Findings Citing § 200.430

Subject: Title I Grants to Local Educational Agencies - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listing Number: 84.010A Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: 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, (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. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: We noted that for 13 of the 40 payroll samples selected, the School Corporation did not have employees fill out semi-annual certifications to support the percentage of their payroll charged to the Title I grants. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100%. We recommend management establish a documented review by management of semi-annual certifications to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2025-003 Federal Program Information: Research and Development Cluster (ALN: 93.U10) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation) B. Allowable Cost/Cost Principles - Federal grant requirements, § 200.430, provide that salaries and wages charged to federal awards must be based on records that accurately reflect the work performed; be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; be incorporated into the official records of the institution; reasonably reflect the total activity for which the employee is compensated; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award. Condition: During our testing of expenditures, we noted the following exceptions: • For 1 of 40 selected Research and Development Cluster expenditures, a level of effort certification to support the payroll costs charged to the federal program was not performed timely. Cause: Insufficient administrative oversight and internal controls with respect to allowable cost/cost principles compliance requirements. Effect or Potential Effect: The School is not properly following it policies and procedures to ensure that compliance is maintained with respect to supporting payroll costs charged to the federal programs which could result in unallowable costs charged to the federal agency. Questioned Costs: None. Context: We tested a sample of 40 expenditures across the major programs and noted 1 exception as noted in the condition. Identification as a Repeat Finding: This is a repeat finding from prior year. This was reported as finding 2024-003 in the 2024 report. Recommendation: We recommend that the School adhere to its procedures and internal controls over the applicable compliance requirements of allowable costs/cost principles requirements to ensure that the School is appropriately monitoring level of effort reporting in a timely manner. Views of Responsible Officials and Planned Corrective Actions: We concur. Due to a change that occurred after the reporting period appropriately reallocating one employee’s effort to the federal funding source, the certification was not displayed on the effort report. The employee has certified that this effort was charged appropriately to this award. We are reviewing our policies and procedures to ensure redistribution of labor is performed within a timely manner. We have moved to an annual effort reporting process aligned to the federal regulations and are implementing the Cayuse Effort Reporting module that will more effectively track and report effort. The system will be implemented during our next effort reporting cycle.

2025-001: Internal Controls over Compliance for Allowable Costs Federal Grantor: U.S. Department of Health and Human Services Pass-Through Grantor: Missouri Department of Health and Senior Services Federal Assistance Listing Number: 93.044/93.045/93.053 Program Title: Aging Cluster Pass-through Entity Identifying Number: ERS10525004 Award Year: 2025 Questioned Costs: None Criteria: 2 CFR 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR 200.430(g)(1) states that, “Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated….” Condition: During our audit, we noted instances where the organization did not have procedures in place to maintain adequate documentation of charged to federal awards: • During our testing of payroll expenses, we selected a sample of 25 payroll transactions across four different pay periods consisting of seven different employees. Five of the seven employees selected were hourly employees. For these five hourly individuals, documentation supporting the authorized rate of pay for each of the four pay periods selected could not be provided. The Board of Directors minutes from July 2024 indicated that the Board approved an across-the-board pay increase of 5%, however, the pay rates of the individuals tested were more than 5% higher than the ending pay rates from fiscal year 2024. In all cases, the actual hourly rate of pay was 11.1% higher than the expected rate of pay after the 5% increase. • During our testing of cash disbursements, we selected a sample of 40 expense transactions, which included monthly expense reimbursement reports from six different subrecipient contractors. We requested copies of the fiscal year 2025 contracts with these service providers to ensure that per unit reimbursement rate used to determine the contractor’s payment for the month was correct. However, the organization could not provide copies of the signed fiscal year 2025 contracts. We were able to view the procurement files and the organization’s on-site monitoring files for each service provider. Cause: The organization has had significant turnover in the Chief Executive Officer and Chief Financial Officer positions in the past 24 months, in addition to undergoing multiple office relocations during that time. The organization could not determine how the prior Chief Financial Officer calculated the fiscal year 2025 pay rates which were entered into QuickBooks and could not locate the signed copies of the fiscal year 2025 contracts with service providers. Effect: The maintenance of proper documentation of authorized employee pay rates and contractor reimbursement rates helps to ensure that expenses charged to federal awards are allowable. Recommendation: We recommend that the Agency implement procedures to ensure that authorized pay rates are properly documented and maintained through forms maintained in personnel files or other means. We also recommend that copies of signed contracts with contractors be documented and maintained in a location where they are accessible to all authorized staff.

Criteria: Per 2 CFR 200.403, costs charged to federal awards must be necessary, reasonable, and adequately documented. Additionally, 2 CFR 200.430 requires payroll costs charged to federal awards to be accurately supported and properly allocated to the benefiting program. Condition: During testing of expenditures charged to the federal award, we identified contractual payroll amounts that were charged to the grant for instruction and curriculum development activities. However, these activities were already charged to the grant through the separate training fee (HRSA-approved fee-for-service). This essentially resulted in these payroll expenditures being double charged to the grant. Cause: Management indicated that the duplication resulted from confusion regarding the proper treatment and recording of contractual payroll costs under the grant requirements, which led to the amounts being charged to the program more than once. Effect: As a result, contractual payroll costs charged to the federal award were overstated. Questioned Costs: Questioned costs totaling $ 6,405 were identified as duplicated contractual payroll amounts charged to the grant. Recommendation: We recommend that management implement additional review procedures over payroll allocations charged to federal awards and ensure staff responsible for grant accounting receive additional guidance regarding grant requirements to prevent similar errors in the future. Management Response: Management agrees with the finding. Management has already corrected by reducing the most recent drawdown from HRSA by the amount in question. Management will also implement additional review procedures to prevent similar errors in the future.

Assistance Listing, Federal Agency, and Program Name 21.027 COVID 19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year SLFRP1027 Pass through Entity Michigan Strategic Fund; 20 Fathoms; Lean Rocket Lab; Talent First Inc.; Lansing Economic Area Partnership; Michigan Economic Development Corporation Finding Type Significant deficiency Repeat Finding Yes 2024 001 Criteria As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed, including complying with established accounting policies and practices of the University. Per the University policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair, or dean) of the work performed approximately 30 days after each reporting period. Condition Of the 6 employees included in the payroll expenditures sample selected for testing, the University did not complete a full, executed review of the effort certifications within the time period outlined for one employee. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed None Context In the samples mentioned above, the University completed review of the effort certification to support salaries were allowable, one of the total of 6 employees tested were not reviewed timely. Cause and Effect The University implemented a new automated process during the year to initiate the employee groups that are required to complete an effort certification; however, an employee group was excluded during the set up of the process resulting a certification that was completed outside of the University policy. Recommendation We recommend the University review employee groups maintained in the enterprise resource planning (Workday) to ensure that all employees required to perform effort certifications are included. Views of Responsible Officials and Planned Corrective Actions A new control has been added to the effort certification process that occurs prior to the distribution of effort reports for certification. The Effort Certification Administrator reconciles a compiled listing of all federal grant effort by employee name from the general ledger to ensure that an effort report is subsequently generated for each qualifying employee who worked on a federal grant during the appropriate period.

U.S. Department of Education Passed-Through Entity: New York State Education Department Finding Reference: 2025-001 Title I Grants to Local Educational Agencies (Assistance Listing # 84.010) Compliance Requirement: Allowable Costs/Cost Principles Criteria Under 2 CFR §200.430(i), charges to federal awards for salaries and wages must be supported by appropriate documentation that accurately reflects the work performed. Documentation must be signed by the employee or a responsible supervisory official having firsthand knowledge of the work performed by the employee. Condition During testing of payroll expenditures charged to the Title I program, we noted one instance where the time and effort certification was not signed by the employee. The certification covered services charged to the Title I program during the fiscal year. Cause The unsigned certification appears to be a result of oversight in the review and approval process for time and effort documentation. Effect Without a signed certification, the School District cannot demonstrate full compliance with federal documentation requirements for payroll costs charged to the Title I program. This increases the risk that salary costs charged to the program may not be properly supported. Recommendation We recommend the School District strengthen its review procedures to ensure all time and effort certifications are signed and properly retained prior to submission for payroll processing or federal reporting. View of Responsible Officials The School District will institute additional procedures to ensure that time and effort certifications are signed and properly retained.

Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: H027A240103 Pass-Through Agency: New Hampshire Department of Education Pass-Through Number(s): 20230519, 20241089, 20250423 Award Period: July 1, 2024 – June 30, 2025 Compliance Requirement: Allowable Costs / Cost Principles Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: The Code of Federal Regulations (CFR) Title 2 Part 200.430 indicates 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. Such records must also reasonably reflect the total activity for which the employee is compensated by the non-Federal entity. Condition and Context: For three (3) of twenty-two (22) payroll transactions tested, time and effort certifications were not completed in a timely manner. Questioned costs: None Cause: Procedures were not in place to ensure that time and effort certifications were completed in a timely manner for all applicable transactions. Effect: Noncompliance with federal requirements occurred. Repeat Finding: No. Recommendation: We recommend procedures be strengthened to ensure that time and effort certifications are completed in a timely manner. Views of responsible officials: Management agrees with the finding.

FINDING 2025-004 – Payroll Allocations Federal Program: Continuum of Care Program Federal Identifying Number: Direct funding grants - IL0395L5T102214, IL0395L5T102315, IL0184L5T102316, IL0184L5T102417, IL1790H5T102200, IL1791H5T102200, IL1792H5T102200; Passed- through grants -IL1759D5T102201, IL1878D5T102300, IL1759D5T102202, and 8567-D Federal Assistance Listing Number: 14.267 Passed Through: All Chicago Making Homeless History and Aids Foundation of Chicago Federal Agency: U.S. Department of Housing and Urban Development Criteria/Specific Requirement: A. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) require Inner Voice, Inc. to ensure federal expenditures to be consistent with the standards set forth in the Uniform Guidance at 2 CFR part 200, subpart E. B. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.430(g)(1)(i) Standards for Documentation of Personnel Expenses states the following, “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. C. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 Internal Controls states the following, “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.” Condition: Our audit procedures over expenditures revealed the following: 1) For one (1) of forty (40) expenditure transactions tested, The Inner Voice, Inc. did not adequately track or review time and effort documentation for accuracy. For this selection, the time study applied to allocate salary and actual hours reported and paid did not agree. Questioned Costs: None. Context: The Inner Voice, Inc. expended a total of $5,207,762 of federal awards in fiscal year 2025. The Inner Voice, Inc. expended a total of $3,992,341 of federal awards in fiscal year 2025 under the Continuum of Care program. Effect: The Inner Voice, Inc. is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200.426 as it relates to activities allowed or unallowed and allowable costs/cost principles requirements. Additionally, the effect of noncompliance can result in questioned costs. Cause: The Inner Voice, Inc.’s implementation of internal controls is inconsistent in the 1) review of time study against payment and 2) review and approval of payroll salaries transactions. Recommendation: We recommend that The Inner Voice, Inc. establish and maintain effective internal control over federal awards to ensure expenditures are supported as required by 2 CFR 200.430(g)(1)(i). This includes: a. Conducting a formal time and effort study to support payroll allocations; b. Enhancing policies and procedures surrounding time and effort documentation and review and approval of payroll expenditures. Management’s Response: See Corrective Action Plan.

Material Weakness in Internal Controls Over Compliance and Noncompliance: Payroll Federal program: Award Number: Federal Agency: Compliance Requirement: Questioned Costs: FAL 84.010A Title I Grants to Local Educational Agencies (Title I, Part A of the ESEA) None U.S. Department of Education Allowable Costs N/A Criteria: In accordance with 2 CFR, §200.430(i)(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. Condition: For 1 out of 24 payroll transactions tested, Title I funds were being utilized for wages that did not meet the allowable cost criteria defined by the grant. Cause: The School’s control environment failed to detect and correct payroll errors in a timely manner, allowing wages for ineligible activities to be charged against the Title I program. Effect: There is an increased risk that employee compensation will be charged to grants for unallowable activities. Recommendation: To help ensure that charges to payroll expenses are accurately allocated to the grants for which they are reimburseable, the School should implement internal control policies and procedures that require regular review of employees whose work activity deviates from initial budget estimates.

Material Weakness in Internal Controls Over Compliance and Noncompliance: Payroll Federal program: Award Number: Federal Agency: Compliance Requirement: Questioned Costs: FAL 84.010A Title I Grants to Local Educational Agencies (Title I, Part A of the ESEA) None U.S. Department of Education Allowable Costs N/A Criteria: In accordance with 2 CFR, §200.430(i)(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. Condition: For 1 out of 40 payroll transactions tested, Title I funds were being utilized for wages that did not meet the allowable cost criteria defined by the grant. Cause: The School’s control environment failed to detect and correct payroll errors in a timely manner, allowing wages for ineligible activities to be charged against the Title I program. Effect: There is an increased risk that employee compensation will be charged to grants for unallowable activities. Recommendation: To help ensure that charges to payroll expenses are accurately allocated to the grants for which they are reimbursable, the School should implement internal control policies and procedures that require regular review of employees whose work activity deviates from initial budget estimates.

Finding 2025 - 4: Internal Controls Related to Review and Approval of Timecards Finding Code: 30000 Assistance Listing Number: 84.010 Federal Agency: U.S. Department of Education Pass-Through Entity: California State Department of Education Federal Program: Title I, Basic Grants: Low-Income and Neglected Type of Finding: Significant deficiencies in internal control over compliance related to employee timecards monitoring process. Criteria: Per 2 CFR §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 providing reasonable assurance that charges are accurate, allowable, and properly allocated. - Be incorporated into the official records of the entity. - Reasonably reflect total activity for which the employee is compensated. - Be reviewed and approved by a responsible supervisory official. Management is responsible for establishing and maintaining effective internal controls to ensure payroll costs charged to Federal awards are accurate, properly supported, and periodically monitored. Condition and Context: During our testing of payroll expenditures charged to the Title I grant, we identified deficiencies in the timekeeping and monitoring process. Specifically, for 4 of the 40 employee timecards tested, management was unable to locate the original timecards reflecting documented supervisory approval. As a result, evidence of required review and approval was not available for those payroll expenditures. Cause: Inconsistent implementation of review controls by management and insufficient oversight to ensure compliance with Uniform Guidance payroll documentation requirements. Effect or Potential Effect: Payroll costs charged to the Federal award may not accurately reflect actual time worked on the program. While no material questioned costs were identified as a result of our testing, the control deficiencies increase the risk of future noncompliance. Repeat finding: Not a repeat finding. Recommendation: We recommend management develop and implement written policies and procedures for timekeeping and payroll allocation consistent with 2 CFR §200.430 and strengthen controls over the timecard review and approval controls. Views of Responsible Officials and Planned Corrective Action (unaudited): Management concurs with Finding 2025 - 4 and acknowledges that controls over the review and approval of timecards for federally funded staff were not consistently applied. In response, we will reinforce timekeeping expectations, clarify roles, and ensure that policies and procedures are aligned with 2 CFR § 200.430. We will conduct targeted training for supervisors to reinforce expectations. Central office monitoring will now include quarterly internal audit reviews and follow-up, creating a continuous feedback loop that supports compliance. These enhancements reflect management’s commitment to ensuring that payroll charges to federal programs are accurate, well supported, and reliably documented going forward.

Department of the Interior Federal Financial Assistance Listing 15.042 Indian School Equalization Allowable Costs/Activities Allowed or Unallowed Significant Deficiency in Internal Control Over Compliance and Immaterial Instance of Noncompliance Criteria – A good system of internal control includes an adequate system for ensuring all expenditures are properly recorded and allowable under the related federal grant in accordance with 2 CFR 200.430(i). Condition – In our testing of allowable costs and activities we noted one instance totaling $3.27 where payroll benefits were not paid in accordance with the employment letter. Cause – Procedures are not in place to adequately identify unallowable costs or activities. Effect – A lack of internal controls over allowable costs and activities could result in the improper use of federal funds and non-compliance with the provisions of applicable grant requirements. Questioned Costs – None reported Context/Sampling – A nonstatistical sample of 60 transactions out of 882 total transactions were selected for testing, which accounted for $26,666 of $2,203,450 of federal program expenditures. Repeat Finding from Prior Years – Yes, 2024-008 Recommendation – The School should review internal control procedures to ensure federal expenditures are being properly reviewed for unallowable costs and activities. Views of Responsible Officials – The School respectfully disagrees with the classification of this matter as a significant deficiency.

Significant Deficiency 2025-001. Allowed Costs/Cost Principle United States Department of Education, Passed Through New York State, Department of Education: Special Education Cluster Special Education Grants to States: IDEA Part B ALN: 84.027 Special Education Preschool Grants: IDEA Preschool ALN: 84.173 Criteria: Salaries and wages charged to federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart E, 2 CFR §200.430. Condition: Subpart E, 2 CFR §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.” The documentation should support the distribution of the employee’s compensation among specific activities if the employee works on more than one federal award, or a federal award and non-federal award. The preparation of personnel activity reports (PAR) or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District did not prepare this documentation, and, therefore, did not comply with Subpart E, 2 CFR §200.430. Cause: The staff that were responsible for maintaining records that accurately reflect the work performed, as described in Subpart E, 2 CFR §200.430, to support salaries charged to federal awards, did not prepare PARs or certification reports related to work being completed. Effect: Noncompliance could result in the incorrect amount for services rendered being charged to the federal award. Questioned Costs: Dollar amount undetermined as adequate documentation was not available. Context: The District maintains time records for employees charged to federal awards in accordance with approved budgets, and determined that individuals assigned to provide services meet the criteria necessary in accordance with the grant requirements. Identification of a Repeat Finding: This is a repeat finding from the previous audit, item No. 2024-001 related to the Special Education Cluster. Recommendation: The District should revise its procedures to prepare documentation to support actual salaries and wages charged to federal awards after the work was performed in accordance with the requirements of the Uniform Guidance at Subpart E, 2 CFR §200.430. Views of Responsible Officials of Auditee: The District will adopt procedures to ensure appropriate documentation will be prepared to comply with Subpart E, 2 CFR §200.430.

2025 – 005. Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: Department of Defense Federal Program Title: National Guard Military Operations and Maintenance (O&M) Projects Assistance Listings: 12.401 Federal Grant ID Numbers: Various Pass-Through Entity: Not applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance Criteria: 2 CFR § 200.430 states that (a) 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 established written policy of the recipient or subrecipient consistently applied to both federal and non-federal activities; (2) Follows an appointment made in accordance with recipient’s or subrecipient’s laws, rules or written policies and meets the requirements of federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (g) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR § 200.303 requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: Personnel expenditures were charged to the federal award without documented approval as required by the Office’s internal control procedure. Cause: The Office did not document all required approvals of payroll changes for grant employees. Effect: Personnel costs could be incorrectly charged to the federal award. Questioned Costs: Questioned costs are undetermined because this finding relates to missing approvals, rather than a specifically identifiable unallowable amount. Context: Two out of sixty employees tested were missing one or more of the required management approvals on their State Personnel Action Form applicable to the pay received in the selected period. Prior Year Single Audit Report Finding Number: Not applicable Recommendation: We recommend that the Office strengthen its efforts to consistently adhere to its procedures, including maintaining the approved State Personnel Action Form to support the personnel charges and allocations to applicable funding sources. Views of responsible officials and planned corrective actions: See management’s response on page 182.

2025 – 017. Activities Allowed or Unallowed & Allowable Costs/Costs Principles Federal Agency: Environmental Protection Agency Federal Program Title: Drinking Water State Revolving Fund Assistance Listing: 66.468 Federal Grant ID Number: Various Pass-Through Entity: Not Applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR § 200.430(g)(1)(vi) requires charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 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 allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 2 CFR § 200.303 requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: The Department did not accurately calculate time and effort costs associated with the grant. Cause: The Department’s internal control did not ensure that time and effort was allocated appropriately. Effect: The Department could improperly allocate additional labor cost to the grant. Questioned Costs: $678 was the amount overcharged to program after evaluation of time and effort documentation. Context: We tested eleven individuals to ensure time and effort requirements were being properly met. We determined the Department did not properly allocate time and effort for ten of the eleven individuals tested. Prior Year Single Audit Finding Number: Not applicable Recommendation: We recommended the Department strengthen its controls to ensure that time and effort is tracked and allocated accurately. Views of responsible officials and planned corrective actions: See management’s response on page 192.

2025 – 020. Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll and Indirect Costs Federal Agency: Environmental Protection Agency Federal Program Title: Performance Partnership Grants Assistance Listing: 66.605 Federal Grant ID Number: Various Pass-Through Entity: Not Applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR §200.404 states that a cost is reasonable when the charge is consistent with the recipient’s or subrecipient’s established written personnel policies. 2 CFR § 200.430 requires that charges to federal awards for salaries and wages must be supported by accurate time and effort records that reflect the actual work performed. The records must: be supported by a system of internal controls that provides reasonable assurance payroll costs are accurate, allowable, and properly allocated; be incorporated into the recipient’s official accounting records; reasonably reflect the employee’s total compensated activity, not exceeding 100 percent of compensated time; properly allocate payroll costs when employees work on multiple cost objectives, including federal and non-federal activities; comply with the recipient’s established accounting policies and procedures. Charges should not rely solely on budget estimates unless: the estimates reasonably approximate actual work performed; significant changes in work activity are promptly identified and recorded and periodic after-the-fact reviews and adjustments are performed to ensure final charges are accurate, allowable, and properly allocated. 2 CFR § 200.303 requires that the recipient and subrecipient establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Department did not maintain adequate time and effort documentation to support salaries and wages charged to federal awards. Specifically, payroll charges were not consistently supported by records that accurately reflected actual work performed and/or did not properly document the allocation of time between federal and non-federal activities. Indirect costs are directly correlated to the payroll expenditures thus if the payroll expenditures are inaccurate then the indirect cost will also be inaccurate. Cause: The Department lacked sufficient internal controls and/or written procedures to ensure time and effort was allocated among payroll accurately. Effect: As a result, there is an increased risk that salaries and wages charged to federal awards were inaccurate, unallowable, or improperly allocated, which could result in questioned costs and noncompliance with federal grant requirements. Questioned Costs: $17,445 for payroll testing. The overall variance between hours worked and amounts paid represents the questioned costs for payroll. Unknown for journal entry testing. Indirect costs were allocated based on budgeted personnel amounts rather than actual time and effort recorded in the Personnel Cost Account System (PCAS) and discrepancies were identified during our testing of time and effort requirements. Context: We selected thirty-six individuals to ensure time and effort requirements were properly met. Eleven out of thirty-six employees tested were paid more from the grant funds than they actually worked during the pay period. Twenty-three out of thirty-six employees tested, were paid less from the grant funds than they worked during the pay period. We selected seven indirect cost transactions to ensure time and effort requirements were being met properly. Because the journal entries related to indirect cost were made based on the budget for the grant and not the actual time and effort contributed by the individual employees per the PCAS, we were unable to provide reasonable assurance that time and effort was calculated accurately. Prior Year Single Audit Finding Numbers: Not applicable Recommendation: We recommend the Department develop and/or strengthen written policies and procedures for time and effort reporting; Ensure time and effort recordings accurately reflect actual work performed and total compensated activity; Implement supervisory review of time and effort documentation; and perform periodic after-the-fact reviews and adjustments to payroll charges to ensure compliance with federal requirements. Views of responsible officials and planned corrective actions: See management’s response on page 194.

Finding 2025-003, Timesheet – Timekeeping (Assistance Listing 16.575 and 93.958) Criteria: 2 CFR § 200.430 requires that the distribution of salary and wages charged to federal awards be based on records that accurately reflect the work performed, prepared after-the-fact, and includes the total activity for which employees were compensated. Condition and Context: The timesheets used by the Agency through December 2024 did not include the allocation of hours worked by program. Cause: Internal controls over the accurate distribution of hours on the timesheets were not operating effectively or designed properly. Effect: The timesheets do not support the allocation of time charged to the programs. Identification as a repeat finding: Yes. Questioned costs: None. Recommendation: We recommend that the Agency strengthen its policies and procedures for the timekeeping and distribution of the employees’ hours in accordance with the requirements of the federal programs. View of responsible officials: In January 2025, WJCS implemented an automated time and attendance system for staff to track time which integrates with the payroll and financial systems to ensure appropriate allocations to Federal awards. Prior to implementation of the new system, weekly manual timesheets were used to track staff time and attendance on federal contracts. However, these manual timesheets were not integrated into a standard agency-wide payroll processing system. The new system enhancements to payroll tracking will allow WJCS to completely and accurately allocate payroll costs to grants with fewer mechanical steps which increase the risk of miscalculations.

III. Federal Awards Findings and Questioned Costs Finding 2025-002: Significant Deficiency in Internal Control over Compliance – Allowable Costs; Criteria or specific requirements: 2 CFR §200.430 of the Uniform Guidance requires that charges to federal awards for salaries and wages be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Personnel expenses must be supported by records that accurately reflect the work performed and must reasonably reflect the total activity for which the employee is compensated. These records must also be incorporated into the official records of the organization. Condition/Context: During our testing of payroll expenditures charged to the grant, we noted management performs a periodic review or “lookback” to compare budgeted payroll allocations to actual work performed to ensure that payroll costs charged to federal awards are reasonable and accurate, evidence of the review was not retained. Effect: Without supporting documentation and periodic reconciliation, there is an increased risk that payroll costs charged to federal awards may not accurately reflect work performed. Cause: The University completed a payroll conversion in the current fiscal year that resulted in challenges to locate certain documentation to support these lookbacks. Repeat finding: No. Recommendation: As management completes their payroll implementation, we recommend that management implement procedures to ensure compliance with Uniform Guidance requirements for personnel costs. These procedures should include either the ability for individuals to track time spent on individual grants when completing their timesheet or reflect staff responsible for compliance retain periodic reviews (lookbacks) comparing budgeted payroll allocations to actual work performed to ensure charges to federal awards are reasonable and properly supported. Views of responsible officials: With the implementation of the new UKG Payroll system in January 2026, the timesheet process now systematically reflects the ability for individuals to track time spent on individual grants when completing their timesheet.

2025-005 – Allowable Costs/ Cost Principles: Lack of Time and Effort Report Certification and Lack of Timesheets Cluster: Not applicable Sponsoring Agency: United States Agency for International Development (USAID) Award Name: USAID Foreign Assistance for Programs Overseas Award Number: 7200AA19CA00018 Assistance Listing Title: USAID Foreign Assistance for Programs Overseas Assistance Listing Number: ALN 98.001 Award Year: 2024-2025 Pass-through entity: Not applicable Compliance Requirement: Allowable Costs/Cost Principles Criteria or Specific Requirement A. Lack of Time and Effort Report Certification Under 2 CFR 200.430, charges to federal awards for salaries and wages must be supported by records that accurately reflect the work performed, are backed by effective internal controls, and are certified by the employee or an authorized official with knowledge of the work. University policy further requires timely certification of effort reports for all personnel paid in whole or in part from federal awards, with reports issued approximately 45 days after the close of the October 1–September 30 reporting period and required to be certified within 120 days. B. Lack of Timesheets for Hourly Employees Under 2 CFR 200.430(i), charges to federal awards for salaries and wages must be supported by records that accurately reflect the work performed. These charges must also be reasonable, allocable, and adequately documented, including the retention of signed or approved timesheets or equivalent effort documentation to support payroll costs charged to sponsored awards. Identified Condition A. Lack of Time and Effort Report Certification For allowable costs testwork across two (2) campuses, we noted the following at one (1) campus: • Of the 40 employee time and effort reports selected for testwork, we noted one (1) time and effort report for the period October 1, 2023 to September 30, 2024 was not certified in accordance with the University’s established policies and procedures. Note that the audit team was able to substantiate the allowability of the payroll charges through review of alternative supporting documentation, such as the distribution of payroll expense report. B. Lack of Timesheets for Hourly Employees For allowable costs testwork across two (2) campuses, we noted the following at one (1) campus: • Of the 14 hourly employee timesheets selected for testwork, the campus was unable to provide timesheets or other equivalent effort documentation. Therefore, we were unable to verify whether the related payroll costs were accurately charged to the program in accordance with the University’s policies and federal requirements. Cause A. Lack of Time and Effort Report Certification Certain time and effort reports require multiple levels of certification, particularly when employees allocate effort across multiple federally sponsored awards. Responsibilities distributed among departments and program investigators, combined with staff turnover and workflow or routing delays, contributed to the uncompleted certification of the time and effort report. In addition, the campus converted to a new financial system effective January 1, 2024, which does not have a similar key tracking function as the old system. This resulted in certain time and effort reports not being flagged for review and being inadvertently overlooked. B. Lack of Timesheets for Hourly Employees The employee timesheets for the program were maintained at the departmental level. Following the termination of this program, the campus was unable to obtain the relevant records because the personnel responsible for maintaining them were no longer available. The campus also attempted to retrieve the documentation through its central time-reporting system; however, the system did not permit extraction of the required historical data. Consequently, the campus was unable to provide supporting documentation for the reported hours. Effect The lack of proper time and effort certification and evidence of employee timesheets can lead to inaccurate allocation of payroll expense charged to federal awards. This also increases the potential for program noncompliance as personnel costs charged to federal awards may be unsupported or unallowable. Questioned Costs A. Lack of Time and Effort Report Certification Questioned costs for salary charges related to the one (1) time and effort report lacking certification for the sample selected (1 of 40 time and effort reports) totaled $1,179. B. Lack of Timesheets for Hourly Employees Questioned costs for the 14 employee timesheets that were not provided for the sample selected (14 of 14 employee timesheets) totaled $29,775. Recommendation A. Lack of Time and Effort Report Certification We recommend that management strengthen controls over the time and effort reporting process by enforcing timely certification in accordance with University policy, including implementing additional reminder and escalation procedures with assigned follow-up responsibilities, and active monitoring of overdue certifications to ensure timely resolution and processing. B. Lack of Timesheets for Hourly Employees We recommend that the campus implement procedures to ensure timesheet records are centrally retained and accessible regardless of staffing changes or program closures. This should include maintaining a reliable central repository and ensuring time-reporting data can be extracted when needed. Management’s Views and Corrective Action Plan A. Lack of Time and Effort Report Certification Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings. B. Lack of Timesheets for Hourly Employees Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings.

Finding 2025-001 – Allowable Costs / Principles & Activities Allowed or Unallowed Federal Agency: U.S. Department of Health and Human Services Federal Program: Block Grants for Substance Use Prevention, Treatment, and Recovery Services AL Number: 93.959 Award Number: B08TI087059 Award Year: 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: Per 2 CFR 200.430(g)(1)(i) & (ii), “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 that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and be incorporated into the official records of the recipient or subrecipient.” Condition: During our testing of allowable costs and activities, we identified deficiencies in the Organization’s internal controls over salaries and wages. While the Organization maintained original hiring documentation for employees, subsequent pay increases and the associated approvals were not formally documented or retained. In addition, we observed that the Organization did not have a standardized process for reviewing employee timesheets or for overseeing the payroll submission process in its entirety. It is important to note that these issues were limited to items selected from periods prior to the issuance of the prior-year audit report. Following that report, the Organization implemented enhanced payroll controls, including documented timesheet approvals and the use of approved employee status change forms. Context: There were 40 instances of employees’ salaries and wages tested. The sample consisted of 5 employees tested for eight pay periods, For each instance tested before the issuance of the prior year audit report, the deficiency in internal controls around payroll costs, as described in the Condition section, applied. Cause: The Organization did not maintain documentation of employee pay raises or the necessary approvals for those pay raises. The Organization’s internal control process around payroll costs does not include review of employee timesheets to ensure that reported time is reasonable and accurate. Effect: Lack of internal controls surrounding payroll costs could potentially lead to improper allocation of payroll costs to the Federal grant. Repeat finding: Not applicable. Recommendation: We recommend the Organization continue to maintain and monitor the enhanced payroll controls that were implemented during the year ended June 30, 2025. Management’s Response: See Corrective Action Plan.

Finding 2025-010 – B. Allowable Costs/Cost Principles Information on Federal Program(s) – Research and Development Cluster (ALN 43.009, ALN 93.859) Criteria or Specific Requirement - 2 CFR §200.430(i)(1)(i) indicates that 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. Additionally, 2 CFR §200 requires that costs charged to programs are adequately documented. Condition – The summary level hourly documentation retained for payroll expenditures charged to the program was not formally supported with an adequate system of internal controls. Additionally, for certain non-payroll expenditures selected for testing, the University was unable to provide documentation adequately supporting the amount charged to the federal award. Cause - Administrative oversight and insufficient internal controls. Effect or Potential Effect – Noncompliance with documentation of payroll and non-payroll expenditure standards. Questioned Costs – Below reportable threshold. Context – Context is as follows: • Payroll Expenditures: For 4 of 4 employees selected for testing, the summary level hourly documentation retained was not formally supported with an adequate system of internal controls. • Non-Payroll Expenditures: For 2 of 8 expenditures selected for testing, the University was unable to provide adequate documentation to fully substantiate the expenditure balance. We also noted that the University did not have formalized internal controls over indirect costs charged to the federal programs. Indication of Repeat Finding - This is a repeat of prior year Finding 2024-011. Recommendation – We recommend that the University enhance its internal controls over compliance to ensure that time and effort records are appropriately maintained. We also recommend that the University enhance its internal controls over compliance to ensure all non-payroll expenditures are fully supported as required. Views of Responsible Officials – The University acknowledges that the internal controls surrounding the allowable costs during fiscal year 2025 were lacking and needed to be reinforced for future fiscal years. With the hire of the new CFO and HR leader post June 30, 2025 – these enhanced controls and processes have been put in place, and all payroll and other expenses are detailed, supported, and filed appropriately.

Reference Number: 2025-003 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division: Division of Public Health Federal Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Assistance Listing Number: 10.557 Award Number and Year: 241DE701W1003 (10/1/2023 – 9/30/2024) 251DE701W1003 (10/1/2024 – 9/30/2025) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement Compliance: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control 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) 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. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The Division of Public Health (Division) did not have evidence of timely supervisory review and approval of employee timesheets. Context One of forty timesheets selected for testing was not certified timely by a program supervisor. The timesheet was certified several months after the end of the pay period. Questioned Costs None noted. Cause The Division’s controls are not sufficient to ensure that time and effort reporting is performed and documented in a timely manner, in accordance with federal requirements. Effect There is an increased risk of charging unallowed payroll costs to the program. Recommendation The Division should enhance procedures, implement proper controls, and perform additional training over time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials On March 12, 2026, an email to all WIC supervisors was issued notifying the dates that all T&E reports are due to the Administration Office. The policy was reiterated during the March 17,2026 Supervisors meeting held via Zoom.

Reference Number: 2025-008 Prior Year Finding: 2024-010 Federal Agency: U.S. Department of Labor State Department Name: Department of Labor State Division: Division of Unemployment Insurance Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372152255A10 (10/1/2021 – 12/31/2024) UI393142355A10 (10/1/2022 – 12/31/2025) 24A55UI000067 (10/1/2023 – 12/31/2026) 25A55UI000116 (1/1/2024 – 12/31/2027) Compliance Requirement: Allowable Cost/Cost Principles – Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement Compliance: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control 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) 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. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The Division of Unemployment Insurance (Division) was unable to provide support to validate that payroll expenses charged to the federal program were reviewed. Timesheets did not have evidence of supervisory approval. Context For 2 of 60 timesheets selected for testing, the Division was unable to provide documentation that the timesheets were reviewed and approved by a supervisor. Questioned Costs Undetermined. Cause Controls were not operating effectively to ensure that time and effort reporting was performed and documented in a timely manner, in accordance with federal requirements. Effect There is an increased risk of charging unallowed payroll costs to the program. Recommendation The Division should reevaluate its current process, implement proper controls, and perform additional training for time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials We agree that the division was unable to provide documentation supporting the timesheet approval as asserted. However, we respectfully disagree that the lack of timesheet approval translates into charging the program with unallowed costs. It’s important that the auditors understand that the division’s responsibility to ensure that payroll charges to the program are appropriate begins with ensuring that each employee tasked with performing program functions are hired into the correct division internal program unit (“IPU”). And then further within that IPU, instruct employees to use a specific activity code that is assigned to various federal programs. In the samples reviewed, employees properly used the correct activity code to record time for the work performed. Auditor Rejoinder In its response, the Division acknowledges that it was unable to provide documentation to auditors that timesheets were reviewed and approved. Auditors recognize that an allowable activity code was used by the employees, but without review and approval, the actual time recorded and the validity of the activity code could not be verified. However, auditors recognize that the payroll costs would be allowable if they were reviewed by a supervisor and it was determined that appropriate activity codes were used for those employees in the given time periods. Therefore, auditors did not identify questioned costs for this finding due to a lack of documentation but reiterate that there is a possibility that questioned costs may exist if the employee time charged to the program was inappropriate.

Reference Number: 2025-016 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division: Division of Public Health Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: NU50CK000497 (8/1/2019 – 7/31/2027) NU51CK000334 (8/1/2024 – 7/31/2029) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement Compliance: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control 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) 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. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The Division of Public Health (Division) inaccurately charged payroll costs to the program. Context For one of forty time sheets selected for testing, the employee’s time and effort certification indicated that 50% of the employee’s time was spent on the program, but 100% of the employee’s time was charged. Questioned Costs $1,742, the amount charged to the program in error. Cause Controls were not operating effectively to ensure that time and effort reporting was performed accurately. Effect Unallowed payroll costs were charged to the program. Recommendation The Division should reevaluate its current process, implement proper controls, and perform additional training over time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials ELC Financial Lead will work with DPH Support Services to track all recoded time against grant. As recodes are identified, time certifications for affected staff will need to be revised and filed appropriately.

Reference Number: 2025-017 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division: Division of Social Services Federal Program: Temporary Assistance for Needy Families Assistance Listing Number: 93.558 Award Number and Year: 2501DETANF (10/1/2024 – 9/30/2025) 2401DETANF (10/1/2023 – 9/30/2024) 2301DETANF (10/1/2022 – 9/30/2023) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or Specific Requirement Compliance: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control 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) 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. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The Division of Social Services (Division) did not have evidence of that employee time charged to the program was properly documented. Context Forty timesheets were selected for testing, and the following exceptions were noted: • 17 of 40 timesheets selected for testing could not be provided to auditors for testing. • 14 of 40 timesheets selected for testing were not certified timely by a program supervisor. The timesheets were certified several months after the end of the pay period. • 1 of 40 timesheets selected for testing was not certified by a program supervisor. Questioned Costs Undetermined. Cause The Division’s controls are not sufficient to ensure that time and effort reporting is performed and documented in accordance with federal requirements. Effect Employee time charged to the program could not be verified and there is an increased risk of charging unallowed payroll costs to the program. Recommendation The Division should enhance procedures, implement proper controls, and perform additional training over time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials The following action will be taken to improve the current process. • The Fiscal unit is implementing procedures to serve as the central repository for all Time and Effort records, replacing the current practice of storing these forms at the program manager level. • Implement internal controls for Time and Effort Reporting. • Confirm that T&E information submitted is accurate and reconciled. • Provide training for Time & Effort certification.

Reference Number: 2025-020 Prior Year Finding: 2024-019 Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division: Division of Social Services Federal Program: CCDF Cluster Assistance Listing Number: 93.575. 93.596 Award Number and Year: SAI5406 (10/1/2022 – 9/30/2025) SAI5788 (10/1/2023 – 9/30/2026) SAI6656 (10/1/2024 – 9/30/2028) SAI6306 (10/1/2024 – 9/30/2027) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement Compliance: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control 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) 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. Control: Per 45 CFR Part 98, Child Care and Development Fund recipients must establish and maintain robust internal controls to ensure integrity and accountability of program funds. Recipients must implement procedures designed to investigate and recover fraudulent payments, to impose sanctions on clients or providers in response to fraud, document and verify eligibility, and promote compliance with all applicable laws and regulations. These internal control mechanisms serve to prevent misuse, mismanagement, or fraudulent activity, thereby fostering accountability and transparency in the stewardship of federal funds allocated through the CCDF program. Condition The Division of Social Services (Division) did not have evidence of timely supervisory review and approval of employee timesheets. Context Three of sixty timesheets selected for testing were not certified timely by a program supervisor. The timesheets were certified several months after the end of the pay period. Questioned Costs None noted. Cause The Division’s controls are not sufficient to ensure that time and effort reporting is performed and documented in a timely manner, in accordance with federal requirements. Effect There is an increased risk of charging unallowed payroll costs to the program. Recommendation The Division should enhance procedures, implement proper controls, and perform additional training over time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials The following action will be taken to improve the current process. • The Fiscal unit is implementing procedures to serve as the central repository for all Time and Effort records, replacing the current practice of storing these forms at the program manager level. • Implement internal controls for Time and Effort Reporting. • Confirm that T&E information submitted is accurate and reconciled. • Provide training for Time & Effort certification.

Reference Number: 2025-025 Prior Year Finding: 2024-024 Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division: Division of Substance Abuse and Mental Health Federal Program: Opioid-STR Assistance Listing Number: 93.788 Award Number and Year: H79TI085764 (9/30/2022 – 9/29/2024) 6H79TI085764 (9/30/2023 – 9/29/2025) 5H79TI083305 (9/30/2024 – 9/29/2027) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or Specific Requirement Compliance: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control 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) 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. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition Timesheets provided by the Division of Substance Abuse and Mental Health (Division) were not reviewed and approved timely by a supervisor. Context 16 of 28 timesheets selected for testing were not certified timely by a program supervisor. The timesheets were certified several months after the end of the pay period. Questioned Costs Undetermined. Cause The Division’s controls are not sufficient to ensure that time and effort reporting is performed and documented in a timely manner, in accordance with federal requirements. Effect There is an increased risk of charging unallowed payroll costs to the program. Recommendation The Division should enhance procedures, implement proper controls, and perform additional training over time and effort reporting. The Division should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Views of Responsible Officials The Division evaluated the developed process and implemented controls for completion of the process within 60 days with added monitoring roles for accuracy and timeliness. The Division will be performing training for assigned staff, monitoring completion and will continue to improve the process for efficiency and compliance.

Allowable Costs/Cost Principles – Evidence of Services Provided by Part-Time and Extension Credit Lecturers Program Name: Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing 21.027) Federal Award Agency: Department of the Treasury Award Year: Federal Fiscal Year 2025 Federal Award Number: N/A Background The Office of Policy and Management (OPM) was designated as the primary state agency responsible for overseeing the Coronavirus State and Local Fiscal Recovery Funds and reporting to the federal government. OPM allocated funds to the CT State Community College and other state agencies to assist with carrying out the program’s objectives. CT State Community College contracts with part-time and extension credit lecturers who teach a term or class at a flat rate. The college pays them in equal installments based on the terms of individual contracts. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR Part 200.430(g) provides that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Such records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with the established accounting policies and procedures of the recipient. Sections 3-117(b) and 3-119(a) of the Connecticut General Statutes require state entities to certify services are received and documented before paying contractors and state employees. Condition CT State Community College made $70,175,519 in salary and fringe benefit payments for 2,796 part-time and extension credit lecturers without verifying the lecturers provided the contractual services or documenting supervisory approval. Context During the fiscal year ended June 30, 2025, CT State Community College charged $70,624,749 in payroll and fringe benefit costs to Coronavirus State and Local Fiscal Recovery Funds, of which $70,175,519 was attributed to contracted faculty members. Questioned Costs $0 Effect CT State Community College could pay part-time and extension lecturers for services they did not provide. Cause CT State Community College lacks policies and procedures to ensure compensation for part-time and extension credit lecturers is contingent on fulfillment of contractual obligations. Prior Audit Finding We previously reported this as finding 2024-400. Recommendation CT State Community College should strengthen internal controls to ensure that part-time and extension credit lecturer payroll and fringe benefits costs are based on actual time worked and are properly approved. Views of Responsible Officials Response provided by CT State Community College: “Management agrees with this finding and work towards a viable long-term solution for workload review at the campus level is underway. As noted in previous audits, controls were implemented in Banner as part of the Payroll Exception review process that was initiated by the Audit Advisory Committee. These reports are currently unavailable due to limitations that will be resolved soon. Once resolved, the reports will be shared with the appropriate academic reviewer for confirmation of services received.” Views of Responsible Officials Response provided by the Office of Policy and Management: “The Office of Policy and Management has no additional response beyond that offered by the CT State Community College.”

Finding Reference: 2025-002 Federal Agency: U.S. Department of Homeland Security Pass-Through Entity: California Governor's Office of Emergency Services Federal Program Title: Disaster Grants - Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Federal Grant Number: FEMA 4482DR-CA-01387 FEMA 4482DR-CA-01680 FEMA 4482DR-CA-02974 FEMA 4482DR-CA-03269 FEMA-4482-DR-CA-PW-00265(2) FEMA-4482-DR-CA-PW06047(3932) FEMA DR-4683 FEMA DR-4699 Category of Finding: Activities Allowed or Unallowed Allowable Costs/Cost Principles Classification of Finding: Significant Deficiency in Internal Control over Compliance Instance of Noncompliance Criteria The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR §200.403 and §200.430, require that costs charged to federal awards be allowable, reasonable, allocable, and adequately supported. Payroll costs charged to federal programs must be based on accurate payroll records and may not be duplicated or claimed more than once for reimbursement. In addition, management is responsible for establishing and maintaining effective internal control over compliance to ensure federal awards are administered in accordance with applicable laws, regulations, and grant provisions. Condition During our audit, we selected a statistically valid sample of 40 payroll transactions and identified 5 duplicate payroll transactions that were included in amounts submitted for reimbursement under the program. Specifically, certain payroll costs were charged more than once to the federal program, resulting in unallowable costs being claimed for reimbursement. These duplicate charges were not identified or corrected by management prior to submission of reimbursement requests. The City subsequently performed a detailed review of the payroll charges included in the reimbursement submissions, identified duplicate payroll charges of $113,551, and reduced the reported expenditure in the Schedule of Expenditure of Federal Awards for the year ended June 30, 2025. Cause The condition was caused by ineffective internal controls over submission of reimbursement requests, including inadequate review procedures to ensure payroll costs were not duplicated prior to submission, lack of reconciliation between payroll records and reimbursement requests, and insufficient supervisory review over payroll charges included in the reimbursement requests. Identification of Repeat Finding This is not a repeat finding in the immediate prior audit period. Effect As a result of these control deficiencies, unallowable payroll costs were claimed for federal reimbursement. This noncompliance could result in the City being required to repay the federal awarding agency and increase the risk of additional unallowable costs being claimed in future periods if not corrected. Questioned Costs Known questioned costs totaling $113,551 were identified related to duplicate payroll charges included in the reimbursement submission for grant number FEMA-4482-DR-CA-PW06047(3932). Recommendations We recommend that the City strengthen internal controls over payroll cost allocation and reimbursement processes to ensure payroll costs are not duplicated; implement reconciliations between payroll records and reimbursement requests prior to submission; and provide additional training to personnel responsible for grant accounting on federal cost allowability requirements. View of Responsible Officials and Planned Corrective Action See separately prepared Corrective Action Plan.

Reference # and title: 2025-002 Internal Control and Compliance over Special Education, Title I, and Title II Payrolls Federal program and specific federal award identification: AL Number Award Year United States Department of Education; passed through Louisiana Department of Education Special Education Cluster (IDEA): Special Education Grants to States #84.027A 2025 Special Education Preschool Grants #84.173A 2025 Title I Grants to Local Educational Agencies #84.010A 2025 Title II Supporting Effective Instruction State Grants #84.367A 2025 Criteria or specific requirement: For an employee who works in part on the consolidated administrative cost objective and in part on a Federal program whose administrative funds have not been consolidated or on activities funded from other revenue sources, the School Board must maintain time and effort distribution records in accordance with 2 CFR section 200.430(i)(1)(vii) that support the portion of time and effort dedicated to (a) the consolidated cost objective, and (b) each program or other cost objective supported by non- consolidated Federal funds or other revenue sources. Employee pay should be reviewed to ensure that payment amount is correct. Employee attendance should be documented on a consistent basis. Condition found: In testing 29 payroll transactions for the Special Education program, the following exceptions were noted: 20 exceptions noted in which attendance records were not signed by the supervisor; 2 exceptions where one employee was not paid in accordance with the salary schedule, which resulted in an underpayment; 13 exceptions where time certifications were not completed in a timely manner. In testing 29 payroll transactions for the Title I program, it was noted that although the employee had a time certification, that 20 payroll transactions did not reflect a supervisor’s review of the employees’ attendance records. In testing 29 payroll transactions for the Title II program, the following exceptions were noted: 17 exceptions noted in which attendance records were not signed by a supervisor; 12 exceptions where time certifications were not completed in a timely manner; 17 exceptions where employees clock in but do not clock out; 6 exceptions where substitute teachers do not sign in for work. Possible asserted effect (cause effect): Cause: Attendance documentation and semi-annual certifications were not maintained throughout the year by the School Board. Effect: The School Board did not comply with all requirements related to allowable costs and cost principles for the Special Education, Title I, and Title II programs. Recommendations to prevent future occurrences: The School Board should strengthen policies and procedures to ensure that semi-annual time certifications are signed by all employees in a timely manner before school lets out and that employee attendance is adequately approved throughout the year. The School Board should also strengthen procedures to ensure employees’ pay is complete and accurate. Origination date and prior year reference (if applicable): For the Special Education and Title II payrolls, this finding originated in the fiscal year ended June 30, 2025. For the Title I payroll, this finding originated in the fiscal year ended June 30, 2024. View of responsible official: The School Board is evaluating current policies and procedures over semi-annual certifications and employee attendance, and also ensuring new employees are properly trained regarding these policies and procedures. In addition, the School Board is implementing electronic employee attendance software throughout the District to ensure accuracy and completeness of attendance records.

Compliance Requirement: Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education Assistance Listing Number and Title: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 255GA324N1199 (Year: 2025) Questioned Costs: $7,474 Repeat of Prior Year Finding: FA 2024-001, FA 2023-004 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $60,051,234.81 were expended and reported on the DeKalb County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the recipient or subrecipient… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements… and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the recipient or subrecipient consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a recipient’s or subrecipient’s laws, rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (g)…, [as follows:] (g) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient…” Condition: A sample of 60 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if internal controls were properly functioning, and applicable compliance requirements were met. The following deficiencies were noted: • One employee was paid on the incorrect pay scale and thus was overpaid by $4,903. • Two employees were paid on the incorrect pay scale and thus were underpaid by $1,287. • Additional pay totaling $967 for 2 employees was incorrectly charged to the federal program. • Documentation of retrospective pay totaling $317 could not be located for 1 employee. Questioned Costs: Upon testing a sample of $1,643,657 in personnel services expenditures, known questioned costs of $7,474 were identified for payroll charges not supported by adequate documentation. Using the total personnel services expenditure population of $20,618,901 (excluding benefits payments), we project the likely questioned costs to be approximately $93,759. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: A lack of oversight by personnel in the Office of Federal Grants and Program Compliance led to noncompliance with the requirements of the Uniform Guidance in relation to charging of personnel costs to a federal program. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees with CNC funds the appropriate amount and/or maintain documentation supporting those payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the CNC funds as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control process related to the approval and retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that CNC employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: The District acknowledges the audit team’s findings regarding undocumented additional pay and the isolated instances of overpayment identified during the testing of School Food Nutrition program. While the District remains committed to absolute fiscal accuracy, we believe the following context is essential for a complete understanding of the program’s scale and the nature of the identified error. • Scale of Operations: The District’s School Food Nutrition program is a massive operation, serving over 90,000 students across 124 separate kitchens. This decentralized environment requires the management of approximately 900 personnel and a total salary expenditure of $20,618,901. • Statistical Significance vs. Actual Error: The audit identified actual errors totaling $7,474. While the District understands that federal auditing standards (Uniform Guidance) require this amount to be extrapolated across the entire $20.6M population-resulting in a projected error exceeding the $25,000 mandatory reporting threshold-it is important to note that the actual identified discrepancy represents only 0.036% of the program’s personnel budget. • Accuracy Rate: Even when utilizing the extrapolated figure of $25,000, the District maintains a 99.64% accuracy rate in payroll processing for this program. We believe this demonstrates a robust internal control environment, particularly given the complexities of managing 124 distinct points of service. • Disproportionate Reporting Thresholds: The District notes that the $25,000 reporting threshold is a fixed statutory limit that does not scale with the size of the Local Educational Agency (LEA). Consequently, a District of our size is held to a significantly more compressed margin of error (less than one-eighth of one percent) than a smaller district with fewer employees and sites. Auditor’s Concluding Remarks: While the questioned costs identified by auditors appear to be relatively small in the context of the School District’s overall School Nutrition expenditures, the amounts exceed the reporting threshold established by the Uniform Guidance. This threshold is designed to ensure consistent reporting of noncompliance across entities of all sizes. Given the information reflected above, we reaffirm our finding and will review the status of the finding during our next audit.

2025-001 Lack of Time and Effort Documentation (Material Weakness) Federal Agency: U.S. Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: COVID19 - Education Stabilization Fund Assistance Listing Number: 84.425U Passed-through Identification: 20220801 Compliance Requirement: Activities Allowed or Unallowable and Allowable Costs/Cost Principals Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: In accordance with 2 CFR 200.430, compensation for personal services charged to federal awards must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable, and properly allocated, and must reasonably reflect the total activity for which the employee is compensated. Acceptable support includes personnel activity reports or equivalent documentation that demonstrates work performed and its connection to the federal program. Such documentation is necessary to establish that payroll costs are allowable, allocable, and properly charged to the award. Condition: As part of our testing, stipends charged to the ESSER III program were selected for review. Each individual tested was compensated based on a predetermined daily rate for a specified number of days worked. While employment contracts outlined the agreed-upon number of days and corresponding rates of pay, the School District did not maintain documentation (e.g., time and effort certifications or equivalent records) to substantiate that employees actually worked the days for which they were compensated. Cause: This issue appears to result from the School District’s reliance on contractual agreements and predetermined stipend structures as sufficient support for payroll charges, without implementing procedures to document and verify actual days worked. In addition, internal controls were not designed or operating effectively to require time and effort documentation or supervisory review to confirm that services provided were allowable and aligned with ESSER III program requirements. Effect: Due to the lack of documentation supporting the days worked, the School District is unable to demonstrate that the stipend payments charged to the ESSER III program were allowable, allocable, and properly supported. This represents noncompliance with federal requirements and increases the risk that unallowable or unsupported costs could be charged to the program. As a result, the tested costs totaling $30,800 have been identified as questioned costs. Questioned Costs: $30,800 Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District strengthen its internal controls over payroll and stipends charged to federal programs by establishing and enforcing procedures requiring documentation that accurately reflects both the time worked and the activities performed. Such procedures should include employee certifications (e.g., periodic or semi-annual, as appropriate) and documented supervisory review to verify that (1) the days worked align with amounts paid and (2) the activities performed are allowable and consistent with program objectives. Management should also ensure that all supporting documentation is retained in accordance with federal record retention requirements and is readily available for audit. Views of Responsible Officials: Management’s views and corrective action plan are included at the end of this report.

Finding Number: 2025‐001 Repeat Finding: No Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Title I Grants to Local Educational Agencies 84.010 S010A240003 N/A Forest Service Schools and Roads Cluster 10.665 N/A N/A Federal Agencies: U.S. Department of Education, U.S. Department of Agriculture Pass‐Through Agencies: Arizona Department of Education, Navajo County Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria Management is responsible for establishing and maintaining internal controls over payroll. In addition under 2 CFR 200.430, management is responsible for maintaining documentation to support all salary and wage payments to employees. Condition The District lacked proper internal controls over payroll including maintaining adequate supporting documentation. Cause The District did not establish adequate controls over the processing of payroll expenses. Effect The District could not adequately support payments for employee payroll expenses. Context During our review of payroll, we noted the following:  For three of 50 payroll records reviewed, employee pay could not be recalculated.  For four of 50 payroll records reviewed, the employee's contract salary could not be agreed to the annual distribution report, resulting in a net overpayment of $2,101.  For two of 50 payroll records reviewed, time and effort documentation was not maintained.  For four of 50 payroll records reviewed, the timesheet was not signed by the supervisor, employee, or both to indicate approval.  For five of 50 payroll records reviewed, the District was unable to provide supporting documentation for election of prorated compensation.  For 11 of 50 payroll records reviewed, the Governing Board approval of the employee contract was not provided. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should enhance its internal control procedures over payroll to ensure that all employee payroll expenses are correct and supported. Views of Responsible Officials See Corrective Action Plan.

Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Federal Financial Assistance Listing Number: 10.557 Federal Grantor: U.S. Department of Agriculture Passed-Through: California Department of Public Health Award No. and Year: 22-10270 A03 and 2022 Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, states that 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. 2 CFR Section 200.430, Compensation – Personal Services, states that 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 that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing of the HCA’s provisions for activities allowed or unallowed and allowable costs/cost principles requirements, we noted that for one (1) of sixty (60) payroll samples tested, the employee was able to review and approve their own timecard. Cause: It was determined that the control deficiency resulted from a system configuration error that permitted the employee to approve their own timecard under the supervisor/manager review role. Effect: Failure to consistently apply internal controls over payroll charges increases the risk that unallowable or unsupported payroll costs could be charged to the Federal program and not be detected in a timely manner. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sampling of sixty (60) timecards was selected for testing out of a population of 1,144. The condition noted above was identified during our procedures related to activities allowed or unallowed and allowable costs/cost principles. Repeat Finding from Prior Years: No. Recommendation: Management should ensure appropriate segregation of duties within the payroll system by restricting approval authority to independent supervisors or managers and implementing controls to prevent self-approval. In addition, management should periodically review user access roles and system configurations to confirm that approval controls are operating as designed and that payroll charges to Federal programs are allowable, properly allocated, and adequately supported. Views of Responsible Officials: See separately issued Corrective Action Plan.

Program: HIV Emergency Relief Project Grants (Ryan White) Federal Financial Assistance Listing Number: 93.914 Federal Grantor: U.S. Department of Health and Human Services Award No. and Year: 6H89HA00019-32-04; 2024 Compliance Requirements: Activities Allowable or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, states that 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. 2 CFR Section 200.430, Compensation – Personal Services, states that 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 that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing, for one (1) out of sixty (60) payroll expenditures, we noted the timecard did not contain documented evidence of supervisory approval. Cause: The County’s internal control procedures were not consistently followed to ensure that the review and approval of timecards was documented. Effect: Lack of documented review for personnel hours could lead to an increased risk that unallowable or inaccurate activities and costs to be charged to the Federal program. Question Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sampling of sixty (60) timecards were selected for testing out of a population of 5,994. The condition noted above was identified during our procedures related to activities allowed or unallowed and allowable costs/cost principles. Repeat Findings from Prior Years: No. Recommendation: We recommend that the County strengthen its policies and procedures to ensure that timecards consistently include documented evidence of supervisor approval prior to payroll processing. The County should also establish compensating controls for circumstances where timely supervisory approvals is not possible, and ensure such controls are consistently documented. Views of Responsible Officials: See separately issued Corrective Action Plan.

2025-005 Federal Agency: U.S. Department of Agriculture Pass Thru Entity: Oklahoma State Department of Education Program: Child and Adult Care Food Program Assistance Listing: 10.558 Grant Period: Year ending June 30, 2025 Compliance Requirement: B. Allowable Costs/Cost Principles Type of Finding: Material Weakness & Non-Compliance Condition: Documentation was not kept for personnel services paid with funds. In addition, supporting documentation was not maintained for allocation of expenditures between food service programs. Criteria: 2 CFR 200.405 require allocable costs in general to be allocated to projects based on proportional benefits. 2 CFR 200.430(g) requires that charges to federal awards for salaries and wages must be base on records that accurately reflect the work performed (Time and Effort). Cause: Failure to understand requirements for federally funded programs. Context: Personnel costs paid with federal funds where personnel work on multiple federal programs must be supported by monthly time and effort records for amounts paid. Allocation of expenditure must also have documentation completed and maintained supporting the split between the federal programs. Effect: Noncompliance with Uniform Guidance Repeat Finding from Prior Year: No Recommendation: We recommend that the District maintain time and effort for employees paid with the federal funds. We also recommend that District document the method used for allocation of costs between programs and maintain the documentation. Views of Responsible Officials and Planned Corrective Action: The District will implement time and effort documentation for employees paid with federal funds. The District has already implemented allocation process on the Child Nutrition invoices in FY26.

Federal Agency: US Department of Education Federal Program Name: Higher Education Institutional Aid Assistance Listing Number: 84.031X Federal Award Identification Number and Year: P031X230004 - 2025, P031X200017 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding:  Compliance, Other Matter  Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.430(g)(1)(vi), Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records should 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 nonfederal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College did not have proper documentation of Time and Effort reporting. Questioned costs: None. Context: During our testing of 40 payroll transactions, we identified four employees’ time and effort reports that were not documented properly to track hours worked on federal grants. Cause: The College did not have proper procedures in place to track time and effort for all personnel on federal grants. Effect: The College could potentially expend incorrect amounts to federal grants. Repeat Finding: No Recommendation: We recommend the College review policies and procedures to ensure all personnel on federal grants have documented time and effort reports as stated in federal regulations. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Information on the federal program: Research and Development Cluster, Multiple Federal Grantors, Multiple Award Periods Criteria or specific requirement: Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Condition: During our test work over the Research and Development cluster, we noted the Institute did not have time and activity records with sufficient detail per federal regulations to support its salary and fringe benefit expenses. Cause: Lack of understanding of the requirements of the time and activity reports. Effect of Potential Effect: Based on testing completed, the Institute did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2025. Questioned Costs: Total questioned costs are $556,632. This includes all salaries and benefits charged to the cluster which lacked documentation to support the charge and allocation to the grant. Assistance Listing Number & Questioned Costs 10.001 - $10,000 10.216 - $5,333 10.303 - $45,801 10.307 - $7,167 10.310 - $457,524 10.326 - $30,807 Context: We selected a sample of 25 salary and benefit charges to the Research and Development cluster. Within our sample we noted that that none of the selections had proper documentation to support the charge and allocation to the grant (e.g. , daily time and activity records, effort verification reports, etc.). These 25 selections had a value of $24,352. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $556,632 and represented 59% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend management utilize a time and activity tracking method that will meet the requirements of federal regulations. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the stated finding and has implemented a corrective action plan.

Program: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Assistance Listing No.: 10.557 Federal Grantor: U.S. Department of Agriculture Passed-through: California Department of Public Health Award No.: 22-10307 Award Year: 2022 Compliance Requirement: Activities Allowable or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, states that 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. 2 CFR Section 200.430, Compensation – Personal Services, states that charges to Federal awardsfor 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 that provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: For one (1) of sixty-five (65) expenditures tested, we noted one timecard where the employee’s timecard was not approved by a supervisor. Cause: The County’s procedures did not consistently ensure that the review of timecards was documented. Effect: Lack of review for personnel hours could lead to unallowable activities and costs to be charged to the Federal program. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of sixty-five (65) out of one thousand ninety-two (1,092) expenditures were tested, totaling $164,654 out of $4,553,367 of the federal program expenditures. Repeat Finding from Prior Years: Yes. Finding 2024-003. Recommendation: We recommend that the County modify and/or strengthen its current policies and procedures to ensure that all timecards consistently document evidence of supervisor approval. The procedures should also address the compensating controls for circumstances where obtaining the supervisor’s approval is not possible. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

Criteria or Specific Requirement: Per Uniform Guidance § 200.430(g), "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." This includes a requirement that records are "supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated." Condition: One employee's pay rate used was not updated to reflect the increased board-approved rate for the 2024-2025 school year. Questioned Costs: $88 – known questioned costs. Likely questioned costs are not included as they are under $25,000 Context: Identified two out of 40 samples selected in which the incorrect pay rate was used to calculate the employee's gross wages for the pay period. Both underpayments were related to the same employee, and therefore determined to be isolated. Cause: Upon Board approval of annual salary schedules, the HRIS System Specialist loads the approved schedules into the B+ payroll system. A secondary review is then performed by HR to verify that affected employee pay assignments align with the approved rates prior to the first payroll of the fiscal year (July 1). The underpayment resulted from an isolated human error in which the secondary verification step was not completed for this employee prior to the July 1, 2024, payroll. This occurred during a period of operational disruption within the HR department, including temporary remote operations, limited system access, and leadership transition. Director of Human Resources reviewed all other program-paid employees to verify no others were affected by the same human error during the affected pay period. CLA's testing deemed to be sufficient corroboration, as CLA tested every program-paid employee, except for one (92%), for at least one pay period. This breakdown was not representative of standard practice. Effect: Incorrect payments paid to employees, which results in noncompliance with Uniform Guidance standards for documentation of personnel expenses. Repeat Finding: No Recommendation: CLA recommends implementing a stronger system of review for ensuring all changes in employee payroll are properly implemented and approved. Views of Responsible Officials: There is no disagreement with the audit finding.

Findings and Questioned Costs Related to Federal Awards Finding Number: 2025‐001 Repeat Finding: Yes, 2024‐002 Program Name/Assistance Listing Title: Indian School Equalization Program Assistance Listing Number: 15.042 Federal Agency: U.S Department of Interior Federal Award Number: A24AV00758 Pass‐Through Agency: Bureau of Indian Education Questioned Costs: $2,279 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria According to Uniform Guidance 2 CFR 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 that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition Employees were not always paid in accordance with contracts. Cause The School lacked adequate internal controls over payroll. The School's process did not include a review of that payroll data entered into the system and did not include a review of the payroll register before the pay was processed. Effect The School’s internal controls over payroll were not adequate to ensure employees are paid in accordance with their contracts. Context For two of 40 employees reviewed, employees were not paid in accordance with their approved contracts resulting in a net overpayment of $1,811. One employee was overpaid $2,279, and the second employee was underpaid $468. Recommendation The School should implement review procedures and controls to ensure employees are paid in accordance with their contracts. Views of Responsible Officials See Corrective Action Plan.

2025-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Material Weakness in Internal Controls over Compliance and Compliance Finding Criteria: Per 2 CFR 200.430(i) of the Uniform Guidance, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Semi-annual or monthly time and effort certifications are to be utilized if the non-federal entity’s records do not meet the related standards described in the Uniform Guidance. Condition: Semi-annual time and effort certifications were not maintained for grant employees whose salaries and wages were not supported by detailed time records. Cause: The School did not follow their policies and procedures for time and effort certifications. Effect: The School is not in compliance with applicable cost principles related to salaries and wages. Questioned Costs: $77,838 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to obtain time and effort certifications from grant employees whose wages are not supported with detailed time records. Views of Responsible Official: Management agrees with the finding.

Criteria Payroll costs charged to Federal awards must be allowable, allocable, and supported by records that accurately reflect the work performed, in accordance with 2 CFR 200.430(i). Non-Federal entities are required to establish and maintain effective internal controls to provide reasonable assurance that payroll charges comply with Federal requirements. Specific requirements for Research and Development involve ensuring payroll costs were reasonable and necessary for performance of the R&D effort identified in the applicable award. Condition The College’s documented control design requires review and approval of employee timesheets (hourly employees) or effort percentage reports (salaried employees) by the Principal Investigator (PI) or an immediate supervisor to evidence that time charged to R&D awards reflects actual work performed. However, this control was not operating effectively, as 18 out of the 40 samples selected lacked evidence of required review. Cause The condition occurred because the College’s designed control requiring PI or direct supervisor review of employee timesheets or effort percentage reports was not operating effectively in practice. While the control was intended to be performed through the Kronos timekeeping system, system and workflow limitations prevented consistent requirement of PI or supervisor approvals within the system during the audit period. Additionally, the College did not have compensating procedures in place to detect or remediate missing required approvals when Kronos approval evidence was not obtained. As a result, the control was not consistently operating for employees charging time to R&D awards. Possible Asserted Affect The lack of Principal Investigator (PI) or supervisor review of timesheets increases the risk that payroll costs charged to Federal Awards may not be supported or reflect actual work performed on the sponsored projects. This condition may result in noncompliance with 2 CFR 200.430(i) and limits the College’s ability to demonstrate that payroll expenditures charged to Federal awards were incurred for allowable activities and in accordance with the terms and conditions of the awards. Questioned Costs No questioned costs were identified. Statistical Sampling The sample was not intended to be, and was not a statistically valid sample. Repeat Finding The conditions found do not constitute a repeat finding from the prior year. Recommendation We recommend that the College ensure consistent documentation of PI or supervisor review of employee timesheets and/or effort percentage reports charged to Federal R&D awards by formalizing procedures and configuring the timekeeping system to require and retain evidence of approval. The College should also implement monitoring controls to identify missing approvals and ensure compliance with Federal award requirements. Views of Responsible Officials The identified conditions related to timesheets for hourly student employees. To mitigate the risk of missing approval documentation for payroll charged to Federal R&D awards, the College is formalizing procedures requiring PI or supervisor review of applicable timesheets, configuring the approval workflow in Workday to require and retain evidence of approval, and implementing periodic monitoring to identify and correct missing approvals. These corrective actions are being implemented in fiscal year 2026.

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

Significant Deficiency 2025-001. Allowable Costs/Cost Principles United States Department of Education, Passed Through New York State, Department of Education: Title I Grants to Local Educational Agencies ALN: 84.010A Criteria: Salaries and wages charged to federal awards must be supported by documentation that meets the standards prescribed by the Uniform Guidance Subpart E, 2 CFR §200.430. Condition: Subpart E, 2 CFR §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.” The documentation should support the distribution of the employee’s compensation among specific activities if the employee works on more than one federal award, or a federal award and non-federal award. The preparation of personnel activity reports (PAR) or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District prepared periodic certification equivalents, but it did not comply with the documentation standards prescribed in Subpart E, 2 CFR §200.430; the amount of one employee’s actual payroll charged to the Title I federal award was less than the allocation percentage on the periodic certification reports that were signed by the employee’s supervisor. Cause: The staff who was responsible for maintaining records that accurately reflect the work performed, as described in Subpart E, 2 CFR §200.430, to support salaries charged to federal awards, prepared semi-annual periodic certification reports using a different full time equivalent (FTE) allocation than what was reflected in the employee’s actual payroll records. The District’s internal procedures did not identify the discrepancy. Effect: Noncompliance could result in the incorrect amount for services rendered being charged to the federal award. Questioned Costs: Dollar amount undetermined. Context: The District maintains time records for employees charged to federal awards using a different FTE allocation than the employee’s actual payroll allocation. A total of 18 employees’ wages were charged to the Title I grant. Audit samples selected based on payroll transactions covered 9 of the employees. Condition was noted on payroll transactions for one of the 9 employees in the audit sample. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should revise its procedures to prepare documentation to support actual salaries and wages charged to federal awards after the work was performed in accordance with the requirements of the Uniform Guidance at Subpart E, 2 CFR §200.430. Views of Responsible Officials of Auditee: The District will adopt procedures to ensure appropriate documentation will be prepared to comply with Subpart E, 2 CFR §200.430.

2025-007: Federal Awards – Allowable Costs Federal Agency: U.S. Department of Housing and Urban Development CFDA No.: 14.218 Federal Program: Community Development Block Grants/Entitlement Grants Federal Award Year: 2025 Control Category: Allowable Costs Known Questioned Costs: $17,375 (sample) Projected Questioned Costs: $217,355 (projected) Condition During our testing of payroll expenditures, we noted that employee salaries and wages were charged to the federal program using predetermined allocation percentages rather than actual time recorded on employee timesheets or activity reports. Employees working on multiple programs did not maintain documentation identifying the actual hours worked on each program during the pay period. Instead, payroll costs were distributed across funding sources using fixed percentages established by management. Criteria 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states, in part: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed…” Charges must “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;…” And “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Cause The City's payroll system charges time for employees each pay period based on an allocation rather than actual hours documented on the employee’s timesheet. Effect Because payroll costs were not supported by records reflecting the actual work performed, the City cannot demonstrate that salary and wage costs charged to the federal program were accurate and properly allocable. As a result, payroll expenditures charged to the program may be unallowable under federal cost principles, and there is an increased risk that federal funds could be misallocated among programs.Questioned Costs There were known questioned costs in the amount of $17,375 from the sample tested and $217,355 of projected questioned costs from projections. These costs are unsupported due to inadequate time documentation, not necessarily unallowable.

2025-008: Federal Awards – Allowable Costs Federal Agency: U.S. Department of Housing and Urban Development CFDA No.: 14.871 Federal Program: Housing Choice Voucher Program Federal Award Year: 2025 Control Category: Allowable Costs Known Questioned Costs: $29,924 (sample) Projected Questioned Costs: $214,045 (projected) Condition During our testing of payroll expenditures, we noted that employee salaries and wages were charged to the federal program using predetermined allocation percentages rather than actual time recorded on employee timesheets or activity reports. Employees working on multiple programs did not maintain documentation identifying the actual hours worked on each program during the pay period. Instead, payroll costs were distributed across funding sources using fixed percentages established by management. Criteria 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states, in part: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed…” Charges must “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;…” And “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Cause The City's payroll system charges time for employees each pay period based on an allocation rather than actual hours documented on the employee’s timesheet. Effect Because payroll costs were not supported by records reflecting the actual work performed, the City cannot demonstrate that salary and wage costs charged to the federal program were accurate and properly allocable. As a result, payroll expenditures charged to theprogram may be unallowable under federal cost principles, and there is an increased risk that federal funds could be misallocated among programs. Questioned Costs There were known questioned costs in the amount of $29,924 from the sample tested and $214,045 of projected questioned costs from projections. These costs are unsupported due to inadequate time documentation, not necessarily unallowable. Recommendation We recommend that the City charge time to the program based on actual hours worked per the employees' timesheets.

Finding 2025-003 - U.S. Department of Education (USD), TRIO Programs (Significant Deficiencies): Information on the federal program – Student Support Services, FAL No. 84.042A, June 30, 2025; Ronald McNair Program, FAL No. 84.217A, June 30, 2025. a) Cash Management/Drawdown Supporting Documentation and Recordkeeping Criteria – Under 2 CFR 200.305, non-Federal entities must request Federal funds only for allowable program costs that have been incurred, and must maintain contemporaneous supporting documentation demonstrating: 1. Actual, allowable expenditures existed at the time Federal funds were drawn; and 2. Records supporting the nature and timing of those expenditures were on file and readily available. These requirements ensure that drawdowns reflect immediate cash needs supported by verifiable program expenditures. Condition – During our testing of cash drawdowns, we noted in four (3) of the four (4) drawdowns tested, the College did not maintain adequate supporting documentation to substantiate that allowable expenditures had been incurred at the time of the drawdowns. Additionally, although drawdowns exceeded recorded expenditures at certain points during the year, the College did not have Federal cash on hand at year-end. Additionally, two (2) of these four (4) unsupported transactions lacked evidence of required approval, such as documented review or authorization prior to requesting Federal funds. Cause – The condition resulted from insufficient internal controls over the drawdown and documentation retention processes, including the absence of a timely reconciliation between recorded expenditures and drawdown requests. Effect – Requesting Federal funds without maintaining adequate documentation of actual expenditures increases the risk of noncompliance with Federal cash management requirements and may result in temporary use of Federal funds for unallowable purposes. As a result, questioned costs totaling $52,159 were identified. Questioned Costs – $52,159 Program Title FAL No. Questioned Costs Ronald McNair Program 84.217A $ 32,684 Student Support Services 84.042A 19,475 Total Questioned Costs $ 52,159 Auditor’s Perspective – Although no Federal cash was on hand at year-end and funds were ultimately applied to allowable TRIO costs, the absence of adequate support at the time of the drawdowns constitutes a compliance deviation. Without contemporaneous documentation, the accuracy and allowability of drawdown requests cannot be assured. Repeat Finding – No. Auditor's Recommendation – We recommend the College strengthen controls over the cash drawdown process by: • Ensuring that reimbursement requests are supported by complete and readily available documentation at the time of submission; and Requiring contemporaneous reconciliations between expenditures and drawdown requests; • Implementing improved supervisory review procedures prior to requesting funds. View of Responsible Officials – The College now mandates that G5 drawdown requests include approved documentation stored on the accounting drive, effective July 31, 2025. b) Time and Effort Reporting & Grant Salary Accuracy Criteria – (Compensation – Personnel Services Documentation Requirements): Under 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and such records must: • Be supported by a system of internal controls providing reasonable assurance that the charges are accurate, allowable, and properly allocated; • Reflect 100% of the employee’s compensated activities, both Federal and non-Federal; • Be incorporated into the official records of the non-Federal entity; and • Be completed and documented in a timely and consistent manner. For TRIO programs, personnel costs must be supported by complete and accurate documentation demonstrating the portion of time dedicated to allowable TRIO activities Condition – During our testing of time and effort reporting and salaries charged to the TRIO programs, we identified the following exceptions: 1. Incorrect Salary Charge – For one (1) of the nine (9) time and effort reports tested, the salary expense charged to the McNair grant did not agree with the employee’s documented distribution of time. As a result, $24,947 of personnel costs charged to the grant were not supported by the corresponding time and effort report. 2. Incomplete Time and Effort Reports – Two (2) of the nine (9) reports tested, (both were for the same employee noted in the error above), were incomplete and did not reflect the employee’s full allocation of time across both restricted (grant-funded) and unrestricted activities. These omissions resulted in incomplete documentation to support the distribution of payroll costs. The College corrected the documentation after our inquiry; however, the corrections were not in place at the time of testing. Cause – The condition resulted from inconsistent application of time and effort reporting procedures and insufficient review controls to verify the completeness and accuracy of time distribution records prior to charging payroll costs to TRIO programs. Effect – Charging salaries without accurate, complete, and timely time and effort documentation increases the risk of unallowable personnel costs being charged to the program. As a result, questioned costs totaling $24,947 were identified for unsupported salary charges. Additionally, incomplete reports undermine the reliability of payroll allocations used to support Federal expenditures. Questioned Costs – Ronald McNair Program, FAL No. 84.217A: $24,947. Auditor’s Perspective – Although the College corrected the incomplete reports after our inquiry, corrections made after the fact do not demonstrate compliance at the time costs were charged. Accurate and complete time and effort reporting is essential to ensuring that salary costs charged to TRIO programs are allowable and properly supported. Repeat Finding – No. Auditor’s Recommendation – We recommend the College strengthen internal controls over time and effort reporting for TRIO programs by: • Ensuring all reports reflect 100% of compensated activities for each employee; • Implementing a supervisory review process to confirm accuracy before payroll is allocated to the grant; • Providing refresher training to staff responsible for preparing and approving time and effort documentation; and • Maintaining documentation that is complete, accurate, and contemporaneous with the period of performance. Views of Responsible Officials – Time and Effort reports must be submitted monthly with supervisor sign-off before reaching the Office of Sponsor Programs, showing 100% time allocation. Any changes will require a Personnel Action Form and administrative signatures of approval.

Payroll Federal Program and Specific Federal Award Identification CFDA Title and Number 84.031 Higher Education Institution Aid Federal Award Year June 30, 2025 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria In accordance with Uniform Guidance § 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and must be supported by a system of internal controls, including alignment with personnel documentation. Conditions and Contexts Out of twenty-five (25) payroll transactions tested: • Five (5) salary amounts, as calculated per labor distribution reports, did not agree to the approved personnel action forms; and • Two (2) time and effort report percentages did not agree to the percentages reflected on the personnel action forms. Cause The University lacked adequate controls to ensure that payroll charges were consistent with approved personnel action forms and supporting time and effort documentation. Questioned Costs For the purposes of this condition, I have not questioned any costs. Effect Payroll costs charged to the federal program may be inaccurate or unsupported, increasing the risk of unallowable costs. Repeat Finding No. Recommendation The University should strengthen controls over payroll processing and review to ensure that salary charges and time and effort reporting agree with approved personnel action forms. Management should also perform periodic reconciliations and supervisory reviews. Management’s Response The University acknowledges the finding related to discrepancies between payroll charges, personnel action forms, and time and effort reporting. We understand the requirement that all salary and wage charges to federal awards must be supported by accurate records and internal controls in accordance with Uniform Guidance §200.430. Corrective Actions 1. Alignment of Personnel Actions and Payroll Distribution: The University will implement additional review steps to ensure that labor distribution reports match the approved personnel action forms before payroll is charged to the grant. Any discrepancies must now be corrected before processing. 2. Strengthened Time and Effort Verification: Time and effort reports must now be reviewed and reconciled against the percentages authorized on personnel action forms. Reports that do not match will be returned to departments for correction before certification. 3. Enhanced Internal Controls and Documentation: A standardized monthly reconciliation process will be established to ensure consistency between personnel records, effort reporting, and payroll charges. 4. Staff Training: Training will be provided to fiscal managers, the Office of Research and Sponsored Programs, human resources, and payroll personnel on Uniform Guidance requirements, proper effort reporting, and documentation standards. 5. Periodic Monitoring: Supervisory reviews will be conducted to ensure continued compliance and to identify discrepancies proactively. The University believes these corrective measures will strengthen internal controls and ensure that payroll charges to federal programs are accurate, allowable, and properly documented.

2025-005 Allowability of Payroll Expenditures U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Continuum of Care Program—Assistance Listing No. 14.267 Hennepin County Contract HS00001366; Grant Period – Year ended June 30, 2025 Material Weakness in Internal Control over Compliance, Noncompliance Other Matter Criteria: 2 CFR 200.430(g)(1)(i) states charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Refer to financial statement finding 2025-002 for further context. Condition: Payroll controls were not adequately designed or implemented to accurately account for payroll expenditures charged to the Continuum of Care Program for the first half of fiscal year 2025 (July 1, 2024 through December 31, 2024). In addition, supporting payroll documentation was missing or incomplete for certain individual payroll allocations charged to the program during this period. Refer to financial statement finding 2025-002 for further context. Cause: Refer to financial statement finding 2025-002. Effect: Refer to financial statement finding 2025-002. Context: A statistically valid sample of 41 payroll entries by employee totaling $67,977 was selected for testing from a population of more than 250 individual payroll entries totaling $208,015. The audit identified nine instances in which payroll controls were not followed. Refer to Financial Statement Finding 2025-002 for further context. Extrapolated likely questioned costs total $16,525, representing 2.9% of total payroll costs allocated to this program. Known Questioned Costs: Total known questioned costs of $4,940. Identification of Repeat Finding: 2024-001 - Lack of Documentation in Personnel Files Recommendation: Refer to financial statement finding 2025-002. Views of Responsible Officials and Planned Corrective Actions: Refer to financial statement finding 2025-002.