Findings Citing § 200.403

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

FINDING 2025-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, 23619-021-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context The School Corporation is a member of the Greater Lafayette Area Special Services (GLASS) Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, and 23619-021-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 26311-021-PN01, and 23619-021-PN01 grant awards. INDIANA STATE BOARD OF ACCOUNTS 17 LAFAYETTE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the School Corporation's nonpublic proportionate share expenditures could not be determined, and it could not be determined if the School Corporation met its minimum nonpublic proportionate share as required by the grant agreement. INDIANA STATE BOARD OF ACCOUNTS 18 LAFAYETTE SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: COVID-19 - Education Stabilization Fund - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425U, 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425U210013, S425D200013 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not have an effective system of internal controls over federal award requirements that would have ensured that expenses charged to the grant were for activities and costs that were allowable under the federal award. The School Corporation designed a process for vendor claims in which all purchase orders were approved by either the Superintendent of Schools or a member of his staff who was knowledgeable of the requirements of the federal program, with the associated claim vouchers, then reviewed by another employee who was also knowledgeable of the requirements of the federal program prior to submission to the School Board for final approval for payment and inclusion on the reimbursement requests submitted for the program. Out of a sample of 25 claims selected for internal control testing, the School Corporation was unable to provide 5 claim vouchers to show the aforementioned review and approval. We were therefore unable to verify that the stated internal control was properly implemented and operated effectively for those claims to ensure the expenditures were for activities and costs allowed under the federal award. INDIANA STATE BOARD OF ACCOUNTS 17 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation also designed a process for payroll claims where the Superintendent of Schools reviewed and approved the detailed payroll distribution reports which included employees with payroll expenses charged to the federal award. However, the internal control was not adequately designed and did not detect noncompliance with the allowable cost requirements of the award. During compliance testing of vendor and payroll claims, one payroll claim for a Certified Intervention Teacher was selected for testing. The School Corporation was unable to provide documentation to support the determination of the amount of the teacher's total salary that was allocated to the federal award. We then reviewed all payroll expenses associated with the Certified Intervention Teacher position paid out of the federal award during the audit period and determined that a total of $22,416 was charged to the federal award without proper documentation to support the amount of the teacher's salary allocated to the federal award. We consider the $22,416 to be questioned costs. The lack of effective vendor internal controls was systemic to both awards but was isolated to fiscal year 2023-2024 prior to the appointment of the current Treasurer. The lack of effective payroll internal controls was systemic to both awards, while the noncompliance was isolated to award number S425U210013. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (3) Records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, asses, expenditures, income and interest and be supported by source documentation. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . INDIANA STATE BOARD OF ACCOUNTS 18 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (g) Be adequately documented. . . ." Cause The School Corporation experienced turnover in a key position related to the internal controls over the federal award, resulting in issues with organization and retention of supporting documentation to verify the key internal control over vendor claims. In addition, the School Corporation's policies and procedures were not properly designed to show the determination of how employees' compensation would be allocated to multiple cost centers. As a result, the key internal control over payroll claims was unable to prevent, or detect and correct, noncompliance with the allowable costs requirement of the federal award. Effect Without proper implementation of an effectively designed system of internal controls, noncompliance that resulted in questioned costs remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs We identified $22,416 in known questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure expenditures made from federal awards are for activities and costs allowed per the terms and conditions of the federal award and in compliance with the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. We also recommended that the School Corporation strengthen its policies and procedures to ensure that appropriate supporting documentation is retained and available for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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

Criteria 2 CFR section 200.403, Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for State and local governments and Indian Tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b). (g) Be adequately documented. See §§ 200.300 through 200.309. (h) Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. At its discretion, the Federal agency is authorized to waive prior written approvals to carry forward unobligated balances to subsequent budget periods. See § 200.308(g)(3). 10th Edition Procurement Manual issued by the District in September 2023, Chapter 8 – What to Do When Item or Services Are Received A. Online Goods Receipts Prior to entering an online Goods Receipt (GR), schools and offices must have a copy of the vendor invoice and Purchase Order (PO). They are responsible for verifying the accuracy of the order and entering the “online receiver” into SAP immediately after delivery of materials. Partial receiving is acceptable to account only for materials actually received. Payments are processed based on materials that have been received online. F.1. Payment for Materials Accounts Payable will process payment when the following three items are matched in SAP: (1) Purchase Order, (2) Goods Receipt, and (3) vendor invoice. F.2.c. Contracted Professional Services Accounts Payable will process payments for contracted professional services when the following four items are matched: executed contract/amendment, Purchase Order, vendor invoice, and approved authorization for payment. F.3. Contract Close-Out Upon contract expiration or termination, the District must ensure all deliverables have been received, final invoices paid, indirect costs settled, and any unspent funds unencumbered and transferred to the appropriate District account. Condition As part of our review of cash disbursement expenditures, we selected a statistically valid sample of forty (40) cash disbursement transactions from each of the following programs: Title I, Title IV, and Perkins. We reviewed the supporting documentation for these transactions to determine whether the expenditures were allowable under program regulations, accurately charged to the programs, and appropriately supported in accordance with 2 CFR Section 200.403 and the District Procurement Manual. Title I: From the $3,265,728 sample tested (out of $48,286,535 total disbursements), we identified one (1) purchase order with a variance between the Goods Receipt (GR) and vendor invoice (IR) amounts. This discrepancy resulted in an overstatement of reported expenditures by $21,394. The District subsequently corrected this by reversing the amount to the expenditure accounts in FY 2026. Title IV: From the $560,572 sample tested (out of $9,999,536 total disbursements), we identified one (1) purchase order with a variance between the GR and IR amounts, resulting in an overstatement of reported expenditures by $94,500. The District subsequently corrected this by reversing the amount to the expenditure accounts in FY 2026. Perkins: Additionally, from a $329,432 sample (out of $5,738,606 total disbursements), we identified seven (7) disbursements totaling $868 that lacked adequate proof of delivery of materials. Supporting documentation, such as signed delivery receipts or equivalent evidence of goods received, was not available for these transactions. Cause and Effect These conditions occurred because adjustments were not made to the GR amounts to reflect changes in goods or services received after the initial recording. The unadjusted GR balances led to variances between the GR and IR amounts, resulting in overstatements of reported expenditures for the affected programs. In addition, the lack of adequate proof of delivery of materials occurred because GR were entered without supporting documentation to substantiate that the materials were received. This increased the risk of payment for goods not received, misstatement of expenditures, and noncompliance with federal cost documentation requirements under 2 CFR section 200.403(g). Questioned Costs • Title I (AL No. 84.010): $21,394 overstated due to GR-IR variance. • Title IV (AL No. 84.424A): $94,500 overstated due to GR-IR variance. • Perkins (AL No. 84.048): $868 lacked sufficient supporting documentation that the goods were received. Recommendation We recommend that the District: 1. Strengthen review and reconciliation procedures to ensure that adjustments to the Goods Receipt (GR) are made promptly to reflect actual goods or services received. 2. Enforce documentation controls to require that all Goods Receipts are supported by adequate proof of delivery (e.g., signed delivery receipts, receiving reports, or equivalent evidence) before processing payments. 3. Provide staff training on documentation and reconciliation requirements to ensure compliance with federal cost principles and the District Procurement Manual.

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

FINDING 2025-004 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. The School Corporation entered into a fixed price meal contract with a food service management company (FSMC). For each meal type, a fixed price was established and billed by the FSMC based on meal counts served. The School Corporation did not compare the invoices received from the FSMC to the School Corporation's software reports to ensure the number of meals invoiced agreed to the meals served. Two invoices totaling $213,049 from the FSMC were selected for testing but could not be supported with documentation for the amounts billed. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 19 SOUTH PUTNAM COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Invoices from the FSMC were not thoroughly reviewed to ensure the number of meals invoiced agreed with meals served by the School Corporation. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirement could have resulted in the loss of funds to the School Corporation. Questioned Costs We identified $213,049 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls, including segregation of duties, to ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-076-PN01, 22611-076-ARP, 23619-076-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not have an effective internal control system in place to ensure compliance with the earmarking requirements and to ensure that the required level of expenditures for nonpublic school students with disabilities was met. The 22611-076-PN01, 23611-076-PN01, 22611-076-ARP, 22619-076-ARP, and 23619-076-PN01 grant awards ended during the audit period. The School Corporation did not have internal controls in place to ensure that it fully spent the required nonpublic proportionate share amounts by the end of the grant award for three of the five grant awards tested. The following schedule shows the total nonpublic proportionate share approved by the Indiana Department of Education (IDOE) for the School Corporation for each grant award compared with the total expenditures posted to the ledger for nonpublic proportionate share. The School Corporation had not spent $25,100 of proportionate share funds by the end of the grant award for all awards ending during the audit period. Total Nonpublic Proportionate Grant Award/ IDOE Approved Nonpublic Share Spent by School Project No. Proportionate Share Corporation Difference 22611-076-PN01 $ 61,782 $ 45,609 $ 16,173 22611-076-ARP 14,833 6,553 8,280 23619-076-PN01 2,359 1,712 647 Totals $ 78,974 $ 53,874 $ 25,100 INDIANA STATE BOARD OF ACCOUNTS 19 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were isolated to the 22611-076-PN01, 22611-076-ARP, and 23619-076-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation had not developed or implemented an effective system of internal controls, including oversight and review procedures, to ensure that expenditures for the nonpublic proportionate share were monitored and fully utilized within the grant period. Management was aware of the ability to request a waiver for unspent funds but chose not to pursue that option, resulting in the funds remaining unspent. Effect The failure to establish and maintain an effective internal control system prevented the School Corporation from identifying and correcting the unspent balance of required earmarking funds in a timely manner. This resulted in noncompliance with the earmarking requirements for three of the five grant awards tested as the School Corporation failed to expend $25,100 of the required nonpublic proportionate share by the end of the grant awards. Noncompliance with federal program requirements and the lack of internal controls could jeopardize future federal funding and may require the School Corporation to repay the unspent portion to the pass-through agency. INDIANA STATE BOARD OF ACCOUNTS 20 SOUTH GIBSON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to track total nonpublic proportionate share by approved grant amounts from the IDOE to ensure proportionate share is being spent by the end of the grant award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

U.S. Department of Agriculture/Passed-through Texas Department of Agriculture Food Distribution Cluster Federal Assistance Listing Number 10.565 – Commodity Supplemental Food Program (Administrative Costs), 10.568 – Emergency Food Assistance Program (Administrative Costs) Award Number: 01576 Criteria or Specific Requirement: Activities Allowed or Unallowable and Allowable Costs/Cost Principles – Costs charged to Federal awards must be necessary, reasonable, consistently treated, adequately documented, and allocable to the program in proportion to the benefits received. (2 CFR §200.403 and §200.405) Condition: During testing of administrative cost allocations for the Food Distribution Cluster, we identified an error in the entity’s allocation spreadsheet used to distribute administrative costs among Texas Emergency Food Assistance Program (TEFAP), Commodity Credit Corp (CCC)-funded TEFAP operations, and Commodity Supplemental Food Program (CSFP). This error caused TEFAP's share of administrative costs to be overstated by $188,459. Reimbursement requests for these overstated amounts were submitted between October and January. Although TEFAP reimbursement caps prevented any actual overpayment for the nine-month period, the early over‑allocation exhausted TEFAP funds sooner, leaving later allowable costs unreimbursed. Cause: A formula error in the allocation spreadsheet double-counted CCC amounts in the TEFAP base, inflating TEFAP’s percentage of shared administrative costs. Effect or Potential Effect: The error caused TEFAP to be assigned more in shared administrative costs than warranted by program benefit. Although reimbursement caps prevented an actual overpayment for the fiscal year, the misallocation exhausted TEFAP funds earlier, leaving later allowable costs unreimbursed. Without correction, the entity could continue to recognize TEFAP administrative and operational reimbursements earlier than warranted in future periods. Questioned Costs: Assistance Listing Number 10.568 – $188,459. Calculated difference between TEFAP funds billed versus actual allocated cost that should have been billed between October and January. Context: The allocation spreadsheet design error caused CCC amounts to be doublecounted in the TEFAP base, inflating TEFAP’s share of pooled administrative costs. Repeat Finding: No Recommendation: Correct the allocation methodology to ensure CCC amounts are not double-counted in TEFAP bases and that each program bears costs in proportion to benefit per 2 CFR §200.405. Implement a documented secondary review of the monthly allocation spreadsheet before posting. Views of Responsible Officials and Planned Corrective Actions: Management concurs with the finding and recommendation. While the misallocation resulted in overstated TEFAP administrative costs by $188,459, the program’s reimbursement cap and the entity’s actual incurred costs prevented any overbilling or excess Federal draw. See further information on the corrective action plan provided by management.

Identification of the Federal Program: Federal Agency and Program Name Assistance Listing # COVID-19 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) (FEMA) U.S. Department of Homeland Security Pass through grantor: Virginia Department of Emergency Management Pass through award number: 4512DR-VA Award Period: 1/21/2020 – 6/30/2022 97.036 Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that a non-Federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(h) states: “Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. At its discretion, the Federal agency is authorized to waive prior written approvals to carry forward unobligated balances to subsequent budget periods. See § 200.308(g)(3).” Condition: The Authority did not validate the accuracy of the cost incurred dates and identify expenditures that were incurred outside of the period of performance related to assistance listing 97.036 – COVID-19 – Disaster Grants – Public Assistances (Presidentially Declared Disasters) (FEMA) prior to submission of the non-federal entity’s project worksheet. Cause: The Authority did not have sufficient internal controls to ensure that accuracy of the cost incurred dates or expenditures were incurred within the period of performance prior to submission of the non-federal entity’s project worksheet. Effect or Potential Effect: The Authority may inappropriately obtain funding for unallowable expenses or costs incurred outside the period of performance as a result of the reporting and verification of the completeness and accuracy of the cost incurred dates and expenditures included within the submission was not sufficient. Questioned Costs: $104,434 – represents the total payroll expenditures incurred after the end of the period of performance. Context: We identified $104,434 of payroll expenditures included in the submission of two force labor FEMA projects, resulting in duplicate costs being submitted to FEMA. The $104,434 was incorrectly included in the project that ended June 30, 2022 and was appropriately included in the project that began July 1, 2022. The costs in question are the payroll expenses from the second week of the pay period (June 26, 2022 through July 9, 2022) incurred after the end of the period of performance. The total obligation of the project worksheet that had the duplicate costs was $2,278,390. Management corrected the duplicated amount of the federal expenditures reported on the Schedule, in which total FEMA expenditures are $31,901,782 for the year ended June 30, 2025. The duplicate costs represent 4.6% of the related project and approximately 0.3% of total FEMA expenditures for the fiscal year. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: The Authority’s policy and procedures should be designed to strengthen the internal controls over the review of the submissions to ensure accurate reporting as required by the Uniform Guidance. Views of Responsible Officials: There is no disagreement with the audit finding and the Authority has developed a plan to correct the finding.

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

FINDING 2025-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Program: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027x Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-PN01, 22611-043-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Significant Deficiency, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context The School Corporation was a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. Due to the timing of the Cooperative's corrective action, the nonpublic expenditures spent did not meet the earmarking requirements for grant award numbers 22611-043-PN01 and 22611-043-ARP. From the beginning of the grant awards until September 2022, total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. Beginning in September 2022, the Cooperative began tracking expenditures by member school for the nonpublic services. As such, we were unable to identify if the minimum amount per the grant award was expended and properly reported to the IDOE from the beginning of the grant awards through September 2022, as required. The lack of internal controls and noncompliance was isolated to the 22611-043-PN01 and 22611-043-ARP grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." INDIANA STATE BOARD OF ACCOUNTS 18 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Through inquiry of management, they were unaware of the requirements to track nonpublic proportionate share expenditures directly for each member school. While the Cooperative did implement new processes and procedures to ensure expenditures were tracked by each member school starting in September 2022, most of the grant awards had been allocated to the member schools based on a percentage of the budget. Effect Without the proper implementation of an effectively designed system of internal controls, the Cooperative was unable to track expenditures for nonpublic services for each member school. Consequently, the amounts requested for reimbursement were not supported by actual expenditures but rather a percentage based on the budget per member school. Because of this, expenditures were not accurately reported to the oversight agency. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Cooperative should develop written policies and procedures which would require tracking of actual nonpublic proportionate share expenditures by member school. Documentation should be maintained to show how these expenditures are being tracked to ensure compliance with the earmarking requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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

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

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

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

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

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

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

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

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

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

Reference Number: 2025-015 Prior Year Finding: 2024-025 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Foster Care – Title IV-E Assistance Listing Number: 93.658 Award Number and Year: 2502WVFOST (10/1/2024 – 9/30/2025) 2401WVFOST (1/1/2024 – 3/31/2025) Compliance Requirement: Allowable Costs/Cost Principles, Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Compliance: Allowable Costs/Cost Principles – Per 2 CFR section 200.403, except where otherwise authorized by statute, costs must meet certain criteria to be allowable under Federal awards. Criteria includes that costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Costs must also conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. Eligibility – Funds may be expended for foster care maintenance payments on behalf of eligible children, in accordance with the Title IV-E agency’s foster care maintenance payment rate schedule and in accordance with 45 CFR section 1356.21, to individuals serving as foster family homes, to child-care institutions, directly to a youth aged 18 or older who is in a supervised independent living setting if no actual provider or other child placing intermediary is involved, or public or private child-placement or child-care agencies. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Human Services (Department) charged the Foster Care program for payments made to psychiatric facilities which is an unallowable cost under the program. Context: One of sixty cases selected for testing included payments to a psychiatric facility. Payments to psychiatric facilities are not allowable under the Foster Care program. Cause: The Department’s corrective action plan from the prior audit indicated that a system change was made during FY 2025 to prevent future payments to psychiatric facilities from being charged to the Foster Care program. The exception noted was prior to the implementation of the correction action plan. Effect: Ineligible expenditures were charged to the Foster Care program. Questioned costs: $665, the amount paid to the psychiatric facility for the case tested. Recommendation: The Department should ensure its corrective action plan from the prior audit has been fully implemented and ensure that payments to psychiatric facilities are no longer charged to the Foster Care program. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.

Reference Number: 2025-016 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Foster Care – Title IV-E Assistance Listing Number: 93.658 Award Number and Year: 2502WVFOST (10/1/2024 – 9/30/2025) 2401WVFOST (1/1/2024 – 3/31/2025) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Compliance: 2 CFR section 200.403 states, in part, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Human Services (Department) was unable to provide supporting documentation for costs charged to the program. Context: For two of sixty cases selected for testing, the Department was unable to provide supporting documentation for the transactions. Auditors were unable to verify that the expenditures were allowable nor that they had been reviewed and approved prior to issuance. Cause: While the Department has established procedures in place, a clerical error resulted in supporting documentation not being properly maintained for certain program expenditures. Although the Department's multi-layered review process identified the missing documentation before the automated financial system issued payment, the error was not corrected prior to issuance. Consequently, internal controls did not prevent these errors. Effect: Expenditures without supporting documentation were charged to the Foster Care program. Questioned costs: $50, the amount charged to the program without supporting documentation. Recommendation: The Department should reevaluate its current process, implement proper controls, and perform additional training to ensure that, prior to charging costs to the program, it has supporting documentation which is reviewed and approved by a supervisor who is knowledgeable of the regulations regarding allowable program costs. Supporting documentation should be maintained and be readily available for audit. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.

Reference Number: 2025-017 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Adoption Assistance Assistance Listing Number: 93.659 Award Number and Year: 2502WVADPT (10/1/2024 – 9/30/2025) 2502WVADPT (1/1/2024 – 3/31/2025) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Compliance: 2 CFR section 200.403 states, in part, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Human Services (Department) was unable to provide supporting documentation for costs charged to the program. Context: For one of sixty cases selected for testing, the Department was unable to provide supporting documentation for the transaction. Auditors were unable to verify that the expenditure was allowable nor that it had been reviewed and approved prior to issuance. Cause: While the Department has established procedures in place, a clerical error resulted in supporting documentation not being properly maintained for certain program expenditures. Although the Department's multi-layered review process identified the missing documentation before the automated financial system issued payment, the error was not corrected prior to issuance. Consequently, internal controls did not prevent these errors. Effect: An expenditure without supporting documentation was charged to the Adoption Assistance program. Questioned costs: $26, the amount charged to the program without supporting documentation. Recommendation: The Department should reevaluate its current process, implement proper controls, and perform additional training to ensure that, prior to charging costs to the program, it has supporting documentation which is reviewed and approved by a supervisor who is knowledgeable of the regulations regarding allowable program costs. Supporting documentation should be maintained and be readily available for audit. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.

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

FINDING 2025-005 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Significant Deficiency, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Allowable Costs/Cost Principles compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 20 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) A sample of 13 claims charged to the COVID-19 - Education Stabilization Fund program for which reimbursement was received during the audit period was selected for testing to verify the expenditures were in conformance with the applicable cost principles. Of the 13 claims tested, 3 were found to include unallowable costs. The description of the claims are as follows: • The School Corporation had 2 claims for supplies/building materials to build a storage building totaling $5,932. The building was not able to be completed due to the Fire Marshal's report. The School Corporation decided to not complete this project and used these materials/supplies within the School Corporation for other projects. There was no documentation presented for review to show where these materials were used; therefore, it could not be determined if the expenses were allowable. • The School Corporation had 1 claim for concrete for the storage building. The concrete pad was completed, and the building was never completed. Total cost of this claim was $3,619. There are no plans for the use of the concrete so it could not be determined if the expense was allowable. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Once the original project was discontinued no documentation was created to show how the purchased materials were used and for what purpose. INDIANA STATE BOARD OF ACCOUNTS 21 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to establish an effective internal control system and maintain adequate supporting documentation enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls and maintain adequate supporting documentation to ensure compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): 2023-2024, 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 16 LINTON-STOCKTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation did not have adequate procedures in place to ensure that allocation of costs related to compensation and fringe benefits of the food service director was appropriately documented. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430 states in part: ". . . Compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Compensation for personal services may also include fringe benefits . . . (i) Standards for Documentation of Personal Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; INDIANA STATE BOARD OF ACCOUNTS 17 LINTON-STOCKTON SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); (iv) Encompass federally-assisted and all other activities compensated by the non- Federal entity on an integrated basis but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause The School Corporation's Management had not developed nor implemented a system of internal controls that would have ensured that the allocation of costs are appropriately documented, and made available for audit, as it related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation did not retain and provide appropriate supporting documentation to ensure compliance with allowable cost and cost principles requirements. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's Management establish an effective system of internal controls and develop policies and procedures to ensure the allocation of costs are appropriately documented, which are to be maintained and made available for audit as related to the Allowable Cost/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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

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

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

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

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

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

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

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

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

FINDING 2025-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, 23619-021-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. INDIANA STATE BOARD OF ACCOUNTS 16 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Greater Lafayette Area Special Services Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education programs and spent the federal money on behalf of all its members. As the grant agreements were between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure nonpublic school expenditures were appropriately identified and reported. The nonpublic proportionate share expenditures for the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, and 23619-021-PN01 grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The nonpublic proportionate share expenditures were determined by applying a percentage to the nonpublic school budgeted expenditures. As such, we were unable to identify if the minimum amount per the grant awards was expended and properly reported to the IDOE as required. The lack of internal controls and noncompliance were isolated to the 22611-021-PN01, 22611-021-ARP, 22619-021-ARP, 23611-021-PN01, and 23619-021-PN01 grant awards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." INDIANA STATE BOARD OF ACCOUNTS 17 WEST LAFAYETTE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause Records were not kept at the School Corporation or the Cooperative of funds spent by each member school corporation on nonpublic school students with disabilities. In reporting the amount expended for this purpose, the amounts reported as expenditures for nonpublic school students was based on a percentage to the schools nonpublic budgeted expenditures. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the School Corporation's nonpublic proportionate share expenditures could not be determined, and it could not be determined if the School Corporation met its minimum nonpublic proportionate share as required by the grant agreement. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure nonpublic proportionate share funds are appropriately allocated to the member school based on expenses charged directly on behalf of the member school. Supporting documentation for these expenses should be retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-004 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X; 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-056-PN01, 22611-056-ARP, 22619-056-PN01, 22619-056-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Proportionate share is an amount of funds that must be expended on special education/related services for parentally placed private school and homeschooled students. The amount to be spent is automatically calculated within each grant application. The School Corporation had not designed, nor implemented, policies and procedures to ensure that the required level of expenditures for nonpublic students was met for each grant. The Non-Public Proportionate Share expenditures for the 22611-056-PN01, 22619-056-PN01, 22611-056-ARP, and 22619-056-ARP grants were not spent in full, and the School Corporation did not file a waiver, which, if approved, would have allowed the funds to be moved and spent under the regular Part B special education scope. INDIANA STATE BOARD OF ACCOUNTS 26 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation did not request a waiver so that unused preschool funds could be carried over to Part B of the program. Effect The failure to establish an effective system of internal controls enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement could result in the loss of future funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 27 METROPOLITAN SCHOOL DISTRICT OF WASHINGTON TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: Child Nutrition Cluster - Allowable Costs/Costs Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. The School Corporation's salary ordinance for classified staff reported the beginning wage rate and not the current wage rate. As a result, 11 of the 13 payroll disbursements sampled for classified employees did not agree with the School Corporation's salary ordinance, which totaled $714. This amount was considered questioned costs. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 MACONAQUAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause The School Corporation was not aware of the need for reporting the current wage rate within its salary ordinance. Effect Payroll disbursements for classified employees paid from the grant did not agree with the School Corporation's salary ordinance. As a result, known questioned costs of $714 were identified in the Condition and Context. Questioned Costs Known questioned costs of $714 were identified as described above in the Condition and Context. Recommendation We recommended that the School Corporation's management report the current wage rate within its salary ordinance and establish effective internal controls to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-003 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 MACONAQUAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation's salary ordinance for classified staff reported the beginning wage rate and not the current wage rate. As a result, six of the seven payroll disbursements sampled for classified employees did not agree with the School Corporation's salary ordinance, which totaled $952. This amount was considered questioned costs. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause The School Corporation was not aware of the need for reporting the current wage rate within its salary ordinance. Effect Payroll disbursements for classified employees paid from the grant did not agree with the School Corporation's salary ordinance. As a result, known questioned costs of $952 were identified in the Condition and Context. Questioned Costs Known questioned costs in the amount of $952 were identified as described above in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 18 MACONAQUAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that School Corporation's management report the current wage rate within its salary ordinance and establish effective internal controls to ensure costs are adequately documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-001 Subject: Twenty-First Century Community Learning Centers - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Twenty-First Century Community Learning Centers Assistance Listings Number: 84.287 Federal Award Numbers and Years (or Other Identifying Numbers): S287C220014, S287C230014, S287C240014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context The Twenty-First Century Community Learning Centers grant is awarded to schools to provide opportunities for academic enrichment for children, particularly students who attend a high-poverty and lowperforming school. The program is intended to help students meet state and local academic achievement standards in core academic subjects, such as reading and math; to offer students a broad array of enrichment activities that reinforce and complement their regular academic programs; and to offer literacy and other educational services to the families of participating children. Program funds are intended to be used for activities that provide students with activities that complement the regular school-day program of participating students and also fund local activities that are included as part of an expanded learning time (ELT) program that provides students at least 300 additional program hours before, during or after the traditional school day. A sample of 41 vouchers reimbursed by the Indiana Department of Education from the School Corporation's grant funds were selected for testing, consisting of 17 vendor claims and 24 payroll claims. Of the 17 vendor claims selected, 2 were for activities and costs that were determined to be unallowable. The first voucher was paid to NLB Sportswear to purchase 85 Sport-Tek Stripe Pom Pom Beanies in the amount of $1,190. The second voucher was paid to Shoup's Country Foods for a Staff Christmas Dinner in the amount of $1,504. We found 3 additional payments made to Shoup's Country Foods from grant funds during the audit period totaling an additional $3,209, 1 for a December 2024 Christmas dinner and 2 for a December 2023 Christmas dinner. The total amount of charges for these expenditures was $5,903, which we considered to be questioned costs. Internal controls over grant expenditures were not properly designed and implemented to detect and prevent the noncompliance noted above. Criteria 2 CFR 200.303 states in part: "The recipient and subrecipient must: INDIANA STATE BOARD OF ACCOUNTS 14 CLINTON CENTRAL SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control-Integrated Framework' issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federallyfinanced and other activities of the non-Federal entity. . . ." Cause The grant manager approved the expenses and directed that they be paid from this funding. The Treasurer, who reviewed all expenses, did not consider it appropriate to question the expenses because the grant manager had already approved them. Effect Without proper implementation of an effectively designed system of internal controls, the School Corporation made purchases for unallowable items. Examiners were unable to determine how these items benefited the program. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs Questioned costs in the amount of $5,903 were identified as described in the Condition and Context. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including documented policies and procedures, that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are obtained to support disbursements that are charged to the respective grants. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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

Program: AL 10.561 – State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.558 – Temporary Assistance for Needy Families; AL 93.563 – Child Support Services; AL 93.566 – Refugee and Entrant Assistance State/Replacement Designee Administered Programs; AL 93.575 Child Care and Development Block Grant; AL 93.658 – Foster Care Title IV-E; AL 93.659 – Adoption Assistance; AL 93.767 – Children’s Health Insurance Program; AL 93.778 – Grants to States for Medicaid – Allowable Cost/Cost Principles Grant Number & Year: 243NE406S2514, FFY 2024; 253NE406S2514, FFY 2025; 2201NETANF, FFY 2022; 2501NESCSS, FFY 2025; 2401NERCMA, FFY 2024; 2301NECCDD, FFY 2023; 2401NECCDD, FFY 2024; 2401NEFOST, FFY 2024; 2501NEFOST, FFY 2025; 2401NEADPT, FFY 2024; 2501NEADPT, FFY 2025; 2405NE5021, FFY 2024; 2505NE5021, FFY 2025; 2405NE5ADM, FFY 2024; 2505NE5ADM, FFY 2025 Federal Grantor Agency: U.S. Department of Health and Human Services and U.S. Department of Agriculture Criteria: Per 2 CFR § 400.1 (January 1, 2024, and January 1, 2025), the U.S. Department of Agriculture adopted the OMB Uniform Guidance as its policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards. Per 45 CFR § 75.405(a) (October 1, 2024) and 2 CFR § 200.405(a) (January 1, 2024, and January 1, 2025), costs are allocable to Federal awards or other cost objectives if the costs involved are assignable to those Federal awards or other cost objectives in accordance with relative benefits received. 45 CFR § 75.403 (October 1, 2024) and 2 CFR § 200.403 (January 1, 2024, and January 1, 2025) require costs to be necessary, reasonable, and adequately documented. 45 CFR § 75.303 (October 1, 2024) and 2 CFR § 200.303 (January 1, 2024, and January 1, 2025) require the State to “maintain effective internal control over the Federal award that provides reasonable assurance that the [State] is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 45 CFR § 75.302 (October 1, 2024) and 2 CFR § 200.302 (January 1, 2024, and January 1, 2025) require financial management systems of the State sufficient to permit both preparation of required reports and tracing of funds to a level of expenditures adequate to establish that the use of those funds was in accordance with applicable regulations. Per Title 471 NAC 25, Attachment A, Claiming Issues, C. Offset of Revenues (eff. 10/4/2020) and the Medicaid School-Based Administrative Claiming Guide provided by the Centers for Medicare and Medicaid Services (May 2003), Section V (“Claiming Issues”), C. (“Offset Revenues”), “[a] government program may not be reimbursed in excess of its actual costs, i.e., make a profit.” EnterpriseOne is the official accounting system for the State of Nebraska, and all expenditures are generated from it. Good internal control requires procedures to ensure that amounts charged to Federal funds are proper. 45 CFR § 75.511 (October 1, 2024) and 2 CFR § 200.511 (January 1, 2024, and January 1, 2025) require the auditee to prepare a summary schedule of prior audit findings. Subsection (b)(2) of both regulations also requires that, when the audit findings were not corrected or only partially corrected, the auditee must describe the reasons for the findings recurrence and planned corrective action. Condition: Inadequate procedures to ensure the accuracy of journal entries and adjustments to the Public Assistance Cost Allocation Plan (PACAP), resulting in multiple Federal programs being overcharged. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2024-037 Questioned Costs: $3,986,559 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: We selected 14 journal entries related to the PACAP. We noted the following: • Four journal entries to reconcile Foster Care Title IV-E expenditures to the PACAP contained multiple errors, including using aid amounts as administrative costs, miscalculating the portion of the Bridge to Independence (B2I) program that can be charged to the grant, not accounting for all amounts already charged to the grant, and adding in additional amounts earned that did not exist or were calculated incorrectly. For one entry, the Agency not only calculated the wrong amounts to charge to the grant, but then posted the exact same entry from the previous quarter instead of the current quarter’s entry. In total, $306,667 was overcharged to the Foster Care Title IV-E grant due to these errors. We consider this amount to be Federal questioned costs. • Another journal entry for Foster Care Title IV-E was posted to correct an error in previous quarters’ journal entries. The Agency was charging program-related training costs at a 50% Federal financial participation rate (FFP), while such activity is allowable at a 75% FFP. However, the Agency did not correctly account for all the costs that had already been charged to the grant for training costs. This error led to the Agency charging an additional $1,777,318 in costs to the Federal award that was already charged to the grant. We consider this amount to be Federal questioned costs. • One journal entry was to reconcile Supplemental Nutrition Assistance Program (SNAP) expenditures to the PACAP. The Agency’s calculation included costs earned by the Summer EBT program but failed to include amounts already charged to the Summer EBT Federal grant of $72,292. Additionally, the Summer EBT program is a separate Federal grant from SNAP and should have been accounted for separately. The full $72,292 is the Federal portion and is considered questioned costs. • One journal entry to reconcile Medicaid administrative expenditures to the PACAP did not properly account for $35,114 in personnel costs that had already been charged to the grant. As a result, the Federal funds were overcharged this amount and are considered questioned costs. • One journal entry to allocate costs related to Field Office Administration to various programs across the Agency for the month of March 2025 was calculated incorrectly and did not account for all programs involved. Each quarter, Field Office Administration costs are allocated in the PACAP to various programs based on hours worked in the field offices. The journal entry tested was meant to do the same calculation, but on a monthly basis, so programs can keep track of their budgets more timely. When calculating the amounts to allocate, however, the Agency used six months of costs, or $1,798,755, rather than just the costs that occurred in March 2025, or $171,255. Further, the Agency did not move the costs to all of the applicable programs, such as Foster Care and SNAP. Lastly, the Agency used the Labor Hours from the quarter ending December 31, 2023, rather than the quarter ending March 31, 2025. Due to these errors, Medicaid was overcharged $131,637, which are considered Federal questioned costs. • For one journal entry to move costs from the State General Fund to a Cash Fund for $1,766,949, the Agency used the incorrect business units within EnterpriseOne, which resulted in multiple Federal programs being overcharged through the PACAP, as listed below. We consider these to be Federal questioned costs. See Schedule of Findings and Questioned Costs for chart/table. We also selected six adjustments made to the PACAP and noted the following: • Two adjustments tested were related to the Medicaid School-based Administration program. The Agency uses a contractor to determine the allowable Medicaid activities by school district, and the amounts owed to each school district, for the Federal share of expenses. Schools are responsible for covering matching funds. The Agency makes an adjustment to the Cost Allocation Plan to account for the matching funds that are not shown on the State Accounting records. However, we noted that the Agency is calculating this adjustment based on the amount of allowable expenses provided by the contract, and not the actual amount of Federal funds paid to the schools. The Agency reduces the amount to pay to the schools for missing provider enrollment, negative claims, and/or recoupments. We then reviewed the CMS-64 reports and noted that the Agency is claiming the entire amount of allowable expenses provided by the contractor, and not just the amount paid to the schools. It is not reasonable to claim costs on the CMS-64 reports that are not actually spent. We recalculated the amounts that should have been reported based on the actual amounts paid to the schools and noted that the Agency overclaimed $566,018 in Federal costs. Of the $566,018, $110,970 is due to a 3% fee for administration that the Agency subtracts from each school’s payment. The Agency then essentially pays itself this amount through a reconciliation journal entry. Administrative costs of the Agency are distributed through the PACAP to benefiting programs and would include charges to Medicaid; therefore, the Federal portion of the 3% administrative fee should have been credited back to Medicaid, but it was not. The $566,018 is considered Federal questioned costs. • Two adjustments tested were to correct prior period allocation errors. Both errors were due to a finding from the Fiscal Year 2024 Single audit. The Agency’s calculations to correct allocations included errors, such as using the incorrect statistics, using the incorrect amounts, and inputting the incorrect amounts into the cost allocation system. These errors resulted in the following programs being overcharged. See Schedule of Findings and Questioned Costs for chart/table. Cause: Inadequate procedures to ensure that adjustments to the PACAP are proper, and journal entries are appropriate for each program. Effect: Unallowable expenditures were charged to Federal funds and an increased risk for errors, fraud, and noncompliance with Federal regulations. Recommendation: We recommend the Agency strengthen procedures to ensure adjusting entries are complete and accurate. We further recommend the Agency strengthen procedures to ensure compliance with Federal regulations. Management Response: The Agency agrees with the finding.

Program: AL 10.561 – State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.090 – Guardianship Assistance; AL 93.558 – Temporary Assistance for Needy Families; AL 93.563 – Child Support Services; AL 93.566 – Refugee and Entrant Assistance State/Replacement Designee Administered Programs; AL 93.575 Child Care and Development Block Grant; AL 93.658 – Foster Care Title IV-E; AL 93.659 – Adoption Assistance; AL 93.767 – Children’s Health Insurance Program; AL 93.778 – Grants to States for Medicaid – Allowable Cost/Cost Principles Grant Number & Year: 243NE406S2514, FFY 2024; 253NE406S2514, FFY 2025; 2501NEGARD, FFY 2025; 2201NETANF, FFY 2022; 2401NESCSS, FFY 2024; 2501NESCSS, FFY 2025; 2401NERCMA, FFY 2024; 2401NECCDD, FFY 2024; 2501NECCDD, FFY 2025; 2401NEFOST, FFY 2024; 2501NEFOST, FFY 2025; 2401NEADPT, FFY 2024; 2501NEADPT, FFY 2025; 2405NE5021, FFY 2024; 2505NE5021, FFY 2025; 2405NE5ADM, FFY 2024; 2505NE5ADM, FFY 2025 Federal Grantor Agency: U.S. Department of Health and Human Services and U.S. Department of Agriculture Criteria: Per 2 CFR § 400.1 (January 1, 2024, and January 1, 2025), the U.S. Department of Agriculture adopted the OMB Uniform Guidance as its policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards. 45 CFR § 75.303 (October 1, 2024) and 2 CFR § 200.303 (January 1, 2024, and January 1, 2025) require the State to “maintain effective internal control over the Federal award that provides reasonable assurance that the [State] is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 45 CFR § 75.403 (October 1, 2024) and 2 CFR § 200.403 (January 1, 2024, and January 1, 2025) require costs to be necessary, reasonable, and adequately documented. 45 CFR § 75.302 (October 1, 2024) and 2 CFR § 200.302 (January 1, 2024, and January 1, 2025) require financial management systems of the State sufficient to permit both preparation of required reports and tracing of funds to a level of expenditures adequate to establish that the use of those funds was in accordance with applicable regulations. Per 45 CFR § 75.405(a) (October 1, 2024) and 2 CFR § 200.405(a) (January 1, 2024, and January 1, 2025), costs are allocable to Federal awards or other cost objectives if the costs involved are assignable to those Federal awards or other cost objectives in accordance with relative benefits received. Good internal control and sound accounting practices require policies and procedures to ensure that all administrative costs are allocated to the proper funding source for activities performed. 45 CFR § 75.511 (October 1, 2024) and 2 CFR § 200.511 (January 1, 2024, and January 1, 2025) require the auditee to prepare a summary schedule of prior audit findings. Subsection (b)(2) of both regulations also requires that when the audit findings were not corrected or only partially corrected, the auditee must describe the reasons for the findings recurrence and planned corrective action. Condition: The Agency did not properly charge Federal programs for 9 of 27 allocations tested. A similar finding has been noted since 2013. Repeat Finding: 2024-038 Questioned Costs: $2,743,946 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: We tested 27 PACAP allocations. We noted errors for 9 of 27 allocations tested, resulting in various programs undercharged or overcharged. We consider the overcharged to be questioned costs. We noted the following: RMTS Allocations For four of four allocations tested based on the Random Moment Time Study (RMTS) observations, the RMTS Summary report was not allocated correctly to the various State and Federal programs. Additionally, costs were included in the allocations that were either misassigned or unrelated to the cost centers being allocated. The following RMTS allocations were tested: See Schedule of Findings and Questioned Costs for chart/table. • RMTS observations were not properly determined. We reviewed two quarters to determine if observations were correctly counted. The September quarter allocation included 4,481 activity observations and the March quarter included 4,402 observations. We noted the following: o Four responses were invalidated by supervisors; however, these responses were originally left blank as they were not completed by employees. This resulted in four additional responses being created as activities funded by the State. o For two responses that were not included in the sub-sample for supervisory review, the supervisor performed a review and invalidated the moments. As these were not originally selected for supervisor review, this invalidation resulted in two additional responses being created and recorded as activities funded by the State as well as the original responses remaining under their original funding source. o One response was originally recorded as SNAP and was later invalidated by the supervisor. This moment was incorrectly not moved to “Non-DHHS Activity” and remained coded as SNAP on the final allocation. • The Agency did not properly allocate observations in accordance with the PACAP for 7 of the 81 activities in the quarter ended September 31, 2024, and 2 of the 75 activities in the quarter ended March 31, 2025: o Six of the observations included Child Protection Initial Assessment. Per the PACAP, Child Protection Initial Assessment is allocated to Foster Care, Guardianship, and Adoption. The Agency did not properly update the formula used to calculate each quarterly allocation for Child Protection Initial Assessment from the previous quarter. In both quarters tested, this resulted in overcharges to the Adoption and Guardianship programs and undercharges to the Foster Care program. o Two of the observations should have been allocated evenly between SNAP and the State; however, the observation was incorrectly allocated three ways, between SNAP, the State, and the Social Services Block Grant Program (SSBG). This resulted in overcharges to SSBG and undercharges to SNAP and the State. o One of the observations should have been allocated with two-thirds to the Temporary Assistance for Needy Families Program (TANF) and one-third to SNAP; however, the observation was incorrectly allocated evenly between TANF and SNAP. This resulted in overcharges to SNAP and undercharges to TANF. Additionally, two business units were misassigned to the RMTS allocations. • One business unit with total charges of $125,246 during State fiscal year 2025 was assigned to the Economic Assistance RMTS allocation when it should have been assigned to the P&S RMTS allocation. Impacts of this error included undercharges to Foster Care and overcharges to SNAP. • The second business unit with total charges of $5,433,458 during State fiscal year 2025 was assigned to the P&S RMTS; however, it should not have been assigned to either RMTS allocation as the costs were related to the Youth Rehabilitation Treatment Center in Kearney, Nebraska. This resulted in overcharges to Federal programs, including Foster Care and Adoption Assistance. Questioned costs by Program for RMTS Allocations are as follows: See Schedule of Findings and Questioned Costs for chart/table. Time Study Allocation One allocation tested was based on a time study of the Legal and Regulatory Services Team for the quarter ended March 31, 2025, which allocated $1,126,957 of administrative costs. The time study was completed annually by the attorneys of the Legal and Regulatory Services Team. We noted the following issues regarding the time study and the allocation tested. • The Agency’s processes and procedures for the time study were not adequately defined in the PACAP, and there were no written processes and procedures for how the time study would be completed. • The time study used for the basis of the allocation tested consisted of only 26 of the 33 attorneys that were part of the team, and the time study was only conducted during a two-week period. Additionally, a paralegal also completed the time study, which was against the Agency’s stated procedures. • An Internal Auditor’s payroll costs were also included in the allocation; however, the Internal Auditor was not part of the Legal and Regulatory Services Team. This resulted in $16,281 in misallocated costs. • Hours coded on the time study for “Child Welfare” were all allocated directly to Foster Care; however, the “Child Welfare” hours should have also been allocated to Adoption, Guardianship, and other State programs. • Hours coded on the time study for “TANF” were incorrectly charged to LIHEAP. As the same time study was used for allocations for all four quarters of the State fiscal year 2025, we calculated the impact for all four quarters. Questioned costs by program for the Time Study allocation are as follows: See Schedule of Findings and Questioned Costs for chart/table. Recipient Counts The PACAP includes five cost centers allocated to State and Federal programs based on recipient counts per NFOCUS and MMIS reports. NFOCUS and MMIS are applications used to manage various programs such as SNAP, Child Care, TANF, and Medicaid. Over $39.5 million in costs were allocated using these counts during the State fiscal year 2025. We tested the allocation for the quarter ended September 30, 2024, and noted the following: • The Agency did not maintain the detail for the recipients of Medicaid or the Children’s Health Insurance Program (CHIP). The numbers they used in the allocations for Medicaid and CHIP were maintained on a summary spreadsheet. The counts used for the allocation tested, pulled from the summary spreadsheet, did not include Medicaid Expansion recipients in the count of Medicaid recipients, thus undercharging Medicaid for the quarter tested and overcharging all other programs in the allocation. Furthermore, when we requested detailed reports to support the numbers on the summary spreadsheet, the Agency was unable to provide detailed reports at the time of the allocation. Instead, the reports showed recipients for Medicaid and CHIP, for September 2024 as of August 2025. The detailed report did not agree to the summary spreadsheets. • Other recipient counts were off due to clerical errors: o The recipient count for the TANF Solely State Funded Plan was incorrect. The recipient count used by the Agency was zero, but the supported number was 2,017 recipients. o The recipient count for SNAP included 1,609 more recipients than what was supported. Having recalculated the quarter’s allocation, based on the supported recipient counts available, we have the following questioned costs: See Schedule of Findings and Questioned Costs for chart/table. Labor Hours Statistics The PACAP includes 36 cost centers allocated to State and Federal programs through labor hours. Over $295.6 million in costs were allocated by labor hours during the 2025 State fiscal year. We tested seven of these allocations, and one had errors. Below is a summary of allocations tested: See Schedule of Findings and Questioned Costs for chart/table. For the allocation tested for Cost Center 25C23545, we noted that five business units related to Home and Community Based Services were being incorrectly mapped to Cost Center 25C23545. Additionally, the labor hours statistic should have allocated the costs throughout the Finance and Program Integrity Section, but it only allocated costs to one unit within this section. These errors resulted in CHIP being overcharged $85,174. Time and Effort Report Allocations We tested the allocation of cost center 25C21940 Field Office Resource Development for the quarter ended September 30, 2024, which allocated $1,077,853 of administrative costs, based on Time & Effort reports. During testing, we noted the payroll costs for 71 employees were charged to the cost center; however, four of the employees’ payroll costs should not have been charged to the cost center. The four employees included three Child and Family Services Specialist Supervisors (CFSSS), and a Program Specialist. The three CFSSS employees were, at one time, Resource Developers; however, when their roles changed, their pay source was not updated. The Program Specialist has been a Program Specialist since he was hired in April 2022. Because of this error, the following programs were overcharged. See Schedule of Findings and Questioned Costs for chart/table. Other We tested the allocation of cost center 25C23823 iServe IAPD H971 – Shared, which allocated $17,529,039 in project costs for State fiscal year 2025. The iServe Nebraska Portal, which is an online application for Nebraskans to apply for benefits from Federal and State programs, began implementation in July 2021 and went live in October 2023, replacing ACCESSNebraska. For the implementation phase of the project, the Agency allocated costs only to the following four programs: LIHEAP, TANF, SNAP, and Medicaid. However, there are other Federal and State programs that are utilizing, or intend to utilize, the iServe application. We reviewed documentation obtained in the prior year, including correspondence from the Agency’s Federal contacts, which stated the following: As long as SNAP, Medicaid, LIHEAP, and TANF are the only benefiting programs for the State’s iServe Nebraska Portal project, the State may just include these four programs in the development of its cost allocation plan. If/when the State decides to add other Federal programs that will benefit from enhancements to the portal, it will need to revisit and adjust its cost allocation plan. In addition to SNAP, Medicaid, LIHEAP, and TANF, other programs went live during the previous fiscal year, including Child Care, SSBG, Refugee Assistance, and various State programs. We noted the following: • The allocation method was last updated by the Agency, and approved by the Federal grantor, as of September 28, 2023, to include the Child Care program and some State-funded programs, such as Assistance to the Aged, Blind, or Disabled Program (AABD) and State Disability Program (SDP). However, the Agency-provided implementation date for Child Care, AABD, and SDP was the same as the implementation date for the initial four programs, July 26, 2021. So it remains unclear why all benefiting programs were not being included in the allocation of this cost center from the start of implementation. • The SSBG program began implementation in October 2023 and went live in April 2024, but no costs have been allocated to this program. Similarly, the Refugee Assistance program began implementation in March 2024 and went live in July 2024, but no costs have been allocated to this program either. We were unable to determine questioned costs for the cost center. The total costs allocated from the iServe project for fiscal year 2025 are noted below. See Schedule of Findings and Questioned Costs for chart/table. Cause: Inadequate procedures to ensure that allocations were adequately supported and calculated correctly. Effect: Without adequate documentation to support the allocation of costs, there is an increased risk of programs not being charged the proper amounts. Recommendation: We recommend the Agency improve procedures to ensure the following: employee pay is recorded correctly; system reports are set up correctly, and formatting instructions are followed; and costs are properly allocated and charged, based on supporting documentation. Management Response: The Agency agrees with the finding.

Program: AL 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Allowability Grant Number & Year: SLFRP1965, March 3, 2021, through December 31, 2024 Federal Grantor Agency: U.S. Department of the Treasury Criteria: 31 CFR § 35.6(b) (July 1, 2024) states, in relevant part, the following: A recipient may use funds to respond to the public health emergency or its negative economic impacts if the use meets the criteria provided in paragraph (b)(1) of this section or is enumerated in paragraph (b)(3) of this section; provided that, in the case of a use of funds for a capital expenditure under paragraph (b)(1) or (b)(3) of this section, the use of funds must also meet the criteria provided in paragraph (b)(4) of this section. Treasury may also articulate additional eligible programs, services, or capital expenditures from time to time that satisfy the eligibility criteria of this paragraph (b), which shall be eligible under this paragraph (b). (1) Identifying eligible responses to the public health emergency or its negative economic impacts. (i) A program, service, or capital expenditure is eligible under this paragraph (b)(1) if a recipient identifies a harm or impact to a beneficiary or class of beneficiaries caused or exacerbated by the public health emergency or its negative economic impacts and the program, service, or capital expenditure responds to such harm. (ii) A program, service, or capital expenditure responds to a harm or impact experienced by an identified beneficiary or class of beneficiaries if it is reasonably designed to benefit the beneficiary or class of beneficiaries that experienced the harm or impact and is related and reasonably proportional to the extent and type of harm or impact experienced. * * * * (3) Enumerated eligible uses: responses presumed reasonably proportional. A recipient may use funds to respond to the public health emergency or its negative economic impacts on a beneficiary or class of beneficiaries for one or more of the following purposes unless such use is grossly disproportionate to the harm caused or exacerbated by the public health emergency or its negative economic impacts: * * * * (ii) Responding to the negative economic impacts of the public health emergency for purposes including: * * * * (D) Assistance to tourism, travel, hospitality, and other impacted industries for programs, services, or capital expenditures, including support for payroll costs and covered benefits for employees, compensating returning employees, support for operations and maintenance of existing equipment and facilities, and technical assistance[.] 31 CFR § 35.6(c) (July 1, 2024) states the following: Providing premium pay to eligible workers. A recipient may use funds to provide premium pay to eligible workers of the recipient who perform essential work or to provide grants to eligible employers that have eligible workers who perform essential work, provided that any premium pay or grants provided under this paragraph (c) must respond to eligible workers performing essential work during the COVID-19 public health emergency. A recipient uses premium pay or grants provided under this paragraph (c) to respond to eligible workers performing essential work during the COVID-19 public health emergency if: (1) The eligible worker's total wages and remuneration, including the premium pay, is less than or equal to 150 percent of the greater of such eligible worker’s residing State’s or county’s average annual wage for all occupations as defined by the Bureau of Labor Statistics’ Occupational Employment and Wage Statistics; (2) The eligible worker is not exempt from the Fair Labor Standards Act overtime provisions (29 U.S.C. 207); or (3) The recipient has submitted to the Secretary a written justification that explains how providing premium pay to the eligible worker is responsive to the eligible worker performing essential work during the COVID-19 public health emergency (such as a description of the eligible workers’ duties, health, or financial risks faced due to COVID-19, and why the recipient determined that the premium pay was responsive despite the worker's higher income). 31 CFR § 35.3 (July 1, 2024) defines “premium pay,” in relevant part, as follows: Premium pay means an amount of up to $13 per hour that is paid to an eligible worker, in addition to wages or remuneration the eligible worker otherwise receives, for all work performed by the eligible worker during the COVID-19 public health emergency. Such amount may not exceed $25,000 in total over the period of performance with respect to any single eligible worker. H.J. Res 7 (2023) states the following: Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That, pursuant to section 202 of the National Emergencies Act (50 U.S.C. 1622), the national emergency declared by the finding of the President on March 13, 2020, in Proclamation 9994 (85 Fed. Reg. 15337) is hereby terminated. Approved April 10, 2023. Additionally, the “Final Rule” was released by the U.S. Department of the Treasury on January 6, 2022. The Final Rule, Section II. Eligible Uses, A. Public Health and Negative Economic Impacts, 1. General Provisions: Structure and Standards, a. Standards for Identifying a Public Health or Negative Economic Impact, Standards: Designating a Negative Economic Impact, states the following, in relevant part: (Page 4344) First, there must be a negative economic impact, or an economic harm, experienced by an individual or a class. The recipient should assess whether, and the extent to which, there has been an economic harm, such as loss of earnings or revenue, that resulted from the COVID-19 public health emergency. A recipient should first consider whether an economic harm exists and then whether this harm was caused or made worse by the COVID-19 public health emergency. * * * * Second, the response must be designated to address the identified economic harm or impact resulting from or exacerbated by the public health emergency. In selecting responses, the recipient must assess whether, and the extent to which, the use would respond to or address this harm or impact. * * * * Responses must be reasonably designed to benefit the individual or class that experienced the negative economic impact or harm. Uses of funds should be assessed based on their responsiveness to their intended beneficiary and the ability of the response to address the impact or harm experienced by that beneficiary. Responses must also be related and reasonably proportional to the extent and type of harm experienced. The Final Rule, Section II. Eligible Uses, A. Public Health and Negative Economic Impacts, 4. General Provisions: Other, a. Public Sector Capacity and Workforce, states the following, in relevant part: (Page 4386) The final rule allows for an expanded set of eligible uses to restore and support public sector employment. Eligible uses include hiring up to a pre-pandemic baseline that is adjusted for historic underinvestment in the public sector, providing additional funds for employees who experienced pay cuts or were furloughed, avoiding layoffs, providing worker retention incentives, and paying for ancillary administrative costs related to hiring. * * * * The final rule provides two options to restore pre-pandemic employment, depending on recipient’s needs. Under the first and simpler option, recipients may use SLFRF funds to rehire staff for pre-pandemic positions that were unfilled or were eliminated due the pandemic without undergoing further analysis. Under the second option, the final rule provides recipients an option to hire above the pre-pandemic baseline, by adjusting the pre-pandemic baseline for historical growth in public sector employment over time, as well as flexibility on roles for hire. * * * * To pursue the second option, recipients should undergo the analysis provided below. In short, this option allows recipients to pay for payroll and covered benefits associated with the recipient increasing its number of budgeted full-time equivalent employees (FTEs) up to 7.5 percent above its pre-pandemic employment baseline, which adjusts for the continued underinvestment in state and local governments since the Great Recession. * * * * Funds may be used to maintain current compensation levels, with adjustments for inflation, in order to prevent layoffs that would otherwise be necessary. Recipients must be able to substantiate that layoffs were likely in the absence of SLFRF funds and would be substantially due to the public health emergency or its negative economic impacts (e.g., fiscal pressures on state and local budgets) and should document their assessment. * * * * Funds may be used to provide worker retention incentives, which are designed to persuade employees to remain with the employer as compared to other employment options. Recipients must be able to substantiate that the employees were likely to leave employment in the absence of the retention incentive and should document their assessment. * * * * All worker retention incentives must be narrowly tailored to need and should not exceed incentives traditionally offered by the recipient or compensation that alternative employers may offer to compete for the employees. Further, because retention incentives are intended to provide additional incentive to remain with the employer, they must be entirely additive to an employee’s regular rate of wages and other remuneration and may not be used to reduce or substitute for an employee’s normal earnings. Treasury will presume that retention incentives that are less than 25 percent of the rate of base pay for an individual employee or 10 percent for a group or category of employees are reasonably proportional to the need to retain employees, as long as the other requirements are met. The Final Rule, Footnote 230, states the following, in relevant part: (Page 4379) Ultimately, recipients must comply with the eligible use requirements and any other applicable laws or requirements and are responsible for the actions of their subrecipients or beneficiaries. Per 2 CFR § 1000.10 (January 1, 2024), “[T]he Department of the Treasury adopts the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200.” 2 CFR § 200.303 (January 1, 2024) states, in relevant part, the following: 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. Per 2 CFR § 200.403 (January 1, 2024), costs must be necessary and reasonable for the performance of the Federal award. Costs must also be adequately documented. Good internal control and sound business practices require procedures for ensuring that: 1) premium pay is paid to only eligible individuals; 2) expenditures are adequately supported; and 3) all expenditures are for allowable purposes. Condition: The State lacked procedures to ensure that: • Grants issued to beneficiaries for worker retention and incentives were used for such purposes. • Premium pay paid to eligible individuals was for work performed during the COVID-19 public health emergency. Repeat Finding: 2024-069 Questioned Costs: $2,619,690 known Statistical Sample: No Context: We randomly selected 40 payments to test. We also judgmentally selected 12 payments and 7 journal entries to test. We noted the following: Payments to Nursing Facilities & Assisted Living Centers for Employee Retention and Recruitment LB 1014 (2022), section 28, appropriated $12,500,000 from the CSLFRF grant to the Department of Health and Human Services (DHHS) for State fiscal year 2025 to be paid out to Medicaid-certified nursing facilities. The funds were to be used to provide supplemental incentive payments for direct care staff members employed at the nursing facilities. DHHS paid out $12,500,000 to Medicaid-certified nursing facilities during State fiscal year 2025. During testing of 40 randomly selected CSLFRF payments, we tested five payments, totaling $452,690, made to Medicaid-certified nursing facilities. We asked for documentation of how DHHS ensured that the payments were used for allowable employee retention and recruitment programs, and for any documented assessments that were required by the Final Rule for worker incentive programs. According to DHHS, the funds were paid out in accordance with the requirements of LB 1014 (2022). Additionally, during June and July 2024, DHHS obtained signed attestations from all entities that had previously received funds in fiscal years 2023 and 2024, attesting that the entity was aware that funds provided could be used only to enhance employee recruitment and retention and that funds were used for such purpose. These forms applied only to funds already received at the time and did not include language referencing that they would apply to those payments issued in the State fiscal year 2025. DHHS claimed to have performed additional monitoring procedures in response to our finding in fiscal year 2024, which consisted of reviewing four entities that received funds in fiscal year 2024. The APA noted that this review consisted of only 4 of the 181 entities that received payments in fiscal year 2025, and the review considered only the use of funds disbursed prior to fiscal year 2025. Lastly, the APA noted that the documentation on file for DHHS’ review did not contain any analysis to support that funds were allowed for allowable retention and recruitment. Because no documentation was provided to support that funds were used for allowable employee retention and recruitment programs, we questioned all costs for the five payments tested, totaling $452,690, and noted that all $12,500,000 disbursed are dollars at risk. Premium Pay LB 1412 (2024), section 112, allowed the Governor to reallocate previously appropriated CSLFRF dollars that could not otherwise be obligated by the December 31, 2024, obligation deadline. Under this authority, the Office of the Governor authorized $3,007,058 to be used for premium pay to State employees. In December 2024, May 2025, and June 2025, DHHS posted three journal entries to move payroll costs of $2,167,000 to the CSLFRF grant. During our review of these entries, totaling $2,167,000, we noted that DHHS had determined the allowability of the entry by calculating the total amount of allowable premium pay during the grant period. DHHS had identified premium pay, totaling $10,537,975, paid to employees providing mental health services as part of the Lincoln Regional Center and Norfolk Regional Center Sex Offender Treatment Program for work dates from December 23, 2019, through April 30, 2023, and stated that this was more than the $9,760,287 in premium pay coded to the grant as of June 30, 2025, including the $2,167,000 tested; therefore, the entry was allowable. However, during our review, we noted the following deficiencies in DHHS’ review: • DHHS included $5,054,478 of payroll costs associated with work performed prior to the implementation of any premium pay on November 1, 2021, and after the end of the public health emergency on April 10, 2023, which is not allowable. • DHHS projections did not include any review of employee exemption status or total wages to support that moving payroll costs to the grant was responsive to employees performing essential work. Further, DHHS had no written justification on file to support the responsiveness of premium pay for any employees. We noted 28 employees who were exempt with wages over 150% of the State average. • DHHS did not properly cap the amount of premium pay at $25,000 per person for the life of the grant. Rather, DHHS capped premium pay at $25,000 per employee per each fiscal year during the grant. • Despite attempting to cap premium pay at $13 per hour for all employees, DHHS did not properly calculate the amount of premium pay earned by each employee. Employees were afforded a 20-30% pay increase for premium pay; however, DHHS calculated the premium pay as 20-30% of the new rate (including premium pay) instead of the employees’ original pay rate, resulting in overstatements of 3-7%. • In determining the amount of premium pay, DHHS erroneously included duplicate payroll lines, totaling $709,206, of gross pay. Taking all of the deficiencies into consideration, the APA calculated total allowable premium pay for the grant period to be only $5,001,281, which was $4,759,005 less than the amount of premium pay coded to the grant. The APA observed that, prior to fiscal year 2025, the agency had moved $7,593,287 of payroll costs to the grant. Therefore, all $2,167,000 of these journal entries tested are questioned costs. Cause: Inadequate procedures to ensure: 1) grants to nursing and assisted-living facilities were used for allowable purposes; and 2) premium pay was paid only to individuals who performed work during the COVID-19 public health emergency and at allowable rates. Effect: Without adequate supporting documentation and review procedures, there is an increased risk that Federal awards could be used for unallowable costs. Recommendation: We recommend the State strengthen procedures for ensuring that all Federal funds are used for intended and allowable purposes. Management Response: Department of Health and Human Services Agency disagrees with this finding. The methods utilized to calculate claims over the $25k per person cap and the max $13/hour increase cap were erroneous. DHHS was able to consolidate the entire data set for the appropriation periods between State fiscal year 2022 and State fiscal year 2025 and showed that, based on allowable claims for each period, there was a total of $10,537,974.76 possible to be claimed, and $9,760,286.67 actually claimed. APA Response: As noted above, 31 CFR § 35.3 (July 1, 2024) defines “premium pay” as an additional amount up to $13 per hour that is paid to an eligible worker for all work performed by the eligible worker during the COVID-19 public health emergency and states that it “may not exceed $25,000 in total over the period of performance with respect to any single eligible worker.” Review of DHHS’s analysis of $10,537,974.76 noted that it includes premium pay in excess of the $25,000 per person total limit for the period of performance for 138 individuals, totaling $4,208,829.04.

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

Finding 2025-001: Questioned Costs – Allowable Costs/Costs Principles (material weakness) Statement of Condition: During our testing of expenditures applied to the Economic Adjustment Assistance Program, we identified that the College charged federal funds to a capital project that had previously been paid for with bond proceeds. The bond proceeds were restricted for use on the same project for which federal funds were awarded. Criteria: In accordance with 2 CFR 200.403(a), costs charged to a federal award must be necessary, reasonable, and allocable to the federal program. Additionally, 2 CFR 200.404(a) states that a cost is reasonable if the cost is generally recognized as ordinary and necessary for the recipient’s operation or the proper and efficient performance of the Federal award. Further, 2 CFR 200.405(a) notes that a cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received. In addition, the cost must be incurred specifically for the Federal award. 2 CFR 200.406(a) states that applicable credits refer to transactions that offset or reduce direct costs allocable to a federal award. To the extent that such credits are received by the recipient relate to allowable costs, they must be credited to the federal award either as a cost reduction or cash refund, as appropriate. Effect of Condition: Federal funds were used to reimburse costs that had already been paid with bond proceeds, resulting in unallowable costs being charged to the federal program. Cause of Condition: The College did not have adequate controls in place to ensure that costs charged to the federal program had not already been funded by another source. Questioned Costs: The questioned costs total approximately $1,100,000, representing the federal funds used to pay for the capital project already funded by bond proceeds. Recommendation: We recommend that the College implement and enforce procedures to ensure that all costs charged to federal programs comply with the Cost Principles stated in Subpart E of 2 CFR 200.400.

Information on the federal program: Subject: Special Education Cluster (IDEA) – Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-047-PN01, 22611-047-ARP, 22619-047-ARP, 24611-047-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over 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). . . ." 34 CFR 300.202(a) states: "General. Amounts provided to the LEA under Part B of the Act – (1) Must be expended in accordance with the applicable provisions of this part; (2) Must be used only to pay the excess costs of providing special education and related services to children with disabilities, consistent with paragraph (b) of this section; and (3) Must be used to supplement State, local, and other Federal funds and not to supplant those funds." 34 CFR 300.208 states: "(a) Uses. Notwithstanding §§ 300.202, 300.203(b), and 300.162(b), funds provided to an LEA under Part B of the Act may be used for the following activities: (1) Services and aids that also benefit nondisabled children. For the costs of special education and related services, and supplementary aids and services, provided in a regular class or other education-related setting to a child with a disability in accordance with the IEP of the child, even if one or more nondisabled children benefit from these services. (2) Early intervening services. To develop and implement coordinated, early intervening educational services in accordance with § 300.226. (3) High cost special education and related services. To establish and implement cost or risk sharing funds, consortia, or cooperatives for the LEA itself, or for LEAs working in a consortium of which the LEA is a part, to pay for high cost special education and related services. (b) Administrative case management. An LEA may use funds received under Part B of the Act to purchase appropriate technology for recordkeeping, data collection, and related case management activities of teachers and related services personnel providing services described in the IEP of children with disabilities, that is needed for the implementation of those case management activities." 34 CFR 300.800 states: "The Secretary provides grants under section 619 of the Act to assist States to provide special education and related services in accordance with Part B of the Act – (a) To children with disabilities aged three through five years; and (b) At a State's discretion, to two-year-old children with disabilities who will turn three during the school year." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (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. . 511 IAC 7-34-9 states in part: “(a) The public agency must hold title to and exercise continuing administrative control of all: (1) property; (2) equipment; and (3) supplies; the public agency acquires with Part B funds for the benefit of nonpublic school students with disabilities. (b) The public agency may place equipment and supplies in a nonpublic school for the period of time needed to provide special education and related services. The public agency must ensure that the equipment and supplies: (1) are used only for the provision of special education and related services; and (2) can be removed from the nonpublic school without remodeling the nonpublic school facility.” Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the Special Education Cluster program and Activities Allowed or Unallowed and Allowable Costs compliance requirements. Cause: Management was not aware that non-public school officials have no authority to obligate or receive federal funds and that School Corporation must maintain control of all Special Education funds, property, equipment and supplies; therefore, reimbursements were made to a non-public school for proportionate share expenditures. Effect: The payment of proportionate share expenditures to a non-public school resulted in the potential misuse of funds that were meant to pay the excess costs of providing special education to students. The unallowable nature of these expenditures may also result in the School Corporation not meeting their requirements related to Non-Public Proportionate Share for the respective grants. Questioned Costs: There were questioned costs identified in the amount of $17,857. Context: During fiscal year 2023-2024, the School Corporation was a member of Cooperative School Services (Cooperative). The Cooperative operated the special education programs and spent the federal money on behalf of its member schools. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. For costs related to non-public schools, the practice of the Cooperative was to separate out the required amount for each member school from the Cooperative budget, and the member schools would work with the non-public schools to determine how to spend their proportionate share amount. Each member school would then request reimbursement from the Cooperative for non-public school expenditures incurred. This allowed both the Cooperative and member schools to maintain control of all Special Education funds, property, equipment and supplies. In the initial sample of 25 expenditures, there was no noncompliance identified. However, while performing a review of separate transactions for the Period of Performance compliance requirement, it was noted that non-public schools received direct reimbursements from the Cooperative for their proportionate share expenditures, which is not allowable under the grant award. The audit team reviewed the expenditure population in entirety and identified a total of 5 expenditures, totaling $17,857, that were made from Special Education funds directly to non-public schools by the cooperative during the audit period. The lack of controls and noncompliance was an isolated to the 22611-047-PN01, 22611-047-ARP, 22619-047-ARP and 24611-047-PN01 grant awards. This issue was isolated to fiscal year 2024. No direct payments to non-public schools were identified during fiscal year 2025. Identification as a repeat finding, if applicable: No Recommendation: We recommended that the School Corporation's management establish a system of internal controls to ensure that no direct reimbursements are made to the non-public schools and to ensure compliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management has agreed with the finding and prepared a corrective action plan.

FINDING 2025-001 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-046-PN01, 22611-046-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Porter County Education Services (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-046-PN01and 22611-046-ARP grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The non-public proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per each applicable member schools’ grant award was expended and properly reported to IDOE, as required. The lack of internal controls was isolated to the 22611-046-PN01 and 22611-046-ARP grant awards which were fully expended during fiscal year 2024. These two grant awards had minimum earmarking requirements for the Non-Public Proportionate Share of $35,513 and $8,472, respectively. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior finding number was 2023-003. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.