Findings Citing § 200.403

Federal Agency: 11 – Department of Commerce, 12 – Department of Defense, 15 – Department of the Interior, 16 – Department of Justice, 43 – National Aeronautics and Space Administration, 47 – National Science Foundation, 81 – Department of Energy, 84 – Department of Education, 93 – Department of Health and Human Services Federal Program Title: R&D Cluster and TRIO Cluster Assistance Listing Number: R&D and 84.TRIO Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: In accordance with 2 CFR §200.403(a), costs charged to Federal awards must be necessary, reasonable, and allocable to the Federal award. Additionally, 2 CFR §200.309 requires costs to be incurred during the approved period of performance of the Federal award. Further, 2 CFR §200.302(a) requires non‑Federal entities to maintain financial management systems that provide for accurate, current, and complete disclosure of the financial results of each Federal award, and 2 CFR §200.303 requires non‑Federal entities to establish and maintain effective internal control over Federal awards. Condition/Context: The population sizes below are presented only for programs in which exceptions were identified for the applicable compliance test. Cash Disbursement Testing – TRIO Cluster (Control Finding Only): • For 2 of the 40 TRIO samples tested, the related expenses were allowable and incurred within the awards’ approved periods of performance; however, the expenses were improperly recorded in fiscal year 2025. Specifically, 1 expense related to fiscal year 2024, and 1 expense represented a prepayment for a fiscal year 2026 cost. The resulting misstatement to the Schedule of Expenditures of Federal Awards (SEFA) totaled $5,260, which is less than program materiality. Payroll Testing – R&D Cluster (Control Finding Only): • For 10 of the 40 R&D samples tested, timesheets were not submitted timely, resulting in variances between the payroll register and the recalculated gross wages for the applicable pay periods. No unallowable payroll costs were identified; however, controls over timely payroll documentation and reconciliation did not operate effectively. • For 1 of the 40 R&D samples tested, the timesheet was not signed by the supervisor, indicating that payroll review controls were not consistently applied. Questioned Costs: None. Effect: Although the costs tested were allowable and incurred within the approved periods of performance, improper period recognition and untimely or incomplete payroll documentation increase the risk that Federal expenditures are not recorded in the proper fiscal period and that Federal financial reporting is not accurate. Cause: The UEC’s internal controls were not designed or implemented to consistently ensure that expenditures are recorded in the proper fiscal period and that payroll documentation is submitted, reviewed, and approved timely. Repeat Finding: No. Recommendation: We recommend the UEC strengthen its controls over expenditure recognition to ensure costs are recorded in the appropriate fiscal period and enhance payroll review procedures to ensure timesheets are submitted and reviewed timely to support accurate payroll reporting. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding.

U.S. Department of Agriculture (“USDA”) Passed through Colorado Department of Education National School Lunch Program (Child Nutrition Cluster) / ALN 10.555 Compliance Requirement: Reporting Significant Deficiency in Internal Control over Compliance and Other Non- Compliance Criteria: Federal regulations require that recipients of federal awards maintain adequate records to support amounts claimed for reimbursement. Under 2 CFR 200.403 and 2 CFR 200.302, costs must be adequately documented and supported, and financial management systems must provide accurate, current, and complete disclosure of the financial results of each federally funded program. Additionally, USDA program guidance requires entities to retain documentation supporting daily meal counts and reimbursement claims. Condition: During testing of National School Lunch Program reimbursements, the District was unable to provide adequate supporting documentation for a sample of meal reimbursement claims relating to sack lunches/field meals during the District’s football season. As a result, we were unable to verify that the reimbursement amounts claimed were fully supported and allowable under program requirements. Questioned Costs: Estimated questioned costs for which there is projected to be no support for totals $53,772, which is an extrapolation of the $6,140 that did not have support in the $48,798 we tested for a sample month, multiplied by the total National School Lunch Program expenditures of $427,357 in 2025. Context: A non-statistical sample of 1 month of reimbursements from the fiscal year were selected for testing. Effect: Because sufficient documentation was not available, the allowability and accuracy of certain National School Lunch Program reimbursements could not be fully substantiated. This resulted in questioned costs related to unsupported reimbursements. Cause: The District did not have a formalized process to ensure that all required supporting documentation for meal counts and reimbursement calculations was retained and centrally maintained. In addition, staff turnover and reliance on manual processes contributed to missing or incomplete records. Identification as a repeat finding: Not applicable. Recommendation: We recommend that the Entity strengthen internal controls over the National School Lunch Program by implementing formal procedures to ensure that daily meal counts, edit checks, and reimbursement calculations are properly documented, reviewed, and retained in accordance with federal requirements. Management should also ensure that reimbursement claims are reconciled to supporting records prior to submission. Views of Responsible Officials and Planned Corrective Action: The District agrees with the finding. See separate corrective action plan at page for planned corrective action.

Finding Number: 2025-008 State/Educational Agency(s): Arkansas Department of Education Pass-Through Entity: Not Applicable AL Number(s) and Program Title(s): 21.027 – COVID 19: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Federal Awarding Agency: U.S. Department of the Treasury Federal Award Number(s): SLFRP3627 Federal Award Year(s): 2021 Compliance Requirement(s) Affected: Allowable Costs / Cost Principles Type of Finding: Noncompliance and Significant Deficiency Repeat Finding: Not applicable Criteria: In accordance with 2 CFR § 200.403(g), costs must be adequately documented to be allowable under federal awards. Condition and Context: ALA staff selected five payments to literacy coaching contractors who provide services under the Literacy Empowerment Accountability Readiness Networking and School Safety (LEARNS) Act to determine if sufficient, appropriate documentation was maintained to support that reimbursements were made for allowable literacy coaching expenses. ALA review revealed the following: • Of the 32 schools that received literacy coaching services from a contractor, 3 were randomly selected for testing. The Agency did not have adequate supporting documentation, including a description of daily activities performed by the contracted coach (e.g., a daily log), for two of the three schools. Questioned costs for this contractor totaled $109,557. • Of the 22 schools that received literacy coaching services from a different contractor, 2 were randomly selected for testing. The Agency did not have adequate supporting documentation, including a description of daily activities performed by the coach (e.g., a daily log), for either of the schools. Questioned costs for this contractor totaled $36,000. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: $145,557 – SLFRP3627 Cause: Discussion with Arkansas Department of Education (ADE) management indicates they were unaware of uniform guidance documentation requirements for costs charged to federal programs. In addition, the Agency did not have controls in place to ensure a review of documentation supporting invoices was properly performed prior to issuing payments. Effect: Payments to literacy coaching contractors may have been issued without the contractor performing the contractual obligations. Recommendation: ALA staff recommend the Agency strengthen controls by providing training to Agency personnel approving disbursements to literacy coaching contractors, as well as to literacy coaching contractors, to ensure all costs are adequately documented. Views of Responsible Officials and Planned Corrective Action: During the audit, initial evidence was submitted, including monthly and daily logs from vendor coaches to verify coaching activities. Additional documentation, including daily logs obtained from vendors, is available for review. Adjustments and recommendations that have resulted from this audit will be incorporated into future processes and requirements for vendor coaches, to further strengthen our oversight and ensure ongoing adherence to required standards. There are procedures put into place to monitor vendor adherence to scheduled coaching days, with vendors consistently held to a high standard and expectation to fully complete contracted days by requiring vendors to do the following: • Submit monthly evidence of coaching activities that align with contracted days. The Division Received monthly summaries from vendors detailing coaching support, activities, and specific dates when coaching was provided. • Conduct scheduled site visits with state content leaders • Complete monthly walkthroughs with school leaders, with consistency of walkthrough data being outcomes-based and providing tangible evidence that coaching actions directly supported the improvement of instructional programs. Data is collected through Jot Form and displayed on an Air Table Dashboard. This has been maintained since 2023. • Hold ongoing meetings with district staff to review outcomes and address improvement areas, ensuring fulfillment of literacy coaching contracts under Agency requirements Transparency and compliance remain a priority. Required documentation will continue to be accessible to support any future reviews. Anticipated Completion Date: Continuous. Contact Person: Greg Rogers Chief Fiscal Officer DESE 4 Capitol Mall, Room 204-A Little Rock, AR 72201 (501) 682-4475 Greg.Rogers@ade.arkansas.gov

Finding Number: 2025-010 State/Educational Agency(s): Arkansas Department of Commerce – Arkansas Economic Development Commission Pass-Through Entity: Not applicable AL Number(s) and Program Title(s): 21.029 – Coronavirus Capital Project Funds Federal Awarding Agency: U.S. Department of the Treasury Federal Award Number(s): CPFFN0186 Federal Award Year(s): 2022 Compliance Requirement(s) Affected: Allowable Cost/Cost Principles Type of Finding: Material Noncompliance Repeat Finding: Not applicable Criteria: In accordance with 2 CFR § 200.403(g), allowable costs must be adequately documented. Arkansas State Broadband Office (ASBO) Administrative Procedures require reimbursement requests to be specific to the project and to be for incurred costs documented by attached source documentation, such as receipts, vouchers, bills, invoices, etc. All subaward expenditures must be allowable, necessary, and reasonable for the proper and efficient administration of the grant; be allocable to the grant; be authorized or not prohibited under state or local laws; and conform to the limits of exclusions in federal laws and regulations. Condition and Context: ALA selected five broadband infrastructure projects, totaling $39,789,080, for testing, from a total of 20 broadband infrastructure projects totaling $127,227,854. During testing, ALA reviewed 247 invoices totaling $20,486,786 and identified issues with 212 invoices totaling $6,666,409. The invoices with issues did not have appropriate documentation to identify the items purchased, to support proof of payment by the subrecipient for the items, and/or to determine the expense was related to the specific project. Also, ALA discovered duplicate invoices and invoices associated with other projects. Many invoices had a combination of these various issues. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: $6,666,409 Cause: ASBO management did not properly review invoices submitted by subrecipients for appropriate supporting documentation. Effect: Failure to obtain proper supporting documentation for invoices may result in the reimbursement of unallowable expenses. Recommendation: ALA staff recommend the Agency follow established procedures for review of reimbursement requests. Invoices should have appropriate source documentation enabling the reviewer to determine the cost meets the criteria for allowability. Views of Responsible Officials and Planned Corrective Action: ASBO respectfully notes that Treasury’s SLFRF and CPF Supplementary Broadband Guidance provides that ISPs receiving fixed amount subawards for broadband infrastructure projects are not required to comply with the cost principles of 2 CFR Part 200, Subpart E (see U.S. Department of the Treasury, SLFRF and CPF Supplementary Broadband Guidance, available at: https://home.treasury.gov/system/files/136/SLFRF-and-CPF-Supplementary-Broadband-Guidance.pdf) Further, the guidance states, “...[m]ore specifically, subawards that provide for a maximum payment amount that is calculated based on a reasonable estimate of actual cost (see 2 CFR 200.201(b)(1)) will be considered fixed amount subawards even if the subaward agreement also provides that payments to the ISP subrecipient will be limited to actual costs after review of evidence of costs.” Arkansas’ CPF subawards meet these criteria. In short, relative to the applicability of cost principles under the Uniform Guidance, U.S. Treasury treats Arkansas’ CPF subawards as fixed amount subawards, exempting cost principles. Accordingly, ALA’s citation to §200.403(g) under Subpart E is not directly applicable to Arkansas’ CPF Program. Nevertheless, while ASBO maintains that the cost principles standard noted above does not apply to the awards in question, the office conducted a detailed review of the invoices identified. That review determined the following: • A substantial portion of the invoices were specific to approved CPF projects and included subrecipient certification statements affirming project use. • Certain invoices flagged as insufficiently detailed included annotations or supporting documentation sufficient to trace costs to the relevant project. • Invoices identified as potential duplicates were, in several cases, attributable to mixed inventory usage (allowed under GAAP) or subsequent credit/refund adjustments. • A limited subset of invoices (approximately $47,047.79) may require further reconciliation due to a known calculation variance. This funding may be returned, if deemed necessary. ASBO does not concur that the invoices totaling $6,666,409 represent unallowable expenditures. Rather, the observation reflects differences in documentation presentation, invoice formatting, and inventory accounting practices. The office maintains that the costs were associated with eligible broadband infrastructure activities under CPF. Further, in accordance with 2 CFR § 200.201(b)(1), the CPF broadband projects reviewed were monitored through routine oversight and reporting. To strengthen documentation consistency and audit traceability, ASBO is implementing a standardized reimbursement checklist requiring clearer identification of project attribution and supporting documentation prior to approval. Anticipated Completion Date: June 30, 2026 Contact Person: Glen Howie State Broadband Director Arkansas State Broadband Office 1 Commerce Way Little Rock, AR 72202 (501) 683-6000 broadband@arkansas.gov

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

FINDING 2025-002 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, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 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, Other Matters Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with the Allowable Costs/Cost Principles compliance requirement. Form 9 Expenditures The School Corporation submits a Form 9 to the Indiana Department of Education (IDOE) every six months. The expenditures reported on the Form 9 are used by the IDOE to calculate the School Corporation's indirect cost rate. The rate represents the percentage of indirect costs (overhead, administration) that can be recovered from federal grant funds, derived from the cost incurred in a previous fiscal year. As such, the amounts submitted to the IDOE in fiscal year 2022-2023 are to be used in the indirect costs computation for 2024-2025 and are tested to ensure they were recorded properly in the School Corporation's records as to the account or object codes. A test of 53 disbursement line items were sampled from the IDOE Form 9 submitted for 2022-2023 totaling $935,432 and 3 line items were not properly supported by the School Corporation's records. The School Corporation's ledger was filtered for the fund, account, and object code reported on the Form 9, and we determined 3 line item expense variances as follows: INDIANA STATE BOARD OF ACCOUNTS 17 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)  There were 2 expense line items under reported on the Form 9 by a total of $1,604.  There was 1 expense line item over reported on the Form 9 by $8. The lack of internal controls and noncompliance over the Form 9 expenditures was isolated to 2024-2025. School Corporation Expenditures - Indirect Cost Rate In a test of 50 School Corporation expenditures, we were unable to determine if 9 expenditures totaling $29,948.32 were posted to the proper account and object codes within the accounting records to ensure the underlying data used by the IDOE to calculate the indirect cost rate was accurate. Records to support these 9 expenditures could not be located for audit. The lack of internal controls and noncompliance over the School Corporation expenditures were a systemic issue 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: . . . (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 . . ." Cause The School Corporation's management had not developed a system of internal controls that would have ensured compliance. The School Corporation did not ensure that supporting documentation was maintained and made available for audit, as related to the Allowable Costs/Cost Principles compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure compliance with the Allowable Costs/Cost Principles compliance requirement. As a result, amounts reported to the oversight agency were not accurately reported. INDIANA STATE BOARD OF ACCOUNTS 18 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure the data submitted on the Form 9's and underlying expenditures are properly documented and retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Level of Effort/Maintenance of Effort Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): 24611-036-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Matching, Level of Effort, Earmarking compliance requirement. Level of Effort - Maintenance of Effort Maintenance of Effort (MOE) is a district-level test that determines whether the School Corporation is providing a consistent level of financial support to public schools from year to year. This rule ensures that the School Corporation does not use special education funds to shore up reductions in state and local support for public education. The Indiana Department of Education (IDOE) performs the maintenance of effort calculation utilizing Form 9 information provided by the School Corporation from the prior year. As such, the amounts submitted to the IDOE in the prior year to be used in the computation are tested to ensure they were recorded properly in the School Corporation's records as to the account or object code. A test of 53 disbursement line items were sampled from the IDOE Form 9 submitted for fiscal year 2022-2023 totaling $935,432, and 3 line items were not properly supported by the School Corporation's records. The School Corporation's ledger was filtered for the fund, account, and object code reported on the Form 9, and we determined the 3 line item expense variances as follows:  There were 2 expense line items under reported on the Form 9 by a total of $1,604.  There was 1 expense line item over reported on the Form 9 by $8. INDIANA STATE BOARD OF ACCOUNTS 19 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The ineffective internal controls and noncompliance were isolated to the 2022-2023 Form 9 information used to calculate the MOE for the 2023-2024 grant award. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." Cause The School Corporation's management had not developed a system of internal controls that would have ensured compliance. The School Corporation did not ensure that supporting documentation was maintained and made available for audit, as related to the Matching, Level of Effort, Earmarking compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. As a result, amounts reported to the oversight agency were not accurately reported. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure the data submitted on the Form 9's and underlying expenditures are properly documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-005 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-005. INDIANA STATE BOARD OF ACCOUNTS 22 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The COVID-19 - Education Stabilization Fund (ESF) grant was established by the Coronavirus Aid, Relief and Economic Security (CARES) Act to respond to the Coronavirus outbreak and assist schools in creating healthy learning environments, return students to classrooms, and address local needs. The ESF grant was further funded by the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and the American Rescue Plan (ARP) Act. The School Corporation did not have effective internal controls in place over the Allowable Costs/Cost Principles compliance requirement. A sample of 13 payroll claims paid from the School Corporation's ESF grant were selected for testing. Of the sample, 6 employee pay rates could not be verified to a School Board-approved, allowable hourly pay rate for a high dosage tutor position. High dosage tutors were paid anywhere from $20 to $77 an hour. The School Corporation was unable to provide documentation that the School Board approved a pay rate for the high dosage tutor positions during the audit period. The total amount paid to high dosage tutors during the audit period was $472,354, which were considered questioned costs. In addition, the School Corporation paid a consulting firm to provide general support to the finance department. The expenditures were deemed unallowable as there was no documentation available that the consultants were assisting the School Corporation in preventing, preparing for, and responding to COVID-19. The total amount expended to the consultant during the audit period was $514,156, which were considered questioned costs. The lack of internal controls and noncompliance were isolated to the costs noted above for the ESSER II and ESSER III grants. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." INDIANA STATE BOARD OF ACCOUNTS 23 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for State and local governments and Indian Tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b). (g) Be adequately documented. See §§ 200.300 through 200.309. (h) Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. At its discretion, the Federal agency is authorized to waive prior written approvals to carry forward unobligated balances to subsequent budget periods. See § 200.308(g)(3). 2 CFR 200.430(i)(1) states in part: "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 24 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.404 states: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134 Stat. 1924 (2020) states in part: "For an additional amount for "Education Stabilization Fund".to remain available through September 30, 2022, to prevent, prepare for, and respond to coronavirus, domestically, or internationally . . ." Cause Payroll records were incomplete as the School Corporation was unable to provide documentation that all rates of pay were approved by the School Board. The School Corporation did not include the consultants above in the budget submitted as part of the grant application, and so the School Corporation did not get the required prior approval for the purchases. Effect Without proper documentation, the allowability of the ESF grant expenditures cannot be substantiated, creating a risk that unallowable costs may be charged to the federal grant. Additionally, we could not determine how the expenditures met the purpose of the program. Questioned Costs We identified $986,510 in known questioned costs as described above in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 25 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommend that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure rates of pay are approved by the School Board and adequately documented and that costs are allowable. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Finding 2025-002 – Indirect Cost Reimbursement Noncompliance with Federal Requirement Program: ALN # 84.282M Charter Schools Program Criteria or Specific Requirements In accordance with: •2 CFR §200.403, costs charged to federal awards must be allowable and based on actual activity; •2 CFR §200.414, indirect costs must be calculated by applying the approved rate to actual direct costs incurred; and •2 CFR §200.305(b), under the reimbursement method, federal funds must be drawn only for costs incurred. Condition The Organization requested and received $130,000 of indirect cost reimbursement during the fiscal year ended June 30, 2025. However, only $44,575 was supported by actual allowable direct costs incurred during the eligible period April 1, 2025 to June 30, 2025. The excess amount of $85,425 relates to expenditures applicable to a subsequent period. During the audit, management recorded this amount as a grant advance (liability) and did not recognize it as revenue or expense in the current year. Cause Use of budgeted amounts and lack of review controls. Effect Reimbursement requests exceeded allowable costs incurred during the period, resulting in noncompliance. Questioned Costs None, the excess was adjusted to a liability account. Context This exception was noted in 1 of 1 sample selected of indirect cost claims during the period. Recommendation We recommend that the Organization design and implement controls to ensure reimbursements are reviewed and based on actual costs. Views of Responsible Officials and Corrective Action Plan iLearn Schools, Inc. notes that the excess reimbursement of $85,425 was identified, properly recorded as a grant advance liability, and not recognized as revenue or expense in the current year. Going forward, all reimbursement requests will be based on actual allowable direct costs incurred. Management will establish written procedures for indirect cost recovery, implement a formal review and reconciliation process prior to submission, and provide staff training on Uniform Guidance requirements. These corrective actions will be in place for the fiscal year ending June 30, 2026.

Allowable Costs/Period of Performance Federal Program and Specific Federal Award Identification CFDA Title and Number 84.031 Higher Education Institution Aid Federal Award Year June 30, 2025 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria In accordance with Uniform Guidance §§ 200.403 and 200.309, costs charged to federal awards must be allowable, properly supported, and incurred during the approved period of performance. Adequate documentation must be maintained to support all expenditures. Conditions and Contexts During my testing, I noted the following: • Out of twenty-five (25) transactions tested, twelve (12) transactions included costs incurred outside the period of performance (before and/or after the fiscal year under audit); and • One (1) of twenty-five (25) transactions selected for testing, supporting documentation was not provided for audit review. Cause The University lacked effective controls to ensure that costs were incurred within the appropriate period of performance and that supporting documentation was retained and made available for audit. Questioned Costs For the purposes of this condition, I have not questioned any costs. Effect Costs may have been improperly charged to the federal program and may be unallowable. Additionally, the lack of supporting documentation limits the ability to determine the allowability and accuracy of expenditures. Repeat Finding No. Recommendation The University should strengthen controls to ensure that only costs incurred within the approved period of performance are charged to federal awards. Additionally, procedures should be implemented to ensure that all expenditures are supported by adequate documentation and are readily available for audit. Management’s Response The University acknowledges the finding related to expenditures recorded outside the approved period of performance and the missing supporting documentation for one transaction. We recognize that all federally funded costs must be both allowable and incurred within the designated performance period, and that proper documentation must be retained for audit purposes. Corrective Actions 1. Improved Period-of-Performance Verification: The University has strengthened its review procedures to ensure all expenses are confirmed as occurring within the applicable grant period before being charged the award. Both grants management and accounting staff now verify dates prior to posting. 2. Enhanced Documentation Requirements: A shared electronic repository is being used to ensure all supporting documents are uploaded and retained before any expenditure is approved. Transactions submitted without documentation are now automatically rejected. 3. Staff Training: Relevant staff have received targeted training on allowable-cost rules, documentation standards, and period-of-performance requirements under Uniform Guidance. 4. Ongoing Monitoring: Periodic internal reviews will be conducted to verify continued compliance and ensure that all costs charged to federal awards are timely, appropriate, and fully supported, and charged within the required time periods. The University believes these actions address the issues noted and will strengthen internal controls over federal expenditures moving forward.

2025-006 Allowability of Rental Assistance Payments - Unallowable Program Expenditure U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Continuum of Care Program—Assistance Listing No. 14.267 Hennepin County Contract HS00001366; Grant Period – Year ended June 30, 2025 Significant Deficiency in Internal Control over Compliance, Noncompliance Other Matter Criteria: 2 CFR 200.403(a) requires that costs charged to Federal awards be necessary, reasonable, and allocable to the performance of the Federal award. In addition, expenditures under the Continuum of Care Program must meet program allowability requirements. Cleaning costs are not explicitly identified as allowable rental assistance expenses under 24 CFR 578.51. Condition: One instance of unallowable program costs was noted during our testing of direct program expenses. Cause: Turnover within the accounting department during 2025 resulted in policies and procedures not being consistently followed. Effect: The questioned cost and related extrapolated costs may be disallowed. Context: A statistically valid sample of 40 rental assistance payment transactions totaling $52,138 was selected for testing from a population of 393 transactions totaling $561,523. The audit identified one transaction totaling $2,325 for cleaning costs paid to a landlord, which does not appear to be an allowable expenditure under the Continuum of Care Program. In addition, the cleaning costs exceeded one month’s rent. Total extrapolated questioned costs were $25,040. Known Questioned Costs: Total known questioned costs of $2,325. Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Agate Housing and Services, Inc. strengthen internal controls to ensure all expenditures charged to the Continuum of Care Program are allowable and comply with applicable federal and program requirements. Views of Responsible Officials and Planned Corrective Actions: Agate Housing and Services, Inc. agrees with the finding and is in the process of strengthening its controls over its review of program expenditures prior to submitting requests for reimbursement.

2025-006 – Allowable Costs/Cost Principles Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Rural Health Outreach and Rural Network Development Program Assistance listing numbers: 93.912 Award year: 7/1/2024 – 6/30/2025 Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented, be necessary and reasonable for the performance of the federal award, and be allocable thereto under the principles in 2 CFR Part 200, Subpart E. Additionally, according to 2 CFR Part 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with established accounting policies and practices of the entity. Condition: For the months of May and June 2025, SFRC allocated 100% of the payroll costs of two employees to two separate grants of this program. This resulted in the program being charged twice for the same payroll costs in these months. This error also increased the direct cost base of the program, which also caused indirect costs to be over-charged to the program. Context: Two of ten employees tested in this program. Questioned Costs: Payroll costs of $12,409 and indirect costs of $3,944. Cause: SFRC allocates payroll costs to its federal programs using journal entries. These journal entries are not being independently reviewed and approved prior to posting. Effect: The program was over-charged for payroll costs and indirect costs in fiscal year 2025. Auditor’s Recommendation: SFRC should implement a review and approval process for the journal entries posted to allocate payroll costs to its federal programs. Management’s Response: This was a one-time error when the checks and balances process did not take place because of the timing of notification of an extended grant. The May and June 2025 period was an overlap due to this extension, and normal processes were not followed. Management developed processes accepted by government funders, conducted training to a small group, and began implementation. Accounting staffing was not sufficient to fully train and implement. Contractors have been tasked with training and implementation during fiscal year 2026. Revised accounting staff structure will provide better on-going implementation and monitoring compliance.

8. Criteria or specific requirement (including statutory, regulatory, or other citation) Federal awards claimed on a reimbursement basis must be limited to allowable costs incurred during the period of performance. Recipients must maintain effective internal controls to ensure charges are accurate, supported, and compliant with federal requirements (2 CFR §200.303 – Internal controls; §200.302 – Financial management; §200.403 – Factors affecting allowability of costs; §200.405 – Allocable costs; §200.344 – Closeout). Under cash management principles, reimbursement must not exceed expenditures incurred. 9. Condition The District submitted an expenditure report for $19,165,569 for the quarter ending March 31, 2025, which included amounts that were properly obligated but not yet expended as of the report date. The District reported $14,638,097 in ESSER funds on the Schedule of Expenditures of Federal Awards (SEFA), resulting in an unsupported difference of $4,527,472. 10. Questioned Costs Questioned costs totaled $4,527,472. 11. Context The District claimed the remaining award amount in the March submission as the liquidation extension for the grant was no longer available. 12. Effect The submission of expenditure reports that include unexpended obligations may result in inaccurate financial reporting and misrepresentation of the District’s use of federal funds. This could impact cash management decisions and compliance monitoring by the pass-through entity. 13. Cause As the ESSER grant period approached expiration, management attempted to maximize remaining available funding by submitting reimbursement requests in advance of incurring related expenditures. The District did not have adequate controls in place to ensure that expenditures were incurred prior to requesting federal reimbursement, as required by program regulations. 14. Recommendation We recommend the District submit claims for reimbursement for expenditures that the District has incurred. 15. Management's response See Corrective Action Plan.

Federal agency: U.S. Department of Health and Human Services Federal program title: Block Grants for Community Mental Health Services FALN Number: 93.958 Pass-Through Agency: Illinois Department of Human Services Pass-Through Number(s): 45CDB04278 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Immaterial Noncompliance 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: Costs outside of the period of performance were charged to the grant. Questioned costs: $5,521 Context: Four (4) of the eight (8) transactions selected for testing. Cause: Oversight. Effect: The Organization may allocate unallowable costs to the federal grant. Repeat Finding: The finding is a repeat of a finding in the prior year. Prior year finding number was 2024-002. Recommendation: Management should review and revise its process for allocating costs to federal grants to include additional layers of review and so that costs for which some or all are from outside of the period of performance, may be appropriately excluded from the federal grant. Views of responsible officials: There is no disagreement with the audit finding

Finding 2025-001: The Corporation for National and Community Service – Foster Grandparent/Senior Companion Cluster – ALN 94.011 and 94.016 – Significant Deficiency – Controls over Stipend Allocations Criteria: AmeriCorps Foster Grandparent Program guidelines limit stipends charged to the grant to $4.00 per hour, with any excess required to be funded by non-Federal sources. Internal controls must ensure that costs charged to Federal awards are allowable and properly allocated (2 CFR 200.303, 200.403, 200.405). Condition: We noted that volunteer stipends of $5.00 per hour were initially allocated to the AmeriCorps program. The portion in excess of the allowable allocation was removed and funded with non-Federal sources. Cause: Controls were not sufficient to ensure stipend rates were reviewed for compliance before being charged to the grant. Effect: Without proper review, unallowable costs may be charged to the AmeriCorps program and go undetected. Context: For the 18 out of 26 stipends tested, the allocation rate was not correct. Recommendation: Strengthen controls to ensure stipend rates are reviewed for compliance with AmeriCorps limits before allocation to the Federal award. Views of Responsible Officials: Management acknowledges the finding and agrees with the recommendation. Once notified of the stipend rate issue, management immediately corrected the allocation and ensured the unallowable portion was funded with non-Federal resources. To prevent future occurrences, SoFIA Management has reinforced controls by (1) requiring a compliance review of stipend rates before charging costs to the AmeriCorps award, (2) updating written procedures to reflect stipend limits, and (3) providing further training to program and finance staff. These measures will ensure that only allowable stipend costs are charged to the Federal program going forward. We are committed to maintaining strong fiscal controls and ensuring full compliance with all federal grant requirements.

Federal Agency: United State Department of Education Federal Program Name: Title II, Part A – Supporting Effective Instruction State Grants Special Education Cluster (IDEA) Title I A – Grants to Local Educational Agencies Assistance Listing Number: 84.367 84.027, 84.173 84.010 Federal Award Identification Number and Year: S367A240047-2024 H027A240064-2024, H173A240070-2024 S010A240049-2024 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number(s): 2025 - 403619 - DPI - YIPPE - 342, 2025-403619-DPI-FLOW-341, 2025-403619-DPI-FLOW-341, 2025 - 403619 - DPI - FNC - 342, 2025-403619-DPI-ELIMG-348, 2025-403619-DPI-ELTAI-348, 2025-403619-DPI-PRESCH-347, 2025-403619-DPI-TI-A-141 Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: In accordance with 2 CFR 200.303(a), the District must establish and maintain effective internal control over the federal award that provides reasonable assurance that the District entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. In accordance with 2 CFR 200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under federal awards. Condition: During testing, instances were identified in which the semi-annual certifications utilized by the District to support time charged to federal awards completed and approved prior to the final claims. Title II, Part A – Supporting Effective Instruction State Grants (ALN 84.367) Three (3) of the 40 individuals selected for testing time was supported by a semi-annual certification that was not approved timely. The semi-annual certification was approved after the submission of the final reimbursement claim. This was not a statistically valid sample. Special Education Cluster (IDEA) (ALN 84.027, 84.173) Two (2) of the 40 individuals selected for testing time was supported by a semi-annual certification that was not approved timely. The semi-annual certification was approved after the submission of the final reimbursement claim. This was not a statistically valid sample. Title I-A – Grants to Local Educational Agencies (ALN 84.010) Three (3) of the 60 individuals selected for testing time was supported by a semi-annual certification that was not approved timely. The semi-annual certification was approved after the submission of the final reimbursement claim. This was not a statistically valid sample. Questioned costs: None Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of the final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. During the fiscal year under audit the collection and review of these certifications were delayed, resulting in some being collected after the final claim dates. Cause: From 2023 through 2025, the District experienced substantial turnover within the finance department, including management positions. Individuals in these roles lacked the necessary skills, knowledge, and experience to oversee day-to-day operations, resulting in delays in execution of controls and collection of required supporting time and effort reporting. Effect: Lack of timely collection and review of approved semi-annual could result in unallowable costs may be submitted for reimbursement. Repeat Finding: This is a repeat of prior year finding 2024-009 Recommendation: We recommend the District design and implement controls to ensure semi-annual time and effort certification are obtained and reviewed timely. Views of responsible officials: There is no disagreement with the audit finding.

Finding No. 2025-071 Federal Awarding Agency: USDHHS Impact: Significant Deficiency, Noncompliance AL Number and Title: 93.658 Foster Care - Title IV-E Federal Award Number: 2502AKFOST Applicable Compliance Requirement: Allowable Costs/Cost Principles, Special Tests and Provisions Condition: Deficiencies were identified in OCS's FY 25 foster care base rate setting methodology. Context: Foster care program base rates must be reviewed annually. Since 2013, OCS had been using a rate setting methodology recommended in a study conducted by Hornby Zeller Associates, Inc. The study was conducted for the State in response to the Mulgrew v. State of Alaska lawsuit which concluded that OCS’s foster care reimbursement system did not reflect the current financial needs of family foster homes in Alaska. The study recommended the following rate setting methodology: 1. The U.S. Department of Agriculture (USDA) report titled "Expenditures on Children by Families" should be used as a foundation for rate calculations. This data is supported by the Bureau of Labor Statistics Consumer Expenditure Survey’s actual historical costs and projections associated with caring for a child and presents data by different regions such as urban northeast, urban south, urban midwest, urban west, rural areas, and a national average. The Hornby Zeller study recommended using the national average cost data as the foundation for foster care rate setting. 2. Rates should be grouped as follows: 0 to 5 years, 6 to 11 years, and 12 years or older. 3. The USDA cost data should be adjusted for inflation using the U.S. Consumer Price Index (CPI) inflation calculator. 4. Rates should then be adjusted using the cost-of-living multiplier for Anchorage. 5. Given the large variances in the cost of living across Alaska, rates should also be adjusted using the geographic multipliers defined in the 2008 Alaska Geographical Differential Study utilized by Alaska for reimbursement of Medicaid services. In summary, the rate study recommended OCS calculate foster care base rates annually by starting with the national average table from the most recently available USDA report, adjust for inflation, apply the cost-of-living adjustment for Anchorage, and apply the geographic multipliers as appropriate for non-Anchorage communities. The audit identified that OCS’s foster care rate setting methodology for FY 25 deviated from the methodology recommended by the Hornby Zeller study and was unreasonable as follows: National multiplier used on regional cost data When calculating the FY 25 rates, OCS’s staff used the most recent USDA Expenditures on Children and Families report, which was for 2015. The report included several different cost tables such as urban northeast, urban south, urban midwest, urban west, rural areas, and the national average. OCS’s management chose to start the rate calculation by using the “urban west” cost data instead of the national average data. Auditors noted the urban west cost data was higher than the national average cost data. After adjusting for inflation, OCS management applied the Anchorage cost-of-living multiplier of 128.4 percent to the urban west data. This was not reasonable because the cost-of-living multiplier for Anchorage reflected Anchorage costs in relation to the national average. Using the multiplier with the urban west data unreasonably inflated the FY 25 rates. 2015 USDA cost data was adjusted for inflation starting from 2018 When calculating the FY 25 rates, OCS staff used the 2015 USDA cost data, which was the most current data available. However, staff then adjusted the 2015 data for inflation using CPI inflation rates beginning in 2018, which was the last time rates were adjusted. Because the USDA cost table was presented in 2015 dollars, the costs should have been adjusted to include inflation from 2016 onwards. Cause: As the FY 25 foster care base rate setting methodology was set by the Department of Law, OCS management could not explain why the national multiplier was used on regional data and why inflation was not calculated beginning in 2016. Supervisory review of the FY 25 rate setting calculations was not sufficient to identify and correct the deficiencies. Criteria: Title 45 CFR 75.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant awards. Per Title 2 CFR 200.403, to be allowable under federal awards, costs must be necessary and reasonable for the performance of the award, and be adequately documented. Per Title 2 CFR 200.404, a cost is reasonable if it does not exceed an amount that a prudent person would incur under the circumstances prevailing when the decision was made to incur the cost. In determining the reasonableness of a given cost, consideration must be given to several criteria including whether the cost is generally recognized as ordinary and necessary for the proper and efficient performance of the federal award and whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the State, the public at large, and the federal government. Effect: The rate setting deficiencies understated FY 25 foster care rates due to not fully adjusting for inflation, and overstated rates due to using a national multiplier on regional cost data. Questioned Costs: Indeterminate Recommendation: DFCS’s OCS director should ensure the foster care rate setting methodology is reasonable. Further, supervisory review procedures should be strengthened to identify and correct deficiencies. Views of Responsible Officials: DFCS disagrees with this finding. DFCS evaluated two foster care base rate proposals using the established Hornsby Zeller Methodology. The first option applied the traditional methodology and the second followed the same structure but incorporated Urban West regional expenditure data, which includes Alaska and eleven other western states as well as Hawaii. This change was implemented because Urban West data more accurately reflects Alaska’s high cost of living environment, whereas reliance on national averages has historically produced rates below Alaska’s true cost of care. Both options were reviewed with departmental legal counsel, who were involved in the original settlement, division leadership and the Commissioner’s Office. DFCS advanced the second option, resulting in an approximate 30% increase to foster care base rate stipends effective July 1,2025. DFCS disagrees with the conclusion that the cost-of-living (inflation) factor should be adjusted to include inflation from 2016 forward. When the 2018 Foster Care Base Rates were established, inflation up to that point was already incorporated into the rate calculation. The current rate-setting process correctly used the 2018 rates as the baseline, which already accounted for prior inflation. Adding inflation from 2016 again would result in doublecounting. DFCS disagrees with the conclusion that the rate-setting process did not follow the Hornsby Zeller methodology. The methodology was followed in full. As part of the rate analysis, DFCS applied the national average cost-of-living factor as outlined; however, the resulting amount did not adequately meet the needs of the children under the care and responsibility of the Department. DFCS is fiduciarily required to ensure that rates are sufficient to meet the actual needs of children in out-of-home care, and the national average input did not satisfy that obligation. To ensure the methodology produced accurate and appropriate results, DFCS utilized the Urban West index, an allowable and geographically relevant data source under the methodology. This adjustment did not change the methodology itself; it refined the underlying input to better reflect Alaska’s actual cost of living and support the intended purpose of the rate-setting process. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. OCS management’s response did not explain why the national multiplier was used on regional data and why inflation was not calculated beginning in 2016. We reaffirm the finding.

Finding No. 2025-030 Prior Audit Finding: 2024-036 Federal Awarding Agency: U.S. Department of Homeland Security (USDHS) Impact: Material Weakness, Material Noncompliance AL Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disaster) (Disaster Grants) 97.036 Disaster Grants – COVID-19 Federal Award Number: 4413DRAKP00000001, 4533DRAKP00000001, 4585DRAKP00000001, 4672DRAKP00000001 Applicable Compliance Requirement: Allowable Costs/Cost Principles Condition: A review of 17 FY 25 Disaster Grants payments found that 15 payments (88 percent) lacked adequate supporting documentation. Context: FEMA provides public assistance funding to states for federally declared disaster mitigation and response. To be allowable under the Disaster Grants program, costs must be directly tied to the performance of eligible work, adequately documented, and necessary and reasonable to accomplish the work properly and efficiently. DMVA issues subawards to eligible applicants, including not-for-profits and local governments, and transfers funds to other State departments for disaster response. The State (DMVA) and Disaster Grants subrecipients may contract for services but must meet state and federal procurement requirements when doing so. Contracts must include the procurement provisions detailed in Title 2 CFR 200.327. Furthermore, contractors’ performance must be monitored to ensure compliance with the contract conditions. According to management within DMVA’s Division of Homeland Security and Emergency Management (DHSEM), due to the high number of State disasters and a lack of staff resources, DMVA hired contractors to help oversee the federal disaster projects by performing administrative duties typically conducted by DHSEM staff, including reviewing and approving subrecipient applications for funding, obtaining the required documents to ensure projects were administered in accordance with FEMA requirements, and processing subrecipient payment requests. There were 327 Disaster Grants payments totaling $325,318,285 during FY 25. The audit tested 17 Disaster Grant payments totaling $188,888,098, of which 15 were inadequately unsupported. Specifically, 11 payments were partially supported by procurement contracts that did not include all federal requirements and four were not fully supported by complete or signed contracts. Other errors included: one payment contained amounts for an unrelated project; five payments were not fully supported by invoices; one payment included a markup on a subcontractor’s work; one included an advance payment that lacked required supporting documentation; one payment included a completion bonus; and several payments were not identified as allowable costs in the approved project worksheets. Cause: Due to competing priorities and inadequate supervisory review procedures, DHSEM staff and contractors did not verify that the contracts issued by subrecipients included federal requirements and that documentation for the reimbursement of subrecipient costs was received. Furthermore, contracts for interagency projects were not obtained by DMVA staff or contractors to verify that the costs were within the contract scope or that the contracts included all federal requirements. The audit noted that Department of Health and Social Services (DHSS) submitted a signed Contract/Procurement Review Waiver declining to submit documentation to DMVA for review with the understanding that DHSS would assume all responsibility for the procurement and contracts. DHSEM contractors accepted the waiver and did no monitoring to ensure contracts complied with appropriate procurement processes and included all federally required clauses. Lack of adequate review of the payment requests and supporting documentation, including supervisory review, resulted in payments without adequate invoices or other source documentation. Lack of adequate project oversight resulted in a subrecipient not providing supporting documentation within the 60-day timeline for advance payments. Criteria: Title 2 CFR 200.403(g) requires costs to be adequately documented. FEMA’s guidance for administering the program is detailed in the Public Assistance Program and Policy Guide (PAPPG), which requires Disaster Grants contracts to include the procurement related provisions of Title 2 CFR 200.327 and Homeland Security Acquisition Regulation Class Deviation 15-01 clauses. PAPPG also requires costs to be adequately documented and directly tied to the performance of eligible work. Further, the PAPPG states that FEMA does not reimburse costs incurred under a cost plus a percent of cost contract. Annually, DHSEM management updates the State Administrative Plan for the federal disaster assistance program, which is a required document in each federally approved FEMA-State Agreement for presidentially declared disasters. The purpose of the plan is to identify the State’s roles, responsibilities, processes and procedures for administering FEMA’s Disaster Grants program. The plan requires DHSEM staff to obtain documentation to support all costs claimed and to perform a thorough review to ensure compliance with programmatic and eligibility requirements. The plan also outlines the requirements for advancing FEMA funds to a subrecipient; specifically, the subrecipient must report on the status of advance funds within 30 days of receipt and has up to 60 days to provide the appropriate summary forms and support cost documentation, i.e, invoices, timesheets, etc. If the summary forms and supporting documentation are not received within the time limits, the Plan requires that the State de-obligate remaining funds, recoup advance funds, and close the subrecipient’s project file. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: Inadequate documentation may result in unallowable costs. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: Indeterminate Recommendation: DMVA’s DHSEM director should strengthen written procedures to ensure Disaster Grants contracts are obtained and reviewed for compliance with federal requirements. Furthermore, supervisory review procedures should be strengthened to ensure DHSEM staff and contractors obtain and review cost documentation to ensure subrecipient payment requests are allowable for the project and adequately supported. Views of Responsible Officials: Management agrees with this finding.

2025-001 Approval of Invoices (Material Weakness) Federal Agency: U.S. Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425U Passed-through Identification: 20220810 Compliance Requirement: Activities Allowed or Unallowable and Allowable Costs / Cost Principles Type of Finding: Internal Control over Compliance – Material Weakness Criteria or Specific Requirement: Per 2 CFR 200.303, non-Federal entities are required to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing such awards in compliance with Federal statutes, regulations, and the terms and conditions of the award. These controls should be designed in accordance with established internal control frameworks and include appropriate supervisory review and approval processes. In addition, 2 CFR 200.403 requires that all costs charged to Federal awards be necessary, reasonable, and adequately documented. Adequate documentation includes evidence that expenditures were reviewed and approved by appropriate personnel to ensure allowability, allocability, and compliance with program requirements prior to payment. Condition: During our testing of expenditures, we identified two invoices totaling $818,074 that did not contain evidence of formal supervisory review and approval. Specifically, the invoices were not initialed, signed, or otherwise documented to demonstrate that a compliance review had been performed prior to payment. Although the School District has established procedures requiring review and approval of invoices, these procedures were not consistently followed. As a result, there was no documented evidence to support that the expenditures were reviewed for allowability, allocability, and compliance with applicable Federal requirements prior to disbursement. Cause: This deficiency appears to be the result of inconsistent adherence to established internal control procedures and a lack of effective monitoring to ensure that required review and approval controls are performed and documented. While a review process exists, it is not operating effectively in practice, and responsibilities for documenting approval may not be clearly enforced or consistently applied. Effect: As a result of the lack of documented supervisory review, the School District is unable to demonstrate that expenditures charged to the grant were evaluated for compliance with Federal requirements prior to payment. This control deficiency increases the risk that unallowable, unsupported, or noncompliant costs could be charged to the Federal program and not be detected in a timely manner. In addition, the absence of documented approval weakens the audit trail and reduces transparency and accountability over Federal expenditures, which may result in increased scrutiny from oversight agencies and the potential for questioned or disallowed costs. Questioned Costs: None. While a control deficiency was identified, our testing did not identify any instances of noncompliance or unallowable costs charged to the program. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District strengthen its internal controls over Federal expenditures by ensuring that all invoices charged to Federal programs are subject to a documented supervisory review and approval prior to payment. This review should include consideration of allowability, allocability, and compliance with program requirements. Evidence of such review should be consistently documented (e.g., signature, initials, or electronic approval) and retained in accordance with Federal record retention requirements. In addition, management should implement monitoring procedures to verify that established controls are operating effectively and consistently across all applicable transactions. Views of Responsible Officials: Management’s views and corrective action plan are included at the end of this report.

Department of Health and Human Services and Department of Treasury 2025-001 Coronavirus State and Local Fiscal Recovery Funds (Allowable Costs, Period of Performance, and Procurement) and Congressional Directives (Procurement) Criteria: Under 2 CFR 200.302 and 200.403, non-federal entities must maintain records sufficient to demonstrate that costs charged to Federal Awards are allowable, properly allocated and adequately supported. Under 2 CFR 200.309 costs must provide documentation that costs were incurred within the approved period of performance. Additional 2 CFR 200.317-200.327 requires entities to maintain documentation sufficient to support the procurement process for the use of Federal Awards. Condition: The Center did not maintain adequate documentation to support compliance with Federal requirements related to allowable costs, period of performance, and procurement standards. Allowable Costs – The Center provided grant allocation worksheets that show individual employees hours charged to the federal awards; however, the grant allocation worksheets did not include any employee or supervisor signatures to attest the hour allocations were accurate. Additionally, certain invoices had a portion of the total costs allocated to the federal award, but the Center could not substantiate the basis for the allocation. Period of Performance – The Center had charged costs to the federal award for costs incurred outside the period of performance as defined by the grant agreement but could not provide documentation that supported the grantor allowed charges to be made for costs incurred outside that period. Procurement – The Center entered a contract with a Company under the Simple Acquisition threshold for procurement but was unable to provide documentation that quotes were obtained from multiple qualified vendors. Cause: The Center did not have effective controls in place to ensure proper documentation was obtained and retained to support compliance with the federal award. Effect: Without adequate supporting documentation the Organization is unable to demonstrate its compliance with all requirements of the federal award. Questioned Costs: $175,389 out of $2,453,443 of total expenditures tested. Auditor’s Recommendation: We recommend The Center review and revise its documentation policies and procedures to ensure that compliance is met with regards to federal awards. Management Response: Management agrees with the finding and has collaborated with grant personnel to implement standardized personnel activity reporting and cost allocation documentation for all federal grants. The Center will strengthen controls to ensure that only allowable costs incurred within the approved grant period are charged to federal awards. In addition, procurement procedures have been revised to ensure compliance with 2 CFR $$ 200.317-200.327. Corrective actions have been implemented or are in progress and apply to all federal awards moving forward beginning in FY2026.

Statement of Condition: During the fiscal year ended June 30, 2025, the Organization charged indirect costs to the federal program at a rate of 8%, consistent with the grant agreement. However, the total amount of indirect costs charged exceeded the total allowable Management and General costs incurred in the Organization’s indirect cost pool. As a result, the Organization recorded excess indirect cost recovery of approximately $50,000, resulting in a surplus within a cost-reimbursement federal award. Criteria: Under Uniform Guidance (2 CFR §200.403 and §200.414), costs charged to a federal award must be: Allowable, Allocable, consistently applied Indirect costs must be supported by actual allowable costs incurred and may not exceed the underlying cost pool to which the rate is applied. Additionally, 2 CFR §200.303 requires non-federal entities to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. Effect and Questioned Costs: At the time indirect costs were charged, allowable costs incurred were exceeded, resulting in a compliance issue under Allowable Costs / Cost Principles. Although the Organization subsequently obtained approval from the pass-through entity to retain and use the funds for specified purposes, the excess was not allowable as incurred, and the matter remains reportable as a compliance finding. Questioned costs of approximately $50,000 were identified; however, no repayment is required, provided the funds are used in accordance with the approval and related oversight requirements. Cause: The condition resulted from a combination of factors, including reclassification of certain vendors from subrecipients to contractors, which expanded the base of expenditures eligible for indirect cost allocation and increased indirect cost recovery without a corresponding increase in indirect expenses; and insufficient monitoring of indirect cost recovery following approval of an increased grant budget during a period of leadership transition, resulting in delayed identification of the imbalance between indirect recovery and actual indirect expenditures. Recommendations: We recommend that the Organization continue to adhere to the approved resolution with the pass-through entity regarding the use of excess indirect cost recovery, implement procedures to monitor indirect cost recovery relative to the underlying cost pool throughout the year, periodically reconcile indirect costs charged to actual management and general expenses incurred, enhance budgeting and forecasting processes to incorporate expected indirect cost recovery and ensure consistent application of the approved indirect cost rate in accordance with the grant agreement.

Statement of Condition: During testing of disbursements, we identified three instances in which expenditures were recognized in full in FY 2025 despite portions of the costs relating to services to be received in FY 2026. These items included: one multi-year subscription membership, and two additional expenditures with smaller prepaid components. In each instance, the Organization did not record a prepaid expense or allocate the costs between fiscal periods based on the period benefited. As a result, costs benefiting a period outside the fiscal year and outside the reporting period for FY 2025 federal expenditures were included in FY 2025 grant costs. Criteria: Under 2 CFR §200.403 and 2 CFR §200.405, costs charged to a federal award must be allowable, allocable, reasonable, incurred during the applicable period of performance and be allocable to a federal award in proportion to the relative benefits received. Additionally, 2 CFR §200.302 requires nonfederal entities to maintain financial management systems that provide for accurate and complete disclosure of the financial results of each federal award. Costs that benefit multiple accounting periods must be allocated to the periods benefited, regardless of the timing of cash disbursement. Effect and Questioned Costs: Federal expenditures reported for FY 2025 were overstated by $15,253, representing the portion of costs applicable to FY 2026. This resulted in noncompliance with Uniform Guidance requirements related to cost allocability and accurate financial reporting. Cause: The Organization did not have a formal process in place to identify and allocate prepaid or multiperiod costs to the appropriate fiscal periods for federal grant reporting purposes. Expenditures were recorded and charged to the federal award based on payment date rather than the period in which the costs were incurred and benefited the program. The lack of procedures to identify and allocate multi-period costs represents a deficiency in internal control over compliance, as controls were not designed or operating effectively to ensure that costs were charged to the appropriate fiscal period in accordance with Uniform Guidance. This deficiency did not rise to the level of a significant deficiency or material weakness, as the costs were otherwise allowable, within the period of performance, and the issue was limited to timing. Recommendations: We recommend that the Organization implement procedures to identify costs that benefit multiple accounting periods and allocate such costs to the appropriate fiscal years for both financial reporting and federal grant reporting purposes. Additionally, we recommend that the Organization record prepaid expenses at year end, as applicable, and ensure that only costs incurred and allocable to the fiscal year are included in federal expenditures and reported on the Schedule of Expenditures of Federal Awards.

Type of finding: Federal Award Situation: Material weakness; compliance with federal regulations. Program: ALN: 97.036 Program: Disaster Grants – Public Assistance Disaster Grants – Public Assistance Compliance Requirements: Reporting Prior-Year(s) Audit Finding(s): 2024-005, 2023-004, 2022-006 Questioned Costs: Not determined. Condition: The Municipality’s staff was unable to provide officially prepared and certified reports supporting compliance with the filing and submission requirements for reports and financial information, as established by federal award and regulatory agreements. Similarly, reconciliations were not provided between the information used to prepare the required and submitted reports and the formal data recorded in the Municipality’s official accounting system. Due to these conditions, compliance with the reporting requirements established by the federal grantor and effectiveness of related internal controls could not be verified. Context: The Municipality is required to submit quarterly progress reports to the state for each individual approved project worksheet. These progress reports consist of 10 questions that among other things report on the total amount of expenses incurred up to the reporting period, the estimated final cost of the project, percentage of completion, scope of work completion date, period of performance and the name and user category of the person that completed the report. As of June 30, 2025, the Municipality had 154 projects that were required to submit quarterly progress reports. Although the Municipality submitted to us the summary of these submitted reports, in excel, as they were extracted from the reporting platform, the Municipality did not submit for our review the individual reports, nor the accounting records that reconcile to these reports. Criteria: The state is required to make an accounting of eligible costs. Similarly, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project in in compliance with the provisions of the State Agreement, all grants conditions were met, and the provisions for that project were made in accordance with the applicable payment provisions. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause: There is a lack of adequate knowledge and training among personnel assigned to the management and preparation of reports required by this federal award. Additionally, the Municipality did not demonstrate, nor did it provide evidence, that it has designed and implemented an adequate system of procedures and internal controls to monitor the activity, filing, and custody of reports, as required by the federal award and the pass-through entity. These deficiencies limit the Municipality’s ability to document and support compliance with the reporting requirements. Effect: These conditions expose the program to noncompliance with the reporting requirements established in the grant agreement. Furthermore, the Municipality may be at risk of the grantor questioning the allowability and use of federal funds. Auditor’s recommendation: The personnel or Department responsible should identify, compile, and retain all reports required under the grant agreement, including reconciliation with the Municipality’s official accounting records and subsidiary ledgers. Additionally, it is essential for the Municipality to develop, document, and implement a comprehensive training program, along with written guidelines and procedures, for all personnel involved, directly or indirectly, in the management of these federal funds. Views of Responsible officials and Corrective Actions: In response to the Auditor’s recommendations and as corrective action, the staff responsible or department will locate and document all required reports that were filed in accordance with the grant agreement requirements, including reconciliations with the Municipality’s official accounting subsidiary ledgers. Furthermore, the Municipality will design, document, establish, and provide the necessary training, along with written guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds. In addition, the Municipality will implement periodic reviews and monitoring mechanisms to ensure ongoing compliance with reporting requirements and the accuracy of financial information related to federal funds. Audit Status: Unresolved

SIGNIFICANT DEFICIENCY; CRITERIA: 2 CFR §200.302(b)(5) requires non‑Federal entities to have written procedures to implement effective control over and accountability for all funds, including budgeting and financial management practices that allow the entity to relate financial results to project performance.; CONDITION: For the fiscal year ended June 30, 2025 the Town did not prepare or maintain project-level budgets for emergency response and recovery activities. ; EFFECT: Without project budgets, The Town lacks assurance that FEMA funds are spent in accordance with approved scopes of work and allowable cost principles under 2 CFR §200.403 and is unable to demonstrate effective financial oversight or compare actual expenditures to planned costs. This increases the risk of cost overruns, questioned costs, or ineligible expenditures, which may lead to FEMA deobligating funds or requiring repayment.; CAUSE: The Town did not have established internal processes requiring the development of project‑specific budgets for emergency FEMA awards. During the emergency response period, Town staff focused on operational activities, and no designated personnel were assigned responsibility for creating or monitoring project budgets.; RECOMMENDATION: The Town should implement written procedures requiring project‑specific budgets for all Federal awards, including FEMA emergency funding. The Town should also provide staff training to ensure personnel understand Federal grant budgeting requirements and are capable of preparing and maintaining compliant documentation.; VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: The Town of Spruce Pine agrees with this finding. Finance procedures will be updated to include project-level budgeting and recommended training for staff.

Condition: During the review of 100% of federal disbursements totaling $2,813,954 for Coronavirus State and Local Fiscal Recovery Fund, program disbursements were not expended in accordance with the Activities Allowed or Unallowed and Allowable Costs/Cost Principles as noted below: • One (1) purchase order in the amount of $108,728 did not have invoices or supporting documentation to determine if the project was allowable. This disbursement was approved in the BOCC meeting with no documentation. Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with federal award requirements. Effect of Condition: This condition resulted in noncompliance with federal grant requirements and could result in loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and design and implement policies and procedures to ensure compliance with these requirements. Management Response: Chairman of the Board of County Commissioners and County Clerk: Creek County will work with all offices making sure that a proper invoice is attached on all purchase orders. Educating offices that there is a difference in a quote verses an invoice. The County Clerk will make sure that there are multiple eyes on the purchase orders to ensure that this is caught before payment is issued. Criteria: Title 2 CFR § 200.303(a) Internal Controls reads as follows: The 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 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). Additionally, Title 2 CFR § 200.403 - Factors affecting allowability costs 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.

2025-002. Allowable Costs/Cost Principles – (Excess Reimbursement Due to Inaccurate Final Expenditure Reporting) United States of Department of Education, Passed Through New York State, Department of Education: COVID-19: Elementary and Secondary School Emergency Relief Fund ALN: 84.425D Pass-through Entity Number: 5891-21-1490 COVID-19: American Rescue Plan - Elementary and Secondary School Emergency Relief ALN: 84.425U Pass-through Entity Number: 5880-21-1490 COVID-19: American Rescue Plan - Elementary and Secondary School Emergency Relief ALN: 84.425U Pass-through Entity Number: 5884-21-1490 Criteria: Per 2 CFR Part 200, specifically §§200.302 and 200.403, financial management systems must ensure that expenditures reported for federal awards are accurate, allowable, and properly supported. Costs charged to federal awards must be incurred and supported by underlying accounting records. Reports and reimbursement requests must be reconciled to the recipient’s accounting records. Additionally, guidance from the pass-through entity, New York State Education Department, requires that the Final Expenditure Report (FS-10F) reflect actual expenditures incurred, not outstanding obligations or encumbrances that have not been fully liquidated (e.g., purchase orders), and that districts revise or adjust claims as necessary if amounts differ from final expenditures. Condition: The District submitted Form FS-10F final expenditure reports that included amounts for open encumbrances that were not fully expended after the final reports’ submission; the cumulative expenditures in the District’s accounting records for two of the Education Stabilization Fund (ESF) grants (CRRSA ESSER II, pass-through entity number 5891-21-1490, and ARP ESSER III, pass-through entity number 5880-21- 1490) were less than the amounts claimed by the District on the FS-10Fs. The FS-10F for a third ESF grant (ARP SLR Learning Loss, pass-through entity number 5884-21-1490) included a duplicated amount for purchased services that was the result of a duplicated journal entry in the District’s accounting records. As a result, the expenditures reported on the FS-10F final expenditure reports exceeded the actual expenditures incurred and recorded by the District, and the District received reimbursements from the pass-through entity, New York State Education Department (NYSED) for expenditures it did not incur. Cause: The District lacked adequate internal controls and review procedures to ensure that FS-10F reports were based solely on actual, incurred expenditures, and reported amounts are subsequently reconciled to final general ledger balances in its accounting records. The District’s procedures for reviewing and approving journal entries failed to identify two erroneous entries. Additionally, there was a failure to implement procedures to monitor outstanding encumbrances included in the FS-10F and to communicate adjustments to the NYSED when those encumbrances were not ultimately realized as expenditures. Effect: As a result of the overstatement of expenditures on the FS-10F, the District received reimbursement in excess of allowable amounts. The District may be required to repay the excess funds received. Questioned costs: $52,798 for CRRSA ESSER II grant, $119,095 for ARP ESSER III grant, and $25,667 for ARP SLR Learning Loss grant. Context: For the CRRSA ESSER II grant, a payment of $72,906 to a vendor was charged to the grant in a prior year and included on the FS-10F filed in October 2023, the District subsequently determined that expenditure was not an allowable cost and corrected its accounting records; however, the District did not notify the NYSED of the change and the FS-10F was not revised to reflect this correction. Furthermore, there were $20,107 of expenditures recorded in the District’s accounting records that were not included in the FS- 10F; collectively, these two items resulted in the District reporting expenditures on the FS-10F for the CRRSA ESSER II grant that exceeded actual, allowable expenditures incurred by a net amount of $52,799. For the ARP ESSER III grant, the District included $6,400 related to an open purchase order for architectural and engineering fees on the FS-10F filed in October 2024. The purchase order was originally encumbered for $10,400; however, only $4,000 in actual expenditures were incurred, the remaining $6,400 balance was never expended as the project was completed with no additional invoices received from the engineering firm. Additionally, unliquidated payroll-related encumbrances at June 30, 2025, totaling $112,695 were included in the FS-10F; however, there were no actual expenditures incurred. For the ARP ALR Learning Loss grant, the District recorded a journal entry to reclassify the expenditure for a payment made to a vendor, but duplicated that amount in another journal entry recording expenditure to the grant. The duplicated amount was included in the FS-10F filed in October 2024. Identification of a Repeat Finding: This is not a repeat finding from the immediately prior audit. Recommendation: The District should strengthen its internal controls over grant reporting and reimbursement processes to ensure that expenditures reported on the FS-10F final expenditure reports are accurate, allowable, and fully supported by the accounting records. Journal entries affecting federal grants expenditures The District should perform a comprehensive reconciliation of the FS-10F to the general ledger prior to submission, and again after the grant period ends to confirm all reported amounts were ultimately expended, and establish a formal process to review and clear outstanding encumbrances included in grant reports, ensuring any amounts not realized as expenditures are removed or adjusted. Additionally, the District should develop procedures to identify and track subsequent adjustments, including reclassifications of unallowable costs, and ensure that such changes are timely communicated and corrected with the New York State Education Department, and to require documented supervisory review and approval of all final expenditure reports and their subsequent reconciliations with supporting documentation and final accounting records. Views of Responsible Officials of Auditee: The District acknowledges the finding related to the reporting of expenditures on the FS-10F and agrees that certain encumbrances and subsequently adjusted items were not properly reflected in the final expenditure submissions to the New York State Education Department (SED). The District notes that several of the identified items, including open purchase orders and payroll encumbrances, were initially included in the FS-10F in accordance with prior internal practice and interpretation of reporting guidance at the time of submission. In addition, the District acknowledges that certain post-submission adjustments, including reclassifications of unallowable costs and the liquidation of encumbrances, were not subsequently reflected through amended FS-10F filings. The District further recognizes that these conditions resulted in reporting discrepancies between the FS-10F submissions and actual expenditures incurred, leading to an overstatement of expenditures and excess reimbursement. The District has calculated the net obligation of $52,798.77 and intend to reimburse the NYSED for this amount.

Criteria: The Uniform Guidance requires the City to establish and maintain effective internal control over compliance for federal awards, including controls to reasonably ensure that costs charged to federal programs are allowable, properly supported, and comply with applicable federal requirements and the terms and conditions of the award. Under 2 CFR 200.403, costs charged to a federal award must be allowable, including that they be adequately documented and not be included as a cost or used to meet cost-sharing requirements of any other federally financed program in the current or a prior period. Condition: The City did not have adequately designed and implemented review controls over certain material project costs included in reimbursement requests submitted to the pass through agency. Our testing identified that the city submitted the same eligible project cost for reimbursement under two different federal grant awards, of which one was denied for reimbursement Cause: The City lacked sufficiently designed or effectively operating controls over the preparation, review, and approval of reimbursement requests for federal awards. In particular, the City’s controls did not include an effective reconciliation of expenditure detail by invoice, pay application, or other unique transaction identifier across open grant awards before submission of reimbursement requests. Effect: The absence of effective review controls over material project costs increases the risk that ineligible, unsupported, or incorrectly costs could be included in reimbursement requests without timely detection and correction. The duplicate submission was not reimbursed from both federal awards and therefore does not require repayment or adjustment of reimbursement requests. This deficiency is considered a material weakness in internal control over compliance for the Department of Transportation program.

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.

Allowable Costs/Cost Principles – Consultant Payments Program Name: Federal-State Partnership for Intercity Passenger Rail (Assistance Listing 20.326) Federal Award Agency: Department of Transportation Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 69A36524520310FSPCT Background The Department of Transportation (DOT) Consultant Design Administration Manual defines extra work as work the department orders beyond the scope of the agreement when such work is not reflected in the fee payments specified in the agreement. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.317 requires that when conducting procurement transactions under a federal award, a state must follow the same policies and procedures it uses for procurements with non-federal funds. Title 2 CFR Part 200.403(c) and (g) provides that to be allowable under federal awards, costs must be consistent with established policies and procedures and adequately documented. The DOT Consultant Design Administration Manual requires consultants to obtain written authorization from the department before they begin any extra work; otherwise, DOT is not obligated to compensate the consultant for that work. Condition Our review of 11 transactions totaling $46,543,994 disclosed that DOT made a $47,870 payment for extra work performed by a consultant that it did not authorize before work began. Context During the fiscal year ended June 30, 2025, non-payroll expenditures totaled $105,024,824. We randomly selected ten payments to review, as well as one manual journal adjustment. The sample was not statistically valid. Questioned Costs $47,870 Effect Failure to comply with DOT’s policies regarding extra work performed by consultants may result in unauthorized costs. Cause A lack of management oversight contributed to this condition. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Transportation should strengthen internal controls over consultant payments for extra work. Views of Responsible Officials “We agree with this finding.”

Activities Allowed or Unallowed – Benefit Payments Program Name: Money Follows the Person Rebalancing Demonstration (MFP) (Assistance Listing 93.791) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 1LICMS300142 Background The Department of Social Services (DSS) is the designated single state agency to administer the Medicaid program in accordance with Title 42 U.S. Code of Federal Regulations (CFR) 431. Connecticut administers benefit payments for the Money Follows the Person Rebalancing Demonstration (MFP) program the same way it administers Medicaid benefit payments. Criteria Title 2 CFR Part 200.403 provides that to be allowable under federal awards, costs should be adequately documented. The DSS Provider Enrollment Agreement requires the medical provider to only submit claims for medical goods and services they provided to the MFP recipient. Condition Our review of 40 MFP benefit payments totaling $49,144, of which $36,858 was federally reimbursed, disclosed that one medical provider submitted a claim with $146 of services that the provider did not perform, of which $110 was federally reimbursed. Context During the fiscal year ended June 30, 2025, DSS processed $18,243,599 in MFP benefit payments and received $13,682,699 in federal reimbursement. The sample was not statistically valid. Questioned Costs We computed questioned costs of $110 by applying the applicable federal financial participation rate to the unallowed expenditures. Effect DSS received federal reimbursement for unallowed expenditures. Cause The medical provider billed for eight hours of services when they only performed two hours of services. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Social Services should conduct an audit of the medical provider in accordance with Section 17b-99 of the Connecticut General Statutes to ensure integrity of the Money Follows the Person Rebalancing Demonstration program. The Department of Social Services should recoup any improper payments issued to medical providers and refund the corresponding federal reimbursements to the Centers for Medicare and Medicaid Services. Views of Responsible Officials “The Department agrees with the finding. The improper payment has been recouped and the DSS Audit Division will open an audit of the provider.”

Activities Allowed or Unallowed – Individual Plans and Service Records Program Name: Money Follows the Person Rebalancing Demonstration (MFP) (Assistance Listing 93.791) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 1LICMS300142 Background The Department of Social Services (DSS) is the designated single state agency to administer the Money Follows the Person Rebalancing Demonstration (MFP) program. Connecticut administered certain aspects of MFP through several state agencies including the Department of Developmental Services (DDS). Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.403 provides that to be allowable under federal awards, costs should be adequately documented. Title 2 CFR Part 200.303 requires the non-federal entity to establish, document, and maintain effective internal controls over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. Procedure No. I.C.1.PR.002.a. of the DDS Operation Manual states that DDS should obtain agreements and approvals for the individual plan during the planning process. The case manager should document who participated in the planning process and obtain signatures on the individual plan. Participants typically include the recipient, parent, guardian, advocate, case manager, support brokers, private agency designee, and other DDS staff. Condition Our review of 25 MFP benefit payments totaling $11,000, of which $8,250 was federally reimbursed, disclosed that DDS did not have signatures of agreement and approval for six individual plans. Additionally, DDS could not obtain service records from one medical provider to support one $46 payment, for which DSS received $35 in federal reimbursement. Context During the fiscal year ended June 30, 2025, DSS processed $4,978,654 in MFP benefit payments on behalf of 36 DDS recipients. DSS received $3,733,990 in federal reimbursement. The sample was not statistically valid. Questioned Costs $0 Effect The lack of signatures to indicate agreement and approval of an individual plan by relevant participants increases the risk of inadequate services for the recipient. DSS received federal reimbursement for an unallowed expenditure. Cause Lack of management oversight contributed to the condition. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Developmental Services should strengthen internal controls to ensure it obtains the required signatures for the individual plan for all Money Follows the Person Rebalancing Demonstration recipients. The Department of Social Services should conduct an audit of the medical provider in accordance with Section 17b-99 of the Connecticut General Statutes to ensure integrity of the Money Follows the Person Rebalancing Demonstration program. Views of Responsible Officials Response provided by the Department of Developmental Services: “DDS agrees with the finding. The errors were attributed to current manual processes and case management oversight regarding documenting signatures when individual plan (IP) meetings are held remotely rather than in-person. Most of the deficiencies (5 of 6) were isolated to one case manager. The MFP division is small with 3-4 case managers, causing a higher error rate when extrapolated against the sample size. The missing support service records have been forwarded to the Department of Administrative Services for research. There are plans to improve the individual plan process to enhance internal controls through automation. In the interim, case managers and case manager supervisors will be reminded of the IP signature requirements.” Response provided by the Department of Social Services: “The Department agrees with this finding and the response provided by the Department of Developmental Services. Additional research is needed to determine whether the missing documentation was the provider's responsibility or was due to a billing issue. The Department of Developmental Services is coordinating with the Department of Administrative Services to research this further.”

Eligibility Program Name: Money Follows the Person Rebalancing Demonstration (MFP) (Assistance Listing 93.791) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 1LICMS300142 Background The Department of Social Services (DSS) uses several systems to administer the Money Follows the Person Rebalancing Demonstration (MFP) program. The My Community Choices web portal is the primary system that maintains data about MFP applicants and participants, including client start and end dates. The DSS eligibility management system maintains client eligibility determinations for the program. The Medicaid Management Information System (MMIS) processes medical services payments and provides financial reports for federal reimbursement claims. Since the My Community Choices web portal does not interface with other systems, DSS staff must manually input client MFP program start and end dates into the DSS eligibility management system. The DSS eligibility management system interfaces with MMIS daily. Criteria Section 6071(b)(2) of Public Law 109-171 defines an eligible individual for the MFP demonstration project as a person who, immediately before beginning participation in the MFP demonstration project, resides in an inpatient facility, receives Medicaid benefits for inpatient services, continues to require the level of care provided in an inpatient facility, and who resides in a qualified residence beginning on the initial date of participation in the demonstration project. Section 6071(b)(7) of Public Law 109-171 defines qualified expenditures by the state under its MFP demonstration project as home and community-based long-term care services for an eligible individual participating in the MFP demonstration project. However, this is only with respect to services furnished during the 12-month period beginning with the individual's discharge date from an inpatient facility. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.403 provides that to be allowable under federal awards, costs should conform to any limitations or exclusions set forth in the federal award. Title 2 CFR Part 200.303 requires the non-federal entity to establish and maintain effective internal controls over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. Title 42 CFR Part 431.420 requires the state to comply with the terms and conditions of the MFP demonstration project. MFP terms and conditions require the state to ensure the availability of adequate resources for implementation and monitoring of the demonstration project including tracking participant enrollment, maintaining eligibility systems, and administering effective transition coordination. MFP terms and conditions require the state to develop and amend an operational protocol that details how the state will adhere to statutory and program requirements. Section B of the MFP Operational Protocol includes the following policies and procedures. • Determining MFP eligibility includes ensuring an individual’s annualized cost of care in the community is equal to or less than the annualized rate paid for residing in an institution. • The state will not provide an administrative hearing to an applicant for denied services due to the applicant’s care plan exceeding the allowable cost of care in the community. • The state will suspend MFP participation and services during any inpatient stay. Suspended MFP participants may continue MFP participation upon discharge from the inpatient facility. Condition We reviewed 40 MFP claims, totaling $49,144, of which $36,858 was federally reimbursed, to determine if DSS properly granted eligibility. Our review disclosed the following: 1. DSS did not terminate MFP participation for two clients. DSS processed $918 for the selected claims for these clients. DSS processed $184,088 in additional claims in fiscal year 2025 and $270,274 in claims in prior fiscal years for periods when these clients were no longer eligible under the MFP program. DSS should have ended participation on April 5, 2018, and July 30, 2020, respectively. 2. DSS processed $7,724 of ineligible MFP expenses for two clients during inpatient hospital or nursing facility stays ranging from 14 to 21 days. DSS did not properly track MFP participation dates for these clients in its systems. Additionally, DSS did not properly track participation dates for a third client for seven days of hospitalization. 3. DSS approved two applicant care plans that exceeded the cost of institutional care by $1,530 (19%) and $3,507 (39%) per month. 4. DSS did not perform or document a comparative cost analysis for one client to demonstrate that care plan costs did not exceed nursing facility costs. Context During the fiscal year ended June 30, 2025, DSS processed $18,243,599 in payments on behalf of 824 MFP clients and received $13,682,699 in federal reimbursement. The sample was not statistically valid. Questioned Costs We computed questioned cost of $347,253 by applying the applicable federal financial participation rate to the ineligible expenditures. Questioned costs were $144,548 for fiscal year 2025 and $202,705 for prior fiscal years. Effect DSS provided MFP benefits to ineligible individuals. DSS received federal reimbursement for unallowed expenditures. Cause The My Community Choices web portal did not interface with DSS eligibility and financial systems. DSS relied on staff to manually input client participation start and end dates in multiple systems. Management oversight did not identify input errors of client participation dates. DSS management overrode applicant care plan costs. The MFP Operational Protocol has no written procedures to override program policies or federal regulations. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Social Services should strengthen internal controls to ensure that only eligible recipients receive Money Follows the Person Rebalancing Demonstration services in accordance with federal laws, award terms and conditions, and the Money Follows the Person Operational Protocol. Views of Responsible Officials “The Department agrees in part with this finding. Condition #1: DSS agrees that participation end dates were not updated timely due to cross-system manual entry limitations. Reconciliation procedures and supervisory oversight will be strengthened. Condition #2: DSS agrees that participation suspensions were not consistently reflected across systems due to timing delays. Monitoring and real-time reconciliation controls will be enhanced. Condition #3: DSS agrees approved costs exceeded institutional thresholds in limited cases. Variances were clinically justified, reviewed, and authorized. DSS will strengthen documentation and internal protocols to ensure clearer policy alignment. Condition #4: DSS agrees that the documentation was incomplete in one instance. Internal review standards will be reinforced to ensure comparative cost analyses are consistently documented. Please note, the Department will not be returning the questioned costs associated with this finding. According to federal regulations, recoveries based on eligibility errors can only be pursued when identified by programs operating under Centers for Medicare and Medicaid Services’ (CMS) Payment Error Rate Measurement program, per section 1903(u) of the Social Security Act and regulations at Title 42 CFR Part 431, Subpart Q.” Auditors’ Concluding Comments The Department of Social Services should amend its MFP Operational Protocol and seek approval from the Centers of Medicare and Medicaid Services if the department plans to continue to use management overrides of care plan costs.

Criteria: In accordance with 2 CFR Part 200.403 of the Uniform Guidance, charges to Federal awards must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: For the year ended June 30, 2025, the Agency did not maintain individual support for the allocation of allocable salaries. These were charged based on a flat rate. Furthermore, there are instances where an independent approved pay rate was not maintained by the human resources department. Cause: The allocable salaries and wages are not charged based on actual work performed. The approved pay rate was not properly documented by the human resources department. Effect: The Agency is not in compliance with 2 CFR Part 200.403 of the Uniform Guidance. Questioned Costs: None reported. Context: A random sampling of the federal expenditures. Repeat Finding: Yes Recommendation: We recommend that the Agency establish a system to determine and document the time spent by allocable staff and appropriately allocate the staff’s personnel expenses to the program. We also recommend that the Agency ensure the staff’s approved salary is properly documented. View of Responsible Officials: Refer to management’s corrective action plan.

Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants Cluster - Entitlement/Special Purpose Federal Agency: U.S. Department of the Housing and Urban Development Pass-through Entity: County of Orange Community Resources Department Pass-through Identification Number: J2JWJVWQBEA6 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): For federally funded programs, recipients are required to establish and maintain effective internal control over compliance in accordance with 2 CFR §200.303. These controls should provide reasonable assurance that federal awards are managed in compliance with applicable laws, regulations, and the provisions of contracts or grant agreements. Pursuant to 2 CFR §§200.403 through 200.405, costs charged to federal programs must be allowable, reasonable, necessary, and adequately documented. Recipients must maintain sufficient documentation to support the nature of expenditures, vendor selection, and cost reasonableness to ensure compliance with allowable cost principles. Additionally, pursuant to 2 CFR §200.318, non-Federal entities are required to use documented procurement procedures that reflect applicable federal, state, and local requirements. These procedures must ensure that procurement activities are conducted in a manner providing for full and open competition, use appropriate procurement methods, and include adequate documentation to support vendor selection and cost reasonableness. Recipients are responsible for ensuring that procurement activities performed by employees, consultants, or contractors on their behalf comply with these requirements. Failure to follow these procedures may result in costs that are not adequately supported as allowable under federal requirements. Further, pursuant to 24 CFR §570.506, when CDBG funds are used for rehabilitation activities, recipients must ensure that work is completed in accordance with applicable laws, codes, and requirements related to housing safety, quality, and habitability. This includes ensuring that required permits are obtained and inspections are performed in accordance with local building and safety requirements prior to and throughout construction activities. Condition: During our audit of the CDBG program, we identified the following deficiencies related to internal control and compliance over compliance requirements: Allowable Costs/Cost Principles: The City did not maintain sufficient documentation to support compliance with federal requirements related to CDBG-funded rehabilitation activities. Specifically, the City did not maintain adequate documentation to support vendor selection, cost reasonableness, or the basis for contractor procurement. In addition, the City did not maintain evidence demonstrating that procurement-related activities performed by a consultant on its behalf were conducted in accordance with established procedures. Special Tests and Provisions – Rehabilitation: During our testing of nine CDBG-funded rehabilitation projects, we noted that one project had a building permit on file that expired in 2008 and was not renewed prior to or during construction. Additionally, five projects had building permits that were issued after construction activities had already commenced, indicating that required permits were not obtained prior to the start of rehabilitation work. Cause: The City has not established and implemented effective internal controls and monitoring procedures over its CDBG program to ensure compliance with all federal requirements. Effect or Potential Effect: The City did not maintain sufficient documentation to support expenditures, limiting its ability to demonstrate that costs charged to the program are allowable, reasonable, and adequately supported in accordance with federal requirements. As a result, there is an increased risk that costs may be questioned or disallowed. Additionally, failure to obtain and maintain valid permits prior to construction increases the risk of noncompliance with rehabilitation requirements and may result in ineligible activities. Questioned Costs: None. Context: See condition above for the context of the finding. Recommendation: We recommend that the City strengthen its internal control system over the CDBG program by implementing and documenting formal policies and procedures to ensure compliance with federal requirements. This includes maintaining sufficient documentation to support vendor selection, cost reasonableness, and overall allowability of costs, as well as ensuring appropriate oversight of consultants performing activities on the City’s behalf. Additionally, the City should enhance its monitoring procedures over rehabilitation activities by maintaining sufficient documentation to support that work was performed in accordance with program requirements, including evidence of inspections and completion of approved work; permits or local approvals alone should not be relied upon as sole evidence of compliance. The City should provide training to staff involved in program administration and implement ongoing monitoring procedures to ensure compliance with federal requirements. Views of Responsible Officials: Management concurs with the finding and agrees to implement necessary corrective procedures.

2025-005: Noncompliance with Period of Performance Requirements - ALN 93.568 Condition: Management is responsible for ensuring that costs charged to federal awards are incurred within the applicable period of performance and properly recorded in the appropriate period. During our testing, we noted that, as part of the grant closeout process, management reclassified certain expenses from a Fee-for-Service program to the WXHHS grant to align costs with grant budget categories. The expenses reclassified related to prior year activity and were recorded during the year ended June 30, 2025, outside the applicable period of performance. Criteria: In accordance with 2 CFR §200.309, costs may be charged to a federal award only during the approved period of performance. Additionally, 2 CFR 200.403 requires that costs be allocable to the federal award and incurred during the period of performance to be allowable Cause: The condition appears to be attributable to the client’s closeout procedures, which permit post-period reclassification of costs to grants without sufficient controls to ensure that only costs incurred within the applicable period of performance are charged to the award. Questioned Costs: $2,536 Effect: As a result of this condition, costs were charged to the grant outside of the applicable period of performance, resulting in noncompliance with federal requirements. Recommendation: We recommend that management enhance controls over the grant closeout process to ensure that all costs charged to federal awards are incurred within the applicable period of performance. This should include a formal review of transaction dates and supporting documentation prior to recording any reclassifications to grant accounts, as well as procedures to prevent the inclusion of prior-period costs in current grant activity. Views of Responsible Officials: Management agrees with this finding and their response is included in the corrective action plan.

Finding 2025-005 – Revenue Recognition Cutoff and Schedule of Expenditures of Federal Awards – Material Weakness in Internal Control Over Compliance and Noncompliance (Repeat Finding – Prior Year 2024-002) Criteria or Specific Requirement: The Uniform Guidance, 2 CFR 200.510(b), requires the auditee to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the financial statements, which must include the total federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.403 requires that costs charged to federal awards be allocable, allowable, and properly recorded in the period in which they are incurred. 27 Condition: During the audit of the fiscal year ended June 30, 2025, it was determined that revenue earned under the Indian Health Service Behavioral Health Programs grant (CFDA 93.654, Award No. BH22IHS0008) during the fiscal year ended June 30, 2024 was not recognized until the fiscal year ended June 30, 2025. The misapplication of the revenue recognition cutoff resulted in federal award revenue and expenditures being reported on the SEFA in the incorrect fiscal year, requiring a material post-close adjusting journal entry. This finding is a repeat of prior year Finding 2024-002. Cause and Effect: Controls over the period-end review of federal award revenue recognition and SEFA preparation were not operating effectively. The Organization did not perform a sufficient review of grant expenditure activity and award eligibility requirements relative to the June 30 fiscal year-end cutoff. The recurrence of this condition, despite being identified and reported in the prior year audit, indicates that corrective actions implemented were not sufficient to prevent the issue from recurring. Auditors' Recommendations: Management should implement a formal SEFA preparation and review process to ensure federal award expenditures are accurately reported for each fiscal year. A designated Finance staff member with sufficient knowledge of the Uniform Guidance requirements should be responsible for overseeing SEFA preparation for each fiscal year-end. A grant-by-grant SEFA reconciliation should be completed prior to year-end close. Management should engage its external accountants earlier in the year-end close process to allow sufficient time to identify and correct any SEFA discrepancies prior to fieldwork. Management's Response: Management has implemented a series of 3 checks and balance procedures for monthly review for SEFA procedures. A finance staff member with Uniform Guidance requirements will prepare the annual statement preparation at year end with review from Director of Finance and Board Treasurer before submission.

2025-003 Improve Controls over Period of Performance Federal Program(s) Information Federal Agency: U.S. Department of Education Pass-Through Entity: Massachusetts Department of Elementary and Secondary Education Award Name: Special Education Grants to States Assistance Listing Number: 84.027 Award Year: 2024 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Period of Performance Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Uniform Guidance (2 CFR § 200.403, 200.309) requires that costs charged to a federal award be allowable, allocable, and incurred within the grant’s period of performance. Expenditures incurred outside of the specified performance period are not allowable charges to the federal program. Condition and Context Of the twenty-five non-payroll transactions tested for the Special Education Cluster, two invoices charged to the 2024 award were incurred and paid outside of the grant’s period of performance. The City established purchase orders for these transactions in September of 2024. Due to staffing changes within the Grants and Special Education Departments, attention shifted to fiscal year 2025 activities under the assumption that all fiscal year 2024 obligations had been processed. Consequently, this encumbrance was inadvertently overlooked, and the final grant report was submitted in January based on the remaining available balance. The unprocessed payment was identified only after the vendor contacted the school regarding the outstanding balance, leading to the recognition that the payment was not timely processed. Cause The City did not have effective internal controls to ensure all obligations were identified, tracked, and paid within the grant’s period of performance, particularly during periods of staff turnover. Effect or Potential Effect Payments for obligations incurred outside the period of performance are unallowable under federal regulations. This increases the risk of unallowable costs being charged to the grant. Questioned Costs Known questioned costs are reported as follows: AL Number(s) Name of Federal Program or Cluster Questioned Costs 84.027 Special Education Grants to States $112,707 Identification as a Repeat Finding This is not a repeat finding. Recommendation The City should strengthen internal controls to ensure all purchase orders and obligations are monitored, documented, and paid within the grant’s period of performance. Additional procedures should be implemented to review unliquidated obligations prior to final grant reporting, especially during periods of staff transitions. View of Responsible Officials Management’s corrective action plan is included at the end of this report after the Summary Schedule of Prior Year Findings.

Finding 2025-002: Reportable finding considered a material weakness – Expenses incurred outside of the period of performance Program name: WIOA Cluster Assistance Listing: 17.278, 17.258 Federal awarding agency: U.S. Department of Labor Pass-through entity: Maryland State Department of Labor Award identification number: P56-MG-FY25-A, P56-MG-FY25-D Award Years: 2024/2025 Criteria: Section 2 CFR 200.458 addresses the allowability of pre-award costs under the Uniform Guidance. The regulation provides that pre-award costs are costs incurred before the start date of a Federal award or subaward that are incurred in anticipation of the award and are necessary for the efficient and timely performance of the scope of work. Under this section, pre-award costs are allowable only if all of the following conditions are met: •The costs would have been allowable if incurred after the start date of the Federal award. •The costs are incurred directly pursuant to the negotiation and in anticipation of the Federalaward. •The costs have written approval from the Federal awarding agency (or pass-through entity, asapplicable) Condition: The Organization charged and billed pre-award costs incurred prior to the start date (October 1, 2024) for multiple federal awards without obtaining written approval from the pass-through entity prior to incurring those costs. As a result, the Organization was reimbursed for expenses that were incurred outside of the period of performance and unallowable under federal regulations. Audit adjustments were required to remove these amounts from the Schedule of Federal Awards. Cause: The Organization did not have sufficiently designed or implemented policies and procedures to ensure that pre-award costs were identified and segregated from allowable expenditures, and written approval from the federal awarding agency was obtained prior to charging pre-award costs to the federal award. Effect: The Organization claimed and was reimbursed for unallowable costs under 2 CFR 200.458. Failure to maintain effective controls over cost allowability increases the risk of noncompliance, questioned costs, and potential repayment of federal funds. Repeat finding: This is not a repeat finding. Questioned costs: Known questioned costs of $403,805 were identified by reviewing each transaction prior to the award date and for the month after the award began to ensure there are no likely questioned costs. Perspective: The awards noted were the only ones where pre-award costs were identified. No additional charges or related awards were noted. Recommendation: We recommend that the Organization: •Formalize and implement written policies and procedures governing the identification,approval, and accounting for pre-award costs. •Require documented written approval from the federal awarding agency prior to charging anypre-award costs to federal awards. •Provide training to program and finance personnel on Uniform Guidance cost allowabilityrequirements, including 2 CFR 200.458 and 2 CFR 200.403. •Implement supervisory review controls to ensure costs charged to federal awards are incurredwithin the approved period of performance or have documented prior approval. Management’s response and corrective action plan (unaudited): See corrective action plan

Finding 2025-005: Reportable finding considered a significant deficiency – Accounting for expenses covered under the resource sharing agreement Program name: WIOA Cluster Assistance Listing: 17.278, 17.258, 17.259 Federal awarding agency: U.S. Department of Labor Pass-through entity: Maryland State Department of Labor Award identification number: P46-MG-PY23-Y, P56-MG-PY24-Y, P56-MG-PY24-A, P56-MG-FY25-A, P56-MG-PY24-D, P46-MG-FY24-D, P56-MG-FY25-D Award Years: 2024/2025 Criteria: 2 CFR 200.403(e) requires that costs charged to a Federal award be determined in accordance with generally accepted accounting principles. Condition: The Organization has a resource sharing agreement for the operation and management of the American Job Centers in Montgomery County. As part of the agreement, each partner is responsible for a portion of the expenses. These expenses are paid by the Organization and then charged quarterly to the individual partners and reimbursed. The Organization should recognize expenses net of the amounts reimbursed by the partners. The Organization records the expenses at the total amount in the general ledger. When these expenses are reimbursed by the partners, the offsetting expense is credited to rent expense. While revenues and expenses are properly recorded in total, several expense classifications are misstated among the individual accounts by $70,223. Cause: Procedures were established by the prior Outsourced Accountant and the practice continued throughout 2025. Effect: Individual expense categories are misstated by $70,223. Since the federal awards and resource sharing agreements have certain budgeted amounts, not properly recording expenses in the proper categories could cause budget overages and noncompliance. Repeat finding: This is not a repeat finding. Questioned costs: There are no questioned costs related to this finding. Perspective: The error was pervasive throughout the year and treated consistently across all expenses covered under the resource sharing agreement. Recommendation: We recommend that management review current policies and procedures to ensure compliance with GAAP and federal regulations. Management’s response and corrective action plan (unaudited): See corrective action plan.

FINDING REFERENCE NUMBER 2025-001 FEDERAL PROGRAMS (ALN – 84.027) SPECIAL EDUCATION – GRANTS TO STATES (IDEA, PART B) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.173) SPECIAL EDUCATION – PRESCHOOL GRANTS (IDEA PRESCHOOL) – SPECIAL EDUCATION CLUSTER (IDEA) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS H027A230003 (07/01/2023 – 09/30/2024); H027A240003 (07/01/2024 – 09/30/2025); H173A230002 (07/01/2023 – 09/30/2024); H173A240002 (07/01/2024 – 09/30/2025) COMPLIANCE REQUIREMENTS ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR Section 200.302 (a) establishes that each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state’s own funds. In addition, the state and the other non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403 (b) establishes that except where otherwise authorized by statute, costs must be adequately documented in order to be allowable under Federal awards. In addition, IDEA’s Special Education—Grants to States program (IDEA, Part B) provides grants to states, and through them to LEAs, to assist them in providing special education and related services to eligible children with disabilities ages 3 through 21 (20 USC 1411). STATEMENT OF CONDITION As part of our procedures over internal controls and compliance for the allowable activities’ requirement, we selected a sample of eighty-five (85) disbursement to suppliers made during fiscal year under audit. We noted the following deficiencies: 1. In three (3) disbursement vouchers, the Excel master sheet and the adjustment report presented different amounts. No justification was provided for the differences in the reports. 2. In one (1) disbursement we found that the therapy, monthly, and tuition costs per student did not match the contract, which already stipulated a cost for each service per student. We were not presented with any evidence that the contract had been amended; we were only provided with a letter from PRDE approving the cost increase across the board. 3. In forty-three (43) vouchers evaluated, it was found that the invoiced expenses corresponded to both cluster programs (ALNs 84.027 and 84.173), and the invoices established this. However, the expenses in the system were recognized in grant ALN 84.027, not according to the participants attending and invoiced, according to their age. 4. In five (5) disbursement vouchers related to educational services and therapies, we found in the master Excel spreadsheet of three (3) different entities, participants ranging in age from 22 to 31 years old were provided educational services. In total, seven (7) students over 21 years of age were identified among the three entities. The amount related to these students is $85,535. 5. In two (2) disbursement vouchers related to educational services in private institutions, three (3) participants were invoiced and paid, who, in accordance with the excel master of each institution, attend to another private institution. 6. In eight (8) disbursement vouchers related to therapies provided by private educational institutions, the costs for therapies are higher than the costs according to the contract fee schedule. 7. In eight (8) disbursement vouchers, no details were provided on how the monthly educational costs were determined. The proposals submitted are inconsistent with the invoices and do not describe the services included in each monthly payment. 8. Of the selected sample, there was one (1) disbursement voucher for which we were not provided with evidence of the master Excel spreadsheet, a document that details each participant, the service provided, the cost of the service, among other information necessary to evaluate the disbursement. The amount paid for this invoice was $568,968. 9. On a disbursement voucher, we noticed that the invoice included 38.5 hours of service. However, the invoice details only showed 36 hours of service rendered, with payment made for 2.5 hours for which no details of the services rendered were provided. The total overpayment to the supplier is $312.50. QUESTIONED COSTS We understand that the $312.50 described in the condition number 9 is not allowable. In addition, because the PRDE was not able to provide the Excel Master spreadsheet for a disbursement voucher, we were unable to audit this transaction. The amount of this voucher is $568,968. In relation to participants who are more than 21 years old, the amount included in the vouchers evaluated is $85,535; for a total estimated amount of $654,815.50. PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training and controls that require standard evaluation, approval, and reporting of expenditures incurred. In addition, standardized documentation in the educational services should be maintained which presents clear costs for services provided and reasons for modification of the legal contract, modifying amounts and services, should be available for inspection. The sample was statistically valid sample. STATEMENT OF CAUSE According to interviews carried out and documentation evaluated, some goods and services are received in the different Regional Offices (ORE), and each one carries out similar, but not standard, processes when certifying as received or pre-intervening invoices. No evidence regarding how the PRDE monitors the age of the participants when they reach 21 years of age and properly documents the reasons to continue providing the services after reaching 21 years of age. Regarding the distribution of expenses, according to interviews and evaluated documentation, it was found that at the time of binding a contract, an analysis of the assigned participants is not made, in order to be able to make a distribution between the two programs of the cluster according to the age of the participant. In addition, according to interviews, although the contract budget is validated, they only limit themselves to verifying the amount available in general and there is no distribution of the expense according to the service provider's invoice. There is no clear process in place for negotiations with private institutions, nor is there a clear way to determine whether the cost of educational services is reasonable. POSSIBLE ASSERTED EFFECT The PRDE is reporting expenses within the cluster that do not necessarily reflect the actual expenses incurred by each program in the cluster, this deficiency requires that when the period of availability of funds is ending, some adjustments be made to reclassify expenses, up to the amount of the award. In addition, the PRDE may have incurred payments for which the service or good were not provided as contracted. The PRDE was not able to present how they are monitoring that the services provided to the participants are reasonable and comply with the necessities of the child. Furthermore, no proper documentation is maintained when services are provided to participants who reach 21 years and are required to provide any service. IDENTIFICATION OF REPEAT FINDING This is a repeat finding (Finding Reference Number 2024-002). RECOMMENDATIONS We recommend that the PRDE establish standardized written guidelines and train the staff of the Regions to carry out and document the reviews and approvals of services and ascertain that this information is uploaded in the accounting system of SIFDE. In addition, the personnel must be instructed to account for the budget and expense of therapy and related services, according to the enrollment of students who will attend, in accordance with the program that applies within the cluster.

FINDING REFERENCE NUMBER 2025-002 FEDERAL PROGRAM (ALN – 84.938A) HURRICANE EDUCATION RECOVERY – INMMEDIATE AID TO RESTART SCHOOL OPERATIONS (RESTART) U.S. DEPARTMENT OF EDUCATION AWARD NUMBER S938A180002 (04/26/2018 – 09/30/2025) COMPLIANCE REQUIREMENTS ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES // EQUIPMENT AND REAL PROPERTY MANAGEMENT TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – SIGNIFICANT DEFICIENCY AND NONCOMPLIANCE CRITERIA 2 CFR §200.302(b)(3)(4) establishes that the recipient's and subrecipient's financial management system must provide for the following: maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. 2 CFR §200.403 establishes that costs must meet the following criteria to be allowable under Federal awards: (g) be adequately documented. The Fiscal Process Guide – Program Funds Restart designed by the PRDE establishes that all movable and immovable property with a unit cost of five hundred dollars ($500.00) or more and a useful life of more than two (2) years will be capitalized. Both conditions must exist. These will be classified in the E5000 expense accounts, as appropriate. Also, indicate that capitalizable equipment (E5000) and non-capitalizable equipment (E4414) purchased with program funds will be labeled with the number assigned by the Property Registry System, as established in Section X of the "Procedure for the Control and Accounting of the Property of the Department of Education”. Also as stated in the Section 102(h)(3) of the 2018 Hurricane Relief Act, states that public control of funds and property for services provided to non-public schools must remain with a public agency, which also administers the funds and resources or contracts for services with public or private entities. STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activity’s requirement, we selected a sample of forty (40) disbursements from a population of six hundred forty-two (842) disbursements to suppliers made during the fiscal year 2024-2025. During our testing, the following deficiencies were noted: 1. For five (5) reimbursement payments for purchase of equipment were incorrectly recorded in account E6170 (Donations and Contributions to Private Entities) rather than in one of the E5000-series accounts designated for equipment. Also, these equipment were not included in the property & equipment register of the PRDE. According to the Restart Fiscal Process Guide, all the equipment purchased or reimbursed to the private schools should be recorded as part of the property list that belongs to the PRDE. In other words, PRDE must maintain ownership over the property bought with the Restart funds. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systemic deficiency. The codifications of these transactions were not properly reviewed in order to avoid missed codification, considering that the PRDE has the Third-Party Fiduciary Agent that had reviewed them and did not detect the missing codification and the missing documentation for the proper accounting and authorization process. The sample was statistically valid sample. STATEMENT OF CAUSE The PRDE lack of training or oversight on proper accounting practices, which leads to equipment expenses being coded incorrectly in account E6170 rather than the proper E5000 series. POSSIBLE ASSERTED EFFECT The PRDE incorrect accounting of equipment expenses could result in inaccurate financial reporting and a potential noncompliance issue with Federal regulations that require proper codification of expenses. IDENTIFICATION OF REPEAT FINDING Yes, this finding is a repeat of a finding reported in the prior audit. The corresponding prior year Finding Number is 2024-003. RECOMMENDATIONS We recommend that the PRDE provides training to all relevant personnel on the importance of accurate accounting and documentation, particularly for equipment purchases, and ensures that such expenses are properly coded. Implement a review process to verify that equipment reimbursements are supported by the required receiving report, invoice and that disbursements are coded appropriately in the accounting system (SIFDE).

FINDING REFERENCE NUMBER 2025-003 FEDERAL PROGRAMS FEDERAL PROGRAMS IN THE CONSOLIDATED FUNDS: (ALN – 84.010A) TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES (TITLE I, PART A OF THE ESSEA) (ALN – 84.287) TWENTY-FIRST CENTURY COMMUNITY LEARNING CENTERS (ALN – 84.367A) SUPPORTING EFFECTIVE INSTRUCTION STATE GRANTS (FORMERLY IMPROVING TEACHER QUALITY STATE GRANTS) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS S010S220052 (Fiscal Year: 07/01/2022 – 09/30/2023); S010S230052 (Fiscal Year: 07/01/2023 – 09/30/2024); S010S240052 (Fiscal Year: 07/01/2024 – 09/30/2025) S287C230039A (Fiscal Year: 0701/2023 – 09/30/2024); S287C230039A (Fiscal Year: 0701/2023 – 09/30/2024) S367A230052 (Fiscal Year: 0701/2023 – 09/30/2024); S367A240052B (Fiscal Year: 0701/2024 – 09/30/2025) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E establish the requirements for Cost Principles – Allowable Costs under Federal awards. This Section at § 200.403 discloses factors affecting allowability of costs – states 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; and (g) Be adequately documented. Section § 200.404 Reasonable costs add: A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost including (c) Market prices for comparable goods or services for the geographic area. Also, § 200.405 Allocable Costs include that: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received; including (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods. STATEMENT OF CONDITION During our internal control and compliance tests of disbursements for Federal programs (included in the Consolidated Fund), we selected seven (7) payments of professional services of Third-Party Fiduciary Agent Services ("TPFA") as part of our samples of the different Federal major programs. During our tests, we noted the following conditions: 1. Reasonableness of costs: The payment made to the vendor is a "flat fee" monthly payment agreed to in the professional service contract. Although the vendor invoice includes a detail of hours of service and expense summary, this information is solely for "information purposes" and not to be taken into account for the actual invoice payment process. The monthly payment amount only consideration is the agreed upon "flat fee". In the invoices evaluated (see detail below), the vendor includes a total hours incurred for each invoice with a price per hour range from $195 to $695. Also, the invoices include an expense summary for the period. When we compared the actual payment to the hours incurred and related expenditures, we noted an unreasonable charge to the PRDE and its Federal funds based upon the payment being made versus the actual service hours/expenses included on the invoice; when it is compared to price estimates made during the RFP process when the per hour price ranges were from $65 to $352. VOUCHER NUMBER VOUCHER DATE VOUCHER AMOUNT INVOICE NUMBER INVOICE DATE SERVICE PERIOD TOTAL HOURS INVOICED INVOICE AMOUNT TOTAL RELATED EXPENSES AVERAGE HOURLY RATE CALCULATED 25AP0268 7/29/2024 $ 2,500,000.00 830311-2024-39 7/1/2024 Jun-24 5,421.00 $ 2,500,000.00 $ 672,893.25 $ 337.04 1277646 9/9/2024 2,500,000.00 830311-2024-40 8/1/2024 Jul-24 5,777.00 2,500,000.00 89,160.12 417.32 1281131 9/23/2024 2,500,000.00 830311-2024-41 9/1/2024 Aug-24 6,414.00 2,500,000.00 55,557.56 381.11 1287473 10/11/2024 2,500,000.00 830311-2024-42 10/1/2024 Sep-24 6,082.00 2,500,000.00 142,510.00 387.62 1300722 12/5/2024 2,500,000.00 830311-2024-43 11/1/2024 Oct-24 6,311.00 2,500,000.00 56,081.93 387.25 1301526 1/7/2025 2,500,000.00 830311-2024-44 12/2/2024 Nov-24 5,060.00 2,500,000.00 70,654.00 480.11 1309568 2/14/2025 2,500,000.00 830311-2025-45 1/1/2025 Dec-24 5,302.00 2,500,000.00 60,040.27 460.20 1316767 3/5/2025 2,500,000.00 830311-2025-46 2/1/2025 Jan-25 5,538.00 2,500,000.00 37,906.95 444.58 1324572 3/25/2025 2,500,000.00 830311-2025-47 3/1/2025 Feb-25 4,961.00 2,500,000.00 80,429.52 487.72 1333390 / 1333392 4/25/2025 & 5/6/2025 2,500,000.00 830311-2025-48 4/1/2025 Mar-25 5,260.00 2,500,000.00 58,231.99 464.21 1345009 5/26/2025 2,375,000.00 830311-2025-50 5/1/2024 Apr-25 5,223.00 2,375,000.00 614,961.22 ● 336.98 1356525 6/26/2025 2,375,000.00 830311-2025-51 6/1/2024 May-25 5,187.00 2,375,000.00 229,866.71 413.56 $ 29,750,000.00 $ 29,750,000.00 $ 2,168,293.52 ●This amount include $570,000 of Performance Bond Insurance. 2. Allocability – the payment made was distributed among several Federal programs (Consolidated Funds) and state funds as follows: State Fund CONSOLIDATED FUNDS (SEA/LEA) TOTAL ALLOCATED AMOUNT $ - $ 2,500,000.00 $ 2,500,000.00 - 2,500,000.00 2,500,000.00 - 2,500,000.00 2,500,000.00 - 2,500,000.00 2,500,000.00 2,500,000.00 - 2,500,000.00 2,500,000.00 - 2,500,000.00 2,500,000.00 - 2,500,000.00 2,500,000.00 - 2,500,000.00 2,500,000.00 - 2,500,000.00 195,723.15 2,304,276.85 2,500,000.00 2,375,000.00 - 2,375,000.00 - 2,375,000.00 2,375,000.00 $ 15,070,723.15 $ 14,679,276.85 $ 29,750,000.00 50.66% 49.34% Based on the payment documentation of the evaluated invoices, the allocations were made based on available budget of administrative allocation of Federal awards that “consolidate administration funds of those programs”, the invoices didn't include any basis for the allocation of costs between Federal and non-Federal funds, and no allocation was made to programs that do not consolidated administration funds but benefited from the TPFA process. QUESTIONED COSTS Based on the Criteria established on Part II, § 200.403 and § 200.404 for Cost Principles – Allowable Costs under Federal awards, the based used for the costs distribution without specific services rendered to Federal Programs, as described in the Statement of Condition, we estimate as minimum the amount of $14,679,276.85 as questioned costs for not supported documentation. See also Perspective Information for more support. PERSPECTIVE INFORMATION This is a systemic deficiency. The total contract amount awarded for the services over the two-year period is $79,675,000, with a flat fee of $3,143,750 for the first twelve months, and $3,495,833 for the next twelve months. In the fiscal year 2023 there were 3 amendments to the original contract where it was agreed to pay a total fee of $2,995,833 for the months of April and May 2023 and the total amount of $23,333,333 for 10 additional months or $2,333,333 monthly from June 2023 to March 2024. During fiscal year 2024 there were two (2) amendments to the original contract where it was agreed to pay a total monthly fee of $2,500,000 for the months of April 2024 to March 2025, and a total monthly fee of $2,375,000 for the months of April 2025 to October 2025. From the first year of the contract up to the last amendment the total contract amount is approximately $155,625,000. Based on the inconsistent cost allocation method and the lack of a requirement for the payments being made for actual works performed, we considered this a systematic problem in the contract management and payment. Based on the information provided and evaluated, the allocation between Federal and non-Federal funds is not applied consistently. In accordance with the documentation provided the allocation used is based on the budget amounts available from state and Federal funds; during this fiscal year the total amount paid to the supplier was $29,750,000. Of this amount 50.66% were covered with state funds, and 49.34% with consolidated activities administrative funds of Federal Awards of some programs. Some payments were charged completely to state funds or consolidated funds, while others were prorated between the two funding sources without documentation of services provided. STATEMENT OF CAUSE The PRDE did not include on the RFP process and the contract negotiation a clause that requires that the payment of services will be made upon actual hours incurred or that a final reconciliation process will be made during the contract period of performance based on actual service hours and expense incurred. The PRDE agreed upon a "flat fee" contract based on an estimate / budget of hours presented by the vendor on its proposal without considering the requirement of adjusting the payment for actual workhours incurred as part of its contract negotiation. The PRDE staff could not provide the basis used to distribute the cost between the different programs and state funds in accordance with the benefit obtained from the costs incurred. There is no consistent treatment or basis for the allocation of the payment costs between Federal programs and state funds. The contract includes the accounting codes that can be charged for the contract costs; however, no amounts, limitations, or basis for the cost’s distributions were included in the contract or in the payment documentation. POSSIBLE ASSERTED EFFECT Unreasonable costs may be charged to the PRDE's Federal programs that may result in questionable or unallowable costs by the Federal grantors. IDENTIFICATION OF REPEAT FINDING This is a repeat finding (Finding Reference 2024-004). RECOMMENDATIONS We recommend PRDE to establish an adequate and consistent allocation method of each invoice amount that reflects the relative benefits that the Federal program received from the services provided by the supplier during the invoice period, so the Federal program can be charged for the costs of that period. In addition, we recommend that the PRDE revised the contract terms to include a reconciliation of total hours and rates to adjust the payments made to the vendor before the contract expiration. Also, we recommend that the PRDE should request that adequate supporting evidence from the vendors be presented for any expenses to be reimbursed by the PRDE.

FINDING REFERENCE NUMBER 2025-004 FEDERAL PROGRAMS (ALN – 10.553) SCHOOL BREAKFAST PROGRAM (SBP) – CHILD NUTRITION CLUSTER (ALN – 10.555) NATIONAL SCHOOL LUNCH PROGRAM (NSLP) – CHILD NUTRITION CLUSTER (ALN – 10.559) SUMMER FOOD SERVICE PROGRAM FOR CHILDREN (SFSP) – CHILD NUTRITION CLUSTER (ALN – 10.582) FRESH FRUIT AND VEGETABLE PROGRAM (FFVP) – CHILD NUTRITION CLUSTER U.S. DEPARTMENT OF AGRICULTURE (ALN – 84.010A) TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES (TITLE I, PART A OF THE ESSEA) (ALN – 84.027) SPECIAL EDUCATION – GRANTS TO STATES (IDEA, PART B) (ALN – 84.425D) COVID-19 EDUCATION STABILIZATION FUND: ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND (ALN – 84.425U) COVID-19 EDUCATION STABILIZATION FUND: AMERICAN RESCUE PLAN – ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ARP ESSER) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS 1PRAEA18SCESUBA (10/01/2017 – 09/30/2018); 1PRAEA19SCESUBA (10/01/2018 – 09/30/2019); 1PRAEA20SCESUBA (10/01/2019 – 09/30/2020); 1PRAEA21SCESUBA (10/01/2020 – 09/30/2021); 1PRAEA22SCESUBA (10/01/2021 – 09/30/2022); 1PRAEA23SCESUBA (10/01/2022 – 09/30/2023); 1PRAEA24SCESUBA (10/01/2023 – 09/30/2024); 1PRAEA25SCESUBA (10/01/2024 – 09/30/2025); H027A1200003 (07/01/2020 – 09/30/2021); H027A2200003 (07/01/2022 – 09/30/2023); H027A2300003 (07/01/2023 – 09/30/2024); H027A2400003 (07/01/2024 – 09/30/2025); V048A180052 (07/01/2018 – 09/30/2019); S425D200029 (06/16/2020 – 09/30/2021); S425D210029 (01/05/2021 – 09/30/2022); S425U210029 (03/24/2021 – 09/30/2023) COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR Section 200.403 (g) establishes that except where otherwise authorized by statute, costs must be adequately documented in order to be allowable under Federal awards. In addition 2 CFR Section 200.1, defines improper payments as a payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. The term improper payment includes any payment to an ineligible recipient, any payment for ineligible goods or service, any duplicate payment, any payment for a good or service not received (except for those payments where authorized by law), any payment that is not authorized by law, and any payment that does not account for credit for applicable discounts. STATEMENT OF CONDITION As part of our audit procedures and interviews over financial reporting, we obtained a detail of accounts receivable related to duplicate or incorrect payments made for payroll transactions in the amount of $3,756,580. Invoices issued during the fiscal year ended June 30, 2025, balance, were distributed as federal and state, as follows: Assistance Listing Number Program Description Transaction Balance 10.553/ 10.555/ 10.559/ 10.582 Child Nutrition Program Cluster $ 94,915 84.010A Title I Grants to Local Educational Agencies (Title I, Part A of the ESEA) 13,665 84.027 Special Education – Grants to States (IDEA, Part B) 33,798 84.425D COVID-19 Education Stabilization Fund: Elementary and Secondary School Emergency Relief Fund 43,252 84.425U COVID-19 Education Stabilization Fund: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) 55,837 Subtotal 241,467 Not Determined Schoolwide Program (State and Federal Funds) 2,106,827 Not Determined Consolidated Funds (State and Federal Funds) 32,730 Not Applicable State Funds 1,375,556 Total Invoices Issued Balance at 06/30/2025 $ 3,756,580 QUESTIONED COSTS Identified questioned costs are $241,467, which were identified as employees that didn't work for the Federal program. Other amount may be unallowed, if the PRDE can identify the portion of Federal funding incurred in Schoolwide and Consolidated activities. PERSPECTIVE INFORMATION This is a systemic deficiency. The amount of $3,756,580, corresponds to incorrect payroll payments made from current and prior years, for which during fiscal year 2024-2025, the PRDE determined that an invoice for excess payroll payments proceeds. The PRDE was unable to indicate which amount of Schoolwide or Consolidated funds corresponds to Federal funding, because these funds close at year end. STATEMENT OF CAUSE The PRDE sends the Treasury Department of Puerto Rico a balance of the payroll, before the end of the fortnight, to speed up the payment process. By sending this information without balancing the hours worked, it causes errors in the payroll computations. POSSIBLE ASSERTED EFFECT The PRDE incurred payments to employees for hours not worked, and for which specific grants were received. IDENTIFICATION OF REPEAT FINDING This is a repeat finding (Finding Reference Number 2024-005). RECOMMENDATIONS We recommend PRDE design and implement adequate internal controls and payroll processes that will identify in real – time or sooner any incorrect payroll payment made.

Finding 2025-003 Assistance Listing Number(s): 93.558 Name of Federal Program or Cluster: Temporary Assistance for Needy Families Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entity: Virginia Department of Social Services Pass-through Entity Identifying Number: BEN-21-029 Award Period: July 1, 2024 through June 30, 2025 Criteria or Specific Requirement: Per 2 CFR 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and must be supported by a system of internal controls.Fringe benefits must be based on actual costs incurred and be allocable to the federal award. Per 2 CFR 200.403, costs must be allowable, reasonable, and properly supported. Condition and Context: UCM did not maintain effective internal controls over payroll and employee benefit costs charged to the federal award. Testing of all 14 employees charged to the program identified the following: Payroll costs – time and effort reporting • No internal controls existed over time and effort reporting for 2 out of 14 employees charged to the federal award. • Required after-the-fact documentation of actual time worked was not maintained. Retroactive time and effort certifications were received during audit for 10 out of 14 employees who worked within the program. • 5 of 14 employees were charged to the federal award at amounts exceeding the time reflected on time certifications, indicating payroll charges were not based on actual effort. Employee Benefits – lack of controls and overcharging • There were no internal controls to ensure that employee benefits charged to the award reflected actual costs incurred. • 13 of 14 employees had employee benefit costs charged to the federal award that exceeded actual benefits incurred, indicating the use of budgeted or estimated amounts rather than actual costs. Cause: UCM lacked formal written policies and procedures governing time and effort reporting, employee benefit allocations, and documentation standards. Significant management personnel turnover resulted in inadequate federal grant knowledge and inconsistent application of Uniform Guidance requirements. Effect or Potential Effect: Unallowable, unsupported, or inaccurately allocated costs were charged to the federal award. UCM may be required to repay federal funds and implement corrective actions. Repeat Finding: This finding is a repeat of 2024-001. Questioned Costs: Questioned costs include the 2 out of 14 unsupported time and effort costs, excess salaries and employee benefits than actual allocable to the employees within the program, and 10% de minimis charged on the questioned costs. Payroll: $55,523 Employee benefits: 99,980 Indirect overcharge on above questioned costs: 15,550 Total known questioned costs: $171,053 Recommendation: UCM should develop and implement comprehensive written policies and proceduresaddressing time and effort, employee benefits, payroll allocations, and documentation standards. Staff responsible for grant accounting should receive Uniform Guidance training. Views of Responsible Officials: Management acknowledges the finding and will work to implement appropriate corrective actions to address the deficiency and improve compliance going forward.

Finding 2025-005 Assistance Listing Number(s): 93.558 Name of Federal Program or Cluster: Temporary Assistance for Needy Families Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entity: Virginia Department of Social Services Pass-through Entity Identifying Number: BEN-21-029 Award Period: July 1, 2024 through June 30, 2025 Criteria or Specific Requirement: Per 2 CFR 200.403 Factors affecting allowability and 2 CFR 200.404 Reasonable costs, costs charged to Federal awards must be adequately documented, reasonable, and based on actual costs. Allocations must be supported and not based on unsupported estimates. Condition and Context: 9 of 60 disbursements tested (totaling $2,736 in the sample) were allocated to the Federal award using estimates for insurance, software, IT support, telephone system, payroll processing, and benefit plan administration. Total charges to the award for these categories were approximately $18,838. Cause: The entity used estimated allocations without adequate supporting documentation or reconciliation to actual costs. Effect or Potential Effect: Costs charged to the Federal award may not be accurate, allowable, or properly allocated, resulting in likely questioned costs of $18,838. Repeat Finding: This finding is a repeat of 2024-002 representing the continued instance of noncompliance identified separately in the current year. Questioned Costs: $18,838. This is the total of allocated costs charged to the federal award. Actual bases for allocation were not determined at time of audit. Recommendation: UCM should develop and implement comprehensive written policies and procedures addressing allowability and documentation standards. Controls should ensure only actual costs are charged. Staff responsible for grant accounting should receive Uniform Guidance training. Views of Responsible Officials: Management acknowledges the finding and will work to implement appropriate corrective actions to address the deficiency and improve compliance going forward.

Finding 2025-001: Material Weakness in Internal Control and Material Noncompliance, Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Assistance Listing Program Title and Number: Education Stablization Fund: COVID-19 American Rescue Plan - Elementary and Secondary School Emergency Relief (ARP ESSER) (84.425U) Federal Agency: U.S. Department of Education Pass-Through Entity: Illinois State Board of Education Award Year: 2024-2025 Award Number: 25-4998-C3 and 24-4998-E3 Criteria or Specific Requirement: Per 2 CFR §§ 200.403 and 200.438, costs charged to federal awards must be necessary, reasonable, and allowable under federal statutes, regulations, and the terms and conditions of the award. Costs for entertainment, gifts, or similar items are generally unallowable unless they serve a documented, programmatic purpose and are explicitly authorized. In addition, U.S. Department of Education guidance for the ARP ESSER program indicates that funds may not be used to provide direct monetary incentives, such as gift cards, to students or families to encourage attendance or participation, as such expenditures do not meet federal allowability requirements. Condition: During our testing of nine transactions totaling $428,326, we identified one transaction in the amount of $38,200 for the purchase and distribution of Amazon gift cards to students as incentives to improve attendance. Further inquiry of the District’s management and specific identification of all expenditures labeled as “prepaid gift cards” indicated that the District expended $113,200 of ARP ESSER funds during the fiscal year ended June 30, 2025 on prepaid gift cards for similar purposes. Cause: The condition was caused by inadequate design and implementation of controls over the review and approval of nonpayroll expenditures charged to federal awards, specifically the lack of procedures to evaluate allowability in accordance with federal regulations and program guidance prior to purchase. The District submitted an application for the use of funds and the pass through entity approved the submitted annual ESSER budget for the period ending June 30, 2025. Effect: District incurred unallowable costs and was not in compliance with federal requirements. As a result of the noncompliance, the District may be required to return the funds to the State. Additionally, the lack of effective controls increases the risk that additional unallowable expenditures could occur and not be detected in a timely manner. Context: The unallowable costs of $113,200 represented approximately 12% of the $915,106 in total expenditures reported for this award. The sample used was not a statistically valid sample. Questioned Costs: Questioned costs of $113,200 represent the total amount of ARP ESSER funds expended on prepaid gift cards identified through testing and follow-up procedures as unallowable. Repeat Finding: N/A Recommendation: We recommend the District strengthen internal controls over federal expenditures by implementing procedures to: • Evaluate and document allowability of expenditures prior to approval, • Require review of expenditures against Uniform Guidance and program-specific requirements, and • Provide training to relevant personnel regarding allowable and unallowable costs under federal programs. Views of Responsible Officials: The District's determination was based on its interpretation of available guidance and the approval of the related grant budget; however, the District acknowledges that additional reviews should have been performed to independently assess and document the allowability of the expenditures under federal requirements. However, the District recognizes that approval of a budget does not relieve the District of its responsibility to independently evaluate and document compliance with federal allowability requirements. The District will strengthen its review and approval procedures for expenditures charged to federal programs by providing additional training to personnel responsible for grant administration and implementing enhanced procedures to evaluate and document allowability before costs are incurred and charged to federal awards.

2025-003 – Allowable Costs (Significant Deficiency) ______________________________________________________________________ Federal Program Information: Funding Agency: U.S. Department of Energy Title: Nuclear Energy Research, Development and Demonstration Assistance Listing Number: 81.121 Award Number: DE-NE0009334 and DE-NE0009328 Award Period: 09/29/2023-09/28/2025; 05/04/2023-05/03/2026 Criteria: In accordance with 2 CFR §200.403, except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards:  Be necessary and reasonable for the performance of the federal program.  Be adequately documented.  Conform to any limitations or exclusions set forth in the federal award. Further, 2 CFR §200.302(b)(3) the entity should maintain records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Additionally, 2 CFR §200.473 says that the cost of alcoholic beverages is unallowable. Condition: During our expenditure testwork we noted the following: 1. The Alliance could not provide supporting documentation, such as an invoice, purchase order or receipt, for $197 out of $14,881 expenses tested. 2. There were no itemized receipts for four purchases of $315. 3. One of the submitted receipts included an unallowable alcoholic beverage purchase totaling $39.Context: Four out of Five invoices sampled for reimbursed expenses tested. Questioned Costs: $552. Cause: The Alliance did not ensure that reimbursed expenses were supported by appropriate documentation and there was a lack of review to identify unallowable costs. Effect: The program was charged for costs that were not adequately supported and included unallowable costs. Recommendation: We recommend that the Alliance strengthen internal controls over the allowability and documentation of expenditures charged to federal awards by requiring original, itemized receipts for all purchases prior to reimbursement or payment. Additionally, the Alliance should implement a documented review and approval process to verify that each expenditure is allowable, reasonable, allocable, and adequately supported in accordance with Uniform Guidance. Management Response: ECA believes that the documentation existed at the time for the charges as we have all of the receipts prior to creating any bills. However, for the unallowable costs ($39), ECA is reversing the charge and has already implemented a process to ensure that such costs are not charged to the grants in the future

Federal Agency: National Science Foundation Federal Program Name: Research and Development Cluster Assistance Listing Number: 47.076 Federal Award Identification Number and Year: R&D - 2025 Award Period: June 1, 2024 to May 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: The Code of Federal Regulations 2 CFR Part 200, Subpart E, requires that expenses be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principals (200.403(a)) and allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to the Federal award or cost objective in accordance with relative benefits received (200.405). Condition: We noted that one out of 8 items selected for period of performance was incorrectly coded to an R&D grant. Questioned costs: $100 Context: The University's review and internal controls over R&D grant charges did not identify an expense that had been incorrectly coded. Cause: The University’s processes and controls did not ensure that all expenses charged to R&D grants were valid R&D expenditures. Effect: An incorrect amount of R&D expenditures was drawn down. Repeat Finding: No Recommendation: We recommend that the University review its procedures around review and approval of R&D expenditures to ensure that only valid expenditures are reported. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: National Science Foundation Federal Program Name: Research and Development Cluster Assistance Listing Number: 47.076 Federal Award Identification Number and Year: R&D - 2025 Award Period: June 1, 2024 to May 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: The Code of Federal Regulations 2 CFR Part 200, Subpart E, requires that expenses be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principals (200.403(a)) and allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to the Federal award or cost objective in accordance with relative benefits received (200.405). Condition: We noted that one out of 8 items selected for period of performance was incorrectly coded to an R&D grant. Questioned costs: $100 Context: The University's review and internal controls over R&D grant charges did not identify an expense that had been incorrectly coded. Cause: The University’s processes and controls did not ensure that all expenses charged to R&D grants were valid R&D expenditures. Effect: An incorrect amount of R&D expenditures was drawn down. Repeat Finding: No Recommendation: We recommend that the University review its procedures around review and approval of R&D expenditures to ensure that only valid expenditures are reported. Views of responsible officials: There is no disagreement with the audit finding.

Criteria: Federal regulations require non-federal entities to maintain records that adequately support allowable costs and program activities. Specifically, 2 CFR 200.302 requires financial management systems to provide accurate, current, and complete disclosure of financial results, and 2 CFR 200.403 requires that costs charged to federal awards be allowable, reasonable, and adequately documented. HRSA program requirements further require health centers to maintain patient-level documentation to support reported encounters and costs. Condition: During audit testing of patient eligibility and sliding fee scale application, supporting documentation of income was not available for 25 of 40 patients sampled. As a result, the health center was unable to demonstrate that the sliding fee discounts were appropriately determined in accordance with program requirements. Cause: Per HRSA and UDS requirements, FQHC’s must determine patient eligibility for the sliding fee discount based on income and family size, and retain documentation to support income verification for each patient applying for the discount. Effect: As a result, the health center is in noncompliance with HRSA sliding fee discount program requirements, which represents a material weakness in internal control over compliance and results in an increased risk that patients received sliding fee discounts for which they were not eligible or that eligible patients were improperly classified, and that Uniform Data System (UDS) data related to patient income levels and sliding fee discount utilization may be materially misstated. Questioned Costs: Questioned costs could not be determined due to the lack of supporting documentation for the affected patients. Recommendation: We recommend that management reinforce policies requiring documentation of income and family size before applying sliding fee discounts, implement periodic review of patient files to ensure compliance, provide staff training, and accountability measures for intake procedures, and consider adding monitoring on a quarterly basis to ensure ongoing adherence.