFR § 200.328 provides the Federal awarding agency may solicit only the standard, OMB-approved governmentwide data elements for collection of financial information. This information must be collected with the frequency required by the terms and conditions of the Federal award.The American Rescue Plan Act Statewide Planning Award states that Grantee shall submit to Grantor Project Progress Reports. Grantee agrees to provide Grantor with project progress reports, communicating the important activities and accomplishments of the project, on a semi-annual basis for the period ending March 31 and September 30, or any portion thereof, for the entire project period. Reports are due no later than two weeks following the end of the semi-annual period. Reports shall be in clear format, not exceeding six pages, and shall: i. Document accomplishments, benefits, and impacts of the project. The Grantee should identify activities that have led to specific outcomes, such as job creation/retention, private investment, increased regional collaboration, engagement with historically excluded groups or regions, enhanced regional capacity, or other positive economic development benefits; ii. Identify any upcoming or potential press events or opportunities for collaborative press engagement to highlight the benefits of the award investment; iii. Compare progress on the project with the targeted schedule, explaining nay departures, identifying how those departures will be remedied, and projecting the course of work for the next semi-annual reporting period; iv. Outline challenges impending or that my impede progress on the project over the next semi-annual reporting period and identify ways to address those challenges; v. Outline any areas in which assistance is needed to support the project; and vi. Provide any other information that would be helpful for Grantor to know.The Project Progress Report for the semi-annual basis for the period ending March 31 contained the required information; however, due to insufficient controls over ensuring reports are submitted by the required due date, it was not submitted timely within the two weeks following the end of the semi-annual period and was submitted on October 16, 2023, six months late by the Commission.Failure to submit reports on a timely basis could result in delays in federal funding or other penalties and sanctions.The Commission should ensure that all federal reports are submitted timely.

2 CFR § 200.328 provides the Federal awarding agency may solicit only the standard, OMB-approved governmentwide data elements for collection of financial information. This information must be collected with the frequency required by the terms and conditions of the Federal award.The American Rescue Plan Act Statewide Planning Award states that Grantee shall submit to Grantor Project Progress Reports. Grantee agrees to provide Grantor with project progress reports, communicating the important activities and accomplishments of the project, on a semi-annual basis for the period ending March 31 and September 30, or any portion thereof, for the entire project period. Reports are due no later than two weeks following the end of the semi-annual period. Reports shall be in clear format, not exceeding six pages, and shall: i. Document accomplishments, benefits, and impacts of the project. The Grantee should identify activities that have led to specific outcomes, such as job creation/retention, private investment, increased regional collaboration, engagement with historically excluded groups or regions, enhanced regional capacity, or other positive economic development benefits; ii. Identify any upcoming or potential press events or opportunities for collaborative press engagement to highlight the benefits of the award investment; iii. Compare progress on the project with the targeted schedule, explaining nay departures, identifying how those departures will be remedied, and projecting the course of work for the next semi-annual reporting period; iv. Outline challenges impending or that my impede progress on the project over the next semi-annual reporting period and identify ways to address those challenges; v. Outline any areas in which assistance is needed to support the project; and vi. Provide any other information that would be helpful for Grantor to know.The Project Progress Report for the semi-annual basis for the period ending March 31 contained the required information; however, due to insufficient controls over ensuring reports are submitted by the required due date, it was not submitted timely within the two weeks following the end of the semi-annual period and was submitted on October 16, 2023, six months late by the Commission.Failure to submit reports on a timely basis could result in delays in federal funding or other penalties and sanctions.The Commission should ensure that all federal reports are submitted timely.

FINDING 2023-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): ILBC-2023-Body Camera-00052 Pass-Through Entity: Indiana Department of Homeland Security Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 KOSCIUSKO COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The County Sheriff applied for the Indiana Local Body Camera Grant (ILBC). The grant is a reimbursable grant through the Indiana Department of Homeland Security. The County Sheriff was awarded this grant on January 1, 2023, with a grant cost amount of up to $31,920 to be spent from January 1, 2023 to December 31, 2023. The County Sheriff ordered body-worn cameras and other equipment on April 26, 2023. A Reimbursement Claim Form (Form) was submitted for the cameras and other equipment on September 11, 2023. The Form shows the County Sheriff requested the full $31,920; however, the County had only spent $9,581 from the grant fund towards the purchase. The reimbursement of $31,920 from the Indiana Department of Homeland Security was received on September 27, 2023. The fund had a balance of $22,339 as of December 31, 2023. As there are no grant expenditures for the remaining reimbursements received and the period of performance had ended, the County should have reimbursed the Indiana Department of Homeland Security $22,339. On May 9, 2023, the County Sheriff's grant administrator submitted a Program Report for the ILBC grant. The report was completed and submitted by the County Sheriff's grant administrator without a documented oversight or review process to ensure the completeness and accuracy of the report. The report incorrectly indicated that all expenditures had been completed. However, as of the date of the submission, the County had not purchased the body-worn cameras, and all federal funds had not been expended. 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 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." INDIANA STATE BOARD OF ACCOUNTS 14 KOSCIUSKO COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.344(d) states in part: "The non-Federal entity must promptly refund any balances of unobligated cash that the Federal awarding agency or pass-through entity paid in advance or paid and that are not authorized to be retained by the non-Federal entity for use in other projects. . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not designed by management of the County to ensure the accuracy of the reimbursement invoice and the Program Report. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a 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 such, federal reimbursement was requested in excess of the amount spent. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish 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 to ensure reimbursement invoices are complete and accurate prior to submission. Furthermore, we recommended the County contact the awarding agency to discuss the funds remaining. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Item 2023-001 – Financial Reporting: Federal Financial Report (SF425) Awarding Agency: U.S. Department of Defense Federal Program: 12.431 – U.S. Army Research Laboratory - Basic Scientific Research; 12.800 - U.S. Air Force Research Laboratory - Air Force Defense - Research Sciences Program Federal Award Identification Number: W911NF-22-2-0050, FA8650-13-2-5402 Grant Period: July 2022 to June 2025; September 2018 to December 2025 Criteria: During the course of the 2023 audit, it was noted during a discussion with management that the financial reports for the above-mentioned awards were not submitted timely. 2 CFR 200.328 requires the reporting of financial information by the auditee according to the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award. The Cooperative Agreements note that reporting period end dates fall on the end of the calendar year for annual reports (12/31) and the end date of the award for the final report. Annual reports are due 30 days after the reporting end date, and the final report is due 90 days after the end date. Condition: We determined that the required annual SF425 for federal award W911NF-22-2-0050 was due by January 31, 2024, and was not submitted as of June 2024. In addition, we determined that the annual SF425 for federal award FA8650-13-2-5402 was due on January 31, 2024, and was submitted on March 25, 2024. Cause: SEMI details the occurrence was due to an administrative oversight. Effect: The SF425 for federal awards W911NF-22-2-0050 and FA8650-13-2-5402 were not submitted timely. Questioned Cost: None Context: This is the first time that it was determined that a financial reporting form for one of their five awards was not submitted according to the required due date. Repeat Finding: No Recommendation: We recommend for management to implement process improvements to ensure financial reports are submitted by their required due dates. Views of Responsible Official: SEMI concurs with the finding and will evaluate process improvements to ensure financial reports are submitted by their required due dates or filing extensions are received in writing on a go-forward basis.

Item 2023-001 – Financial Reporting: Federal Financial Report (SF425) Awarding Agency: U.S. Department of Defense Federal Program: 12.431 – U.S. Army Research Laboratory - Basic Scientific Research; 12.800 - U.S. Air Force Research Laboratory - Air Force Defense - Research Sciences Program Federal Award Identification Number: W911NF-22-2-0050, FA8650-13-2-5402 Grant Period: July 2022 to June 2025; September 2018 to December 2025 Criteria: During the course of the 2023 audit, it was noted during a discussion with management that the financial reports for the above-mentioned awards were not submitted timely. 2 CFR 200.328 requires the reporting of financial information by the auditee according to the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award. The Cooperative Agreements note that reporting period end dates fall on the end of the calendar year for annual reports (12/31) and the end date of the award for the final report. Annual reports are due 30 days after the reporting end date, and the final report is due 90 days after the end date. Condition: We determined that the required annual SF425 for federal award W911NF-22-2-0050 was due by January 31, 2024, and was not submitted as of June 2024. In addition, we determined that the annual SF425 for federal award FA8650-13-2-5402 was due on January 31, 2024, and was submitted on March 25, 2024. Cause: SEMI details the occurrence was due to an administrative oversight. Effect: The SF425 for federal awards W911NF-22-2-0050 and FA8650-13-2-5402 were not submitted timely. Questioned Cost: None Context: This is the first time that it was determined that a financial reporting form for one of their five awards was not submitted according to the required due date. Repeat Finding: No Recommendation: We recommend for management to implement process improvements to ensure financial reports are submitted by their required due dates. Views of Responsible Official: SEMI concurs with the finding and will evaluate process improvements to ensure financial reports are submitted by their required due dates or filing extensions are received in writing on a go-forward basis.

2 CFR 1000.10 gives regulatory effect to the Department of Treasury for 2 CFR 200.328 which states: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Federal awarding agency must use OMB-approved common information collections, as applicable, when providing financial and performance reporting information. The following have been determined to be Key Line Items for the State and Local Fiscal Recovery Fund Program (SLFRF) 1. Obligations and Expenditures - Quantificable Objective Criteria: Reported obligations and expenditures. a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure. The County submitted the annual SLFRF Compliance Report for March 2023, however cumulative obligations, cumulative expenditures, current period obligations and current period expenditures, eaching totaling $5,227,729 were not reported. By not reporting obligation and expenditures, the County is underreporting its obligations and expenditures for the program and the report is not an accurate reflection of the County's SLFRF activity.

#2023-008 – Major Federal Award Finding – Reporting Nature of Finding: Material Weakness in Internal Controls Over Compliance This is a partial repeat of prior year finding #2022-009. Criteria/Condition: Federal regulations 2 CFR 200.328 - 200.329 provide that required reporting under the federal program must be completed timely and accurately. The federal award agreement includes specific report filing due dates. Segregation of duties is also a key element of internal controls, including controls over compliance, and involves processes whereby the activities of one employee are reviewed or checked by the activities of another individual, and avoids one employee having the ability to perform a transaction or process from beginning to end. We noted during testing that no review procedures are in place surrounding these reports. Cause/Context: Controls were not in place to ensure accurate reporting. Only one individual was involved in the reporting process. Effect: Controls in place do not sufficiently ensure complete, accurate, and timely reporting compliance. Recommendation: We recommend that a full-range of controls related to reporting, including federal program reporting be implemented. The Organization should devote the resources necessary to ensure that reports are timely and accurately prepared, reviewed, and approved prior to filing. All controls, including review and approval should be documented and that documentation be maintained. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to implement a full – range of controls relating to reporting, including federal program reporting. MARR will take such steps as necessary to ensure that reports are timely and accurately prepared, reviewed, and approved prior to filing. All controls, including review and approval will be documented in such documentation to be maintained.

#2023-008 – Major Federal Award Finding – Reporting Nature of Finding: Material Weakness in Internal Controls Over Compliance This is a partial repeat of prior year finding #2022-009. Criteria/Condition: Federal regulations 2 CFR 200.328 - 200.329 provide that required reporting under the federal program must be completed timely and accurately. The federal award agreement includes specific report filing due dates. Segregation of duties is also a key element of internal controls, including controls over compliance, and involves processes whereby the activities of one employee are reviewed or checked by the activities of another individual, and avoids one employee having the ability to perform a transaction or process from beginning to end. We noted during testing that no review procedures are in place surrounding these reports. Cause/Context: Controls were not in place to ensure accurate reporting. Only one individual was involved in the reporting process. Effect: Controls in place do not sufficiently ensure complete, accurate, and timely reporting compliance. Recommendation: We recommend that a full-range of controls related to reporting, including federal program reporting be implemented. The Organization should devote the resources necessary to ensure that reports are timely and accurately prepared, reviewed, and approved prior to filing. All controls, including review and approval should be documented and that documentation be maintained. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to implement a full – range of controls relating to reporting, including federal program reporting. MARR will take such steps as necessary to ensure that reports are timely and accurately prepared, reviewed, and approved prior to filing. All controls, including review and approval will be documented in such documentation to be maintained.

Cluster: Not applicable Federal Granting Agency: Department of Health and Human Services (“HHS”), Substance Abuse and Mental Health Services Administration (“SAMHSA”) Award Name: Congressional Directives Award Year: 2023 Assistance Listing #: 93.493 Federal Award Identification Number: 1H79FG000903-01 Criteria In accordance with 2 CFR 200.328 and the notice of award, there are other reporting requirements that the entity must complete and submit to HHS. Specifically, the Programmatic Report, as defined in the notice of award, is required on an annual basis and must be submitted as a .pdf to the View Terms Tracking Details page in the eRA Commons System no later than 90 days after the end of each 12-month budget period. Condition The Programmatic Report, which was due by December 28, 2023, was not submitted to the eRA Commons System until July 25, 2024. Cause Management initially did not have the accurate access to submit the report in the eRA Commons System. Once the access was resolved, management did not have an adequate understanding of the reporting requirements of the award and the control was not designed to ensure that the reports were completed and submitted to the agency in a timely manner. Effect The late submission of the Programmatic Report causes Franciscan to be out of compliance with specific grant reporting requirements. Questioned Costs None noted. Recommendation We recommend that Franciscan enhance its internal control around the monitoring of grant reporting requirements, including evaluating report due dates, confirming reporting requirements with the granting agency as appropriate, ensuring appropriate access to systems is maintained, and performing reviews prior to submission to ensure all reports are being completed accurately and submitted in a timely manner. Management’s Views and Corrective Action Plan Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior audit findings and status.

FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients may use COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) funds for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 and amended by the Consolidated Appropriations Act of 2023. The SLFRF program provides substantial flexibility for each recipient to meet local needs within seven separate eligible use categories. Recipients may use SLFRF funds to:  Respond to the COVID-19 public health emergency and its negative economic impacts;  Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of eligible employers that have eligible workers who are performing essential work;  Provide government services, to the extent COVID-19 caused a reduction in revenues collected in the most recent full fiscal year of the recipient;  Make necessary investments in water, sewer, or broadband infrastructure;  Provide emergency relief from natural disasters or their negative economic impacts;  Fund eligible Surface Transportation projects; and  Fund Title I projects that are eligible activities under the Community Development Block Grant and Indiana Community Development Block Grant programs. As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City did not properly design or implement such a system. The City elected to receive the standard revenue loss allowance, allowing it to claim its total SLFRF allocation of $2,290,914 as revenue loss to use for government services. The allocated funds may only be used to cover costs incurred from the period beginning on March 3, 2021, and ending on December 31, 2024. Obligations for costs incurred are required to be liquidated no later than December 31, 2026 (the end of the period of performance). During the audit period, the City completed three separate transfers of SLFRF funds from the ARPA Coronavirus Local Fiscal fund to the Comm Crossing Grant Fund and Water Utility-Operating funds, totaling $976,431 and $494,159, respectively. The transfers allowed for federal grant funds to be commingled with other grant and operating funds. Subsequently, expenditures were disbursed from the Comm Crossing Grant Fund and Water Utility-Operating funds. However, since the transfer of SLFRF funds into the Comm Crossing Grant Fund and Water Utility-Operating funds commingled receipts, and the City did not ensure there was an appropriate system of internal controls in place to account for the federal expenditures separately from other grant and operating expenditures, we were unable to determine a complete population of federal expenditures. Without a complete population of expenditures, we were unable to determine the City's compliance with the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Period of Performance compliance requirements. As such, the $976,431 and $494,159 transferred from the ARPA Coronavirus Local Fiscal fund are considered questioned costs. The lack of internal controls and appropriate documentation to test the compliance requirements was isolated to the situation described 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 200.300(b) states in part: "The non-Federal entity is responsible for complying with all requirements of the Federal award. . . ." 2 CFR 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. . . ." Cause Due to the lack of internal controls, the City was unable to differentiate expenditures made from federal and nonfederal funds once it commingled other grant, operating, and federal grant awards into a single fund within its ledger without consideration of the need to separately identify and account for federal expenditures. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot identify the expenditures paid with federal grant funds. As such the Town cannot ensure nor can we determine that expenditures of the grant were not unallowable and fell within the period of performance. Questioned Costs We identified $1,470,590 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that management of the City establish a system of internal controls to ensure that grant award funds are accounted for and tracked in a designated grant fund. All activity of the grant should be in this fund with supporting documentation for each transaction. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.