Findings Citing § 200.328

Federal Agency: 84 – Department of Education Federal Program Title: Higher Education Institutional Aid Assistance Listing Number: 84.031 Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: In accordance with 2 CFR §200.328, non‑Federal entities must submit required performance reports in accordance with the terms and conditions of the Federal award and include all information required by the Federal awarding agency. Performance reports must be submitted in the form, manner, and frequency prescribed in the award agreement. Additionally, 2 CFR §200.303 requires non‑Federal entities to establish and maintain effective internal control over Federal awards, including controls to ensure required reports are reviewed, approved, documented, and submitted in accordance with award requirements. Condition/Context: During our testing of Reporting, we selected a sample of 5 Higher Education Institutional Aid performance reports. This major program includes 5 award agreements, of which 2 agreements have quarterly reporting requirements, 2 agreements have semi‑annual reporting requirements, and 4 agreements have annual reporting requirements. The following exceptions were noted: • For 2 of the 5 reports tested, the reports were prepared; however, evidence supporting submission was not provided, and documentation could not be provided to demonstrate that the reports were reviewed and approved prior to submission. As a result, evidence of management review and report submission could not be verified. Questioned Costs: None. Effect: Failure to retain documentation supporting report submission and management review limits the UEC’s ability to demonstrate compliance with Federal reporting requirements and increases the risk that required reports are not reviewed or submitted in accordance with award terms. Cause: The UEC’s internal controls were not designed or implemented to consistently ensure that required performance reports are reviewed, approved, and submitted in accordance with Federal award requirements, and that documentation is retained to support evidence of review and submission. Repeat Finding: No. Recommendation: We recommend the UEC strengthen its reporting procedures to ensure required performance reports are reviewed and approved prior to submission and that documentation is retained to support evidence of management review and report submission in accordance with Federal award requirements. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding.

Finding No: 2025-003– Internal control deficiencies over accounting and identification of federal funds received from the Federal Emergency Management Agency (FEMA) that should be included on SEFA Federal Programs ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) Name of Federal Agency U.S. Department of Homeland Security (Pass-through program from The Central Office of Recovery, Reconstruction and Resiliency) Category Internal Control; Compliance. Compliance Requirement Activities Allowed/Unallowed, Allowable Costs/Cost Principles, Period of Performance, Project Accounting. Criteria 2 CFR Part 200 Subpart D Subsection 200.302 states the following: The recipient's and subrecipient's financial management system must provide for the following: 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. Condition During our procedures concerning the Administration’s funds received from FEMA we noticed that the reimbursement funds received from FEMA were not recognized as income during the year ended June 30, 2025. Cause The Administration recognized the reimbursement as an accrual and not as income during the year ended June 30, 2025. They have recognized only the amount that they disbursed during the year at their discretion. This accounting is correct when the funds received are capital advances. Effect This can result in amounts not to be included in the Schedule of Expenditures and Federal Awards in the correct period and understate SEFA. Also, the Administration could be subject to penalties or sanctions from the Federal Grantor. Context The Administration identified $6,543 as federal expenditures from prior years capital advances of FEMA awards but did not identify as expended the amount of $11,063 from advances. In addition, the Administration received reimbursements of $1,413,451 in the fiscal year, however management did not identify this amount as federal expenditures until the audit procedures was performed. Identification of repeat finding None. Questioned costs None, as adjustments were made during the audit to correct the misstatement. Recommendation We recommend validating, with the staff in charge of Engineering, the type of funds received from FEMA, if they are reimbursements or capital advances. When the funds received are reimbursements they should be recognized as income in the year received. If the funds are capital advances they should be recognized as unearned revenue and as income in the year in which they are disbursed. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan.

Finding Number: 2025-015 State/Educational Agency(s): Arkansas Department of Commerce – Arkansas Economic Development Commission Pass-Through Entity: Not applicable AL Number(s) and Program Title(s): 21.029 – Coronavirus Capital Project Funds Federal Awarding Agency: U.S. Department of the Treasury Federal Award Number(s): CPFFN0186 Federal Award Year(s): 2022 Compliance Requirement(s) Affected: Reporting Type of Finding: Noncompliance Repeat Finding: Not applicable Criteria: All recipients of federal funds must complete financial, performance, and compliance reporting as required by the Grant Agreement, 2 CFR § 200.328 – 329, and as outlined in Part 2 of Coronavirus Capital Projects Fund Compliance and Reporting Guidance. In accordance with Coronavirus Capital Projects Fund Compliance and Reporting Guidance, Capital Project Fund recipients are responsible for reporting on subawards in the Federal Subaward Reporting System (FSRS). A Project and Expenditure Report must be completed for each project included in an approved Program Plan. The Project and Expenditure Report provides information on projects funded, obligations, expenditures, project status, outputs, performance indicators, and other information. Condition and Context: ALA reviewed the Q2 2025 Project and Expenditure Report for five of the 20 projects to determine expenditure and obligation amounts used for matching requirements were accurately reported to the U.S. Department of the Treasury. ALA noted the cumulative obligations for two of the five projects contained errors. The cumulative obligations for one of the projects was overstated by $2,569,790 and understated by $574,066 for the other project. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: None Cause: Arkansas State Broadband Office (ASBO) management did not adequately review amounts submitted to the U.S. Department of the Treasury for accuracy. Effect: Failure to accurately report project obligations and expenditures to the U.S. Department of the Treasury could result in noncompliance with federal laws and regulations. Recommendation: ALA staff recommend the Agency management ensure all amounts submitted on Project and Expenditure Reports are accurate. Views of Responsible Officials and Planned Corrective Action: ASBO acknowledges the auditor’s observation regarding cumulative obligation amounts reported for two projects in the Q2 2025 Project and Expenditure Report submitted to the U.S. Department of the Treasury. The variances identified were the result of an administrative reporting error within a quarterly submission spreadsheet and did not reflect improper expenditures, questioned costs, or misuse of funds. The Agency identified the discrepancy during its internal review process and submitted corrected information to Treasury. By the time of audit review, the corrected reporting had already been provided. This issue was isolated to a specific reporting period and did not impact the underlying financial integrity of the projects. Anticipated Completion Date: June 30, 2026 Contact Person: Glen Howie State Broadband Director Arkansas State Broadband Office 1 Commerce Way Little Rock, AR 72202 (501) 683-6000 broadband@arkansas.gov

FINDING 2025-004 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Participation of Private School Children 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): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Test and Provisions - Participation of Private School Children Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not provide supporting documentation for the amounts disbursed for Participation of Private School Children. No time sheets or logs were provided to support the hours paid to employees for working with the private school children. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . ." Cause The School Corporation had not developed a system of internal controls that would have ensured that records were maintained and made available for audit related to the Special Tests and Provisions - Participation of Private School Children compliance requirement. Effect The lack of appropriate documentation prevented the determination of the School Corporation's compliance with the Special Tests and Provisions - Participation of Private School Children compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the Special Test and Provisions - Participation of Private School Children compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FEDERAL AWARD FINDING: 2025-101 The County did not develop internal control procedures over program reporting and cash management requirements, increasing risk of report errors to awarding agencies and wrongly receiving monies Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings number(s) and name(s): 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number(s) and year(s): IGA DI23-002389 July 1, 2023 through June 28, 2028 IGA DI21-002286 July 1, 2024 through June 30, 2025 Federal agency: U.S. Department of Labor Pass-through grantor(s): Arizona Department of Economic Security Compliance requirement(s): Reporting Questioned costs: Not applicable Assistance Listings number(s) and name(s): 21.027 COVID-19—Coronavirus State and Local Fiscal Recovery Funds Award number(s) and year(s): 1505-0271 March 3, 2021 through December 31, 2024 CT-FM-22-149 October 1, 2024 through September 30, 2025 SLFRFP1962 January 5, 2023 through December 31, 2026 CTR069300 January 1, 2024 through December 30, 2026 GTAW-FM-23*123 October 3, 2022 through July 3, 2026 ACJC-VC-25-001A July 1, 2024 through December 31, 2024 Federal agency: U.S. Department of the Treasury Pass-through grantor(s): Stratford Art Works; Arizona Supreme Court; Arizona Housing Coalition, Inc.; Arizona Criminal Justice Commission Compliance requirement(s): Reporting Questioned costs: Not applicable Assistance Listings number(s) and name(s): 93.268 Immunization Cooperative Agreements Award number(s) and year(s): CTR062571 July 1, 2022 through June 30, 2025 CTR059891 July 1, 2022 through June 30, 2027 Federal agency: U.S. Department of Health & Human Services Pass-through grantor(s): Arizona Department of Health Services Compliance requirement(s): Cash management and reporting Questioned costs: Not applicable Condition Contrary to federal regulation, the County’s Grants Management and Innovation Department (Department) did not develop, document, or implement internal control procedures to monitor compliance with the programs’ reporting and/or cash management requirements for the Workforce Innovation and Opportunity Act (WIOA) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, and Immunization Cooperative Agreements (ICA) programs. Specifically, for 13 of 17 reports we tested, we found the Department did not perform an independent review and approval of reports prior to submitting them to the federal agency or pass-through grantor to ensure the reported expenditures were accurate, agreed to the County’s records, and contained only allowable expenditures for: • 9 of 9 WIOA monthly reconciliation reports we tested. • 3 of 4 SLFRF quarterly project and expenditure reports we tested. • 1 of 4 ICA quarterly contract expenditure reports (CER) we tested. These reports are also used to request reimbursement from the federal agency. For the same 3 SLFRF reports identified above and submitted during fiscal year 2025, we found the Department did not retain documentation, such as system reports, screenshots, or queries, to support the information it reported. Despite lacking internal control procedures, we did not identify inaccurate program information for WIOA and ICA reported to the federal agency or pass-through grantor, and we did not identify any ICA costs incurred prior to requesting reimbursement. In addition, the Department did not prepare and submit timely ICA program information to the federal agency for monitoring. Specifically, for award CTR062571—the Immunization Bridge Access program, the Department failed to submit 3 quarterly CERs by their required due dates in fiscal year 2025 and instead, on August 2, 2025, submitted 1 report that contained information covering all quarterly information for fiscal year 2025. Effect Without effective internal control procedures in place, there is an increased risk that the Department may not prevent or detect and correct errors on reports it submits to federal agency and pass-through agencies, which rely on them to effectively monitor the program administration, including its compliance with program requirements, ability to prevent and detect fraud, and to evaluate the programs’ success. There is also an increased risk that the Department could receive federal monies to which it is not entitled. Further, the Department is at risk that this finding applies to other federal programs it administers. Cause The Department’s management reported that it had sometimes performed independent reviews and approvals of reports but did not maintain documentation of these independent reviews because the Department did not have a formal policy requiring a documented review and approval of its reports. In addition, the Department’s management reported that policies and procedures were not followed to retain documentation for the SLFRF reports. Further, the Department’s management reported it did not have a process to track when each ICA report was required to be completed and did not verify that reports were submitted by the designated due dates. Criteria 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). This would include developing, documenting, and implementing internal control procedures to monitor compliance with federal agency guidelines requiring the Department to report accurate and complete information for the WIOA monthly reconciliation reports, SLFRF quarterly financial reports, and ICA quarterly contract expenditure reports. Also, federal regulation and Department retention policies require the Department to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report (2 CFR §200.334). Further, federal regulation requires the Department to submit financial reports as required by the federal award. Reports submitted quarterly are due no later than 30 calendar days after the reporting period (2 CFR §200.328). Recommendations to the Department 1. Perform and document an independent review and approval of federal program reports before submitting the reports to the federal agency to ensure the reported expenditures were accurate, agreed to the County’s records, and contained only allowable expenditures. 2. Retain detailed documentation, such as system reports, screenshots, or queries related to submitted reports to ensure accurate and complete program information is reported to the federal agency or pass-through grantor for each federal program. 3. Submit ICA reports by their quarterly due dates. 4. Follow its retention policies and procedures and federal regulation requirements to retain all records relating to a federal award for a period of 3 years from the date of its submission of the reports. Develop, document, and implement policies and procedures to monitor compliance with the programs’ reporting requirements to: 5. Perform and document an independent review and approval of federal program reports before submitting the reports to the federal agency or pass-through grantor to ensure reports are accurate, agree to County records, and contain only allowable expenditures for the applicable fiscal year. 6. Create a tracking mechanism to ensure reports are completed and submitted by their due dates. This finding is similar to prior-year finding 2024-104 that was initially reported in fiscal year 2024. Views of responsible officials County management concurs with this finding. The County’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.

Finding 2025-002 – U.S. Department of Education (ED), TRIO Programs (material weakness): Information on Federal Programs – TRIO Upward Bound Assistance Listing, FAL No. 84.047, June 30, 2025 Criteria – Federal regulations require that at least two-thirds (67%) of participants served by the TRIO Upward Bound Program be low-income and first-generation college students. 20 U.S.C. § 1070a-11 34 CFR § 645.3 (Definitions); 34 CFR § 645.11 (Participant eligibility and selection). In addition, recipients are required to maintain accurate eligibility documentation and report complete and reliable participant data in the annual performance report in accordance with 2 CFR § 200.303 and 2 CFR § 200.328. Condition – The TRIO Upward Bound Program did not meet the federally required two-thirds first-generation/low-income participant threshold. The annual performance report reflected that only 51% of participants were identified as first-generation and/or low-income. During testing of participant eligibility documentation, the participant roster reflected that only 58% of participants met the first-generation and/or low-income eligibility requirement. Cause – The condition appears to be the result of insufficient internal controls over participant eligibility determination and monitoring, including: a) inadequate review procedures to ensure eligibility requirements were met prior to participant enrollment; b) lack of ongoing monitoring to ensure continued compliance with the two-thirds eligibility requirement throughout the program year and c) insufficient reconciliation between eligibility documentation and performance reporting data. Effect – Failure to meet the statutory eligibility threshold places the program out of compliance with federal requirements and may result in: a) questioned eligibility of program participants, b) increased risk of enforcement actions, including corrective action plans or repayment of federal funds.; c) possible loss or reduction of future funding and d) risk of program eligibility. Repeat Finding – Yes. Although this is a repeat finding for Upward Bound, Student Support Services was resolved in the current year. Questioned Costs – Questioned costs could not be reasonably determined for this finding due to the inability to directly associate program expenditures with individual ineligible participants. Auditor’s Perspective – From the auditor’s perspective, this finding represents material noncompliance with federal eligibility and reporting requirements for the TRIO Upward Bound Program. Federal statutes and regulations require that at least two-thirds (67%) of program participants be low-income and first-generation college students. The program’s failure to meet this threshold both in reported data (51%) and in tested eligibility documentation (58%) demonstrates a systemic breakdown in compliance, rather than an isolated or clerical error. The discrepancy between eligibility documentation and the annual performance report further indicates weaknesses in internal controls over compliance, as required by 2 CFR § 200.303. Accurate eligibility determination is a core program requirement, directly tied to the program’s statutory purpose and funding authorization. Noncompliance with this requirement undermines assurance that federal funds were used to serve the intended population. Auditor’s Perspective – (continued) Because eligibility compliance affects the allowability of participant-related costs, the inability to demonstrate that the required proportion of participants met eligibility criteria creates an elevated risk of questioned or disallowed costs. While questioned costs could not be reasonably quantified, the scope and pervasiveness of the condition support classification of this finding as material. Absent corrective action, the program remains exposed to continued noncompliance, increased federal oversight, and potential enforcement actions by the U.S. Department of Education. Strengthening eligibility controls, monitoring, and reporting reconciliation is necessary to restore compliance and reduce future audit risk. Auditor’s Recommendation – We recommend that management: a) strengthen internal controls over participant eligibility determination, including documented review and approval procedures; b) implement periodic monitoring to ensure the two-thirds first-generation/low-income require-ment is met throughout the program year; c) Ensure accurate and consistent reporting between eligibility records and annual performance reports and d) provide staff training on federal eligibility requirements for the TRIO Upward Bound Program. View of Responsible Officials – The correct 2/3 requirement percentage from the 2024-2025 TRIO Upward Bound APR is 63%; the referenced 51% was from the 2023-2024 APR. The TRIO Upward Bound Program’s fiscal year for 2024-2025 was September 1, 2024, to August 31, 2025, which is different from the College’s fiscal year. A roster was requested and submitted reflecting TRIO Upward Bound participants during the College’s fiscal year, July 1, 2024 -June 30, 2025. The submitted roster did not reflect the participants for the Program’s 2024-2025 fiscal year. Failure to meet the 2/3 requirement stems from ongoing challenges in recruiting Program participants. Recruitment has been and continues to be a challenge for TRIO Programs nationwide since the pandemic. The TRIO Upward Bound Staff are very knowledgeable about Program eligibility and documentation requirements. A thorough review of eligibility is completed to ensure applicants meet at least one (and preferably both) eligibility criteria PRIOR TO acceptance. The TRIO Upward Bound Program received funding for FY2025 (September 1, 2025, - August 31, 2026) in the full amount of $550,864.00. The receipt of a Non-Competing Continuation (NCC) Grant Award Notice means the U.S. Department of Education is giving approval to allow the Paine College TRIO Upward Bound Program to continue serving students without any stipulations to the Program or College. The Program is operating under normal terms and conditions. Program Staff is working diligently to recruit more students to ensure compliance with the 2/3 eligibility requirement for the 2025-2026 program/fiscal year.

Finding No. 2025-042 Federal Awarding Agency: USDOC Impact: Significant Deficiency, Noncompliance AL Number and Title: 11.438 PCSRT Federal Award Number: NA24NMF4380259, NA24NMFX438G0056 Applicable Compliance Requirement: Reporting Condition: Two of four randomly selected FY 25 PCSRT SF-425 federal financial reports tested did not include the recipient share of expenditures. Context: The SF-425 is a required semi-annual federal financial form used for reporting on the financial status of federal grant awards. Recipients of PCSRT grants must submit semi-annual SF-425 reports for all active federal awards. During FY 25, 20 grant awards were subject to SF-425 submission for a total of 37 required reports filed. Four reports were selected for testing. The audit identified that the recipient share of expenditures (line 10j) reported for two federal awards was not completed. Cause: The errors were due to DFG staff misunderstanding instructions for completing SF-425 reports. Federal guidance on whether the State must report the recipient share of expenditures changed prior to the fiscal year. DFG report preparation and review procedures were insufficient to identify the revised reporting requirements. Criteria: Per Title 2 CFR 200.328(c), the State must submit financial reports as required by the federal award. Title 2 CFR 200.303(a) requires the State to establish, document, and maintain effective internal controls over Federal awards that provide reasonable assurance that the State is managing Federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect: Inaccurate federal reporting may impair federal decision-making and may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funds. Questioned Costs: None Recommendation: DFG’s DAS director should strengthen procedures for the preparation and review of the SF-425 report to ensure submitted reports are accurate. Furthermore, the DAS director should work with the federal oversight agency to revise the incomplete SF-425 reports, as needed. Views of Responsible Officials: ADFG respectfully disagrees with the audit finding regarding SF-425 reporting and recipient share. During the audit period, the federal awarding agency transitioned to a new reporting system but did not issue updated written instructions, revised award terms, or formal guidance clarifying new SF-425 fields or reporting expectations. Under 2 CFR §200.328, recipients are required to submit financial reports as specified in the Federal award, and agencies may require only OMB-approved, government-wide data elements. No updated award terms or instructions were provided to ADFG during this transition. System behavior clearly indicated that certain fields were not applicable. In Grants Online, the fields were grayed out, signaling they were not required. In contrast, eRA Commons left these fields open without any explanation or guidance. NOAA now requires these fields, but this requirement was not communicated at the time of the transition. This inconsistency demonstrates that the agency had not finalized or communicated enforceable requirements for these fields during the reporting period. DFG acted reasonably and consistently based on the information available. It would be inappropriate to penalize DFG for continuing to report under prior requirements or omitting data in fields that were not previously required. The Uniform Guidance places responsibility on awarding agencies to provide clear written guidance, transition timelines, and clarification on new reporting requirements before they become enforceable. For these reasons, DFG requests that this finding be reconsidered. Our reporting complied with the award terms and the system instructions available at the time, and any changes introduced by the agency were not formally communicated or incorporated into our award during the relevant reporting period. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. DFG management reports that the federal agency did not provide updated written instructions or reporting requirements when the federal awarding agency transitioned to a new reporting system. However, DFG management is responsible for complying with federal reporting requirements. We reaffirm the finding.

Finding No. 2025-059 Federal Awarding Agency: U.S. Environmental Protection Agency (EPA) Impact: Significant Deficiency, Noncompliance AL Number and Title: 66.202 Congressionally Mandated Projects (CMP) Federal Award Number: 01J83401, 02J14601 Applicable Compliance Requirement: Reporting Condition: Unliquidated obligations as reported in two of three tested SF-425 Federal Financial Reports were inaccurate. Context: Recipients of EPA grants must submit annual SF-425 Federal Financial Reports for all active federal awards. During FY 25, five grant awards were subject to SF-425 submission of which three were tested. The audit identified that the federal share of unliquidated obligations (line 10f) reported for two federal awards were overstated by $543,052 and $523,069, respectively. DEC staff inadvertently included the State’s share of unliquidated obligations in the report. Cause: The errors were due to insufficient procedures over the preparation and review of SF-425 reports. Criteria: Title 2 CFR 200.328(c) requires the State to submit financial reports as required by the federal award. Title 2 CFR 200.303(a) requires the State to establish, document, and maintain effective internal controls over Federal awards that provide reasonable assurance that the State is managing Federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect: Inaccurate federal reporting may impair federal decision-making and may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional requirements or withholding/terminating funds. Questioned Costs: None Recommendation: DEC’s DAS director should strengthen procedures for the preparation and review of the SF-425 report to ensure reports submitted to EPA are accurate. Furthermore, the DAS director should work with the federal oversight agency to revise the inaccurate SF-425 reports, as needed. Views of Responsible Officials: Management agrees with this finding.

2025-001 Head Start Program – Control Weakness Over Timely Reporting (Repeated 2024-003) CFDA Title: Head Start CFDA Number: 93.600 Federal Agency: Department of Health and Human Services Condition: The District does not have adequate internal controls in place to ensure that required semi-annual and annual Head Start reports are prepared and submitted timely. Context: We analyzed the submission dates of required semi-annual and annual reports by comparing the reporting period end dates to the actual submission dates. All reports tested were submitted significantly past the required deadlines of 30 days for semi-annual reports and 90 days for annual reports. Criteria: Head Start program requirements and grant agreements require that semi-annual and annual financial and performance reports be submitted within established deadlines (generally 30 days for semi-annual reports and 90 days for annual reports) to ensure timely monitoring and reimbursement by the awarding agency. Additionally, 2 CFR §200.328 requires recipients to submit performance reports at the frequency required by the federal awarding agency. Effect: Untimely submission of required reports increases the risk of noncompliance with federal program requirements and may result in delayed reimbursements, reduced oversight by the awarding agency, and potential funding consequences. Continued delays also indicate a breakdown in internal controls over grant compliance and reporting. Cause: The District does not have formalized procedures or a monitoring system in place to ensure required Head Start reports are prepared, reviewed, and submitted within required timeframes. Recommendation: We recommend the District implement policies and procedures to ensure timely preparation and submission of all required Head Start reports, including: • Establishing a reporting calendar with clearly defined deadlines, • Assigning responsibility for report preparation and review, • Implementing a tracking mechanism to monitor report status and submission dates, and • Performing supervisory review to ensure compliance with required timelines prior to submission.

Finding 2025-004 – Reporting Federal Program: Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance and Noncompliance Criteria Per 2 CFR §200.328, non-Federal entities must submit financial and performance reports that are accurate, current, and complete. Additionally, per 2 CFR §200.303, entities must maintain effective internal control over Federal awards. Treasury SLFRF guidance requires Project and Expenditure (P&E) Reports to provide complete and accurate project information. Condition The Town’s March 2025 Project and Expenditure Report contained a project description that revenue replacement funds were used on payroll costs, when the costs were construction related. This error was not identified prior to submission. Cause The condition resulted from insufficient review of financial and narrative reporting elements. Effect The report submitted to Treasury was not accurate, resulting in noncompliance with federal reporting requirements. Questioned Costs None. Repeat Finding No. Recommendation We recommend the Town strengthen controls over SLFRF reporting by establishing documented review and approval controls, ensuring alignment between project descriptions and actual use of funds, and providing training on reporting requirements. Views of Responsible Officials Management agrees with the finding and will strengthen review procedures to ensure financial and narrative reports are accurate, complete, and consistent with underlying records.

Finding Reference: 2025-006 Federal Agency: U.S. Department of Health and Human Services Federal Program Title and ALN: Child Care and Development Block Grant (CCDF Cluster) (ALN 93.575) Compliance Requirement: Reporting – Financial Reporting (L) (MW) Type of finding: Significant Deficiency in Internal Control (SD), Instance of Noncompliance (NC) Statement of Condition: During our audit procedures, we noted that during fiscal year 2024-2025, the Program did not submit the required accumulated expenditure reports within the 15-day reporting deadlines established. In addition, the final financial reports required under the award were not submitted within the 90-day deadline. Criteria Title 2 Code of Federal Regulations (CFR) Sections 200.328 and 200.329 require subrecipients to submit accurate, complete, and timely financial and performance reports in accordance with the terms and conditions of the Federal award. In addition, the subaward agreement and reporting guidelines issued by ACUDEN establish specific deadlines for the submission of required financial reports, including final reports. Cause of Condition: The condition resulted, in part, from resource constraints experienced by the Program during the fiscal year, which affected the timely preparation and submission of required financial reports to ACUDEN. Effect of Condition: The untimely submission of accumulated expenditure reports and final financial reports may impair the pass-through entity's ability to effectively monitor program activities and financial performance on a timely basis and resulted in noncompliance with the reporting requirements established under the award. Recommendation: We recommend that Program management strengthen its procedures for monitoring reporting requirements and deadlines to ensure that all required financial reports, including final reports, are submitted timely in accordance with the terms and conditions of the award. Questioned Costs: None Prior-Year Finding: This is a new finding. View of Responsible Official and Planned Corrective Action Plan: Management established corrective measures immediately upon identifying the deficiency related to the untimely submission of the required reports. The Municipality implemented formal procedures to monitor reporting deadlines and ensure the timely submission of reports required by ACUDEN. Management will continue monitoring compliance with these corrective measures to ensure the timely submission of reports in future periods. Implementation Date: July 1, 2026 Responsible Person Mrs. Mayra Ortiz Arroyo, Finance and Budget Director

Federal agency: Federal Aviation Administration Federal program title: Airport Improvement Program Assistance Listing Number: 20.106 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2024 to June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter Criteria: Federal Aviation Administration (FAA) guidelines require Airport Improvement Program recipients to submit periodic financial reports, including SF-425 (Federal Financial Report), Form 5100-127 (Operating and Financial Summary), Form 5100-126 (Financial Government Payment Report), Form 5370-1 (Construction Progress and Inspection Report), and Form SF-271 (Requests for Reimbursement) in accordance with 2 CFR §200.328 and §200.329. Condition: During our testing, we noted that 3 of the 5 grants tested for SF-425 were not submitted for Fiscal year ended June 30, 2025. Questioned costs: None Context: Three of the five SF-425 reports selected for testing that were required to be submitted during the fiscal year were not prepared by the County and, therefore, were not submitted to the grantor agency. As a result, these reports were unavailable for audit. Cause: The Aviation Department continued working through a backlog of previously unsubmitted grant reports. The Department has been coordinating with the FAA to address historical non‑submission and ensure all required reports are submitted. While progress has been made, the volume of prior‑year reports and ongoing staffing constraints have contributed to delays in completing and submitting the remaining backlog. Effect: The County’s failure to submit all the required reports for each of its three Airport Improvement Program grants resulted in noncompliance with FAA reporting requirements under 2 CFR §200.328 and §200.329. This lack of reporting may impact the County’s ability to demonstrate proper stewardship of federal funds, delay reimbursement processing, and potentially affect future grant eligibility or funding decisions. Repeat Finding: Finding is a repeat finding from the prior year (2024-006). Recommendation: CLA recommends that the County continue providing staff with training related to identifying and complying with grant reporting requirements. In addition, CLA recommends that the County maintain and enhance tracking procedures, such as a monitoring checklist, to ensure all required grant reports including those related to prior‑year activity are submitted accurately and in a timely manner. Views of responsible officials: There is no disagreement with the audit finding.

Information on the federal program: Subject: Education Stabilization Fund – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425U, 84.425D Federal Award Numbers: S425U210013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness Criteria: 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 Financial reporting . . . ." 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." Condition: The School Corporation did not have a review control in place to ensure the annual data report was reviewed by someone other than the preparer. In addition, original documents and related support were not maintained by the School Corporation. Cause: There were not sufficient internal controls in place to ensure the Annual Data Report agreed to the underlying fund ledger detail. Effect: The Annual Data Reports could be submitted with incorrect information. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not have a formal review process in place to review the Annual Data Reports that were required to be submitted during the audit period. Original copies of the reports and submission receipts were not maintained and therefore, we were unable to verify the reports were submitted by the required due dates. The Annual Data Report for the period of July 1, 2022 through June 30, 2023 was overstated by $36,297. Management could not provide support for Cross Act total employees reported at 147. Also, management here was a variance of 16 positions for Cross Act positions paid by ESSER. The amount reported was 135 while management’s support detail was 151 positions. Identification as a repeat finding, if applicable: Yes, Finding 2023-005. Recommendation: We recommend management review internal controls around the preparation, review, and submission of the Annual Data Reports to verify accuracy and that support detail is maintained. We recommend someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted and that the School Corporation maintain records to validate the reports were submitted timely. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Finding 2025-008 Assistance Listing Number(s): 93.558 Name of Federal Program or Cluster: Temporary Assistance for Needy Families 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, 2024 through June 30, 2025 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, the organization 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, the organization may be out of compliance with federal reporting requirements and federal agencies may rely on inaccurate financial information for monitoring and funding decisions. Repeat Finding: This finding is a repeat of 2024-005. Recommendation: We recommend the organization 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.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: HIV Prevention Activities: Non-Governmental Organization Based Assistance Listing Number: 93.939 Federal Award Identification Number: NU65PS923746 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Material Weakness in Internal Control over Compliance and Compliance – Reporting Criteria or Specific Requirement: Per 2 CFR §200.302 and §200.328, recipients of federal awards must provide accurate, current, and complete disclosure of financial results of each federally-sponsored project or program in accordance with the reporting requirements of the federal awarding agency. Condition: It was noted that the expenditures reported on the FFR matched the cash receipts for the period rather than the actual expenditures incurred. Questioned Costs: $117,889 Context: During the testing of reporting compliance of the contract during the fiscal year ended 6/30/25, we identified errors in the interim FFR reporting during the period of 4/1/22-9/30/24 for the actual expenditures in the amount of $117,889.20. Cause: The Organization lacked effective internal controls to reconcile actual expenditures incurred within reporting periods. The process relied on estimates and did not include timely reconciliation of actual costs. Effect: This deficiency resulted in noncompliance with federal reporting requirements. It also indicates a reasonable possibility that material noncompliance with federal requirements may not be prevented or detected and corrected on a timely basis. Repeat finding: Yes Recommendation: We recommend that management implement procedures to ensure that expenditures reported on the Federal Financial Report reflect actual costs incurred during the reporting period and are supported by appropriate documentation. Staff responsible for preparing the Federal Financial Report should be trained in federal reporting requirements to ensure compliance. Views of Responsible Officials: There is no disagreement with the audit finding. See Corrective Action Plan.

Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Federal Programs ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds Category U.S. Department of Treasury U.S. Department of Homeland Security Compliance Requirement Activities Allowed/Unallowed, Allowable Costs/Cost Principles, Period of Performance, Project Accounting. Criteria 2 CFR Part 200 Subpart D Subsection 200.302 states the following: The recipient's and subrecipient's financial management system must provide for the following: 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. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 102 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Criteria – (continued) 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. In addition, the 2 CFR Compliance Supplement states the following under Special Test and Provisions – Project Accounting: For large projects, the recipient is required to make an accounting to Federal Emergency Management Agency (FEMA) of eligible costs. Similarly, the subrecipient must make an accounting to the recipient. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, all grant conditions were met, and that payments for that project were made in accordance with the applicable payment provisions. For improved and alternate projects, if the total cost of the projects does not equal or exceed the approved eligible costs, then the auditor should expect to see an adjustment to reduce eligible costs (44 CFR section 206.205). For Small Projects, FEMA does not adjust estimated costs to the actual incurred amount. The Subrecipient must certify that they completed the approved SOW, and the Recipient must certify that they made all payments in accordance with the FEMA-State/Territory/Tribe agreement. This is typically completed on a Small Project Completion Certification. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 103 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Condition During our procedures over the Authority’s funds received from FEMA we noticed the following: 1. Return of interest earned on FEMA-related funds totaling approximately $211,853 was not timely recorded in the general ledger and was subsequently recorded through a post-closing entry dated January 26, 2026. 2. Management initially misclassified approximately $6 million received under the Coronavirus State and Local Fiscal Recovery Funds as state funds rather than federal awards. As a result, the amount was originally excluded from the Schedule of Expenditures of Federal Awards (the Schedule). Cause The condition was caused by the Authority's lack of personnel on the federal funds management office which has been present during prior audit periods, the early retirement program established under Act No. 80 of August 3, 2020 – “Law for Incentivized Retirement Program and Justice for Our Servants” (Act No. 80), and the resignation of some personnel from their occupied position and left the Authority willingly as stated in finding 2025-004 are the main causes for the condition. Effect Inadequate accounting and controls over federal funds can cause incorrect revenue recognition as capital advances are recognized as revenue when used appropriately and not when received. In addition, this can cause amounts to be included on the Schedule incorrectly as some of the activities received as capital advances have not actually occurred. It also creates risk of allocating funds in the incorrect federal awards as some of these have similar uses and assistance listing numbers. Also, the Authority could be subject to penalties or sanctions from the Federal Grantor. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 104 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Context The Authority recognized as federal award revenue of $6 million approximately, as contributions from the Commonwealth of Puerto Rico and therefore were originally not included in the Schedule. Also, $211,853 on the bank accounts where FEMA funds were deposited had to be returned since the funds cannot be deposited in an interest-bearing account. Journal entry recognizing this return was subsequently recorded through a post-closing entry dated January 26, 2026. Identification of repeat finding This is a repeat finding from the immediate previous audit, Finding 2025-006 Questioned costs None as adjustments were made during the audit to correct the misstatement. Recommendation We recommend the Authority’s Federal Funds Management Office (FFMO) and finance department coordinate with the external consultant who handles federal funds received from FEMA to better identify and classify funds received. In addition, we recommend the Authority to address the FFMO personnel limitations by hiring additional personnel for the Authority, re-shifting task between current personnel or by relaying on outsourced third party providers. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan provided on pages 108-114.

Reporting Federal Agency: U.S. Department of Agriculture Federal Program Title: Child Nutrition Cluster (CNC) State Administering Department: California Department of Education ALN: 10.553, 10.555, 10.556, 10.559, 10.582 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 247CACA3N1199; October 1, 2023 – September 30, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient 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). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system 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 in §§ 200.328 and 200.329. (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. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included testing FFATA reporting submissions for 40 subrecipients to evaluate compliance with federal reporting requirements and the design and implementation of internal controls over the FFATA reporting process. Our testing identified that FFATA reports for 40 of the 40 subrecipients were not submitted within the required reporting timeframe. Although the reports were ultimately submitted and the information reported was complete and accurate, the submissions were delayed following the federal government's transition from the FFATA Subaward Reporting System (FSRS.gov) to the SAM.gov Subaward Reporting platform. The transition eliminated the bulk upload functionality previously used by the Department, significantly increasing the manual effort required to complete FFATA reporting while the Department worked to implement the new reporting process. Questioned costs: None Context: See “Condition.” Cause: During fiscal year 2024-25, the U.S. General Services Administration (GSA) transitioned FFATA reporting from FSRS.gov to the SAM.gov Subaward Reporting system. As part of this transition, the bulk upload functionality previously utilized by the Department was not initially available in the new system, significantly increasing the resources needed to prepare and submit FFATA reports. The increased reporting burden, coupled with staffing constraints and technical challenges encountered during implementation of the new reporting platform, contributed to delays in submitting FFATA reports within federally required timeframes. Effect: As a result of the elimination of the bulk upload process, staffing limitations, and implementation challenges associated with the federal reporting system transition, FFATA reports for 40 of 40 subrecipients were not submitted within the federally required reporting deadlines, resulting in noncompliance with FFATA reporting requirements. However, all required reports were ultimately submitted and contained complete and accurate information. Repeat finding: No Recommendation: The Department should evaluate staffing and resource needs associated with FFATA reporting and establish contingency procedures to address significant changes in federal reporting processes. Management should continue to monitor federal system changes, document implementation challenges, and maintain communication with federal agencies when external system limitations affect reporting timeliness. Additionally, the Department should identify and implement process improvements, including available automated reporting solutions and workarounds, to mitigate the impact of future system changes and help ensure FFATA reports are submitted within required timeframes. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.

Reporting Federal Agency: U.S. Department of Agriculture Federal Program Title: Summer Electronic Benefit Transfer Program for Children State Administering Department: California Department of Social Services (CDSS) ALN: 10.646 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 257CDSS7N1175; October 1, 2024 - September 30, 2025 257CDSS6N1803; October 1, 2024 - September 30, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient 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). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system 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 in §§ 200.328 and 200.329. §200.328 Financial reporting (c) 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. (d) The final financial report submitted by the recipient must be due no later than 120 calendar days after the conclusion of the period of performance. A subrecipient must submit a final financial report to a pass-through entity no later than 90 calendar days after the conclusion of the period of performance. Title 7 – Agriculture Subtitle B - Regulations of the Department of Agriculture Chapter II - Food and Nutrition Service, Department of Agriculture Subchapter C - Supplemental Nutrition Assistance and Food Distribution Program Part 274 – Issuance and Use of Program Benefits § 274.1 Issuance system approval standards (a) Basic issuance requirements. State agencies shall establish issuance and accountability systems which ensure that only certified eligible households receive benefits; that Program benefits are timely distributed in the correct amounts; and that benefit issuance and reconciliation activities are properly conducted and accurately reported to FNS. § 274.4 Reconciliation and reporting (c) Required reports. The State agency shall review and submit the following reports to FNS on a monthly basis: (1) Form FNS-46, Issuance Reconciliation Report, shall be submitted by each State agency operating an issuance system. The report shall be prepared at the level of the State agency where the actual reconciliation of posted benefits and the master issuance file occurs. (i) The State agency shall identify and report the number and value of all issuances which do not reconcile with the master issuance file. All unreconciled issuances shall be identified as specified on this reporting document. (ii) The report shall be received by FNS no later than 90 days following the end of the report month. Condition: Audit procedures included a review of 3 FNS-46 reports selected from a population of 12 reports submitted during the audit period to determine whether reports were filed in accordance with federal reporting deadlines. Of the 3 reports tested, 2 were not submitted within the required timeframe. Specifically, the reports were submitted 23 and 38 days after the applicable federal due dates. As a result, the Department did not consistently comply with federal reporting requirements for timely submission of FNS-46 reports. Questioned costs: None Context: See “Condition.” Cause: The Department did not maintain sufficiently precise internal controls to ensure FNS-46 reports were prepared, reviewed, and submitted in accordance with federally established reporting deadlines. Specifically, monitoring and supervisory review procedures were not designed or operating at a level of precision sufficient to identify and correct delays in report preparation and submission before the applicable due dates. As a result, late submissions were not detected and resolved in a timely manner. Effect: Failure to submit FNS-46 reports in a timely manner delays federal oversight of S-EBT issuance activity and increases the risk that reconciliation issues, including improper or unsupported issuances, are not promptly identified and resolved. Continued delays may result in noncompliance with federal reporting requirements and reduce the usefulness of reported information for program oversight. Repeat finding: No Recommendation: We recommend that the Department implement controls to ensure timely submission of FNS-46 reports, including establishing a formal reporting calendar aligned with the 90-day requirement, assigning clear responsibility for report preparation and review, and implementing monitoring procedures to track progress and escalate delays. Controls should operate with sufficient precision to ensure all required reports are completed and submitted within prescribed deadlines. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.

Reporting Federal Agency: U.S. Department of Labor Federal Program Title: Unemployment Insurance State Administering Department: Employment Development Department (EDD) ALN: 17.225 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: UI347022055A6; April 1, 2020 – June 30, 2025 UI387882255A6; April 1, 2022 – May 22, 2025 23A60UR000018; January 1, 2023 – September 30, 2025 23A55UD000003; February 27, 2023 – September 30, 2025 23A60UB000081; April 1, 2023 – May 22, 2025 23A55UD000007; April 27, 2023 – April 26, 2026 24A55UT000026; October 1, 2023 – September 30, 2024 24A60UD000027; February 19, 2024 – February 19, 2027 25A55UE000010; July 1, 2024 – December 31, 2025 25A60UD000072; January 8, 2025 – January 8, 2028 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient 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). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system 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 in §§ 200.328 and 200.329. (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. Subtitle B – Federal Agency Regulations for Grants and Agreements Chapter XXIX – Department of Labor Part 2900 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart D – Post Federal Award Requirements § 2900.14 – Financial reporting In addition to the guidance set forth in 2 CFR 200.328, for Federal awards from the Department of Labor, the DOL awarding agency will prescribe whether the report will be on a cash or an accrual basis. If the DOL awarding agency requires reporting on an accrual basis and the recipient's accounting system is not on the accrual basis, the recipient will not be required to convert its accounting system, but must develop and report such accrual information through best estimates based on an analysis of the documentation on hand. ETA-9130 Reporting Requirements 1) Submission of the ETA-9130 is required on a quarterly basis. Reporting quarter end dates shall correspond to the following calendar quarter end dates: March 31, June 30, September 30, and December 31. A final quarter ETA-9130 is required at the completion of the quarter, encompassing the grant award end date, or at the completion of the quarter in which all funds have been expended, whichever comes first. 2) Quarterly reports, including the final quarter report, are required to be submitted no later than 45 calendar days after the end of each specified reporting period. The reporting due dates are: May 15, August 15, November 15, and February 15. The deadlines for ETA-9130 submissions do not change, even in instances when the reporting due date falls on a weekend or holiday. The e-reporting system is available 24 hours a day, 7 days a week, and reports can be submitted in advance of the due date. 3) All financial data is required to be reported cumulative from grant inception, through the end of each reporting period. Expenditure data is required to be reported on an accrual basis. 4) A separate ETA-9130 is required for each program and each fund source (subaccount) awarded to a grant recipient. 5) All sections of the report must be completed unless otherwise noted in the grant agreement Condition: Audit procedures included a review of the entire population of Form 9130 reports for administrative expenses, consisting of 22 reports. Our testing identified that certain reported amounts did not agree to the underlying general ledger for 12 reports, resulting in a total variance of $32,843,139. Additionally, audit procedures identified that internal controls over reporting were not operating effectively to ensure the timely and accurate submission of reports. Specifically, six reports were not submitted by the required due dates, and 12 reports contained inaccuracies at the time of submission, and controls were not performed with sufficient precision to verify that reported information was complete and accurate in accordance with federal reporting requirements. Questioned costs: None Context: See “Condition.” Cause: The controls over the preparation and review of Form 9130 reports that were not performed with sufficient precision to identify and resolve discrepancies between reported amounts and the underlying general ledger. Specifically, controls were not designed or operating at a level precise enough to ensure that reported data was accurate, reconciled, and submitted in a timely manner in accordance with federal requirements. As a result, variances and reporting errors were not detected or corrected prior to submission. Effect: The lack of a robust and thorough reconciliation process between Form 9130 reports and the Administrative Fund (870) general ledger may lead to inaccurate reporting. Repeat finding: Yes – 2024-003 Recommendation: Management should establish a formal reconciliation process to ensure that Form 9130 administrative expense reports align with the general ledger. This process should include assigning responsibility to a designated finance team member for performing and documenting reconciliations, implementing a monthly reconciliation schedule, and promptly investigating and resolving any variances with documented approvals. Additionally, financial reporting policies should be updated to incorporate reconciliation requirements, and staff should receive training on compliance and reconciliation procedures to strengthen internal controls and reduce the risk of reporting inaccuracies. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.

Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Aging Cluster State Administering Department: California Department of Aging ALN: 93.044, 93.045, 93.053 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2401CAOACM; October 1, 2023 – September 30, 2025 2401CAOAHD; October 1, 2023 – September 30, 2025 2401CAOANS; October 1, 2023 – September 30, 2025 2401CAOASS; October 1, 2023 – September 30, 2025 2501CAOACM; October 1, 2024 – September 30, 2026 2501CAOAHD; October 1, 2024 – September 30, 2026 2501CAOANS; October 1, 2024 – September 30, 2026 2501CAOASS; October 1, 2024 – September 30, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient 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). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system 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 in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included a review of 60 FFATA reporting submissions associated with subrecipients. During this review, we assessed compliance with federal reporting requirements and evaluated the adequacy of internal controls over the FFATA reporting process. Of the 60 subrecipients examined, we identified that FFATA reporting was not performed timely for 31 subrecipients. Additionally, audit procedures further determined that reporting was only being performed once annually for all sampled subrecipients, rather than on an ongoing basis as required. The department lacked documented procedures and monitoring mechanisms to ensure timely and accurate reporting, including verification that subrecipient data was submitted in accordance with federal requirements. Questioned costs: None Context: See “Condition.” Cause: Procedures to perform the required FFATA reporting were not established by the Department. The absence of documented policies, assigned responsibilities, and monitoring mechanisms create an environment which may result in noncompliance with federal reporting. Effect: The lack of established procedures and internal controls for FFATA reporting resulted in noncompliance, with 31 out of 60 subrecipients not reported timely as required. Repeat finding: Yes, 2024-013 Recommendation: The Department should implement a robust process and related internal controls to ensure timely and accurate FFATA reporting. These controls should include developing written policies and procedures that outline the steps for collecting subrecipient data, preparing reports, and submitting them within required timelines; assigning accountability by designating specific personnel responsible for compliance; and implementing a monitoring and review process to verify completion and accuracy of reporting. Additionally, training programs should be established to ensure staff understand reporting requirements, and automated tracking tools or checklists should be utilized to provide transparency and reduce the risk of missed submissions. By introducing these internal controls, the Department can strengthen its compliance framework, mitigate the risk of federal funding repercussions, and enhance overall operational integrity. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.

Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for ProgramInfectious Diseases (ELC) State Administering Department: California Department of Public Health ALN: 93.323 Pass-Through Agency: Heluna Health Pass-Through Number(s): 95-2557063 Award Number and Period: NU50CK000539; August 1, 2019 – July 31, 2027 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient 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). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system 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 in §§ 200.328 and 200.329. (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. § 200.332 – Requirements for pass-though entities A pass-through entity must: (b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes: (1) Federal award identification. (i) Subrecipient's name (must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated in the subaward; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414). Condition: Audit procedures included a review of eleven subrecipient agreements to determine whether the pass-through entity included the information required to be communicated to subrecipients in accordance with Uniform Guidance. Of the eleven agreements tested, all eleven (100%) did not contain one or more required federal award identification elements. Specifically, the agreements omitted the subrecipient’s Unique Entity Identifier (UEI), the Federal Award Identification Number (FAIN), the Federal award date, the applicable Assistance Listing Number (ALN), identification of whether the award was designated as research and development (R&D), and the applicable indirect cost rate for the federal award, including whether the de minimis indirect cost rate authorized under 2 CFR §200.414 was being used. As a result, the subrecipient agreements did not include all information required to be provided to subrecipients under 2 CFR §200.332(b). Questioned costs: None Context: See “Condition.” Cause: Controls designed to ensure the inclusion of all federally required award identification information in subrecipient agreements were not operating with sufficient precision to identify and prevent the omission of required elements prior to execution of the agreements. As a result, agreements were issued without all information required under 2 CFR §200.332(b), including the UEI, FAIN, Federal award date, ALN, identification of whether the award was designated as R&D, and the applicable indirect cost rate. Effect: The omission of required federal award information from subrecipient agreements may limit subrecipients' understanding of applicable federal award requirements and increase the risk of noncompliance with federal regulations. Incomplete award information may also result in inaccurate or inconsistent administration, monitoring, and reporting of federal awards by subrecipients and the pass-through entity. Repeat finding: Yes – 2024-009 Recommendation: Public Health should ensure every subaward includes all requirements imposed on the subrecipient so that the federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the federal award. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.

Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Foster Care Title IV-E State Administering Department: California Department of Social Services (CDSS) ALN: 93.658 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2501CAFOST; October 1, 2024- September 30, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient 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). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system 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 in §§ 200.328 and 200.329. (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. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included a review of the entire population of 58 FFATA subaward submissions for the Foster Care program reported in SAM.gov during the year ended June 30, 2025, and a comparison of those submissions to the related funding actions. Testing identified that all 58 subawards, representing 100 percent of the population, were reported after the required reporting deadline. Based on inquiry and review of supporting documentation, CDSS prepared and submitted the FFATA reporting file; however, certain submitted records were rejected by the reporting system and required correction and resubmission. Because the submission and review process was performed too close to the applicable reporting deadline, there was insufficient time to identify, resolve, and successfully resubmit the rejected records before the deadline. As a result, FFATA subaward information was not reported within the timeframe required by federal reporting requirements. The results of testing indicate that controls over FFATA reporting did not operate with sufficient precision to ensure submitted records were timely reviewed, validated, and accepted prior to applicable reporting deadlines. Accordingly, FFATA reporting was not consistently completed in a timely manner in accordance with federal requirements. Questioned costs: None Context: See “Condition.” Cause: CDSS did not maintain controls over the FFATA reporting process that operated with sufficient precision to ensure subaward submissions were completed, validated, and accepted before applicable federal reporting deadlines. Specifically, FFATA reports were submitted too near the reporting deadline to allow sufficient time to identify, investigate, and correct rejected submissions. In addition, CDSS did not have monitoring procedures to review submission status, follow up on system-generated rejection notices, and verify that all submitted records had been successfully accepted in SAM.gov before the reporting deadline. As a result, submission errors were not resolved timely, resulting in late reporting of all reportable subawards. Effect: Untimely reporting reduced the timeliness, transparency, and reliability of publicly available federal spending information and limited the ability of federal agencies, oversight bodies, and the public to promptly monitor the distribution of federal funds to subrecipients. In addition, the lack of controls to timely identify and resolve rejected submissions increases the risk that future FFATA reporting deadlines may not be met. Repeat finding: No Recommendation: We recommend that CDSS strengthen its department-wide controls over FFATA reporting to ensure reportable subawards are identified, reviewed, and submitted within required federal reporting deadlines. Specifically, CDSS should establish and implement centralized procedures to track subaward actions, amendments, allocation changes, and other reportable funding events; monitor applicable FFATA reporting deadlines; and maintain documentation demonstrating that reportable subawards have been evaluated and reported timely. In addition, CDSS should implement review controls that operate with sufficient precision to verify that all reportable subawards have been identified, reporting deadlines have been met, and FFATA submissions are complete, accurate, and supported by underlying award documentation prior to submission in SAM.gov. These procedures should include documented supervisory review, reconciliation of reportable subaward activity to source documentation, and periodic monitoring to identify and resolve untimely or omitted submissions. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report. Response to views of responsible officials: We acknowledge CDSS's position that an initial FFATA submission was made on November 27, 2024, and that only two records required correction and resubmission. However, CDSS did not provide sufficient documentation to support the asserted November 27 submission date, such as submission confirmations, systemgenerated reports, audit logs, or other contemporaneous evidence demonstrating that the subaward information was successfully submitted before the reporting deadline. The audit evidence available for inspection reflected a submission date after the required deadline for all 58 Foster Care subawards. Although CDSS indicated that only two records failed during the original upload process, documentation supporting that assertion and the cause of the upload failure was not provided for audit review. Accordingly, based on the evidence available, we were unable to verify that FFATA reporting requirements were met by the applicable deadline. Therefore, we continue to conclude that the finding is valid as presented.

Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Child Care and Development Block Grant/Child Care Mandatory and Matching Funds of the Child Care and Development Fund State Administering Department: California Department of Social Services (CDSS) ALN: 93.575, 93.596 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2101CACDC6; October 1, 2020 – September 30, 2024 2334CACCDD; October 1, 2022 – September 30, 2025 2334CACCDF; October 1, 2022 – September 30, 2025 2334CACCDM; October 1, 2022 – September 30, 2025 2434CACCDD; October 1, 2023 – September 30, 2026 2434CACCDF; October 1, 2023 – September 30, 2026 2434CACCDM; October 1, 2023 – September 30, 2025 2534CACCDD; October 1, 2024 – September 30, 2027 2534CACCDF; October 1, 2024 – September 30, 2027 2534CACCDM; October 1, 2024 – September 30, 2026 2534CACCDY; December 21, 2024 – September 30, 2028 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Complianceand Material Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient 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). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system 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 in §§ 200.328 and 200.329. (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. §200.328 Financial reporting (c) 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. (d) The final financial report submitted by the recipient must be due no later than 120 calendar days after the conclusion of the period of performance. A subrecipient must submit a final financial report to a pass-through entity no later than 90 calendar days after the conclusion of the period of performance. § 200.329 Monitoring and reporting program performance (a) Monitoring by the recipient and subrecipient The recipient and subrecipient are responsible for the oversight of the Federal award. The recipient and subrecipient must monitor their activities under Federal awards to ensure they are compliant with all requirements and meeting performance expectations. Monitoring by the recipient and subrecipient must cover each program, function, or activity. See also § 200.332. Title 45 – Public Welfare Subtitle A – Department of Health and Human Services Subchapter A – General Administration Part 98 – Child Care and Development Fund Subpart G – Financial Management § 98.60 – Availability of funds (d) The following obligation and liquidation provisions apply to States and Territories: (1) Discretionary Fund allotments shall be obligated in the fiscal year in which funds are awarded or in the succeeding fiscal year. Unliquidated obligations as of the end of the succeeding fiscal year shall be liquidated within one year. (2)(i) Mandatory Funds for States requesting Matching Funds per § 98.55 shall be obligated in the fiscal year in which the funds are granted and are available until expended. (4) Both the Federal and non-Federal share of the Matching Fund shall be obligated in the fiscal year in which the funds are granted and liquidated no later than the end of the succeeding fiscal year. (5) Determination of whether funds have been obligated and liquidated will be based on State or local law or, if there is no applicable State or local law, the regulation at 2 CFR 200.1, Expenditures and Obligations. § 98.65 Audits and financial reporting (a) Each Lead Agency shall have an audit conducted after the close of each program period in accordance with 2 CFR part 200, subpart F, and the Single Audit Act Amendments of 1996. (b) Lead Agencies are responsible for ensuring that subgrantees are audited in accordance with appropriate audit requirements. (c) Not later than 30 days after the completion of the audit, Lead Agencies shall submit a copy of their audit report to the legislature of the State or, if applicable, to the Tribal Council(s). Lead Agencies shall also submit a copy of their audit report to the HHS Inspector General for Audit Services, as well as to their cognizant agency, if applicable. (d) Any amounts determined through an audit not to have been expended in accordance with these statutory or regulatory provisions, or with the Plan, and that are subsequently disallowed by the Department shall be repaid to the Federal government, or the Secretary will offset such amounts against any other CCDF funds to which the Lead Agency is or may be entitled. (e) Lead Agencies shall provide access to appropriate books, documents, papers and records to allow the Secretary to verify that CCDF funds have been expended in accordance with the statutory and regulatory requirements of the program, and with the Plan. (f) The audit required in paragraph (a) of this section shall be conducted by an agency that is independent of the State, Territory or Tribe as defined by generally accepted government auditing standards issued by the Comptroller General, or a public accountant who meets such independent standards. (g) Lead Agencies shall submit financial reports, in a manner specified by ACF, quarterly for each fiscal year until funds are expended. (h) At a minimum, a State or territorial Lead Agency's quarterly report shall include the following information on expenditures under CCDF grant funds, including Discretionary (which includes realloted funding and any funds transferred from the TANF block grant), Mandatory, and Matching Funds (which includes redistributed funding); and State Matching and Maintenance-of- Effort (MOE) Funds: (1) Child care administration; (2) Quality activities, including any sub-categories of quality activities as required by ACF; (3) Direct services for both grant or contracted slots and certificates; (4) Non-direct services, including: (i) Establishment and maintenance of computerized child care information systems; (ii) Certificate program cost/eligibility determination; (iii) All other non-direct services; and (5) Such other information as specified by the Secretary. § 98.67 – Fiscal requirements (c) Fiscal control and accounting procedures shall be sufficient to permit: (1) Preparation of reports required by the Secretary under this subpart and under subpart H; and (2) The tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the provisions of this part. Condition: Audit procedures included a review of the entire population of ACF-696 financial reports submitted for the CCDF Cluster. Our testing identified that certain reported amounts did not agree or reconcile to the underlying general ledger, resulting in a total variance of $491,119,535. Additionally, audit procedures identified that internal controls over reporting were not operating effectively to ensure the accurate submission of reports. Specifically, certain reports contained inaccuracies at the time of submission, and controls were not performed with sufficient precision to verify that reported information was complete and accurate in accordance with federal reporting requirements. Questioned costs: None Context: See “Condition.” Cause: The controls over the preparation and review of ACF-696 reports were not performed with sufficient precision to identify and resolve discrepancies between reported amounts and the underlying general ledger. Specifically, controls were not designed or operating at a level precise enough to ensure that reported data was accurate, reconciled, and submitted in a timely manner in accordance with federal requirements. As a result, variances and reporting errors were not detected or corrected prior to submission. Effect: Without a documented reconciliation between the ACF-696 reports and the general ledger, the Department cannot demonstrate that reported expenditures were accurate, complete, and supported by accounting records. This increases the risk that expenditures, obligations, liquidations, unobligated balances, or expenditure categories reported to ACF may be misstated. Inaccurate ACF-696 reporting may affect ACF’s ability to monitor compliance with CCDF spending, obligation, liquidation, and availability requirements. Repeat finding: Yes – 2024-015 Recommendation: Management should establish a formal reconciliation process to ensure that ACF-696 expense reports align with the general ledger. This process should include assigning responsibility to a designated finance team member for performing and documenting reconciliations, implementing a monthly reconciliation schedule, and promptly investigating and resolving any variances with documented approvals. Additionally, financial reporting policies should be updated to incorporate reconciliation requirements, and staff should receive training on compliance and reconciliation procedures to strengthen internal controls and reduce the risk of reporting inaccuracies. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report. Response to views of responsible officials: We acknowledge management's explanation that variances between the ACF-696 reports and the general ledger resulted from timing differences associated with subsequent cost allocations, accruals, and other adjustments. However, the issue identified during the audit was not the existence of timing differences, but that the reconciliation process did not adequately identify, explain, and support significant variances. Audit testing identified unreconciled variances totaling $491,119,535 between the ACF-696 reports and the general ledger. Although management indicated that adjustments were reported in subsequent quarters, documentation supporting a complete and accurate reconciliation was not available at the time of report preparation and submission. As a result, controls did not operate with sufficient precision to ensure reported amounts were accurate, complete, and supported by the Department's accounting records. Accordingly, we continue to conclude that the finding is valid as presented. We appreciate management's planned corrective actions to formalize the reconciliation process and strengthen oversight of ACF-696 reporting.

Reporting Federal Agency: U.S. Department of Health and Human ServicesFederal Program Title: Child Care and Development Block Grant/Child Care Mandatory and Matching Funds of the Child Care and Development Fund State Administering Department: California Department of Social Services (CDSS) ALN: 93.575, 93.596 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2534CACCDD; October 1, 2024 – September 30, 2027 2534CACCDF; October 1, 2024 – September 30, 2027 2534CACCDM; October 1, 2024 – September 30, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient 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). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system 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 in §§ 200.328 and 200.329. (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. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included a review of 60 FFATA subaward submissions for the CCDF Cluster reported in SAM.gov and a comparison of those submissions to underlying agreements and funding allocations applicable to FY 2024–25. Our testing identified that CDSS did not consistently perform or retain a documented evaluation of whether agreements constituted subawards or procurement contracts in accordance with 2 CFR § 200.331 prior to FFATA reporting. FFATA submissions did not align with the timing and structure of funding communicated through Child Care Bulletins, including allocation amendments and contract modifications, and all submissions tested contained errors in key data elements, including subrecipient identification and linkage to the prime award. In addition, CDSS included agreements in FFATA reporting without documented support that the substance of the relationship met the definition of a subaward, while agreements with subaward characteristics were not consistently identified and reported, resulting in reported amounts that did not consistently reflect underlying funding actions. Accordingly, controls over FFATA reporting were not performed with sufficient precision to ensure that agreements were appropriately classified and that reported information was complete and accurate in accordance with federal reporting requirements. Questioned costs: None Context: See “Condition.” Cause: The condition occurred because CDSS has not established an effective, centralized process to identify, evaluate, track, and report first-tier subawards subject to FFATA across its federal programs. CDSS did not maintain a complete reporting workflow that links funding actions, allocation amendments, agreement modifications, subrecipient classifications, and SAM.gov reporting deadlines. As a result, FFATA reporting relied on manual program-level processes that did not consistently ensure reportable subawards were identified, supported, reviewed, and submitted by the required deadline. Effect: Failure to timely and accurately report FFATA subaward information results in noncompliance with federal reporting requirements and reduces the transparency and reliability of publicly available federal spending data. Late, incomplete, or inaccurate reporting limits the ability of federal agencies, oversight bodies, and the public to determine how federal funds were passed through to subrecipients. Because similar FFATA deficiencies were identified across multiple CDSS-administered programs, there is an increased risk that reporting errors may continue or affect other federal programs unless CDSS implements a department-wide corrective action. Repeat finding: Yes – 2024-014 Recommendation: We recommend that CDSS revise its department-wide FFATA reporting procedures to address errors resulting from reliance on manual tracking, decentralized spreadsheets, and program-level processes that do not consistently capture funding actions, allocation amendments, agreement modifications, reporting deadlines, and SAM.gov submission status. Revised procedures should require program-specific review of each federal program’s funding structure and supporting documentation to determine whether agreements, allocations, amendments, or other funding actions are reportable subawards or procurement contracts, and whether new or updated FFATA reporting is required. CDSS should also require documented review before submission to verify that reported subrecipient information, award amounts, Assistance Listing numbers, prime award linkages, and reporting dates agree to underlying award documents, allocation letters, amendments, and agreements. These controls should help ensure FFATA submissions are accurate, timely, supported, and aligned with the unique funding structure of each CDSS-administered federal program. CDSS should consider utilizing a grant management solution to manage the full grant lifecycle more efficiently and ensure compliance with federal reporting requirements. The solution should support centralized tracking of awards, subawards, amendments, reporting deadlines, supporting documentation, review responsibilities, automated reminders, and submission status. This would reduce reliance on manual tracking and decentralized spreadsheets, improve accountability over responsible personnel, and strengthen CDSS’s ability to complete FFATA reporting accurately and timely. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.

Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Social Services Block Grant State Administering Department: California Department of Social Services (CDSS) ALN: 93.667 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2501CASOSR; October 1, 2024 - September 30, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient 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). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system 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 in §§ 200.328 and 200.329. (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. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included a review of FFATA subaward submissions for the Social Services Block Grant reported in SAM.gov and a comparison of those submissions to funding actions applicable to FY 2024–25. Our testing identified that no subawards were reported within the required timeframe. Questioned costs: None Context: See “Condition.” Cause: The condition occurred because CDSS has not established an effective, centralized process to identify, evaluate, track, and report first-tier subawards subject to FFATA across its federal programs. CDSS did not maintain a complete reporting workflow that links funding actions, allocation amendments, agreement modifications, subrecipient classifications, and SAM.gov reporting deadlines. As a result, FFATA reporting relied on manual program-level processes that did not consistently ensure reportable subawards were identified, supported, reviewed, and submitted by the required deadline. Effect: Failure to timely and accurately report FFATA subaward information results in noncompliance with federal reporting requirements and reduces the transparency and reliability of publicly available federal spending data. Late, incomplete, or inaccurate reporting limits the ability of federal agencies, oversight bodies, and the public to determine how federal funds were passed through to subrecipients. Because similar FFATA deficiencies were identified across multiple CDSS-administered programs, there is an increased risk that reporting errors may continue or affect other federal programs unless CDSS implements a department-wide corrective action. Repeat finding: No Recommendation: We recommend that CDSS revise its department-wide FFATA reporting procedures to address errors resulting from reliance on manual tracking, decentralized spreadsheets, and program-level processes that do not consistently capture funding actions, allocation amendments, agreement modifications, reporting deadlines, and SAM.gov submission status. Revised procedures should require program-specific review of each federal program’s funding structure and supporting documentation to determine whether agreements, allocations, amendments, or other funding actions are reportable subawards or procurement contracts, and whether new or updated FFATA reporting is required. CDSS should also require documented review before submission to verify that reported subrecipient information, award amounts, Assistance Listing numbers, prime award linkages, and reporting dates agree to underlying award documents, allocation letters, amendments, and agreements. These controls should help ensure FFATA submissions are accurate, timely, supported, and aligned with the unique funding structure of each CDSS-administered federal program. CDSS should consider utilizing a grant management solution to manage the full grant lifecycle more efficiently and ensure compliance with federal reporting requirements. The solution should support centralized tracking of awards, subawards, amendments, reporting deadlines, supporting documentation, review responsibilities, automated reminders, and submission status. This would reduce reliance on manual tracking and decentralized spreadsheets, improve accountability over responsible personnel, and strengthen CDSS’s ability to complete FFATA reporting accurately and timely. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.

Reporting Federal Agency: Federal Emergency Management Agency Federal Program Title: Disaster Grants - Public Assistance State Administering Department: Governor’s Office of Emergency Services ALN: 97.036 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 4407DRCAP00000001; November 12, 2018 – September 30, 2022 4431DRCAP00000001; May 1, 2019 – September 30, 2022 4482DRCAP00000001; January 20, 2020 – September 30, 2025 4558DRCAP00000001; August 24, 2021 – September 30, 2025 4683DRCAP00000001; December 27, 2022 – September 30, 2025 4699DRCAP00000001; April 3, 2023 – September 30, 2025 4750DRCAP00000001; August 19, 2023 – September 30, 2025 4769DRCAP00000001; January 31, 2024 – September 30, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient 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). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system 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 in §§ 200.328 and 200.329. (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. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included testing 60 FFATA reporting submissions related to subrecipients to evaluate compliance with federal reporting requirements and the design and implementation of internal controls over the FFATA reporting process. Our testing identified that FFATA reports for 36 of the 60 subrecipients were not submitted timely in accordance with federal requirements. While the reports were ultimately complete and accurate, controls over the reporting process were not performed with sufficient precision to ensure timely submission. Questioned costs: None Context: See “Condition.” Cause: During the fiscal year, the Department revised its procedures for performing FFATA reporting; however, the updated procedures and related controls were not consistently implemented across all subrecipient reporting activities. As a result, certain reports were processed outside of the revised control framework, contributing to delays in timely submission. Effect: The lack of established procedures and internal controls for FFATA reporting resulted in noncompliance, with 36 out of 60 subrecipients not reported timely as required. Repeat finding: Yes – 2024-020 Recommendation: The Department should strengthen controls over FFATA reporting by ensuring that revised procedures are fully implemented and consistently applied to all subrecipient reporting activities. This should include establishing clear protocols to identify all reports subject to FFATA requirements, monitoring compliance with reporting deadlines, and performing periodic reviews to verify that controls are operating with sufficient precision to ensure timely submission. Additionally, the Department should provide training and communication to relevant personnel on updated procedures and implement supervisory review controls to detect and remediate untimely filings. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.

Classification: Material Weakness in Internal Control Over Compliance/Instance of Noncompliance Federal Awarding Agency: U.S. Department of Commerce Federal Program: Investments for Public Works and Economic Development Facilities Assistance Listings Number (ALN): 11.300 Federal Award Number and Year: 01-01-15333 (2022) Repeat Finding: No Statistically Valid Sample: No (Sample size: 0 reports tested; Universe size: 2 reports required) Subject: Failure to File Required Semi-Annual SF-425 Reports Criteria: In accordance with 2 CFR Section 200.328 and the specific grant award terms and conditions, grant recipients must monitor their federally sponsored activities to ensure compliance with applicable federal requirements. The grant agreement mandates the submission of a Standard Form 425 (SF-425) Federal Financial Report on a semi-annual basis. These reports are due no later than 30 calendar days after the end of each semi-annual reporting period. Condition: The Town did not submit any of the required semi-annual SF-425 Federal Financial Reports for the reporting periods ending September 30, 2024, and March 31, 2025. Out of a total universe of 2 required financial reports for the fiscal year, 0 were filed or available for testing. Cause: The failure to submit the reports was caused by a lack of internal controls and assigned staff oversight regarding grant reporting requirements. Effect: The Town is in non-compliance with federal reporting guidelines under Uniform Guidance. Failing to submit required financial reports prevents the federal awarding agency from monitoring the financial progress of the award. This can lead to a suspension of grant drawdowns or a withholding of future federal funding allocations. Questioned Costs: None noted. No unallowable expenditures were identified during testing but the necessary administrative transparency was compromised. Recommendation: We recommend that the Town implement a formalized grant tracking system that records all key filing deadlines upon award acceptance. Management should explicitly assign the responsibility of preparing, reviewing, and submitting the SF-425 reports to specific personnel within the Finance Department to ensure timely reporting compliance moving forward.

Criteria: Under the terms and conditions of the CARES Act Coronavirus Relief Fund awards and federal reporting guidelines (2 CFR 200.328 / 2 CFR 200.329), non-federal entities are required to submit quarterly financial and performance reports within ten days following the end of each reporting quarter. Additionally, the Cash on Hand quarterly reports must be submitted within thirty days after each quarter-end. Condition: During our audit of the County’s CARES Act funds for the fiscal year, we noted the required quarterly compliance and reporting submissions were not filed. Additionally, two Cash on Hand quarterly reports were not submitted within 30 days of the end of the quarter. Context: See above condition. Cause: Management oversight. Effect: The County was not in compliance with reporting requirements. Recommendation: We recommend that the County establish procedures to ensure proper reporting in a timely manner. Views of Responsible Official and Planned Corrective Action: We concur. We will establish procedures to ensure timely submission of all required reports.

Federal Program: ALN 93.575 Child Care and Development Block Grant (CCDBG) Category: Compliance/Internal control significant deficiency Compliance requirement: Reporting Criteria: In accordance with 2 CFR § 200.328, “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. For the ALN 93.575 and in accordance with clause 9.1 J of the agreement with the awarding agency, requirements for processing subsequent fund requests establish that such requests must be submitted during the first fifteen (15) calendar days of each quarter that includes the fund request (CC-004); prior quarter cumulative expense report (CC-003); list of outstanding obligations; certified payroll (with full employee names) for reported months; and bank reconciliations (CC-005) with statements, copies of checks, and invoices for expenses ≥ $100. Although the 2 CFR § 200.328 allows up to 30 days for submission, the subaward agreement establishes a more restrictive deadline of 15 calendar days, which governs compliance for BGCPR. Condition: Quarterly reports were not submitted in a timely manner. Context: Two (2) of the four (4) quarterly reports were not submitted in a timely manner. Cause: BGCPR did not have available financial information necessary to complete the reports on a timely matter Effect or potential effect: The reports being submitted late and non-compliance with reporting requirements. Recommendation: We recommend that BGCPR enhance onboarding and transition procedures for key personnel, including formal training, documented reporting processes, and automated deadline tracking, to ensure timely submission of required reports Views of officials responsible: We recognize that due to the volume of report and transaction, these two reports were not issued as required. Steps have been taken to avoid this situation happening in the future, which includes preparing schedule reports, establishing datelines and hiring additional finance personnel to work with the required reports. Anticipated completion date: September 30, 2026

Federal Program: ALN 93.600-Head Start Category: Compliance/Internal control significant deficiency Compliance Requirement: Reporting Criteria: In accordance with 2 CFR §§ 200.328(c) and 200.329(a), recipients are required to submit reports required by the Federal award within the prescribed timeframes and maintain adequate monitoring procedures to ensure compliance with all applicable Federal requirements. In accordance with 45 CFR § 75.343, non-Federal entities are required to submit reports at least annually on the status of real property in which the Federal Government retains an interest. Accordingly, Head Start grantees, including those with no covered real property to report, are required to submit the SF-429 Real Property Status Report and SF-429 Attachment A annually by the due date. Condition: The SF-429 Real Property Status Report was not submitted within the required due date. Cause: Turnover of key personnel responsible for preparing and/or reviewing the report. Questioned cost: No real property was included under the Head Start award 02CH012049; therefore, no questioned costs were identified. Effect or potential effect: The reports being submitted late and in non-compliance with reporting requirements. Recommendation: We recommend that BGCPR enhance onboarding and transition procedures for key personnel, including formal training, documented reporting processes, and automated deadline tracking, to ensure timely submission of required reports Views of officials responsible: Due to the BCPR’s transition period, the reports were submitted late. After the new Finance Director started in June 25, 2025. On January 30, 2026, we received system access, all reports were submitted on February 4, 2026. This matter was presented in the most recent focus Area II monitoring by the Agency, with no complaints noted. We will request additional system access for reporting purposes in case the person responsible is unavailable. Anticipated completion date: September 30, 2026

Criteria: GLIDE’s award terms for Federal Award No. CE1HS52473 required submission of an annual Federal Financial Report (FFR/SF-425) within 90 calendar days after the end of the budget period. This requirement is consistent with 45 CFR 75.302(a)(2), 75.303, and 75.341 (current 2 CFR 200.302(b)(2), 200.303, and 200.328), which require financial management systems and internal controls sufficient to permit accurate, current, and complete reporting and timely submission of required federal financial reports in accordance with award terms. Condition: For the budget period ended September 29, 2024, the annual FFR was due December 28, 2024. Management submitted the report on January 30, 2025, which was 33 days after the due date Questioned Costs: There were no questioned costs identified. Context: The exception related to the annual FFR tested for this direct HHS award and indicates that report due dates were not effectively tracked and monitored for timely submission. Cause: Controls over tracking award-specific reporting deadlines, preparing the annual FFR, and ensuring timely management review and submission were not operating effectively. Effect: Late submission of required financial reports constitutes noncompliance with award terms and increases the risk of delayed grantor monitoring, delayed payment processing, or other follow-up by the awarding agency. Recommendation: Establish a reporting calendar by award and budget period, assign responsibility for preparation and review of each FFR, require documented supervisory review before submission, and retain evidence of submission and any approved extensions. Repeat finding: This is not a repeat finding.

Finding 2025-022 Federal Program Name Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs (COVID-19) Federal Awarding Agency U.S. Department of Transportation State Agency Montana Department of Transportation (department) ALN # 20.106 Grant # 3-30-0000-016-2020, 3-30-0000-019-2022, 3-30-0000-020-2024, 3-30-0050-009-2021, 3-30-0050-010-2021, 3-30-0050-011-2022, 3-30-0050-012-2024, 3-30-0082-022-2021, 3-30-0082-024-2021, 3-30-0082-026-2022, 3-30-0082-027-2022, 3-30-0082-028-2022, 3-30-0082-029-2023, 3-30-0082-030-2023, 3-30-0082-031-2023, 3-30-0082-032-2024, 3-30-0082-033-2025, 3-30-0082-034-2025 Compliance Requirement L. Reporting Type of Finding Material Weakness and Material Noncompliance Questioned Costs No questioned costs identified Criteria: Federal regulation, 2 CFR 200.328, requires grant recipients to submit financial reports as stipulated in the terms and conditions of the federal award. The terms and conditions of Airport Improvement Program (AIP) grants require annual submission of SF-270 and SF-425 financial reports. Federal Aviation Administration (FAA) instructions for completing the SF-425 require that negative cash on hand be reported when a grant recipient has incurred eligible expenses in excess of reimbursements. If positive cash on hand is reported, the grant recipient must return the excess funds. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Department controls were insufficient to ensure financial reports were completed accurately, resulting in misreported financial information. Context: The department prepares SF-270 and SF-425 reports annually for each AIP grant, as required by grant terms and conditions. Both reports are prepared at the same time using the same financial data and are reviewed and certified by an accounting supervisor. During planning, auditors found that the department had transposed the cash receipts and cash disbursements lines on the SF-425, causing positive cash on hand to be reported. Because the department operates the Airport Improvement Program on a reimbursement basis, all cash is disbursed before FAA reimbursement is received. The department does not draw cash in advance of expenditures and should never report positive cash on hand. Auditors conducted a nonstatistical random sample of grant financial reports. Of the 18 grants requiring SF-270 and SF-425 reports during the audit period, auditors tested three and found multiple errors in two of them: • The state share of expenditures was reported as zero, even though the actual federal share was less than 100%, misstating multiple lines on both reports. • For one report, total expenditures were not supported by documentation. Effect: These reporting errors misrepresent the department's financial management of grant funds and reduce the FAA's ability to oversee their use. The transposition caused the SF-425 to show positive cash on hand, signaling to the FAA that the department held excess funds and owed a return, even though no excess funds existed. Across the reports reviewed, cash on hand was reported at amounts ranging from approximately $2,000 to $2 million. Cause: Neither the preparer nor the reviewer understood what each report line required. Report line names alone do not always make the required inputs clear, leading to incorrect entries. Recommendation: We recommend that the Montana Department of Transportation: A. Strengthen internal controls to ensure federal financial data is reported accurately. B. Work with the Federal Aviation Administration to clarify the required information for each SF-270 and SF-425 report line. C. Accurately report financial information on the SF-270 and SF-425 as required by the Federal Aviation Administration. Views of Responsible Officials: The department concurs with this recommendation. For additional information regarding the department’s planned corrective action see the Corrective Action Plan starting on page D-1.

FEDERAL PROGRAM: 10.582, 10.553, 10.555 Child Nutrition Cluster CONDITION: The District submitted monthly child nutrition reimbursement claims that contained inaccurate meal counts for multiple months during the fiscal year. Specifically, the District understated reimbursable meal counts due to errors in excluding reimbursable meals served. Additionally, the District was unable to provide supporting documentation for several months of reimbursement claims. CRITERIA: Management is responsible for ensuring reporting meets the Reporting Principles as required by 2 CFR §200.302, §200.328 and program regulations, where information reported is complete, accurate and timely. Monthly claim reports submitted through the state reporting system must accurately reflect reimbursable meals served. EFFECT: While the reimbursing state agency corrected the errors and reimbursed the District for the corrected amounts, the incorrect filings could potentially result in the District not being reimbursed the full amount to which it is entitled under the grant specifications. CAUSE: Insufficient staff training resulted in reimbursement claims requests to be misstated or lack sufficient and appropriate supporting documentation. RECOMMENDATION: We recommend the District ensures staff are adequately trained to ensure the proper documentation of child nutrition reimbursement claims is maintained. VIEWS OF RESPONSIBLE OFFICIALS: The District will continue to review their processes to ensure that child nutrition reimbursement claims are completed accurately.

Program: COVID19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing No.: 21.027 Federal Agency: U.S. Department of Treasury Pass-Through Agency: State of California Federal Award Year: FY2024-25 Compliance Requirement: Reporting Questioned Costs: None Condition: The City did not report accurate expenditures during the year in its Project and Expenditure Quarterly Reports for the uses of ARPA funding. The reports contained incorrect project amounts and expenditure classifications due to internal control deficiencies, including insufficient review and reconciliation by someone other than the preparer. Criteria: Per 2 CFR 200.302(b)(3) and 2 CFR 200.328, recipients of federal funds are required to maintain accurate financial records and report expenditures in accordance with federal award terms. Specifically, recipients of ARPA funding are required to submit accurate quarterly Project and Expenditure Reports to provide transparency and ensure funds are used in compliance with allowable purposes. Cause: The inaccuracies resulted from a lack of sufficient internal controls over the reporting process. Specifically:  No independent review was performed to validate the accuracy and completeness of the quarterly reports.  Documentation of the expenditure allocation process was not consistently maintained to support the reported amounts.  The timing of the prior year audit limited the City’s ability to implement corrective measures before the FY2025 reports were due.  There was no reconciliation performed to tie underlying financial data to the quarterly reports. Effect: The lack of accurate reporting undermines compliance with the reporting requirements of the federal award. Although no unallowable costs were identified, the inaccuracies may necessitate correction of reported amounts in the future. Recommendation: We recommend that the City strengthen its internal controls over the reporting process by: 1. Identifying and correcting previous reporting amounts and balances to ensure the lifetime project is properly reported. 2. Implementing a formal review process where quarterly reports are reviewed and approved by a designated individual other than the preparer. 3. Establishing a documented process for reconciling expenditures reported to the underlying accounting records and federal award guidelines. 4. Providing training to staff responsible for the preparation and review of federal compliance reports to ensure familiarity with reporting requirements. Management’s Response: See Corrective Action Plan.

FINDING 2025-005 Subject: Special Education Cluster (IDEA) - Condition of Records 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): 23611-051-PN01,24611-051-PN01, 22611-051-ARP, 23619-051-PN01, 25619-051-PN01, 22619-051-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Matching, Level of Effort, Earmarking; Period of Performance; Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation received reimbursements totaling $12,668,761 from the Special Education Cluster (IDEA) federal awards during the audit period. The reimbursements were associated with six separate federal awards, each of which was required to be accounted for in a separate fund within the School Corporation's financial management system. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the Indiana Department of Education (IDOE). The School Corporation was responsible for maintaining detailed disbursement ledgers for each grant fund to support the amounts claimed for reimbursement. As is typical with reimbursement-based grants, the ending cash and investment balances of each grant fund were expected to reflect overdrawn balances until the subsequent reimbursements were received from the IDOE. The $12,668,761 received in the Special Education Cluster (IDEA) funds during the audit period was based on 23 reimbursement requests for expenditures incurred. Based on our review of grant fund records and inquiry with management, we identified the following deficiencies:  The reimbursement requests for the reimbursements received during the audit period included dates of July 1, 2021 to March 31, 2025. It was not easily determined what was requested for reimbursement for the earlier dates due to the School Corporation including in the "Dates Included in this Request" section descriptions such as "Entire Grant Period" and "Start to March 21, 2025". The supporting documentation with the reimbursement requests did not always have detail or specifically state which disbursements were included in the amount for the request. Several had documentation that showed detail for a period of time then a calculation was done to subtract what was previously requested for reimbursement. The total received in reimbursements was $12,668,761. The total detailed disbursement ledgers for the population that could be determined reflected total expenditures of $15,894,839. This resulted in $3,226,078 in disbursements in excess of what the School Corporation requested for reimbursement.  Of the six federal awards reported on the Schedule Expenditures of Awards, four reached the award's performance end date, and of those four, three reported a Grant Balance After Reimbursement on the last Reimbursement Form. o Grant 23619-051-PN01 reported a Grant Balance After Reimbursement of $1,367 on February 26, 2024. The dates included in this final request were "01/01/24 - 01/31/24." INDIANA STATE BOARD OF ACCOUNTS 29 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) o Grant 22611-051-ARP reported a Grant Balance After Reimbursement of $55,581 on December 15, 2023. The dates included in this final request were "06/01/23 - 09/30/23." o Grant 22619-051-ARP reported a Grant Balance After Reimbursement of $82,677 on December 13, 2023. The dates included in this final request were "Entire Grant Period."  Of the 23 reimbursement requests submitted, only 10 were supported by detailed disbursement ledgers that agreed with the dates and amounts claimed. The remaining 13 reimbursement requests could not be directly reconciled to the supporting documentation provided. Upon further inquiry with management, additional information was provided; however, these records lacked sufficient detail, such as transactions, reasons for overspending, and which transactions were not requested for reimbursement due to overspending. Due to the deficiencies noted above, the School Corporation was unable to provide sufficient appropriate evidence for us to determine populations, and, therefore, audit and base an opinion on the compliance requirements subject to audit that were determined to have a direct and material effect on the program. As a result, the $12,668,761 in reimbursements received during the audit period were considered questioned costs. The lack of internal controls and noncompliance were material and systemic 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 states in part: "(a) . . . 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. See also § 200.450. (b) The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): INDIANA STATE BOARD OF ACCOUNTS 30 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 assets. The non- Federal entity must adequately safeguard all assets and ensure that 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 of this part and the terms and conditions of the Federal award." 2 CFR 200.1 states in part: "Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 31 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.1 states in part: ". . . Financial obligations, when referencing a recipient's or subrecipient's use of funds under a Federal award, means orders placed for property and services, contracts and subawards made, and similar transactions that require payment. Period of performance means the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Identification of the period of performance in the Federal award per § 200.211(b)(5) does not commit the awarding agency to fund the award beyond the currently approved budget period. Unliquidated financial obligations means, for financial reports prepared on a cash basis, financial obligations incurred by the non-Federal entity that have not been paid (liquidated). . . ." 2 CFR 200.309 states: "If a Federal awarding agency or pass-through entity approves an extension, or if a recipient extends under § 200.308(e)(2), the Period of Performance will be amended to end at the completion of the extension. If termination occurs, the Period of Performance will be amended to end upon the effective date of termination. If a renewal award is issued, a distinct Period of Performance will begin." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 32 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation experienced turnover in key personnel over the federal program which contributed to the lack of appropriate supporting records. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs We identified $12,668,761 in questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change, and that all reimbursement requests are properly supported by detailed records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-014 Subject: Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) - Condition of Records Federal Agency: Department of Education Federal Program: Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) Assistance Listings Number: 84.374 Federal Award Number and Year (or Other Identifying Number): S374A200039 Compliance Requirements: Matching, Level of Effort, Earmarking; Period of Performance; Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation received reimbursements totaling $3,530,669 from Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) (TSL) federal awards during the audit period. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the U.S. Department of Education. The School Corporation was responsible for complying with requirements of the grant per the grant agreements. We found the following deficiencies: Matching, Level of Effort, Earmarking The School Corporation did not provide documentation of how the matching requirement was met. Grant award letters were not provided; therefore, we could not ensure the required percentage local match was met. Period of Performance Grant award letters would indicate the period of the grant in which expenditures are allowed to be reimbursed. However, those letters were never provided. Therefore, we could not test to ensure compliance with the Period of Performance compliance requirement. Reporting According to our understanding of the grant, there should have been two final Annual Performance Reports and two mid-year Annual Performance Reports submitted within the audit period. Two reports were provided; however, they were from outside the audit period. Since the appropriate reports were not provided for audit, we could not test to ensure compliance with the Reporting compliance requirement. There were multiple Directors over the Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) during the audit period. At the time the audit was conducted, no previous Directors were employed with the School Corporation and there were no current employees that were knowledgeable of the grant and its requirements. The lack of internal controls and failure to maintain and provide adequate supporting documentation were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 50 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 200.334 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 Federal awards that are renewed quarterly or annually, from the date of the 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. . . ." 2 CFR 200.302 states in part: "(a) . . . 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. See also § 200.450. (b) The financial management system of each non-Federal entity must provide for the following (see §§ 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. 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 assets. The non- Federal entity must adequately safeguard all assets and ensure that they are used solely for authorized purposes. See § 200.303. INDIANA STATE BOARD OF ACCOUNTS 51 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 of this part and the terms and conditions of the Federal award." Cause The School Corporation experienced turnover in key personnel over the federal program, which contributed to the lack of appropriate documentation. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-022 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-010. Condition and Context During the audit period, the School Corporation received 36 total reimbursements related to the Education Stabilization Fund grant. The School Corporation received 2 ESSER I reimbursements, 8 ESSER II reimbursements, 16 ESSER III reimbursements, and 10 ARP HCY reimbursements. A sample of 15 reimbursements request forms were tested against the School Corporations records for accuracy. Of the 15 reimbursement requests forms tested, 7 totaling $9,583,074 were not supported by the School Corporation's records. The errors detected were isolated to the ESSER III grant. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 68 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 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 Federal awards that are renewed quarterly or annually, from the date of the 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. . . ." 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." Cause The School Corporation did not establish or implement a properly designed internal control system, including appropriate segregation of duties, to ensure the accuracy and reliability of financial data submitted to the Indiana Department of Education. The absence of formal review procedures, oversight mechanisms, and reconciliation processes resulted in the submission of materially misstated reimbursement requests. Contributing factors included inadequate staff training on federal reporting requirements, the lack of documented financial reporting policies, and insufficient allocation of resources to monitor compliance with grant guidelines. Effect As a result, 7 out of 15 reimbursement request forms tested during the audit period were either overstated or understated, reflecting inconsistent and inaccurate financial reporting tied to federal grant activity. These systemic errors represent significant noncompliance and undermine the reliability of reporting used for state and federal oversight. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 69 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation The School Corporation should strengthen its financial reporting processes related to federal grant activity by implementing a formal internal control system that ensures accuracy, consistency, and proper documentation. This includes reconciling financial records with data submitted through JotForm, establishing review procedures for reimbursement requests, and assigning qualified personnel to verify all reports prior to submission. Staff responsible for grant management and financial reporting should receive necessary support and resources regarding federal documentation standards and reporting requirements. The School Corporation should adopt standardized documentation policies and procedures across all departments to ensure compliance and oversight. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-023 Subject: Title I Grants to Local Educational Agencies - Reporting 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, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-006. Condition and Context The School Corporation was required to submit reimbursement requests and final expenditure reports that included, among other data, both current and prior period expenditures. However, the required reports for federal awards did not capture all activity for the reporting period and were not supported by the School Corporation's records. Reimbursement Requests The School Corporation uses reimbursement requests to claim allowable expenses paid from the Title I funds. These requests must be based on and supported by transactions recorded within the School Corporation's Title I accounts. Although internal controls were in place, they were not effective in ensuring the accuracy of the reimbursement requests. Of the 11 reimbursement requests selected for testing, 9 could not be verified against either the summary-level detail attached to the request or a detailed transaction listing. Because the amounts requested for reimbursement could not be traced to underlying records or to reports that accumulated or summarized the data, the accuracy and completeness of the reimbursement requests could not be verified. INDIANA STATE BOARD OF ACCOUNTS 70 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Final Expenditure Reports There was no documented internal control to show a review and oversight process was in place to ensure the accuracy and completeness of the final expenditure reports. 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 200.334 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 Federal awards that are renewed quarterly or annually, from the date of the 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. . . ." 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. . . . (3) Records that identify adequately the source and application of funds for federally funded 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. . . ." 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 71 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation did not design or implement an effective internal control system to ensure the accuracy and compliance of reimbursement and final expenditure reporting processes. Specifically, the School Corporation did not have established procedures requiring the retention of detailed supporting documentation for reimbursement requests, and oversight responsibilities were not consistently carried out or evidenced over the reimbursement requests and final expenditure reports. Effect Because the School Corporation did not retain detailed documentation to support reimbursement requests or provide evidence of the required review of final expenditure reports, the audit team could not verify the accuracy or completeness of expenditures charged to the grant. As a result, the risk of misreporting, misallocation of federal funds, and potential violations of grant requirements were heightened. Questioned Costs There were no questioned costs identified. Recommendation The School Corporation should establish and implement a formal internal control system to ensure accurate financial reporting and compliance with federal grant requirements. This system should include documented review procedures, clear segregation of duties, and consistent oversight of reimbursement requests and expenditure reports. All financial submissions should be supported by verifiable documentation and reconciled with internal records prior to submission. Additionally, the School Corporation should provide necessary support and resources to staff responsible for ensuring grant compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Reporting Federal Agency: U.S. Department of Labor Federal Program Title: WIOA Cluster (WIOA Adult Program; WIOA Youth Activities; WIOA Dislocated Worker Formula Grants) ALN: 17.258, 17.259, 17.278 Award Identification Number: 23A55AY000015; AA-38542-22-55-A-32; AA-36332-21-55-A-32, 23A55AT000046; 23A55AW000038; 23A55AY000015 Pass-Through Agency: State of Nevada, Department of Employment, Training and Rehabilitation (DETR) Pass-Through Award Number and Period: PY23-A-01-WIOA; PY24-A-01-WIOA; PY23-Y-01-WIOA; PY24-Y- 01-WIOA; PY23-DY-01-GR; PY23-DW-01-WIOA; PY24-DW-01- WIOA (All for the period 4/1/2023 – 6/30/2026) Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Pursuant to 2 CFR 200.328, federal financial reports must be accurate, complete, and submitted timely. The Department of Labor requires ETA financial reports to be submitted quarterly with cumulative expenditure information from grant inception through the reporting period. Effective controls over grant reporting are required under 2 CFR 200.303. Condition: Audit procedures included reviewing all quarterly financial reports submitted under the WIOA Cluster during fiscal year 2025. Testing identified that the fourth-quarter fiscal year 2025 financial report submitted to the grantor was an exact duplicate of the third-quarter report. As a result, fourth-quarter expenditures, obligations, and other financial activity were not reported. Management was unable to provide evidence that the report had been independently reviewed prior to submission, and no corrected report had been subsequently filed with the grantor agency. Further inquiry determined that the reporting process lacked procedures requiring reconciliation of reported amounts to accounting records before submission. The condition indicates that reporting controls failed to identify a significant reporting error prior to submission to the awarding agency. Questioned costs: Unknown. Context: The audit reviewed the entire population of four quarterly reports required during fiscal year 2025. One of the four reports reviewed was materially inaccurate and incomplete, representing a reporting error affecting an entire quarter of grant activity. Cause: Management did not maintain effective review controls over grant reporting. Staff turnover and changes in reporting responsibilities contributed to the failure; however, the underlying cause was the absence of a formal reconciliation and review process designed to verify report accuracy prior to submission. Effect: Required federal financial reporting was inaccurate and incomplete. The awarding agency did not receive accurate cumulative financial information necessary to monitor grant performance, funding utilization, and compliance with federal requirements. The condition constitutes material noncompliance with federal reporting requirements. Repeat Finding: No. Recommendation: Management should implement a formal reporting review process requiring reconciliation of all quarterly reports to underlying accounting records prior to submission. Reports should be independently reviewed and approved by a qualified individual and evidence of the review should be retained. Management should also submit any required corrected reports to the granting agency. Views of responsible officials: There is no disagreement with the audit finding. Nevadaworks will strengthen its federal reporting process by implementing a reporting calendar, requiring reconciliation of reports to accounting records before submission, and establishing documented independent review and approval procedures. Any necessary corrected reports will be submitted to the awarding agency.

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP1095 Pass-Through Agency: State of Rhode Island Department of Administration Pass-Through Number(s): Unknown Award Period: March 3, 2021 – December 31, 2026 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: In accordance with 2 CFR 200.328 and 31 CFR section 35.4(c), the City is required to submit quarterly “Project and Expenditure Reports” which are due 30 days after the end of each quarterly period. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure the quarterly reports were completed accurately. Questioned costs: None Context: During our testing, it was noted that the City did not accurately report the current period expenses and cumulative expenditures, or the revenue loss calculations for each of the quarterly reports. Cause: Lack of controls surrounding the preparation of quarterly reports. Effect: Failure to comply with Uniform Guidance and Treasury reporting requirements may result in questioned costs, audit findings, and potential recoupment of federal funds. Repeat Finding: 2024-003 Recommendation: We recommend the City implement procedures to ensure the accuracy of quarterly reporting and maintain supporting documentation for each of the amounts reported. Views of responsible officials: There is no disagreement with the audit finding.

CFDA Number: 93.224 Federal Program or Cluster: Health Center Program Cluster Grantor Agency: U.S. Department of Health and Human Services Federal Award Identification: H8FCS41177 Compliance Requirements: Reporting Type of Finding: Noncompliance/Material Weakness in Internal Control over Compliance Quiestioned Costs: None Criteria: 2 CFR Part 200, Section 200.302 Financial management requires that the Organization's financial management system must provide for the following: 1) Identification of all Federal awards received and expended and the Federal programs under which they were received..; and 2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in Sections 200.328 and 200.329. Section 200.328 Financial reporting states that the required financial reporting consists of the Federal Financial Report (SF-425). Condition: The SF-425 Federal Financial Report filed by the Organization for the H8FCS41177 Federal award reported that cash disbursements of $2,675,250, the total amount of the Federal award, had been made. However, $1,248,456 of those cash disbursements were determined during our audit to not be allowable due to not being obligated and/or liquidated by the period of performance deadlines. The cash disbursements reported on the SF-425 were not readily determinable from the Organization's general ledger accounts. Cause: Organization personnel were not aware of the period of performance with respect to this federal award. The Organization's previous CEO retired approximately May 31, 2024. Per inquiry of the Organizaton's CFO, their understanding was that the deadline to obligate for this federal award was December 31, 2024, and the deadline to expend or liquidate was December 31, 2026. The Organizaton's chart of accounts and general ledger do not include separate and distinct accounts or classes to which federal award expenditures are recorded. Effect or Potential Effect: The SF-425 Federal Financial Report filed by the Organization included cash disbursements of $1,248,456 that were not chargeable to the Federal award because they were not obligated before the period of performance end date and/or the payment was not made before the deadline to liquidate obligations. Context: We requested detail of expenditures for the Federal award and were provided with manual spreadsheets lacking all the transactional details needed. Information from the general ledger did not agree with cash disbursements reported on the SF-425. The general ledger information indicated $1,185,164 of the Federal award had not yet been disbursed at the time the SF-425 was filed. Repeat Finding: No Recommendation: We recommend that the Organization provide grants management training to all its financial staff and management covering the Uniform Guidance/OMB Guidance for Federal Financial Assistance. We also recommend that the Organization develop and implement policies and procedures for financial and performance report preparation to ensure information is supported by proper documentation and agrees with the general ledger. These policies and procedures should also include a requirement that all reports are reviewed by a member of management who is not involved in the preparation of the reports. Views of Responsible Officials: We agree with the finding. We have never received proper training. See Corrective Action Plan for Reference 2025-007.

Criteria: 2 CFR §200.327 and §200.328 requires recipients of federal awards to submit accurate and timely financial reports as required by the terms and conditions of the award. The Federal Financial Report (FFR) must be submitted by the due date specified in the grant agreement and must reflect accurate financial data. Condition and Context: During our audit of the Community Health Centers Cluster, we noted the entity failed to submit the required FFRs by the established deadlines for two annual reports. Additionally, two submitted reports contained inaccuracies, including expenditures that did not agree to amounts reported on the 2024 Schedule of Expenditures of Federal Awards and/or underlying supporting financial records. In one instance the report was filed 107 days late. In the second instance the report was filed 33 days late. Since this is a repeat finding, this is considered to not be an isolated instance and appears to be more indicative of a systemic problem. Effect: Failure to submit timely and accurate financial reports may result in noncompliance with federal regulations, potential withholding of future funding, and increased risk of questioned costs or audit findings. Cause: The delays and inaccuracies were attributed to inadequate internal controls over the financial reporting process, including lack of review procedures and insufficient training of staff responsible for preparing the reports. Recommendation: We recommend the entity strengthen its internal controls over the financial reporting process by implementing formal review procedures, providing staff training on federal reporting requirements, and establishing a calendar system to ensure timely submissions.

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 (Repeat Finding) 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 - From our sample, one of the annual SF-425 selected for testing was submitted 41 days after the required due date. Questioned Costs - None 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.

U.S. Department of Health and Human Services Federal Financial Assistance Listing 93.423 1332 State Innovation Waivers Reporting Significant Deficiency in Internal Control in Federal Compliance Criteria: Recipients of federal funds must submit financial reports as required by the Federal award. Reports submitted annually by the recipient 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, in accordance with CFR § 200.328(c). Condition: The Association’s existing controls over their reporting processes, to ensure reports were submitted timely, were not functioning in such a way that ensured reports were submitted on time. Cause: The Association didn’t set a reminder or have a pre-arranged schedule that notified management a report was due. Effect: 1 quarterly report was submitted 3 days late. 1 quarterly report was submitted 2 days late. Questioned Costs: None reported Context/Sampling: Sampling was not used. 100% of the reports submitted during the year were tested. Repeat Finding from Prior Year(s): No Recommendation: Management should have a control in place to ensure they are notified that a report is coming due so they are able to compile and submit it on time. If information required to be included in the report is not available at the time the report is due, management should have a control in place to request an extension for the delayed submission of the report. Views of Responsible Officials: Management of the Association agrees with the finding.

Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3-46-0050-59, AIP3-46-0050-62, AIP3-46-0050-63, and AIP3-46-0050-64. COVID-19 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance; Material Noncompliance 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, 2024, for award AIP3-46-0050-64 underreported the federal share of expenditures by $23,588, while the FAA Form 5100-127 annual report dated December 31, 2023, for all awards underreported the total capital expenditures and construction in progress by $2,729,962. 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 7 reports out of 27 reports. Repeat Finding from Prior Year – Yes, prior year finding 2023-002 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 AIP3-46-0050-59, AIP3-46-0050-62, AIP3-46-0050-63, and AIP3-46-0050-64. COVID-19 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance; Material Noncompliance 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, 2024, for award AIP3-46-0050-64 underreported the federal share of expenditures by $23,588, while the FAA Form 5100-127 annual report dated December 31, 2023, for all awards underreported the total capital expenditures and construction in progress by $2,729,962. 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 7 reports out of 27 reports. Repeat Finding from Prior Year – Yes, prior year finding 2023-002 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 AIP3-46-0050-59, AIP3-46-0050-62, AIP3-46-0050-63, and AIP3-46-0050-64. COVID-19 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance; Material Noncompliance 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, 2024, for award AIP3-46-0050-64 underreported the federal share of expenditures by $23,588, while the FAA Form 5100-127 annual report dated December 31, 2023, for all awards underreported the total capital expenditures and construction in progress by $2,729,962. 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 7 reports out of 27 reports. Repeat Finding from Prior Year – Yes, prior year finding 2023-002 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 AIP3-46-0050-59, AIP3-46-0050-62, AIP3-46-0050-63, and AIP3-46-0050-64. COVID-19 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance; Material Noncompliance 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, 2024, for award AIP3-46-0050-64 underreported the federal share of expenditures by $23,588, while the FAA Form 5100-127 annual report dated December 31, 2023, for all awards underreported the total capital expenditures and construction in progress by $2,729,962. 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 7 reports out of 27 reports. Repeat Finding from Prior Year – Yes, prior year finding 2023-002 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.

Finding Number: 2024-001 Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year: 2024 Assistance Listing Number (ALN): 21.027 Federal Awarding Agency: U.S. Department of Treasury Compliance Requirement: Reporting – Quarterly Program Reports Pass-through Entity: Ohio Department of Development Repeat Finding: No Significant Deficiency and Noncompliance – Timely Submission of Quarterly Program Reports Criteria: 2 C.F.R. § 200.328 Financial Reporting states, in part, the Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. The recipient must submit quarterly program reports as required by the Federal award. In the Ohio Department of Development Water and Wastewater Infrastructure Program Grant Agreement, Statement of Agreement, Section 6 Reporting Requirements, Exhibit II Reporting, Section 2, Program Reports, all grant award recipients are required to submit program reports on a quarterly basis. Quarterly program reports must be submitted by close of business, on the second Friday, at the end of each quarter. Condition: The City did not submit the quarter ending December 31, 2024 Quarterly Program Report until March 7, 2025, after the deadline of January 10, 2025. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Auditor reviewed the Quarterly Program Report for period ending December 31, 2024 via email submission to Ohio Department of Development, and noted the City did not submit the report until March 7, 2025, which was after the deadline of January 10, 2025. These requirements are outlined in the federal award agreement and applicable UG provisions. Cause and Effect: The issue results of lack of monitoring control related to grant reporting requirements. Failure to submit reports as required, could result in non-compliance with grant requirements. Recommendation: We recommend that the City implement procedures and internal deadlines for reviewing and timely submitting all reports under federal awards. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Finding Number: 2024-001 Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year: 2024 Assistance Listing Number (ALN): 21.027 Federal Awarding Agency: U.S. Department of Treasury Compliance Requirement: Reporting – Quarterly Program Reports Pass-through Entity: Ohio Department of Development Repeat Finding: No Significant Deficiency and Noncompliance – Timely Submission of Quarterly Program Reports Criteria: 2 C.F.R. § 200.328 Financial Reporting states, in part, the Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. The recipient must submit quarterly program reports as required by the Federal award. In the Ohio Department of Development Water and Wastewater Infrastructure Program Grant Agreement, Statement of Agreement, Section 6 Reporting Requirements, Exhibit II Reporting, Section 2, Program Reports, all grant award recipients are required to submit program reports on a quarterly basis. Quarterly program reports must be submitted by close of business, on the second Friday, at the end of each quarter. Condition: The City did not submit the quarter ending December 31, 2024 Quarterly Program Report until March 7, 2025, after the deadline of January 10, 2025. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Auditor reviewed the Quarterly Program Report for period ending December 31, 2024 via email submission to Ohio Department of Development, and noted the City did not submit the report until March 7, 2025, which was after the deadline of January 10, 2025. These requirements are outlined in the federal award agreement and applicable UG provisions. Cause and Effect: The issue results of lack of monitoring control related to grant reporting requirements. Failure to submit reports as required, could result in non-compliance with grant requirements. Recommendation: We recommend that the City implement procedures and internal deadlines for reviewing and timely submitting all reports under federal awards. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.