Findings Citing § 200.403

Finding 2025-002 – Allowable Costs and Period of Performance (Significant Deficiency and Noncompliance)- (Partial repeat finding) Information on the Federal Program: U.S. Department of Education, Higher Education – Institutional Aid (Title III), Assistance Listing No. 84.031 Criteria: 2 CFR Part 200 Subpart E establishes cost principles to apply in determining costs under federal awards. Non-federal entities are also required to establish controls over the disbursement process to ensure compliance with allowable cost requirements. In addition, a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and non-federal entities are also required to establish controls over the disbursement process to ensure compliance with period of performance requirements. [2 CFR sections 200.308, 200.309, and 200.403(h)]. Condition: We selected a sample of 25 non-payroll disbursements and 25 payroll disbursements charged to the grant. There were 44 pay checks tested in the sample of 25; of those 44, nine exceptions were noted. In four instances, there was no documented approved pay rate and in five instances, there was no approval for salary to be charged to the grant number and documentation showed unrestricted, a different account or offer letter had no Title III documentation. Cause: The College did not obtain proper approval by the Director of the program, expenses did not fit into the grant budget line items, approved pay rates were not properly documented as approved Title III expenses for the proper grant period. Effect: The College’s grant disbursements were not properly approved. Questioned Costs: $14,731 Recommendation: We recommend the College strengthen its policies and procedures surrounding payroll and non-payroll grant disbursements to ensure controls are functioning and compliant withfederal regulations. Views of Responsible Officials: See Management’s View and Corrective Action Plan included at the end of the report.

Finding 2025-001: Reportable Finding Considered a Significant Deficiency - Eligibility Program name: Supportive Housing for Elderly Assistance Listing: 14.157 Federal award Identification number: 121-EE015 Federal award year: 2025 Federal awarding agency: U.S. Department of Housing and Urban Development (HUD) Criteria: The Project Rental Assistance Contract requires that rental subsidy claims be based on the HUD-approved contract rent for each unit. Under 2 CFR 200.403(a), costs must be “necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition: Two of seven units tested were billed at rates exceeding the HUD-approved contract rent, resulting in overcharges to the Federal program. Cause: Internal controls over compliance with program compliance requirements are not operating effectively. Effect or Potential Effect: Overbilling resulted in unallowable costs charged to the Federal award, which may require repayment and could affect future funding. Known Questioned Costs Known questioned costs total $52,780, calculated as the difference between the approved contract rent and the billed amount for all units overcharged. Repeat finding: This is not a repeat finding. Perspective: Our sample included 7 units out of a population of 50 units; 2 errors were noted, indicating a potential systemic issue. Recommendation: We recommend the Owner/Agent: 1) Implement a review process to verify billed subsidy amounts against the approved contract rent schedule; 2) Train staff on compliance with the Project Rental Assistance Contract and 2 CFR 200 cost principles; and 3) Reimburse the Federal program for identified overcharges. Management’s response and corrective action plan (unaudited): Management at SAHA PM notes its responsibility to establish and maintain effective internal control over financial reporting to provide reasonable assurance that transactions are properly recorded, processed, and summarized to permit the preparation of reliable financial statements in accordance with generally accepted accounting principles (“GAAP”). We plan to establish a checklist for the property accounting team that includes a comparison of gross rent potential to the HUD approved rent schedule.

2025 001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Beneficiary Payments U.S. Department of State: Bureau of Population and Refugees and Migration: U.S. Refugee Admissions Program: FY24 MRA Capacity Development Funds (ALN 19.510, award number SPRMCO23CA0361) FY2023 25 Year 3 Reception and Placement Program Affiliate MRA DA+Admin (ALN 19.510, award number SPRMCO24CA0356) FY2023 25 Year 3 Reception and Placement Program Affiliate ERMA DA+Admin (ALN 19.510, award number SPRMCO24CA0357) Statistically valid sample: No, and it was not intended to be. Repeat finding: Not a repeat finding. Finding Type: Significant Deficiency and noncompliance Criteria: 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statues, regulations, and the terms and conditions of federal awards. The specific requirements for activities allowed or unallowed are unique to each federal program and are found in the federal statutes, regulations, and the terms and conditions of the federal award pertaining to the program. 2 CFR Part 200 establishes cost principles for determining costs applicable to federal awards with nonprofit organizations. The Uniform Guidance (2 CFR 200.403) requires that costs charged to federal awards be necessary, reasonable, allocable, adequately documented, and in compliance with the terms and conditions of the federal award. Costs that do not provide a direct programmatic benefit, or where the benefit cannot be reasonably demonstrated or allocated, and are incurred outside the approved scope of the award are not allowable as direct charges. Condition and context: On February 13, 2025, IRC’s Ethics & Compliance Unit (ECU) received a whistleblower report alleging that an IRC Housing Coordinator located in an office in Northern California submitted unauthorized and fraudulent requests for funds, which were uploaded onto USIO bank debit cards, claiming they were expenses for newly resettled IRC clients, and instead using the funds for personal benefit. These USIO cards are intended to be used to cover expenses for newly arrived refugees during the initial 90 day period, including rent, food and other miscellaneous expenses. An internal investigation was initiated in February 2025 which found that the Housing Coordinator had loaded funds onto USIO bank debit cards between May 8, 2023 and February 11, 2025 which were for purposes other than refugees. The investigation concluded that there were unauthorized and fraudulent requests for funds in the amount of $215,639, plus the related indirect costs that were applied on these direct costs of $33,920, for a total of $249,559 related to federal funds expended in 2025 and charged to the grants identified in this finding. The total expenditures in this program included on the 2025 schedule of expenditures of federal awards amount to $42,671,438. This unauthorized and fraudulent requests for funds noted of $249,559 is not included in the total expenditures in this program on the 2025 schedule of expenditures of federal awards as the amounts were recoded to unrestricted funds. IRC communicated this matter to the federal agency in February 2025 when the investigation began and again in September 2025 when the investigation was completed. The expenditures were reallocated to IRC’s unrestricted funds so that the federal grants were not charged. Cause: The internal investigation completed by ECU concluded that the unauthorized and fraudulent requests for funds resulted from the Housing Coordinator’s ability to request the transactions and approve the transactions because he obtained his direct report’s general ledger log in credentials. Additionally, there were several control gaps in the Northern California office, including the following: • There was a lack of safekeeping of blank USIO Cards – this office was not following the established control to keep the blank cards in a locked safe. • USIO cards were not tracked or recorded properly – this office was not always following the established control to have the refugees sign a log book upon receipt of a USIO card. • A lack of oversight from the heads of programs and finance in this office regarding reconciliations between budgeted and actual amounts with irregular transactions being flagged (excessive housing expenses). Effect: The auditee charged certain costs directly to the program that did not meet the requirements noted above, and were therefore, not allowable. Questioned Costs: Questioned costs were $249,559, however, IRC reallocated these costs to IRC’s unrestricted funds, so that the grants were not charged. Recommendation: IRC should design and implement enhanced internal control procedures over the authorization and disbursement of funds to IRC refugee clients through USIO cards to ensure that funding provided is allowable. Additionally, IRC should provide training to employees about sharing their personal credentials to access IRC’s general ledger. Views of Responsible Officials: Management agrees with this finding, which was identified by IRC in February 2025 and raised to KPMG prior to the single audit. Corrective actions related to USIO portal access, office leadership and structure, training and policies, and spot checking have been implemented and will continue through June 2026.

Program Name: 93.778 Medicaid Cluster Description: Unallowable Costs and Reporting Condition and Criteria: The District charged payroll costs to the Medicaid program that were also charged to another federal program (IDEA Flow-Through), resulting in duplicate federal reimbursement for the same expenditures (“double-dipping”). Under 2 CFR 200.403 and 2 CFR 200.405, costs must be allocable to a single federal award and must not be charged to multiple programs. During audit testing of payroll charges, we identified employees whose salaries were allocated to both the Medicaid and IDEA Flow-Through programs for overlapping pay periods. Effect: The District’s internal controls failed to prevent or detect duplicate charges of federal payroll costs, resulting in noncompliance with federal cost principles and inaccurate Medicaid claiming. Cause: The condition resulted from control deficiencies in the District’s implementation of the new Skyward “Qmlative” accounting system. Specifically, the District did not select a configuration setting (“cross-reference other federal codes”) necessary to prevent duplicate allocations when importing payroll data for Medicaid claiming. Additionally, the District’s quarterly payroll review procedures focused on verifying employee totals rather than reconciling detailed payroll allocations across federal programs, which contributed to the oversight. Questioned Costs: $345,925 (projected) Auditors’ Recommendation: We recommend that the District strengthen internal controls over payroll cost allocation and Medicaid claiming to ensure that costs are charged to only one federal program. Specifically, the District should review and update the Skyward Qmlative configuration to properly identify and exclude payroll costs already charged to other federal projects, and implement detailed quarterly review procedures to verify that payroll data reconciles across all federal program codes. Views of Responsible Officials and Corrective Action Plan: See attachment for District’s corrective action plan.

ALN 84.010 - Title I - Grant # 241530 2324 - Grant Ending September 30, 2024 Condition and Criteria: 2 CFR 200.403 of the Uniform Guidance mandates that only necessary, and allowable costs be drawn down off of federal grants. During the audit, we found that the prior fiscal year’s accrued payroll, which was drawn off of the grant in the previous fiscal year, was drawn off of the grant a second time in the current fiscal year. Effect: The District unintentionally drew payroll expenses off of the Title I grant a second time. Cause: The prior year accrued payroll related to Title I was not reversed out of the current year expenses prior to the Final Expenditure Report being prepared. Context: Management believed that all accrued payroll had been reversed out of the current fiscal year prior to preparing the Final Expenditure Report and did not intend to draw those expenses a second time. Questioned Costs: $53,509 Auditors' Recommendation: We recommend that management implement procedures to ensure that all accruals charged to federal grants are properly reversed in the subsequent fiscal year to ensure that duplicate draws on those same expenses are not made. Views of Responsible Officials and Planned Corrective Actions: The District understands the issue and will ensure that all payroll accruals are fully reversed at the start of the new fiscal year, to ensure that expenses are not drawn a second time. Please see the attached Corrective Action Plan prepared by the District.

Allowable Costs Information on Federal Program: U.S. Department of Education, Education Stabilization Funds - American Rescue Plan (Elementary and Secondary School Emergency Relief Fund, and Homeless Youth and Children, Assistance Listing numbers 84.425U and 84.425W) passed through the New York State Education Department. Criteria: 2 CFR Section 200.402 stipulates the total cost of a federal award is the sum of the allowable direct and allocable indirect costs minus any applicable credits. In addition, 2 CFR Section 200.403(e) stipulates that costs must 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 that part.Statement of Condition: During our review of the final cost reporting related to Education Stabilization Funding, it was noted that amounts reported did not agree to the underlying accounting records and financial statements. Statement of Cause: The District did not have appropriate internal controls over compliance to reconcile the expenditures reported and claimed under each grant within the Education Stabilization Funds with the underlying accounting records. Statement of Effect: The District is not in compliance with 2 CFR Section 2004.02 and 2 CFR Section 200.403(e). The District has submitted final claims related to expenditure of federal awards that do not agree to the underlying accounting records. For program 84.425U, total expenditures recorded in the general ledger were $9,449,986, however, the expenditures claimed on the final cost report were $9,857,389. The District was paid $9,857,389 under this grant. For program 84.425D, total expenditures recorded in the general ledger were $4,813,366, however, the expenditures claimed on the final cost report were $4,413,838. The budget approved for the costs under this program was $4,773,034. The District was paid $4,773,034 under this grant. In the District financial statements, the District has a liability recorded in the amount of $407,403 which represents the difference between the actual expenditures and expenditures claimed under 84.425U. For 84.425D, as the District expended more than the approved budget amount, there is no receivable recorded related to the amount expended in excess of the approved budget and funds received. Questioned Costs: None Perspective Information: As part of our testing, we review final cost reports in comparison to the underlying accounting records. The expenditures recorded in the general ledger agree to the cumulative amounts that have been reported on the schedule of expenditures of federal awards for each year within the grant period. Expenditures under these programs have been tested throughout the grant period on a test basis to determine compliance with allowability of costs. Repeat Finding: No Recommendation: We recommend that all cost reporting for federal grants be reconciled to the underlying accounting records and reviewed prior to submission. Additionally, we recommend reaching out to the oversight agency to correct the errors. Views of the Responsible Officials: The District will work to determine where the discrepancy derives from and will correct claim reports and resubmit as necessary.

CONDITION: During testing of disbursements charged to the Head Start program, two instances were identified where duplicate payments were made to the same vendor for the same invoice. The payments were charged to the Head Start program. CONTEXT: A sample of 40 disbursements totaling $124,950 was selected from a population of 1,385 disbursements totaling $811,622. The test found two disbursements that were not in compliance with questioned costs totaling $2,824. CRITERIA: 2 CFR § 200.303(a) requires that the School Board must “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes. Additionally 2 CFR§200.403(a) states that costs must “be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” CAUSE: The School Board relies on its accounting software’s automated controls to prevent the processing of duplicate invoices. However, the duplicate payments occurred because slightly different invoice numbers were entered into the system, allowing the software to recognize the transactions as unique and process both payments. EFFECT: The federal program may have been overcharged. RECOMMENDATION: The School Board should evaluate their internal controls and review expenses being charged to the Head Start program to ensure they are allowable.

FINDING 2025-001 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-046-PN01, 22611-046-ARP, 22619-046-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Porter County Education Services (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-046-PN01, 22611-046-ARP, and 22619- 046-ARP grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The non-public proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per each applicable member schools’ grant award was expended and properly reported to IDOE, as required. The lack of internal controls was isolated to the 22611-046-PN01, 22611-046-ARP, and 22619-046-ARP grant awards which were fully expended during fiscal year 2024. These three grant awards had minimum earmarking requirements for the Non-Public Proportionate Share of $39,016, $9,471, and $533, respectively. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Assistance Listing, Federal Agency, and Program Name - 97.036, U.S. Department of Homeland Security, Disaster Grants - Public Assistance (Presidentially Declared Disasters) Federal Award Identification Number and Year - 752894 and 752895; 2025 Pass through Entity - Michigan State Police (MSP) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - According to 2 CFR § 200.403(f), which outlines factors affecting the allowability of costs under federal awards, costs must not be included as a cost or used to meet cost-sharing or matching requirements of any other federally financed program in either the current or a prior period. This provision is intended to prevent duplication of federal funding and ensure that each program bears only its fair share of costs. Condition - Costs charged to ALN 97.036 - Disaster Grants - Public Assistance were also charged to ALN 84.425 - Education Stabilization Fund (Elementary and Secondary School Emergency Relief - ESSER) in prior fiscal years, indicating potential duplication of expenditures across federal programs. Questioned Costs - $70,015,657 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A - questioned costs were determinable. Identification of How Questioned Costs Were Computed - Questioned costs represent all of the expenditures reported on the SEFA for the year ended June 30, 2025. Refer to the Context section below for additional details. Context -In April 2022, FEMA issued an advisory regarding its funding support for the in-person operation of schools and school districts. The advisory clarified that schools and districts could utilize ESSER funds under ALN 84.425, administered by the U.S. Department of Education, to cover upfront costs for health and safety measures. These costs could later be submitted for reimbursement through FEMA’s Public Assistance program. However, the advisory emphasized that once FEMA reimbursement is received, the district must return the corresponding amount to the ESSER grant. The School District was awarded two grants under ALN 97.036 in December 2024 and January 2025. These grants were used to cover costs associated with COVID-19 diagnostic and screening testing. The ESSER grant period concluded on September 30, 2024. On October 16, 2025, the School District received reimbursement from MSP. Cause and Effect - The obligation dates for the FEMA awards occurred after the end of the ESSER grant period under ALN 84.425. Although FEMA’s advisory permitted districts to use ESSER funds for eligible upfront costs, the School District was unable to reimburse the ESSER grant prior to the expiration of its period of availability. As a result, approximately $70 million in expenditures are considered questioned costs. Recommendation - Because the obligation dates for the FEMA awards occurred after the conclusion of the ESSER grant period, we recommend that the School District coordinate with the Michigan Department of Education as the pass-through entity for ESSER funding and the Michigan State Police as the pass-through entity for FEMA funding. This collaboration is essential to address the timing misalignment, which prevented reimbursement to the ESSER grant prior to its period of availability. Views of Responsible Officials and Corrective Action Plan - The School District applied for reimbursement of potentially eligible COVID-19 expenditures in 2022. Per an April 5, 2022 FEMA memo, "FEMA Continues Funding to Support the Safe Operations of Schools," school districts could apply for reimbursement for ESSER-funded expenditures and then, upon approval of application, shift the funds to general fund. “Schools and school districts may utilize FEMA Public Assistance to receive full reimbursement for costs for the purposes above. Schools and districts may also use Elementary and Secondary School Emergency Relief (ESSER) funding from the U.S. Department of Education as a way to provide the up-front cost for the above health and safety measures, and later seek reimbursement through the FEMA Public Assistance process. For example, a local education agency (LEA) may use ESSER funds for costs that may ultimately be covered by FEMA; however, once it receives funds from FEMA for those costs, it must reimburse the ESSER grant account.” FEMA provided district award notification for COVID-19 testing in December 2024 and January 2025. By this time, the ESSER grant had closed on September 30, 2024 and the final expenditure reports for ESSER had been submitted to MDE in November 2024. Therefore, the School District could not complete the allowable general fund swaps. The School District notified Michigan Department of Education and Michigan State Police of the timing issue. Upon request from Michigan State Police, the School District provided documentation that general funds were available to conduct the swaps if the FEMA approval had been received in a timely manner.

2025-001 Costs Incurred Beyond the Period of Performance Program Name/Assistance Listing Number: 93.788 Opioid STR Federal Agency: Department of Health and Human Services Type of Finding: Significant Deficiency Compliance Requirement: Period of Performance Criteria: According to 2 CFR §§200.1, 200.308, 200.309, 200.344, and 200.403(h), a non-Federal entity may only charge allowable costs incurred during the approved budget period of the Federal award’s period of performance, and any costs incurred before the Federal award was made that were authorized by the Federal awarding agency or pass-through entity. All financial obligations incurred under the Federal award must be liquidated within the required time period. Costs incurred outside the approved period of performance are unallowable and constitute questioned costs. Condition: During cash disbursement testing, it was identified that costs totaling $56,017.62 were incurred after the end of the period of performance (which ended on September 30, 2024; grant ID 2401119 SOR 3.0 – SOS). Although the expenditures were allowable in nature, they were outside the approved period and therefore did not comply with the grant terms. Cause of Condition: The expenditures were incurred after the period of performance, possibly due to timing of invoicing. There was insufficient monitoring or review to ensure that all expenses were properly charged within the approved period. Potential Effect of Condition: The following are the potential effect based on the findings noted above: a. Non-Compliance: The Organization is at risk of non-compliance with the funding agreement, which may lead to questioned costs or repayment obligations. b. Financial Oversight Risk: Continued occurrence may indicate a lack of internal controls ensuring compliance with grant period requirements. Questioned Cost: $56,017.62 Recommendation: We recommend the following: a. Implement a monitoring process to ensure that all costs are incurred within the approved period of performance. b. Document and maintain a checklist of allowable expenses by period to prevent future occurrences of similar issues. Description of the Nature and Extent of Issues Reported: All expenditures outside the period of performance were identified during testing. The total known questioned cost is $56,017.62, which exceeds the $25,000 threshold for reporting under 2 CFR §200.516(a)(3). Management Response: Management concurred with the finding. During the current fiscal year, the Organization has implemented additional controls to ensure that all grant funding is expended within the timeframe allotted

Grant Cash Management - Community Development Block Grants ALN 14.228 - Community Development Block Grants - Grant # MSC-221005-WRI - Grant Ending December 31, 2025 Condition and Criteria: 2 CFR 200.403 of the Uniform Guidance mandates that only necessary, and allowable costs be drawn down off of federal grants. During the audit, we found that the Water Plant Construction project had construction invoices being drawn down from two grant sources which occasionally had draw requests that totaled more than the invoice. Effect: The City received reimbursements in excess of the amounts expended during the current year. The grants are budgeted to cover the total cost of the overall project, therefore, the total amount drawn will not exceed the total expenditures in the long run, however, this is a cash management issue, as some grant funds were then received in advance. Cause: The grant funded by the Economic Development Administration (EDA) and the grant funded by the Michigan Economic Development Corporation (MEDC) jointly cover the costs of the Water Plant Construction project. During the year, the EDA grant reimbursed construction invoices based on a set percentage, while the MEDC grant then had draw requests that exceeded the remaining percentage for those same invoices. Context: The EDA grant reimburses the City for a set percentage of construction invoices, with the remaining balance intended to be covered by the MEDC grant, However, during the current year, there were situations where the EDA grant reimbursed construction invoices for the set percentage, with the requests made on the MEDC grant exceedin the percentage not covered by the EDA grant. Questioned Costs: $230,444. As a result of the grants being budgeted to cover the total cost of the overall project, the total amount drawn will not exceed the total expenditures in the long term. These questioned costs are entirely due to advanced draws on the grant, causing a timing issue. Auditor's Recommendation: We recommend that management view these two grant sources as one and take additional care when drawing down funds to ensure that invoices are not being drawn in excess of the amount expended. Views of Responsible Officials and Planned Corrective Actions: The City Manager understands the issue has will work on devoloping and implementing procedures to ensure that all invoices are not drawn beyond the amount expended.

FINDING 2025-001 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 24611-009-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 15 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context The School Corporation did not have an effective internal control system in place to ensure compliance with the earmarking requirements and to ensure that the required level of expenditures for nonpublic school students with disabilities was met. Specifically, internal controls were not designed to ensure expenditures for nonpublic school students with disabilities were appropriately identified, tracked in the accounting records, and accurately reported. The School Corporation did not meet the earmarking requirements for grant award number 24611-009-PN01. The required expenditures for nonpublic proportionate share was $4,330; however, the School Corporation could only provide documentation of expenditures totaling $2,250. This resulted in an underexpenditure of $2,080 relative to the required set-aside amount for the grant. In addition, the School Corporation did not track the expenditures in a separate line item within the ledger to specifically identify services provided for nonpublic school students. The lack of internal controls and noncompliance was isolated to 24611-009-PN01 grant award. 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 16 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation had a lack of documented internal controls and oversight regarding specific grant compliance requirements. The School Corporation Treasurer was unaware of the mandate to separately track and ensure full expenditure of nonpublic proportionate share funds. This lack of knowledge led to an unverified assumption that the Special Education Cooperative was performing this tracking function on the School Corporation's behalf, which was not the case. Effect The School Corporation's lack of internal controls resulted in noncompliance with federal earmarking requirements and the terms of the grant award. The outcome was an underexpenditure of $2,080, representing funds intended for eligible nonpublic students. This amount constitutes questioned costs and may be subject to repayment to the granting agency. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs We identified $2,080 in known questioned costs as noted above in the Condition and Context. Recommendation Management of the School Corporation should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

8. Criteria or specific requirement (including statutory, regulatory, or other citation: Per the US Department of Education ESSER FAQ E-3.d: E-3.d. How long may ESSER or GEER-funded activities continue after the liquidation period? Generally, it is not good stewardship of Federal funds or prudent business practice to prepay for services that will extend many years into the future. However, under limited circumstances where a grantee or subgrantee timely obligates ESSER funds, ESSER-funded activities may continue for a reasonable time beyond the liquidation period. Factors impacting how long ESSER-funded activities may extend past the liquidation period include: (1) Whether the funds were properly obligated and liquidated in a timely manner; (2) Whether the activities would be allowed to extend beyond the liquidation period under applicable State and local procurement rules; (3) Whether the extended activities constitute a reasonable and necessary use of Federal funds; and (4) Whether prudent business practices and internal controls (which generally limit prepayment) would support the continued activities for the length of time proposed. Grantees and subgrantees must obligate funds by each program’s deadline, which means that if a grantee or subgrantee enters into a contract for activities that continue past the date of obligation and the contractor does not provide the services, the grantee or subgrantee may not enter into a new contract or obligate those funds for a different allowable use. Instead, those funds that were obligated for services that were not delivered will remain unused and will be returned to the U.S. Treasury. Because these are State-administered programs, the SEA or Governor determines whether activities extending past the liquidation period are allowable under the circumstances. For example, an SEA may determine that it is reasonable and necessary under 2 CFR §§ 200.403-200.404 for an LEA to enter into a multi-year software licensing contract with a vendor during the period of availability of ARP ESSER funds and to pay for the entirety of the software license within the liquidation period. However, under the contract, the vendor would continue to provide the services (i.e., software and technical support) for some time after the funds had been liquidated. Please note that the SEA, LEA, or subgrantee would be responsible for returning to the Federal government the cost of any services that were paid with Federal funds but not received. Under no circumstances may services extend beyond the date on which funds revert to the U.S. Department of Treasury (31 USC § 1552), which occurs four years after the obligation deadline. However, nothing prevents an SEA or LEA from continuing successful activities or services with non-ESSER/GEER funding. 9. Condition: ESSER III funds were expended for a 6-year math curriculum, beginning 9/30/24 and ending 9/30/30. Additionally, ESSER III funds were expended for the 2-year prepayment of cases of paper, to be delivered periodically from November 2024 through July 2026. The services extend beyond the dates noted above and include a prepayment. 10. Questioned Costs: For the math curriculum, questioned costs have been identified of $51,233 for the service period of 9/30/28-9/30/30. It is unclear if costs of $76,849 applicable to service period 9/3/25-9/30/28 are allowable, as this would be determined by the SEA. For the prepayment of paper, questioned costs have been identified of $27,320, applicable to service period March 2025-July 2026. 11. Context: N/A 12. Effect: A portion of the Federal funds received may need to be returned to the granting agency. Because the obligation date has passed, those funds may not be re-obligated to cover otherwise eligible costs. 13. Cause: In an effort to utilize available funding, the District overlooked these requirements. 14. Recommendation: We recommend that the District gain a thorough understanding of all applicable compliance requirements prior to expending Federal funds. 15. Management's response: See corrective action plan.

FINDING 2025-002 Subject: Special Education Cluster (IDEA) - Earmarking 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): 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, 23619-021-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context The School Corporation is a member of the Greater Lafayette Area Special Services (GLASS) Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, and 23619-021-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 26311-021-PN01, and 23619-021-PN01 grant awards. INDIANA STATE BOARD OF ACCOUNTS 17 LAFAYETTE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. 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 such, the School Corporation's nonpublic proportionate share expenditures could not be determined, and it could not be determined if the School Corporation met its minimum nonpublic proportionate share as required by the grant agreement. INDIANA STATE BOARD OF ACCOUNTS 18 LAFAYETTE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be 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.

FINDING 2025-002 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425U, 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not have an effective system of internal controls over federal award requirements that would have ensured that expenses charged to the grant were for activities and costs that were allowable under the federal award. The School Corporation designed a process for vendor claims in which all purchase orders were approved by either the Superintendent of Schools or a member of his staff who was knowledgeable of the requirements of the federal program, with the associated claim vouchers, then reviewed by another employee who was also knowledgeable of the requirements of the federal program prior to submission to the School Board for final approval for payment and inclusion on the reimbursement requests submitted for the program. Out of a sample of 25 claims selected for internal control testing, the School Corporation was unable to provide 5 claim vouchers to show the aforementioned review and approval. We were therefore unable to verify that the stated internal control was properly implemented and operated effectively for those claims to ensure the expenditures were for activities and costs allowed under the federal award. INDIANA STATE BOARD OF ACCOUNTS 17 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation also designed a process for payroll claims where the Superintendent of Schools reviewed and approved the detailed payroll distribution reports which included employees with payroll expenses charged to the federal award. However, the internal control was not adequately designed and did not detect noncompliance with the allowable cost requirements of the award. During compliance testing of vendor and payroll claims, one payroll claim for a Certified Intervention Teacher was selected for testing. The School Corporation was unable to provide documentation to support the determination of the amount of the teacher's total salary that was allocated to the federal award. We then reviewed all payroll expenses associated with the Certified Intervention Teacher position paid out of the federal award during the audit period and determined that a total of $22,416 was charged to the federal award without proper documentation to support the amount of the teacher's salary allocated to the federal award. We consider the $22,416 to be questioned costs. The lack of effective vendor internal controls was systemic to both awards but was isolated to fiscal year 2023-2024 prior to the appointment of the current Treasurer. The lack of effective payroll internal controls was systemic to both awards, while the noncompliance was isolated to award number S425U210013. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (3) Records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, asses, expenditures, income and interest and be supported by source documentation. . . ." 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. . . . INDIANA STATE BOARD OF ACCOUNTS 18 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (g) Be adequately documented. . . ." Cause The School Corporation experienced turnover in a key position related to the internal controls over the federal award, resulting in issues with organization and retention of supporting documentation to verify the key internal control over vendor claims. In addition, the School Corporation's policies and procedures were not properly designed to show the determination of how employees' compensation would be allocated to multiple cost centers. As a result, the key internal control over payroll claims was unable to prevent, or detect and correct, noncompliance with the allowable costs requirement of the federal award. Effect Without proper implementation of an effectively designed system of internal controls, noncompliance that resulted in questioned costs remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs We identified $22,416 in known questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure expenditures made from federal awards are for activities and costs allowed per the terms and conditions of the federal award and in compliance with the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. We also recommended that the School Corporation strengthen its policies and procedures to ensure that appropriate supporting documentation is retained and available for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

8. Criteria or specific requirement: Per Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200) Subpart E, Cost Principles Section 200.403(b), Factors affecting allowability of costs, costs must conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. Per 2 CFR Section 200.308(b), Deviations from approved budget, the recipient must report deviations from the approved budget, project, or program scope, or objectives. The recipient must request prior approvals from the Federal agency or pass-through entity for budget and program plan revisions in accordance with this section. '9. Condition: Nine (9) employee payroll expenditures were claimed at an hourly rate greater than that approved by ISBE. 10. Cause: The District's internal controls over compliance were not functioning effectively to ensure claims for payroll expenditures were made at the approved hourly rate. '11. Effect: The District was not in compliance with the allowable costs/cost principles compliance requirement. '12. Questioned Costs: Questioned costs of $28,651 were computed based on the difference between the payroll expenditures claimed and the allowable amount calculated using the hourly rate approved by ISBE. '13. Context: From the population of one hundred (100) employees claimed under this grant, a sample of ten (10) employees were selected for testing. We noted nine (9) employee payroll expenditures were claimed at a rate greater than the rate allowable per the ISBE approved budget. A statistically valid sample was not utilized. 14. Recommendation: We recommend that management review its policies and procedures and implement changes to strengthen internal control over compliance. 15. Management's response: The District agrees with the auditor's finding and recommendation.

Criteria 2 CFR section 200.403, Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following criteria 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). 10th Edition Procurement Manual issued by the District in September 2023, Chapter 8 – What to Do When Item or Services Are Received A. Online Goods Receipts Prior to entering an online Goods Receipt (GR), schools and offices must have a copy of the vendor invoice and Purchase Order (PO). They are responsible for verifying the accuracy of the order and entering the “online receiver” into SAP immediately after delivery of materials. Partial receiving is acceptable to account only for materials actually received. Payments are processed based on materials that have been received online. F.1. Payment for Materials Accounts Payable will process payment when the following three items are matched in SAP: (1) Purchase Order, (2) Goods Receipt, and (3) vendor invoice. F.2.c. Contracted Professional Services Accounts Payable will process payments for contracted professional services when the following four items are matched: executed contract/amendment, Purchase Order, vendor invoice, and approved authorization for payment. F.3. Contract Close-Out Upon contract expiration or termination, the District must ensure all deliverables have been received, final invoices paid, indirect costs settled, and any unspent funds unencumbered and transferred to the appropriate District account. Condition As part of our review of cash disbursement expenditures, we selected a statistically valid sample of forty (40) cash disbursement transactions from each of the following programs: Title I, Title IV, and Perkins. We reviewed the supporting documentation for these transactions to determine whether the expenditures were allowable under program regulations, accurately charged to the programs, and appropriately supported in accordance with 2 CFR Section 200.403 and the District Procurement Manual. Title I: From the $3,265,728 sample tested (out of $48,286,535 total disbursements), we identified one (1) purchase order with a variance between the Goods Receipt (GR) and vendor invoice (IR) amounts. This discrepancy resulted in an overstatement of reported expenditures by $21,394. The District subsequently corrected this by reversing the amount to the expenditure accounts in FY 2026. Title IV: From the $560,572 sample tested (out of $9,999,536 total disbursements), we identified one (1) purchase order with a variance between the GR and IR amounts, resulting in an overstatement of reported expenditures by $94,500. The District subsequently corrected this by reversing the amount to the expenditure accounts in FY 2026. Perkins: Additionally, from a $329,432 sample (out of $5,738,606 total disbursements), we identified seven (7) disbursements totaling $868 that lacked adequate proof of delivery of materials. Supporting documentation, such as signed delivery receipts or equivalent evidence of goods received, was not available for these transactions. Cause and Effect These conditions occurred because adjustments were not made to the GR amounts to reflect changes in goods or services received after the initial recording. The unadjusted GR balances led to variances between the GR and IR amounts, resulting in overstatements of reported expenditures for the affected programs. In addition, the lack of adequate proof of delivery of materials occurred because GR were entered without supporting documentation to substantiate that the materials were received. This increased the risk of payment for goods not received, misstatement of expenditures, and noncompliance with federal cost documentation requirements under 2 CFR section 200.403(g). Questioned Costs • Title I (AL No. 84.010): $21,394 overstated due to GR-IR variance. • Title IV (AL No. 84.424A): $94,500 overstated due to GR-IR variance. • Perkins (AL No. 84.048): $868 lacked sufficient supporting documentation that the goods were received. Recommendation We recommend that the District: 1. Strengthen review and reconciliation procedures to ensure that adjustments to the Goods Receipt (GR) are made promptly to reflect actual goods or services received. 2. Enforce documentation controls to require that all Goods Receipts are supported by adequate proof of delivery (e.g., signed delivery receipts, receiving reports, or equivalent evidence) before processing payments. 3. Provide staff training on documentation and reconciliation requirements to ensure compliance with federal cost principles and the District Procurement Manual.

FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to the States Assistance Listings Number: 84.027, 84.027X Federal Award Numbers and Years (or Other Identifying Numbers): 23611-161 PN01, 22611-161-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each grant award. The School Corporation did not have effective internal controls in place to ensure that the required level of expenditures for private school and homeschooled students as nonpublic students were met. The School Corporation spent the entire portion of the required proportionate share amount during the audit period. Time and effort logs were not maintained to determine if the speech-language pathologists paid from these funds were performing duties for the nonpublic students; therefore, amounts charged to the grants were not based on actual time spent for the nonpublic students as required. The School Corporation required amount of proportionate share for grant awards 22611-161-ARP and 23611-161-PN01 was $1,256 and $1,156, respectively. The lack of internal controls and noncompliance was isolated to the 22611-161-ARP and the 23611-161-PN01 grant awards. INDIANA STATE BOARD OF ACCOUNTS 18 MITCHELL COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation's management had not developed nor implemented a system of internal controls that would have ensured that time and effort logs were maintained and made available for audit, as it related to the grant agreement and the earmarking compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation did not retain and provide appropriate supporting documentation to ensure compliance with earmarking requirements. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls and develop policies and procedures to ensure the Non-Public Proportionate Share funds are appropriately documented using time and effort logs, which are to be maintained and made available for audit as related to the earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 MITCHELL COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles 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): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. The School Corporation entered into a fixed price meal contract with a food service management company (FSMC). For each meal type, a fixed price was established and billed by the FSMC based on meal counts served. The School Corporation did not compare the invoices received from the FSMC to the School Corporation's software reports to ensure the number of meals invoiced agreed to the meals served. Two invoices totaling $213,049 from the FSMC were selected for testing but could not be supported with documentation for the amounts billed. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTH PUTNAM COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 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. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Invoices from the FSMC were not thoroughly reviewed to ensure the number of meals invoiced agreed with meals served by the School Corporation. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirement could have resulted in the loss of funds to the School Corporation. Questioned Costs We identified $213,049 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, to ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-076-PN01, 22611-076-ARP, 23619-076-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not have an effective internal control system in place to ensure compliance with the earmarking requirements and to ensure that the required level of expenditures for nonpublic school students with disabilities was met. The 22611-076-PN01, 23611-076-PN01, 22611-076-ARP, 22619-076-ARP, and 23619-076-PN01 grant awards ended during the audit period. The School Corporation did not have internal controls in place to ensure that it fully spent the required nonpublic proportionate share amounts by the end of the grant award for three of the five grant awards tested. The following schedule shows the total nonpublic proportionate share approved by the Indiana Department of Education (IDOE) for the School Corporation for each grant award compared with the total expenditures posted to the ledger for nonpublic proportionate share. The School Corporation had not spent $25,100 of proportionate share funds by the end of the grant award for all awards ending during the audit period. Total Nonpublic Proportionate Grant Award/ IDOE Approved Nonpublic Share Spent by School Project No. Proportionate Share Corporation Difference 22611-076-PN01 $ 61,782 $ 45,609 $ 16,173 22611-076-ARP 14,833 6,553 8,280 23619-076-PN01 2,359 1,712 647 Totals $ 78,974 $ 53,874 $ 25,100 INDIANA STATE BOARD OF ACCOUNTS 19 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were isolated to the 22611-076-PN01, 22611-076-ARP, and 23619-076-PN01 grant awards. 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation had not developed or implemented an effective system of internal controls, including oversight and review procedures, to ensure that expenditures for the nonpublic proportionate share were monitored and fully utilized within the grant period. Management was aware of the ability to request a waiver for unspent funds but chose not to pursue that option, resulting in the funds remaining unspent. Effect The failure to establish and maintain an effective internal control system prevented the School Corporation from identifying and correcting the unspent balance of required earmarking funds in a timely manner. This resulted in noncompliance with the earmarking requirements for three of the five grant awards tested as the School Corporation failed to expend $25,100 of the required nonpublic proportionate share by the end of the grant awards. Noncompliance with federal program requirements and the lack of internal controls could jeopardize future federal funding and may require the School Corporation to repay the unspent portion to the pass-through agency. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTH GIBSON SCHOOL CORPORATION 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 track total nonpublic proportionate share by approved grant amounts from the IDOE to ensure proportionate share is being spent by the end of the grant award. 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 Agriculture/Passed-through Texas Department of Agriculture Food Distribution Cluster Federal Assistance Listing Number 10.565 – Commodity Supplemental Food Program (Administrative Costs), 10.568 – Emergency Food Assistance Program (Administrative Costs) Award Number: 01576 Criteria or Specific Requirement: Activities Allowed or Unallowable and Allowable Costs/Cost Principles – Costs charged to Federal awards must be necessary, reasonable, consistently treated, adequately documented, and allocable to the program in proportion to the benefits received. (2 CFR §200.403 and §200.405) Condition: During testing of administrative cost allocations for the Food Distribution Cluster, we identified an error in the entity’s allocation spreadsheet used to distribute administrative costs among Texas Emergency Food Assistance Program (TEFAP), Commodity Credit Corp (CCC)-funded TEFAP operations, and Commodity Supplemental Food Program (CSFP). This error caused TEFAP's share of administrative costs to be overstated by $188,459. Reimbursement requests for these overstated amounts were submitted between October and January. Although TEFAP reimbursement caps prevented any actual overpayment for the nine-month period, the early over‑allocation exhausted TEFAP funds sooner, leaving later allowable costs unreimbursed. Cause: A formula error in the allocation spreadsheet double-counted CCC amounts in the TEFAP base, inflating TEFAP’s percentage of shared administrative costs. Effect or Potential Effect: The error caused TEFAP to be assigned more in shared administrative costs than warranted by program benefit. Although reimbursement caps prevented an actual overpayment for the fiscal year, the misallocation exhausted TEFAP funds earlier, leaving later allowable costs unreimbursed. Without correction, the entity could continue to recognize TEFAP administrative and operational reimbursements earlier than warranted in future periods. Questioned Costs: Assistance Listing Number 10.568 – $188,459. Calculated difference between TEFAP funds billed versus actual allocated cost that should have been billed between October and January. Context: The allocation spreadsheet design error caused CCC amounts to be doublecounted in the TEFAP base, inflating TEFAP’s share of pooled administrative costs. Repeat Finding: No Recommendation: Correct the allocation methodology to ensure CCC amounts are not double-counted in TEFAP bases and that each program bears costs in proportion to benefit per 2 CFR §200.405. Implement a documented secondary review of the monthly allocation spreadsheet before posting. Views of Responsible Officials and Planned Corrective Actions: Management concurs with the finding and recommendation. While the misallocation resulted in overstated TEFAP administrative costs by $188,459, the program’s reimbursement cap and the entity’s actual incurred costs prevented any overbilling or excess Federal draw. See further information on the corrective action plan provided by management.

Identification of the Federal Program: Federal Agency and Program Name Assistance Listing # COVID-19 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) (FEMA) U.S. Department of Homeland Security Pass through grantor: Virginia Department of Emergency Management Pass through award number: 4512DR-VA Award Period: 1/21/2020 – 6/30/2022 97.036 Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that a non-Federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(h) states: “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).” Condition: The Authority did not validate the accuracy of the cost incurred dates and identify expenditures that were incurred outside of the period of performance related to assistance listing 97.036 – COVID-19 – Disaster Grants – Public Assistances (Presidentially Declared Disasters) (FEMA) prior to submission of the non-federal entity’s project worksheet. Cause: The Authority did not have sufficient internal controls to ensure that accuracy of the cost incurred dates or expenditures were incurred within the period of performance prior to submission of the non-federal entity’s project worksheet. Effect or Potential Effect: The Authority may inappropriately obtain funding for unallowable expenses or costs incurred outside the period of performance as a result of the reporting and verification of the completeness and accuracy of the cost incurred dates and expenditures included within the submission was not sufficient. Questioned Costs: $104,434 – represents the total payroll expenditures incurred after the end of the period of performance. Context: We identified $104,434 of payroll expenditures included in the submission of two force labor FEMA projects, resulting in duplicate costs being submitted to FEMA. The $104,434 was incorrectly included in the project that ended June 30, 2022 and was appropriately included in the project that began July 1, 2022. The costs in question are the payroll expenses from the second week of the pay period (June 26, 2022 through July 9, 2022) incurred after the end of the period of performance. The total obligation of the project worksheet that had the duplicate costs was $2,278,390. Management corrected the duplicated amount of the federal expenditures reported on the Schedule, in which total FEMA expenditures are $31,901,782 for the year ended June 30, 2025. The duplicate costs represent 4.6% of the related project and approximately 0.3% of total FEMA expenditures for the fiscal year. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: The Authority’s policy and procedures should be designed to strengthen the internal controls over the review of the submissions to ensure accurate reporting as required by the Uniform Guidance. Views of Responsible Officials: There is no disagreement with the audit finding and the Authority has developed a plan to correct the finding.

Inaccurate Amount Reported on Monthly Reimbursment Claim - Understatement of $31,277 (Material Weakness and Non-Compliance) ALN Title and Number: 10.553 and 10.555 - Child Nutrition Cluster: School Breakfast and School Lunch Name of Federal Agency: U.S. Department of Agriculture Name of Pass-through Entity: Tennessee Department of Agriculture Condition: During our audit, it was noted that the April claim for reimbursement submitted by the District did not reconcile to the daily totals reported by individual schools. The amounts reported on the claim differed from the supporting documentation maintained at the school level. Criteria: In accordance with 2 CFR section 200.403 and 7 CFR section 210.8, costs charged to federal programs must be accurately reported and supported by accounting records. Monthly claims for reimbursement under the USDA National School Lunch Program must reflect actual allowable costs and be based on accurate records of reimburseable meals served during the claiming period. Cause: The condition noted above occurred because reconciliation procedures were not properly performed prior to submission of the reimbursement claim. The District did not ensure that the totals compiled for the monthly report agreed to the underlying school records. Effect: As a result, the District's reimbursement amount was $31,277 less than it was entitled to receive. Failure to reconcile claims to supporting documentation may result in inaccurate reporting and the potential loss of reimbursement revenue. Questioned Cost: None Recommendation: The District should strengthen internal controls over the preparation and review of reimbursement claims. Specifically, reconciliation between school-level reports and the monthly reimbursement claim should be performed and documented prior to submission. Management should review and approve all claims to verify accuracy, completeness, and agreement with records. Response: Vickie Dunaway, School Nutrition Director, corrected and resubmitted the claim in question, as soon as the issue was revealed. USDA paid the difference owed on October 28, 2025. Once Vickie completes the monthly claim, Leanne Green, Finance Director, reviews the paperwork, verifying that all is correct before the claim is filed.

FINDING 2025-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027x Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-PN01, 22611-043-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context The School Corporation was a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. Due to the timing of the Cooperative's corrective action, the nonpublic expenditures spent did not meet the earmarking requirements for grant award numbers 22611-043-PN01 and 22611-043-ARP. From the beginning of the grant awards until September 2022, total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. Beginning in September 2022, the Cooperative began tracking expenditures by member school for the nonpublic services. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE from the beginning of the grant awards through September 2022, as required. The lack of internal controls and noncompliance was isolated to the 22611-043-PN01 and 22611-043-ARP grant awards. 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 18 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by each member school starting in September 2022, most of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Cooperative should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by member school. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding 2025-004 – Significant Deficiency – Internal Controls Over Allowable Costs Identification of Federal Program: AL Number: 11.611 Manufacturing Extension Partnership Condition – During the year ended June 30, 2025, a severance payment was issued to an employee that worked on more than one federal program. The payment was an allowable cost, but was not allocated across the other federal programs based on time and effort per their policy. Criteria – Per allowable costs 2 CFR section 200.431(i)(1), severance pay is allowed to be charged to federal grants only to the extent that it is required by law, employer-employee agreement, established policy, or circumstances of the particular employment. Per 2 CFR 200.403(c), costs should be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient, therefore severance pay must be allocated based on the activities performed by the associated employee. Context and Cause – While internal controls and procedures have been established for payroll expenses, the procedures were bypassed when processing the severance payment. It should be noted that the employee spent the majority of their time on the program the severance was allocated to, and the transaction was isolated. Effect of Condition – The failure to allocate all payroll expenses may result in wrongful use of federal funds and non-compliance with federal awards. Questioned Cost – None. Recommendation – The Organization should follow established written policies for allocation. Views of Responsible Officials and Planned Corrective Actions – Management concurs with the finding and has developed a corrective action plan. We analyzed the funds the employee charged to and did not identify another federal funding source available to charge the severance to. As a result, we did not complete the standard payroll allocation spreadsheet, as the severance was determined to be appropriately charged to the one fund. In the future, we will include this payroll allocation documentation. The finding does not impact the Organization’s ability to manage federal funds. Regardless, we place the utmost importance on the summary of auditors’ results and will work to increase the strength of our internal controls over compliance.

Federal Program - Research and Development Cluster Assistance Listing Numbers - Various Federal Agency - All Research and Development Sponsor Award Number - Various Award Period - Various Criteria or Specific Requirement – Period of Performance – Costs must be incurred during the approved budget period. (2 CFR 200.403(h)) Condition - Management reported instances where costs not incurred during the approved budget period were charged to the grant. Cause - Turnover of University personnel responsible. Questioned Costs – We identified $498 in questioned costs, calculated per vendor invoice, as a result of our audit procedures performed surrounding period of performance. The grant programs and amounts improperly charged identified during testing were: • Assistance Listing Number: 16.838 o Award Number: 15PBJA-21-GG-04493-COAP; Linkage to Hope Project - $479 • Assistance Listing Number: 12.800 o Award Number: FA8650-20-F-5234; Direct Integrated/Computational/Testing and Onsite Research (DICTATOR) - $19 Effect – While the University has established controls to detect costs recorded that had been incurred outside of the approved period, by not fully following these control guidelines, costs that would be unallowable under 2 CFR 200.403(h) may be applied incorrectly. Context - Management reported instances where costs not incurred during the approved budget period had been recorded. From a sample of 5 grants (population of 44 grants), two grants had expenditures recorded to the grant for costs that had not been incurred within the approved budget period. This sample was not, and was not intended to be, a statistically valid sample. Identification as a Repeat Finding - No. Recommendation - We recommend management consult with the grantor to discuss whether the questioned costs should be refunded and complete training with responsible individuals to ensure future compliance.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Program Assistance Listing Number: 14.267 Federal Award Identification Number: IL178L5T172302 - 2024 IL0315L5T142316 - 2024 IL1651L5Y142305 - 2024 IL1780LST172201 - 2023 IL1651L5Tl42204 - 2023 IL0315LST142215 – 2023 Award Periods: August 1, 2023 – July 31, 2024; August 1, 2024 – July 31, 2025; July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: Per Uniform Guidance (2 CFR 200.403) costs charged to federal awards must be 1) adequately documented with supporting invoices and receipts and reviewed and approved by authorized personnel prior to payment. Condition: The Agency did not retain documentation supporting the disbursements as well as the control over those disbursements. Questioned Costs: None Context: The Agency did not retain documentation supporting the disbursements as well as the control over those disbursements and the propriety of the expenses charged to the grant cannot be verified due to the change in invoice management systems during the fiscal year for six items tested. Cause: Unknown Effect: Inability to maintain proper supporting documentation over expenses incurred could lead to unallowable costs being reimbursed under the grant. Repeat Finding: This finding is not a repeat finding. Recommendation: CLA recommends the Agency follow established policies to maintain supporting documentation for expenses incurred including their review and approval. Views of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: HOME Investment Partnerships Program Assistance Listing Number: 14.239 Federal Award Identification Number and Year: M20-MC350209 - 2020 M21-MC350209 - 2021 Award Period: 5/29/2020 - 9/01/2028 8/03/2021 - 9/01/2029 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.403 Factors affecting allowability of costs of 2 CFR Part 200, costs must conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. Additionally, according to §200.431 costs of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences should be equitably allocated to all related activities, including Federal awards. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure proper allocation of fringe benefits. Management 's Progress for Repeat Findings: This is a repeated and modified finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: $973.77 Context: During our testing, it was noted that for one of twenty-four samples, the City applied incorrect fringe benefits to the grant, resulting in $371.11 that should have been allocated to the grant. Additionally, for one of twenty-four samples, the City did not accurately apply sick leave conversion to wages, resulting in $973.77 of wages improperly allocated to the grant. Cause: Management oversight. The city did not have adequate controls in place to ensure proper allocation of fringe benefits. Effect: The auditor noted instances of noncompliance. Noncompliance results in potential pay back of federal funds. Recommendation: We recommend the City review fringe benefits charged to the grant to equitably allocate fringe benefits between federal and city funding sources. Management Response: The City concurs with the finding. The Department of Health, Housing & Homelessness will review the allocation of fringe benefits to grant payroll charges on a quarterly basis to ensure fringe benefits are properly allocated to funding sources. The reconciliations will be prepared by fiscal staff and approved by the Fiscal Manager. Additionally, the DFAS Grant Administrator will perform a semi-annual review of excess leave payouts to ensure they are charged to the correct grant funding string. Timeline and Responsible Position: June 2026 – Department of Health, Housing and Homelessness Fiscal Manager

U.S. Department of Health and Human Services - 93.600 Head Start 2025-003 Inconsistencies with Cost Allocations Criteria: In accordance with 2 CFR §200.405(d), any cost allocated to a federal award must be allocable, reasonable, and based on a method that is supported and consistently applied. In addition, 2 CFR §200.403(g) requires that costs be adequately documented. A written allocation plan is essential to demonstrate that the allocation of shared costs is equitable and in compliance with Uniform Guidance. Condition: During our audit testing of payroll allocations, we noted the Organization uses a payroll allocation spreadsheet to distribute employee salaries across programs and administrative cost centers. However, the spreadsheet did not include all employees, resulting in staff members’ payroll costs being allocated based on default or informal assumptions rather than established methodology. During our review of expense allocations for both payroll and non-payroll expenses, we noted that the Organization did not consistently follow the cost allocation plan. Cause: The omission of certain employees appears to be the result in oversight in maintaining the allocation spreadsheet and/or the inconsistent communication between HR/payroll and program management. This may have been due to changes in personnel that were not adequately briefed on procedures or lack of review for the allocated expenses. Effect: Failing to include all employees in the payroll allocation policy may result in noncompliance with the Organization’s cost allocation plan and applicable grant requirements or inaccurate distribution of payroll costs to programs. Not following the cost allocation plan increases the risk of noncompliance with grant requirements, inaccurate reporting of program costs, or misstatement of financial results. Questioned Costs: None noted. Recommendation: We recommend the Organization implement a formal process for updating the allocation spreadsheet whenever there are staffing changes and conduct periodic reviews (at least quarterly) to verify that payroll allocations remain accurate and compliant with the cost allocation plan. We recommend the Organization implement a stronger documentation process for shared cost distribution and monitor compliance regularly to ensure all allocations continue to follow the cost allocation plan. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and will document the allocation methods used for employees and expenses.

Material weakness in internal control over compliance - Lack of control over monitoring of excess costs Federal Program: Special Education Cluster (ALNs 84.027A, 84.173A) Federal Agency: U.S. Department of Education Pass-through Entity: Texas Education Agency (246600011589016600, 256600011589016600, 66002512, 2466100115890116610, 256610011589016610) Compliance Requirement: A - Activities Allowed or Unallowed Criteria: Per the federal compliance supplement and Uniform Guidance (2 CFR 200.403), federal funds must supplement, not supplant, state and local funds. Excess cost calculations are required to ensure compliance with the federal program requirements. Condition: The District could not provide the documentation demonstrating compliance with the excess cost calculation. There is a limited awareness that the excess cost calculation should be monitored throughout the year to ensure the District is in compliance. Cause: The District had a lack of understanding and control surrounding the excess cost calculation and requirements. The District had not been preparing its own excess cost calculation, therefore had no baseline to know if they were meeting the requirement of spending at a minimum. Effect: Failure to perform and document excess cost calculations increases the risk of noncompliance with federal requirements, which could result in potential repayment of funds or loss of future funding. Questioned Costs: No questioned costs were identified. Context: The District did not prepare the required excess cost calculation. The federal program was not tested in the prior year, therefore, it has only been a known issue in the current year. The consequence of this audit finding is failure to document the excess cost calculation may put the District at risk of noncompliance, which can result in questioned costs, loss of grant funding and required repayment. Recommendation: We recommend that the District assign responsibility to qualified personnel for the preparation of excess cost calculations. Utilization of the calculation tools provided by TEA, including the guidance handbooks, will assist in the preparation. We also recommend the District implement procedures and provide the necessary training to qualified personnel to ensure maintenance of effort is calculated and reviewed as part of the grant monitoring process. Views of Responsible Officials: See Corrective Action Plan.

National School Lunch Program - 2025- Project No. 4210 ALN 10.555 Passed through: ISBE Federal Agency: U.S. Department of Agriculture Criteria or specific requirement (including statutory, regulatory, or other citation): Grant agreements and applicable federal regulations (e.g., 2 CFR 200.403 and 2 CFR 200.404) require that all costs charged to a federal program be adequately documented, supported, and allowable. Supporting documentation such as invoices and employee timecards must be maintained to substantiate expenditures. Condition:The District was unable to provide documentation for three invoices charged to the program. The District was also unable to provide supporting documentation for one employee time card. Questioned Costs:$4,823.03 Context: During testing of expenditures under the Child Nutrition Cluster, a sample of invoices and payroll transactions was selected for review. We requested supporting documentation to verify the allowability and accuracy of the charges. The District was unable to provide documentation for three invoices and one employee timecard included in the sample. Effect:Without adequate supporting documentation, we are unable to determine whether the questioned costs are allowable, allocable, and reasonable under program requirements. As a result, these costs are considered unsupported and questioned. Cause:The District did not maintain or was unable to locate required supporting documentation for certain expenditures charged to the Child Nutrition Cluster, indicating weaknesses in record retention and documentation controls. Recommendation: We recommend that management strengthen internal controls over record retention to ensure all invoices and payroll documentation supporting program expenditures are properly maintained and readily accessible. Management should also review current documentation practices to ensure compliance with federal and grant requirements. Mangement's Response: Management agrees with this finding and response is included within the corrective action plan.

COVID-19 Elementary and Secondary School Emergency Relief Grant - 2024 Passed through: ISBE Federal Agency: U.S. Department of Education Project Number: 2024-4998-E3 ALN 84.425U Criteria or specific requirement (including statutory, regulatory, or other citation): In accordance with 2 CFR 200.403, 2 CFR 200.404, and applicable ESSER grant requirements, all costs charged to federal awards must be adequately documented, supported, allowable, allocable, and reasonable. Supporting documentation, including vendor invoices, must be maintained to substantiate expenditures. Condition: The District could not provide supporting documentation for one (1) invoice charged to the program. Questioned Cost: $2,324.25 Context: During testing of ESSER program expenditures, a sample of disbursements was selected for review. We requested supporting documentation to verify the allowability and accuracy of the charges. The District was unable to provide documentation for one invoice included in the sample. Effect: Without adequate supporting documentation, we are unable to determine whether the expenditure is allowable, allocable, and reasonable under ESSER program requirements. As a result, the cost is considered unsupported and questioned. Cause:The District did not maintain or was unable to locate the required supporting documentation for the expenditure, indicating weaknesses in documentation retention and internal controls over grant expenditures. Recommendation: We recommend that management strengthen internal controls over documentation retention to ensure all expenditures charged to ESSER are properly supported and readily available for review. Management should also conduct a review of recordkeeping procedures to ensure compliance with federal grant requirements. Management's Response: Management agrees with this finding and response is included within the corrective action plan.

FA 2025-001 Strengthen Controls over Employee Compensation Compliance Requirement: Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants Federal Award Numbers: H027A230073 (Year: 2024), H027A240073 (Year: 2025), H173A240081 (Year: 2025) Questioned Costs: $1,283 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Special Education Cluster. Background: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. SEC funds totaling $2,769,220.76 were expended and reported on the Lowndes County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “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… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs of compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the recipient or subrecipient consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with recipient’s or subrecipient’s laws, rules, or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (g)…, [as follows:] (g) 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 that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient…” Condition: A sample of 16 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if internal controls were properly functioning, and applicable compliance requirements were met. The following deficiencies were noted: • For two employees, the amount paid did not agree to supporting documentation and resulted in underpayments totaling $4,378. • For one employee, the amount paid did not agree to board-approved salary scales and resulted in the overpayment of salary and benefit amounts by a total of $1,283. Questioned Costs: Upon testing a sample of $195,182 in personnel services expenditures, known questioned costs of $1,283 were identified for payroll charges exceeding documented federal program activities, including $743 in salaries and $540 in associated benefits. Using the total personnel services expenditure population of $1,806,992 (excluding benefits payments), we project the likely questioned costs to be approximately $6,882. Cause: The identified variances resulted from isolated payroll processing errors during position changes and pay scale updates for specific positions resulting in data-entry and reconciliation discrepancies. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees associated with Special Education Cluster the appropriate amount and/or maintain documentation supporting these payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Special Education Cluster fund as ED or GaDOE may require the School District to return funds associated with unallowable or improperly documented expenditures. Recommendation: The School District should evaluate their internal control processes related to the documentation and review of employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that Special Education Cluster employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.

Noncompliance with Allowable Costs/Cost Principles Assistance Listing Number: 10.559 Federal Agency: U.S. Department of Agriculture Pass-Through Entity: Kentucky Department of Education Criteria: Per 2 CFR 200.403 and the grant agreement, only allowable costs that are necessary, reasonable, and adequately documented may be charged to the program. Reimbursement requests must accurately reflect actual participation and allowable costs. Condition: During our audit of the Summer Feeding Program, we identified that the entity submitted reimbursement sheets that did not accurately reflect actual participation and allowable costs. As a result, the entity received $20,601 in excess federal reimbursements during the audit period ended June 30, 2025. Cause: The entity did not have adequate internal controls to ensure that reimbursement sheets were properly completed and reconciled to actual participation and allowable costs prior to submission. Effect: Unallowable costs were charged to the federal program, resulting in $20,601 of questioned costs. The State oversight agency subsequently suspended the entity's ability to operate the federal summer feeding program and required repayment of the excess funds. Known Questioned Costs: $20,601, calculated as the excess reimbursement received due to errors in the reimbursement sheets during the audit period. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the entity implement procedures to ensure that all reimbursement requests are accurately prepared and reconciled to actual participation and allowable costs prior to submission. Staff should receive training on federal documentation and reporting requirements. However, as of this time, the Agency has been disallowed from participating in the Summer Feeding program by the Kentucky Department of Education. Views of Responsible Officials: Management concurs with the finding. The entity has implemented new procedures for the preparation and review of reimbursement requests.

Reference Number: 2025-015 Prior Year Finding: 2024-025 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Foster Care – Title IV-E Assistance Listing Number: 93.658 Award Number and Year: 2502WVFOST (10/1/2024 – 9/30/2025) 2401WVFOST (1/1/2024 – 3/31/2025) Compliance Requirement: Allowable Costs/Cost Principles, Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Compliance: Allowable Costs/Cost Principles – Per 2 CFR section 200.403, except where otherwise authorized by statute, costs must meet certain criteria to be allowable under Federal awards. Criteria includes that costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Costs must also conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. Eligibility – Funds may be expended for foster care maintenance payments on behalf of eligible children, in accordance with the Title IV-E agency’s foster care maintenance payment rate schedule and in accordance with 45 CFR section 1356.21, to individuals serving as foster family homes, to child-care institutions, directly to a youth aged 18 or older who is in a supervised independent living setting if no actual provider or other child placing intermediary is involved, or public or private child-placement or child-care agencies. 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: The Department of Human Services (Department) charged the Foster Care program for payments made to psychiatric facilities which is an unallowable cost under the program. Context: One of sixty cases selected for testing included payments to a psychiatric facility. Payments to psychiatric facilities are not allowable under the Foster Care program. Cause: The Department’s corrective action plan from the prior audit indicated that a system change was made during FY 2025 to prevent future payments to psychiatric facilities from being charged to the Foster Care program. The exception noted was prior to the implementation of the correction action plan. Effect: Ineligible expenditures were charged to the Foster Care program. Questioned costs: $665, the amount paid to the psychiatric facility for the case tested. Recommendation: The Department should ensure its corrective action plan from the prior audit has been fully implemented and ensure that payments to psychiatric facilities are no longer charged to the Foster Care program. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.

Reference Number: 2025-016 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Foster Care – Title IV-E Assistance Listing Number: 93.658 Award Number and Year: 2502WVFOST (10/1/2024 – 9/30/2025) 2401WVFOST (1/1/2024 – 3/31/2025) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Compliance: 2 CFR section 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 non-Federal entity. (d) Be accorded consistent treatment. A cost may 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 or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. 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: The Department of Human Services (Department) was unable to provide supporting documentation for costs charged to the program. Context: For two of sixty cases selected for testing, the Department was unable to provide supporting documentation for the transactions. Auditors were unable to verify that the expenditures were allowable nor that they had been reviewed and approved prior to issuance. Cause: While the Department has established procedures in place, a clerical error resulted in supporting documentation not being properly maintained for certain program expenditures. Although the Department's multi-layered review process identified the missing documentation before the automated financial system issued payment, the error was not corrected prior to issuance. Consequently, internal controls did not prevent these errors. Effect: Expenditures without supporting documentation were charged to the Foster Care program. Questioned costs: $50, the amount charged to the program without supporting documentation. Recommendation: The Department should reevaluate its current process, implement proper controls, and perform additional training to ensure that, prior to charging costs to the program, it has supporting documentation which is reviewed and approved by a supervisor who is knowledgeable of the regulations regarding allowable program costs. Supporting documentation should be maintained and be readily available for audit. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.

Reference Number: 2025-017 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Adoption Assistance Assistance Listing Number: 93.659 Award Number and Year: 2502WVADPT (10/1/2024 – 9/30/2025) 2502WVADPT (1/1/2024 – 3/31/2025) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Compliance: 2 CFR section 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 non-Federal entity. (d) Be accorded consistent treatment. A cost may 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 or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. 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: The Department of Human Services (Department) was unable to provide supporting documentation for costs charged to the program. Context: For one of sixty cases selected for testing, the Department was unable to provide supporting documentation for the transaction. Auditors were unable to verify that the expenditure was allowable nor that it had been reviewed and approved prior to issuance. Cause: While the Department has established procedures in place, a clerical error resulted in supporting documentation not being properly maintained for certain program expenditures. Although the Department's multi-layered review process identified the missing documentation before the automated financial system issued payment, the error was not corrected prior to issuance. Consequently, internal controls did not prevent these errors. Effect: An expenditure without supporting documentation was charged to the Adoption Assistance program. Questioned costs: $26, the amount charged to the program without supporting documentation. Recommendation: The Department should reevaluate its current process, implement proper controls, and perform additional training to ensure that, prior to charging costs to the program, it has supporting documentation which is reviewed and approved by a supervisor who is knowledgeable of the regulations regarding allowable program costs. Supporting documentation should be maintained and be readily available for audit. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.

Federal Agency: U.S. Dept. of Commerce – National Oceanic and Atmospheric Administration Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2025 Pass-Through Agency: California State Coastal Conservancy Award Period: 7/1/24-6/30/25 Compliance Requirement Affected: Suspension & Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For five procured vendors that were selected for testing, documentation evidencing timely verification that each procured vendor was neither suspended or debarred was not retained. Context: A nonstatistical sample of five out of seven procured vendors were selected for testing for the above program. The condition noted above was identified during our procedures over the procured vendors. Effect: ESF did not retain documentation evidencing that suspension or debarment status of procured vendors was verified timely, which could result in procuring services with a suspended or debarred vendor. Cause: ESF did not consistently retain documentation evidencing procured vendors were verified for Suspension or Debarment status before procuring the vendor. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that ESF strengthen its current policies and procedures to ensure that evidence is retained showing Suspension and Debarment Status is verified for each vendor subject to verification of suspension and debarment verification according to ESF’s Procurement policy. Management’s Views: See separate corrective action plan.

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 Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Significant Deficiency, Other Matters 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 Allowable Costs/Cost Principles compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 20 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) A sample of 13 claims charged to the COVID-19 - Education Stabilization Fund program for which reimbursement was received during the audit period was selected for testing to verify the expenditures were in conformance with the applicable cost principles. Of the 13 claims tested, 3 were found to include unallowable costs. The description of the claims are as follows: • The School Corporation had 2 claims for supplies/building materials to build a storage building totaling $5,932. The building was not able to be completed due to the Fire Marshal's report. The School Corporation decided to not complete this project and used these materials/supplies within the School Corporation for other projects. There was no documentation presented for review to show where these materials were used; therefore, it could not be determined if the expenses were allowable. • The School Corporation had 1 claim for concrete for the storage building. The concrete pad was completed, and the building was never completed. Total cost of this claim was $3,619. There are no plans for the use of the concrete so it could not be determined if the expense was allowable. 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 200.403 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. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Once the original project was discontinued no documentation was created to show how the purchased materials were used and for what purpose. INDIANA STATE BOARD OF ACCOUNTS 21 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to establish an effective internal control system and maintain adequate supporting documentation enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls and maintain adequate supporting documentation to ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles 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): 2023-2024, 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 16 LINTON-STOCKTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation did not have adequate procedures in place to ensure that allocation of costs related to compensation and fringe benefits of the food service director was appropriately documented. 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 200.403 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. . . . (g) Be adequately documented. . . ." 2 CFR 200.430 states in part: ". . . Compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Compensation for personal services may also include fringe benefits . . . (i) Standards for Documentation of Personal Expenses (1) 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 that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; INDIANA STATE BOARD OF ACCOUNTS 17 LINTON-STOCKTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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); (iv) Encompass federally-assisted and all other activities compensated by the non- Federal entity on an integrated basis but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and . . . (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. . . ." Cause The School Corporation's Management had not developed nor implemented a system of internal controls that would have ensured that the allocation of costs are appropriately documented, and made available for audit, as it related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation did not retain and provide appropriate supporting documentation to ensure compliance with allowable cost and cost principles requirements. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's Management establish an effective system of internal controls and develop policies and procedures to ensure the allocation of costs are appropriately documented, which are to be maintained and made available for audit as related to the Allowable Cost/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding 2025-044 Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles for the Coronavirus Capital Projects Fund The Department administers the federal Coronavirus Capital Projects Fund program (CCPF) [ALN 21.029] for non-entitlement municipalities, counties, and subcontractors to carry out capital development and infrastructure activities related to increasing awareness, education, and monitoring of the Coronavirus emergency by developing broadband infrastructure. Examples of activities related to CCPF include the development of fiber-optic broadband infrastructure and investments in improving broadband infrastructure within a municipality, addressing affordability and access to broadband infrastructure, and the development and improvement of buildings that directly enables work related to the education and monitoring of the Coronavirus emergency. The Department’s accounting section records all financial transactions within CORE and must ensure the accurate reporting of federal award expenditures and reimbursements and maintain adequate supporting documentation related to transactions recorded in CORE. The Department’s accounting section is also responsible for providing information through the submission of exhibits to the Office of the State Controller (OSC) to assist in preparation of the State’s financial statements, required note disclosures, and the State’s Schedule of Expenditures of Federal Awards (SEFA). For Fiscal Year 2025, the Department reported $33.7 million in expenditures for CCPF. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to review the Department’s internal controls over the CCPF payment processes and to determine whether payments were processed and paid in accordance with state regulations and federal “allowable cost” requirements during Fiscal Year 2025. As part of our audit work, we obtained from the Department the Fiscal Year 2025 expenditures listing for CCPF, comprised of eight transactions. We tested five transactions as part of our testing of the Department’s compliance with federal allowable cost requirements for the CCPF program. We also reviewed the Department’s Exhibit K1, Schedule of Federal Assistance, which it submitted to the OSC for Fiscal Year 2025 year-end reporting, and the related supporting documentation, including CORE transaction detail for revenues and expenditures associated with CCPF, to determine whether Department accounting staff prepared the exhibit in accordance with the OSC’s Fiscal Procedures Manual (Manual), and to determine whether the Exhibit K1 was accurate and complete. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: • Federal regulations [2 CFR 200.403] require that costs under federal awards must be necessary, reasonable, and allocable; conform to any limitations or exclusions; be consistent with policies and procedures; receive consistent treatment; adhere to GAAP; not be used for cost sharing of other programs; and be adequately documented. • Federal regulations [2 CFR 200.302] require that recipients must expend and account for the federal award in accordance with State laws and procedures for expending and accounting for the State’s funds. All recipients’ financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with federal statutes, regulations, and the terms and conditions of the federal award. • The OSC’s Manual contains instructions for the completion of exhibits. Specifically, the Exhibit K1 is used to report federal expenditure information to the OSC for inclusion in the State’s SEFA. • Federal regulations [2 CFR 200.303] state that each recipient of federal funds must establish and maintain effective internal controls over its federal awards, which provide reasonable assurance that the recipient is managing its federal grants in compliance with federal statutes, regulations, and the award terms and conditions. The OSC has adopted the Green Book as the State’s standard for internal controls, which all state agencies must follow. Green Book, Paragraphs 3.09 and 3.10, states that management is to develop and maintain documentation of its internal control system, establishing the who, what, when, where, and why of internal control execution to personnel. What problem did the audit work identify? Through our audit testwork, we identified an error with 1 of the 5 expenditures (20 percent) tested. Specifically, the Department recorded the expenditure transaction, which totaled $3,266,662, twice in CORE. Further, because CORE is programmed to automatically record earned federal revenue when a federal expenditure is recorded, the Department also recorded federal revenue in CORE to match the duplicate federal expenditure. As a result, the Department overstated both revenues and expenditures for CCPF by $3,266,662. In addition, the Department overstated its Fiscal Year 2025 CCPF expenditures on its Exhibit K1 by $3,266,662. After we notified Department staff of the errors, they provided a corrected Exhibit K1 to the OSC. The Department passed on correcting the overstated expenditures and revenues in CORE because, based on discussions with the auditors, the amount was not material. Why did this problem occur? The Department lacked sufficient internal controls during Fiscal Year 2025 over its financial management and federal allowable cost compliance requirements for the CCPF program. Specifically, the Department lacked sufficient training over the calculation of its year-end accrued liabilities. The Department incorrectly calculated and recorded the year-end accrual entry in CORE, and lacked adequate internal review processes, including a supervisory review process, to ensure the program’s accrued expenditures—and ultimately amounts reported on the Exhibit K1—were accurate and complete. Why does this problem matter? By failing to have strong internal controls over the recording and monitoring of federal expenditures and revenues, the Department cannot ensure that financial records are accurate, complete, and recorded in a timely manner. Internal review and approval processes reduce the risk of material misstatements affecting federal awards. Additionally, insufficient controls over federal program requirements can lead to a lack of accountability, making it difficult to demonstrate compliance and potentially resulting in further scrutiny or penalties from federal oversight bodies. Finally, failing to properly report expenditures of federal funds on its Exhibit K1, if uncorrected, could cause the State’s overall SEFA to be inaccurate and out of compliance with federal regulations. See "Schedule of Findings and Questioned Costs" for table/chart. Recommendation 2025-044 The Department of Local Affairs should strengthen its internal controls over the financial management of federal Coronavirus Capital Projects Fund grant expenditures by implementing an adequate supervisory review process and training for staff over year-end estimates/accruals to ensure transactions are accurately recorded in the Colorado Operations Resource Engine (CORE), the State’s accounting system; and that the Exhibit K1, Schedule of Federal Assistance, is accurate and complete. Response Department of Local Affairs Agree Implementation Date: April 2026 The Department of Local Affairs (Department) agrees with the recommendation to strengthen internal controls over the financial management of federal Coronavirus Capital Projects Fund grant expenditures and the accuracy and completeness of the Exhibit K1, Schedule of Federal Assistance. The Department will develop a corrective action plan that includes enhanced procedures for the performance of year-end estimates/accruals. The Department will create and implement staff training for staff that are responsible for preparing and reviewing the estimates/accruals, the Exhibit K1, grant transactions and enhancements.

Finding 2025-048 Compliance with Period of Performance for the Highway Safety Cluster The objective of the federal National Highway Traffic Safety Administration’s Highway Traffic Safety Grant Programs (Highway Safety Cluster) is to provide a coordinated national highway safety program to reduce traffic crashes, deaths, injuries, and property damage. Non-federal entities apply for federal Highway Safety Cluster funds to add or improve safety features on highways and roads around the country. A condition of receiving these federal dollars is that the recipient must comply with various rules on how and when the money can be spent. The recipient must also establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. One of these requirements is that the Department must spend the funds within the period of performance identified in the grant award. For Fiscal Year 2025, the periods of performance for the Department’s grant awards for this program were each 4-year periods, as follows: October 1, 2022 through September 30, 2026; October 1, 2023 through September 30, 2027; and October 1, 2024 through September 30, 2028; depending on the year of grant funding. The Department requires a minimum of two staff that are a different reviewer and approver for all costs charged to the grant. Expenditures charged to the grant are reviewed and entered into the Department’s enterprise resource planning system, Systems, Applications, and Products in Data Processing (SAP), by grant coordinators, and then reviewed and approved by the Department’s headquarters business office staff. Grant coordinators that provide a first-level review of the grant expenditures entered into SAP and the Department’s headquarters business office staff should all be knowledgeable in allowable costs and period of performance requirements for the Highway Safety Cluster. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether: the Department had adequate internal controls over federal period of performance requirements for the Highway Safety Cluster; the Department recorded Highway Safety Cluster expenditures during the approved period of performance for the Highway Safety Cluster during Fiscal Year 2025; and costs were allowable under the grant. As part of our audit work, we selected all seven expenditure transactions charged to the Highway Safety Cluster grant during the first 30 calendar days of the period of performance for the four grant awards in place during Fiscal Year 2025. For example, for the Fiscal Year 2025 grant awards, the beginning date of the period of performance was October 1, 2024, so we reviewed expenditures charged to the grant from October 1 through October 30, 2024. We reviewed the Department’s supporting documentation to support the date each expense was incurred and evidence of internal controls related to approval of the expense. Another purpose of our audit work was to determine whether the Department implemented our Fiscal Year 2024 audit recommendations to: • Enforce its existing policies and procedures that require that grant expenditures be allowable, and that two individuals review the related supporting documentation for compliance with grant requirements. This should include monitoring to ensure that Department personnel performing the reviews review the related supporting documentation for incurred dates in order to verify that expenditures comply with the applicable award period of performance; adjustments should be made for any expenditures charged to an award outside the proper period of performance. • Provide additional training to Department personnel on period of performance compliance requirements. The Department agreed with these recommendations and planned to implement them by June 2025. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: • Federal regulations [2 CFR 200.308, 200.309, and 200.403(h)] state that a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or passthrough entity made the federal award that were authorized by the federal awarding agency or pass-through entity. A period of performance may contain one or more budget periods. A budget period represents the specific time frame approved by the federal awarding agency for using grant funds. • The Department’s internal control procedures over federal expenditure approval and processing require that all federal grant expenditures must have adequate supporting documentation, such as an invoice, purchase order, or reimbursement request, included with the transaction and the supporting documentation must be reviewed for allowability under the applicable federal grant program by two individuals. What problems did the audit work identify? Based on our audit work, we determined that the Department did not fully comply with the period of performance requirements for the Highway Safety Cluster during Fiscal Year 2025 and did not fully implement our prior audit recommendations. Based on our audit testwork, 2 of the 7 transactions selected for testing (29 percent) had expenses recorded to the grant that were incurred outside the period of performance; each expense was incurred one day prior to the start of the period of performance. We further verified with the Department that the expenditures were not specifically authorized by the federal awarding agency to be charged to the grant. These errors resulted in questioned costs totaling $347. Why did these problems occur? This problem occurred because the Department’s internal controls were not operating effectively to ensure that expenditures charged to the Highway Safety Cluster were incurred within the award’s period of performance. Specifically, the Department’s reviewers of the transactions for which the problems occurred did not ensure the transactions were fully within the period of performance. Both transactions related to employee reimbursements of travel expenses for the period September 30, 2024 through October 4, 2024. The Department’s reviewers did not identify that the expenses for September 30, 2024 should have been charged to a different grant award, and the Department did not split the invoice into two transactions to allocate the expenses to the appropriate grant award based on the period of performance of those grant awards. Department personnel did not appear to be sufficiently trained on the Highway Safety Cluster’s period of performance compliance requirements. Why do these problems matter? By failing to properly record expenditures to the Highway Safety Cluster within the grant award’s period of performance, the Department risks its costs being deemed unallowable by the federal awarding agency. See "Schedule of Findings and Questioned Costs" for table/chart. Recommendation 2025-048 The Department of Transportation (Department) should ensure that it complies with federal Highway Safety Cluster grant period of performance requirements by: A. Enforcing its existing policies and procedures that require that grant expenditures be allowable, and that two individuals review the related supporting documentation for compliance with grant requirements. This should include ensuring that Department personnel performing the reviews review the related supporting documentation for incurred dates in order to verify that expenditures comply with the applicable award period of performance and making adjustments for any expenditures charged to an award outside the proper period of performance. B. Providing training to Department personnel to ensure that staff understand and can apply the period of performance requirements. Response Department of Transportation A. Agree Implementation Date: April 2026 The Department agrees with the recommendation. The Center for Accounting (CFA) and the Office of Transportation Safety (OTS) have coordinated to implement updated reviews and controls. This implementation involves reviewing current processes to ensure supporting documentation is vetted and grant compliance is verified prior to payment. It also includes assessing the need for increased monitoring to ensure initial program reviews are complete and accurate. This remediation effort was finalized on June 30, 2025, following the September 2024 transaction in question. Additionally, the Department plans to review the remediation plan with all relevant staff again this season. This will ensure that all supporting documentation is thoroughly vetted and that expenditures comply with the applicable award period of performance B. Agree Implementation Date: April 2026 The Colorado Department of Transportation (CDOT) agrees with the recommendation. The Center for Accounting (CFA) and the Office of Transportation Safety (OTS) have coordinated on its implementation. The Department has assessed and updated training for staff responsible for reviewing and approving invoices for Highway Safety Cluster grants, with a specific focus on the period of performance. This training plan will be revisited and reviewed with all staff involved by April 2026.

2025-003. Payroll and Disbursement (Allowable Costs/Cost Principles) United States Department of Education, Passed-through New York State Department of Education: Special Education Cluster: Special Education Grants to States: IDEA Part B ALN: 84.027 Education Stabilization Funds COVID 19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U Criteria: Ensure that costs charged to federal awards are allowable, reasonable, and allocable in accordance with terms and conditions of the federal award and the approved grant budget, and maintain a financial management system that provides accurate, current, and complete disclosure of expenditures charged to federal awards prescribed by Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302. Condition: As required under Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302, which require a financial management system to provide effective control over accountability for federal funds, and to identify the source and application of funds. During the year, we noted that the District recorded journal entries transferring payroll and disbursement related expenditures from the General Fund to the Special Aid Fund under the Special Education Cluster and Education Stabilization Funds grant codes. These journal entries lacked adequate supporting documentation to demonstrate approvals and if the costs were allowable and allocable to the applicable federal awards. Consequently, we were unable to obtain sufficient appropriate audit evidence to conclude whether the journalized transactions were properly charged to the federal programs in order to comply with Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302. Cause: All journalized transactions should include adequate supporting documentation to substantiate the transfer of funds, especially when recorded to federal awards, as prescribed in Subpart E, 2 CFR §200.430 and Subpart D, 2 CFR §200.302. During the current year, we noted the District did not consistently retain or attach original source documentation to journal entries reallocating General Fund expenditures to the Special Aid Fund. Additionally, internal controls were not in place to ensure that such journal entries were reviewed to confirm allowability, reasonableness, allocability, and compliance with the approved budgets for the Special Education Cluster and Education Stabilization Funds prior to being posted, as required by Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302. Effect: Due to the lack of supporting documentation and approvals, there is an increased risk that unallowable or unsupported costs may have been charged to the Special Education Cluster and Education Stabilization Funds and included in reimbursement requests. As a result, the District could be subject to disallowed costs and potential repayment to the grantor agencies, if costs are determined to be unallowable. Questioned Costs: The dollar amount was undetermined at the time of the audit due to insufficient documentation to support the allowability of the journalized expenditures. Context: For the Special Education Cluster and the Education Stabilization Funds, based on a sample of journal entries, we noted instances where supporting documentation was insufficient. For the Special Education Cluster, one (1) of three (3) journal entries lacked adequate documentation for payroll-related transactions, as original timesheets were not available to verify the employee’s work activity or confirm alignment with the grant’s approved budget. Similarly, for the Education Stabilization Funds, two (2) of three (3) journal entries lacked sufficient supporting documentation. The District did not provide time and effort records for payroll-related transactions or supporting invoices for disbursement transactions, limiting the ability to confirm that these costs were properly documented and consistent with grant requirements. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should implement procedures to ensure all journal entries made that reallocate payroll and disbursement expenditures charged to federal grants are supported by complete and adequate documentation and approvals, including time and effort documentation for payroll, and supporting invoices for disbursements as support for the journal entries in accordance with the requirements of Uniform Guidance at Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302. Views of Responsible Officials of Auditee: The District acknowledged the finding and noted that procedures have been implemented to prevent recurrence. These procedures are intended to ensure all journal entries contain adequate supporting documentation and approvals, including time and effort records for payroll, and supporting invoices for disbursements. Additionally, documentation will be consistently maintained and reviewed for all payroll and disbursement expenditures reallocated through journal entries and charged to federal grants in compliance with Subpart E, 2 CFR §200.403 through §200.405 and §200.430, and Subpart D, 2 CFR §200.302.

FINDING 2025-001 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-046-PN01, 22611-046-ARP, 22619-046-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Porter County Education Services (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-046-PN01, 22611-046-ARP, and 22619-046-ARP grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The non-public proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per each applicable member schools’ grant award was expended and properly reported to IDOE, as required. The lack of internal controls was isolated to the 22611-046-PN01, 22611-046-ARP, and 22619-046-ARP grant awards which were fully expended during fiscal year 2024. These three grant awards had minimum earmarking requirements for the Non-Public Proportionate Share of $18,682, $4,510, and $302 respectively. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior finding number was 2023-004. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84,027, 84.173 Federal Award Identification Number: H027A240076 Pass-Through Agency: Massachusetts Department of Elementary and Secondary Education and the Massachusetts Department of Early Education and Care Pass-Through Number: 240-000558-2025-0131 Award Period: November 15, 2024 through June 30, 2026 Compliance Requirement: Allowable Costs / Cost Principles Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matter Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition and Context: Four (4) of four expenditures in our statistically valid sample were charged to the grant but incurred outside of the period of performance. Questioned costs: Known & Likely: $27,874 Cause: Procedures were not in place to ensure that expenditures charged to the grant program were incurred within the period of performance in the grant award. Effect: Noncompliance with federal compliance requirements occurred. Repeat Finding: No. Recommendation: We recommend procedures be implemented to ensure that charges to the grant program are incurred within the period of performance included in the grant award. Views of responsible officials: We have reviewed the finding and have since implemented controls to ensure that expenditures are charged to a grant only after final approval has been issued in the grant portal. In this instance, the grant was submitted in a timely manner, and DESE provided comments that were addressed by the Hingham Public Schools grant writer. However, formal final approval had not yet been issued by DESE in the grant portal at the time the expenditures were posted to the grant.

2025-024: Comply with Period of Performance Requirements for Vocational Rehabilitation Grants Applicable to: Department for Aging and Rehabilitative Services Assigned Topic: Federal Grants Management Prior Finding Number: N/A Finding Type: Compliance Finding Severity: N/A Financial Statement Finding: No Federal Awards Finding: Yes ALPT - ALN: Rehabilitation Services Vocational Rehabilitation Grants to States - 84.126 Federal Award ID (Year): H126A240070 (2024) Federal Agency: U.S. Department of Education Compliance Requirement: Period of Performance - 2 CFR § 200.403(h); 34 CFR § 76.707 Known Questioned Costs: $166,000 Aging and Rehabilitative Services’ Finance Division inappropriately applied $166,000 in expenses to its federal fiscal year 2024 VR grant. Since this amount exceeded $25,000 for the period of performance compliance requirement, we are required to report the known questioned cost identified during the audit through an audit finding in accordance with 2 CFR § 200.516(a)(4). The objective of this federal grant program is to assist states in operating a VR program that is designed to assess, plan, develop, and provide services to individuals with disabilities so that they may prepare for and engage in gainful employment. During state fiscal year 2025, the Commonwealth of Virginia incurred approximately $109 million in expenses under the VR federal grant program. Aging and Rehabilitative Services received a vendor invoice in August 2024 for pre-employment transition services related to an obligation incurred in July 2023. However, the contract administrator inadvertently indicated that this expense should be applied to the federal fiscal year 2024 VR grant, which began on October 1, 2023, instead of the federal fiscal year 2023 VR grant when Aging and Rehabilitative Services incurred the obligation to the federal award. Aging and Rehabilitative Services’ Finance Division did not consider the obligation date when reviewing the vendor invoice and as a result, did not identify that the contract administrator incorrectly applied this expense to the project code for the federal fiscal year 2024 VR grant. Aging and Rehabilitative Services uses project codes in its financial system to track and record expenses for its various federal grant programs and monitor compliance with the period of performance requirements. Title 34 CFR § 76.707 states that an obligation for performance of work other than personal services occurs on the date on which the State makes a binding written commitment to obtain the services. Further, 2 CFR § 200.403(h) stipulates that costs must be incurred during the approved budget period or period of performance to be considered allowable. Finally, the United States Department of Education’s Rehabilitative Service Administration’s Frequently Asked Questions for Period of Performance for Formula Grant Awards mandates that States must track all expenditures against their obligation to ensure they are incurred during the period of performance and are properly reported to the federal government. Without tracking expenses against their obligation date and verifying use of correct project codes, Aging and Rehabilitative Services risks posting expenses to incorrect award periods and risk having to return monies to the federal government. Aging and Rehabilitative Services’ Finance Division should strengthen its review processes to ensure that it applies transactions to the correct project code applying to the award’s period of performance. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.

Assistance Listing, Federal Agency, and Program Name - ALN 21.027, Department of the Treasury, COVID 19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - CW 5912A 2026 2021 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403(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. Condition - The City applied the same expenses to pass through and direct funded awards, which resulted in reported quarterly reports and SEFA expenditures including approximately $2.7 million of expenditures that were being double counted. Questioned Costs - N/A If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The City applied approximately $2.7 million to the direct funded ARPA funds that were already reimbursed under CSLFRF pass through agreements. Cause and Effect - Direct CSLFRF funds were utilized for various water projects that were already reimbursed under CSLFRF pass through agreements, which resulted in an overstated expenditure amount reported on the City's initial SEFA shared with the auditors and reporting for direct CSLRFR being incorrect for the year. Recommendation - We recommend that the City implement stronger internal controls to ensure the reports are reviewed for completenss and accuracy. Views of Responsible Officials and Corrective Action Plan - The City will ensure that all future expenses under this program are in compliance and under CSLFRF guidelines.

Criteria or specific requirement: According to 2 CFR §200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to 2 CFR §200.403(f), except where otherwise authorized by statute, costs must meet 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. Condition: During our testing of drawdowns related to matching, we noted that the Department did not adjust its reimbursement request to account for a duplicate travel reimbursement. Questioned costs: $169 Context: The Department processed a travel reimbursement twice, resulting in a duplicate payment of $225 to the employee. The employee reimbursed the Department for this duplicate payment. However, the Department did not adjust its reimbursement request to reflect the credit in the financial records. Cause: The Department was unaware that the query used for the reimbursement request excluded the credit. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible under or over charges to the grant. Repeat Finding: No. Recommendation: We recommend that the Department identify the reason for the exclusion of the credit in its query. Additionally, the Department should consider reviewing the query to the general ledger as part of the final review before submitting the reimbursement request. Views of responsible officials and planned corrective actions: The Department recognizes the audit finding and its responsibility to comply with 2 CFR §200.403(f). Corrective action will be taken. The Department revised the policies and procedures for cash disbursements within the Administrative Services Division. Effective immediately, upon running the monthly query of federal expenditures for the cash reimbursement for federal grants, the Federal Financial Analyst will submit the query to the Budget Director and the Accountant/Auditor. A reconciliation to the General Ledger will be completed by them prior to the Federal Financial Analyst requesting the cash reimbursement. Responsible Employee Position: CFO Timeline: July 31, 2026

Finding 2025-003 Duplicate expenditures charged to same grant Federal Program: Education Stabilization Fund – ESSER III ALN 84.425U Federal Agency: U.S. Department of Education Federal Award Year: 2021 Type of Finding: Significant Deficiency Noncompliance Criteria: In accordance with 2 CFR §200.403 (Factors affecting allowability of costs), costs charged to federal awards must be:  Necessary and reasonable for the performance of the federal award;  Allocable to the award;  Consistent with policies and procedures applied uniformly to both federally financed and other activities;  Adequately documented; and  Conform to any limitations or exclusions set forth in the Uniform Guidance or the terms of the award. Condition: During our testing of expenditures charged to ESSER III, we identified costs that were not allowable under the Uniform Guidance (2 CFR Part 200) and the terms and conditions of the federal award. Specifically, payroll expenditures were charged twice to the grant for one payroll period. Cause and Effect: The condition appears to be the result of inadequate review procedures over expenditures charged to the federal program. Without proper internal controls, the District cannot prevent duplicate expenditures from being charged to a grant. Failure to properly review expenditures charged can result in noncompliance with federal requirements. Questioned Costs: The identified cost of $1,593 is less than 5 percent of the total program expenditures of $1,269,440. This is not considered a material noncompliance instance. Recommendation: We recommend the District establish and maintain proper review procedures for expenditures charged to grants prior to submission for reimbursement. Management’s views: Management agrees with the finding. See corrective action plan on page 95.

FINDING 2025-002 Subject: Special Education Cluster (IDEA) - Earmarking 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): 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, 23619-021-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. INDIANA STATE BOARD OF ACCOUNTS 16 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Greater Lafayette Area Special Services Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The nonpublic proportionate share expenditures for the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, and 23619-021-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, and 23619-021-PN01 grant awards. 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." INDIANA STATE BOARD OF ACCOUNTS 17 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Records were not kept at the School Corporation or the Cooperative of funds spent by each member school corporation on nonpublic school students with disabilities. In reporting the amount expended for this purpose, the amounts reported as expenditures for nonpublic school students was based on a percentage to the schools nonpublic budgeted expenditures. 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 such, the School Corporation's nonpublic proportionate share expenditures could not be determined, and it could not be determined if the School Corporation met its minimum nonpublic proportionate share as required by the grant agreement. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be 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.