Findings Citing § 200.334

Condition: During our testing of program eligibility for the TANF program, we tested a nonstatistical sample of 40 participant files. For two participants, eligibility determinations could not be located. Additionally, for seven participants, eligibility determinations provided were either not dated or dated after fiscal year end (December 31, 2025). As a result, we were unable to determine whether eligibility had been properly documented prior to the participant beginning the program, as required. Criteria: Under 2 CFR §200.300(b), non Federal entities must comply with federal statutes, regulations, and the terms and conditions of federal awards. Eligibility is a compliance requirement identified in the Compliance Supplement for the TANF program. Additionally, 2 CFR §200.303 requires non Federal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that the entity is administering federal awards in compliance with program requirements. Adequate documentation supporting participant eligibility must be retained in accordance with 2 CFR §200.334. Cause: The finding resulted from a lack of formal controls over the review, documentation, and retention of TANF eligibility determinations. Specifically, there were no documented procedures to ensure eligibility determinations were completed, dated timely, and retained prior to participant enrollment. Effect: Because eligibility documentation was missing or not timely for nine participants, we were unable to verify compliance with TANF eligibility requirements. This resulted in questioned costs of $4,474 related to benefits provided to participants whose eligibility could not be substantiated. Questioned Costs: $4,474 Recommendation: We recommend that management establish formal procedures to ensure TANF eligibility determinations are completed, reviewed, and dated prior to participant enrollment and that all supporting documentation is retained in accordance with federal requirements. Additionally, management should consider implementing a documented review process to verify eligibility files are complete before benefits are provided.

#2025-004 – Major Federal Award Finding – Reporting; Procurement and Suspension and Debarment; Subrecipient Monitoring; Allowable Costs/Cost Principles Nature of Finding: Maintenance of Documentation/Records – Compliance Finding and Significant Deficiency in Internal Control over Compliance This is a repeat of prior year #2024-005. Criteria/Condition: Documentation was not maintained to support financial data provided in reports submitted to the funding source. Documentation was also not maintained to support certain procurement procedures. Per 2 CFR 200.334, financial records and supporting documentation must be maintained for three years from the date of the final financial report. Per 2 CFR 200.318(i), recipients must maintain records sufficient to detail the history of each procurement transaction, including (among other items) rationale for contractor selection or rejection. Cause/Context: The following activities did not consistently have supporting documentation: Expenditure balances reported to the State of Michigan in quarterly reports were not amended or reconciled to the final accounting records for each reporting period. The accounting periods were impacted by various transactions between the dates of the grant expenditure reports and the close of the respective period financial statement. Performance of subrecipient and contractor/vendor suspension and debarment search on SAM.gov prior to September 2025. No documentation was maintained to support review for the review of processed payroll registers for two of the three pay periods tested. For 1 of the 7 employee wage allocations tested, no documentation was retained to support independent review of the allocation. Effect: Evidence to support a reconciliation between reports submitted to a funding source and the general ledger is not readily available. Evidence to support that the appropriate contractor/vendor vetting process was conducted is not available. Recommendation: The Organization should produce and maintain supporting documentation for all reports submitted to funding sources, including information to reconcile reports to the final financial statements for the respective period and resolution of any reporting differences with the funding agency. We also recommend that the Organization maintain all documentation to support the decision process associated with procurement. Views of Responsible Officials and Planned Corrective Actions: Since the Finance Manager's arrival, a process has been implemented to reconcile quarterly expenditure reports submitted to the State of Michigan against the general ledger; this reconciliation has become clearer and more consistent with each subsequent period. Beginning in September 2025, suspension and debarment checks on SAM.gov are performed for every new vendor and subrecipient — owned by the Executive Director of the Center for Adult College Success for Center vendors and the Finance Manager for TalentFirst vendors, with all checks reviewed by the Finance Manager. Employee wage allocations are now supported by timesheets and documented on the monthly journal accrual e-signature form, which retains the allocation and its approval electronically.

Finding 2025-007 –Waiting List – Eligibility – Internal Control over Waiting Lists – ALN 14.871 Housing Choice Voucher Program, ALN 14.850 Low Rent Public Housing Program – Noncompliance and Material Weakness Condition & Cause: The Housing Authority was unable to provide a copy or electronic extract of the waiting list as it existed on or near the date of applicant selection or offer. The Housing Authority also could not provide a sufficient audit trail demonstrating the applicant's position on the waiting list, applicable preferences, and the basis for selection. As a result, we were unable to determine from the records maintained by the Housing Authority whether applicants and selected participants were consistently selected in accordance with applicable federal requirements, the Housing Authority's Administrative Plan, and the Admission and Continued Occupancy Policy (ACOP). The condition appears to have resulted from the absence of a documented procedure requiring Housing Authority personnel to capture and retain the waiting list, applicant ranking, applicable preferences, and selection information at or near the time each applicant is selected or offered assistance. The Housing Authority also does not have an adequate records-retention procedure specifically addressing waiting-list documentation and the preservation of an audit trail of applicant selections. Criteria: For the Housing Choice Voucher Program, 24 CFR §982.204(a) requires participants, except for special admissions, to be selected from the PHA waiting list in accordance with the PHA's Administrative Plan. Section 982.204(b) requires the PHA to maintain information that permits participants to be selected from the waiting list in accordance with the PHA's admission policies, including applicant name, family unit size, date and time of application, and qualification for local preferences. For the Public Housing program, 24 CFR §960.206(c)(1) requires the PHA to use its approved selection method when selecting among applicants with the same priority, and §960.206(c)(2) specifically requires the selection method to leave a clear audit trail that can be used to verify that each applicant was selected in accordance with the method specified in the PHA Plan. Additionally, 2 CFR §200.334 requires recipients and subrecipients to retain Federal award records, including financial, supporting, and statistical records, for the applicable retention period. Accordingly, the Housing Authority should maintain sufficient waiting-list records and supporting documentation to demonstrate that applicants were selected in accordance with applicable Federal requirements, the PHA's Administrative Plan, ACOP, and PHA Plan, including applicable preferences and selection priorities. Effect: The inability to reconstruct the waiting list and applicant selection process prevents the Housing Authority from demonstrating that applicants were selected in accordance with federal requirements and the Housing Authority's Administrative Plan and ACOP. This condition increases the risk of inconsistent treatment of applicants, inappropriate selection of applicants, failure to properly apply preferences, and undetected manipulation or alteration of the waiting list. Recommendation: We recommend that the Housing Authority establish and implement written procedures requiring the preservation of the waiting list and related applicant-selection documentation at the time of each selection. At a minimum, the Housing Authority should retain documentation showing: • The waiting list in effect at or near the date of selection; • Applicant name or identification number; • Applicant rank or position; • Applicable preferences; • Date of selection; • Basis for selection; • Date and method of offer; • Disposition of the offer; and • Any subsequent changes to the applicant's status or position on the waiting list. The Housing Authority should also establish appropriate retention periods and access controls to ensure that waiting-list records cannot be altered or deleted without an adequate audit trail. Management should periodically review waiting-list selections through its QC process to verify compliance with the Administrative Plan, ACOP, and applicable federal requirements. Questioned Costs: None Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Federal Agency: Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: SC-112010 - 2025 Pass-Through Agency: Pierce County Pass-Through Number(s): WA0154L0T032316 Award Period: 5/1/25-4/30/26 Type of finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or specific requirement: Per 2 CFR 200.334, recipients of Federal funds "must retain all Federal award records for three years from the date of submission of their final financial report." This includes supporting documentation for all transactions funded by the Federal program. Condition: Of 40 samples tested, one sample had incomplete documentation retained. Questioned costs: None Context: The deficient selection was for water utility fees paid on behalf of one program participant. The participant in question had changed residences; while the old lease was provided, the new lease was misplaced and unlocated for audit testing. Cause: Due to insufficient procedures surrounding adequate documentation retention. Effect: Lack of sufficient documentation could result in payments made with program funds that are unallowable costs or activities for the program. Repeat finding: No Recommendation: Share & Care should strengthen document retention and disbursement review procedures by implementing a centralized filing system for invoices, lease agreements, and supporting documentation. Management should require all supporting documents to be electronically maintained and attached to each disbursement batch prior to approval. In addition, periodic reviews should be performed to ensure documentation is complete, properly organized, and readily accessible for compliance and audit purposes. Views of responsible officials: Management agrees with the finding and has provided its corrective action plan.

Finding 2025-001 – Cash Disbursements and Procurement Material Weakness Condition and Context: Sound, adequate internal controls as well as HUD rules and regulations require adequate accounting and record keeping for all expenditures. During review of disbursements, nine paid invoices could not be located (including one credit card statement with supporting documentation). Criteria: 2 CFR § 200.302 requires records supporting Federal expenditures to be supported by source documentation, and 2 CFR § 200.334 requires financial records and supporting documentation related to Federal awards to be retained for the applicable retention period. Cause: The Authority did not have effective procedures to ensure that complete supporting documentation was retained and readily retrievable after disbursements were processed. Effect: Without adequate supporting documentation, the Authority cannot demonstrate that the expenditures were valid, properly authorized, accurately classified, incurred for an appropriate purposes, or allowable under applicable funding requirements. Because the deficiency affects the Authority’s ability to substantiate recorded expenditures and could allow material errors, unauthorized expenditures, or misappropriation of assets to occur without timely prevention or detection, we consider this deficiency to be a material weakness in internal control over financial reporting. Questioned Cost: Total unsupported disbursements were $64,621. Recommendation: We recommend the Authority implement required documented review and approval by an individual independent of payment preparation, maintain supporting documentation in a centralized electronic records system with routine backups, periodically review disbursement files to verify that documentation is complete and retrievable, contact the applicable vendors and attempt to obtain replacement documentation for the unsupported transactions identified during the audit, and evaluate whether any expenditures that remain unsupported should be repaid to the applicable program.

Finding 2025-006: Inadequate Controls Over Allowable Costs and Supporting Documentation – Significant Deficiency and Instance of Noncompliance Federal Program: Health Center Program (Assistance Listing 93.224) Criteria: Uniform Guidance requires non-Federal entities to maintain effective internal control over federal awards and maintain records sufficient to support that costs charged to a federal award are allowable, adequately documented, and properly charged to the federal program. Expenditures included in reimbursement requests must be supported by source documentation, including invoices, payroll records, contracts, or other documentation demonstrating the nature and amount of the expenditure. Condition: Management represented that expenditures included in federal reimbursement requests are supported by invoices and other source documentation and are reviewed prior to submission for reimbursement. During the testing of expenditures charged to the Health Center Program, we identified the following exceptions: • Three transactions charged to the federal program did not have supporting invoice documentation available for examination. • One expenditure included in a reimbursement request was based on an invoice totaling $8,221.92. However, a revised invoice was subsequently issued, reducing the amount due to $7,284.96. The reimbursement request was not adjusted to reflect the revised invoice amount, resulting in questioned costs of $936.96. These exceptions indicate expenditures were included in reimbursement requests without adequate supporting documentation or without ensuring the amounts requested agreed to the final supporting documentation. Cause: As noted in Finding 2025-00X, management has not established an effective review and approval process over federal reimbursement requests and the underlying supporting documentation. Reimbursement requests are prepared and reviewed using summarized expenditure information, and supporting documentation is not consistently reviewed to verify that expenditures are adequately supported and accurately reflected in reimbursement requests prior to submission. Effect: Because expenditures are not consistently supported by adequate documentation and reimbursement requests are not subject to an effective review of underlying support, there is an increased risk that unsupported, inaccurate, or unallowable costs may be charged to the federal program and included in reimbursement requests. Questioned Costs: $1,180.06. Context: During testing of expenditures charged to the Health Center Program, we identified three transactions for which supporting invoice documentation could not be provided. In addition, one reimbursement request included an expenditure amount that exceeded the amount supported by the final vendor invoice. These exceptions indicate deficiencies in controls over the retention, review, and verification of supporting documentation for costs charged to the federal program and are consistent with the control deficiencies identified in Finding 2025-00X related to the review and approval of reimbursement requests. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management implement procedures to ensure all expenditures charged to federal programs are supported by adequate source documentation and that reimbursement requests are reconciled to final invoices, payroll records, and other accounting records prior to submission. Management should also implement an independent review process requiring examination of supporting documentation to verify that expenditures are allowable, adequately supported, and accurately included in reimbursement requests. Management Response: Management concurs with the finding. The Organization recognizes that documentation supporting certain expenditures charged to federal programs was not adequately maintained and that review procedures over reimbursement requests were not sufficient to ensure expenditures were fully supported and accurately reflected. Management is implementing enhanced procedures requiring all expenditures included in reimbursement requests to be supported by source documentation and reconciled to accounting records prior to submission. The Accounting Department will collect original invoices, receipts, payroll registers, and other source documents when costs are incurred, and will prepare reconciliations using final invoices rather than estimates, quotes, or purchase orders. In limited circumstances where an estimate must be used for anticipated expenses, the basis for the estimate will be documented and approved prior to submission, and the estimated amount will be reconciled to actual expenditures in a timely manner, no later than the subsequent reimbursement request, with any differences promptly adjusted and supporting documentation retained. In addition, independent review procedures will be performed to verify allowability, accuracy, and completeness before federal reimbursement requests are submitted. Each reimbursement request will then be reviewed and approved by the Chief Financial Officer (CFO) or the Chief Executive Officer (CEO) before submission, consistent with the approval process described in the response to Finding 2025-003. The Organization will organize supporting documentation by grant and reimbursement period and retain it in accordance with the record retention requirements of the Uniform Guidance (2 CFR 200.334). Additionally, the Chief Financial Officer (CFO) will perform periodic sample-based reviews of expenditures charged to federal awards to verify that documentation standards are consistently followed, and any exceptions identified will be promptly corrected, including adjustment of amounts previously requested where necessary.

Finding 2025-007: Inadequate Controls Over Payroll Allocations and Allowable Costs – Significant Deficiency and Instance of Noncompliance Federal Program: Health Center Program (Assistance Listing 93.224) Criteria: Uniform Guidance requires non-Federal entities to maintain records that accurately reflect the work performed and support the distribution of salary and wages charged to federal awards. Internal controls should provide reasonable assurance that payroll costs charged to federal programs are based on records that accurately reflect the employee's actual work performed and that compensation costs are properly allocated among funding sources. Condition: Management represented that employee compensation costs are allocated to federal programs based on time worked and that employee time records are maintained and approved by employees and supervisors. However, the Organization does not have adequate controls to ensure payroll allocations charged to federal programs agree to approved time records or that overtime compensation is allocated in accordance with the employee's actual distribution of work performed. During testing of 40 payroll selections comprising 83 payroll allocation instances, we identified the following exceptions: • Ten payroll allocation instances were noted where the hours charged to the Health Center Program did not agree to the hours reflected on the employee's approved timecard. Management indicated that, for salaried employees, timecards are maintained for internal reporting purposes only and are not used as the basis for allocating payroll costs to grant programs. As a result, payroll costs allocated to the program were manually adjusted and did not consistently agree with the employees' approved time records. • Seven payroll allocation instances were noted where overtime compensation was allocated based on the distribution of regular hours charged to the program rather than the actual hours worked during the overtime period. As a result, overtime costs were not allocated in a manner consistent with the work performed. Cause: The Organization has not implemented effective controls to ensure payroll allocations are based on approved time records and that employees and supervisors are adequately trained regarding timekeeping and program coding requirements. In addition, management has not established procedures to review payroll allocations for consistency with approved time records or to verify that overtime compensation is allocated based on actual work performed. Effect: Because payroll allocations are not consistently supported by approved time records and overtime costs are not allocated based on actual work performed, there is an increased risk that compensation costs charged to federal programs may be inaccurate, unsupported, or improperly allocated. This may result in federal programs being charged for costs that do not reflect the actual services performed for the program. Questioned Costs: $3,447.45, consisting of $3,440.89 related to payroll allocations that did not agree to approved time records and $6.56 related to improper allocation of overtime compensation. Context: During testing of 40 payroll selections and 83 payroll allocation instances, we identified 17 instances where compensation costs were not allocated in accordance with approved time records or actual work performed. The exceptions resulted from manual adjustments to program allocations that differed from employee-approved time records and from the use of allocation methodologies for overtime compensation that did not reflect actual overtime hours worked on the program. The exceptions indicate a systemic deficiency in controls over payroll allocations and compensation cost documentation. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management strengthen controls over payroll allocations by requiring compensation costs charged to federal programs to be supported by employee and supervisor-approved time records that accurately reflect actual work performed. Employees and supervisors should receive training regarding program coding requirements, and management should implement a documented review process to verify that payroll allocations, including overtime compensation, are consistent with approved time records before costs are charged to federal programs. Management Response: Management concurs with the finding. The Organization acknowledges deficiencies in controls over payroll allocation processes and recognizes the importance of ensuring compensation costs charged to federal programs are supported by records reflecting actual work performed. Management is implementing revised payroll allocation procedures requiring allocations to be supported by approved time records and documented review processes. Specifically, compensation charged to each federal award will be based on timesheets or other time and effort records that reflect the actual hours worked on each program, are signed by the employee, and are approved by the employee’s direct supervisor, in accordance with the standards for documentation of personnel expenses under the Uniform Guidance (2 CFR 200.430(g)). Overtime will require advance supervisory approval and will be charged only to the program on which the overtime hours were worked. Additional training will be provided to employees and supervisors regarding timekeeping and grant coding requirements, and management will periodically review payroll allocations to verify compliance with federal requirements. Each pay period, the Accounting Department will reconcile payroll allocations recorded in the payroll system to approved time records before posting related costs to the general ledger and charging them to federal programs, and will investigate and correct any discrepancies before including the costs in a reimbursement request form. Where budgeted allocations are used for interim purposes, they will be compared to actual effort at least quarterly and adjusted as necessary so that final amounts charged to federal awards reflect actual work performed. The Chief Financial Officer (CFO) will review the results of these reconciliations, and all time records, approvals, and reconciliations will be retained in accordance with the record retention requirements of the Uniform Guidance (2 CFR 200.334).

Finding 2025-008: Activities Allowed/Unallowed and Allowable Costs – Significant Deficiency Federal Program: Health Center Program (Assistance Listing 93.224) and Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease (Assistance Listing 93.918) Criteria: Pursuant to 2 CFR 200.303, the Organization is required to establish and maintain effective internal control over federal awards to provide reasonable assurance that the award is managed in compliance with federal statutes, regulations, and the terms and conditions of the award. In addition, 2 CFR 200.403(g) requires costs charged to a federal award to be adequately documented. Effective controls should include documented review and approval of expenditures and reimbursement requests to ensure costs charged to the federal award are allowable, allocable, reasonable, and adequately supported. Condition: The Organization represented that expenditures charged to Federal Programs were reviewed and approved by the Chief Executive Officer prior to reimbursement requests being submitted. During testing, the auditors noted no evidence of review or approval by the Chief Executive Officer for expenditures selected for testing. In addition, reimbursement requests prepared by the Chief Financial Officer were not supported by documentation demonstrating that the amounts requested were reconciled to specific expenditures incurred under the grant at the time the requests were prepared. Cause: Management did not maintain documented procedures requiring retention of evidence of review and approval over expenditures charged to the grant. In addition, reimbursement requests were prepared and submitted without a formal reconciliation package demonstrating that the requested amounts were supported by documented expenditures. Effect: The lack of documented review and approval increases the risk that expenditures charged to the federal award may not be allowable, allocable, reasonable, or adequately documented and that errors or noncompliance may not be detected in a timely manner. Questioned Costs: None. Context: Of the items tested, the auditors noted the review control described by management was not operating as designed. Specifically, documentation evidencing Chief Executive Officer review and approval of expenditures was not maintained and support for reimbursement requests was not consistently retained. Repeat Finding: This is not a repeat finding. Recommendation: Management should establish and document a formal review process over expenditures charged to Federal Programs. Documentation supporting reimbursement requests should be maintained and should include a reconciliation of amounts requested to actual allowable expenditures incurred under the grant. Evidence of reviewer approval should be retained. Management Response: Management concurs with the finding. The Organization acknowledges that evidence of review and approval was not consistently retained and that documentation supporting reimbursement requests was not maintained at a level sufficient to demonstrate compliance with federal requirements. To address this deficiency, management is implementing formal documentation standards requiring each reimbursement request to be supported by a reconciliation of amounts requested to actual allowable expenditures recorded in the general ledger, together with documented evidence of reviewer approval. Each reconciliation will be prepared by grant and budget category and will compare cumulative expenditures recorded in the general ledger to cumulative amounts previously drawn through the Payment Management System, with any differences investigated and resolved before the request is submitted. The Chief Financial Officer (CFO) or the Chief Executive Officer (CEO) will then review and approve each Request for Reimbursement form and related reconciliation before submission, consistent with the approval process described in the responses to Findings 2025-003 and 2025-006. Evidence of this review will include the approver’s handwritten or electronic signature and the approval date on both the Request for Reimbursement form and the supporting reconciliation. In addition, all expenditures will require documented preapproval by the respective department director or other designated personnel before costs are incurred. Original receipts, invoices, and other supporting documentation will be submitted to the Accounting Department, which will review each expenditure to verify that it is properly authorized, adequately supported, accurately coded, and incurred for a legitimate business purpose of the Organization. Prior to the submission of any reimbursement request, expenditures charged to federal awards will be reviewed for allowability, allocability, reasonableness, and adequate documentation in accordance with the cost principles of the Uniform Guidance (2 CFR Part 200, Subpart E). All reconciliations, approvals, and supporting documentation will be retained in accordance with federal record retention requirements and made readily available for review. Supporting documentation will be maintained in a centralized location, organized by grant and reimbursement period, and retained in accordance with the Uniform Guidance record retention requirements (2 CFR 200.334). The Organization will incorporate these review and approval procedures into its written financial policies and procedures, and finance staff involved in preparing reimbursement requests will receive training on them. In addition, management will periodically perform a secondary review of a sample of completed reimbursement requests to verify that reconciliations, approvals, and supporting documentation are complete, and any exceptions identified will be promptly corrected and documented.

Finding 2025-009: Activities Allowed/Unallowed and Allowable Costs – Significant Deficiency Federal Program: Health Center Program (Assistance Listing 93.224) and Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease (Assistance Listing 93.918) Criteria: Management should establish and maintain appropriate internal controls to ensure employee compensation is reviewed and approved by authorized personnel independent of payroll processing and accounting functions. Segregation of duties helps reduce the risk of unauthorized or inappropriate compensation changes. Condition: The organization's control documentation indicates that the Chief Executive Officer (CEO) is responsible for reviewing and approving employee pay rates. During testing, we noted that employee pay rate approvals were instead being performed by the CFO, who is also responsible for various accounting and payroll-related functions. Cause: The control was not operating as designed, as responsibility for pay rate approvals had been delegated to the accountant rather than the CEO. Effect: The lack of independent approval over employee pay rates increases the risk that unauthorized or inaccurate compensation changes could occur and remain undetected. No instances of unallowable payroll costs or noncompliance were identified during our testing. Questioned Costs: None. Context: This is a systemic problem. The deficiency relates to the organization's control over the review and approval of employee compensation rates charged to federal programs. Although management's documented control assigns responsibility for pay rate approval to the CEO, the control was not operating as designed because approvals were being performed by the CFO, who also has payroll and accounting responsibilities. Repeat Finding: This is not a repeat finding. Recommendation: Management should ensure that employee pay rates and subsequent compensation changes are reviewed and approved by an appropriate member of management, such as the CEO or another designated individual independent of payroll processing and accounting functions. Documentation of such approvals should be maintained. Management Response: Management concurs with the finding. The Organization acknowledges that employee compensation approvals were not consistently performed in accordance with documented procedures. To strengthen segregation of duties and oversight, responsibility for review and approval of employee compensation changes will be reassigned to appropriate executive leadership personnel independent of payroll processing responsibilities, consistent with the requirement under the Uniform Guidance (2 CFR 200.303) that the Organization establish and maintain effective internal control over federal awards. All pay raises will be initiated upon the recommendation of the respective department directors and must be approved by the Chief Executive Officer (CEO) or Chief Financial Officer (CFO) prior to processing. All compensation changes will be made in accordance with the Organization's Board-approved written compensation policies and will be reasonable and consistent with compensation paid for similar work, as required by the compensation standards for personal services under the Uniform Guidance (2 CFR 200.430). Human Resources will be responsible for ensuring that all pay raise documentation, including department director recommendations and CEO/CFO approvals, is properly completed and filed in the employee’s personnel record. Documentation of all compensation approvals will be maintained in accordance with the record retention requirements of the Uniform Guidance (2 CFR 200.334) and periodically reviewed to ensure compliance with established policies and procedures.

2025-002 – Subrecipient Monitoring Federal program information: Funding Agency: U.S. Department of the Interior; Bureau of Indian Education Title: Indian Education Assistance to Schools Assistance Listing Number: 15.130 Award Period: December 9, 2024 – December 8, 2026 Criteria: Uniform Guidance regulations section 2 CFR 200.332(b) require a pass-through entity to ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the federal award identification information listed at 2 CFR 200.332(b)(1). That information includes the subrecipient's unique entity identifier, the Assistance Listing Number and title, and the subaward budget period start and end date. Where any of that information is unavailable at the time of the subaward, the pass-through entity must provide the best available information and must provide the unavailable information when it is obtained. Condition: NFEAIE issued eight subawards totaling $6,635,000 during the year ended December 31, 2025. The Assistance Listing Number and title were not stated in any of the eight executed subaward agreements or their attachments. The subaward budget period was not stated in any of the eight agreements. The subrecipient's unique entity identifier was not stated in three agreements totaling $2,238,547. Context: Eight subawards tested, representing 100% of the subrecipient population and 96% of total federal expenditures for the year. Questioned Costs: None. Cause: The subaward template was drafted without comparing it to the information required by 2 CFR 200.332(b)(1). NFEAIE has no written procedure requiring executed subaward agreements to be reviewed against that information before execution. Effect: NFEAIE did not comply with 2 CFR 200.332(b)(1). A subrecipient that is not given the Assistance Listing Number may report the award incorrectly or omit it from its own schedule of expenditures of federal awards, which affects the subrecipient's major program determination and audit coverage, and may also affect subaward reporting under the Federal Funding Accountability and Transparency Act. Omission of the unique entity identifier removes the identifier used to match the subaward to the subrecipient's registration. Auditors' Recommendation: NFEAIE should amend each of the eight executed subaward agreements to add the Assistance Listing Number and title, the subaward budget period, and the unique entity identifier where it was omitted, and should provide the amended agreements to each subrecipient. NFEAIE should adopt a written subaward issuance procedure that includes a checklist of the information required by 2 CFR 200.332(b)(1), completed and retained in the subaward file before execution, and should update the subaward template before the second round of awards is issued. Management's Response: Management concurs with the condition described. Three of the federal award identification elements required by 2 CFR 200.332(b)(1) were omitted from the Round 1 subaward instruments. There are no questioned costs. The Round 1 instruments identified the subrecipient, the Federal Award Identification Number, the federal award date, the subaward period of performance, the total amount of the subaward, the federal award project description, the pass-through entity and its contact, the research and development determination, and the applicable indirect cost rate. They flowed down the Uniform Guidance cost principles and administrative requirements, records retention and audit access under 2 CFR 200.334 and 200.337, closeout obligations under 2 CFR 200.344 and 200.345, the nonprocurement suspension and debarment certification, and quarterly and annual reporting requirements. The omission was limited to the Assistance Listing Number and title, the subaward budget period, and, in three instruments, the unique entity identifier. Before making any subaward, NFEAIE evaluated forty applications through a competitive process, each scored independently by three reviewers, and conducted entity-level financial and compliance due diligence on applicants advancing to award consideration. Four applicants were declined or deferred on the basis of that review. NFEAIE has monitored the subawards throughout the period of performance. The Round 1 template was prepared in the organization’s first months of operation and was not checked against the data element list at 2 CFR 200.332(b)(1). NFEAIE corrected the template in September 2026. The corrected form was used for the subaward executed September 18, 2026 and carries the full element set, together with specific conditions imposed under 2 CFR 200.208 for subrecipients designated elevated risk. The remaining remediation is set out below.

Standards for Documentation of Personnel Expenses Charged to Federal Awards Significant Deficiency in Internal Control Over Compliance - Federal Program: Assistance Listing No. 10.719 - Infrastructure Investment and Jobs Act Firewood Bank Program Federal Agency: U.S. Department of Agriculture, Forest Service (direct award; no pass-through entity) Federal Award Identification: 22-DG-11132544-049 (federal award year 2022) and 25-DG-11132544- 082 (federal award year 2025); USDA Forest Service Firewood Bank Program grant agreements identified by the Organization as contract 049 and contract 082 Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant deficiency in internal control over compliance Known Questioned Costs: None in addition to the $64,969 reported in Finding 2025-003. The personnel costs claimed without supporting records are included in that amount and are not questioned a second time here. Criteria: 2 CFR 200.430(g) (2 CFR 200.430(i) for awards subject to the guidance in effect before October 1, 2024) requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed, be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable and properly allocated, be incorporated into the official records of the entity, and reasonably reflect the total activity for which the employee is compensated, encompassing both federally assisted and all other activities. Budget estimates alone do not qualify as support for charges to federal awards. 2 CFR 200.303 requires the entity to establish and maintain effective internal control over the federal award. Condition: The Organization does not maintain records reflecting the work performed by employees whose salaries and related benefits are charged to the federal award. Personnel costs are assigned to programs, and between federal and non-federal activities, on the basis of management’s estimates rather than records of actual activity. For the year ended December 31, 2025, salaries, payroll taxes and related benefits of $177,331 were allocated on that basis, of which $158,372 was assigned to program services. No after-the-fact activity records, certifications or equivalent documentation covering the total compensated time of those employees are prepared, reviewed or retained, and no reconciliation of amounts charged to the award against records of actual effort is performed. Cause: The Organization has not adopted a time and effort reporting process or written policies addressing the documentation required to support personnel costs charged to federal awards. Effect or Potential Effect: Personnel costs charged to the award are not supported by records that meet the standards in 2 CFR 200.430, and unallowable or misallocated personnel charges could occur and not be prevented, or detected and corrected, on a timely basis. The same condition affects the allocation of expenses among functions presented in the financial statements, as described in Note 11 to the financial statements. Should the award impose a cost-sharing or matching requirement satisfied in whole or in part by personnel effort, the amounts claimed toward that requirement would likewise not be verifiable from the Organization’s records as required by 2 CFR 200.306(b)(1). Context: The condition is systemic and applies to all personnel costs charged to the award for the year ended December 31, 2025. Salaries, payroll taxes and related benefits totaling $177,331 were recorded for the year, against total expenditures of the major federal program of $1,244,996. The absence of activity records was established by inquiry and by examination of the Organization’s payroll and allocation records in their entirety; no sampling was used. Recommendation: We recommend that the Organization implement a personnel activity reporting process under which each employee whose compensation is charged to a federal award prepares, not less frequently than monthly, an after-the-fact record accounting for the employee’s total compensated time across federal and non-federal activities. Each record should be reviewed and approved by a supervisor, reconciled to payroll at least quarterly, used as the basis for amounts charged to the award, and retained in accordance with 2 CFR 200.334. Other documentation methods that satisfy the standards in 2 CFR 200.430 are acceptable provided they are applied consistently and are supported by a system of internal control. Repeat Finding: No Views of Responsible Officials: Management agrees that the Organization should maintain specific records of time and activity worked on federal awards. The Organization will implement a monthly process for documenting and reviewing employee activity to support personnel costs charged to federal awards.

Finding Number: 2025-017 Prior Year Finding Number: 2024-018 Compliance Requirement: Reporting; Special Tests and Provisions – Penalty for Failure to Comply with Work Verification Plan Program: U.S. Department of Health and Human Services Temporary Assistance for Needy Families (TANF) ALN: 93.558 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Department of Human Services (DHS)/ Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR Section 261.60 (a), “A State must report the actual hours that an individual participates in an activity, subject to the qualifications in paragraphs (b) and (c) of this section and Section 261.61(c). It is not sufficient to report the hours an individual is scheduled to participate in an activity. (b) For the purposes of calculating the work participation rates for a month, actual hours may include the hours for which an individual was paid, including paid holidays and sick leave. For participation in unpaid work activities, it may include excused absences for hours missed due to a maximum of 10 holidays in the preceding 12-month period and up to 80 hours of additional excused absences in the preceding 12-month period, no more than 16 of which may occur in a month, for each work-eligible individual. Each State must designate the days that it wishes to count as holidays for those in unpaid activities in its Work Verification Plan. It may designate no more than 10 such days. In order to count an excused absence as actual hours of participation, the individual must have been scheduled to participate in a countable work activity for the period of the absence that the State reports as participation. A State must describe its excused absence policies and definitions as part of its Work Verification Plan, specified at Section 261.62. (c) For unsubsidized employment, subsidized employment, and OJT, a State may report projected actual hours of employment participation for up to six months based on current, documented actual hours of work. Any time a State receives information that the client's actual hours of work have changed, or no later than the end of any six-month period, the State must re-verify the client's current actual average hours of work, and may report these projected actual hours of participation for another six-month period. (d) A State may not count more hours toward the participation rate for a self-employed individual than the number derived by dividing the individual's self-employment income (gross income less business expenses) by the Federal minimum wage. A State may propose an alternative method of determining self-employment hours as part of its Work Verification Plan. (e) A State may count supervised homework time and up to one hour of unsupervised homework time for each hour of class time. Total homework time counted for participation cannot exceed the hours required or advised by a particular educational program.” Per 45 CFR Section 261.61 (a), “A State must support each individual’s hours of participation with documentation in the case file. In accordance with Section 261.62, a State must describe in its Work Verification Plan the documentation it uses to verify hours of participation in each activity.” According to the DC State Verification Plan, the D.C. Department of Human Services (DHS), Department of Human Services Monitoring Unit reviews and audits all documentation submitted by vendors reflecting the activities of recipients in TANF Employment program. This documentation includes time sheets, activity logs, school records, pay stubs, and verification of employment, work experience and on-the-job training. The Monitoring Unit completes this audit process to determine if sufficient documentation exists to substantiate reported time and attendance data, to warrant a payment to TANF Employment program vendors, and submission of countable hours for federal reporting purposes. The District projects hours of participation in unsubsidized, self-employment for six months or until the recipient's next scheduled recertification, whichever is sooner. Per 45 CFR Section 265.7 (a)-(c), “Each State’s quarterly reports (the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), and the SSP-MOE Data Report) must be complete and accurate and filed by the due date.” For disaggregated data report, ‘a complete and accurate report’ means that: (1) The reported data accurately reflect information available to the State in case records, financial records, and automated data systems, and include correction of the quarterly data by the end of the fiscal year reporting period; (2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so); (3) The State reports data for all required elements (i.e., no data are missing); (4)(i) The State provides data on all families; or (ii) if the State opts to use sampling, the State reports data on all families selected in a sample that meets the specification and procedures in the TANF Sampling Manual (except for families listed in error); and (5) Where estimates are necessary (e.g., some types of assistance may require cost estimates), the State uses reasonable methods to develop these estimates. For an aggregated data report, “a complete and accurate report” means that: (1) The reported data accurately reflect information available to the State in case records, financial records, and automated data systems; (2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so); (3) The State reports data on all applicable elements; and (4) Monthly totals are unduplicated counts for all families (e.g., the number of families and the number of out-of-wedlock births are unduplicated counts).” 45 CFR Section 265.7 (g) states that “States must maintain records to adequately support any report, in accordance with 2 CFR Section 200.334 through 200.338.” Condition – During our test work over a sample of sixty (60) out of 5,549 participants for Special Tests and Provisions - Penalty for Failure to Comply with Work Verification Plan and Reporting, we noted: • For seven (7) instances, we noted that although the hours reported on the ACF-199 report met or exceeded the required hours, the hours reported did not agree with the average hours reported in CATCH, or were not supported by documentation (audited timesheets or work documentation). In addition, for three (3) of these instances, the supported hours did not meet the required hours. • For four (4) instances, we noted that the hours reported in the ACF-199 were less than the hours required; however, we noted that the customer was not sanctioned for work requirement non-compliance. In addition, for one (1) of these instances, the hours reported were not supported. • For thirteen (13) instances, we noted that the average hours reported in the ACF-199 were not properly supported. In addition, for eight (8) of these instances, the customer was not sanctioned for work requirement non-compliance. We further noted that for one (1) of these instances, additional support was provided but it was related to four (4) months after the sample selected and was not valid for the month being tested. • For two (2) instances, we noted that although participant work activity was adequately documented and properly supported by audited timesheets or work documentation support, the participant did not meet the work participation weekly hours requirement. In addition, for these samples, we noted that the hours reported on the ACF-199 report do not agree with the average hours in CATCH. • For four (4) instances, we noted that for a customer with unsubsidized employment, although the reported hours and the support met or exceeded the required hours, the reported hours on the ACF-199 report do not agree with the documentation provided (hours reported were less than actual support). • For one (1) instance, this customer was not found in CATCH, therefore there were no required hours included in CATCH. We reviewed the timesheet provided for one week during the month tested. We noted that the reported hours were not supported. • For one (1) instance, the hours reported for the Week 1 timesheet covered a two-week period that crossed two months. However, all the hours on the timesheet were improperly allocated to Week 1 of the month being tested instead of being allocated to the two weeks. We noted that the average hours reported on the ACF-199 report do not agree with the hours approved in CATCH, however, the average hours calculated using the correct hours agree with what was reported on the ACF-199 report. BDO noted that the approved hours for Week 1 in CATCH appear to be incorrect but the reported hours for the month appear to be correct. • For one (1) instance, the hours reported for one week did not agree with the hours on the approved hardcopy timesheet. As a result of the variance in the hours for that week, the hours reported did not agree with the recalculated hours, and the required hours were not met. The information tested in our sample represents the underlying data used in Reporting for the 1st and 4th quarters of fiscal year 2025. Consequently, DHS incorrectly reported data in the ACF-199 report for the 1st and 4th quarters of fiscal year 2025. Questioned Costs – Not determinable. Context – This is a condition identified per review of DHS’ compliance with specified requirements using a statistically valid sample. Effect – Data within the ACF-199 report may not be complete and accurate. Specifically, if the work participation data is not substantiated, or inconsistencies are noted, it may result in inaccurate data being reported and may lead to an incorrect ACF-199 report and could result in an incorrect allocation of Federal Funds to the state. Cause – Controls are not operating effectively over the documentation of work participation data to ensure that adequate evidence of the work participation is maintained. Recommendation - We recommend that DHS enforce existing policies and procedures and implement additional controls to ensure that adequate documentation is maintained to substantiate the work participation data reported in the ACF-199 report in accordance with the District of Columbia Work Verification Plan. We also recommend that DHS implement policies, procedures and controls that will enable an accurate reconciliation between the data sources used in the preparation of the ACF-199 report to ensure proper reporting of data elements. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHS agrees with the findings and will work with the DC Access System (DCAS) and Division of Innovation and Change Management (DICM) teams to mitigate the causes of the findings. These findings are mostly residual issues with the tables in DHS/ESA DCAS system. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

Inadequate Tenant File Documentation in MTW Housing Choice Vouchers (ALN 14.881) (Repeat of Finding 2024-005) Condition: During tenant file testing for the Housing Choice Voucher (HCV) component of the MTW Demonstration Program, we identified the following deficiencies. This condition is a repeat of prior year finding 2024-005: 1. For one port-out tenant, the tenant file did not contain the required HUD Form 50058 or the Enterprise Income Verification (EIV) documentation. As a result, the family’s eligibility, income determination, and assistance could not be substantiated from the file. 2. For one tenant, the Authority was unable to provide the HUD Form 50058; the form was not retained in the tenant file and only tenant balances from the Authority’s housing software were available. The data is reportedly retrievable from HUD’s IMS/PIC system but could not be reproduced from the Authority’s records. 3. For one tenant, the income determination was incorrect. Social Security income was not recalculated based on the prior-year recertification; although an updated Social Security benefit letter was received indicating a change in the monthly benefit, the income reported on the HUD Form 50058 was not updated accordingly, resulting in an inaccurate rent and housing assistance payment (HAP) calculation. Criteria: Under 2 CFR §200.302 and §200.303, the Authority must maintain financial management systems and internal controls sufficient to ensure that costs are allowable, supported, and compliant with program requirements. The 2025 Compliance Supplement (4-14.881) identifies Eligibility (Type E) as subject to audit and requires that the HUD Form 50058-MTW key line items be “documented in the recipient’s file.” HUD program rules require PHAs to complete and retain accurate HUD Forms 50058, to verify income through HUD’s EIV system, and to recalculate income upon receipt of updated benefit information. Records supporting federal program compliance must be retained and accessible (2 CFR §200.334). Cause: The Authority lacked effective internal controls over tenant file documentation, income verification (including use of EIV and updated benefit information), HUD Form 50058 completion and retention, and reexamination procedures. Effect: Missing Forms 50058 and EIV documentation leave family eligibility and assistance payments unsupported; the failure to recalculate income based on updated Social Security benefit information resulted in an inaccurate income determination and rent/HAP calculation. These deficiencies increase the risk of over- or under-payment of housing assistance and questioned costs under the MTW program. Questioned Costs: $395,581 Recommendation: The Authority should ensure the executed HUD Form 50058 (and supporting income/EIV documentation) is completed and retained in each tenant file; recalculate income promptly upon receipt of updated benefit information and reflect the change on the Form 50058; perform EIV verification and reconciliation at each admission and reexamination; conduct a file-completeness review before sign-off; provide staff training on income determination, EIV, and federal recordkeeping; and, where forms were not retained, download and refile them from IMS/PIC. Reply and Corrective Action Plan: The Authority concurs with the finding and questioned costs of $395,581 and acknowledges it is a repeat of finding 2024-005. Ensure Forms 50058 and supporting documentation are retained; recalculate household income when required; retrieve or reconstruct missing records; resolve questioned costs with HUD; conduct file reviews; and provide staff training.

Finding Number 2025-002: Inadequate Tenant File Documentation in MTW Housing Choice Vouchers (ALN 14.881) (Repeat of Finding 2024-005) Condition: During tenant file testing for the Housing Choice Voucher (HCV) component of the MTW Demonstration Program, we identified the following deficiencies. This condition is a repeat of prior year finding 2024-005: 1. For one port-out tenant, the tenant file did not contain the required HUD Form 50058 or the Enterprise Income Verification (EIV) documentation. As a result, the family’s eligibility, income determination, and assistance could not be substantiated from the file. 2. For one tenant, the Authority was unable to provide the HUD Form 50058; the form was not retained in the tenant file and only tenant balances from the Authority’s housing software were available. The data is reportedly retrievable from HUD’s IMS/PIC system but could not be reproduced from the Authority’s records. 3. For one tenant, the income determination was incorrect. Social Security income was not recalculated based on the prior-year recertification; although an updated Social Security benefit letter was received indicating a change in the monthly benefit, the income reported on the HUD Form 50058 was not updated accordingly, resulting in an inaccurate rent and housing assistance payment (HAP) calculation. Criteria: Under 2 CFR §200.302 and §200.303, the Authority must maintain financial management systems and internal controls sufficient to ensure that costs are allowable, supported, and compliant with program requirements. The 2025 Compliance Supplement (4-14.881) identifies Eligibility (Type E) as subject to audit and requires that the HUD Form 50058-MTW key line items be “documented in the recipient’s file.” HUD program rules require PHAs to complete and retain accurate HUD Forms 50058, to verify income through HUD’s EIV system, and to recalculate income upon receipt of updated benefit information. Records supporting federal program compliance must be retained and accessible (2 CFR §200.334). Cause: The Authority lacked effective internal controls over tenant file documentation, income verification (including use of EIV and updated benefit information), HUD Form 50058 completion and retention, and reexamination procedures. Effect: Missing Forms 50058 and EIV documentation leave family eligibility and assistance payments unsupported; the failure to recalculate income based on updated Social Security benefit information resulted in an inaccurate income determination and rent/HAP calculation. These deficiencies increase the risk of over- or under-payment of housing assistance and questioned costs under the MTW program. Questioned Costs: $395,581 Recommendation: The Authority should ensure the executed HUD Form 50058 (and supporting income/EIV documentation) is completed and retained in each tenant file; recalculate income promptly upon receipt of updated benefit information and reflect the change on the Form 50058; perform EIV verification and reconciliation at each admission and reexamination; conduct a file-completeness review before sign-off; provide staff training on income determination, EIV, and federal recordkeeping; and, where forms were not retained, download and refile them from IMS/PIC. Reply and Corrective Action Plan: The Authority concurs with the finding and questioned costs of $395,581 and acknowledges it is a repeat of finding 2024-005. Ensure Forms 50058 and supporting documentation are retained; recalculate household income when required; retrieve or reconstruct missing records; resolve questioned costs with HUD; conduct file reviews; and provide staff training.

Program Name/ALN Title: Health Center Cluster Federal Assistance Listing Number: 93.224/93.527 Federal Agency: U.S. Department of Health and Human Services Award Period: 6/1/2024 – 5/31/2025, 6/1/25-5/31/26 Criteria: 2 CFR 200.334 indicates that 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. Condition: A variance was identified between the supporting documentation provided for the key line item in Table 8A, Line 17, Column C and what was reported in the final UDS report. Additionally, documentation was not available to support the amounts reported on Lines 8, Columns b and b2 and Line 10a, Columns b and b2 within Table 5. Context: Three (3) of seven (7) key line items tested. These key line items are reported in Tables 5 and 8A. Cause: Subsequent to the organization submitting its UDS report, it was requested to make a change by the initial UDS reviewer. The organization made the requested change but did not maintain documentation to support the adjusted amounts. For Table 5 the organization initially created a pivot table based on the underlying data but did not retaining this documentation and therefore couldn’t support the amounts reported. Effect: Potential for inaccurate UDS report to be filed. Recommendation: We recommend the organization enhances its current process related to the preparation of the UDS report and reinforce the requirement to maintain documentation to support the amounts reported within the various tables of the UDS report. Views of the Responsible Officials: There is no disagreement with the audit finding.

FINDING 2025-001 DOCUMENT RETENTION SIGNIFICANT DEFICIENCY Federal Program: Title I, Part A Assistance Listing Number: 84.010A Criteria Per 7 CFR 200.334, “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.” Condition As part of its process to determine allocations of Title I program funds, the State of Indiana uses poverty level data submitted by the schools. The report used to determine Title I funding for the 2025 fiscal year was obtained from the School. A sample of 40 students were selected from the report for testing. Of those selected, the School was unable to provide the records that were used to determine the poverty level of 7 students. Cause The School did not have procedures in place to ensure it maintained this documentation for all reported students. Effect Determination of whether reporting was correct for these students could not be made. Recommendation We recommend the School develop internal controls requiring the maintenance of documentation for poverty level determination records. Views of Responsible Officials The School’s Corrective Action Plan is included on page 22.

FINDING 2025-003 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements 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 2023-003. Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to its laborers and mechanics. Nonfederal entities are to include in their construction contracts that are subject to the wage rate requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause and that a copy of the payroll was submitted for each week in which contract work was performed. Two construction projects were paid for from the Elementary and Secondary School Emergency Relief Fund grant funds during the audit period. Both contracts were tested. One of the two contracts contained the required prevailing wage rate clause; however, a copy of the payroll was not submitted for either of the contracts for any week in which work was performed. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 17 BATESVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages — (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls — . . . (ii) Certified payroll requirements — (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 BATESVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. . . ." Cause The School Corporation did not implement corrective action as planned to rectify the prior audit finding. This was partially due to the timing of the prior audit as well as an oversight by management. Upon realizing corrective action had not been taken, the grant had been fully expended, and corrective action was no longer possible. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, certified payrolls were not obtained by the School Corporation, and one out of two contractors was not notified of prevailing wage requirements. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and ensure certified payrolls are obtained and contractors are notified of prevailing wage requirements as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: Title I Grants to Local Educational Agencies - Eligibility 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): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Other Matters Condition and Context Eligibility for Title I is determined on the Eligible School Summary of the Title I application. Enrollment and poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment (PE) count for each school into the Eligible School Summary page of the Title I application. These counts that are prepopulated should be based on the School Corporation's records as of October of the prior fiscal year. There was no audit evidence that the School Corporation performed a review of the enrollment and poverty counts that were prepopulated into the School Corporation's Title I grant application. During the audit period, the School Corporation submitted two Title I applications. The School Corporation was required to use the October 2022 Real Time Report data for the 2023-2024 Title I application, and the October 2023 Real Time Report data for the 2024-2025 Title I application submitted to the IDOE. Data to be submitted included student socioeconomic status information. The school lunch software was used to verify the socioeconomic status of students reported in the Title I application. A total of 25 students were selected for testing. The socioeconomic status for 1 of the 25 students tested from the October 2022 Real Time Report data did not agree to data reported in the 2023-2024 Title I application. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the October 2022 Real Time Report and the 2023-2024 Title I application. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 MITCHELL COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." Cause Due to turnover of staff in the School Corporation's administrative office, the School Corporation's management had not established a system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and made available for audit related to the eligibility compliance requirement. Effect The School Corporation did not establish an effective system of internal controls to retain and provide appropriate supporting documentation for the Real Time Reports and for the audit period which enabled noncompliance to go undetected. Noncompliance with the grant agreement and the eligibility compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure Real Time Reports are reviewed for accuracy and compared to the Title I application and that adequate documentation is maintained to support the information in the Title I application. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

U.S. Department of Health and Human Services Program Name: Maternal and Child Health Services Block Grant Federal Assistance Listing Number: 93.994 Significant Deficiency, Nonmaterial Noncompliance – Reporting Finding 2025-010 – Repeat Finding Criteria or Specific Requirement: Per Section 200.303 of the Uniform Grant Guidance, a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Per 2 CFR 200.334 the recipient must retain all federal award records for three years from the date of submission of their final financial report. Condition: During the audit we tested nine reports and noted the following: a) There was one instance out of nine reports tested where the submitted reports were unable to be provided, including the date of submission for the reports. b) There were four instances out of nine reports tested where the County was unable to provide evidence the report was reviewed prior to submission. c) There were two instances out of nine reports tested where the County was unable to provide the date of submission for the reports. Questioned Costs: None of the nonmaterial noncompliance items resulted in questioned costs. Effect: By not having the required documentation and underlying support, the County is not able to demonstrate compliance with the applicable requirements. Cause: The County did not have a formal policy to ensure documentation was retained to evidence review and submission of all reports. Recommendation: While the County made updates to policies and procedures surrounding reporting during the current year to address the prior year finding, the County should ensure these policies are adhered to ensure all submitted reports and underlying data are retained in accordance with the Uniform Grant Guidance requirements. Views of Responsible Officials: Management agrees with the finding and is implementing procedures to correct this which is further discussed in the Corrective Action Plan. Corrective Action Plan: See Corrective Action Plan prepared by the County.

Reference Number: 2025-018 Prior Year Finding: No Federal Agency: Various State Agency: Higher Education Policy Commission (HEPC) Bluefield State University Federal Program: Research and Development Cluster Assistance Listing Number: Various Award Number and Year: Various Compliance Requirement: Procurement Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Compliance: 2 CFR 200.320 (a)(1)(iv) states that a recipient or subrecipient may establish a micro-purchase threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The recipient or subrecipient may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal agency or pass-through entity and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: A. A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; B. An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, C. For public institutions, a higher threshold is consistent with State law. Control: Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: HEPC and Bluefield State University utilized micro‑purchase procedures for purchases charged to Federal awards at amounts exceeding the Federal micro‑purchase threshold based on thresholds established in its Board approved policies. However, the entities did not complete and retain the required annual self‑certification supporting the higher thresholds utilized. Context: HEPC applied a micro‑purchase threshold of $50,000 and Bluefield State University applied a micro‑purchase threshold of $25,000. Questioned costs: None noted. Cause: HEPC’s and Bluefield State University’s internal control processes did not include a documented control activity to ensure annual self‑certification of the micro‑purchase threshold was completed, approved by appropriate authority, and retained in accordance with Uniform Guidance requirements. Effect: By applying micro‑purchase procedures to transactions exceeding the Federal micro‑purchase threshold without maintaining required self‑certification documentation, the entities increase the risk of noncompliance with Uniform Guidance procurement standards, insufficient competition or price reasonableness documentation, and the potential for unallowable or unsupported costs charged to Federal awards. Recommendation: HEPC and Bluefield State University should formally establish and document an annual self‑certification of their micro‑purchase thresholds in accordance with 2 CFR §200.320(a)(1)(iv). The self‑certification should clearly identify the approved threshold, include a written justification, and retain supporting documentation demonstrating compliance with one of the allowable criteria. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.

FINDING 2025-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2024, FY 2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Adequate internal controls were not in place over procurements made under the simplified acquisition threshold for one of two vendors tested during the audit period. The School Corporation made purchases with a vendor in fiscal year 2023-2024 totaling $289,127, but it did not provide audit evidence that methods and procedures performed for the selection of the vendor aligned with requirements related to vendors procured under the simplified acquisition threshold. Adequate internal controls were not in place over procurements made under the small purchase threshold for one of five vendors tested during the audit period. The School Corporation made purchases with a vendor in 2023-2024 totaling $103,519 and in 2024-2025 totaling $111,613, but it did not provide audit evidence that the procurement procedures performed in relation to the award had been reviewed or approved. The School Corporation did not provide documentation that it had entered into a contract with the vendor during either year of the audit period. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to procurement requirements. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318(a): "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (1) . . . (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The non-Federal entity may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of any of the following: (A) A qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or, (C) For public institutions, a higher threshold consistent with State law. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." Cause Staff responsible for purchasing were not adequately trained on the School Corporation's procurement policy for obtaining bids for purchases above the simplified acquisition threshold and formal contract requirements for purchases above $50,000. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure that contractors paid under the small purchase and simplified acquisition methods were awarded the best price for their services. This could result in federal funding not providing as many services or projects as possible. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation strengthen its system of internal controls to ensure the proper procurement method is followed and documentation is retained. We also recommended strengthening its policies and procedures to ensure that appropriate audit evidence is retained for audit. Views of Responsible Official For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card, High School Graduation Rate 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 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance to ensure that documentation regarding the reason for a student being removed from the high school graduation cohort for mobility reasons was prepared, reviewed, and retained. The Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirement necessitated that for students removed from the high school graduation cohort for mobility reasons there be proper written documentation to support the identified mobility code. There were 15 students selected for testing. Of the 15 students tested, 3 students did not have the required supporting documentation to substantiate removal from the cohort for mobility reasons. 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). . . ." 20 USC 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause The School Corporation did not have consistent procedures for maintaining and retaining supporting documentation related to student cohort changes. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper documentation was not maintained for students that were removed from the cohort for mobility reasons. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure proper documentation is maintained for students that are removed from the cohort. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card, High School Graduation Rate 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 Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Findings: Material Weakness, Qualified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirement. The School Corporation must report graduation rate data for all public high schools within the School Corporation using the four-year adjusted cohort rate. To remove a student from the cohort, the School Corporation must confirm the reason for removal in writing. Additionally, required documentation for each removal type must be retained by the School Corporation. The School Corporation did not have effective internal controls in place to ensure that documentation for each removal was retained. INDIANA STATE BOARD OF ACCOUNTS 19 SALEM COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Documentation of the reason for removal from the cohort was not retained for six of the eight students selected for testing. The School Corporation was unable to locate documentation for any students who exited the cohort prior to the current high school counselor taking her position. 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). . . ." 20 USC 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation to ensure documentation was retained for the required period of time. When turnover occurred, the required files were not retained or could not be located. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper documentation to support students' mobility was not retained or provided for audit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 20 SALEM COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure mobility documentation is collected and retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Name: Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii, ASL#: 14.228; Federal Grantor: U.S. Department of Housing and Urban Development; Pass Through Entity: State Department of Housing and Community Development; Award No.: 21-CDBG-CV-TRIB; Year: 2024/2025; Compliance Requirement: Other; Criteria: 2CFR Section 200.302 (Financial Management) and 2 CFR Section 200.334 (Retention Requirements for Records) require that non-federal entities maintain documentation that adequately supports federal expenditures, including original invoices, receipts, and approvals demonstrating that costs were allowable, necessary, and reasonable. Condition: During our testing of 40 disbursements for the Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii, we identified two instances (5% error rate) totaling $24.98 where the disbursement was not supported by an original vendor invoice or receipt. Cause: Controls were not consistently followed before processing payments. Effect: The lack of supporting documentation increases the risk that unauthorized, unallowable, or fraudulent expenditures could be charged to the federal program without detection. Questioned Cost: As a result, we are questioning costs of $24.98. Context: The sample was intended to be a systematically valid sample from a population of 556 transactions. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the management strengthen controls over disbursements by ensuring that no payment is processed wihtout a valid, itemized invoice thta has been approved by authorized personnel. Furthermore, all supporting docuemtnation should be attached to the payment voucher and retained for audit purposes. Views of Responsible Officials and Planned Corrective Action: Refer to separate Management's Corrective Action Plan for view of responsible officials and management's responses.

Significant Deficiencies Federal Program: U.S. Department of Health and Human Services Pass-Through from Maryland Department of Health and Cecil County Health Department Major Program: Opioid State Targeted Response (93.788) Finding 2025 - 004: Transactions Lacking Adequate Documentation – Allowable Costs Criteria: 2 CFR Part 200.403(g) requires that costs should be adequately documented to support the nature and amount of a transaction for such charges to be allowable under federal awards. In addition, 2 CFR Part 200.334 requires recipients to maintain financial records sufficient to show compliance with federal statues, regulations, and terms and conditions of the award. Condition: During our audit we identified certain transactions without adequate documentation. Context: A review of 40 disbursements totaling $41,262 noted two transactions without proper support. One employee reimbursement was overpaid due to an incorrect reimbursement form, and one disbursement did not have proper approval of the invoice. Cause: The employee improperly completed the reimbursement form, and the total amount did not match the original receipt. The supervisor failed to notice this difference when reviewing the form. For the other disbursement, the invoice was not properly reviewed and approved by a supervisor prior to payment. Effect: Costs could be deemed unallowable by the awarding agency if not properly substantiated and grant funding could be improperly spent. Questioned Costs: $1,434 of known costs charged to federal awards without adequate documentation. Recommendation: We recommend the Organization reiterate its policy to employees to properly calculate and document reimbursement forms. We also recommend that management adequately review and approve all invoices as they arrive. View of Responsible Officials and Planned Corrective Action: We are in agreement with the finding and will reinforce our policies on reimbursements and invoice approvals.

2025-009 – Insufficient Supporting Documentation of Disbursements Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Allowable Costs/Cost Principles). Program. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC); U.S. Department of Health and Human Services; Assistance Listing Number 93.323; Award Number E20242798-00. Criteria. Under 2 CFR §200.403(g) and 2 CFR 200.334, federal award expenses must be adequately documented, and records must be retained and available for review for the required retention period. Condition. During our testing of disbursements, we noted 1 of 26 disbursements tested where the University did not have adequate documentation to support why the disbursement was charged to the grant. Cause. The lack of required supporting documentation resulted from employee turnover within the grant and accounts payable functions, which led to gaps in knowledge transfer and inconsistent adherence to established documentation procedures. Effect. As a result of this condition, there is an increased risk of unallowable expenses being charged to the grant, inaccurate financial reporting, and other potential noncompliance with federal regulations. Questioned Costs. There were questioned costs of $135. Recommendation. We recommend the University establish formal procedures to ensure all expenses charged to grants have adequate support and reviewed and approved by management. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.

FINDING 2025-002 Subject: Title I Grants to Local Educational Agencies - Eligibility 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): S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Modified Opinion Condition and Context Eligibility for Title I is determined on the Eligible School Summary of the Tile I Application. Enrollment and Poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment count for each school into the Eligible School Summary page of the Tile I application. The counts that are prepopulated should be based on the School Corporation's records as of October of the prior fiscal year. During the audit period, the School Corporation submitted two Title I Applications. The School Corporation was required to use the October 2022 Real Time Report data for the fiscal year 2023-2024 Title I application and the October 2023 Real Time Report data for the 2024-2025 Title I application submitted to the IDOE. Data to be submitted included student socioeconomic status information. Of the 25 students tested, the School Corporation could not provide documentation supporting enrollment status for 1 student or the socioeconomic status for 3 students. 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 annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." INDIANA STATE BOARD OF ACCOUNTS 17 LAKELAND SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." Cause The School Corporation did not have effective internal controls in place to ensure documentation was complete for all student enrollment and socioeconomic statuses. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, documentation was not complete to ensure all student enrollment and socioeconomic statuses in the Title I Application were accurate. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would ensure documentation is complete for all student enrollment and socioeconomic statuses. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Home Partnership Investment Program Assistance Listing Number: 14.239 Pass-Through Agency: State Department of Housing and Urban Development 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: In accordance with 2 CFR § 200.334, recipients and subrecipients of federal awards are required to retain all records pertinent to a federal award for a period of three years from the date of submission of the final expenditure or financial report. These records include, but are not limited to, financial records, supporting documentation, statistical records, and all other records pertinent to the federal award. The County is expected to retain copies of all grant agreements to ensure it can identify and comply with all applicable terms, conditions, and regulatory requirements associated with the funding. Condition: CLA observed that the County did not retain copies of the grant agreements for the Home Partnership Investment Program. Questioned costs: None noted. Context: CLA was unable to obtain the grant agreements for the Home Partnership Investment Program, as the County was unable to provide copies upon request. Cause: The management was unable to retain copies of the grant agreements due to the considerable passage of time since their issuance. Effect: Due to the absence of the original grant agreements, the County may not be fully aware of, or in compliance with, all applicable grant requirements. Repeat Finding: 2024-008 Recommendation: We recommend that management establish and maintain a formal process for the retention and organization of all grant-related documentation. This process should ensure that key documents are securely stored, easily accessible, and periodically reviewed to support ongoing compliance with grant requirements. Additionally, the County should work with granting agencies to obtain copies of any missing agreements and perform a comprehensive review to identify and address any outstanding compliance requirements. Views of responsible officials: There is no disagreement with the audit finding.

FINDING 2025-004 Subject: Special Education Cluster (IDEA) - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-148-PN01, 23611-148-PN01, 24611-148-PN01, 25611-148-PN01, 22611-148-ARP, 22619-148-PN01, 23619-148-PN01, 24619-148-PN01, 25619-148-PN01, 22619-148-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls to ensure that proper documentation was retained for audit. A sample of 40 expenditures from the School Corporation's special education funds during the audit period was selected for testing. Of the sample, there were 5 transactions for which the School Corporation was unable to provide supporting documentation. As a result, 5 expenditures totaling $11,683 could not be verified as allowable activities or costs for the program. 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 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." INDIANA STATE BOARD OF ACCOUNTS 26 GRIFFITH PUBLIC SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 34 CFR 300.202(a) states: "General. Amounts provided to the LEA under Part B of the Act— (1) Must be expended in accordance with the applicable provisions of this part; (2) Must be used only to pay the excess costs of providing special education and related services to children with disabilities, consistent with paragraph (b) of this section; and (3) Must be used to supplement State, local, and other Federal funds and not to supplant those funds." 34 CFR 300.208 states: "(a) Uses. Notwithstanding §§ 300.202, 300.203(b), and 300.162(b), funds provided to an LEA under Part B of the Act may be used for the following activities: (1) Services and aids that also benefit nondisabled children. For the costs of special education and related services, and supplementary aids and services, provided in a regular class or other education-related setting to a child with a disability in accordance with the IEP of the child, even if one or more nondisabled children benefit from these services. (2) Early intervening services. To develop and implement coordinated, early intervening educational services in accordance with § 300.226. (3) High cost special education and related services. To establish and implement cost or risk sharing funds, consortia, or cooperatives for the LEA itself, or for LEAs working in a consortium of which the LEA is a part, to pay for high cost special education and related services. (b) Administrative case management. An LEA may use funds received under Part B of the Act to purchase appropriate technology for recordkeeping, data collection, and related case management activities of teachers and related services personnel providing services described in the IEP of children with disabilities, that is needed for the implementation of those case management activities." 34 CFR 300.800 states: "The Secretary provides grants under section 619 of the Act to assist States to provide special education and related services in accordance with Part B of the Act— (a) To children with disabilities aged three through five years; and (b) At a State's discretion, to two-year-old children with disabilities who will turn three during the school year." 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: INDIANA STATE BOARD OF ACCOUNTS 27 GRIFFITH PUBLIC SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (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. . . ." Cause Due to turnover of staffing in the School Corporation's administrative office, an effective system of internal controls was not established that would have ensured compliance, or that supporting documentation would have been maintained and made available for audit, with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect Without a proper system of internal controls in place that operated effectively, the School Corporation did not retain and provide appropriate supporting documentation. This prevented the determination of the School Corporation's compliance with the compliance requirements listed above. Questioned Costs We identified $11,683 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls to ensure documentation to support all grant expenditures will be maintained and made available for audit as related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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

FINDING 2025-007 Subject: Title I Grants to Local Educational Agencies - Eligibility 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: Eligibility Audit Findings: Material Weakness, Modified Opinion Condition and Context Eligibility for Title I is determined on the Eligible School Summary of the Title I application. Enrollment and poverty numbers for the public school district are automatically pulled from Indiana Department of Education's Official Pupil Enrollment count for each school into the Eligible School Summary page of the Title I application. Enrollment and poverty numbers for any nonpublic schools are manually entered into the Title I application by the School Corporation. The School Corporation was to obtain a list of students and their poverty status from the non-public schools to enter into the Title I application. INDIANA STATE BOARD OF ACCOUNTS 31 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) However, supporting documentation was not provided to verify the nonpublic schools' enrollment and poverty numbers included in the fiscal year 2023-2024 Title I application. In addition, supporting documentation was not provided to verify the nonpublic schools' poverty numbers and the total enrollment number was 42 students greater than the support provided for the 2024-2025 Title I application. The lack of internal controls and supporting documentation was 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 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." Cause Due to a turnover in Title I Directors, supporting documentation for the enrollment and poverty numbers included in the Title I applications could not be located. Effect Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 32 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management develop policies and procedures over the retention of the Title I application enrollment and poverty information for nonpublic schools. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-008 Subject: COVID-19 - Education Stabilization Fund - Condition of Records Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U, 84.425W Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Equipment and Real Property Management; Matching, Level of Effort, Earmarking; Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding numbers were 2023-007 and 2023-009 over the compliance requirements Equipment and Real Property Management and Special Tests and Provisions - Wage Rate Requirements, respectively. Condition and Context The School Corporation received reimbursements totaling $30,316,384 from the COVID-19 - Education Stabilization Fund (ESF) federal awards during the audit period. The reimbursements were associated with three 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 $30,316,384 received in ESF funds during the audit period was based on 28 reimbursement requests for expenditures incurred between June 1, 2023 through December 13, 2024. Based on our review of grant fund records and inquiry with management, we identified the following deficiencies:  The detailed disbursement ledger for the period of June 1, 2023 through December 13, 2024, excluding June 2024 for Grant #S425U210013 as no reimbursement request was submitted, reflected total expenditures of $23,051,334. This resulted in $7,265,050 in reimbursements that were not adequately supported by detailed records. INDIANA STATE BOARD OF ACCOUNTS 33 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)  A review of the submitted reimbursement requests indicated that $1,069,865 was reimbursed for indirect costs; however, a disbursement from the grant funds to other operating funds was not recorded within the School Corporations records.  Of the 28 reimbursement requests submitted, only 5 were supported by detailed disbursement ledgers that agreed with the dates and amounts claimed. The remaining 23 reimbursement requests could not be directly reconciled to the supporting documentation provided. Upon further inquiry with management, additional records were provided; however, these records lacked sufficient detail, such as fund number, fund name, check numbers, dates, and vendor names to be useable.  Reimbursements received were not posted to each grant fund properly. This resulted in the ARP EESER III fund receipts to be understated by $4,297,935 and the ESSER II and GEER PD funds receipts to be overstated by $4,174,376 and $123,560, respectively.  Since this is a reimbursement-based grant, the ending cash and investment balances of each grant fund should either be zero or overdrawn while awaiting reimbursement. However, as of June 30, 2025, the ESSER II and Geer PD funds reported positive cash and investment balances of $5,047,932 and $404,653, respectively. 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 $30,316,384 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. INDIANA STATE BOARD OF ACCOUNTS 34 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 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 35 SCHOOL CITY OF EAST CHICAGO 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 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages— (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls— (ii) Certified payroll requirements— INDIANA STATE BOARD OF ACCOUNTS 36 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II to Part 200 states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." 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 $30,316,384 in known 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 detail records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

4. MEDICAID CLUSTER/CHIP – THIRD PARTY LIABILITY Finding Number: 2025-016 State Agency Number: MCD-04 Assistance Listing Numbers and Titles: 93.767 – Children’s Health Insurance Program (CHIP) 93.767 COVID 19 – CHIP 93.775/93.777/93.778 – Medicaid Cluster 93.775/93.777/93.778 COVID-19 – Medicaid Cluster Federal Award Identification Numbers / Years: 2305OH5023 / 2023 (CHIP) 2405OH5024 / 2024 (CHIP) 2505OH5025 / 2025 (CHIP) 2305OH5MAP / 2023 (Medicaid Cluster) 2405OH5MAP / 2024 (Medicaid Cluster) 2505OH5MAP / 2025 (Medicaid Cluster) Federal Agency: Department of Health and Human Services Compliance Requirements: Allowable Costs / Cost Principles – Third Party Liability Repeat Finding from Prior Audit? No NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY 42 C.F.R. § 433.136, Definitions states, in part: Third Party means any individual, entity or program that is or may be liable to pay all or part of the expenditures for medical assistance furnished under a State plan. 42 C.F.R. § 433.138(b)(1), Identifying liable third parties states, in part: If the Medicaid agency determines eligibility for Medicaid, it must, during the initial application and each redetermination process, obtain from the applicant or beneficiary such health insurance information as would be useful in identifying legally liable third party resources so that the agency may process claims under the third party liability payment procedures specified in § 433.139(b) through (f). Health insurance information may include, but not limited to, the name of the policy holder, his or her relationship to the applicant or beneficiary, the social security number of the policy holder, and the name and address of insurance company and policy number. 42 C.F.R. § 433.139(b), Payment of claims states, in part: (1) If the agency has established the probable existence of third party liability at the time the claim is filed, the agency must reject the claim and return it to the provider for a determination of the amount of liability. The establishment of third party liability takes place when the agency receives confirmation from the provider or a third party resource indicating the extent of third party liability. When the amount of liability is determined, the agency must then pay the claim to the extent that payment allowed under the agency’s payment schedule exceeds the amount of the third party’s payment. (3) The agency must pay the full amount allowed under the agency's payment schedule for the claim and seek reimbursement from any liable third party to the limit of legal liability [in certain circumstances] . . . 2 C.F.R. § 200.334, Record retention requirements states, in part: The recipient . . . must retain all Federal award records for three years from the date of submission of their final financial report. . . . Records to be retained include but are not limited to financial records, supporting documentation and statistical records. . . The Department is the lead agency responsible for administering the Medicaid Cluster and CHIP federal grant programs for the State of Ohio. It is the Department’s responsibility to design and implement a system of internal controls to ensure legally liable third parties are identified, maintain verification documentation, and the claim is paid correctly. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure its third party liability process is operating effectively and as intended. During state fiscal year (SFY) 2025, the Department verified 10,600 third party insurance records within the Medicaid Information Technology System (MITS) which generated a document control number (DCN) record and stored the associated verification documentation received as a response to the verification letters sent to the third party providers within the DCN Panel. Additionally, monthly the Department reviewed a sample of verifications to ensure the third party liability insurance information was properly verified and information within MITS was accurate. As of July 7, 2025, MITS was decommissioned and the third party liability process was moved to the Ohio Medicaid Enterprise System (OMES) Fiscal Intermediary (FI) module. However, no historical evidence such as the DCN or supporting third party insurance documentation was available for review within FI. As such, the Department was unable to provide any of the third party verifications and compliance with federal requirements could not be verified during the audit period. By not maintaining historical third party insurance verifications within FI, the Department cannot be reasonably assured the third party insurance information was verified to ensure accurate payment of the fee-for-service claims and compliance with federal regulations during the audit period. Based on discussions with the Department, the issue was caused by the system change from MITS to FI, as a result, access to MITS was revoked and therefore no record of verifications could be provided for audit. We recommend the Department re-evaluate its policies and procedures over third party insurance verifications to ensure the liability insurance verification information is documented and maintained to be compliant with federal requirements and be available upon request. We recommend the Department continues to review the third party liability DCNs (or equivalent parameter within FI) monthly to ensure the information was properly verified, coverage types were properly identified, and all information in FI and other systems is correct. We further recommend the Department take necessary steps to ensure the proper conversion of all relevant data elements and related documentation is completed by ensuring historical data is maintained and available when a major system upgrade and/or replacement is performed.

Performance Reporting – Semi-Annual Progress Report and Special Reporting – MFP Work Plan Program Name: Money Follows the Person Rebalancing Demonstration (MFP) (Assistance Listing 93.791) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 1LICMS300142 Criteria The Money Follows the Person (MFP) Rebalancing Demonstration federal award requires the state to provide programmatic reports in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200.301. Title 2 CFR Part 200.301 requires the state to correlate financial data to performance accomplishments of the federal award. The state should also measure performance in a way that will help the United States Department of Health and Human Services (DHHS) and other non-federal entities to improve program outcomes, share lessons learned, and spread the adoption of promising practices. Title 2 CFR Part 200.303 requires the non-federal entity to establish and maintain effective internal controls over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. MFP terms and conditions require the state to submit a work plan that documents its progress on the use of initiatives designed to increase the use of home and community-based services rather than institutional long-term services and supports. MFP terms and conditions require the state to submit semi-annual progress reports that present the state’s analysis and the status of various operational areas in reaching the objectives of the demonstration. The semi-annual progress report documents the state’s progress in meeting MFP operational procedures and processes, transition benchmarks, and program goals for expanding and enhancing home and community-based services. Title 2 CFR Part 200.334 requires the state to retain financial and programmatic records to support reported information for three years from the date of submission. Condition Our review of the MFP work plan and semi-annual progress report for July 1 to December 31, 2024, disclosed that the Department of Social Services (DSS) did not maintain MFP program data to support figures reported for seven performance objectives in the work plan and 11 performance measures in the semi-annual progress report. Context DSS submitted two semi-annual progress reports and two work plans to DHHS during fiscal year 2025. The sample was not statistically valid. Questioned Costs $0 Effect DSS may have submitted an inaccurate work plan and progress report. DHHS may be using unreliable data to identify promising practices and make future federal program decisions. Cause DSS lacked adequate controls to document and retain MFP data. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Social Services should strengthen internal controls over performance and special reporting for the Money Follows the Person Rebalancing Demonstration to ensure it maintains data to support figures reported to the Department of Health and Human Services. Views of Responsible Officials “The Department agrees with this finding and is taking steps to strengthen internal controls over performance monitoring and special reporting for the Money Follows the Person (MFP) Rebalancing Demonstration. DSS is implementing a secure SharePoint repository to centrally maintain, organize, and track all documentation supporting the MFP Work Plan and the MFP Semi-Annual 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.

Significant Deficiencies Federal Program: U.S. Department of Treasury Pass-Through from Maryland Department of Labor Major Program: Coronavirus State and Local Fiscal Recovery Funds (21.027) Finding 2025 - 002: Transactions Improperly Recorded - Allowable Costs Criteria: 2 CFR Part 200.403(e) requires that costs should be determined in accordance with generally accepted accounting principles for such charges to be allowable under federal awards. Generally accepted accounting principles require expenses to be recognized when incurred. Prepaid annual services should be recognized ratably over the contract period. In addition, 2 CFR Part 200.334 requires recipients to maintain financial records sufficient to show compliance with federal statues, regulations, and terms and conditions of the award. Condition: During our audit we identified certain transactions that were improperly expensed in their entirety in the fiscal year. Context: A review of 40 disbursements totaling $570,943 noted three transactions totaling $4,291 that were improperly expensed entirely in the current year. A portion of these transactions should have been accrued as prepaid expenses. Cause: The three invoices were not properly reviewed for the effective term of the contract. Management therefore did not consider the portion of the contract that extended into the next fiscal year to determine which amounts should have been deferred into the upcoming year. Effect: Costs could be deemed unallowable by the awarding agency if not recorded in the proper period in accordance with generally accepted accounting principles. Questioned Costs: $2,182 of known costs charged to federal awards outside of the proper period. Recommendation: We recommend that management adequately review service contracts paying particular attention to the service period. When the contract extends into the subsequent fiscal year an adjustment should be made to reclassify as a prepaid any portion of the contract that falls outside the current fiscal year end. View of Responsible Officials and Planned Corrective Action: We are in agreement with the finding and will extra care to review service invoices to ensure expenses are allocated between periods properly.

FINDING 2025-005 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles 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 2023-005. INDIANA STATE BOARD OF ACCOUNTS 22 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The COVID-19 - Education Stabilization Fund (ESF) grant was established by the Coronavirus Aid, Relief and Economic Security (CARES) Act to respond to the Coronavirus outbreak and assist schools in creating healthy learning environments, return students to classrooms, and address local needs. The ESF grant was further funded by the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and the American Rescue Plan (ARP) Act. The School Corporation did not have effective internal controls in place over the Allowable Costs/Cost Principles compliance requirement. A sample of 13 payroll claims paid from the School Corporation's ESF grant were selected for testing. Of the sample, 6 employee pay rates could not be verified to a School Board-approved, allowable hourly pay rate for a high dosage tutor position. High dosage tutors were paid anywhere from $20 to $77 an hour. The School Corporation was unable to provide documentation that the School Board approved a pay rate for the high dosage tutor positions during the audit period. The total amount paid to high dosage tutors during the audit period was $472,354, which were considered questioned costs. In addition, the School Corporation paid a consulting firm to provide general support to the finance department. The expenditures were deemed unallowable as there was no documentation available that the consultants were assisting the School Corporation in preventing, preparing for, and responding to COVID-19. The total amount expended to the consultant during the audit period was $514,156, which were considered questioned costs. The lack of internal controls and noncompliance were isolated to the costs noted above for the ESSER II and ESSER III grants. 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 the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." INDIANA STATE BOARD OF ACCOUNTS 23 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. (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. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for State and local governments and Indian Tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b). (g) Be adequately documented. See §§ 200.300 through 200.309. (h) Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. At its discretion, the Federal agency is authorized to waive prior written approvals to carry forward unobligated balances to subsequent budget periods. See § 200.308(g)(3). 2 CFR 200.430(i)(1) states in part: "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 24 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.404 states: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134 Stat. 1924 (2020) states in part: "For an additional amount for "Education Stabilization Fund".to remain available through September 30, 2022, to prevent, prepare for, and respond to coronavirus, domestically, or internationally . . ." Cause Payroll records were incomplete as the School Corporation was unable to provide documentation that all rates of pay were approved by the School Board. The School Corporation did not include the consultants above in the budget submitted as part of the grant application, and so the School Corporation did not get the required prior approval for the purchases. Effect Without proper documentation, the allowability of the ESF grant expenditures cannot be substantiated, creating a risk that unallowable costs may be charged to the federal grant. Additionally, we could not determine how the expenditures met the purpose of the program. Questioned Costs We identified $986,510 in known questioned costs as described above in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 25 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure rates of pay are approved by the School Board and adequately documented and that costs are allowable. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025-001: Department of Health and Human Services - Temporary Assistance for Needy Families (TANF), Federal Assistance Listing #93.558; Pass Through Virginia Department of Social Services, Pass Through Entity Identifying Number BEN-21-054. Criteria: The Organization should have processes and procedures in place to keep and maintain client eligibility records, per 2 CFR 200.303 and 2 CFR 200.334. Condition: During our audit, we noted that the Organization was unable to locate records substantiating the eligibility of clients served. Context: During testing, the Organization was unable to find supporting eligibility records for 35 out of the 53 samples that received services as part of a federal program. The sample was not intended to be, and was not, a statistically valid sample. Cause/Effect: Internal control processes over proper maintenance of clients’ records were not operating effectively, causing documentation to not be located. Questioned Costs: $40,400 calculated based on the dollar amount submitted for reimbursement for each item tested without proper eligibility records. Identification of Repeat Finding: Repeat Finding 2024-001. Recommendation: We recommend procedures are implemented to ensure proper maintenance of client records. Views of Responsible Officials: Management agrees with the recommendation and has implemented corrective action as outlined in the corrective action plan.

2025-002: Department of Health and Human Services - Temporary Assistance for Needy Families (TANF), Federal Assistance Listing # 93.558; Pass Through Virginia Department of Social Services, Pass Through Entity Identifying Number BEN-21-054. Criteria: The Organization should have effective policies and procedures in place to ensure there is proper documentation supporting funds were used in compliance with the federal award, per 2 CFR 200.303 and 2 CFR 200.334. Condition: During our audit, it was noted that there was not an effective process in place to keep and maintain the required records to support pay-for-performance outputs and outcomes. Context: The Organization was unable to provide documentation supporting the allowability of 7 of the 52 samples selected for testing. Cause/Effect: Internal control processes over maintenance of records supporting pay-for-performance outcomes and outputs were not operating effectively from July 2024 through June 2025. Questioned Costs: $7,200 calculated based on the dollar amount submitted for reimbursement for each item tested without proper records supporting the required outcome or output was met. Identification of Repeat Finding: 2024-002 Recommendation: We recommend that the Organization implements a review process to ensure that documentation is retained to support pay-for-performance outputs and outcomes submitted to the grantor. Views of Responsible Officials: Management agrees with the recommendation and has implemented corrective action as outlined in the corrective action plan.

2025-003: Department of Health and Human Services - Temporary Assistance for Needy Families (TANF), Federal Assistance Listing #93.558; Pass Through Fairfax County, Pass Through Entity Identifying Number 4400012652. Criteria: The Organization should have processes and procedures in place to keep and maintain client eligibility records, per 2 CFR 200.303 and 2 CFR 200.334. Condition: During our audit, we noted that the Organization was not performing procedures to ensure eligibility of clients participating in the program and thus were unable to locate records substantiating the eligibility of clients served. Context: During testing, the Organization was unable to support eligibility for 7 out of the 7 samples that received services as part of a federal program. The sample was not intended to be, and was not, a statistically valid sample. Cause/Effect: Internal control processes over proper processes for eligibility and maintenance of clients’ records were not operating effectively, causing documentation to not be located. Questioned Costs: Unknown. Identification of Repeat Finding: N/A Recommendation: We recommend procedures are implemented to ensure only eligible clients participate in the federal program and client records are maintained. Views of Responsible Officials: Management agrees with the recommendation and has implemented corrective action as outlined in the corrective action plan.

Identification of the Federal Programs: Assistance Listing Number: 14.239 Assistance Listing Title: Home Investment Partnerships Program Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: M24-MC060521 Federal Award Year: FY2024 – FY2032 Criteria or Specific Requirements: Federal regulations require recipients of federal housing rehabilitation and loan program funds to maintain complete, accurate, and reliable documentation demonstrating compliance with all program terms and conditions. Under 2 CFR 200.303, Internal controls, recipients must establish and maintain effective internal controls over Federal awards to ensure proper stewardship of program funds. In addition, 2 CFR 200.334, Record retention requirements, requires recipients to retain records that document compliance with Federal program requirements and make such records available for audit or review. Identified Condition: During the audit, the City was unable to provide the required supporting documentation for several sampled properties. Specifically, documentation was not available to support: • proof of current homeowner’s insurance and verification of updated property tax payments for thirteen sampled properties; • evidence of owner occupancy for the required loan term for the twelve sampled properties; • executed home loan agreements for two sampled properties; and • proof supporting the number of residential units for one sampled commercial property. Because the required documents were not available, we were unable to test compliance with program eligibility requirements. Cause: The condition occurred due to insufficient internal controls over record retention and documentation management within the housing rehabilitation and loan programs. Staff turnover and transitions in program responsibilities contributed to gaps in institutional knowledge and inconsistent maintenance of required records. Effect: The lack of complete and accessible records limits the City’s ability to demonstrate compliance with Federal requirements. These documentation gaps also indicate weaknesses in internal controls over record retention and program oversight, which may affect the reliability of program administration and future audit results. Questioned Costs: None. Recommendation: The City should strengthen its internal controls over record retention and documentation management to ensure all required program records are complete, accurate, and readily accessible for audit. This includes establishing clear procedures for maintaining documentation supporting property eligibility, loan terms, and compliance requirements, as well as implementing a centralized and organized record‑keeping system. The City should also provide training to staff responsible for administering the housing rehabilitation and loan programs to promote a consistent understanding of Federal documentation and retention requirements. Additionally, periodic internal reviews should be conducted to verify that required records are being properly maintained. Views of Responsible Officials and Planned Corrective Action Plan: Management acknowledges the auditors’ review of HUD HOME eligibility testing. We believe our current processes generally comply with HUD requirements; however, we recognize the opportunity to strengthen controls. To address the auditors’ comments, we will enhance our eligibility verification procedures, improve documentation consistency, and provide additional staff training. These corrective actions will help ensure ongoing compliance and accuracy in eligibility determinations. Personnel Responsible for Implementation: Meredith Elguira Position of Responsible Personnel: Community Development Director Expected Date of Implementation: April 30, 2026

Performance Reporting – Semi-Annual Progress Report and Special Reporting – MFP Work Plan Program Name: Money Follows the Person Rebalancing Demonstration (MFP) (Assistance Listing 93.791) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 1LICMS300142 Criteria The Money Follows the Person (MFP) Rebalancing Demonstration federal award requires the state to provide programmatic reports in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200.301. Title 2 CFR Part 200.301 requires the state to correlate financial data to performance accomplishments of the federal award. The state should also measure performance in a way that will help the United States Department of Health and Human Services (DHHS) and other non-federal entities to improve program outcomes, share lessons learned, and spread the adoption of promising practices. Title 2 CFR Part 200.303 requires the non-federal entity to establish and maintain effective internal controls over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. MFP terms and conditions require the state to submit a work plan that documents its progress on the use of initiatives designed to increase the use of home and community-based services rather than institutional long-term services and supports. MFP terms and conditions require the state to submit semi-annual progress reports that present the state’s analysis and the status of various operational areas in reaching the objectives of the demonstration. The semi-annual progress report documents the state’s progress in meeting MFP operational procedures and processes, transition benchmarks, and program goals for expanding and enhancing home and community-based services. Title 2 CFR Part 200.334 requires the state to retain financial and programmatic records to support reported information for three years from the date of submission. Condition Our review of the MFP work plan and semi-annual progress report for July 1 to December 31, 2024, disclosed that the Department of Social Services (DSS) did not maintain MFP program data to support figures reported for seven performance objectives in the work plan and 11 performance measures in the semi-annual progress report. Context DSS submitted two semi-annual progress reports and two work plans to DHHS during fiscal year 2025. The sample was not statistically valid. Questioned Costs $0 Effect DSS may have submitted an inaccurate work plan and progress report. DHHS may be using unreliable data to identify promising practices and make future federal program decisions. Cause DSS lacked adequate controls to document and retain MFP data. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Social Services should strengthen internal controls over performance and special reporting for the Money Follows the Person Rebalancing Demonstration to ensure it maintains data to support figures reported to the Department of Health and Human Services. Views of Responsible Officials “The Department agrees with this finding and is taking steps to strengthen internal controls over performance monitoring and special reporting for the Money Follows the Person (MFP) Rebalancing Demonstration. DSS is implementing a secure SharePoint repository to centrally maintain, organize, and track all documentation supporting the MFP Work Plan and the MFP Semi-Annual Report.”

Finding 2025-002: SLFRF Record Retention Criteria: 2 CFR Section 200.334 - 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. Condition: Elevation timecards for employees for the pay period ending 4/3/2025 were not adequately retained during the required three-year period. Questioned Cost: $12,448.47 Cause: Neighborhood Christian Legal Clinic, Inc. did not have the proper internal controls in place to ensure that all required supporting documents were retained during the specified three-year period. Effect: Payroll amounts for the pay period ending 4/3/2025 that were reported to the awarding agency could not be verified through documentation review. Recommendation: We recommend the Clinic review the internal controls over the administration of Federal funds to ensure documentation is created and retained in accordance with Federal and pass-through requirements. Views of responsible officials and planned corrective actions: While this finding resulted in a deficiency, it resulted from the Clinic's transition from tsheets, a Quickbooks payroll platform, to Paycor, which precluded existing controls from being tested in a retired system to which access could not be regained. The Clinic retained the timesheet records the grantor requested but was not able to produce the payroll records requested during the audit when they were part of the retired system. The current Paycor system is testable and maintains the required level of controls, so there is no additional action required to maintain a compliant system. The deficiency resulted merely from an inability to produce and test records from a retired system, not from a lack of controls in that system. Should the new payroll system records be required, all necessary records will be retained and available to access.

Federal Program: ALN 93.575 Child Care and Development Block Grant (CCDBG) Category: Compliance Compliance requirements: Allowable Costs / Cost Principles Record retention Condition: BGCPR did not maintain sufficient documentation to demonstrate compliance with minimum personnel qualification requirements. Criteria: Pursuant to 2 CFR §200.430(a)(2), costs of compensation are allowed only to the extent that the total compensation for individual employees follows an appointment made in accordance with the recipient's or subrecipient's laws, rules, or written policies Additionally, 2 CFR §200.303(a) requires recipients and subrecipients to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, 2 CFR §200.403(g) requires costs charged to Federal awards to be adequately documented. Moreover, pursuant to 2 CFR §200.334, recipients and subrecipients must retain all Federal award records, including financial records, supporting documentation, and statistical records, for a minimum of three years from the date of submission of the final financial report. If litigation, claims, or audit findings are initiated before the expiration of the retention period, the records must be retained until all such matters are resolved and final action has been taken. Context: During testing of four payroll-related transactions selected for Allowable Activities and Allowable Costs compliance testing, we noted that one sampled employee did not meet the minimum educational and experience qualifications established for the position. Cause: For one payroll-related item, the personnel file did not contain documentation demonstrating that the employee met the minimum educational and experience qualifications established for the position. The employee did not possess the required bachelor's degree at the time of promotion. Although management subsequently provided an undated narrative explaining the basis for the hiring decision, no supporting documentation evidencing an approved exception at the time of promotion was maintained in the personnel file. Questioned cost: Amount is below the threshold to be considered a questioned cost. Effect or potential effect: As a result, BGCPR could not demonstrate that the employee's appointment was made in accordance with its established hiring requirements. Consequently, compensation costs charged to the Federal award may not be fully supported as allowable. Recommendation: Ensure personnel files contain documentation demonstrating that employees meet the minimum qualifications for their positions and retain evidence of any approved exceptions or waivers supporting hiring or promotion decisions. Views of officials responsible: BGCPR will provide additional training and guidance to Human Resources personnel to ensure consistent adherence to the internal procedures established. Anticipated completion date: September 30, 2026

Federal Program: ALN 93.575 Child Care and Development Block Grant (CCDBG) Category: Compliance Compliance requirements: Allowable costs Record retention Condition: The BGCPR did not maintain sufficient documentation to demonstrate compliance with employee background check requirements. Criteria: Pursuant to 2 CFR §200.430(a)(2), compensation costs are allowable when appointments are made in accordance with the recipient's written policies and procedures. Further, 2 CFR §200.303(a) requires recipients to establish and maintain effective internal controls to ensure compliance with applicable requirements. Additionally, 2 CFR §200.403(g) requires costs charged to Federal awards to be adequately documented. Moreover, pursuant to 2 CFR §200.334, recipients and subrecipients must retain all Federal award records, including financial records, supporting documentation, and statistical records, for a minimum of three years from the date of submission of the final financial report. If litigation, claims, or audit findings are initiated before the expiration of the retention period, the records must be retained until all such matters are resolved and final action has been taken. Per the BGCPR Human Resources Policies and Procedures Manual, specifically the Required Certifications and Background Check Policy, all employees and leaders must maintain current required certifications and documentation, including Criminal Record Certificate, Health Certificate, Law 300 Certificate, Educational Credentials, and Fingerprint Verification, and must successfully complete applicable background checks before perform their duties. Failure to comply with these requirements may result in restrictions from performing job responsibilities and may affect continued employment. Context: We found that two (2) of the four (4) sample employees lacked documentation, evidencing compliance with BGCPR's required background check procedures. Cause: For two (2) payroll-related items, the personnel files did not contain evidence demonstrating that required background checks had been completed in accordance with the BGCPR's hiring policies. For one employee, the background check was performed after the employee's recruitment date. For the second employee, the required background check documentation was not available in the personnel file at the time of the audit. Although management subsequently provided the documentation after the exception was identified, the evidence indicated that the background check report was printed in July 2026. Accordingly, the personnel files did not contain sufficient documentation to support compliance with the BGCPR's background check requirements during the audited period. Questioned cost: Amount is below the threshold to be considered a questioned cost. Effect or potential effect: As a result, BGCPR could not demonstrate that the employees were hired in accordance with established hiring requirements or that compensation costs charged to the Federal award were supported by adequate documentation. Recommendation: Ensure personnel records are complete, accurate, and maintained in accordance with established policies and procedures Views of officials responsible: BGCPR will provide additional training and guidance to Human Resources personnel to ensure consistent adherence to the internal procedures established. Anticipated completion date: September 30, 2026

Federal Program: ALN 10.536 CACFP Training Grants Category: Compliance/internal control significant deficiency Compliance requirements: Allowable costs / cost principles/procurement Record retention Condition: The procurement process was not adequately documented to demonstrate compliance with BGCPR's procurement policy. Criteria: 2 CFR § 200.318(a) requires recipients and subrecipients to maintain and use documented procurement procedures for procurement transactions under a Federal award or subaward, including the acquisition of property or services. These procedures must be consistent with applicable State, local, and tribal laws and regulations and the Federal procurement standards. 2 CFR § 200.318 (e) established that when appropriate for the procurement or use of common or shared goods and services, recipients and subrecipients are encouraged to enter into State and local intergovernmental agreements or inter-entity agreements for procurement transactions. These or similar procurement arrangements using strategic sourcing may foster greater economy and efficiency. Documented procurement actions of this type (using strategic sourcing, shared services, and other similar procurement arrangements) will meet the competition requirements of this part. 2 CFR § 200.318 (i) established that the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. According to VI. Purchasing and Procurement of the BGCPR’s Fiscal Policies and Procedures, all requisitions, purchase orders, and invoices must be approved prior to the purchase commitment. For purchases between up to $1,000, quotations are not required; however, the Purchasing Department must obtain price information from the supplier. Every transaction should have a formal purchase order from BGCPR’s system. Further, 2 CFR §200.403(g) requires costs charged to Federal awards to be adequately documented. Moreover, pursuant to 2 CFR §200.334, recipients and subrecipients must retain all Federal award records, including financial records, supporting documentation, and statistical records, for a minimum of three years from the date of submission of the final financial report. If litigation, claims, or audit findings are initiated before the expiration of the retention period, the records must be retained until all such matters are resolved and final action has been taken. Context: For 2 samples tested, purchases were made without a formal purchase order generated from the system. In addition, 1 sample included merchandise received and paid in excess of the amount authorized in the purchase order. The purchase order was not amended. Cause: Program procurement personnel relied on the pass-through entity's procurement process and did not consistently maintain documentation required under BGCPR's internal procurement policy. Questioned cost: Amount is below the threshold to be considered a questioned cost. Effect or potential effect: Failure to consistently follow the entity’s procurement policy may result in unsupported or unauthorized purchases, payments exceeding approved amounts, and questioned costs if the expenditures are not properly authorized, documented, or determined to be allowable. Recommendation: Management should strengthen oversight of procurement activities and ensure that all procurement transactions are supported by documentation demonstrating compliance with BGCPR's procurement policies, including the use of formal purchase orders and adherence to authorized purchasing limits. Views of officials responsible: In order to avoid this situation happening in the future, instruction will be provided to all personnel emphasizing that every purchase should be made through a purchase order. This will ensure that we follow the BGCPR formal procedure and ensure better internal control is being followed. In addition, we will emphasize that no shipment should be received if such purchase is not in accordance with the specification disclosed in the purchase order. Anticipated Completion Date: September 30, 2026

Condition During testing of cash disbursements, the audit team was unable to locate adequate supporting documentation for selected transactions sufficient to determine whether the costs charged were allowable and the activities were allowed under the applicable federal award(s). Documentation such as invoices, receipts, contracts, approvals, or evidence linking the expenditure to an allowable activity could not be located or provided by the Institute. Criteria Per 2 CFR § 200.403, costs charged to a federal award must be necessary, reasonable, and adequately documented. Per 2 CFR § 200.302 and § 200.334, non-federal entities must maintain financial records, including source documentation (e.g., invoices, receipts, canceled checks, time and effort records) that support the allowability, allocability, and reasonableness of costs charged to federal awards, and these records must be retained and readily accessible for a minimum of three years. Additionally, 2 CFR § 200.404 and § 200.405 require that costs be allocable and consistently applied to allowable program activities. Cause The Institute's recordkeeping and document retention practices did not ensure that supporting documentation for cash disbursements was consistently maintained, organized, or readily retrievable. This may be attributable to insufficient internal controls over document retention, lack of a centralized filing/records system, or turnover in staff responsible for maintaining disbursement records. Effect Without adequate supporting documentation, the Institute cannot demonstrate that disbursed funds were used for allowable costs and allowed activities in accordance with the terms of the federal award(s). This exposes the Institute to the risk of questioned costs, disallowed expenditures, required repayment to the funding agency, and potential findings of noncompliance in future audits. It also limits the Institute's ability to demonstrate accountability and stewardship over federal funds. Recommendation We recommend that the Institute strengthen internal controls over cash disbursements to ensure supporting documentation (invoices, receipts, approvals, and evidence of allowable activity) is obtained and retained for every transaction prior to disbursement. The Institute should implement a centralized, organized recordkeeping system (physical or electronic) for disbursement documentation, with clear responsibility assigned for maintenance and retrieval. The Institute should also provide training to relevant staff on documentation retention requirements under 2 CFR Part 200. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendation. The Institute recognizes that complete and readily retrievable supporting documentation is necessary to demonstrate the allowability, allocability, and reasonableness of costs charged to all awards. Management will strengthen its cash disbursement and record-retention procedures to ensure invoices, receipts, approvals, contracts, and other applicable supporting documentation are maintained for each transaction. The Institute implemented a centralized electronic recordkeeping process for cash disbursement documentation and assigned responsibility for maintaining and retrieving supporting records. Documentation supporting the expenditure and applicable approvals are retained with the transaction records. Relevant staff have been instructed on documentation and record-retention requirements applicable to federal awards. Management will hold an annual training at the beginning of the new fiscal year available to all Institute employees.

Finding 2025-068 Federal Program Name Education Stabilization Fund (ESF) (COVID-19) Federal Awarding Agency U.S. Department of Education State Agency Office of Public Instruction (office) ALN # 84.425D and 84.425U Grant # S425D200006, S425U210006, S425D210006 Compliance Requirement L. Reporting Type of Finding Material Weakness and Material Noncompliance Questioned Costs No questioned costs identified Criteria: Federal regulation, 2 CFR 200.334, requires non-federal entities to retain records related to federal awards. Compliance Supplement 2025 (page 4-84.425-29) states an annual special report is required with the following key line items: • Local Education Agency’s (LEA) expenditures by the Elementary and Secondary School Emergency Relief (ESSER) subgrant fund, expenditure category, and object code • Number of specific positions supported with ESSER funds • Allocation of ESSER funds to schools and criteria used to allocate funds to schools, and • Full Time Equivalent (FTE) positions 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: The office receives ESF funds under the ESSER portion of the grant. The office did not have documented evidence that it reviewed the ESSER annual report before submission. No other compensating controls were in place to ensure the report was accurate and complete. Upon reviewing the report submitted during the audit period, we found multiple instances where the report did not reconcile with supporting data. Context: As the ESSER program ended, the federal Department of Education waived the annual report for 2025. As a result, only one annual report was due during the two-year audit period. We reviewed supporting data from 46 schools and found that of those schools, 43 included data that did not match what the office submitted to the federal government. Differences between the two sources ranged from approximately $400 to over $400,000. Repeat Finding: This is a repeat finding and was reported as Single Audit finding #2023-031 from the audit for the two fiscal years ended June 30, 2023. Effect: Annual ESSER reports were posted to a public website to show how ESSER funds were spent across the United States. Montana's report for the office contained information that was not supported by school data, which could mislead the public about how funds were used and create inconsistencies with data reported by other states. By reporting incomplete and/or inaccurate information, the office is not in compliance with federal regulations. Cause: The office indicated it completed a review of the annual report prior to submission. However, staff in the positions responsible for preparing and reviewing the report left the office when the program ended. Current staff could not locate documentation to support that a review occurred or explain why amounts conflicted with supporting documentation. Recommendation: We recommend the Office of Public Instruction A. Strengthen internal controls to ensure that reviews of federal reports are completed and documented prior to submission and documentation is retained in a centralized location. B. Retain supporting documentation and submit accurate federal reports, as required by federal regulation. Views of Responsible Officials: The office concurs with the recommendation. For additional information regarding the office’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2025-033 Federal Program Name Formula Grants for Rural Areas and Tribal Transit Program (COVID-19) Federal Awarding Agency U. S. Department of Transportation State Agency Montana Department of Transportation (department) ALN # 20.509 Grant # MT-2018-011, MT-2020-013, MT-2022-019, MT-2023-004, MT-2023-005, MT-2024-018, MT-2025-006 Compliance Requirement I. Procurement and Suspension and Debarment Type of Finding Material Weakness and Material Noncompliance Questioned Costs No questioned costs identified Criteria: Federal regulation, 2 CFR 180.300, requires grant recipients to verify that an entity is not excluded or disqualified before entering into a covered transaction with that entity. Federal regulation, 2 CFR 200.334, requires grant recipients to retain all records related to a federal award for three years after submitting the final expenditure report. Records for federally funded equipment must be kept for three years after final disposition. State procurement policy requires agencies to maintain a complete procurement record to support compliance and auditing. 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: The department lacks documentation showing it verified that vehicle suppliers were not suspended or debarred before entering into contracts. Context: The department uses term contracts with vehicle suppliers, issuing purchase orders off the master contract as needed throughout the contract period. Procurement staff follow a checklist that includes verifying a supplier is not suspended or debarred, and the department expected staff to save that verification in the procurement file. However, during the audit period the department did not document checklist completion and the department did not require a secondary review for compliance with federal requirements. We requested suspension and debarment verification documentation for two master contracts, two master contract amendments, and three purchase orders. The department could not provide contemporaneous documentation for any of the seven contracts. We confirmed that none of the contracted entities were suspended or debarred. The three purchase orders included a clause in which the supplier certifies it is not suspended or debarred, which is an allowable method of verification. However, neither the master contracts nor their amendments contained this clause. Effect: The department has no documentation confirming it verified whether vehicle suppliers were excluded or disqualified before entering into covered transactions. Without that verification, the department risks contracting with an entity ineligible to receive federal funds. Cause: The department attributes the missing documentation to a single employee who did not save verification records. That employee is no longer with the department, and the department's review found that other procurement staff appropriately document their verifications. Recommendation: We recommend the Montana Department of Transportation: A. Strengthen internal controls to ensure compliance with suspension and debarment verification requirements is documented and retained for all transit vehicle procurements. B. Document verification of exclusion or disqualification status for all covered transactions involving transit vehicles, as required by federal regulation. 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.

Finding 2025-032 Federal Program Name Formula Grants for Rural Areas and Tribal Transit Program (COVID-19) Federal Awarding Agency U.S. Department of Transportation State Agency Montana Department of Transportation (department) ALN # 20.509 Grant # MT-2018-011, MT-2020-013, MT-2022-019, MT-2023-004, MT-2023-005, MT-2024-018, MT-2025-006 Questioned Costs $2,505,563 Federal Program Name Enhanced Mobility of Seniors and Individuals with Disabilities (COVID-19) ALN # 20.513 Grant # MT-2021-006, MT-2022-028, MT-2022-029, MT-2023-007, MT-2023-019, MT-2023-020, MT-2024-018, MT-2025-006 Questioned Costs $3,149,674 Federal Program Name Buses and Bus Facilities Formula, Competitive, and Low or No Emissions Programs ALN # 20.526 Grant # MT-2022-029 Questioned Costs $507,741 Compliance Requirement I. Procurement and Suspension and Debarment Type of Finding Material Weakness, Material Noncompliance, and Other Matter Criteria: Federal regulation, 49 CFR 663.25, requires grant recipients, before signing a public transit vehicle supplier contract, to review documentation listing each vehicle part, its manufacturer, country of origin, and cost, then certify that the vehicles will meet Buy America requirements. Federal regulation, 49 CFR 663.41, requires grant recipients to keep on file a certification that they received the manufacturer's self-certification of compliance with relevant Federal Motor Vehicle Safety Standards (FMVSS) before awarding a public transit vehicle supplier contract. Federal regulation, 49 CFR 665.7, requires grant recipients to determine whether a public transit vehicle requires testing at the Bus Testing Facility. If testing is required, the grant recipient must obtain the test results and certify that the vehicle received a passing score before accepting delivery. Bus models are tested for maintainability, reliability, safety, performance, structural integrity, durability, fuel economy, noise, and emissions. Federal regulation, 2 CFR 200.334, requires grant recipients to retain all records supporting a federal award for three years after submitting the final expenditure report. Records for federally funded equipment must be retained for three years after final disposition. Montana state procurement policy requires agencies to maintain a complete record of the procurement process to ensure compliance and facilitate auditing. 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: The department's internal controls did not include reviews of vehicle procurements to verify compliance with Buy America, FMVSS, or bus testing requirements, resulting in federal noncompliance. Because the affected purchases were paid for with federal grant funds across three programs, we question costs for all affected programs: Formula Grants for Rural Areas, Enhanced Mobility of Seniors and Individuals with Disabilities, and Buses and Bus Facilities Formula, Competitive, and Low or No Emissions Programs. Questioned Costs: Vehicles funded through multiple ALNs were purchased under the noncompliant contracts. We question the federal share of all vehicles purchased under those contracts. Because vehicle deliveries span multiple audit periods, we cannot determine the exact federal expenditures within this audit period alone. Likely questioned costs exceed $25,000 in this audit period, and are also expected to exceed $25,000 in future audit periods. Context: When the department subgrants federal awards to purchase public transit vehicles, it procures the vehicles on behalf of local transit providers. Before signing a supplier contract, the department must review and document that vehicles meet safety, domestic production, and contract specification requirements. The department's procurement division is responsible for obtaining this documentation. In a randomly selected nonstatistical sample of four of the nine purchase contracts issued during the audit period, auditors found two contracts with compliance issues: Contract 1 – Buy America: The supplier did not provide the required part-by-part Buy America documentation. Instead, it provided only a general promise of future compliance. Despite this, the department’s procurement staff certified that they had reviewed the required documentation and awarded the contract. Contract 2 – FMVSS and Bus Testing: The department obtained a manufacturer statement that vehicles complied with safety standards but did not certify receipt of the required documentation, as federal regulation requires. The department also failed to determine whether full bus testing was required, did not obtain the required test results, and accepted vehicle delivery without the required documentation. Federal regulations require Buy America and FMVSS documentation and certification at both the pre-award and post-delivery stages. Documentation provided only at delivery does not satisfy the pre-award requirement. Neither contract should have been awarded without the required certifications in hand. Effect: Without part-by-part Buy America documentation, the department could not confirm the vehicles would be manufactured in compliance with Buy America requirements. Without the required FMVSS certification and bus testing results, the department could not confirm the vehicles met applicable safety, reliability, or performance standards. Cause: The supplier for the first contract told the department it does not provide detailed Buy America documentation before manufacturing vehicles. Department procurement staff accepted the supplier's promise of future compliance rather than requiring the documentation federal regulations mandate before contract award. The department also lacked a process to review procurements for compliance with pre-award federal requirements. Regarding record retention, the department contends that 49 CFR 663 does not require it to retain detailed Buy America documentation. However, both the Uniform Guidance and Montana state procurement policy require agencies to retain procurement records to demonstrate compliance. Recommendation: We recommend that the Montana Department of Transportation: A. Strengthen internal controls to ensure all federal requirements are met when procuring public transit vehicles. B. Conduct a pre-award audit before entering into any vehicle supplier contract, as required by Federal regulations. C. Obtain required bus testing documentation before accepting delivery of vehicles, as required by federal regulations. 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.