Findings Citing § 200.430

Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR 200.430(a)(2) outlines the requirements of allowable compensation, and states that the compensation should follow an appointment made in accordance with the non-Federal entity's written policies. The Monroe County Board of Education's (the "Board") Policies and Procedures Manual states, "Except as established and governed by the terms of a special employment contract, Board employees will be compensated at rates of pay that are approved by the Board" and "When required, such salary or compensation rates will be included in a schedule to be developed and adopted by the Board in accordance with state law". When reviewing the Child Nutrition Cluster, sixty expenditures were randomly selected for testing. Five of the sixty expenditures tested included errors related to the calculation of leave and errors in payments of approved salaries. Controls were not in place to ensure personnel were properly compensated in accordance with approved rates of pay and approved salary schedules. As a result, the Monroe County Board of Education (the “Board”) did not calculate salaries paid to employees in accordance with the Board’s policies.

Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR 200.430(a)(2) outlines the requirements of allowable compensation, and states that the compensation should follow an appointment made in accordance with the non-Federal entity's written policies. The Monroe County Board of Education's (the "Board") Policies and Procedures Manual states, "Except as established and governed by the terms of a special employment contract, Board employees will be compensated at rates of pay that are approved by the Board" and "When required, such salary or compensation rates will be included in a schedule to be developed and adopted by the Board in accordance with state law". When reviewing the Child Nutrition Cluster, sixty expenditures were randomly selected for testing. Five of the sixty expenditures tested included errors related to the calculation of leave and errors in payments of approved salaries. Controls were not in place to ensure personnel were properly compensated in accordance with approved rates of pay and approved salary schedules. As a result, the Monroe County Board of Education (the “Board”) did not calculate salaries paid to employees in accordance with the Board’s policies.

Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR 200.430(a)(2) outlines the requirements of allowable compensation, and states that the compensation should follow an appointment made in accordance with the non-Federal entity's written policies. The Monroe County Board of Education's (the "Board") Policies and Procedures Manual states, "Except as established and governed by the terms of a special employment contract, Board employees will be compensated at rates of pay that are approved by the Board" and "When required, such salary or compensation rates will be included in a schedule to be developed and adopted by the Board in accordance with state law". When reviewing the Child Nutrition Cluster, sixty expenditures were randomly selected for testing. Five of the sixty expenditures tested included errors related to the calculation of leave and errors in payments of approved salaries. Controls were not in place to ensure personnel were properly compensated in accordance with approved rates of pay and approved salary schedules. As a result, the Monroe County Board of Education (the “Board”) did not calculate salaries paid to employees in accordance with the Board’s policies.

Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR 200.430(a)(2) outlines the requirements of allowable compensation, and states that the compensation should follow an appointment made in accordance with the non-Federal entity's written policies. The Monroe County Board of Education's (the "Board") Policies and Procedures Manual states, "Except as established and governed by the terms of a special employment contract, Board employees will be compensated at rates of pay that are approved by the Board" and "When required, such salary or compensation rates will be included in a schedule to be developed and adopted by the Board in accordance with state law". When reviewing the Child Nutrition Cluster, sixty expenditures were randomly selected for testing. Five of the sixty expenditures tested included errors related to the calculation of leave and errors in payments of approved salaries. Controls were not in place to ensure personnel were properly compensated in accordance with approved rates of pay and approved salary schedules. As a result, the Monroe County Board of Education (the “Board”) did not calculate salaries paid to employees in accordance with the Board’s policies.

Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR 200.430(a)(2) outlines the requirements of allowable compensation, and states that the compensation should follow an appointment made in accordance with the non-Federal entity's written policies. The Monroe County Board of Education's (the "Board") Policies and Procedures Manual states, "Except as established and governed by the terms of a special employment contract, Board employees will be compensated at rates of pay that are approved by the Board" and "When required, such salary or compensation rates will be included in a schedule to be developed and adopted by the Board in accordance with state law". When reviewing the Special Education Cluster, sixty expenditures were randomly selected for testing. Five of the sixty expenditures tested included errors related to the calculation and proration of salaries paid to employees. Controls were not in place to ensure personnel were properly compensated in accordance with approved rates of pay and approved salary schedules. As a result, the Monroe County Board of Education (the “Board”) did not calculate salaries paid to employees in accordance with the Board’s policies.

Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR 200.430(a)(2) outlines the requirements of allowable compensation, and states that the compensation should follow an appointment made in accordance with the non-Federal entity's written policies. The Monroe County Board of Education's (the "Board") Policies and Procedures Manual states, "Except as established and governed by the terms of a special employment contract, Board employees will be compensated at rates of pay that are approved by the Board" and "When required, such salary or compensation rates will be included in a schedule to be developed and adopted by the Board in accordance with state law". When reviewing the Special Education Cluster, sixty expenditures were randomly selected for testing. Five of the sixty expenditures tested included errors related to the calculation and proration of salaries paid to employees. Controls were not in place to ensure personnel were properly compensated in accordance with approved rates of pay and approved salary schedules. As a result, the Monroe County Board of Education (the “Board”) did not calculate salaries paid to employees in accordance with the Board’s policies.

Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR 200.430(a)(2) outlines the requirements of allowable compensation, and states that the compensation should follow an appointment made in accordance with the non-Federal entity's written policies. The Monroe County Board of Education's (the "Board") Policies and Procedures Manual states, "Except as established and governed by the terms of a special employment contract, Board employees will be compensated at rates of pay that are approved by the Board" and "When required, such salary or compensation rates will be included in a schedule to be developed and adopted by the Board in accordance with state law". When reviewing the Special Education Cluster, sixty expenditures were randomly selected for testing. Five of the sixty expenditures tested included errors related to the calculation and proration of salaries paid to employees. Controls were not in place to ensure personnel were properly compensated in accordance with approved rates of pay and approved salary schedules. As a result, the Monroe County Board of Education (the “Board”) did not calculate salaries paid to employees in accordance with the Board’s policies.

Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR 200.430(a)(2) outlines the requirements of allowable compensation, and states that the compensation should follow an appointment made in accordance with the non-Federal entity's written policies. The Monroe County Board of Education's (the "Board") Policies and Procedures Manual states, "Except as established and governed by the terms of a special employment contract, Board employees will be compensated at rates of pay that are approved by the Board" and "When required, such salary or compensation rates will be included in a schedule to be developed and adopted by the Board in accordance with state law". When reviewing the Special Education Cluster, sixty expenditures were randomly selected for testing. Five of the sixty expenditures tested included errors related to the calculation and proration of salaries paid to employees. Controls were not in place to ensure personnel were properly compensated in accordance with approved rates of pay and approved salary schedules. As a result, the Monroe County Board of Education (the “Board”) did not calculate salaries paid to employees in accordance with the Board’s policies.

Finding Number: 2023-001 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Agriculture Supplemental Nutrition Assistance Program Cluster (SNAP) ALN: 10.551, 10.561 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation – Personal Services: “Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.” 2 CFR Section 200.430(i): “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vi) [Reserved] (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.” Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must: 1. Submit a request in advance to use annual leave to their manager or supervisor. 2. Receive approval from the manager or supervisor; and 3. Record the approved leave taken on their timesheet in PeopleSoft. Condition – We noted that for six (6) out of a sample of seven (7) employees tested of total costs sampled of $30,993, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet. Questioned Costs – Known amount is $28,093. Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the SNAP program in fiscal year 2023 were $16,063,809. Effect – Without adequate internal controls in place to ensure costs are properly reviewed for allowability, DHS/ESA could be noncompliant with the allowability requirement and could request funds for costs that are unallowed. Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet is obtained and maintained. Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of scheduled leave or overtime is obtained and maintained. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

Finding Number: 2023-001 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Agriculture Supplemental Nutrition Assistance Program Cluster (SNAP) ALN: 10.551, 10.561 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation – Personal Services: “Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.” 2 CFR Section 200.430(i): “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vi) [Reserved] (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.” Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must: 1. Submit a request in advance to use annual leave to their manager or supervisor. 2. Receive approval from the manager or supervisor; and 3. Record the approved leave taken on their timesheet in PeopleSoft. Condition – We noted that for six (6) out of a sample of seven (7) employees tested of total costs sampled of $30,993, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet. Questioned Costs – Known amount is $28,093. Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the SNAP program in fiscal year 2023 were $16,063,809. Effect – Without adequate internal controls in place to ensure costs are properly reviewed for allowability, DHS/ESA could be noncompliant with the allowability requirement and could request funds for costs that are unallowed. Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet is obtained and maintained. Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of scheduled leave or overtime is obtained and maintained. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

Finding Number: 2023-001 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Agriculture Supplemental Nutrition Assistance Program Cluster (SNAP) ALN: 10.551, 10.561 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/ Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation – Personal Services: “Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.” 2 CFR Section 200.430(i): “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vi) [Reserved] (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.” Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must: 1. Submit a request in advance to use annual leave to their manager or supervisor. 2. Receive approval from the manager or supervisor; and 3. Record the approved leave taken on their timesheet in PeopleSoft. Condition – We noted that for six (6) out of a sample of seven (7) employees tested of total costs sampled of $30,993, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet. Questioned Costs – Known amount is $28,093. Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the SNAP program in fiscal year 2023 were $16,063,809. Effect – Without adequate internal controls in place to ensure costs are properly reviewed for allowability, DHS/ESA could be noncompliant with the allowability requirement and could request funds for costs that are unallowed. Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that documentation to show the preapproval of the scheduled leave and overtime approved on the timesheet is obtained and maintained. Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of scheduled leave or overtime is obtained and maintained. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

Finding Number: 2023-005 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Agriculture Special Supplemental Nutrition Program for Women, Infants and Children (WIC) ALN: 10.557 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation – Personal Services: “Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.” 2 CFR Section 200.430(i): “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vi) [Reserved] (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition – From a sample of 40 payroll transactions, we noted five (5) transactions for one employee that did not work on the program, thus, there should be no hours charged to the program during the year. Per review of the total payroll charged to the program for the year for this employee, we noted $32,290 that should not have been charged to the program. Questioned Costs – Known amount is $32,290. Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the WIC program in fiscal year 2023 were $1,073,965. Effect – DC Health was unable to demonstrate that the payroll expenditures charged to the WIC program were allowable expenses in accordance with 2 CFR Part 200.430. Cause – DC Health did not adhere to its internal control policies and procedures for reviewing the eligibility and allowability of payroll expenditures charged to the WIC program. Recommendation – We recommend that DC Health strengthen its policies and procedures to ensure that only allowable expenses are charged to the program as required by 2 CFR 200.430. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. DC Health complies with local and federal requirements for regular and routine review of budgeted employee time and alignment with allowable costs and hours worked. Staff duties are documented in performance plans, SMART goals, logs/calendars and reports revised by supervisors. The exception found in the sample was corrected in January 2024 when the employee was found to be budgeted partly on the WIC grant. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

Finding Number: 2023-005 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Agriculture Special Supplemental Nutrition Program for Women, Infants and Children (WIC) ALN: 10.557 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Health (DC Health) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation – Personal Services: “Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.” 2 CFR Section 200.430(i): “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vi) [Reserved] (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition – From a sample of 40 payroll transactions, we noted five (5) transactions for one employee that did not work on the program, thus, there should be no hours charged to the program during the year. Per review of the total payroll charged to the program for the year for this employee, we noted $32,290 that should not have been charged to the program. Questioned Costs – Known amount is $32,290. Context – This is a condition identified per review of DC Health’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the WIC program in fiscal year 2023 were $1,073,965. Effect – DC Health was unable to demonstrate that the payroll expenditures charged to the WIC program were allowable expenses in accordance with 2 CFR Part 200.430. Cause – DC Health did not adhere to its internal control policies and procedures for reviewing the eligibility and allowability of payroll expenditures charged to the WIC program. Recommendation – We recommend that DC Health strengthen its policies and procedures to ensure that only allowable expenses are charged to the program as required by 2 CFR 200.430. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DC Health concurs with the finding. DC Health complies with local and federal requirements for regular and routine review of budgeted employee time and alignment with allowable costs and hours worked. Staff duties are documented in performance plans, SMART goals, logs/calendars and reports revised by supervisors. The exception found in the sample was corrected in January 2024 when the employee was found to be budgeted partly on the WIC grant. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

Finding Number: 2023-014 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Award #: N/A Award Year: 10/01/2021 – 09/20/2023 Department of Behavioral Health (DBH); Department of Energy and Environment (DOEE) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation – Personal Services: “Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.” 2 CFR Section 200.430(i): “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vi) [Reserved] (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition – During our tests of the design and implementation of internal controls, we noted the following issues: DBH did not effectively implement controls over employee premium pay benefits. • For two (2) out of 60 samples, we identified exceptions to the hours charged to the program. In one instance, there were 24 hours charged to the program on a single day for one employee. In addition, we also noted an instance of charging of hours within the “not worked” code and incorrect hours were charged to the project. At DOEE, employees charge hours worked each pay period on a time sheet to specific cost centers or combo codes as referred by the agency. • For one (1) out of 60 samples, we noted that the holiday hours have not been allocated between programs proportionally as required by the District’s policies, as such, incorrect hours were charged to the projects. Questioned Costs – Not determinable. Context – This is a condition identified per review of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the Coronavirus State and Local Fiscal Recovery Funds program in fiscal year 2023 were $40,106,238. Effect – Without internal controls operating as designed, the CSLFRF program was unable to demonstrate that the payroll expenditures charged to the program accurately reflected the costs incurred for the program. Cause – The CSLFRF program did not follow its own internal control policies, procedures and controls to ensure that payroll costs recorded are properly reviewed and approved. Recommendation – We recommend that the CSLFRF program fully implement its plan to deploy policies and procedures to ensure that payroll costs are recorded accurately. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH and DOEE concur with the findings. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

Finding Number: 2023-019 Prior Year Finding Number: 2022-010 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: Government Department/Agency: U.S. Department of Health and Human Services Temporary Assistance for Needy Families (TANF) ALN: 93.558 Award #: Various Award Year: 10/01/2022 – 09/30/2023 Department of Human Services (DHS)/Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation – Personal Services: “Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.” 2 CFR Section 200.430(i): “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vi) [Reserved] (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Per District Personnel Issuance No. 2021-10 (Approval Required) - "Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Employees may submit overtime requests in PeopleSoft. To submit a request, go to the main employee self-service page and access the navigator. Click “Self Service,” next “Time Reporting,” then “Report Time,” and finally “Overtime Requests.” Once an employee submits an overtime request, the employee’s supervisor and, if required by PeopleSoft any additional designated agency personnel, must review and approve the request in PeopleSoft for the employee to be authorized to receive overtime pay.” Per District Personnel Issuance No. 2018-00 (Annual Leave) effective April 21, 2018 “Using Annual Leave” - An employee may use accrued annual leave at any time during the leave year if they receive approval from their immediate supervisor or the agency head responsible for the employee’s timesheet. If an employee wishes to use their accrued annual leave, they must: 1. Submit a request in advance to use annual leave to their manager or supervisor. 2. Receive approval from the manager or supervisor; and 3. Record the approved leave taken on their timesheet in PeopleSoft. Condition – During our testwork for Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Payroll), we noted: • For seventeen (17) out of a sample of 40 employees tested, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation that the annual leave or overtime hours worked by the employee during the selected payperiods were preapproved. • For one (1) out of a sample of 40 employees tested, DHS/ESA was unable to provide an explanation of the identified variance between the salary earned and the amount included on the paystub. • For one (1) out of a sample of 40 employees tested, DHS/ESA was unable to provide an explanation and support for the benefit refund taxable included on the paystub and the variance between the hours on the timesheet and on the pay stub. Questioned Costs – Not determinable. Context – This is a condition identified per review of DHS/ESA’s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the TANF program in fiscal year 2023 were $15,577,889. Effect – DHS/ESA was unable to demonstrate that annual leave or overtime hours charged to the federal program was approved in advance in accordance with the internal policies and procedures of the agency. In addition, without adequate internal controls in place to ensure that documentation that supports the costs are properly maintained, costs could be charged that are not properly approved. Cause – DHS/ESA did not follow its own internal controls and policies and procedures to ensure that authorization forms evidencing the preapproval of annual leave or overtime hours are obtained and maintained as well as support of salary and benefits earned. Recommendation – We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of annual leave or overtime hours is obtained and maintained. In addition, we recommend that the agency strengthen their policies and procedures to ensure that transactions are properly supported. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DHS concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

Federal Agency: U.S. Department of Health and Human Services Compliance Requirement: Activities Allowed, Allowable Costs (Payroll) Type of Finding: Significant Deficiency in Internal Control over Compliance Federal Program: 93.696 – Certified Community Behavioral Health Clinics Grant Award: 1H79SM086741-01 Condition/Context During testing over payroll, we noted that out of ten (10) employees selected for testing, documentation of time and effort for one employee was not sufficiently documented, as the allocation of time and effort spent on program-related and general and administrative activities according to the time reporting system did not agree with the related accounting records. Criteria 2 CFR part 200.430 of the Uniform Guidance requires that “charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must….be incorporated into the official records and…support the distribution of the employee’s salary or wages among specific activities.” Cause Sufficient documentation related to time and effort was not maintained by management for the above employee. Effect It could not be determined if the excess time and effort was related to the federal award programs and, therefore, appropriately included as federal expenditures. Questioned Costs Not determinable since it was not clear if the employee partially or fully worked on program-related activities. Recommendation We recommend that management implement procedures to ensure that all time and effort spent on federal award programs be adequately documented with underlying contracts, offer letters, personnel action forms, and time sheets. Views of Responsible Officials and Planned Corrective Actions See corrective actions plans section.

Item 2023‐002 Written policies, procedures, and standards of conduct COVID 19 – Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number 21.027 U.S. Department of Treasury Grant period: Year ended September 30, 2023 Questioned Costs – $0 Condition – The City does not have all of the written policies, procedures and standards of conduct required by UG. Criteria – 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” Grantees should have written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. 2 CFR 200, Subparts D & E requires the non‐ Federal entity to establish and maintain written policies, procedures, and standards of conduct including internal controls over the Federal awards that provides reasonable assurance that the non‐ Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award. Specific requirements relate to the following:  § 200.302 Financial management  § 200.305 Payment § 200.319 Competition  § 200.320 Methods of procurement to be followed  § 200.430 Compensation—personal services  § 200.431 Compensation—fringe benefits Cause of Condition – The City has failed to prepare written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. Potential Effect of Condition – Lack of written policies, procedures, and standards of conduct could result in noncompliance related to federal awards. Recommendation – We recommend that the City implement the required written policies and procedures. Management’s Response – Management agrees with the finding and will implement the necessary written policies to comply with the UG. Management anticipates completion by September 30, 2024.

Finding No. 2023-003: Internal Control over Payroll – Significant Deficiency in Internal Control over Compliance U.S. Agency for International Development, USAID Foreign Assistant for Programs Overseas, Assistance Listing Number 98.001. Criteria Section 200.405 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) indicates that a cost is allocable to a particular federal award if the goods or services involved are chargeable or assignable to that federal award or cost objective in accordance with relative benefits received. This standard is met, among other things, if the cost charged is incurred specifically for the federal award. Also, under cost principles established by 2 CFR Section 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated and be incorporated into the official records of the non-Federal entity. Context During our testing of payroll expenditures, we noted an instance for one employee where the time worked on the award did not have support to document that the payroll expenditure was properly approved and an instance where a bonus was awarded to an employee, where the allocation for time worked on the federal award for the specific pay period was used as the allocable base for the overall bonus instead of the period to which the bonus was related. The total amount recorded to the grant related to this was $2,563. Cause There was a breakdown in internal control where one employee’s timesheet was not reviewed by their supervisor. Also, when reviewing the allocable charges to the federal award, there was a breakdown in internal control when preparing the allocation for the pro-rated salary charges incurred related to the federal award. Effect The amount charged to the federal award was not properly authorized. If the compensation costs allocated to the grant cannot be supported in accordance with the Uniform Guidance, the granting agency could determine that these costs are not allowable. Questioned Costs The amount did not exceed $25,000 and therefore is not required to be reported. Recommendation The Organization’s program staff and management should ensure that the amounts charged to the federal award are properly approved and accurate. Monthly reconciliation of all expenses, including of salaries charged to program versus actual hours incurred should be performed timely. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan

Finding 2023-002 Significant deficiency in internal controls over compliance and instances of noncompliance related to allowable costs/cost principle compliance requirements. Federal Agency: U.S. Department of Health and Human Services Program Title: Developmental Disabilities Basic Support and Advocacy Grants Assistance Listing Number: 93.630 Awards Number: 2201WAPADD-00 & 03; 2001WAPAPH-00 & 01 Award Period: 10/01/2021 - 9/30/2024 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Subpart E section 2 CFR 200.430 (as codified by the Department of Health and Human Services [DHHS] in 45 CFR 75) requires direct costs to be allocated based on the proportional benefit received by each award. Condition/Context For the year ended September 30, 2023, in a sample of 25 transactions, there were three instances of payroll costs being charged to the award that were not supported by proper documentation of the allocation applied. Effect/Potential Effect DRW was unable to substantiate allocations of payroll costs based on documentation retained. Questioned Costs $125.03 Cause DRW’s internal controls related to payroll costs allocation was not sufficient to prevent or detect errors in compliance with the standards and to ensure consistent treatment with policies and procedures. Repeat Finding Not applicable Recommendation We recommend that DRW implement internal controls to ensure that all payroll costs charged to the federal awards are supported by proper documentation. Views of Responsible Officials Management agrees with the finding and has provided the corrective action plan following the Single Audit Report.

Finding 2023-002 Significant deficiency in internal controls over compliance and instances of noncompliance related to allowable costs/cost principle compliance requirements. Federal Agency: U.S. Department of Health and Human Services Program Title: Developmental Disabilities Basic Support and Advocacy Grants Assistance Listing Number: 93.630 Awards Number: 2201WAPADD-00 & 03; 2001WAPAPH-00 & 01 Award Period: 10/01/2021 - 9/30/2024 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Subpart E section 2 CFR 200.430 (as codified by the Department of Health and Human Services [DHHS] in 45 CFR 75) requires direct costs to be allocated based on the proportional benefit received by each award. Condition/Context For the year ended September 30, 2023, in a sample of 25 transactions, there were three instances of payroll costs being charged to the award that were not supported by proper documentation of the allocation applied. Effect/Potential Effect DRW was unable to substantiate allocations of payroll costs based on documentation retained. Questioned Costs $125.03 Cause DRW’s internal controls related to payroll costs allocation was not sufficient to prevent or detect errors in compliance with the standards and to ensure consistent treatment with policies and procedures. Repeat Finding Not applicable Recommendation We recommend that DRW implement internal controls to ensure that all payroll costs charged to the federal awards are supported by proper documentation. Views of Responsible Officials Management agrees with the finding and has provided the corrective action plan following the Single Audit Report.

Finding 2023-001 – Allowable Activities and Costs of Provider Relief Fund Significant Deficiency in Internal Control over Compliance Program: COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Federal Assistance Listing Number: 93.498 Federal Grantor: U.S. Department of Health and Human Services Pass-Through Entity: None Criteria: Per 2 CFR 200.430(i), personnel costs charged to federal grants are required to be supported by documentation including time records. Per 2 CFR 200.303, a non-federal entity must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Condition: Our audit procedures over the calculation of COVID patient days used to allocate the payroll cost to the PRF/ARP federal program disclosed the amounts were not properly calculated. Cause: The Medical Center has controls in place to review the calculation; however, the control did not operate to identify an error in the calculation of COVID patient days. Effect: The error in the calculation resulted in underreporting payroll costs allowed to be charged to PRF/ARP in the amount of $566,272. Questioned Costs: None Perspective: The error in the calculation resulted in underreporting payroll costs allowed to be charged to PRF/ARP in the amount of $566,272. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Medical Center implement additional internal controls over compliance in order to properly identify any errors in calculation. View of Responsible Officials: See management’s response to the finding in the accompanying Corrective Action Plan.

DEPARTMENT OF HEALTH AND HUMAN SERVICES 2023-003 Immunization Cooperative Agreements, ALN #93.268 Criteria: According to 2 CFR 200.430 i(i)(vii) charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and there should be support to the distributions of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award. Condition: In gaining our understanding of controls over allowable costs for payroll, we noted that the Organization did not have proper documentation of time and effort analysis to support charges to the grants. Cause: The Organization used the grant budget to charge salaries to the grant but did not have any documentation showing an analysis of actual time worked on those grants. Effect: The hours charged to a program could be under stated or overstated if the actual hours differed from the grant budget hours. Auditor’s Recommendation: We recommend implementing the use of time sheets with grants or personnel activity reports that document actual hours worked by personnel on each grant. Management Response: Management will implement time sheets for all employees that work on grants that specify what grants they are working on, number of hours for each for all payrolls in 2024 to correct this problem going forward. In addition, the timesheets will include what functions those

Prior Year Finding Number: 2022-002 Compliance Requirement: Allowable Costs/Cost Principles Program: Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Pass through Entity: District of Columbia Office of the Deputy Mayor for Education -Office of Out of School Times Grant and Youth Outcomes, District of Columbia Human Services Rehousing Stabilization Program - Safe Passage Safe Blocks, D.C. Office of the Deputy Mayor Office Victim Services and Justice Grants and Office of Victim Services and Justice Grants Successful Reentry Program CFDA #: 21.027 Award #: 2023-SPSB-011-CSC, 2023-CSC-04, CW1010626, and 2023-AARPA-2004 Award Year: 10/01/2022-09/30/2023! Criteria: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.430 – Factors Affecting Allowability of Costs - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other 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 included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3). The Personnel Section of the Executed Contract indicated specifies that: A. All staff, volunteers, and contractors, collectively called program personnel, who have regular unsupervised contact and direct interactions with youth, must possess the requisite training, qualifications, clearances, and competency to perform the duties to which they are assigned. B. All program personnel must have the following background checks in order to comply with the District of Columbia’s Criminal Background Checks for the Protection of Children Act of 2004. DC Code §§ 4-1501.01 – 4-1501.11 and other OST Office requirements: • DC Child and Family Services Agency (CFSA) Child Protection Registry (CPR); • Federal Bureau of Investigation (FBI) Criminal Background Check; • Metropolitan Police Department (MPD) Criminal Background Check; and • National Sex Offender Registry. C. Any program personnel with the following felony convictions are not permitted to work or volunteer with children and youth: 1. Murder, attempted murder, manslaughter or arson; 2. Assault, battery, assault and battery, assault with a dangerous weapon, mayhem, or threats to do bodily harm; 3. Burglary; 4. Robbery; 5. Kidnapping; 6. Illegal use or possession of a firearm; 7. Sexual offenses, including indecent exposure; promoting, procuring, compelling, soliciting, or engaging in prostitution; corrupting minors (sexual relations with children); molesting; voyeurism; committing sex acts in public; incest; rape; sexual assault; sexual battery; or sexual abuse; but excluding sodomy between consenting adults; 8. Child abuse or cruelty to children; or 9. Unlawful distribution or possession of or possession with intent to distribute, a controlled substance. Condition: We sampled 60 payroll expense transactions and noted the following: • Four (4) instances in which time charged to this program was not recorded in the timesheets reviewed for the periods tested. The total of these transactions were $12,087. • Six (6) payroll transactions did not satisfy the prohibited felony background requirements as specified in the Safe Passage Safe Block grant agreement for personnel hired under this award. The total of these transactions were $16,404. • Six (6) payroll transactions from the Safe Passage Safe Block award did not show evidence of clearance by the D.C. Child and Family Services Child Protection Registry (CPR) and 2 CPRs provided were outside of the period tested. In addition, 5 CPR and First Aid training documentation were not provided. The total of these transactions were $15,585. Two (2) files did not show evidence of Metropolitan Police Department (MPD) criminal background checks as a condition for employment. Eight (8) MPD files requested were not provided. The total of these transactions were $39,102. Twenty-two (22) National Sex Offenders Registry records were not provided for persons hired under the program. This registry was managed directly by a District Agency and was not submitted to CSC. The total of these transactions were $71,408. Questioned Costs: $154,586 Context: This is a condition identified per review of CSC’s compliance with the specified requirements using a statistically valid sample. The known amount of the payroll transactions totaled $154,586. Effect: CSC is not in compliance with the stated provisions of the grant awards. Failure to properly review and support expenses can result in noncompliance with laws and regulations along with loss of funding. Cause: CSC did not appear to have adequate policies and procedures in place to ensure compliance with the required stipulations regarding background. Recommendation: We recommend that CSC ensure that personnel hired under the grant meet all the background and other checks within the stipulated time frame outlined in the grant agreement. We also recommend that CSC improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for expenses incurred and reported.

Prior Year Finding Number: 2022-002 Compliance Requirement: Allowable Costs/Cost Principles Program: Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Pass through Entity: District of Columbia Office of the Deputy Mayor for Education -Office of Out of School Times Grant and Youth Outcomes, District of Columbia Human Services Rehousing Stabilization Program - Safe Passage Safe Blocks, D.C. Office of the Deputy Mayor Office Victim Services and Justice Grants and Office of Victim Services and Justice Grants Successful Reentry Program CFDA #: 21.027 Award #: 2023-SPSB-011-CSC, 2023-CSC-04, CW1010626, and 2023-AARPA-2004 Award Year: 10/01/2022-09/30/2023! Criteria: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.430 – Factors Affecting Allowability of Costs - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other 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 included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3). The Personnel Section of the Executed Contract indicated specifies that: A. All staff, volunteers, and contractors, collectively called program personnel, who have regular unsupervised contact and direct interactions with youth, must possess the requisite training, qualifications, clearances, and competency to perform the duties to which they are assigned. B. All program personnel must have the following background checks in order to comply with the District of Columbia’s Criminal Background Checks for the Protection of Children Act of 2004. DC Code §§ 4-1501.01 – 4-1501.11 and other OST Office requirements: • DC Child and Family Services Agency (CFSA) Child Protection Registry (CPR); • Federal Bureau of Investigation (FBI) Criminal Background Check; • Metropolitan Police Department (MPD) Criminal Background Check; and • National Sex Offender Registry. C. Any program personnel with the following felony convictions are not permitted to work or volunteer with children and youth: 1. Murder, attempted murder, manslaughter or arson; 2. Assault, battery, assault and battery, assault with a dangerous weapon, mayhem, or threats to do bodily harm; 3. Burglary; 4. Robbery; 5. Kidnapping; 6. Illegal use or possession of a firearm; 7. Sexual offenses, including indecent exposure; promoting, procuring, compelling, soliciting, or engaging in prostitution; corrupting minors (sexual relations with children); molesting; voyeurism; committing sex acts in public; incest; rape; sexual assault; sexual battery; or sexual abuse; but excluding sodomy between consenting adults; 8. Child abuse or cruelty to children; or 9. Unlawful distribution or possession of or possession with intent to distribute, a controlled substance. Condition: We sampled 60 payroll expense transactions and noted the following: • Four (4) instances in which time charged to this program was not recorded in the timesheets reviewed for the periods tested. The total of these transactions were $12,087. • Six (6) payroll transactions did not satisfy the prohibited felony background requirements as specified in the Safe Passage Safe Block grant agreement for personnel hired under this award. The total of these transactions were $16,404. • Six (6) payroll transactions from the Safe Passage Safe Block award did not show evidence of clearance by the D.C. Child and Family Services Child Protection Registry (CPR) and 2 CPRs provided were outside of the period tested. In addition, 5 CPR and First Aid training documentation were not provided. The total of these transactions were $15,585. Two (2) files did not show evidence of Metropolitan Police Department (MPD) criminal background checks as a condition for employment. Eight (8) MPD files requested were not provided. The total of these transactions were $39,102. Twenty-two (22) National Sex Offenders Registry records were not provided for persons hired under the program. This registry was managed directly by a District Agency and was not submitted to CSC. The total of these transactions were $71,408. Questioned Costs: $154,586 Context: This is a condition identified per review of CSC’s compliance with the specified requirements using a statistically valid sample. The known amount of the payroll transactions totaled $154,586. Effect: CSC is not in compliance with the stated provisions of the grant awards. Failure to properly review and support expenses can result in noncompliance with laws and regulations along with loss of funding. Cause: CSC did not appear to have adequate policies and procedures in place to ensure compliance with the required stipulations regarding background. Recommendation: We recommend that CSC ensure that personnel hired under the grant meet all the background and other checks within the stipulated time frame outlined in the grant agreement. We also recommend that CSC improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for expenses incurred and reported.

Prior Year Finding Number: 2022-002 Compliance Requirement: Allowable Costs/Cost Principles Program: Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Pass through Entity: District of Columbia Office of the Deputy Mayor for Education -Office of Out of School Times Grant and Youth Outcomes, District of Columbia Human Services Rehousing Stabilization Program - Safe Passage Safe Blocks, D.C. Office of the Deputy Mayor Office Victim Services and Justice Grants and Office of Victim Services and Justice Grants Successful Reentry Program CFDA #: 21.027 Award #: 2023-SPSB-011-CSC, 2023-CSC-04, CW1010626, and 2023-AARPA-2004 Award Year: 10/01/2022-09/30/2023! Criteria: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.430 – Factors Affecting Allowability of Costs - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other 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 included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3). The Personnel Section of the Executed Contract indicated specifies that: A. All staff, volunteers, and contractors, collectively called program personnel, who have regular unsupervised contact and direct interactions with youth, must possess the requisite training, qualifications, clearances, and competency to perform the duties to which they are assigned. B. All program personnel must have the following background checks in order to comply with the District of Columbia’s Criminal Background Checks for the Protection of Children Act of 2004. DC Code §§ 4-1501.01 – 4-1501.11 and other OST Office requirements: • DC Child and Family Services Agency (CFSA) Child Protection Registry (CPR); • Federal Bureau of Investigation (FBI) Criminal Background Check; • Metropolitan Police Department (MPD) Criminal Background Check; and • National Sex Offender Registry. C. Any program personnel with the following felony convictions are not permitted to work or volunteer with children and youth: 1. Murder, attempted murder, manslaughter or arson; 2. Assault, battery, assault and battery, assault with a dangerous weapon, mayhem, or threats to do bodily harm; 3. Burglary; 4. Robbery; 5. Kidnapping; 6. Illegal use or possession of a firearm; 7. Sexual offenses, including indecent exposure; promoting, procuring, compelling, soliciting, or engaging in prostitution; corrupting minors (sexual relations with children); molesting; voyeurism; committing sex acts in public; incest; rape; sexual assault; sexual battery; or sexual abuse; but excluding sodomy between consenting adults; 8. Child abuse or cruelty to children; or 9. Unlawful distribution or possession of or possession with intent to distribute, a controlled substance. Condition: We sampled 60 payroll expense transactions and noted the following: • Four (4) instances in which time charged to this program was not recorded in the timesheets reviewed for the periods tested. The total of these transactions were $12,087. • Six (6) payroll transactions did not satisfy the prohibited felony background requirements as specified in the Safe Passage Safe Block grant agreement for personnel hired under this award. The total of these transactions were $16,404. • Six (6) payroll transactions from the Safe Passage Safe Block award did not show evidence of clearance by the D.C. Child and Family Services Child Protection Registry (CPR) and 2 CPRs provided were outside of the period tested. In addition, 5 CPR and First Aid training documentation were not provided. The total of these transactions were $15,585. Two (2) files did not show evidence of Metropolitan Police Department (MPD) criminal background checks as a condition for employment. Eight (8) MPD files requested were not provided. The total of these transactions were $39,102. Twenty-two (22) National Sex Offenders Registry records were not provided for persons hired under the program. This registry was managed directly by a District Agency and was not submitted to CSC. The total of these transactions were $71,408. Questioned Costs: $154,586 Context: This is a condition identified per review of CSC’s compliance with the specified requirements using a statistically valid sample. The known amount of the payroll transactions totaled $154,586. Effect: CSC is not in compliance with the stated provisions of the grant awards. Failure to properly review and support expenses can result in noncompliance with laws and regulations along with loss of funding. Cause: CSC did not appear to have adequate policies and procedures in place to ensure compliance with the required stipulations regarding background. Recommendation: We recommend that CSC ensure that personnel hired under the grant meet all the background and other checks within the stipulated time frame outlined in the grant agreement. We also recommend that CSC improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for expenses incurred and reported.

Prior Year Finding Number: 2022-002 Compliance Requirement: Allowable Costs/Cost Principles Program: Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Pass through Entity: District of Columbia Office of the Deputy Mayor for Education -Office of Out of School Times Grant and Youth Outcomes, District of Columbia Human Services Rehousing Stabilization Program - Safe Passage Safe Blocks, D.C. Office of the Deputy Mayor Office Victim Services and Justice Grants and Office of Victim Services and Justice Grants Successful Reentry Program CFDA #: 21.027 Award #: 2023-SPSB-011-CSC, 2023-CSC-04, CW1010626, and 2023-AARPA-2004 Award Year: 10/01/2022-09/30/2023! Criteria: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.430 – Factors Affecting Allowability of Costs - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other 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 included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3). The Personnel Section of the Executed Contract indicated specifies that: A. All staff, volunteers, and contractors, collectively called program personnel, who have regular unsupervised contact and direct interactions with youth, must possess the requisite training, qualifications, clearances, and competency to perform the duties to which they are assigned. B. All program personnel must have the following background checks in order to comply with the District of Columbia’s Criminal Background Checks for the Protection of Children Act of 2004. DC Code §§ 4-1501.01 – 4-1501.11 and other OST Office requirements: • DC Child and Family Services Agency (CFSA) Child Protection Registry (CPR); • Federal Bureau of Investigation (FBI) Criminal Background Check; • Metropolitan Police Department (MPD) Criminal Background Check; and • National Sex Offender Registry. C. Any program personnel with the following felony convictions are not permitted to work or volunteer with children and youth: 1. Murder, attempted murder, manslaughter or arson; 2. Assault, battery, assault and battery, assault with a dangerous weapon, mayhem, or threats to do bodily harm; 3. Burglary; 4. Robbery; 5. Kidnapping; 6. Illegal use or possession of a firearm; 7. Sexual offenses, including indecent exposure; promoting, procuring, compelling, soliciting, or engaging in prostitution; corrupting minors (sexual relations with children); molesting; voyeurism; committing sex acts in public; incest; rape; sexual assault; sexual battery; or sexual abuse; but excluding sodomy between consenting adults; 8. Child abuse or cruelty to children; or 9. Unlawful distribution or possession of or possession with intent to distribute, a controlled substance. Condition: We sampled 60 payroll expense transactions and noted the following: • Four (4) instances in which time charged to this program was not recorded in the timesheets reviewed for the periods tested. The total of these transactions were $12,087. • Six (6) payroll transactions did not satisfy the prohibited felony background requirements as specified in the Safe Passage Safe Block grant agreement for personnel hired under this award. The total of these transactions were $16,404. • Six (6) payroll transactions from the Safe Passage Safe Block award did not show evidence of clearance by the D.C. Child and Family Services Child Protection Registry (CPR) and 2 CPRs provided were outside of the period tested. In addition, 5 CPR and First Aid training documentation were not provided. The total of these transactions were $15,585. Two (2) files did not show evidence of Metropolitan Police Department (MPD) criminal background checks as a condition for employment. Eight (8) MPD files requested were not provided. The total of these transactions were $39,102. Twenty-two (22) National Sex Offenders Registry records were not provided for persons hired under the program. This registry was managed directly by a District Agency and was not submitted to CSC. The total of these transactions were $71,408. Questioned Costs: $154,586 Context: This is a condition identified per review of CSC’s compliance with the specified requirements using a statistically valid sample. The known amount of the payroll transactions totaled $154,586. Effect: CSC is not in compliance with the stated provisions of the grant awards. Failure to properly review and support expenses can result in noncompliance with laws and regulations along with loss of funding. Cause: CSC did not appear to have adequate policies and procedures in place to ensure compliance with the required stipulations regarding background. Recommendation: We recommend that CSC ensure that personnel hired under the grant meet all the background and other checks within the stipulated time frame outlined in the grant agreement. We also recommend that CSC improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for expenses incurred and reported.

Prior Year Finding Number: 2022-002 Compliance Requirement: Allowable Costs/Cost Principles Program: Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Pass through Entity: District of Columbia Office of the Deputy Mayor for Education -Office of Out of School Times Grant and Youth Outcomes, District of Columbia Human Services Rehousing Stabilization Program - Safe Passage Safe Blocks, D.C. Office of the Deputy Mayor Office Victim Services and Justice Grants and Office of Victim Services and Justice Grants Successful Reentry Program CFDA #: 21.027 Award #: 2023-SPSB-011-CSC, 2023-CSC-04, CW1010626, and 2023-AARPA-2004 Award Year: 10/01/2022-09/30/2023! Criteria: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.430 – Factors Affecting Allowability of Costs - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other 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 included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3). The Personnel Section of the Executed Contract indicated specifies that: A. All staff, volunteers, and contractors, collectively called program personnel, who have regular unsupervised contact and direct interactions with youth, must possess the requisite training, qualifications, clearances, and competency to perform the duties to which they are assigned. B. All program personnel must have the following background checks in order to comply with the District of Columbia’s Criminal Background Checks for the Protection of Children Act of 2004. DC Code §§ 4-1501.01 – 4-1501.11 and other OST Office requirements: • DC Child and Family Services Agency (CFSA) Child Protection Registry (CPR); • Federal Bureau of Investigation (FBI) Criminal Background Check; • Metropolitan Police Department (MPD) Criminal Background Check; and • National Sex Offender Registry. C. Any program personnel with the following felony convictions are not permitted to work or volunteer with children and youth: 1. Murder, attempted murder, manslaughter or arson; 2. Assault, battery, assault and battery, assault with a dangerous weapon, mayhem, or threats to do bodily harm; 3. Burglary; 4. Robbery; 5. Kidnapping; 6. Illegal use or possession of a firearm; 7. Sexual offenses, including indecent exposure; promoting, procuring, compelling, soliciting, or engaging in prostitution; corrupting minors (sexual relations with children); molesting; voyeurism; committing sex acts in public; incest; rape; sexual assault; sexual battery; or sexual abuse; but excluding sodomy between consenting adults; 8. Child abuse or cruelty to children; or 9. Unlawful distribution or possession of or possession with intent to distribute, a controlled substance. Condition: We sampled 60 payroll expense transactions and noted the following: • Four (4) instances in which time charged to this program was not recorded in the timesheets reviewed for the periods tested. The total of these transactions were $12,087. • Six (6) payroll transactions did not satisfy the prohibited felony background requirements as specified in the Safe Passage Safe Block grant agreement for personnel hired under this award. The total of these transactions were $16,404. • Six (6) payroll transactions from the Safe Passage Safe Block award did not show evidence of clearance by the D.C. Child and Family Services Child Protection Registry (CPR) and 2 CPRs provided were outside of the period tested. In addition, 5 CPR and First Aid training documentation were not provided. The total of these transactions were $15,585. Two (2) files did not show evidence of Metropolitan Police Department (MPD) criminal background checks as a condition for employment. Eight (8) MPD files requested were not provided. The total of these transactions were $39,102. Twenty-two (22) National Sex Offenders Registry records were not provided for persons hired under the program. This registry was managed directly by a District Agency and was not submitted to CSC. The total of these transactions were $71,408. Questioned Costs: $154,586 Context: This is a condition identified per review of CSC’s compliance with the specified requirements using a statistically valid sample. The known amount of the payroll transactions totaled $154,586. Effect: CSC is not in compliance with the stated provisions of the grant awards. Failure to properly review and support expenses can result in noncompliance with laws and regulations along with loss of funding. Cause: CSC did not appear to have adequate policies and procedures in place to ensure compliance with the required stipulations regarding background. Recommendation: We recommend that CSC ensure that personnel hired under the grant meet all the background and other checks within the stipulated time frame outlined in the grant agreement. We also recommend that CSC improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for expenses incurred and reported.

2023-001: Allocable Costs/Cost Principles - Reporting of Payroll based on budget. Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.696, Certified Community Behavioral Health Clinic Expansion Grant Federal Award Identification Number and Year: 1H79SM086680-01, Program Grant Period 09/29/2022-09/29/2023 Pass-through Entity: N/A Type: Material weakness in internal controls and material noncompliance with laws and regulations Repeat Finding: No Criteria: Per 2 CFR 200.430(i)(1)(viii)(c), the auditee’s system of internal must include control processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: The Authority allocated wages and fringe benefits to the program based on the grant budget, with no adjustment made to actual time spent. Identification of How Likely Questioned Costs Were Computed: A schedule was prepared of time and attendance reports for the year which was compared to the amount charged to the grant. Known Questioned Costs: $19,693 Context: The Authority charged wage and fringe benefit for all employees providing services under the Certified Community Behavioral Health Clinic Expansion Grant based on budget amounts for the fiscal year. A schedule was prepared by management of the time spent on the grant for all employees for the year, which was compared to budget. Cause/Effect: Management was under the understanding that since the budget had been approved by the grantor that they were allowed to charge the budgeted amount to the grant. As a result, wages and fringe benefits charged to the grant were overstated based on time and attendance reports. Recommendation: We recommend the Authority review all federally funded grants and implement a review process to ensure the amount charged to the Federal award is based on the time the employees spend on providing the services. View of Responsible Officials and Planned Corrective Action Plan: See attached corrective action plan.

Finding Number: 2023-001 Federal Agency: U.S. Department of Housing and Urban Development ALN: 14.157 Compliance Requirement: Special Test and Provisions – Use of Project Funds-Payroll Activities Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records: • Reasonable reflects the total activity for which the employee is compensated across all grant-related and non-grant-related activities (100% effort) and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – For ALN 14.157, we sampled and selected 25 out of 173 payroll expenditures and noted six (6) instances where timesheets were not available for review. Questioned Cost – $9,172 Context – This is a condition identified per review of The Project’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditure charged to the program in fiscal year 2023 is $203,516. The total amount sampled is $24,219. The known amount of the exceptions is $9,172. Effect – The Project is not in compliance with he stated provision. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – Timesheets appear to have been misfiled and were not available for review upon request. Recommendation – Management should ensure timesheets are properly filed and be available for review upon request. Views of Responsible Officials – Timesheets were misfiled by a new employee responsible for sorting and filing timesheets. Several employee folders were searched for misplaced timesheets, and some were found; However, the six missing timesheets were not found. This program is physically located in St. Thomas, and the original timesheets arrive at the administrative office about a week after the payroll is processed. A faxed copy of the original timesheets is used for review before processing payroll. Going forward, time sheet sorting and filing by new employees will be monitored more closely for proper sorting and filing

Finding 2023-010 – Salaries and Wages (Allowable Costs) Information on Federal Programs: Environmental Finance Center Grants – Assistance Listing No. 66.203 U.S. Environmental Protection Agency Grant No. 539001D, Grant period July 1, 2022 - September 30, 2023 Grant No. 5127620, Grant period October 1, 2022 - September 30, 2023 Grant No. 5126607, Grant period July 1, 2022 - September 30, 2023 Criteria or Specific Requirements: According to 2 CFR Section 200.430(g), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: a. Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; b. Be incorporated into the official records of the non-Federal entity; c. Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100 percent of compensated activities; d. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; e. Comply with the established accounting policies and practices of the non-Federal entity; f. 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; and g. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Condition: For the period from October 2022 through May 2023, U.S. Water Alliance did not have a timekeeping system in place. A timekeeping system was implemented in June of 2023, that provides for employees to record hours worked for specific cost objectives, including Federal grants. There are limitations to the timekeeping system’s capabilities. One is no availability to run timesheet reports for closed grants after the grant period ends. Second is the need to manually adjust hours transferred from the timekeeping system to the payroll processing system due to semi-monthly payroll processing and the need to have total number of hours equal to 86.67 for salaried employees. For these three awards, budget estimates or relative level of effort by percent of full-time employees and active projects were used throughout the entire grant period, even after the timekeeping system was put in place. No reconciliation between the budget estimates or relative level of effort by percent of full-time employees and active projects and the hours recorded in the timekeeping system was completed even for the period in which the timekeeping system was in place. Cause: A timekeeping system was not implemented until June 2023. Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the Federal agency. Perspective: Qualitative reports on activities on these three awards indicate there was work performed; however, due to lack of quantitative support for hours charged to the grant, it is unable to be determined whether the number of hours and ultimately dollars charged for personnel costs for these three awards are the actual hours spent on activities for these three awards. Questioned Costs: Undetermined. Repeat Finding: Not applicable. Recommendation: U.S. Water Alliance should utilize the timekeeping system data for reporting personnel costs for all Federal awards. U.S. Water Alliance should also revisit its procedures for transferring data from the timekeeping system to the payroll processing system and ultimately the general ledger, and should implement proper internal controls to ensure that the amount of hours and salary expenditures charged to grants in the general ledger reconcile to the hours reported by the timekeeping system and amounts reported by the payroll processing system. Views of Responsible Officials and Planned Corrective Actions: A new timekeeping system was implemented in June 2023 to allocate work hours specific to cost objectives, including Federal Grants. While there are limitations to the system, the allocations are transferred from the timekeeping system upon supervisor approval to the Prism (HRIS) Portal and used to prepare payment vouchers. From the HRIS system, we can produce labor allocation reports reflecting how the time was originally allocated in the timekeeping system. The US Water Alliance indeed operates on a semi-monthly payroll period. It has allowed the Alliance to have fixed pay dates though they may not fall on the same day of the week each month. If the pay date falls on a weekend or holiday, the pay date is typically the business day prior. Because all months are not the same length, the size of the paycheck could vary in that the first paycheck could cover 13-14 days and the second paycheck could cover 15-16 days. To eliminate the variation in the size of the paycheck, specifically for salaried employees, the total yearly salary is evenly divided between 24 payments resulting in the same paycheck amount each time. This division results in 86.67 hours paid in each paycheck and will at times require our payroll partner to adjust the hours allocated downward or upward to equal 86.67. In the rare case that work hours are adjusted upward, the work hours are allocated to the primary funding source for the position. The process has worked traditionally as the Alliance has no hourly employees. Specifically for the three awards referenced, reconciliation between the budget estimates, relative level of effort by percent of full-time employees and active projects, and the hours recorded in the timekeeping system were completed. Staff opted to continue reporting on relative level of effort by percent of full-time employees as opposed to shifting as the timekeeping system was very new and staff experienced a significant learning curve. Additionally, there were only two months left in the grant period. Relative level of effort was carefully documented internally via calendars, Monday.com project management software, and Excel spreadsheets. Since its implementation, staff have been better trained in the use of the timekeeping system. We are also transitioning to a new timekeeping system in December 2024 with enhanced reporting and ease of use. The Alliance will also shift to a bi-weekly payroll period effectively reducing the need to adjust work hour allocations upward or downward to equal 86.67 hours.

Finding 2023-010 – Salaries and Wages (Allowable Costs) Information on Federal Programs: Environmental Finance Center Grants – Assistance Listing No. 66.203 U.S. Environmental Protection Agency Grant No. 539001D, Grant period July 1, 2022 - September 30, 2023 Grant No. 5127620, Grant period October 1, 2022 - September 30, 2023 Grant No. 5126607, Grant period July 1, 2022 - September 30, 2023 Criteria or Specific Requirements: According to 2 CFR Section 200.430(g), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: a. Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; b. Be incorporated into the official records of the non-Federal entity; c. Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100 percent of compensated activities; d. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; e. Comply with the established accounting policies and practices of the non-Federal entity; f. 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; and g. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Condition: For the period from October 2022 through May 2023, U.S. Water Alliance did not have a timekeeping system in place. A timekeeping system was implemented in June of 2023, that provides for employees to record hours worked for specific cost objectives, including Federal grants. There are limitations to the timekeeping system’s capabilities. One is no availability to run timesheet reports for closed grants after the grant period ends. Second is the need to manually adjust hours transferred from the timekeeping system to the payroll processing system due to semi-monthly payroll processing and the need to have total number of hours equal to 86.67 for salaried employees. For these three awards, budget estimates or relative level of effort by percent of full-time employees and active projects were used throughout the entire grant period, even after the timekeeping system was put in place. No reconciliation between the budget estimates or relative level of effort by percent of full-time employees and active projects and the hours recorded in the timekeeping system was completed even for the period in which the timekeeping system was in place. Cause: A timekeeping system was not implemented until June 2023. Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the Federal agency. Perspective: Qualitative reports on activities on these three awards indicate there was work performed; however, due to lack of quantitative support for hours charged to the grant, it is unable to be determined whether the number of hours and ultimately dollars charged for personnel costs for these three awards are the actual hours spent on activities for these three awards. Questioned Costs: Undetermined. Repeat Finding: Not applicable. Recommendation: U.S. Water Alliance should utilize the timekeeping system data for reporting personnel costs for all Federal awards. U.S. Water Alliance should also revisit its procedures for transferring data from the timekeeping system to the payroll processing system and ultimately the general ledger, and should implement proper internal controls to ensure that the amount of hours and salary expenditures charged to grants in the general ledger reconcile to the hours reported by the timekeeping system and amounts reported by the payroll processing system. Views of Responsible Officials and Planned Corrective Actions: A new timekeeping system was implemented in June 2023 to allocate work hours specific to cost objectives, including Federal Grants. While there are limitations to the system, the allocations are transferred from the timekeeping system upon supervisor approval to the Prism (HRIS) Portal and used to prepare payment vouchers. From the HRIS system, we can produce labor allocation reports reflecting how the time was originally allocated in the timekeeping system. The US Water Alliance indeed operates on a semi-monthly payroll period. It has allowed the Alliance to have fixed pay dates though they may not fall on the same day of the week each month. If the pay date falls on a weekend or holiday, the pay date is typically the business day prior. Because all months are not the same length, the size of the paycheck could vary in that the first paycheck could cover 13-14 days and the second paycheck could cover 15-16 days. To eliminate the variation in the size of the paycheck, specifically for salaried employees, the total yearly salary is evenly divided between 24 payments resulting in the same paycheck amount each time. This division results in 86.67 hours paid in each paycheck and will at times require our payroll partner to adjust the hours allocated downward or upward to equal 86.67. In the rare case that work hours are adjusted upward, the work hours are allocated to the primary funding source for the position. The process has worked traditionally as the Alliance has no hourly employees. Specifically for the three awards referenced, reconciliation between the budget estimates, relative level of effort by percent of full-time employees and active projects, and the hours recorded in the timekeeping system were completed. Staff opted to continue reporting on relative level of effort by percent of full-time employees as opposed to shifting as the timekeeping system was very new and staff experienced a significant learning curve. Additionally, there were only two months left in the grant period. Relative level of effort was carefully documented internally via calendars, Monday.com project management software, and Excel spreadsheets. Since its implementation, staff have been better trained in the use of the timekeeping system. We are also transitioning to a new timekeeping system in December 2024 with enhanced reporting and ease of use. The Alliance will also shift to a bi-weekly payroll period effectively reducing the need to adjust work hour allocations upward or downward to equal 86.67 hours.

Finding 2023-010 – Salaries and Wages (Allowable Costs) Information on Federal Programs: Environmental Finance Center Grants – Assistance Listing No. 66.203 U.S. Environmental Protection Agency Grant No. 539001D, Grant period July 1, 2022 - September 30, 2023 Grant No. 5127620, Grant period October 1, 2022 - September 30, 2023 Grant No. 5126607, Grant period July 1, 2022 - September 30, 2023 Criteria or Specific Requirements: According to 2 CFR Section 200.430(g), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: a. Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; b. Be incorporated into the official records of the non-Federal entity; c. Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100 percent of compensated activities; d. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; e. Comply with the established accounting policies and practices of the non-Federal entity; f. 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; and g. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Condition: For the period from October 2022 through May 2023, U.S. Water Alliance did not have a timekeeping system in place. A timekeeping system was implemented in June of 2023, that provides for employees to record hours worked for specific cost objectives, including Federal grants. There are limitations to the timekeeping system’s capabilities. One is no availability to run timesheet reports for closed grants after the grant period ends. Second is the need to manually adjust hours transferred from the timekeeping system to the payroll processing system due to semi-monthly payroll processing and the need to have total number of hours equal to 86.67 for salaried employees. For these three awards, budget estimates or relative level of effort by percent of full-time employees and active projects were used throughout the entire grant period, even after the timekeeping system was put in place. No reconciliation between the budget estimates or relative level of effort by percent of full-time employees and active projects and the hours recorded in the timekeeping system was completed even for the period in which the timekeeping system was in place. Cause: A timekeeping system was not implemented until June 2023. Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the Federal agency. Perspective: Qualitative reports on activities on these three awards indicate there was work performed; however, due to lack of quantitative support for hours charged to the grant, it is unable to be determined whether the number of hours and ultimately dollars charged for personnel costs for these three awards are the actual hours spent on activities for these three awards. Questioned Costs: Undetermined. Repeat Finding: Not applicable. Recommendation: U.S. Water Alliance should utilize the timekeeping system data for reporting personnel costs for all Federal awards. U.S. Water Alliance should also revisit its procedures for transferring data from the timekeeping system to the payroll processing system and ultimately the general ledger, and should implement proper internal controls to ensure that the amount of hours and salary expenditures charged to grants in the general ledger reconcile to the hours reported by the timekeeping system and amounts reported by the payroll processing system. Views of Responsible Officials and Planned Corrective Actions: A new timekeeping system was implemented in June 2023 to allocate work hours specific to cost objectives, including Federal Grants. While there are limitations to the system, the allocations are transferred from the timekeeping system upon supervisor approval to the Prism (HRIS) Portal and used to prepare payment vouchers. From the HRIS system, we can produce labor allocation reports reflecting how the time was originally allocated in the timekeeping system. The US Water Alliance indeed operates on a semi-monthly payroll period. It has allowed the Alliance to have fixed pay dates though they may not fall on the same day of the week each month. If the pay date falls on a weekend or holiday, the pay date is typically the business day prior. Because all months are not the same length, the size of the paycheck could vary in that the first paycheck could cover 13-14 days and the second paycheck could cover 15-16 days. To eliminate the variation in the size of the paycheck, specifically for salaried employees, the total yearly salary is evenly divided between 24 payments resulting in the same paycheck amount each time. This division results in 86.67 hours paid in each paycheck and will at times require our payroll partner to adjust the hours allocated downward or upward to equal 86.67. In the rare case that work hours are adjusted upward, the work hours are allocated to the primary funding source for the position. The process has worked traditionally as the Alliance has no hourly employees. Specifically for the three awards referenced, reconciliation between the budget estimates, relative level of effort by percent of full-time employees and active projects, and the hours recorded in the timekeeping system were completed. Staff opted to continue reporting on relative level of effort by percent of full-time employees as opposed to shifting as the timekeeping system was very new and staff experienced a significant learning curve. Additionally, there were only two months left in the grant period. Relative level of effort was carefully documented internally via calendars, Monday.com project management software, and Excel spreadsheets. Since its implementation, staff have been better trained in the use of the timekeeping system. We are also transitioning to a new timekeeping system in December 2024 with enhanced reporting and ease of use. The Alliance will also shift to a bi-weekly payroll period effectively reducing the need to adjust work hour allocations upward or downward to equal 86.67 hours.

Finding Number: 2023-001 – Time Allocation and Budget Monitoring Federal Agencies: United States Department of State Federal Programs: All programs under Assistance Listing Number 19.345 Assistance Listing Numbers: 19.345 Award Identification Number and Year: All awards under Assistance Listing Number 19.345 Criteria or Specific Requirement: 1. Time and Effort Reporting: According to 2 CFR §200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls that provide reasonable assurance that the charges are accurate, allowable, and properly allocated. 2. Budget Management: Per 2 CFR §200.308, recipients of Federal funds must monitor actual expenditures against the approved budget to ensure funds are used for allowable activities and to avoid over- or underspending. Condition: CIPE did not properly allocate employee time to Federal programs in accordance with actual time worked, resulting in inaccurate charges to Federal awards. Additionally, CIPE did not maintain adequate oversight of budget-to-actual expenditures, leading to potential mismanagement of Federal funds. Cause: 1. The misallocation of Federal funds was primarily due to a lack of adequate training for staff on time and effort requirements and failure to implement adequate tracking systems. 2. The Budget Oversight deficiency was due primarily to a lack of regular budget reviews, inadequate financial reporting processes, and turnover in key personnel. Effect or Potential Effect: 1. The misallocation of employee time increases the risk of unallowable costs being charged to Federal programs, which could result in questioned costs and potential repayment of funds. 2. Lack of oversight over budget-to-actual expenditures may lead to noncompliance with grant requirements, inefficient use of funds, or missed opportunities to reallocate resources effectively. Questioned Costs: None Context: This finding is considered systemic rather than isolated. The entity has not had prior findings related to time allocations or budget monitoring in recent years. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that CIPE: 1. Establish and enforce a robust time and effort reporting system to ensure employee time is allocated accurately and in compliance with Federal regulations. Provide training to employees and supervisors on proper reporting requirements. 2. Implement regular budget-to-actual reviews to identify variances and take corrective actions promptly. Develop a formalized process for financial oversight that includes periodic reporting to management and grant administrators.

Criteria 2 CFR Section 200.403 and Section 200.430 requires all costs charged to federal awards by nonfederal entities to be allowable, allocable, and adequately documented. Specifically, payroll costs must reflect actual time worked and be supported by appropriate review and approval processes. Condition The Organization was unable to provide documentary evidence that costs were charged to federal awards in compliance with the requirements of the Uniform Guidance. We identified multiple instances in which expenditures were charged to federal award programs for costs that were not allowable or documentation provided by the Organization lacked documentary evidence of review by appropriate individuals. Cause The supporting documentation for charging costs to federal awards provided by the Organization was not consistently reviewed on a timely basis by supervisory personnel. Effect Key controls over the Organization’s compliance with allowable cost requirements for federal award programs were not functioning as designed. Questioned Costs $12,814 Context There were six instances in which the Organization’s payroll hours charged to federal awards exceeded the 80-hour limit per individual per pay period and were not detected by employees. In addition, there were four instances in which the Organization was unable to provide any documentary evidence of review by supervisory personnel. The extrapolation of unallowable costs identified during sample testing to the related population resulted in projected likely questioned costs of $256,199 from a total population of approximately $10.1 million of related costs. Recommendation The Organization should adhere to its policies and procedures regarding supervisory review of documentation to support the allowability of costs charged to federal awards. Furthermore, we recommend that the personnel reviewing support for allowable costs initial or sign off on such support to provide evidence of their actions. In addition, the Organization should review, and possibly revise, its policies and procedures for preventing or detecting and correcting unallowable costs charged to federal awards to ensure consistent application of those policies and procedures to all costs charged to federal awards. Views of Responsible Officials See the accompanying Corrective Action Plan.

AAIHB distributed gift cards to both salaried employees and independent contractors as a gesture of appreciation for working extended hours related to COVID-19 contact tracing efforts. The total value of the gift cards was approximately $4,125 and was charged to the COVID-19: Epidemiology and Laboratory Capacity grant (AL #93.231). For contractors, these gift cards were provided in addition to their regular compensation. The gift card disbursements were not processed through payroll nor formalized in contract terms, and there is no documentation indicating the entity obtained approval from the awarding agency. In accordance with 2 CFR § 200.403, costs charged to federal awards must be necessary, reasonable, allocable, and conform to limitations set forth in federal regulations. Per 2 CFR § 200.421(e)(3), the cost of gifts—including cash or cash equivalents such as gift cards—is generally unallowable. Compensation for employees must comply with 2 CFR § 200.430, including support through written policies and documentation of time and effort. Contractor payments must align with procurement standards in 2 CFR § 200.318–200.324 and be governed by written contracts. The use of federal funds to provide gift cards constitutes an unallowable cost under Uniform Guidance. The questioned amount may be subject to repayment to the awarding agency or passthrough entity. The auditee sought to recognize the extraordinary efforts of personnel during the COVID-19 public health response. However, they were unaware that the use of gift cards for this purpose was inconsistent with Uniform Guidance and lacked prior approval or supporting policy. We recommend the auditee discontinue the use of federal funds for gift card distributions. All compensation for employees should be processed through payroll, supported by appropriate documentation and internal policies. Payments to contractors should be governed by written contracts and comply with applicable procurement standards. If the auditee believes these costs are justifiable, they should consult the awarding agency for a determination and, if necessary, reimburse the federal award.

Finding Number: 2023-019 Prior Year Finding Number: 2022-020 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Agriculture Government Department/Agency: Department of Human Services (DHS) Supplemental Nutrition Assistance Program Cluster (SNAP) ALN: 10.551, 10.561 Award #: Various Award Period: 10/01/21 - 09/30/22 10/01/22 – 09/30/23 Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 1,798 payroll disbursements and noted the following: - 34 instances in which DHS did not consistently apply the funding allocation. The hours that should have been split 50/50 between federal and local were charged 100% to the program. - 5 instances in which the hours recorded on the employees’ timesheets did not agree with the hours recorded per the payroll register. - 1 instance in which the employee timesheet was not provided for the pay cycle tested. - 1 instance in which the employee timesheet was not approved by personnel authorized to do so. - 4 instances in which COVID-19 telework hours were not split 50/50 as required by the employees’ funding allocation and charged 100% to the program. Further, we noted that internal controls identified did not appear to be operating at a level of precision to ensure compliance with the above-mentioned requirements. Questioned Costs – Not Determinable. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 were $3,942,422. The amount sampled is $168,409. The known amount of inconsistencies noted is $53,501. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – DHS does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that DHS reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The Department of Human Services (DHS) adopted the electronic Timeforce (STATS) system for payroll, replacing manual processes. Time and attendance are approved through management levels, with payroll based on Notice of Personnel Action (NOPA) cost centers. Financial Analysts reconcile payroll, and a workflow ensures accurate NOPA listings for payroll purposes. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2023-022 Prior Year Finding Number: 2022-023 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Agriculture Government Department/Agency: Department of Education (VIDE) Child Nutrition Cluster ALN: 10.555, 10.559, 10.582 Award #: 1VI300308, 4VI300308, 4VI308908 Award Period: 10/01/2021 – 09/30/2022 10/01/2022 – 09/30/2023 10/01/2022 – 09/30/2024 Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the nonfederal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grantrelated and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 20 of 196 payroll disbursements and noted the following: - 11 instances where the approved timesheet for the pay period selected was not available for review. - 20 instances where VIDE did not provide support that time and effort is charged in accordance with A-87 requirements. - 4 instances where the NOPA provided did not include any evidence that the employee was approved to be federally reimbursed for the project code utilized in the payroll register. - 4 instances where the employee’s pay rate in the approved NOPA provided did not agree with the pay rate in the payroll register. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – $10,789. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 was $196,740. The amount sampled is $21,572. The known amount of the instances of inconsistent funding allocation is $10,789. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – VIDE does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that VIDE reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VIDE will develop and institute stricter fiscal controls to address the root causes of documentation and allocation discrepancies for this program. To prevent discrepancies including unapproved project codes and pay rate mismatches between NOPAs and payroll registers, the Fiscal Team will take the lead in preparing and maintaining the official staffing list for federally funded personnel within this program, an effort that involves reviewing the grant application for all positions and informing HR of required action entries. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2023-029 Prior Year Finding Number: 2022-026 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Defense Government Department/Agency: Office of the Adjutant General (OTAG) National Guard Military Operations and Maintenance (O&M) Projects ALN: 12.401 Award #: W9127P-23-2-1001, W9127P-22-2-1001 Award Period: 10/01/2021 – 09/30/2022 10/01/2022 – 09/30/2023 Criteria – CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Condition – We sampled and selected 60 out of 652 payroll transactions and noted the following: - 1 instance where health insurance costs continued to be charged to the program after the employee retired, with no related time and effort. - 1 instance where the employee pay rate did not agree to the pay rate listed on their NOPA form. - 7 instances where the timesheet for the pay period selected was not provided. Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the allowable costs/cost principles compliance requirements. Questioned Costs – Not determinable. Context – This is a condition identified per review of OTAG’s compliance with the specified requirements using a statistically valid sample. The total amount of payroll expenditures charged to the program during fiscal year 2023 were $1,810,965 and the total amount of our sample was $188,082. The known amount of the exceptions amounted to $26,694. Effect – OTAG is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – OTAG does not appear to have adequate policies and procedures in place to ensure compliance with applicable cost principles stipulations. Recommendation – We recommend that OTAG improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for payroll expenditures. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. OTAG implemented enhanced payroll controls including a dual manual and electronic timesheet system, verification of pay rates against NOPA forms, and separation controls to discontinue benefit charges upon employee separation or retirement. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2023-033 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources Fish and Wildlife Cluster ALN: 15.605, 15.611 Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 620 payroll disbursements and noted the following: - 8 instances where the approved timesheet for the pay period selected were not available for review. - 10 instances where an employees assigned project code documented on the Notice of Personnel Action was not a project code associated with the grant. Additionally, the payroll register reflected a different project code for these transactions. - 1 instance with a variance between the hours reported on the payroll register and the hours reported on the Detail Check History. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – $38,914. Context – This is a condition identified per review of the Government’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 was $1,572,926. The amount sampled is $165,134. The value of transactions with exceptions totaled $38,914. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – The Government does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that the Government reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. We recognize that these findings highlight areas where improvements are necessary to ensure better compliance with applicable policies and regulations governing payroll and grant management. We are committed to implementing corrective actions and enhancing the internal controls to prevent recurrence. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2023-049 Prior Year Finding Number: N/A Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Education Government Department/Agency: Department of Education (VIDE) Special Education Cluster ALN: 84.027A, 84.027X Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Furthermore, CFR 200.113 requires that an applicant, recipient, or subrecipient of a Federal award must promptly disclose, in writing, whenever it has credible evidence of the commission of a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code, or a violation of the civil False Claims Act, in connection with the Federal award (including any activities or subawards thereunder). The disclosure must be made to the Federal agency, the agency’s Office of Inspector General, and the pass-through entity (if applicable). Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 40 of 2,573 payroll disbursements and noted 2 instances where the employee’s pay rate in the approved Notice of Personnel Action provided did not agree with the pay rate in the payroll register. Additionally, a fraud incident related to falsified payroll timesheet entries charged to this program was discovered and investigated during the year. It was discovered that bus driver timesheets were being approved with falsified time entries. An analysis conducted by VIDE determined the amount of theft to be $5,221. This incident was not disclosed or reported to the Federal awarding agency as required. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – $5,221. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 was $5,744,863. The amount sampled is $102,945. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – VIDE does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review was completed prior to charging costs to a federal program. Recommendation – We recommend that VIDE reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll transactions. Additionally, fraud incident should be reported to the appropriate federal awarding agency in accordance with mandatory disclosure requirements. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VIDE is taking immediate action to align payroll controls with our established fiscal improvement plan and to institutionalize a mandatory federal reporting protocol for fraud. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number 2023-052 Prior Year Finding Number: N/A Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Education Government Department/Agency: Department of Education (VIDE) Consolidated Grant to the Outlying Areas ALN: 84.403A Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 40 of 4,518 payroll disbursements and noted the following: - 18 instances where the approved timesheet for the pay period selected were not available for review. - 2 instances where the per diem support were not readily identifiable. - 1 instance where the employee’s pay rate in the approved NOPA provided did not agree with the pay rate in the payroll register. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Questioned Costs – Not determinable. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 was $7,738,716. The amount sampled is $95,985. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – VIDE does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that VIDE reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. VIDE is taking immediate action to align payroll controls with the established fiscal improvement plan. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2023-056 Prior Year Finding Number: 2022-052 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Education Government Department/Agency: Department of Education (VIDE) COVID-19 – Education Stabilization Fund State Educational Agency (Outlying Areas) (ESF-SEA) ALN: 84.425A Award #: S425A200004, S425A210004 Award Period: 06/22/2020 – 09/30/2022 01/13/2021 – 09/30/2023 COVID-19 – American Rescue Plan – Outlying Areas State Educational Agency (ARP-OA SEA) ALN: 84.425X Award #: S425X210004 Award Period: 04/08/2021 – 09/30/2024 Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records: - Reasonable reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100% effort); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – For ALN 84.425 subprogram A and X, we sampled and selected 60 of 6,465 payroll expenditures and noted the following: - 29 instances where the timesheet for the pay period selected were not available for review. - 1 instance where the hours recorded on the employees’ timesheets did not agree with the hours recorded per the payroll register. - 1 instance where the check detail payment support was not available for review. Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the activities allowed or unallowed and allowable costs/cost principles compliance requirements. Questioned Costs – $74,108. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to program in fiscal year 2022 is $9,237,083. Total amount sampled is $116,136. The known amount of the exceptions is $74,108. Effect – Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – VIDE does not appear to have adequate policies and procedures in place to ensure compliance with applicable cost principles and maintenance of underlying documentation. Recommendation – We recommend that VIDE improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for payroll expenditures. Where employees work on multiple activities or cost objectives, a distribution of salaries or wages should be supported by personnel activity reports (time and attendance) or equivalent documents. Such information should also be monitored, retained, and approved by a responsible official of VIDE in a timely manner. Views of Responsible Officials - The Government concurs with the auditor’s findings and recommendations. VIDE is addressing audit findings related to payroll activities by enhancing internal controls to ensure compliance with federal regulations. Key measures include improving timesheet management through electronic submission, mandatory supervisor review, and secure storage. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2023-063 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Head Start Cluster ALN: 93.356, 93.600 Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 2,941 payroll disbursements and noted 1 instance where fringe benefits were incorrectly charged to the program. We found the employer share of fringe benefits charged to the program with no associated time and effort by the employee. The employee retired and the fringe benefit continued to be charged to the program subsequent to retirement. Further, we noted that internal controls identified did not appear to be operating at a level of precision to ensure compliance with the above-mentioned requirements. Questioned Costs - $4,688. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2023 were $7,037,992. The amount sampled is $150,246. The known amount of instances of noncompliance is $4,688, which represents the fringe benefits charged to the program for the entire fiscal year with no associated time and effort by the employee. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – DHS does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that DHS reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials - The Government concurs with the auditor’s findings and recommendations. DHS has incorporated into its internal controls a step to ensure that the accounts, in retrospect, are reconciled to the actual Flex earning report. DHS intends on meeting with the Department of Finance to identify the nuances that create postings to occur contrary to the Flex Earning Report account coding. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Finding Number: 2023-074 Prior Year Finding Number: 2022-071 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Government Department/Agency: Department of Human Services (DHS) Social Services Block Grant ALN: 93.667 Award #: Various Award Period: Various Criteria – CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records. - Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and - Support the distribution of employee salary across multiple activities or cost objectives. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Condition – We sampled and selected 60 of 1,380 payroll transactions and noted the following: - 2 instances in which the project code on an employee’s Notice of Personnel Action (NOPA), which is used to record time and effort to the appropriate grant, was expired and had not been updated. During the fiscal year, program personnel did make adjustments to ensure the employee’s time and effort was recorded to the correct grant. - 1 instance in which the hours noted per the employee’s timesheet did not agree to the hours in the payroll register. We also sampled 60 of 251 non-payroll transactions and noted the following: - 18 expenditures that do not seem to conform to DHS requirements for disbursing program funds. - 6 instances where the approved requisition was not available for review. - 1 instance where the invoice date is prior to the date of the Purchase Order. - 1 instance where no supporting documentation was available for review other than the approved requisition. Questioned Costs – Not determinable. Context – This is a condition identified per review of compliance with the specified requirements using a statistically valid sample. Total amount of payroll expenditures charged to the program in fiscal year 2023 were $3,343,590. Total amount sampled is $180,273. The known amount of the exceptions is $408. Total amount of non-payroll expenditures charged to the program in fiscal year 2023 were $2,551,775. Total amount sampled is $1,004,88. The known amount of the exception is $388,742. Effect - Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – DHS does not appear to have adequate policies and procedures in place to ensure compliance with applicable cost principles and maintenance of underlying documentation. Recommendation – We recommend that DHS improve internal controls to ensure adherence to federal regulations related to the fiscal and administrative requirements for expending and accounting for payroll and non-payroll expenditures. Views of Responsible Officials - The Government concurs with the auditor’s findings and recommendations. The Department of Human Services (DHS) adopted the electronic Timeforce (STATS) system for payroll, replacing manual processes. Time and attendance are approved through management levels, with payroll based on Notice of Personnel Action (NOPA) cost centers. Financial Analysts reconcile payroll, and a workflow ensures accurate NOPA listings for payroll purposes. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.

Criteria: 2 CFR 200.430 requires that costs of compensation be reasonable and properly supported to ensure charges are accurate, allowable, and properly allocated. Condition: During testing, it was noted that the Board was unable to provide a periodic certification for 11 employees who were paid under the Elementary and Secondary School Emergency Program (ESSER) - a subprogram of the Education Stabilization Fund (ESF). Cause: Documentation was not available to current management. Prior management was not available for inquiry. Effect: Costs for employees paid with ESSER funds is not able to be substantiated. Questioned Costs: $150,091 which includes known costs of $110,809 and likely questioned costs of $39,282. Recommendation: Management should implement a process and appropriate controls to ensure costs charged to federal awards are substantiated, accurate, allowable, and properly allocated and documentation of such is properly maintained. View of Responsible Officials: The Board concurs with this finding and has taken steps towards the reassessment of controls and will review these accounts and implement controls to ensure timely signatures on award certifications.

Federal Agency: U.S. Department of Health and Human Services Federal Program: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.243 Pass Through Agency: N/A Pass Through Entity Identifying Number: N/A Award Period: October 1, 2022 – September 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: Although the Organization had processes and procedures in place to properly charge award programs for employee time and effort worked, these processes and procedures were not formally documented. The Organization initially charged employee costs to award programs based on budget. The monthly reimbursement claims were adjusted to actual costs based on management’s review of actual time and effort. However, the actual time and effort documentation was either not retained or not formally documented for all employees testing. Criteria: In accordance with the Compliance Supplement, Part 6 – Internal Control, 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR Part 200.430(g), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control 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; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Cause: The Organization did not have documented internal controls designed to ensure employee payroll allocations charged to the grant reflected actual time and effort. Effect: The Organization was not in compliance with the Compliance Supplement related to establishing and maintaining internal controls over federal awards. Repeat Finding: No Questioned Costs: None Recommendation: We recommend that management implement a requirement for employees to complete level of effort forms attesting to actual time spent working on the federal program on a regular basis, but no less than annually, during the fiscal period. These forms should be reviewed by a supervisor knowledgeable of the employee's activities and grant requirements and retained thereafter.

Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Pass Through Agency: Mercy Care Pass Through Entity Identifying Number: 1505-0271 Award Period: October 1, 2022 – September 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: Although the Organization had processes and procedures in place to properly charge award programs for employee time and effort worked, these processes and procedures were not formally documented. The Organization initially charged employee costs to award programs based on budget. The monthly reimbursement claims were adjusted to actual costs based on management’s review of actual time and effort. However, the actual time and effort documentation was either not retained or not formally documented for all employees testing. Criteria: In accordance with the Compliance Supplement, Part 6 – Internal Control, 2 CFR Section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR Part 200.430(g), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control 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; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Cause: The Organization did not have documented internal controls designed to ensure employee payroll allocations charged to the grant reflected actual time and effort. Effect: The Organization was not in compliance with the Compliance Supplement related to establishing and maintaining internal controls over federal awards. Repeat Finding: No Questioned Costs: None Recommendation: We recommend that management implement a requirement for employees to complete level of effort forms attesting to actual time spent working on the federal program on a regular basis, but no less than annually, during the fiscal period. These forms should be reviewed by a supervisor knowledgeable of the employee's activities and grant requirements and retained thereafter.

Item 2023-007 Activities Allowed/Allowable Costs/Costs Principles Education Stabilization Fund ALN# 84.425D and 84.425U US Department of Education Passed through Alabama State Department of Education Federal Grant/Contract Number: 2021-802-004295; 2021-802-004296; 2021-802-004298; X230168 Grant period – 2023 Criteria - Per 2 CFR 200.303, 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). Per 2 CFR 200.430(g), charges to Federal awards for salaries and wages must be based on records that are supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and that are incorporated into the official records of the recipient or subrecipient. Condition – A detail of $423,029 of costs associated with payroll expenditures could not be obtained and therefore not tested. We were unable to obtain sufficient, appropriate audit evidence related to these amounts. Cause – Employee fund allocations and payroll documentation were not retained by the Academy to substantiate activities allowed and allowable costs. Effect – Inadequate or inconsistent documentation of expenses may result in erroneous or fraudulent transactions occurring. Questioned Costs – $423,029 of payroll expenditures were unable to be tested as a population of expenditures related to payroll could not be obtained. Recommendation – Documentation should be prepared, reviewed, and retained to support the activities allowed and allowable cost of the expense. The documentation should clearly document who prepared the information and who reviewed the information as well as provide an accurate detail of expenditures recorded to the fund source. Management’s Response - Management has reviewed and accepted the finding. See “Corrective Action Plan”.

Item 2023-009 Activities Allowed/Allowable Costs/Costs Principles Child Nutrition Program ALN# 10.555 and 10.553 US Department of Agriculture Passed through Alabama State Department of Education Federal Grant/Contract Number: 802 Grant period – 2023 Criteria - Per 2 CFR 200.303, 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). Per 2 CFR 200.430(g), charges to Federal awards for salaries and wages must be based on records that are supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and that are incorporated into the official records of the recipient or subrecipient. Condition – During testing of program disbursements there was 2 instances where the purchase order or request used to identify approval of the disbursement could not be located, which was approximately 28.5% of the population sampled. In our payroll testing, we noted multiple instances where an approved pay rate and hours covering the appropriate time period could not be obtained. Cause – Supporting documentation relevant to see that proper approval for controls had been performed could not be obtained. Effect – Inadequate or inconsistent review of expenses may result in erroneous or fraudulent transactions occurring. Questioned Costs – Total of expenses sampled in which documentation could not be provided was $9,926 that amount extrapolated to the population was $17,759. Recommendation – Documentation should be prepared, reviewed, and retained to support the activities allowed and allowable cost of the expense. The documentation should clearly document who prepared the information and who reviewed the information as well as provide an accurate detail of expenditures recorded to the fund source. Management’s Response - Management has reviewed and accepted the finding. See “Corrective Action Plan”.

Finding 2023-001 – Material Weakness: Allowable Costs & Activities – Compliance and Control Finding ALN 84.215K – Innovative Approaches to Literacy; Full-Service Community Schools; and Promise Neighborhood Federal Grant Award: S215K220184 (09/12/2022 – 9/30/2023) Federal Agency: U.S. Department of Education Pass-Through Entity: None Federal Award Identification Number: N/A Fiscal Year: For the year ended August 31, 2023 Criteria Or Specific Requirement: 2 CFR section 200.430(i)(1) requires charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. Condition: We noted through procedures performed that allocated salaries and wages were based on an estimated percentage of time to be devoted to the grant-funded programs as opposed to actual hours worked, resulting in a potential over-allocation or under-allocation of expenditures. Cause: Internal controls over compliance put in place by management were not designed effectively to ensure a review of allocated versus actual hours worked by the federal grant was performed and that proof of such reviews was documented and retained. Effect: Instances of noncompliance were not detected by management. Questioned Costs: $159,527 of known questioned costs, which represent the total allocated salary costs of the 6 full-time salaried employees allocated to the grant, were identified in our testing sample Context: Of the sample of 40 individual costs charged to the grant, 6 were allocated salary costs of full-time, salaried employees. For these 6 payroll items, allocated salary costs were based on the estimated, budgeted percentage of time expected to be devoted by each employee to the grant-funded programs. The St. Louis Symphony did not maintain documentation to support the actual time and effort of each employee charged to the grant. Identification As A Repeat Finding: Not applicable Recommendation: For employees working on grant-funded programs, management should develop a time-keeping process to track and verify that the amount of time charged to the grant is accurate and based on the employee’s time spent working on the grant. Documented review and approval of this time allocation by the employee’s supervisor should be maintained. Views Of Responsible Officials: Management’s belief, based on discussions with the staff involved in these grant-funded programs, is that the amount of time the 6 staff members worked actually meets or exceeds their budgeted percentage of time. However, management now understands the requirement to fully document their actual time spent on this type of grant-funded program.