Findings Citing § 200.403

Criteria: In accordance with 2 CFR 200.302(b)(7) and 2 CFR 200.403, charges to federal awards must be supported, allowable, reasonable, and allocable to the applicable federal program. Payroll and benefit costs charged to federal awards should be calculated using accurate payroll information and reviewed to ensure amounts charged to federal awards are supported by underlying records and properly allocated. Condition: During testing of allowable costs for Major Program 93.912, we identified one instance in which payroll benefit costs charged to the federal award were overstated by $383 due to an error in the calculation of payroll-related benefits associated with an individual employee. Cause: Controls over the preparation and review of payroll benefit allocations charged to federal awards were not operating effectively, as the review process did not identify the calculation error. Effect or Potential Effect: As a result of the exception identified during audit testing, management performed additional procedures over the affected population and determined that an incorrect payroll benefit base had been used in calculating benefit allocations charged to federal awards for certain employees for which payroll and benefits are allocated to federal programs. Management identified unsupported payroll benefit costs and indirect costs charged to the following federal programs: Program 93.912 - $15,046; Program 93.387 - $1,901; and Program 93.889 - $29,718, for total questioned costs of $46,665. Management has indicated its intent to return these funds to the grantor agencies. Accordingly, the $46,665 of unsupported costs was removed from expenditures reported on the Schedule of Expenditures of Federal Awards, and no known questioned costs are reported in the Schedule of Findings and Questioned Costs. Questioned costs: $46,665 Repeat finding: No Recommendation: We recommend management strengthen controls over the preparation and review of payroll benefit allocations charged to federal awards. Review procedures should include verification of the payroll and benefit amounts used in the allocation calculations and reconciliation of allocated costs to supporting payroll records prior to charging amounts to federal awards. Management should also implement procedures to periodically monitor and validate allocation methodologies to prevent similar errors from occurring in future periods. View of responsible officials and planned corrective actions: Management agrees with the finding and recommendation. See the accompanying corrective action plan for management’s planned corrective actions.

Information on the Major Federal Program: Program Name: Technical and non-financial assistance to health centers Assistance Listing Number: 93.129 Criteria: As it relates to the allowability of costs, part 2 CFR §200.403 of the Uniform Guidance states, in part, that “costs must meet the following criteria to be allowable under Federal awards: (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, and (g) be adequately documented.” Specifically related to compensation costs, 2 CFR §200.430(g) states that “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; (vi) 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.” Condition: During our testing of payroll costs charged to the grant, we noted that the Organization did not maintain effective controls to ensure payroll costs were consistently and accurately allocated to the grant throughout the year. Specifically, significant turnover within the accounting department resulted in inconsistencies in the methodology used to calculate and assign payroll costs to the grant. As a result, we identified certain instances in which payroll costs charged to the grant for specific employees exceeded the amounts supported by their actual time incurred. While the allocation methodology applied to individual employees resulted in certain overallocations, total payroll costs charged to the grant were less than the total payroll costs that would have been supportable based on actual personnel activity for the grant as a whole. Cause: The Organization experienced significant turnover within its accounting department during the year. Responsibilities related to grant accounting and payroll allocations were transitioned among multiple individuals, and management did not maintain sufficient review controls to ensure payroll allocation methodologies were consistently applied and adequately supported. Effect or Potential Effect: Failure to comply with the allowable cost requirements of the Uniform Guidance related to charging payroll costs to grants could result in expenses from Federal awards being inaccurately reimbursed and reported. Questioned Costs: None. Repeat finding: This is not a repeat finding. Recommendation: We recommend that management review and update its procedures for calculating and reviewing payroll allocations charged to federal awards. Such procedures should include documented methodologies, retention of supporting records, and an independent review of grant allocations to verify costs are based on actual personnel activity and are consistent with grant requirements. Views of Responsible Officials: Management agrees with the finding and has implemented updated procedures designed to improve oversight and review of payroll allocations charged to federal awards.

2026-001 Period of Performance Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 Health Center Program Cluster Award Numbers H80CS00540‐24‐08 Criteria [ ] Compliance Finding [X] Significant Deficiency [ ] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to GAAP. Condition The Organization’s expenditures allocated to the federal program included costs for salaries outside of the approved budget periods for the awards. This finding appears to be an isolated incident. Cause The Organization’s internal controls over compliance did not identify certain payroll expenditures from the prior accounting period and remove them from the listing of expenditures eligible for reimbursement in the current period. Effect Including out-of-period costs in the expenditures eligible for reimbursement increases the risk of noncompliance with the period of performance requirements. The Organization may allocate salaries outside of the grant period to the federal awards. Questioned Costs None noted. Context In a sample of 25 transactions tested, we noted three transactions that related to salaries for services provided outside of the budget period of the award. However, follow-up procedures indicate that there were sufficient eligible expenditures to cover the total funding received during the period. Recommendation We recommend management implement controls to verify that all expenditures allocated to federal programs, including salaries and wages, were incurred in the budget period of the award. Views of responsible officials and planned corrective action Management concurs with Finding 2026-001. Management acknowledges that while the incident was isolated and sufficient total eligible expenditures existed to support the funding received, the review process of the payroll expenses failed to identify and remove the expenses from the current budget period of the award. See corrective action outlined on page 39.

2026-003 Period of Performance (repeat of finding 2025-003) Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 Health Center Program Cluster Award Numbers H80CS00513 Criteria [X] Compliance Finding [] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to GAAP. Condition The Organization’s federal expenditures include costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be claimed as current federal expenditures. Effect The Organization may allocate costs outside of the grant period to the federal awards. Questioned Costs $4,139 Context In a sample of 40 transactions tested, we noted three transactions, totaling $4,139, that were for goods or services provided outside of the budget period for the award. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined on page 33.

Federal Program: U.S. Department of Homeland Security – FEMA Assistance Listing Number: 97.036 - Disaster Grants - Public Assistance Passthrough Entity - Arkansas Department of Emergency Management Program Year: 2025 Criteria - Under 2 CFR 200.403 and 2 CFR 200.404, costs charged to federal awards must be necessary, reasonable, and adequately documented. In addition, FEMA Public Assistance guidance requires that force account labor costs be based on actual hours worked and actual compensation paid, and that such costs not be duplicated or otherwise unallowable. Condition – An employee payroll payment was reported twice as an eligible expenditure, resulting in a duplicate payment being charged to the grant. Cause - The duplicate payment resulted from human error, as accounting personnel inadvertently entered the same payment into the grant reporting system twice. Although controls exist, they were not sufficient in this instance to detect or prevent the duplicate reporting. Effect or potential effect - As a result of the duplicate request, unallowable payroll costs were charged to the FEMA grant. If not identified and corrected, such errors could lead to FEMA reimbursement of costs that do not represent actual, allowable labor expenditures and could result in repayment demands or reduced future reimbursement. Questioned Costs – Known error: $5,072; Total estimated error $57,703 Context - We selected a sample of 29 out of a population of 187 employee payroll expenditures charged to the grant. We noted 1 employee payroll expenditure was duplicated resulting in an error of $5,072. The sample value was $45,597 out of a population value of $518,914. The sampling methodology used is not, and is not intended to be, statistically valid. Recommendation - We recommend management strengthen payroll review and reconciliation procedures to ensure that payroll payments charged to federal grants are reviewed for accuracy and completeness prior to submission for reimbursement. Additional supervisory review or system based duplicate payment controls should be implemented to reduce the risk of similar errors in the future. Views of Responsible Officials and Planned Corrective Action: Management concurs with this finding. The duplicate request for reimbursement of a single payroll payment was an isolated clerical oversight. This specific error was not caught during the final review process prior to submission. Management recognizes the importance of accurate reporting and has already taken steps to ensure all future reimbursement requests are reconciled against previous submissions to prevent recurrence.

Federal Agency: Legal Services Corporation (LSC) U.S. Department of Health and Human Services Federal Program Name: LSC Grants Aging Cluster - Special Programs for the Aging, Title III, Part B Assistance Listing Number: 09.706060 93.044 Federal Award Identification Number and Year: 09-706060 - 2025 Various – Aging Cluster Pass-Through Agency: Various – Aging Cluster, see SEFA Pass-Through Numbers: Various – Aging Cluster, see SEFA Award Period: Various – see SEFA Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Federal regulations (45 CFR 1635.4(a) and 2 CFR 200.430), indicate that federal award recipients must base allocations of salaries and wages costs to grants on records that accurately reflect the work performed. Federal regulations (45 CFR 1630.5 and 2 CFR 200.403) indicate that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities. It also states that costs must be adequately documented. The LSC financial guide also articulates that a cost allocation base must be cost-driven and that budgeted numbers or percentage of revenue are not allowable allocation bases. Condition: During our testing we noted: • LSC Payroll Transactions: Fourteen instances of errors totaling a net under allocation amount of $2,657. The under allocation was due to various over allocations of costs to other grants that were not based on employees’ time charged to the respective other grants in their timesheets. We also noted that the Organization allocated costs from the general fund (which consists of two unrestricted grants and the LSC grants) to LSC grants using allocation bases of percentage of revenue and projected revenue of the grants that make up the general fund. However, as revenue was recognized as expenses were incurred for the general fund, the allocations based on revenue approximated an allocation method based on a cost driver. • LSC Native American Grant Payroll Transactions: Three instances where a total of $4,383 was charged to payroll costs via an estimated fixed percentage allocation of employee time spent on the LSC Native American grant. The Organization was not able to provide supporting documentation for the fixed percentage. • Aging Cluster Payroll Transactions: Seven instances of errors totaling a net overallocation of payroll costs of $144 where an unsupported allocation percentage was used to allocate the employee's pay to the grant. The Organization used an allocation base of monthly hours coded to the grant per timesheets divided by 150 hours for the monthly pay period instead of total monthly hours listed in the employees’ timesheets. • Aging Cluster Fringe-benefit Transactions: Five instances where $2,797 of additional medical insurance costs were allocated to grants based on reconciliations of budgeted grant revenue to period-to-date actual grant expenses that showed revenue exceeding expenses. Based on discussions with management and subsequent recalculations, it appears that the allocated costs (and more) could have been allocated via an allowable cost driver method (grant salaries compared to total organization salaries for the year). Questioned Costs: None. Context: These 29 instances were noting during testing of 120 transactions. Cause: The Organization’s cost allocation methodology is primarily based on time and effort records, and periodic calculations of a LSC allocation base (based on revenue or projected revenue) for the period divided by the total allocation base (based on revenue or projected revenue) coded to the Organization’s general fund, but it often includes manual adjustments based on review of individual time records, expense and other data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments and varying allocation bases in the Organization’s cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities and in a manner where costs are not applied uniformly to both LSC (or, federally)-funded and non-LSC (of, federally) -funded activities. It could also lead to challenges in maintaining sufficient supporting documentation of such cost allocations. Repeat Finding: The finding is a repeat of findings in the immediately prior year. The prior year finding numbers were 2024-002 and 2024-004. Recommendation: We recommend that the Organization consider updating its cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations that are calculated in a consistent manner that ensure costs are applied uniformly to respective benefited activities, and that are reflective on employees’ time and effort records. We also recommend that the Organization maintain contemporaneous documentation supporting all cost allocations. Lastly, the Organization could consider removing LSC from the general fund into its own fund, and using fringe benefit rate and indirect cost rate allocation methods to simplify its cost allocation process. Views of responsible officials: Management partially agrees with this finding. First, 45 CFR Part 1635 codifies the timekeeping requirement. CLS keeps track of every case and time dedicated by staff in strict compliance with this requirement. Manual adjustments primarily result from planned internal reconciliations and reviews designed to ensure the accuracy of CLS allocations. These reconciliations are conducted on a monthly basis and form an integral part of the Organization’s internal control framework. Additionally, with respect to the Native American grant transactions, CLS implemented the necessary correction to the referenced percentage effective beginning in 2026. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Federal regulations specify that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities.

Condition: During our audit procedures over expenditures charged to the federal program, we tested a nonstatistical sample of 40 transactions. Audit procedures identified one expenditure that was not allowable, as the cost was incurred prior to the start date of the grant period, but was charged to the federal award. Criteria: Under 2 CFR §200.403, costs charged to federal awards must be allowable, allocable, reasonable, and incurred during the approved period of performance of the award. Cause: The cause of the finding was insufficient review procedures to ensure that expenditures charged to the federal award were incurred within the approved grant period. Transaction dates were not consistently verified against grant start dates prior to charging costs to the award. Effect: Charging costs incurred outside the grant period results in noncompliance with federal cost principles and increases the risk that additional unallowable costs could be charged to federal programs. This resulted in questioned costs of $455 related to the transaction tested. Questioned Costs: $455 Recommendation: We recommend that management enhance procedures over the review and approval of grant expenditures to ensure that costs are incurred within the approved grant period prior to being charged to the federal award. This may include verifying invoice or expenditure dates against grant start and end dates as part of the approval process.

Finding 2025 – 001 Subject: Apprenticeship USA Grants – internal controls Federal Agency: U.S. Department of Labor Federal Programs: Apprenticeship USA Grants Assistance Listing Number (ALN): 17.285 Direct Agency: Department of Labor Compliance Requirements: Allowable Costs/Cost Principles Audit finding: Significant Deficiency Condition and Context An effective internal control system was not designed or implemented at the Organization related to payroll and incentives/subscriptions to ensure compliance with requirements related to the grant agreements and Allowable Costs/Cost Principles compliance requirements. Payroll The Organization did not design an effective system of internal controls to ensure that actual payroll costs were charged to the grant based on each employee’s time and effort for the time period January through June 2025. The Organization charged amounts that did not reflect the actual amounts paid which created costs charged to the grant over and above those allowable. The total payroll costs found to be unallowable totaled $23,228 and were computed as the difference between the amount charged to the grant and the time and effort allocations of actual payroll costs. Incentives/Subscriptions The Organization did not design an effective system of internal controls to ensure that incentive/subscription costs for the individuals shops were charged to the grant based on amounts agreed upon with the grantor. The total incentive/subscription costs found to be unallowable totaled $7,688 and were computed as the difference between the amount charged to the grant and a capped amount of $1,500 per shop for subscriptions and $8,500 per shop for incentives. Criteria ‘The auditee shall: . . . (b) Maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs. . . ." 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(i) states in part: “Standards for documentation of Personnel 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 which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) 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 difference allocation bases; or an unallowable activity and a direct or indirect cost activity…” Cause The Organization’s management had not developed or implemented a system of internal controls to ensure compliance with the grant agreement, internal policy and the compliance requirements listed above. Effect Noncompliance with the grant agreement and the compliance requirement resulted in questioned costs that could result in the repayment of federal funds. Questioned Costs Known questioned costs of $30,916 were identified as detailed in Condition and Context. Recommendation We recommend that the Inter-Industry Organization’s management establish controls 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 #2025-005 – Material Weakness and Other Noncompliance. Applicable federal programs: U. S. Department of Health and Human Services, 93.566, Refugee and Entrant Assistance State/Replacement Designee Administered Programs, Passed through Texas Office for Refugees: 10/01/24 – 09/30/25, FFY2025-27946V-ASA RSS, 10/01/24 – 09/30/25, FFY2025-27946V-AUSAA-RSS, 10/01/24 – 09/30/25, FFY2025-27946V-CMA, 10/01/24 – 09/30/25, FFY2025-27946V-RSS, Passed through United States Conference of Catholic Bishops: 10/01/24 – 09/30/25, 25RSI13A, Passed through U. S. Committee for Refugees: 10/01/24 – 09/30/25, RHP-2025-YMCA-Houston TX-03, 93.567, Refugee and Entrant Assistance Voluntary Agency Programs, Passed through U. S. Committee for Refugees and Immigrants: 10/01/24 – 09/30/25, 2502VARVMG, 10/01/23 – 09/30/24, 2402VARVMG, 93.676, Unaccompanied Alien Children Program, Passed through U. S. Committee for Refugees and Immigrants: 01/01/25 – 12/31/25, 90ZU0630-02. Criteria: 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 requires recipients and subrecipients of federal funds to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the recipient is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Additionally, section 200.403 indicates that costs charged to federal awards must be necessary and reasonable for the performance of the program and be adequately documented. Condition and context: Same as finding #2025-001. Cause: Same as finding #2025-001. Effect: Same as finding #2025-001. Questioned costs: $1,275. Recommendation: Same as finding #2025-001. View of responsible officials: Management agrees with the finding. See Corrective Action Plan.

United States Environmental Protection Agency – 66.958 – Water Infrastructure Finance and Innovation Act (WIFIA) Agreement No(s): WIFIA – N19137LA Criteria: Under 2 CFR § 200.403, costs charged to a federal award must be necessary, reasonable, and allocable to the federal award and must conform to any limitations or exclusions set forth in the terms and conditions of the award. The WIFIA loan agreement further limits eligible costs to those incurred for EPA-approved projects. Condition: During testing of WIFIA loan draws for the year ended December 31, 2025, we noted that $3,167,614 million of project costs were funded through WIFIA loan draws for a project that had not yet received approval from the EPA at the time the costs were incurred and drawn. Context/Population: The exception was identified during testing of WIFIA loan draws, which totaled $93,409,714 million for the year ended December 31, 2025. The questioned costs totaling $3,167,614 relate to one project that had not yet received EPA approval at the time of the draw. Cause: The Board’s processes for reviewing and approving project eligibility prior to requesting WIFIA loan draws did not include sufficient controls to ensure that projects had received formal EPA approval in accordance with the WIFIA loan agreement before costs were submitted for reimbursement. Effect: As a result, federal funds were used to finance costs that were not associated with an EPA-approved project at the time of draw, resulting in questioned costs of $3,167,614. This represents noncompliance with federal requirements and the terms and conditions of the WIFIA loan agreement and could result in potential disallowance or repayment to the federal agency. Identification of a repeat finding: This is not a repeat finding. Recommendation: We recommend that the Board strengthen its controls over WIFIA draw requests to ensure that: • All projects included in a draw request have received formal EPA approval in accordance with the loan agreement; • A documented review process is performed prior to submission of each draw request to confirm project eligibility; and • A timely reconciliation or crosswalk is maintained linking project costs to approved WIFIA project designations. View of Responsible Officials: Management acknowledges the finding relative to formal documentation for eligible project costs and will enhance review procedures for monthly WIFIA loans draws to have written contemporaneous evidence from the lender in addition to preliminary approval received for project transfers or changes (i.e. renaming of subprojects listed in the loan closing documents within the same scope approved in the loan). The project changes materialized due to a change in expected timing of Sewer Utility work included in joint projects with the City’s Department of Public Works. As a result, standalone projects were executed to complete the required work by the October 2025 deadline mandated in the Sewer Consent Decree. The changes were discussed with the lender upon notification from the Department of Public Works and included in WIFIA quarterly reporting while the formal project approvals are in process. The Utility’s Project Delivery Unit Director is responsible for ensuring that this corrective action is accomplished with an estimated timeline for completion by September 30, 2026. The WIFIA project scope is defined as: I. Water Line Replacement via the Joint Infrastructure (JIRR) Program; II. Sewer Line Replacement via the Joint Infrastructure Recovery Roads (JIRR) Program; III. Sewer System Evaluation and Rehabilitation Program (SSERP); and IV. Sewer Force Main Replacement and Improvement. The eligible activities include, restoration and replacement of damaged gravity sanitary sewer mains, manhole rehabilitation and repair, CIPP lining and point repairs, Water line replacement and repair, Roadway restoration and ADA curb ramp improvements associated with the utility work.

2025-001 – Payroll Costs Charged to Federal Awards Not Consistently Supported Type of Finding: (F) Significant Deficiency in Internal Control over Compliance (G) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Small Business Administration Title: Microloan Program Assistance Listing #: 59.046 Award #s: SBAOCAML250818-01-00 and SBAOCAML240615-01-00 Award Periods: 7/1/2025-6/30/2026 and 7/1/2024-6/30/2025 Compliance Requirement: Allowable Costs/Cost Principles Known Questioned Costs: $15,401 Likely Questioned Costs: Approximately $25,940, inclusive of known and projected questioned costs Statement of Condition During our review of payroll disbursements charged to the Microloan Program, we identified inconsistencies between payroll charges recorded in the general ledger and the underlying support for those charges during two periods of the fiscal year. From January through April 2025, payroll was intended to be allocated based on actual hours recorded by employees in WebClock. Of 13 paychecks tested, 4 had hours recorded to the OFA grant in WebClock but were charged to the MBDA award in the general ledger, resulting in $1,819 misallocated away from OFA. An additional 3 paychecks included $333 charged to OFA for employees who had recorded no OFA hours in WebClock for those pay periods. WESST did not maintain documentation supporting the reason for or approval of these allocation changes. Beginning in May 2025, WESST adopted a fixed-percentage allocation method based on past time studies, grant budgets, and OFA approval. Of 15 paychecks tested from May through September 2025, none were allocated at the approved percentage. Seven paychecks had less charged to OFA than the approved amount, with a cumulative difference of $77, and 8 paychecks had more charged to OFA than the approved amount, with a cumulative difference of $15,068. No exceptions were noted for the 11 paychecks tested from October through December 2025. Criteria Federal award costs must be allowable, allocable, reasonable, consistently treated, and adequately documented in accordance with 2 CFR 200.403. Under 2 CFR 200.405, a cost allocable to one federal award may not be charged to another federal award to overcome funding deficiencies, avoid restrictions, or for other reasons of convenience. Payroll costs charged to federal awards must be supported by records that accurately reflect the work performed and by a system of internal control that provides reasonable assurance the charges are accurate, allowable, and properly allocated. Budget estimates or fixed percentages may be used for interim accounting only if they produce reasonable approximations and are subject to periodic after-the-fact review and necessary adjustment. Effect Known questioned costs charged to the Microloan Program totaled $15,401. This amount consists of $333 charged to OFA during January through April without supporting OFA time records and $15,068 charged to OFA during May through September in excess of the approved allocation percentage. Based on audit projection, total likely questioned costs are estimated at approximately $25,940, including projected questioned costs related to payroll costs charged above the approved allocation percentage during May through September. The condition increases the risk that payroll costs may be charged to incorrect federal awards, reimbursement requests may be inaccurate, and federal expenditures reported on the Schedule of Expenditures of Federal Awards may be misstated. Cause WESST did not have an effective review process in place to ensure payroll charges recorded in the general ledger agreed to employee time records or approved allocation percentages before costs were charged to federal awards. During January through April 2025, certain payroll allocations were changed without documentation of the reason for the change or formal approval. During May through September 2025, the fixed-percentage allocation method was implemented but was not applied correctly, and no reconciliation process was in place to identify and correct variances. Recommendation We recommend WESST strengthen its review procedures over payroll costs charged to federal awards. Specifically, WESST should implement a reconciliation of general ledger payroll charges to employee time records or approved allocation percentages before submitting reimbursement requests. Any changes to payroll allocations should be formally documented, reviewed, and approved, including the reason for the change and the federal award benefited. If fixed percentages are used for interim billing, WESST should establish a routine reconciliation to actual activity and make timely adjustments, as needed. WESST should also perform periodic reviews of payroll allocations to identify and correct errors on a timely basis.

Assistance Listing: 66.957 Greenhouse Gas Reduction Fund: National Clean Investment Fund and 66.959 Greenhouse Gas Reduction Fund: Solar for All Finding No. 2025-003: Significant Deficiency in Controls over Nonpayroll Expense Approvals Condition: During testing of nonpayroll transactions for the SFA and GGRF programs, controls related to review, approval, and segregation of duties were not consistently performed or documented. For instance, under the Solar for All program, of the nine (9) transactions tested, two (2) transactions totaling $179,268 reflected inadequate segregation of duties, as the same individual responsible for contract management also approved the related invoices without evidence of an independent review. One transaction totaling $39,936 lacked documentation identifying the requestor, and five transactions totaling $233,370 did not include evidence of documented invoice approval. Under the GGRF NCIF program, four (4) of eight (8) transactions tested ($58,864.59) did not include evidence of an independent review separate from the requestor and/or individual responsible for payment processing. Criteria: In accordance with Uniform Guidance (2 CFR 200.303 and 200.403), entities are required to maintain effective internal controls over federal awards to ensure that costs charged to programs are allowable, properly authorized, and adequately supported. Transactions should be subject to appropriate review and approval, and responsibilities should be sufficiently segregated to reduce the risk of errors or irregularities. Cause: These conditions appear to result from inconsistent implementation of established internal controls, including the absence of standardized procedures for documenting approvals and insufficient enforcement of segregation of duties. Additionally, reliance on informal or manual processes contributed to incomplete documentation and audit trails supporting transaction review and authorization. Effect or Potential Effect: Weaknesses in review, approval, and segregation of duties increase the risk that improper, unsupported, or unauthorized expenditures may occur and not be identified in a timely manner. As a result, there is an elevated risk of noncompliance with applicable federal requirements and potential misstatement of program expenditures. Questioned Costs: None Perspective Information: While the exceptions identified relate primarily to documentation and consistency in the execution of control activities, they do not necessarily indicate that all review and approval procedures were absent. Management indicated that certain reviews may have been performed; however, documentation to evidence these controls was not consistently retained. Strengthening documentation practices and formalizing review and approval processes would enhance the organization’s control environment, improve transparency, and support compliance with federal requirements. Addressing these matters will also position management to more effectively demonstrate that internal controls over nonpayroll expenditures are designed and operating as intended. Identification of Repeat Finding: Not applicable since this is a new finding. Recommendation: We recommend that management strengthen controls over nonpayroll expenditures by implementing consistent and well-documented review and approval processes. This should include requiring documented approval of all invoices and payments prior to disbursement and ensuring clear segregation of duties among individuals responsible for initiating, approving, and processing transactions. Management may also consider implementing standardized, system-based approval workflows to enhance control enforcement and maintain complete audit trails. Additionally, all supporting documentation, including evidence of request, review, approval, and payment authorization, should be retained in accordance with established policies. Views of responsible Officials: Management agrees with the finding. Documentation supporting review, approval, and segregation of duties for nonpayroll transactions was not consistently maintained. Management has implemented corrective actions, including formalizing procedures that require clear separation between the requestor and approver, documented approval of all invoices prior to payment, and retention of supporting documentation. A standardized approval workflow has been implemented through Bill.com to enforce control requirements and maintain a complete audit trail. Management will incorporate these procedures into formal policies and monitor compliance to ensure controls are consistently applied across programs.

Finding 2025-001: Allowable Costs - Significant Deficiency Federal Program: 93.103 - Research and Development Cluster - Education and Training Program for Outsourcing Facility Industry Award Number: 5UE5FD008142-02 Award Year: January 1, 2025 to December 31, 2025 Federal Agency: U.S. Food and Drug Administration (FDA) Pass-Through Entity: Not applicable Criteria: According to the requirements of Title 2 U.S. Code of Federal Regulations Part 200.403(e), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), allowable costs must be determined in accordance with generally accepted accounting principles (GAAP). Condition/Context: For 2 of the 40 items selected for testing, even though the expenditures were for costs that were necessary and reasonable for the performance of the program, the expense amount benefitted periods beyond the period under audit and did not meet the allowability criteria under the Uniform Guidance. The sample was not statistically valid. Cause: Management determined allowability for certain costs based on the full period of performance covered by the grant and did not account for the period over which the costs provided benefits to the program. Effect: Certain costs allowed by the grant were recognized prior to the period in which the costs provided benefit to the program. Questioned Costs: $35,262 Recommendation: To ensure compliance with Uniform Guidance, the Organization should review its policies and procedures to ensure that the costs are reported in the proper fiscal year for financial reporting purposes, and any costs that benefit future periods are appropriately amortized and reported in the period in which the program derives benefits from the costs. Management Response: Management acknowledges the improper treatment of the expenditure for the specific period. The expenditure in question was for a one-year marketing services agreement supporting activities under the FDA 503B award. The vendor required payment in advance as a condition of service delivery, and the cost was incurred for legitimate grant-related purposes within the approved scope of work and period of performance. The expenditure was fully documented, allocable to the award, reasonable in nature, and directly connected to approved programmatic objectives. Management acknowledges that the transaction involved payment for services extending across a future service period. Specifically, 2 CFR 200 does not prohibit recipients from entering into prepaid contractual arrangements for allowable services necessary to support award implementation, particularly where such arrangements reflect standard vendor business practices and operational necessity. Further, the organization’s actions must be evaluated in the context of significant federal payment administration changes that began in February 2025. Historically, the organization received advance funding under the award consistent with the cash management principles contemplated under 2 CFR 200.305. Beginning in 2025, however, the organization was required to operate under a reimbursement-based process requiring submission of supporting documentation prior to payment release. This materially altered the organization’s working capital position and limited its ability to independently finance operational expenditures for extended periods pending reimbursement. As a result, management was required to make operational decisions necessary to ensure continuity of approved grant activities while balancing vendor requirements, cash flow limitations, and evolving federal reimbursement practices. The organization did not receive excess federal cash, improperly retain federal funds, incur unallowable costs, or use award funds outside the approved project scope. The questioned transaction reflects a timing and payment structure issue rather than a violation of fundamental federal compliance requirements. Management also notes that 2 CFR 200.305 expressly contemplates advance payment methodologies and recognizes that reimbursement-only environments may create operational hardships for recipients lacking sufficient working capital. The organization’s actions were undertaken in good faith to maintain uninterrupted program operations under materially changed federal payment conditions. Importantly, the expenditure was allowable, the services supported approved award objectives, the costs were incurred during the award period, supporting documentation exists, no misuse or diversion of federal funds occurred, and no financial harm to the federal government resulted. Note also that going forward, PDA will record future services and subscriptions to prepaid and amortize based on the periods stipulated on the vendor invoices.

Criteria: The Program requires that costs charged to the Federal award shall be allowable and supportable in accordance with 2 CFR 200.403. Adequate source documentation must be retained to support reimbursed costs, Condition: Support for expenditures and evidence of timely and proper review was not properly retained for all federal expenditures. Context: Supporting documentation for six of eighteen expenditures tested was not retained. No evidence was retained that itemized Instacart invoices were properly reviewed by management to ensure that costs were allowable under federal grant guidelines. Effect: The lack of retained invoices limits the ability to verify that reimbursed expenses were allowable, properly supported, and in compliance with federal requirements. This condition increases the risk of questioned costs, noncompliance with federal requirements, and potential repayment of unsupported expenditures. Questioned Costs: None. Cause: The condition occurred due to inadequate procedures for ensuring that invoices and supporting documentation were retained and reviewed by the organization prior to reimbursement. Specifically, reliance on staff to maintain original receipts without obtaining and retaining copies resulted in incomplete documentation being available for audit purposes. Recommendation: Management should implement and enforce procedures to ensure that all invoices and supporting documentation are obtained and retained prior to requesting reimbursement. Additionally, management should provide guidance to staff regarding documentation requirements and periodically review reimbursement files to confirm compliance with federal record retention requirements. Identification as a Repeat Finding. This is not a repeat finding. View of Responsible Officials and Corrective Actions: We agree with the auditor's recommendation. Although the referenced invoices were reviewed by the CEO from the vendor for eligibility and reasonableness upon receipt of the automatic e-mailed invoice, there was no procedure to print and retain this documentation in the accounting files for Instacart invoices. Effective June 1, 2026, each month the Director of Finance will compare a checklist of all credit charges to the physical copies prior to filing and obtain any missing invoices as part of the monthly closing process.

#2025-003 - Lack of Authorization for Expenses Criteria: Uniform Guidance 2 CFR 200.403 requires costs to be necessary, reasonable, and adequately documented to be allowable under Federal awards. Additionally, the Organization’s internal policies mandate written prior approval before incurring federal expenditures. Cause: Program staff bypassed standard procurement workflows to expedite payments. Additionally, the finance department processed the grant reimbursement requests without verifying that the supporting packages contained the required signatures. Condition: We identified federal grant expenditures that were charged to the program without documented evidence of prior review, approval, or formal authorization by the designated individual. We tested a sample of 20 non-payroll disbursements charged to the federal program. Of these, 2 transactions lacked documented approval. The total population of non-payroll disbursements for this award was $487,816. Effect: The Organization is out of compliance with federal documentation standards. Failure to approve costs pre-disbursement can result in unallowable expenses being charged to the federal award, leading to potential claw backs of funds by the granting agency. Recommendation: Management should reinforce existing policies and require documentation for all approvals. Management’s Response: The Organization is implementing a new approval process.

Finding: 2025-001 Federal Agency: U.S. Department of Agriculture, Forest Service Federal Program: Infrastructure Investment and Jobs Act Prescribed Fire/Fire Recovery Assistance Listing No.: 10.716 Federal Award No.: 22-CS-11132400-309 Federal Award Year: Multiple Finding Type: Significant deficiency in internal control over compliance, other matters Compliance Requirement: Allowable Cost/Cost Principle Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and consistently treated. Additionally, sound accounting practices under generally accepted accounting principles (GAAP) require that expenses be recognized in the period in which they are incurred. Costs that provide benefits to future periods should be recorded as prepaid expenses and allocated to the appropriate period benefiting from the expenditure. Condition: During our testing of disbursements within the major program, we identified a $1,000 invoice that was charged to the federal award in the current fiscal year. However, the expense pertained to services or benefits applicable to the subsequent fiscal year and, therefore, should have been recorded as a prepaid expense rather than an expense of the current period. Context and Effect: This error was noted on one of the 42 samples of disbursements tested for the major programs. While the dollar amount identified was not material to the financial statements as a whole, it represents noncompliance with federal cost principles and GAAP related to proper period recognition of expenses. If this error were to occur for several different invoices or significantly larger invoices, it may have a material effect on the financial statements. Cause: The Society has established and generally effective internal controls over expense recognition, including procedures for cutoff and classification. This instance appears to be an isolated occurrence rather than an indication of a systemic control deficiency. The misclassification was primarily due to ambiguity in the vendor’s invoicing, including multiple invoices from the same vendor for similar events in different periods and limited documentation on the invoices of the applicable service period. This created confusion at the time of recording, resulting in the expense being recognized in the incorrect period. The transaction was not in proximity to year-end. Identification as a Repeat Finding, if Applicable: No. Questioned Costs: $1,000.Recommendation: While the Society’s existing controls over expense recognition appear to be appropriately designed and generally operating effectively, we recommend minor enhancements to further reduce the likelihood of similar isolated occurrences. Specifically, management may consider: • Requesting more detailed invoices from vendors, including clearly defined service periods. • Implementing an additional review step for invoices from vendors with recurring or overlapping billing arrangements. • Reinforcing existing review procedures to ensure that the period of benefit is clearly evidenced, particularly near year-end. These enhancements are intended to strengthen an already effective control environment and help ensure consistent and accurate expense recognition in accordance with federal requirements and GAAP. Responsible Official: CFO of the Society Views of Responsible Official and Planned Corrective Action: Management concurs with the audit finding. See the accompanying management’s corrective action plan for planned corrective action.

Finding Number: 2025-004 Federal Program: Airport Improvement Program Federal Award Identification Number and Year: All Airport Improvement Program awards, 2024, 2023 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Allowability Criteria: Under 2 CFR 200.403, costs charged to federal awards must be allowable, meaning they are necessary, reasonable, allocable, adequately documented, and comply with the terms and conditions of the federal award. Additionally, 2 CFR 200.302(b)(7) requires financial management systems to include effective internal controls over accountability of expenditures, including proper review and approval. Per 2 CFR 200.303, the Entity must establish and maintain effective internal control over federal awards to provide reasonable assurance that expenditures are allowable and in compliance. Condition: During testing of expenditures charged to the Airport Improvement Program, we identified that the Airport did not consistently follow its established invoice approval procedures. Specially, two of five checks tested, invoices totaling $1,469,973, lacked documented evidence of CEO and Vice President of Landside, Planning & Infrastructure’s approval prior to payment. The invoices were approved for payment by the Vice President of Finance and Administration. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Cause and Effect: The CEO and Vice President of Landside, Planning & Infrastructure did not sign off on invoices for Airport Improvement Program expenditures as an indication of their approval and allowability. There is an increased risk of expenditures not being allowable if the control process is not properly followed. Recommendation: The Airport should ensure that all purchasing controls are followed when incurring expenditures of federal funds and that purchases are properly approved prior to payment. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.

Finding: 2025-004 – Allowable Costs ALN and Title: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of Treasury Passthrough Entity: State of Nevada Governor’s Finance Office Budget Division Type of Finding: Significant Deficiency Criteria: Per 2 CFR §200.403, costs charged to federal awards must be allowable and represent actual net expenditures incurred by the non-federal entity. Additionally, 2 CFR §200.406 requires applicable credits, including refunds and reimbursements, to be applied to reduce expenditures charged to federal awards. Condition: During testing of expenditures charged to the federal program, it was noted that the Foundation requested and received reimbursement of approximately $25,000 for legal expenditures under the federal award. Subsequent to reimbursement from the federal program, the Foundation also received reimbursement for the same expenditures from the vendor providing the legal services. The duplicate recovery of costs was not identified by management controls and remained unresolved as of year-end. Cause: The Foundation did not maintain effective controls to identify subsequent refunds, reimbursements, or applicable credits associated with expenditures charged to federal awards Effect: As a result, expenditures charged to the federal program were overstated by approximately $25,000 and did not represent actual net allowable costs incurred by the Foundation. Failure to identify and apply applicable credits increases the risk of unallowable costs being charged to federal awards. Questioned Costs: Known questioned costs of $25,000. Identification of a repeat finding: Not applicable. Context: 1 out of 37 invoices tested was not allowable. Recommendation: We recommend the Foundation strengthen its existing controls over grant reimbursement requests and the monitoring of subsequent vendor refunds, reimbursements, or credits to ensure costs charged to federal awards represent actual net allowable expenditures. Specifically, the Foundation should enhance its documented review procedures to verify that any refunds, reimbursements, or credits received after reimbursement requests are appropriately identified, evaluated, and, when applicable, credited back to the applicable federal award. View of Responsible Officials: Management agrees with this recommendation. See prepared corrective action plan for details.

Material Noncompliance - Allowable Costs/Cost Principles - Compensation Questioned Costs: $ 43,500 New or Repeat: New. Criteria: Uniform Guidance, 2 CFR § 200.430, requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed and that such records be supported by a system of internal control providing reasonable assurance that the charges are accurate, allowable, and properly allocated. Records must reasonably reflect the total activity for which the employee is compensated and support distribution of salary and wages among specific activities or cost objectives when the employee works on more than one federal award, non-federal award, or other activity. In addition, 2 CFR § 200.403 requires that costs charged to federal awards be necessary and reasonable for the performance of the federal award and be adequately documented, among other allowability factors. Condition: During our testing of payroll/personnel costs charged to the Community Development Financial Institutions Program award, Assistance Listing No. 21.020, we noted that the Organization approved employee wages and maintained payroll records (for example, payroll registers, pay rates, and evidence of payment); however, the Organization did not maintain timesheets, time-and-effort records, personnel activity reports, periodic certifications, or other equivalent records sufficient to accurately reflect the work performed and support the allocation of wages and related fringe benefits to the CDFI Program award. The Organization was unable to provide documentation evidencing the employees’ actual work performed that supported the allocation of compensation costs to the Community Development Financial Institutions Program award and, where applicable, between Community Development Financial Institutions Program-eligible activities and other activities/cost objectives. Cause: The condition appears to have occurred because the Organization did not have a sufficiently designed or consistently implemented process to ensure personnel activity documentation (or other equivalent recorded evidence) was prepared, reviewed, and retained to support allocations of payroll and related fringe benefits charged to the federal award. Context and Effect: We selected 10 employees and/or payroll transactions charged to the federal award, for the year ended December 31, 2025. The sample included compensation charges (wages and fringes) totaling $43,500 which was the total population allocated to this federal award. Of the items tested, 10 employees and/or payroll transactions totaling $43,500 did not include sufficient documentation (such as timesheets, periodic certifications, or other equivalent records) to support that the charges accurately reflected work performed and were properly allocated to the Community Development Financial Institutions Program -eligible activities/cost objectives. As a result of the condition, the Organization did not demonstrate that salary, wage, and related fringe benefit charges to the federal award were supported by records that accurately reflect the work performed and that the amounts charged were properly allocated among cost objectives. This increases the risk that compensation costs charged to the federal award may be unsupported, unallowable, or not properly allocated and could result in repayment, disallowances, or additional monitoring by the federal agency or pass-through entity. Questioned Costs: Questioned costs are $43,500 (wages and fringe benefits). This amount represents the portion of costs determined to be unsupported. Recommendation: We recommend that the Organization strengthen its policies, procedures, and internal controls over compensation costs charged to the federal award to ensure compliance with 2 CFR § 200.430 and 2 CFR § 200.403. Specifically, management should: 1. Establish written procedures requiring recorded evidence to support salary, wage, and fringe benefit charges to the federal award and to support allocation among cost objectives. 2. Implement a documented process for personnel activity reporting and/or periodic certifications (or other equivalent documentation) that reasonably reflects actual work performed and supports the allocation of compensation costs to eligible activities. 3. Require supervisory review and approval of personnel activity documentation/certifications on a periodic basis and retain documentation in the grant file and/or payroll file. 4. Perform periodic reconciliation and after-the-fact review of payroll and fringe benefit allocations, including timely adjustments when actual activity differs from budget estimates or planned allocations. 5. Provide training to program and finance personnel on the documentation standards in 2 CFR § 200.430 and allowability factors in 2 CFR § 200.403. 6. Enhance management review controls to ensure compensation costs are supported prior to posting to the general ledger and/or requesting reimbursement. Views of Responsible Officials: Management concurs with this finding. During the audit period, the Organization maintained payroll records, compensation documentation, and payroll allocation schedules; however, it did not maintain personnel activity reports, periodic certifications, or other after-the-fact documentation sufficient to support compensation costs charged to the Community Development Financial Institutions Program in accordance with 2 CFR § 200.430. The Organization's methodology relied on management-established allocation percentages based on employee responsibilities and anticipated level of effort supporting CDFI Fund activities. While management believes the costs charged to the award were incurred in support of eligible program activities, the Organization recognizes that documentation supporting the allocation methodology did not meet the standards required under Uniform Guidance. By December 31, 2026: 1. The CFO will establish a cost allocation plan which includes a methodology to support salary, wage, and fringe benefit charges, and other applicable costs, to the federal award and to support allocation among cost objectives. 2. The CFO will implement a documented process for personnel activity reporting and/or periodic certifications (or other equivalent documentation) that reasonably reflects actual work performed and supports the allocation of compensation costs to eligible activities. 3. The CFO will reconfigure the current workforce management system to ensure projects, departments, and contextual details are logged at the source. 4. The COO will review the existing timesheet submission and review policy to ensure compliance with federal requirements. The policy will require supervisory review and approval of personnel activity documentation/certifications consistent with the payroll cadence and retain documentation in the grant file and/or payroll file. The CFO will review and enforce compliance with timesheet submission requirements. 5. The CFO will implement a dynamic allocations module within Sage Intacct to facilitate automated allocation of time and fringe benefits to federal and other programs. 6. The CFO will ensure that the systems established perform periodic reconciliations and after-the-fact review of payroll and fringe benefit allocations. The CFO will make timely adjustments when actual activity differs from budget estimates or planned allocations. 7. The CFO, COO, and other personnel working on federal programs will receive training on the documentation standards in 2 CFR § 200.430 and allowability factors in 2 CFR § 200.403. 8. The CFO and COO will provide training to program and finance personnel on the documentation standards in 2 CFR § 200.430 and allowability factors in 2 CFR § 200.403. 9. The CFO will, as part of the monthly close process, review compensation charged to federal awards to ensure all costs are appropriate and supported prior to requesting reimbursement.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: DA-202407-02980, DA-202407-02967, 00002098 Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under federal awards, they must be adequately documented and there must be sufficient documentation. “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 allocablethereto under these principles. b)Conform to any limitations or exclusions set forth in these principles or in the Federal awardas to types or amount of cost items. c)Be consistent with policies and procedures that apply uniformly to both federally financedand other activities of the recipient or subrecipient. d)Be accorded consistent treatment. For example, a cost must not be assigned to a Federalaward as a direct cost if any other cost incurred for the same purpose in like circumstanceshas 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 thispart. f)Not be included as a cost or used to meet cost sharing requirements of any other federallyfinanced 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). Ifincurred, these costs must be liquidated prior to the due date of the final report(s) andcharged to the final budget period of the award unless otherwise specified by the Federalagency. All other costs must be incurred during the approved budget period. At itsdiscretion, the Federal agency is authorized to waive prior written approvals to carryforward unobligated balances to subsequent budget periods. See §200.308(g)(3).” Condition: During our testing of direct costs (excluding salaries and related benefits), we noted in accordance with §200.403(g) that 2 of 43 transactions lacked underlying documentation to support the underlying expense for some, or all, of the expense. Cause: LifeWire did not have sufficient controls within the program services department to adequately document the nature of, and provide reconciling information, for the expenses prior to submission to the accounting department for payment. Effect or Potential Effect: Without adequate controls in place to ensure documentation is adequately maintained for costs, LifeWire could incorrectly charge expenditures to the federal programs. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs in 2025 were $1,053,085. The samples tested consisted of 43 transactions totaling $53,885. Questioned costs consist of amounts in excess of maintained documentation and totaled $1,931. For one transaction, only payment confirmation was retained, which did not include documentation of the nature of the expense. For the second transaction, LifeWire charged an amount in excess of the monthly lease payment and did not retain documentation to support the additional amount or nature of those costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that policies and procedures be updated to ensure underlying support is appropriately maintained as required by §200.403 for all transactions. Views of Responsible Officials: Management agrees with the finding that documentation was not sufficiently maintained to support underlying expenditures. LifeWire has updated its policies and procedures to explicitly require that underlying documentation supporting the nature and amount of each expenditure be retained.

Finding No. 2025-003: Period of Performance – Noncompliance Federal Program Name: Juvenile Mentoring Program Pass-through Entity: None Federal Assistance Listing Number: 16.726 Type of Finding Significant Deficiency in Internal Controls over Compliance Other Matters Criteria Uniform Guidance requires that only costs incurred during the approved period of performance are allowable and chargeable to a federal award set forth in 2CFR §200.403, Factors Affecting Allowability of Costs, and §200.309, Period of Performance. Costs incurred prior to the final approval of the program budget must have appropriate written authorization from the awarding agency to be considered allowable. The Department of Justice requires receipt of final approved program and budget documentation before costs can be charged to the award. Condition The Partnership incurred and charged program costs to the federal award prior to receiving final program budget approval from the Department of Justice. Specifically, $25,706 in program costs were incurred from October 1, 2022 through April 25, 2023, as the final budget approval was granted on April 26, 2023. Cause The Partnership did not have adequate internal controls to ensure that program expenditures were incurred during the approved time frame. Program and fiscal staff did not verify the award and budget approval status prior to authorizing or charging costs to the award. Effect The Partnership charged costs to the federal award outside of the approved period of performance, resulting in noncompliance with Uniform Guidance and award requirements. This resulted in questioned or disallowed costs, required repayment of federal funds, and potential impacts on future federal funding. Questioned Costs Costs charged to the grant during fiscal year 2023 prior to the final approval of the program budget on April 26, 2023 are considered disallowed and amount to $25,706. Context Uniform Guidance requirements set forth in 2CFR §200.403, Factors Affecting Allowability of Costs, and §200.309, Period of Performance, state that only costs incurred during the approved period of performance are allowable and chargeable to a federal award. The Partnership must obtain formal budget approval from the federal agency prior to incurring costs to the program. Repeat Finding No

Assistance Listing, Federal Agency, and Program Name: 84.287, U.S. Department of Education, Twenty First Century Community Learning Centers Federal Award Identification Number and Year: 21st CCLC FY 2025 Pass through Entity: Illinois State Board of Education Finding Type: Material weakness Repeat Finding: No Criteria: Under 2 CFR 200.403, costs charged to a federal award must be allowable. Among other requirements, costs must be necessary and reasonable for the performance of the award, allocable to the award, conform to limitations or exclusions in the cost principles or the federal award as to the types or amounts of cost items, be consistent with applicable policies and procedures, be adequately documented, and be incurred during the approved budget period. Condition During the fiscal year ended December 31, 2025, the granting agency issued a monitoring visit report dated December 9, 2025 related to prior year expenses charged to the 21st Century Community Learning Centers grants. The monitoring visit report identified certain transactions and/or categories of expenses as unallowable under the grant terms and conditions and/or the approved grant budget. The identified unallowable items included human resources services claimed under professional development supplies and food costs claimed under instructional supplies. After receiving the monitoring visit report, the auditee did not modify its 2025 procedures to perform a look back review to specifically identify and evaluate whether similar transaction types or expense types were charged to the 2025 federal award prior to the report receipt. Questioned Costs: $12,179 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: Questioned costs were determined by reviewing a sample of transactions and reviewing supporting documentation and comparing against the grant budget. Context: Of the 40 transactions tested, 2 transactions totaling $12,179 represented transaction types and/or expense types that were similar to those identified by the granting agency in its December 9, 2025 monitoring visit report as unallowable under the grant terms and/or approved grant budget. The auditee did not provide evidence that these current year expenses were subjected to an enhanced allowability review that considered the specific determinations communicated by the granting agency. Cause and Effect: The monitoring visit report was not issued until December 2025, at which point the majority of fiscal year 2025 expenses were already submitted to the granting agency for reimbursement. The auditee's corrective action was focused on returning any questioned costs from the 2024 report and adjusting future reimbursement requests. Recommendation: We recommend that the auditee strengthen internal control over compliance for allowability of costs charged to review each expenditure against the approved budget before submitted for reimbursement. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. Management will strengthen controls over allowability before potentially affected costs are charged to the award.

Finding 2025-001 – Internal Control Deficiency and Noncompliance over Indirect Cost Rates Repeat finding: Yes – Prior year finding 2024-003 Identification of the federal program: Federal grantor: United States Department of Health and Human Services (HHS) Assistance Listing No.: 93.048 Program name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.403 costs must be allowable; 2 CFR 200.405 allocable; and indirect costs must follow 2 CFR 200.414 and Appendix IV to Part 200 (nonprofit rate determination). Entities without a current negotiated rate may elect the de minimis rate (2 CFR 200.414(f)). HHS codified these requirements at 45 CFR Part 75 for periods through September 30, 2025 and effective October 1, 2025, HHS adopted 2 CFR Part 200 directly, with HHS-specific provisions relocated to 2 CFR Part 300. Condition: The Organization applied and included an expired provisional indirect cost rate in its HHS grant application and budgets. HHS approved the application and budgets; however, the rate in use was not current and the Organization had no active negotiated indirect cost rate agreement (NICRA). Subsequent to year end, in March 2026, the Organization submitted a NICRA proposal to HHS Cost Allocation Services. The Organization was informed by HHS that they may continue to use the provisional rate until a new rate agreement is issued, with an understanding any adjustments identified during the review process will be incorporated into future fixed rates and any applicable carryforward amounts. Cause: Lapse in monitoring and renewing the negotiated indirect cost rate. Effect or potential effect: Risk of noncompliance with cost principles and potential unallowable indirect cost recoveries if the expired rate differs from an approved current rate. Questioned costs: Undetermined. The variance between the expired rate and an allowable rate was not calculated. Recommendation: Continue the application process started in March 2026 to obtain an approved NICRA from the cognizant agency (HHS) and apply it prospectively and, if required, retroactively. Implement controls to track rate expirations and require documented verification of the current rate before grant applications, budget submissions, and draw requests. Views of responsible officials: Management concurs with the recommendation. See Management’s Corrective Action Plan.

Finding Number: 2025-001 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Programs: Government Department /Agency: Travel: DFD Meeting Travel Grant Program National Science Foundation (NSF) Assistance Listing Number: 47.041 Award Number: CBET-2434521 Award years: 7/01/2024 – 2/28/2026 PhysTEC: Community Models that Transform Physics Teacher Education Assistance Listing Number: 47.049 Award Number: PHY-2325980 Award years: 09/15/2023 – 08/31/2028 National Physics REU Leadership Group Workshop and Community-Building Assistance Listing Number: 47.049 Award Number: PHY-2011908 Award years: 06/01/2020 – 12/31/2025 Inclusion Across the Nation of Communities of Learners of Underrepresented Discoverers in Engineering and Science Assistance Listing Number: 47.076 Award Number: HRD-1834540 Award years: 09/01/2018 – 05/02/2025 Changing Physics and Astronomy Education Culture: A Reflective Practice Model of Faculty Development to Support Diversity, Equity, Inclusion, and Excellence Assistance Listing Number: 47.076 Award Number: DUE-2141678 Award years: 05/01/2022 – 04/30/2027 Collaborative Research: Mobilizing Physics Teachers to Promote Inclusive and Communal Classroom Cultures through Everyday Actions Assistance Listing Number: 47.076 Award Number: DRL-2300608 Award years: 09/15/2023 – 04/25/2025 Inclusive Graduate Programs: An AGEP Pilot in Physics Assistance Listing Number: 47.076 Award Number: 60066090 APS Award years: 08/15/2023 – 05/02/2025 Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “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.” Condition: During our test work over payroll transactions for Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted that 3 of 40 sampled transactions were duplicate charges to the program. In response, APS reviewed the full payroll population and determined that the total amount of duplicated payroll charges was $29,181. APS subsequently corrected the Schedule of Expenditures of Federal Awards (SEFA) to remove all duplicated costs. Questioned Costs: $29,181. Context: This is a condition identified per review of APS’ compliance with specified requirements using a statistically valid sample. Total amount of samples selected for testing amounted to $48,928. Effect: Lack of proper review of expenditures could result to unallowable costs charged to the program. Cause: APS did not maintain effective internal controls during one month of the year to ensure that only allowable costs were charged to the program, due to internal controls not operating as intended following a system enhancement to the grants management timekeeping system. Repeat Finding: No. Recommendation: BDO recommends that management strengthen controls over payroll processing and grant expenditure review to ensure salary costs charged to federal awards are accurate, supported, and recorded only once. Specifically, management should implement and document a review control to identify duplicate payroll postings before and after upload to the general ledger and grant ledger, reconcile payroll charges to approved payroll records on a timely basis, and investigate and resolve any exceptions noted. Related Noncompliance – Noncompliance. Views of Responsible Officials: APS concurs with the auditor’s findings and recommendations. APS’ corrective action is described in the Management’s Corrective Action Plan included in Management’s Section.

AL title: Supplemental Nutrition Assistance Program Employment & Training (SNAP E&T) Name of federal agency: Department of Agriculture Name of pass-through entity: Los Angeles County Department of Economic Opportunity (DEO) and Foundation for Community Colleges California Employment Development Department Repeat finding: No Criteria: Under the Uniform Guidance, specifically 2 CFR 200.430, charges to Federal awards for compensation must be supported by a system of internal control which provides reasonable assurance that costs are allocated appropriately and accurately. Per 2 CFR §200.403, allowable costs must be "necessary, reasonable, and adequately documented." Condition: During our testing of payments charged to the federal major program, we noted that employee timesheets lacked evidence of review and approval. Federal regulations require that expenditures charged to Federal awards be properly reviewed, approved, and documented to ensure allowability and compliance with grant terms. Cause: Due to the size of the Organization's programmatic operations, the implementation of controls over the program is still in progress, as the Federal program is relatively new to the Organization. As a result, controls were not consistently applied to all personnel charged to the program. Effect: Management provided documentation on personnel costs allocated to the program, but was unable to consistently provide evidence of review. Lack of review increases the risk of unauthorized or unallowable costs being charged to the Federal award, potentially leading to questioned costs and noncompliance with Federal grant requirements. Context: This issue applied to compensation costs for four salaried employees charged to the grant, with expenditures of approximately $138,000 out of the total award expenditures of $4,569,611. Questioned cost: None. Recommendation: Management should review the requirements of CFR 200.430 and ensure that current processes, whether digital or hard-copy driven, are consistent with the requirements of the Uniform Guidance. In addition, management should consider adding additional resources to its payroll approval process. Views of responsible officials: The Organization has made significant progress in strengthening its timekeeping processes over the past 18 months. In 2025, the agency transitioned approximately 800 weekly transitional workers from a paper-based timekeeping process to an electronic timekeeping system. In 2026, the agency implemented an upgraded workforce management system that provides enhanced scheduling, monitoring, and supervisory oversight capabilities. Management recognizes the importance of full compliance with timekeeping requirements. Given the size and complexity of the Organization's operations, including a large workforce distributed across multiple programs and locations, implementation of system and process changes requires substantial planning, training, and operational coordination. To support these efforts, the agency has dedicated additional resources and established clearly defined responsibilities to drive implementation and oversight. The agency continues to refine procedures, provide training, and leverage system capabilities to strengthen controls and ensure consistent compliance across the Organization.

AL title: Workforce Innovation and Opportunity Act (WIOA Cluster) Name of federal agency: Department of Labor Name of pass-through entity: California Employment Development Department Repeat finding: Yes Criteria: Under the Uniform Guidance, specifically 2 CFR 200.430, charges to Federal awards for compensation must be supported by a system of internal control which provides reasonable assurance that costs are allocated appropriately and accurately. Per 2 CFR §200.403, allowable costs must be "necessary, reasonable, and adequately documented." Additionally, 2 CFR §200.302(b)(3) requires non_x0002_Federal entities to maintain records that sufficiently detail financial transactions to support Federal expenditures. Condition: During our testing of payments charged to the federal major program, we noted that employee timesheets lacked evidence of review and approval. Certain employees charged to the grant did not prepare timesheets and a separate tracking system was used. Federal regulations require that expenditures charged to Federal awards be properly reviewed, approved, and documented to ensure allowability and compliance with grant terms. Cause: The Federal program was new to the organization and controls over the program had not been fully established. Turnover in the accounting department contributed to the lack of resources for tracking these costs. Effect: Management provided documentation on personnel costs allocated to the program, but was unable to provide evidence of review. Lack of review increases the risk of unauthorized or unallowable costs being charged to the Federal award, potentially leading to questioned costs and noncompliance with Federal grant requirements. Context: This issue applied to approximately 50% of the compensation costs charged to the grant expenditures. Management performed time studies on some of the employees whose costs were shared among programs, and the local granting organization did not cite this as a finding in their review of their subrecipient's activities. Questioned cost: Unable to be determined. Recommendation: Management should review the requirements of CFR 200.430 and ensure that current processes, whether digital or hard-copy driven, are consistent with the requirements of the Uniform Guidance. In addition, management should consider adding additional staff to its accounting and/or grants management team. Views of responsible officials: The Organization has made significant progress in strengthening its timekeeping processes, as described in finding number 2025-002. This program ended in March 2025, and therefore management was unable to complete full remediation of the processes before completion of the grant.

#2025-003 – Major Federal Award Finding – Period of Performance Nature of Finding: Period of Performance – Compliance Finding and Material Weakness in Internal Control over Compliance This is a repeat of prior year #2024-004. Criteria/Condition: The Organization recorded certain expenses upon payment of invoices rather than when the service was provided. The guidelines provided at 2 CFR 200.403(e) require that costs be determined in accordance with GAAP to be allowable. In accordance with GAAP and the accrual basis of accounting, such expenses are to be recorded when services are performed, rather than upon payment of invoice. Cause/Context: The Organization had limited accounting resources which impacted timing and frequency of processing certain transactions. In addition, the Organization has contracts with providers that include pre-determined payment terms that may not precisely correlate to the actual work performed in terms of timing. The Organization recorded certain contract costs as the invoices were processed, and not necessarily as the providers’ actual work was completed. Effect: Adjusting journal entries were proposed during the audit to record expenses in the proper period for the financial statements. Federal grant expenses of approximately $154,000 were originally recorded in 2025 that related to 2026 services. Additionally, approximately $25,000 of federal grant expenses were originally recorded in 2026 that related to 2025 services. This net adjustment decreased federal grant revenue and expenditures by approximately $129,000 for the year ended December 31, 2025. Recommendation: We recommend that care be exercised to evaluate financial activity considering the cost factors contained in 2 CFR 200.403, the accrual basis of accounting and period of performance. Controls should be enhanced to ensure that expenses are recorded to the proper period based on when the service or work is provided. Views of Responsible Officials and Planned Corrective Actions: Certain grants — particularly at the Center for Adult College Success — were prepaid by the funder and provided funding for a period of time that covered multiple fiscal years. TalentFirst applied certain contract costs related to work that also covered multiple fiscal years to these grants in the accounting records before the full period of performance had concluded, resulting in expenses recorded in the wrong period. Management has implemented a contract timeline document that tracks each grant and contract's actual period of performance and governs when a grant is closed out in the accounting records. Grants are no longer closed out until the full period of performance has concluded, and contract costs are more closely monitored for period of performance considerations. Management is also moving away from structuring large prepaid contracts, in part to ease the cash flow pressure that structure creates.

Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Healthy Marriage Promotion and Responsible Fatherhood Grants CFDA Number 93.086 Award Period: October 1, 2024 through September 30, 2025 Type of Finding:  Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The Code of Federal Regulations 2 CFR 200.403, states, "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.” Condition: The organization requested reimbursement for a prepayment to a third party for services to be provided in 2026, outside of the period of performance. Context: In our review of 40 nonpayroll disbursements we noted one instance where the organization allocated expenses to the major program and were reimbursed by the awarding agency for costs that were not incurred within the period of performance. Questioned Costs: $14,300 Effect: Unallowable costs of $14,300 were charged to the major program. Repeat Finding: This is not a repeat finding Recommendation: We recommend that the organization implement a process to review all invoices to determine when the expense will be incurred to ensure that only costs incurred within the period of availability are charged to the major program. Views of responsible officials: Management disagrees with the finding. Management charged the audit cost to the award that received the benefit of the audit services because management determined that award to be the appropriate cost objective. The audit was required because of the financial activity conducted under the completed ACF award. The audit tested costs incurred, funds drawn, financial reporting, internal control, and compliance obligations arising from that award. Management does not believe the cost provided a programmatic or administrative benefit to a later federal award. Charging the cost to a subsequent award solely because the audit work or payment occurred after the award end date would have resulted in a different federal award, and potentially a different federal agency, bearing the cost of audit procedures performed on activity attributable to the completed ACF award. Auditors’ response to views of responsible officials: We have considered management’s response and acknowledge management’s position that the audit services related to activity under the completed ACF award. However, our finding is based on the period-of-performance requirement in 2 CFR 200.403, which provides that, except for allowable closeout costs incurred and liquidated within the required closeout reporting period, costs must be incurred during the approved budget period of the federal award. The cost identified in the finding represented a prepayment to a third party for services to be provided in 2026, which was outside the award’s period of performance of October 1, 2024 through September 30, 2025. Accordingly, we continue to believe the cost was not incurred within the approved budget period and was not allowable to the award. Therefore, the finding and questioned costs of $14,300 remain unchanged.

MANAGEMENT IS RESPONSIBLE FOR ESTABLISHING AND MAINTAINING AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS TO ENSURE COMPLIANCE WITH 2 CFR PART 200, SECTION 200.514(C). ADDITIONALLY, 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 200.308, 200.309, AND 200.403(H)). DURING TESTING OF 25 EXPENDITURE SELECTIONS WE OBSERVED 14 PAYROLL AND NON-PAYROLL EXPENDITURES WHICH WERE RECORDED UNDER THE 2401IDSDVC GRANT PROGRAM WHICH WERE OUTSIDE OF THE PERIOD OF PERFORMANCE ENDING DATE OF SEPTEMBER 30, 2025.

Information on Federal Program United States Department of Homeland Security - Federal Emergency Management Agency (FEMA). Federal Assistance Listing Number 97.036 – Disaster Grants – Public Assistance. Compliance Requirements Activities Allowed or Unallowed / Allowable Costs and Cost Principles Criteria In accordance with 2 CFR §200.403, costs charged to a federal award must be necessary, reasonable, and allocable to the award. Additionally, costs must be adequately documented to be allowable under federal awards. Condition During our testing of activities and allowable costs for the year ended December 31, 2025, we identified four (4) instances in which invoices were submitted twice for reimbursement. Cause No cause could be determined. Effect The City received FEMA grant reimbursements for duplicated costs, potentially reducing available federal funds for future emergencies. Questioned Costs $71,629 Context Seventy-four (74) disbursements totaling $962,629 were selected for testing. Of the items tested, two (2) exceptions were identified in which invoices had been included in multiple reimbursement requests. Upon performing additional procedures, two (2) additional exceptions were noted, resulting in questioned costs. Recommendation We recommend the City review the identified transactions and consult with FEMA regarding resolution of the questioned costs. The City should also take steps to ensure that only allowable, adequately documented costs are submitted for reimbursement and that duplicate invoices are not included in future reimbursement requests. Management’s Response Responsible Official’s Response and Corrective Action Planned: Management has implemented a new process to include financial oversight and review of all documents prior to submission to FEMA for reimbursement going forward. Since the Finding last year, we have not had the opportunity to utilize this new process as the FEMA expenditures in question were prior to last year’s Finding. We will continue to meet with all leadership staff to discuss documentation requirements necessary for FEMA reimbursements. Lastly, Management will only sign off on reimbursed costs after all changes to FEMA requests have been adequately documented. Implementation Date: Immediate Person Responsible for Corrective Action Plan: Chief Financial Officer, Ashley Cason

Finding 2025-002: Allowability of Costs and Allocation of Vendor Credits Federal Agency: United States Department of State Federal Program: International Programs to Support Democracy, Human Rights and LaborAssistance Listing Number: 19.345 Award Identification Number and Year: All Criteria: 2 CFR 200.303 requires entities to maintain effective internal controls over Federal awards. 2 CFR 200.403 and 200.405 require costs charged to Federal awards to be allowable, reasonable, and allocable based on benefits received. Condition: Management identified that a staffing agency improperly charged VAT on salaries from mid-2024 through fall 2025. In 2026, a credit of approximately $201,000 was issued and applied to 2026 salary costs. Management performed an analysis and determined that the estimated impact to Federal awards was approximately $40,000 of improperly charged VAT. Management was unable to allocate the credits received back to originally affected awards due to the timing of payments made and credits received. Cause: The Organization did not have a sufficiently designed or operating review process to identify that VAT was being improperly charged on employee salary costs before those costs were recorded and charged to awards. In addition, the Organization did not maintain sufficient award-level tracking to determine the specific awards affected by the VAT overcharges and to allocate the related credit back to the original awards or cost objectives. Effect or Potential Effect: The Organization was able to determine the estimated VAT overcharges that were charged to Federal awards. Federal awards were charged costs that were not allowable or not properly allocable. In addition, because the related credit was applied against 2026 salary costs rather than allocated back to the awards or cost objectives that originally incurred the overcharges, the financial records may not reflect the proper allocation of costs and credits among Federal and non-Federal awards. Questioned Costs: Management identified an aggregate credit of approximately $200,000 of which approximately $40,000 is attributable to Federal awards. Context: The issue relates to VAT charges improperly applied by a staffing agency to employee salary costs from mid-2024 through fall 2025. The related credit was issued in 2026 and applied against 2026 salary costs. Management was unable to allocate the overcharged VAT and related credit back to the original affected awards. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that management strengthen controls over the review of payroll and staffing agency invoices to ensure that taxes, fees, and other charges included in salary-related costs are allowable and properly allocable before costs are charged to Federal awards. We also recommend that management develop and document a process to:  Identify and review vendor credits, refunds, and adjustments related to prior-period costs;  Determine the original awards, projects, or cost objectives affected by such credits or refunds;  Allocate credits back to the awards or cost objectives that originally incurred the related costs, when practicable;  Evaluate the impact on closed Federal awards and determine whether communication with the Federal agency or pass-through entity is necessary; and  Maintain sufficient documentation supporting management’s evaluation and allocation methodology.

Finding No. 2025-005 Federal Agency: U.S Department of Health Services Federal Program Name: Medicaid Cluster Assistance Listing Number: 93.778 Pass Through Entity: Wisconsin Department of Health Services Federal Award Notification Number and Year: All – 2025 Award Period: January 1, 2025 – December 31, 2025 Compliance Requirement Affected: Reporting Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or Specific Requirement: Allowable Costs/Cost Principles - CFR 200.403 Factors Affecting Allowability Of Costs requires that reported costs not be included as a cost of any other federally financed program. Condition: During testing of the Wisconsin Children’s Long-Term Support Medicaid Waiver program, (CLTS), a material difference was noted between the total of the monthly amounts submitted as administrative costs and total amount submitted on the annual grant reconciliation report. The program expectation is that the total of the monthly amounts should be comparable to the amount submitted on the annual reconciliation. Questioned Costs: None Context: The Wisconsin Department of Health Services (WI DHS) CLTS program allows counties to claim a self-calculated administrative cost each month for reimbursement, with the final payment early the following year. A separate annual report that requires a higher level of detail is due in early April of the following year, including each employee's payroll costs, hours worked both in and out of the program, paid time off and details of any additional administrative costs reported. WI DHS reconciles the submitted costs on the annual report with the amounts already billed to the State CLTS Medicaid program and considers any unreimbursed amounts to be administrative costs. Those costs are compared to the amounts the County reported and has already been reimbursed. WI DHS either pays or takes back the difference. Cause: The County submitted $458,639 in monthly administrative costs for reimbursement which they had already recouped from the Medicaid billing program; they received payments of $236,429 from those submitted costs based on contract limitations. The grand total submitted for 2025 administrative reimbursement was $571,458; the County was ultimately entitled to $112,820 after the annual reconciliation report was reviewed and approved by WI DHS. The County received reimbursements totaling $216,433 through November 2025, with an additional $132,816 in reimbursements received through May 2026. WI DHS recouped the $236,429 overpayment in June 2026. Effect: The County submitted administrative costs for reimbursement under WI DHS CLTS program which were previously recouped from the Medicaid billing program. As a result, the County had to pay back $236,429 to WI DHS for this duplicate reporting. Recommendation: The Human Services Department (the Department) should develop a uniform payroll allocation process that will allocate all employee costs to each program based on actual hours worked, including fiscal and administrative employees. They should also implement a uniform account structure that includes the objects necessary to track program costs, so they can be used to accurately calculate and report costs in accordance with all program requirements. In addition, the Department should redesign its accounting, reporting and reconciliation structure to include all programs and prevents double reporting from happening. Views of Responsible Officials: There is no disagreement with the finding.

2025-001: Activities Allowed or Unallowed and Allowable Costs/Cost Principles - Material Weakness in Internal Control and Material Noncompliance Repeat of Prior Audit Finding 2024-001 Federal Program: Trans-National Crime Federal Agency: U.S. Department of State - Bureau of International Narcotics and Law Enforcement Affairs Federal Assistance Listing Number: 19.705 Federal Award Year: December 31, 2025 Criteria: 2 CFR Section 200.303(a) of the Uniform Guidance requires all non-Federal entities to establish, document, and maintain effective internal control over the Federal awards 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 awards. In addition, 2 CFR Sections 200.405 and 200.403(g) require federal awards be expended only for allowable activities and be adequately documented, respectively. Condition/Context: The Corporation was unable to provide a signed contract or reconciliation to evidence allowability of the expenditures or documentation of review and approval for the following: • For 3 out of 40 selections, no evidence of approval of signed contracts could be provided (control and compliance). • For 1 out of 40 selections, no evidence of approval of time sheet could be provided (control and compliance). • For 11 out of 40 selections, no evidence of approval of payroll payments could be provided (control). This was not a statistically valid sample. Questioned Costs: Questioned costs were approximately $12,016. Cause: The Corporation did not retain/could not retrieve the signed contracts due to poor document retention. Effect: The Corporation has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs may have been charged to the federal program. Recommendation: We recommend that the Corporation review its process and implement procedures that would allow management to properly maintain all required documentation related to its federal expenditures.

Assistance Listing Number: 93.193 Name of Federal Program: Urban Indian Health Services; COVID-19 Urban Indian Health Services Name of Federal Agency: Department of Health and Human Services Award Period: January 1, 2025 – December 31, 2025 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal awards must establish and maintain written policies and procedures addressing areas including, but not limited to: procurement (§200.317–§200.327); travel costs (§200.475); methods for avoiding duplication of costs (§200.403); subrecipient monitoring (§200.332); cash management and allowable costs (§200.302, §200.305). Condition: The organization has not implemented all policies and procedures required under the Uniform Guidance. Specifically, certain written policies and procedures required by 2 CFR Part 200, such as cash management, allowability of costs, equipment management, conflict of interest, procurement, travel, compensation, and fringe benefits, were either incomplete, not formally documented, or not in place during the audit period. Cause: Due to timing constraints and a small staff size, the Council has not detailed its policies to conform with the requirements of the Uniform Guidance. Effect or Potential Effect: Without documented and implemented policies and procedures, the organization increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs or sanctions from funding agencies. Repeat Finding: Yes, this is a repeat of Finding 2024-003. Recommendation: Management should develop, formally adopt, and implement all required Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and revise its policies and procedures to meet the criteria of the Uniform Guidance.

Finding 2025-003: Significant Deficiency - Control and Compliance Over Allowable Costs Program: Disaster Grants - Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Pass-Through Agency: Minnesota Department of Public Safety Criteria: In accordance with 2 CFR §200.303 and 200.403 through 200.405, the County is required to establish and maintain effective internal control over the federal award. Costs charged to a federal award must be allowable under the applicable federal cost principles, including being necessary and reasonable for the performance of the award, allocable to the award, and adequately documented with review and approval. Condition: Of the forty (40) expenditures tested, five (5) did not have sufficient evidence of review and approval or contained an error that was not identified during the review process. Cause: The County relied on in-person verification and approval for certain expenditures but did not consistently retain documentation evidencing the review performed. In addition, for one expenditure, the total invoice amount was erroneously entered as the unit price, and the review performed was not sufficiently detailed to identify and correct the error before the expenditure was claimed. Context: Four (4) of the exceptions were related to force account equipment costs for which the County did not retain documentation evidencing review and approval. One (1) exception involved an input error that caused the amount claimed as an eligible cost to exceed the amount actually incurred, resulting in questioned costs identified below. The sample was not statistically valid. Effect: Without adequate review controls and documentation evidencing the review performed, there is an increased risk that unsupported, inaccurate, or otherwise unallowable costs could be charged to the federal program and not detected timely. Such costs may be subject to disallowance and repayment to the grantor. Questioned Costs: $5,301 Recommendation: The County should strengthen its internal controls over expenditures claimed for reimbursement under the federal program. The County should require and retain documentation evidencing the review and approval of expenditures and ensure that the review includes verification of amounts claimed to underlying supporting documentation. The review should be performed at a sufficient level of detail to identify errors or irregularities before costs are claimed to the program. Views of Responsible Officials: The County will implement a documented review and approval process for expenditures included in reimbursement requests. Supporting documentation will be reviewed prior to submission to verify that amounts claimed agree to underlying records, including invoices, force account equipment records, and other applicable supporting documentation. Evidence of the review and approval will be retained with the reimbursement documentation. The County has reached out to the Minnesota Department of Public Safety to update the claimed costs as necessary for the mathematical error.

Finding COVID-19 – 2025-001 Allowable Costs/Cost Principles Identification of the federal program: Federal agency: U.S. Department of Homeland Security Pass-through program from: State of New York Division of Homeland Security and Emergency Services Federal Assistance Listing Number: 97.036 COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Contract/pass-through entity identifying number: 140215 Award period of performance: January 20, 2020 – July 1, 2022 Criteria or specified requirement (including statutory, regulatory, or other citation): 2 CFR section 200.303 of the Uniform Guidance requires that non-federal entities receiving federal awards establish, document 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 statutes, regulations, and the terms and conditions of the federal awards. The 2 CFR section 200.303 indicates that the internal controls required to be established by a non-federal entity receiving federal awards 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. Section III – Federal Award Findings and Questioned Costs (continued) 2 CFR section 200.403 states the following: “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 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; (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; and (h) administrative closeout costs may be incurred until the due date of the final report(s), 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.” Condition: The New York and Presbyterian Hospital (the Hospital) has processes and internal controls in place to ensure that costs submitted to the Federal Emergency Management Agency (FEMA) in relation to the Disaster Grants – Public Assistance program were eligible under FEMA’s provisions and were allowable COVID-19-related expenses. These internal controls include ensuring completeness and accuracy of the costs to ensure the costs comply with the terms and conditions of the award. However, the Hospital’s internal controls did not identify that management inadvertently included certain pharmacy costs under project number 140215 that were not paid by the Hospital. Cause: Pharmacy costs include a very high volume of primarily low cost items and, as a result, a separate process was developed by the Hospital for accumulating such activity as compared to other costs that were submitted to FEMA for reimbursement. When compiling pharmacy costs for project number 140215, management utilized the pharmacy cost information derived from a report from its materials management system detailing purchase orders that were placed by the Hospital with its primary vendor for medications and supplies used in the treatment of patients during the COVID-19 pandemic. In the normal course of business, the pharmacy vendor may modify the fulfillment of purchase orders for medications and supplies that are not available or are available at different quantities than requested in the purchase order. The Hospital’s internal controls specific to this pharmacy activity did not include a step for management to verify that the costs derived from the report detailing purchase orders placed (which were submitted for FEMA reimbursement) were actually paid. Effect or potential effect: Due to the above, the Hospital included certain costs under project number 140215 that were not paid. Accordingly, there is an overstatement of the total pharmacy costs reported in project number 140215, and the Hospital was reimbursed by FEMA for certain costs that it did not incur, resulting in questioned costs. Questioned costs: Known questioned costs observed in the audit sample selections totaled $235. This amount represents the difference between the amount reimbursed by FEMA and the amount paid by the Hospital for certain pharmacy costs to the specific vendor. Based on the audit procedures performed, likely questioned costs exceed $25,000. Context: During our testing of expenditures underlying FEMA project number 140215, we selected a random sample of 60 expenditures and 5 key item expenditures from the project period (activity during 2020 – 2022) related to FEMA obligations that were approved in calendar year 2025. In our tests of compliance and internal controls over compliance, we identified certain expenditures for activity with the specific pharmacy vendor that were included under project number 140215 (and subsequently paid to the Hospital by FEMA) that were not incurred and expended by the Hospital. For 4 of the sample items tested, the amount reimbursed exceeded the actual amount paid by approximately $235. The terms and conditions of the FEMA award require recipients to submit eligible costs incurred and paid, thus this issue results in questioned costs and a control deficiency. The total FEMA expenditures for project number 140215 reported on the Hospital’s Schedule of Expenditures of Federal Awards for the year ended December 31, 2025 is $340,396,170, which includes approximately $12.5 million of total costs submitted related to the specific pharmacy vendor referred to above. Management performed a further review of pharmacy cost activity for the specific vendor as a result of this issue and determined that likely questioned costs for certain items that were submitted exceed $25,000. Management also informed us that they identified certain eligible costs from the applicable period that were not submitted for FEMA reimbursement and therefore were not reimbursed. Identification as a repeat finding, if applicable: The finding is not a repeat finding. Recommendation: Management should consider the control deficiency described above to the extent there is applicability to other FEMA submissions or other federal programs in the future. Additionally, management should address with FEMA and remediate as appropriate the noncompliance for reimbursed amounts that were not expended by the Hospital. View of responsible officials: Management agrees with the finding.

Finding 2025-001 – Significant Deficiency in Internal Control Over Compliance Federal Agency: U.S. Department of Labor Federal Program Name: Registered Apprenticeship Assistance Listing Number: 17.285 Federal Award Identification Number: 24A60AP000078 Award Number: 24A60AP000078-01-00 Major Program: Yes Compliance Requirement: B: Allowability Criteria: In accordance with 2 CFR 200.403, costs must be allocable to the federal award and adequately documented to be allowable. Under these cost principles and standard accrual accounting rules, an expenditure can only be recognized and charged to a federal program during the specific fiscal period in which the underlying services are actively performed or a valid legal obligation is incurred. Condition: During our compliance testing over ALN 17.285, we selected 40 expenditures totaling $225,467 for testing. We identified three exceptions. Two expenditures totaling $17,050 were not properly charged to the federal award because the services had not yet been incurred. In addition, one expenditure totaling $4,000 was charged to the fiscal year under audit but was incurred in the prior fiscal year. As a result all three items totaling $21,050 should not have been reported as federal expenditures on the initial draft Schedule of Expenditures of Federal Awards (SEFA) for this fiscal year. Cause: AACF has established procedures designed to ensure that federal expenditures are recorded and reported in the appropriate fiscal year. However, the year-end review procedures did not identify the specific transactions noted above. Effect: AACF is not in compliance with 2 CFR 200.403. Questioned Costs: Known questioned costs identified from the auditor’s testing totaled $21,050. This amount is below the $25,000 threshold for reporting known questioned costs; however, it is presented here for transparency and to support corrective action and management decision-making. In addition, based on projection/extrapolation of the exceptions identified in the sample to the universe, the auditor estimates likely questioned costs of approximately $37,207. Likely questioned costs are not the same as known questioned costs and represent an estimate of questioned costs that may exist in the population beyond the specific items tested. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management enhance its existing year-end review procedures to ensure that costs are incurred and reported in the appropriate fiscal year and that the SEFA includes only expenditures applicable to the current reporting period. Views of Responsible Officials: AACF concurs with this finding. Within 30 days, AACF leadership and the Board of Directors will assess whether grants accounting staff have the capacity to complete all required year-end review procedures. If additional capacity is needed, AACF will retain external accounting support. Relevant staff will complete professional development training within 90 days, and no later than December 31, 2026. Additional context: AACF’s grants accounting staff, including the Director of Operations, conduct final level of review for each grant at the end of its performance period and during the grant close-out process to verify that all expenditures charged to the grant are allowable under applicable Uniform Guidance requirements and funder-specific restrictions before reporting the final cumulative totals.

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

FINDING 2025-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Allowable Costs/Cost Principles, Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2025 Compliance Requirements: Allowable Costs/Cost Principles, Period of Performance 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 2024-003. Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Prior to the receipt of direct COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), all eligible entities were required to execute a Financial Assistance Agreement (Agreement), which included the Award Terms and Conditions that recipients must comply with in carrying out the objectives of their award. Per the Agreement, the City was responsible for the effective administration of the federal award, as well as the application of the sound management practices and administration of federal funds in a manner consistent with program objectives and terms and conditions of the award. Recipients may use the SLFRF funds for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act, as added by section 9901 of the American Rescue Plan Act of 2021. The SLFRF program provides substantial flexibility for each recipient to meet the local needs within four separate eligible use categories. Recipients may use the SLFRF funds to:  Respond to the COVID-19 public health emergency and its negative economic impacts.  Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of eligible employers that have eligible workers who are performing essential work.  Provide government services, to the extent COVID-19 caused a reduction in revenues collected in the most recent full fiscal year of the recipient.  Make necessary investments in water, sewer, or broadband infrastructure. The City elected to receive the standard revenue loss allowance, allowing it to claim its total SLFRF funds allocation of $3,821,386 as revenue loss to use for government services. The allocated funds may only be used to cover costs incurred from the period beginning on March 3, 2021, and ending on December 31, 2024. Obligations for costs incurred are required to be liquidated no later than December 31, 2026. During the audit period, the City identified that it had not properly obligated its remaining unspent SLFRF funds by the required deadline. Based on guidance from its financial consultant, the City reevaluated activity recorded in its Coronavirus State and Local Fi fund and adjusted the fund to include health insurance payments that had previously been made from another City fund. These payments related to a contractual agreement executed in July 2024 for coverage from August 2024 through July 2025. Health insurance costs incurred and paid between January and July 2025 totaled $591,563. Of the total SLFRF funds balance, the City had $77,706 in funds that were properly obligated by December 31, 2024, but remained unspent. These obligated funds were reclassified to cover $77,706 of the $591,563 in health insurance costs incurred between January and July 2025, leaving $513,857 of those costs without a corresponding obligation as of the December 31, 2024 deadline. In addition, the City incurred and paid health insurance costs totaling $619,875 for the period August through December 2025, which occurred after the contractual coverage period ended. These costs also were not obligated by December 31, 2024. As a result, a total of $1,133,732 in SLFRF funds expenditures were not obligated within the required timeframe and were not paid within the period of performance. Accordingly, these costs do not meet program requirements and are considered unallowable. The City also did not have written procedures for determining the allowability of costs in accordance with subpart E of C CFR 200. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF VINCENNES 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 200.300(b) states in part: "The non-Federal entity is responsible for complying with all requirements of the Federal award. . . ." 2 CFR 200.302 states: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." INDIANA STATE BOARD OF ACCOUNTS 23 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (g) Be adequately documented. . . ." 31 CFR 35.5 states in part: "(a) . . . A recipient may only use funds for the purposes enumerated in § 35.6 (b) through (f) to cover costs incurred during the period beginning March 3, 2021, and ending December 31, 2024 . . . (c) . . . A recipient must return any funds that have not been obligated by December 31, 2024, pursuant to orders placed for property and services or entry into contracts, subawards, and similar transactions that require payment other than funds in the amount reported to Treasury by April 30, 2024, as the estimate of funds that the recipient will expend to comply with a requirement under federal law or regulation or provision of the award terms and conditions to which a recipient becomes subject as a result of receiving or expending funds. A recipient must return funds obligated for a use . . . by December 31, 2024, but not expended by December 31, 2026. . . ." Cause A proper system of internal controls over the SLFRF funds expenditures was not designed by management of the City to ensure the SLFRF funds were being used appropriately. The City did not have policies and procedures in place to ensure that its SLFRF funds were properly obligated by the December 31, 2024 deadline. Effect The lack of an effective internal control system enabled material noncompliance with the Allowable Costs/Cost Principles and Period of Performance compliance requirements to occur and remain undetected. Payments made from the SLFRF funds which were not obligated as of December 31, 2024, as required by the federal grant funding resulted in payments not made in compliance with the period of performance, and, therefore, were not allowable costs. Questioned Costs We identified $1,133,732 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure that expenditures of federal awards are allowable costs and occur within the period of performance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025-005 UNALLOWABLE COSTS DUE TO EXPENSE CLASSIFICATION ALN 11.307 Grant Number 05-79-06072 US Department of Commerce - Economic Development Cluster Type of Finding: Noncompliance Related to Federal Awards Criteria: Under Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 200.403, costs charged to a federal award must be allowable. In general, allowable costs must be necessary and reasonable for the performance of the award, allocable to the federal award, consistent with applicable policies and procedures, consistently treated, not used to meet cost-sharing or matching requirements of another federal program, adequately documented, and incurred during the approved budget period. Condition: During our testing of the Allowable Costs compliance requirement, we identified $2,871 in expenses charged to the federal award that were not allowable, based on a review of supporting documentation. Cause: The condition occurred because the District’s procedures for reviewing and approving costs charged to federal awards did not consistently identify whether expenses were properly classified and allocable to the award. Effect: The District is out of compliance with 2 CFR 200.403. Recommendation: We recommend that management strengthen controls over costs charged to federal awards. Recommended actions include implementation and enhancement of grant coding review procedures. Management's Response: Northern Rocky Mountain Economic Development District (NRMEDD) agrees with the recommendation. The $2,871 misclassified expenditures has been reclassified to the correct account. The corrective action described in response to Finding 1 applies uniformly to expense classifications, with no separate or exception process.

FINDING 2025-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP0032 Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context Under the COVID-19 - State and Local Fiscal Recover Funds (SLFRF), recipients may only use funds to cover costs incurred beginning March 3, 2021, and ending December 31, 2024. Of 73 claims selected for testing, 12 were incurred after the grant period ended. 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). . . ." 31 CFR 35.5(a) states: "In general. A recipient may only use funds for the purposes enumerated in § 35.6 (b) through (f) to cover costs incurred during the period beginning March 3, 2021, and ending December 31, 2024, subject to the restrictions set forth in sections 602(c)(2) and 603(c)(2) of the Social Security Act, as applicable. A recipient may only use funds for the purposes enumerated in § 35.6 (g) through (h) to cover costs incurred during the period beginning December 29, 2022, and ending December 31, 2024, subject to the restrictions set forth in sections 602(c)(2), 602(c)(5)(C), 603(c)(2), and 603(c)(6)(B) of the Social Security Act, as applicable." 31 CFR 35.3 states in part: ". . . Obligation means an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment. . . ." 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: . . . (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3)." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF TERRE HAUTE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The grant period ended on December 31, 2024; however, the cost of 12 invoices selected for testing occurred in 2025. There was no contract or any documentation stating that the projects with the vendors started before the end of the grant period. Effect Without the proper implementation of an effectively designed system of internal controls, payment was made on claims that occurred after the period of performance. Noncompliance with the provisions of federal statues, regulations, and terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs Questioned costs totaling $74,698 were identified. Recommendation We recommended that management of the City establish a system of internal controls and develop policies and procedures to ensure the SLFRF funds are used appropriately. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

2025-001 Activities Allowed or Unallowed and Allowable Costs / Cost Principles (Allowability) U.S. Department of Health and Human Services, Passed through County of Hudson, Department of Health and Human Services: HIV Emergency Relief Project Grants (93.914) Federal Grant Numbers and Years: H89HA00010- Medical Case Management (1/1/2025-12/31/2025) and H89HA00010- Minority Health Initiative (1/1/2025-12/31/2025) Statistically Valid Sample: No, and it was not intended to be Prior Year Finding: Not a repeat finding Finding Type: Significant Deficiency and Noncompliance Criteria: Under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200, Subpart E - Cost Principles): • 2 CFR § 200.403 (Factors affecting allowability of costs): Costs must be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles, and also must be documented adequately and conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amounts of cost items. • 2 CFR § 200.426: Bad Debts, defined as debts determined to be uncollectible, including losses (whether actual or estimated) arising from uncollectible accounts and other claims are unallowable under federal cost principles. • 2 CFR § 200.303: Non-federal entities receiving federal awards must establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the Schedule of Expenditures of Federal Awards (SEFA) and information provided for audit purposes is complete and accurate. Condition and Context: RWJ Barnabas Heath, Inc. (RWJBH) administers a component of the HIV Emergency Relief Project Grants (Ryan White Part A) (the Program) through its Jersey City Medical Center (JCMC) facility. During our testing of other than personal services (OTPS) expenditures at JCMC, we identified through our initial sample selection that JCMC submitted and received federal reimbursement of approximately $620 for patient laboratory costs under the Program for both Medical Case Management and Minority Health Initiative grants. We noted that these specific clinical laboratory tests were recorded as bad debt expense in RWJBH’s consolidated financial statements. Because bad debt and losses arising from uncollectible accounts are explicitly unallowable under Uniform Guidance cost principles, these expenditures should not have been charged to the federal grant. A further evaluation of the full population identified a total of $121,358 in patient clinical laboratory costs recorded as bad debt that were improperly approved and submitted for federal grant reimbursement that are also deemed unallowable under 2 CFR § 200.426. Cause: There was no automated or manual interface or screening rule within the enterprise resource planning or laboratory information management systems to flag and block patient accounts classified as bad debt or uncollectible balances from having their clinical costs allocated to federal grant cost centers. Additionally, management did not perform effective manual reviews or reconciliations prior to requesting reimbursement to identify and exclude bad debt expenses from OTPS expenditure reimbursement requests under the Program. Effect: Unallowable bad debt costs under 2 CFR § 200.403 and 2 CFR § 200.426 were approved and submitted for federal reimbursement. Questioned costs: $121,358 ($104,164 for Medical Case Management and $17,194 for the Minority Health Initiative). Recommendation: We recommend that RWJ Barnabas Health, Inc. strengthen its current processes and internal controls to ensure that all clinical laboratory costs being submitted for reimbursement are deemed allowable in accordance with the Uniform Guidance cost principles and have not been recorded as bad debt. Views of Responsible Official: Management concurs with the finding. Due to an administrative error, JCMC included certain ineligible patient clinical laboratory testing costs, recorded as bad debt expense, in federal grant expenditures. Although management consulted with the Program administrator, the County of Hudson, prior to seeking reimbursement and received approval to include these costs, JCMC acknowledges its responsibility to ensure federal funds are not used to reimburse unallowable services. Going forward, JCMC will strengthen its review process to exclude unallowable bad debt costs from grant expenditures. Management has reviewed the applicable Uniform Guidance cost principles with Program grant personnel and supporting analysts to reinforce compliance.

Findings and Questioned Costs Relating to Federal Awards 2025-004: Compliance Requirements: Allowable Costs/Cost Principles Federal Granting Agency: U.S. Department of Homeland Security Award Name: Disaster Grants – Public Assistance (Presidentially Declared Disasters) Award Number: FEMA-4506-DR-PA Geisinger Project: 698009 Assistance Listing Number: 97.036 Award Year: Fiscal year 2025 Pass-through Entity: Commonwealth of Pennsylvania Emergency Management Agency Criteria: The terms and conditions for recipients of Disaster Grants - Public Assistance (Presidentially Declared Disasters) require that federal funds be used only for eligible emergency protective measures and other eligible work. Emergency work is defined as work that must be performed immediately to save lives, protect public health and safety, or avert or lessen the threat of a major disaster. Federal Emergency Management Agency (FEMA) guidance provides that claimed costs must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR § 200.403(g)); • Reduced by all applicable credits and other sources of funding, including those that would result in a duplication of benefits (Stafford Act § 312; 42 U.S.C. § 5155; 2 CFR § 200.406); • Authorized and not prohibited under applicable laws and regulations; • Consistent with the entity’s established policies and procedures; and • Necessary and reasonable for the performance of the federal award (2 CFR § 200.403). In addition, 2 CFR § 200.303 requires non-federal entities receiving federal awards to establish and maintain effective internal controls that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Condition: Geisinger made claims to the Federal Emergency Management Agency (FEMA) under the Disaster Grants - Public Assistance (Presidentially Declared Disasters) program for qualifying costs incurred to prepare for and respond to the COVID-19 pandemic. Geisinger’s applications and supporting documentation demonstrated that the claimed costs were incremental to its normal operating costs and were directly attributable to pandemic response activities. Geisinger prepared and submitted its claims in accordance with FEMA guidance available at that time. FEMA subsequently approved, obligated, and paid several projects. Accordingly, Risant reported approximately $615,555 on its Schedule of Expenditures of Federal Awards (SEFA) for the year ended December 31, 2025, based on amounts obligated by FEMA prior to FEMA’s duplication of benefits review. Following the approval and obligation of the projects, FEMA issued clarifying guidance related to patient care revenue duplication of benefits in December 2023 and subsequently performed a duplication of benefits analysis of Geisinger’s applications. On September 22, 2025, FEMA issued an Applicant Review Memo concluding that certain costs previously approved and obligated were at risk of duplication with patient care revenue. FEMA’s recommended reductions were based on its reassessment of previously approved claims utilizing the duplication of benefits methodology established in the clarifying guidance. Based on FEMA’s reassessment, Geisinger accepted FEMA’s determination and returned $72,763 related to one FEMA project obligated during 2025. Questioned Cost: $72,763 representing costs associated with the identified project that FEMA subsequently determined to be at risk of duplication of benefits and that Geisinger returned to FEMA during 2025. Repeat Finding in the Prior Year Not a repeat finding. Cause: FEMA issued clarifying guidance in December 2023 regarding the evaluation of potential duplication of benefits and subsequently performed a retrospective review of previously approved and obligated Geisinger projects. Effect: Costs previously approved and obligated by FEMA were subsequently determined to be at risk of duplication under FEMA’s revised duplication-of-benefits assessment methodology resulting in a reduction of previously awarded funding and federal expenditures reported on the SEFA. Recommendation: We recommend that management continue to monitor FEMA guidance related to COVID-19 Public Assistance funding and assess the impact of any subsequent FEMA determinations on amounts reported on the SEFA for existing and future awards. Views of Responsible Officials: Management agrees with the finding and the following corrective actions are being taken to minimize future risks. Management will continue to monitor FEMA guidance and determinations related to COVID-19 Public Assistance funding. Geisinger will evaluate the impact of subsequent FEMA reviews or determinations on amounts reported on the SEFA and adjust, as appropriate.

Assistance Listing Number: 93.193 Name of Federal Program: Urban Indian Health Services; COVID-19 Urban Indian Health Services Name of Federal Agency: Department of Health and Human Services Award Period: January 1, 2025 – December 31, 2025 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal awards must establish and maintain written policies and procedures addressing areas including, but not limited to: procurement (§200.317–§200.327); travel costs (§200.475); methods for avoiding duplication of costs (§200.403); subrecipient monitoring (§200.332); cash management and allowable costs (§200.302, §200.305). Condition: The organization has not implemented all policies and procedures required under the Uniform Guidance. Specifically, certain written policies and procedures required by 2 CFR Part 200, such as cash management, allowability of costs, equipment management, conflict of interest, procurement, travel, compensation, and fringe benefits, were either incomplete, not formally documented, or not in place during the audit period. Cause: Due to timing constraints and a small staff size, the Council has not detailed its policies to conform with the requirements of the Uniform Guidance. Effect or Potential Effect: Without documented and implemented policies and procedures, the organization increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs or sanctions from funding agencies. Repeat Finding: Yes, this is a repeat of Finding 2024-003. Recommendation: Management should develop, formally adopt, and implement all required Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and revise its policies and procedures to meet the criteria of the Uniform Guidance.

Finding Type: Significant Deficiency in Internal Control Over Compliance Title and ALN of Federal Program: 93.558 – Temporary Assistance for Needy Families Criteria or Specific Requirement: B. Allowable Costs and Cost Principles - 2 CFR section 200.303 of the Uniform Guidance 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 statutes, regulations, and the terms and conditions of the federal awards. In addition, 2 CFR section 200.403 provides that costs charged to a Federal award must be necessary, reasonable, allocable, adequately documented, and in conformance with applicable Federal requirements and the terms and conditions of the Federal award. Condition: During the audit, it was noted that the Association was unable to provide formal support for the internal review and approval of costs relating to stipends paid that were submitted to the pass-through grantor under the major program. Cause: The Association lacks established procedures which provide formal evidence that the allowability, accuracy and completeness of stipend transactions were verified before submission. Effect or Potential Effect: Although no stipend payments were identified which exceeded the allowable amount under the subaward agreement, without adequate controls in place to ensure all charges to the federal program are properly reviewed and approved for allowability, the Association faces increased risk of noncompliance with the allowability requirement and could request funds for unallowed costs. Questioned Costs: None. Identification as a Repeat Finding: N/A — this was not reported as a finding in the prior year audit report. Context: For the stipend payments selected for testing, there was no formal support for the internal review and approval of costs submitted to the pass-through grantor under the major program. Recommendation: We recommend the Association implement a formal process for review and approval of stipend payments. This should include maintenance of a standardized stipend calculation form or comparable documentation for each payment. The documentation should identify the participant, applicable payment period, attendance and participation records and/or milestones achieved, calculation of the stipend amount, and evidence of review and approval before payment. Views of Responsible Officials: Management agrees with the finding and recommendation.

2025 001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles U.S. Department of Homeland Security, Federal Emergency Management Agency: Passed through New Jersey Department of Law and Public Safety, Office of Emergency Management: COVID 19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) (ALN 97.036) Contract Number and Years: 4488DR NJ 734668; 4488DR NJ 734675; 4488DR NJ 736923 (01/20/2020 – 05/11/2023) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Repeat Finding: No Finding Type: Material Weakness, Material Noncompliance Criteria The terms and conditions for recipients of Disaster Grants Public Assistance (Presidentially Declared Disasters) include the following: • The funds are utilized to perform emergency work, which is defined as “Work that must be done immediately to save lives, protect improved property, protect public health and safety, or avert or lessen the threat of a major disaster.” • Federal Emergency Management Agency (FEMA) defines the eligibility of costs based on the following factors: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR section 200.403 (g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406); • Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations; • Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR section 200.403) • For large projects, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA State Agreement, all grant conditions were met, and that payments for that project were made in accordance with the applicable payment provisions. 2 CFR Section 200.406 states: Applicable credits refer to those receipts or reduction of expenditure type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. 2 CFR 200.303 requires non Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Condition and Context On April 28, 2025, FEMA approved and obligated the System’s three applications (734675, 734668, and 736923) totaling $986,596 in total Federal assistance under the COVID 19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) (Disaster Grants). The System reported $986,596 on the schedule of expenditures of Federal awards (SEFA), as these funds were obligated by FEMA in the System’s fiscal year 2025. Subsequently, after the approval of the obligations, FEMA completed the final financial reconciliation, and in March 2026 issued a letter to the System concluding that a portion of the costs previously funded under the program had also been funded through another source, resulting in unallowable costs under Federal requirements. FEMA concluded that $480,020 of the $562,314 obligated under Obligation 734675 and $192,444 of the $384,755 obligated under Obligation 736923 were unallowable due to duplicate funding. In August 2026, the System decided to not appeal FEMA’s finding of duplication of benefits and accepted the finding. The System is responsible for establishing internal controls to ensure the accuracy of eligible expenses reported to the New Jersey Office of Emergency Management. By deciding not to appeal the finding of duplication of benefits, the System’s originally reported amount of $986,596 was reduced to $314,132 creating $672,464 of questioned costs. Cause The System’s did not establish adequate policies and procedures to identify, track, and reconcile Disaster Grants funded expenditures against insurance recoveries and other sources of disaster related funding to ensure that applicable credits were identified and offset against FEMA claims, to detect potential duplicate funding. Effect The System claimed and received reimbursement for amounts under Federal requirements because the costs had been funded from another source. This resulted in questioned costs of $672,464 and the de obligation of previously awarded Federal assistance. The noncompliance affected multiple obligations within the Disaster Grants program. Questioned Costs $672,464 Recommendation We recommend that the System strengthen its policies and procedures to ensure only allowable Disaster Grants costs are claimed for reimbursement, and prior to submission for reimbursement, such costs are reviewed to ensure there are no offsetting amounts or any duplication of benefits paid from other sources for the same disaster. View of Responsible Official Management agrees with the auditor’s finding and will strengthen its grant management and monitoring policies and procedures to ensure insurance recoveries, alternative funding sources, and other applicable credits are identified, communicated, and reconciled to Disaster Grant expenditures. Management will also enhance oversight procedures to identify and prevent potential duplication of benefits and ensure compliance with applicable Federal requirements.

Finding No. 2025-004: Lack of a Formal Cost Allocation Plan Federal Program Name: Refugee and Entrant Assistance State/Replacement Designee Administered Programs; Refugee and Entrant Assistance Discretionary Grants Federal Assistance Listing Number: 93.566; 93.576 Type of Finding Material Weakness in Internal Control over Compliance Criteria In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be adequately documented, allowable, and allocated to programs based on relative benefits received. Organizations allocating shared or indirect costs among multiple funding sources are required to maintain a reasonable, consistently applied, and current cost allocation methodology. Condition IRIS does not have a cost allocation plan ("CAP") that has not been formally reviewed and approved and does not reflect the current structure of awards and programs. As a result, IRIS could not demonstrate that costs charged to federal awards were consistently allocated in accordance with a current, formally approved methodology. Questions Costs None Context IRIS’ cost allocation plan has not been formally reviewed and approved. Management utilized an informal practice during the audit period to allocate shared costs among multiple funding sources and programs. Effect Without an approved CAP, there is an increased risk that costs charged to federal awards may not be properly allocated, may not reflect relative benefits received, or may not be consistently applied in accordance with federal requirements. Cause Management has historically allocated shared costs based on established practices; however, the methodology has not been formalized in a written cost allocation plan. Repeat Finding: No. Recommendation We recommend that the Organization formally document its cost allocation methodology and establish procedures for periodic review and update of the CAP to ensure it reflects current operations and funding sources. The CAP should be formally approved by governance and retained as support for allocation of shared costs to state programs. Management’s Response/Views of Responsible Officials See Auditee’s Corrective Action Plan.

Kentucky's Full-Service Community Schools Program - Assistance Listing No. 84.215J; Grant No. S215J220173; Grant period - Years ended December 31, 2025 and 2024 Condition. Fringe benefit reimbursements for the major program exceeded actual costs incurred, resulting in questioned costs of $349,687. The auditee applied a fixed fringe benefit rate of 30% to salaries charged to the program without reconciling these amounts to actual fringe benefit costs incurred. No periodic true-up process was performed. Criteria. Under 2 CFR 200.403 and 200.431, costs charged to federal awards must be allowable, reasonable, and allocable, and fringe benefits must be based on actual costs incurred or an approved indirect/fringe benefit rate agreement. Cause. The lack of reconciliation controls described in Finding 2025-001 contributed to this condition, as management did not identify that fringe benefit charges exceeded actual costs incurred. Effect. Federal program expenditures and related revenue reimbursements were overstated due to fringe benefit charges exceeding actual costs incurred. This resulted in questioned costs totaling $167,426 for the year ended December 31, 2025 and $182,260 for the year ended December 31, 2024, totaling $349,687. This represents material noncompliance with Uniform Guidance requirements related to allowable and allocable costs and a material weakness in internal control over compliance. Recommendation. We recommend that the auditee charge fringe benefits to federal awards based on actual costs incurred or, alternatively, obtain a formally approved fringe benefit rate agreement and perform required periodic reconciliations to actual costs. Management should implement internal controls to ensure that fringe benefit costs are accurately calculated, properly supported, and consistently allocated to benefiting programs. In addition, reimbursement requests submitted to federal programs should be reviewed to ensure they are supported by actual incurred costs and comply with Uniform Guidance requirements. Finally, management should evaluate prior period charges and consult with the federal awarding agency to determine the appropriate resolution of questioned costs. View of Responsible Officials and Planned Corrective Actions. Management agrees with and will implement corrective action. The following corrective actions will be implemented: strengthening budget monitoring by requiring monthly budget-to-actual reviews for all active grants; standardizing grant allocation procedures through the development and documentation of formal cost allocation methodologies; enhancing review and approval processes by conducting quarterly internal audits of grant expenditures; and improving reconciliation practices by performing monthly reconciliations of each grant account, requiring sign-off by both finance and program managers, and investigating and resolving variances within 10 business days.

Finding 2025-001 Program Name: Covid 19: Disaster Grants – Public Assistance Federal Grantor: U.S. Department of Homeland Security, Federal Emergency Management Agency Passthrough Grantor: State of New York Homeland Security and Emergency Services Assistance Listing Number: 97.036 Federal Award Year: January 1, 2025 December 31, 2025 Grant Number and Years: PW4708-Pjct685140 (January 1, 2025 December 31, 2025) Compliance Requirements: Activities Allowed or Unallowed/Allowable Costs/Cost Principles Criteria FEMA evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. According to the FEMA Public Assistance Program and Policy Guide (PAPPG), FP 104-009-2 (June 1, 2020), Chapter 6: Cost Eligibility (pages 65 and 93–95), as referenced in the 2025 OMB Compliance Supplement for ALN 97.036, all claimed costs must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR section 200.403(g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406); • Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations; • Consistent with applicant's internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR section 200.403). Condition and Context VNS Health claimed $32,483 for additional cleaning services at a rented location, asserting the costs were necessary incremental expenditures incurred in response to the COVID-19 pandemic. Upon inspection of the supporting documentation, which consisted of an invoice with multiple line items summing to $32,483, only $2,024 of the claimed amount represented incremental COVID-19-related costs as defined by the grant agreement. The remaining $30,459 consisted of routine rent related expenses that did not meet FEMA eligibility requirements for emergency protective measures and therefore is unallowable under FEMA guidance and 2 CFR § 200.403. To assess whether this matter was pervasive, we expanded our testing to all expenditures within the Infection Control contracted services category. While reviewing the population, we observed no other unallowable claims, however we identified $2,630 of COVID-19-related eligible costs that had not been included in the reimbursement claim. Cause VNS Health's internal control for reviewing invoiced expenditures, while generally effective, was not performed with sufficient precision to identify and segregate ineligible expenditures on non-standard invoices where federal and non-federal reimbursable charges are comingled. As a result, the control did not prompt the reviewer to obtain a detailed breakdown of the commingled charges, which resulted in the unallowable portion being approved for reimbursement. Effect VNS Health received reimbursement from FEMA for $30,459 of costs determined to be unallowable. Questioned costs $30,459 Statistical Sample No Repeat Finding A similar finding was not reported in the prior year audit. Recommendation We recommend VNS Health enhance its grant expenditure review process to specifically address the risk posed by complex or commingled invoices. View of Responsible Official Management agrees with the auditor’s recommendation and will strengthen procedures related to the verification of the allowability of the expenditures to ensure they are reported to the granting agencies completely and accurately.

FINDING 2025-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Allowable Costs/Cost Principles Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2022 Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Significant Deficiency, Other Matters Condition and Context Prior to receipt of the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), all eligible entities were required to execute a Financial Assistance Agreement (Agreement), which included the award terms and conditions that recipients must comply within carrying out the objectives of its award. Per the Agreement, the County was responsible for the effective administration of the federal award, as well as the application of sound management practices and administration of the federal funds in a manner consistent with the program objectives and the terms and conditions of the award. INDIANA STATE BOARD OF ACCOUNTS 20 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recipients may use the SLFRF funds for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act, as added by section 9901 of the American Rescue Plan Act of 2021. The SLFRF program provides substantial flexibility for each recipient to meet local needs within four separate eligible use categories. Recipients may use the SLFRF funds to:  Respond to the COVID-19 public health emergency and its negative economic impacts;  Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of eligible employers that have eligible workers who are performing essential work;  Provide government services, to the extent COVID-19 caused a reduction in revenues collected in the most recent full fiscal year of the recipient; and  Make necessary investments in water, sewer, or broadband infrastructure. During the audit, it was identified that the County charged various drug court expenditures to the SLFRF award throughout the audit period. While certain drug court expenditures were used to provide government services, detailed testing determined that the SLFRF funds were applied to costs that are not allowable under state guidance governing the drug court program. These expenditures do not meet the federal eligibility or cost-allowability requirements established for the SLFRF funds, and, therefore, constitute unallowable charges to the grant. The County had a system of internal controls over the compliance requirement; however, they were not properly implemented to prevent noncompliance. 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 200.400 states in part: "The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the recipient's or subrecipient's operation or the proper and efficient performance of the Federal award; . . . (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." Indiana Code 12-23-14-6 states in part: "(a) A program may provide for eligible individuals a range of necessary intervention services, including the following: (1) Screening for eligibility and other appropriate services. (2) Clinical assessment. (3) Education. (4) Referral. (5) Service coordination and case management. (b) A program that is eligible under section 7 of this chapter may also provide a range of necessary treatment and rehabilitation services, including the following: (1) Emergency services. (2) Detoxification. (3) Counseling. (4) Rehabilitative care. INDIANA STATE BOARD OF ACCOUNTS 22 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The County improperly charged the SLFRF funds to unallowable drug court costs. This occurred because the County did not have sufficient internal controls or review procedures in place to ensure that expenditures charged to the SLFRF award met federal and state allowability requirements. The approval process did not include adequate verification of eligibility, and staff responsible for coding and approving transactions did not consistently apply federal cost principles when determining whether drug court expenditures were appropriate for the SLFRF funding. As a result, unallowable costs were charged to the grant, leading to noncompliance with federal guidance and an internal control deficiency within the County's grant management processes. Effect Due to a misunderstanding of the SLFRF requirements, the County inadvertently allocated federal grant funds to an unallowable expenditure. Questioned Costs We identified $25,837 in known questioned costs. Recommendation We recommended that management of the County design and implement a proper system of internal controls including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place prior to payment of funds from the SLFRF award. We could also recommend county officials review and become familiar with the grant requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.