Findings Citing § 200.430

Material Weakness in Internal Controls over Compliance and Noncompliance Condition: The Organization could not provide documentation to support that personnel costs were charged to the federal awards based on actual costs and time spent on the federal program. Criteria: Per §200.430(g)(1) of the Code of Federal Regulations, charges to Federal awards for personnel costs must be based on records that accurately reflect the work performed. These records must support the distribution of employees’ salary among specific activities or cost objectives and must not exceed the actual time worked. Per § 200.303 of the Code of Federal Regulations, recipients must establish, document, and maintain internal controls over Federal awards that provides reasonable assurance that the recipient is managing the Federal Award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: Due to staff transitions during the year, the Organization could not provide documentation to support the amount of personnel costs charged to federal awards. While staff reported time spent on work performed under the federal awards, no review of the reported time was documented and no allocation documentation could be provided to trace the amount of personnel costs charged to federal awards to the time reported by staff. Effect: Federal expenditures on the Schedule of Federal Awards (SEFA) could be overstated resulting in noncompliance with federal cost principles and unallowable cost. Context: During our testing of payroll transactions charged to the federal program, we selected a sample of four out of 26 payroll periods to test. In all four payroll periods tested, the amount charged to the federal program could not be supported by documentation of actual personnel costs incurred for time spent on program activities. Documentation of the review of time spent on program activities reported by staff also could not be provided. Questioned costs total $436,615, which is the total amount of personnel costs reported under the major program grants for the year. Recommendation: We recommend the Organization implement written policies and procedures to ensure that payroll charges to federal awards are based on actual costs incurred. Employees should prepare time and effort documentation reflecting actual hours worked on the federal program activities for each payroll period. This documentation should be reviewed, and evidence of this review should be maintained. This documentation should be used to determine the amount of personnel costs to charge to the federal award, and documentation of this allocation should be maintained. Views of Responsible Officials: Management agrees with the finding.

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

Federal Agency: United States Department of Education Federal Program Name: Special Education Cluster (IDEA programs) Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number and Year: H027A240064-2024; H173A240070-2024 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number(s): 2025 - 403619 - DPI - YIPPE – 342, 2025-403619-DPI-FLOW-341, 2025-403619-DPI-FLOW-341, 2025 - 403619 - DPI - FNC – 342, 2025-403619-DPI-ELIMG-348, 2025-403619-DPI-ELTAI-348, 2025-403619-DPI-PRESCH-347 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: In accordance with 2 CFR 200.303(a), the District must establish and maintain effective internal control over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. In accordance with 2 CFR 200.430(h), costs charged to federal awards must be incurred during the approved budget period as defined in the grant agreement. Condition: For one (1) of the 40 payments to vendors selected for testing, the District did not correctly allocate the cost to the proper grant period. This sample was not statistically valid. Questioned costs: Cost in the amount of $29,850 were identified as being related to periods outside the grants award period. Context: One instance of a payment to a vendor related to services that will provide benefit during the subsequent fiscal year were accrued to the fiscal year and grant period under audit. Cause: From 2023 through 2025, the District experienced substantial turnover within the finance department, including management positions. Individuals in these roles lacked the necessary skills, knowledge, and experience to oversee day-to-day operations, resulting in controls not operating effectively to ensure proper classification of vendor payments by applicable grant period and fiscal year. Effect: This resulted in amounts claimed for reimbursement that did not meet eligibility requirements for reimbursement from the grant award. Repeat Finding: No Recommendation: We recommend the District implement controls that allow for the identification and proper classification of vendor payments to applicable grant period. Views of responsible officials: There is no disagreement with this finding.

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

Finding No. 2025-063 Federal Awarding Agency: U. S. Department of Transportation (USDOT) Impact: Significant Deficiency, Noncompliance AL Number and Title: 20.205 Highway Planning and Construction (HPC) Federal Award Number: 0956(036), 0A45(034), 0851(076), 0002(514), 0617(003), 0002(488), 0A43(024), 0A43(020) Applicable Compliance Requirement: Allowable Costs/Cost Principles Condition: Three of 40 timesheets tested (eight percent) were entered into the State’s accounting system with incorrect coding. Context: DOTPF’s staff allocated personal service costs to federal programs based on program, activity, and profile codes that identify specific federal highway projects. A supervisor reviews the coding and hours in the State’s accounting system to verify the accuracy of time entered by employees. A random sample of 40 timesheets that charged personal service costs to the HPC program in FY 25 was tested. Auditors found three timesheets were entered into the accounting system using incorrect program, activity, or profile codes, resulting in incorrect federal projects being charged. Cause: Human error resulted in timesheets being entered incorrectly. Additionally, supervisory review procedures were inadequate to identify and correct miscoded timesheets. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant awards. Title 2 CFR 200.430 requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. The records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, the records must comply with the entity’s established accounting procedures. Effect: Incorrect coding of personal service expenditures may result in project managers relying on misclassified information to manage and report on the status of the project. The lack of adequate controls could result in unallowable personal services expenditures. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action including withholding/terminating funding. Questioned Costs: None Recommendation: DOTPF’s Division of Administrative Services (DAS) director should provide training to staff on timesheet processing procedures and strengthen supervisory review procedures to ensure personal service expenditures are accurately charged to federal projects. Views of Responsible Officials: Management agrees with this finding.

Finding No. 2025-068 Federal Awarding Agency: USDOT Impact: Significant Deficiency, Noncompliance AL Number and Title: 20.532 Passenger Ferry Grant Program, Electric or Low-Emitting Ferry Pilot Program, and Ferry Service for Rural Communities Program (PFG) Federal Award Number: AK-2024-005 Applicable Compliance Requirement: Allowable Costs/Cost Principles Condition: For two out of 40 timesheets tested (five percent), the employee’s hours were inaccurately recorded in the State’s accounting system. Context: Alaska Marine Highway System (AMHS) payroll costs are calculated based on regular hours worked, overtime hours worked, hazardous activities performed, and the type of work completed. These details are recorded on employee timesheets via various coding. For two AMHS employees, the amounts entered into the State accounting system did not accurately reflect overtime or the correct pay associated with the activities performed, resulting in incorrect employee compensation. Cause: Human error resulted in the incorrect entries into the State accounting system. Review procedures were insufficient to detect and correct the data entry errors. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant awards. Title 2 CFR 200.430 requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. The records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, the records must comply with the entity’s established accounting procedures. Effect: Incorrect recording of employee time in the accounting system can result in unallowable compensation. Inadequate controls increase the risk of noncompliance. Noncompliance with federal regulations may lead the federal awarding agency to impose additional conditions or take corrective actions, including withholding or terminating funding. Questioned Costs: None Recommendation: DOTPF’s DAS director should provide staff training on timesheet processing and strengthen supervisory review procedures to ensure employee hours are properly input into the State’s accounting system. Views of Responsible Officials: Management agrees with this finding.

Finding No. 2025-028 Federal Awarding Agency: U.S. Environmental Protection Agency (EPA) Impact: Significant Deficiency, Noncompliance AL Number and Title: 66.202 Congressionally Mandated Projects (CMP) Federal Award Number: 02J80201 Applicable Compliance Requirement: Allowable Costs/Cost Principles Condition: One of 10 employee timesheets tested did not support the charges billed to the CMP program. Context: DCCED staff log work hours on timesheets, which includes coding personal service costs to the Rural Utility Business Advisor (RUBA) program . Of the 10 timesheets tested, one timesheet indicated that only a portion of time worked was chargeable to RUBA; however, 100 percent of the employee's time was erroneously charged to the program. Cause: According to DCCED management, the unsupported charges were due to a data entry error. The data entry error was not detected by payroll processing staff due to insufficient review procedures. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and terms and conditions of the grant awards. Title 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 be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; 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; 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. Effect: Insufficient payroll processing controls increase the risk of noncompliance and unallowable costs. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including reducing/terminating federal funding. Questioned Costs: $2,273 Recommendation: DCCED’s DCRA director should strengthen timesheet processing, review, and approval procedures to ensure personal service costs charged to CMP are accurate and allowable. Views of Responsible Officials: Management agrees with this finding.

(3) Findings and Questions Costs Relating to Federal Awards Finding 2025-001 Federal Program Title - Cancer Control Assitance Listing No. - 93.399 Federal Agency - Department of Health and Human Services - Passed through Marshfield Clinic Federal Award Identification - JHKBV97FZUC5 Grant Award Period - July 1, 2024 through June 30, 2025 Compliance Requirement - Allowable costs/Cost principles, Special Tests and Provisions Criteria: Section 2 CFR section 200.430(d)(2) states allowable compensation for certain employees is subject to a ceiling in accordance with Federal statute. Per NIH Grants Policy Statement, direct salaries of individuals in exces of the rate prescribed in the governing Appropriation Act for NHI will be adjusted in accordance with the legislative salary limitation. Condition found: During our testing of employee compensation of 25 employees, we identified 6 employees compensation exceeded the NIH salary cap provisions as follows: Salaries $161,894 - Fringe benefits $45,330 - Indirect costs $20,723 - Total $227,947 Further, we noted FTCH did not have adequately effective controls in place to ensure FTCH complies with the NIH salary cap provisions. Cause: In discussing these conditions FTCH management stated that based on documentation received as a passthrough entity, they were unaware of the NIH salary cap being applicable. As a result, a control related to the application of the NHI salary cap provisions was not put in place and therefore not operating effectively. Possible Asserted Effect: Failure to adhere to NIH salary cap provisions resulted in unallowable costs being applied to the grant, including salary and associated fringe benefits and indirect costs. Questioned Costs: $227,947 Repeat Finding: A similar finding was not reported in the prior year's audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend FTCH strengthen processes and develop internal controls to ensure FTCH is appropriately monitoring and aplying NHI salary caps. View of Responsible Official: The Organization concurs with this finding. We acknowledge that salary cap limitations were not applied correctly during the period under review and have implemented enhanced controls to prevent recurrence. These corrective actions include strengthened review procedures, augmented pre-submission compliance checks, and targeted traning for staff involved in grants and financial administration. These measurs will be fully in place by May 31, 2026 to ensure consistent and accurate application of NIH salary cap requirements gong forward. The Organization remains committed to strong financial stewardship and full compliance with all applicable Federal regulations and award terms.

2025-002 Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: H027A230076, H027A230039, FH027A230076 Pass-Through Agency: Massachusetts Department of Education Pass-Through Number(s): 240-563190-2025-0326-5.0, 262-566046-2025-0326-5.0, 0274-000662- 2025-0326 Award Period: July 1, 2024 – June 30, 2025 Compliance Requirement: Allowable Costs / Cost Principles Type of Finding: Significant Deficiency in Internal Control over Compliance 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 one (1) of fifteen (15) payroll transactions tested, the time and effort certification was 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: Internal control finding. 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 and planned corrective actions: Management agrees with the finding.

2025-002. Payroll (Allowable Costs/Cost Principles) United States Department of Education, Passed-through New York State Department of Education: Special Education Cluster: Special Education Grants to States: IDEA, Part B ALN: 84.027 Pass-through Entity Number: 0032-25-0875 Criteria: Salaries and wages charged to federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart I, 2 CFR §200.430. Such documentation must accurately reflect the work performed and support the distribution of compensation among activities. This includes maintaining appropriate personnel activity reports or equivalent documentation to substantiate amounts charged to federal award programs. Condition: One instance within the audit sample where the semi-annual personnel activity report (PAR) supporting the payroll expenditure charged to the federal award was not maintained for an employee. Cause: The employee whose salary was 100% charged to the federal grant had separated from the District in December 2024; as a result, the PAR was not signed prior to their departure. For employees whose salaries are 100% charged to a federal award, a semi-annual PAR is utilized and signed by the employees in January and June of each school year. Due to the timing of the employee’s separation from the District, the semi-annual PAR was not prepared for the employee’s signature prior to their departure. The District did not have procedures in place to ensure signed PARs are obtained from departing employees before they leave employment, or have an immediate supervisor with knowledge of the employee’s work certify the PAR as an alternative. Effect: The lack of documentation supporting the allocation of payroll costs to the federal award could lead to the costs being disallowed and requiring recoupment. Questioned Costs: Amount undetermined. Context: The District’s Business Office generates monthly PARs for certification by employees whose previous month’s wages and salaries were partially allocated to federal awards programs, and semi-annual PARs for employees whose salaries were 100% allocated to one federal grant program; the PARs are given to the employees for their signature. There were 151 payroll checks charged to the IDEA, Part B grant in the 2024-25 fiscal year, an audit sample size of 10% of the population, which equaled 15 payroll transactions, were selected for testing. Condition was noted in one of the 15 sample selections. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should review and enhance its procedures for preparing and obtaining certified PARs in a timely manner, particularly in situations where an employee is anticipated to separate from service. Procedures may be enhanced to obtain required signatures prior to an employee’s departure, or to implement an alternative review and approval process, such as having the employee’s immediate supervisor review and sign the PAR, to ensure payroll costs charged to federal awards are supported by proper documentation. Views of Responsible Officials of Auditee: The District’s management agrees with the finding. The process and procedures for obtaining signed PARs from departing employees will be reviewed and corrected.

FINDING 2025-014 Federal Program Information: Research and Development Cluster (various ALN #’s), USAID Foreign Assistance for Programs Overseas (ALN 98.001), Charles B. Rangel International Affairs Program (ALN 19.020) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): B. Allowable Costs/Cost Principles – Per 2 CFR Part 200.430(g)(1)(vii), budget estimates (meaning, estimates determined before the services are performed alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient’s or subrecipient’s written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient’s or subrecipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: The University’s system of internal controls did not timely identify missing grant-related earnings certifications. In addition, documentation to support certain cost allocations could not be provided. Cause: Administrative oversight and insufficient internal controls. Effect or Potential Effect: Effort certifications supporting payroll costs charged to federal awards were not completed or appropriately monitored during the six-month period ended June 30, 2025. Questioned Costs: None. Context: • For the Research and Development Cluster, 19 of 40 employees tested did not complete a time and effort certification for the period selected. • For the Charles Rangel Program, 9 of 10 employees tested did not complete a time and effort certification for the period selected. • For the USAID Program, 6 of 10 employees tested did not complete a time and effort certification for the period selected. Identification as a Repeat Finding: This is a repeat of prior year Finding 2024-012. Recommendation: We recommend that the University strengthen its internal controls over effort certifications for federally funded grants by establishing formal procedures to ensure timely completion, review, and monitoring of required certifications. This should include clearly defined roles and responsibilities, automated reminders or tracking mechanisms, periodic management review to identify missing or overdue certifications, and documented follow up procedures to ensure compliance with federal requirements supporting payroll costs charged to federal awards as required. Views of Responsible Officials: The University initiated the Effort Certification process to capture the full calendar year 2025 in April 2026. This represents a one-time extended certification period designed to include previously uncertified periods that had concluded, specifically the second half of FY25 (January–June 2025) and the first half of FY26 (July–December 2025). In May 2025, the non-accounting functions of Grants and Contracts Accounting at Howard University were transitioned to the Office of Research, Sponsored Programs Office. During this organizational transition, the University prioritized the completion and accuracy of all costing allocations to ensure payroll data was complete and reliable for effort certification purposes. This period was also utilized to identify and resolve any backlog of costing allocations and award charges and stabilize the Office of Research. Addressing these items ensured that effort reflected complete and accurate payroll activity, thereby enabling Principal Investigators to appropriately review and certify their effort. The Sponsored Programs Office (SPO) now leads post-award financial oversight and collaborates with Human Resources (HR) and Finance to ensure designated personnel are identified and granted system access to enter costing allocations and labor cost transfers in Workday. In addition, in response to the auditor’s recommendation to enhance internal controls and ensure timely monitoring of effort reporting, Howard University has implemented the following corrective actions: Hired Dedicated Departmental Support – Six College Research Administrators (CRAs) and an Associate Director of CRA’s were hired to support high-volume research colleges. The CRAs ensure timely and accurate labor cost transfers, effort certification, and costing allocation entries during award setup and throughout the award lifecycle. Enhanced Effort Reporting Process – SPO will lead improvements to the effort certification process, including: • Advance communication to PIs, CRAs, and Deans outlining certification deadlines • Clear guidance on when labor cost transfers may occur outside the certification cycle • Reinforcement that all effort changes must be reflected in the effort system to ensure alignment with payroll. • Training – Targeted training will be delivered to Principal Investigators, CRAs, and other research stakeholders to support consistent application of policies and procedures. Monitoring and Oversight – Monthly and quarterly reconciliation reports will be developed to track and validate timely and accurate payroll allocations for research personnel.

Reference Number: 2025-005 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Employment Service Cluster Assistance Listing Number: 17.207, 17.801 Award Number and Year: 23A55WP000005 (7/1/2023 – 9/30/2026) 24A55WP000063 (7/1/2024 – 9/30/2027) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR § 200.430 (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 non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. Per 2 CFR § 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, • Be incorporated into the official records of the non-Federal entity, • Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, • 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, • Comply with the established accounting policies and practices of the non-Federal entity, • 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 Executive Office of Labor and Workforce Development (the Department) charged budgeted personnel costs to the program instead of actual costs due to errors coding employee timesheets. Context: Four of forty timesheets selected for testing charged costs to the program based on budgeted rates instead of actual time worked per employee timesheets. Combination codes are used by employees to allocate and certify hours worked to Federal grants and employees’ supervisors are required to perform a line-item review of hours spent on each grant before approving timesheets. If a timesheet is approved without the use of combination codes, the system defaults to budgeted grant allocations entered into the Labor Cost Management (LCM) module of the Massachusetts Management Accounting and Reporting System (MMARS). Specifically, we noted the following: • 2 of 40 employee timesheets selected for testing did not use combination codes and the employees’ time was defaulted to a budgeted grant allocation rather than the employees’ actual time and effort on the program. • 2 of 40 employee timesheets selected for testing had a bilingual differential and were missing combination codes. The payment was not based on the employee’s timesheet but instead was based on a budgeted percentage of time. One employee’s time was overcharged by 25% and the other was overcharged by 40%. Cause: The Department’s controls were not operating effectively to ensure that time and effort reporting was performed in accordance with federal requirements. Effect: Noncompliance occurred as payroll charges allocated to the grants were not reflective of actual activity for which the employees were compensated. Questioned costs: $5,389, the amount overcharged to the program based on budgeted time rather than actual time recorded on employee timesheets. Recommendation: The Department should update its procedures and controls and perform additional training over time and effort reporting to ensure that payroll costs charged to the program are based on actual time and effort and a combination code that is allowable under the program. The Department should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Views of responsible officials: There is no disagreement with the finding.

Reference Number: 2025-017 Prior Year Finding: 2024-013 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: 24A55AW000097 (7/1/2024 – 6/30/2027) 23A55AW000048 (7/1/2023 – 6/30/2026) AA-38535-22-55-A-25 (7/1/2022 – 6/30/2025) 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: Per 2 CFR § 200.430 (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 non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. Per 2 CFR § 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, • Be incorporated into the official records of the non-Federal entity, • Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, • 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, • Comply with the established accounting policies and practices of the non-Federal entity, • 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 Executive Office of Labor and Workforce Development (the Department) charged budgeted personnel costs to the program instead of actual costs due to errors coding employee timesheets. Context: Two of sixty timesheets selected for testing charged costs to the program based on budgeted rates instead of actual time worked per employee timesheets. Combination codes are used by employees to allocate and certify hours worked to Federal grants and employees’ supervisors are required to perform a line-item review of hours spent on each grant before approving timesheets. If a timesheet is approved without the use of combination codes, the system defaults to budgeted grant allocations entered into the Labor Cost Management (LCM) module of the Massachusetts Management Accounting and Reporting System (MMARS). For these two transactions, the employee had a bilingual differential and was missing combination codes. Payment was not based on the employee timesheets of 55% worked on the program but instead was based on a budgeted percentage of time of 100%. The program was therefore overcharged by 45% for the bilingual differential portion of the employee payroll. Cause: The Department’s controls were not operating effectively to ensure that time and effort reporting was performed in accordance with federal requirements. Auditors note that the Department’s corrective action plan from the prior audit had not yet been fully implemented in FY 2025. Effect: Noncompliance occurred as payroll charges allocated to the grants were not reflective of actual activity for which the employees were compensated. Questioned costs: $72, the amount overcharged to the program for the pay period tested for the bilingual differential. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. The Department should update its procedures and controls and perform additional training over time and effort reporting to ensure that payroll costs charged to the program are based on actual time and effort and a combination code that is allowable under the program. The Department should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Views of responsible officials: There is no disagreement with the finding.

Reference Number: 2025-018 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: 24A55AW000097 (7/1/2024 – 6/30/2027) 23A55AW000048 (7/1/2023 – 6/30/2026) AA-38535-22-55-A-25 (7/1/2022 – 6/30/2025) Compliance Requirement: Allowable Costs/Cost Principles – Time and Effort Reporting Earmarking Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR § 200.430 (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 non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. Per 2 CFR § 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, • Be incorporated into the official records of the non-Federal entity, • Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, • 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, • Comply with the established accounting policies and practices of the non-Federal entity, • 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. Earmarking – Statewide Activities: The governor shall reserve not more than 15 percent of each of the amounts allotted to the state Adult, Dislocated Worker, and Youth Activities for a fiscal year to carry out statewide activities under 29 USC 3164(b) or statewide employment and training activities for adults or dislocated workers under 29 USC 3174(a) (29 USC 3163(a), 128 Stat. 1502). 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 Executive Office of Labor and Workforce Development (the Department) does not have procedures to ensure it does not exceed the 15% limit for statewide activities. Context: The Department does not have controls in place to track or monitor the Governor's Discretionary Funds (GDF) to ensure expenditures charged against this allotment, whether through direct timesheets or payroll adjustments, do not exceed the required 15% limit across all programs within the WIOA Cluster. Cause: The Department lacks sufficient procedures or controls to ensure that it does not exceed the 15% limit for statewide activities. Effect: Failure to track or monitor the GDF could result in the Department exceeding the 15% limit for statewide activities. Questioned costs: None noted. The Department did not exceed the 15% limit. Recommendation: We recommend the Department develop procedures and controls to ensure expenditures coded to the GDF from timesheets or manual adjustments do not exceed the 15% limit. Views of responsible officials: There is no disagreement with the finding.

Finding 2025-001. Federal Agency: US Department of Education State Department/Agency: Kansas Department of Education Federal Program Title: Special Education Cluster Assistance Listing Number: 84.027 – Special Education – Grants to States (IDEA, Part B) 84.173 – Special Education – Preschool Grants (IDEA Preschool) Award Period: July 1, 2024 to June 30, 2025 Award Number: Various Compliance Requirement: Documentation of Employee Time and Effort under 2 CFR 200.430(g) Type of Finding: Questioned Costs Criteria or Specific Requirement: Schools are required to record time and effort of employees in accordance with the Elementary and Secondary Education Act of 1965 (ESEA) and 2 CFR 200.430(g). Specifically, 2 CFR 200.430(g)(1)(vi) states that charges to federal awards for salaries and wages records must support the distribution of the employee’s salary or wages among specific activities must be based on records that accurately reflect the work performed. These 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. Condition: We noted that seven of the employees tested did not have proper time and effort documentation. Upon further examination, it was determined that the salary and wages for these employees were charged to a federal program when they should not have been. Questioned Costs: The charges for these seven employees include $343,766 for wages and $26,544 for the related payroll taxes for a total of $370,310. Cause: Per discussion with management, there was poor communication between the special education director and the director of business services. Context: We selected a sample of employees in other federal programs with no issues identified. This appears to be an isolated instance for this program and not a systemic problem. Effect: The School District is not in compliance with ESEA and 2 CFR 200.430(g). Repeat Finding: No Recommendation: We recommend that the School District implement procedures to improve communication between the special education director and the director of business services. Furthermore, we recommend that the School District implement procedures that better monitor which employees are being paid out of which fund. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: Multiple for FY2024-25 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed (2 CFR 200.430(g)). In addition, under 2 CFR 200.303, the non‑Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During our testing, we noted that LAHSA’s internal control designed to ensure payroll transactions were allowable was not consistently implemented. Questioned Costs: None Context: During our testing, it was noted that three out of forty timesheets were not approved prior to commencement of the audit. Cause: Appropriate personnel did not approve timesheets supporting payroll costs charged to the Continuum of Care program in a timely manner. Effect: LAHSA is not in compliance with maintaining an internal control over compliance for payroll costs charged to the Continuum of Care program. Repeat Finding: No Recommendation: We recommend that LAHSA implement procedures to ensure that timesheet approval is documented timely. Views of responsible officials: There is no disagreement with the audit finding.

Finding 2025-006: Timekeeping and Payroll Allocations (Material Weakness) Federal Agency: National Institute of Health Federal Program: All of Us Research Program Assistance Listing Number: 93.368 Criteria: According to 2 CFR Section 200.430(i) charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 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 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; vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non- Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: We noted that while the Foundation does keep timesheets, we noted several instances in which the timesheets lacked evidence of supervisory approval. In addition, we noted several instances in which the timesheet was not dated when approved. In addition, we noted several instances in which an employee's timesheet was not available for examination. Cause: The Foundation does not document their review and approval process consistently over timesheets. In addition, the Foundation does not ensure adequate retention of timesheets or ensure that timesheets are properly completed for all employees. Effect or Potential Effect: Without the proper, documented, approval processes in place over timesheets, there exists the potential for allocation errors. Questioned Costs: Undetermined, as the allocations are based on employee timesheets, but it is undeterminable if those timesheets were truly accurate due to the lack of consistent, documented approval over the timesheets by a supervisor. Context: Our audit procedures consisted of testwork performed over a sample of timesheets submitted during the year under audit. We consider our sample to be representative of the population. The issue appears to be systematic in nature. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that the Foundation ensure that all approvals over timesheets are clearly documented and dated.

2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR § 200.430(g)(1)(i) which 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 be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The Ohio Department of Education and Workforce’s Grants Manual states, in part, semi-annual certifications are allowed when an employee’s compensation is funded by only one federal grant and works solely on a single cost objective. An employee funded by a federal grant and the general fund would fall under this category. The Ohio Department of Education and Workforce’s Grants Management Guidance 2014-002 states, in part, employees who meet [the criteria to use semi-annual certifications] are not required to maintain time and-effort records if their job description clearly shows the employee is assigned 100% to the program or single cost objective. Each employee must certify in writing, at least semi-annually, that he/she worked solely on the program or single cost objective for the period covered by the certification. The certification is signed by the employee or by the supervisor having first-hand knowledge. Charges to the grant must be supported by these semi-annual certifications. The semi-annual certification is executed after the work has been completed, and not before. Due to insufficient controls over records management, the District did not maintain semi-annual certifications, or other time and effort documentation for 20 out of 25 transactions tested (80%). These errors could result in improper spending and federal questioned costs, which could result in a loss of funding. To effectively control the Nutrition Cluster payroll cycle and to maintain accountability over program expenditures, the District should review its policy and ensure employees complete the necessary time and effort documentation, such as semi-annual certifications, for employees who work solely on a single federal award or cost objective.

Finding #2025-003 Type: Significant deficiency Assisting Listing Number: 14.267 Federal Agency: U.S. Department of Housing and Urban Development Name of Federal Program: Continuum of Care Requirement: Uniform Guidance (2 CFR §200.430) requires that charges to federal awards for salaries and wages be supported by records that accurately reflect the work performed and be supported by an internal control system which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: The Agency supported payroll allocations to federal programs using detailed Google Calendar records, discussions of employee responsibilities, and supervisory review. While this documentation provided insight into employee activities, it was not maintained in a standardized or streamlined format that readily supported audit procedures or served as contemporaneous payroll documentation for compliance purposes. Context: Personnel costs were allocated based on employees’ expected duties as discussed during the budgeting process. Program directors reviewed employee activities using Google Calendar and supervisory knowledge, and the finance team reviewed the resulting allocations for overall reasonableness, including verifying that amounts charged did not exceed gross payroll. The Agency operates with limited administrative resources and relies on existing tools to support program operations. Cause: Due to resource and funding constraints, the Agency has not implemented a more sophisticated time tracking system. Management instead relied on existing scheduling tools and supervisory review as a practical and cost effective means of supporting payroll allocations; however, these tools were not designed to produce compliance ready documentation in a consolidated or audit efficient format. Effect: Although supporting documentation existed and payroll allocations appeared reasonable, the lack of streamlined and standardized documentation limited the ability to readily demonstrate compliance with Uniform Guidance requirements. This represents a deficiency in internal control over compliance related to personnel costs charged to federal awards. Questioned Costs: None. Based on audit procedures performed, the allocations appeared reasonable; however, required supporting documentation was not maintained. Recommendation: We recommend that management evaluate cost effective options to enhance documentation of personnel cost allocations to federal programs. Such options may include simplified time and effort tracking or standardized summary documentation that can be implemented within existing resource constraints while improving support for compliance with Uniform Guidance requirements. Management’s Response: Management agrees with the finding. The Agency’s current approach was designed to balance compliance needs with limited resources. Management will assess feasible improvements to its documentation practices to enhance support for payroll allocations to federal awards while remaining mindful of funding and staffing constraints.

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.”

Federal Agency: United States Department of Health and Human Services Federal Programs: Certified Community Behavioral Health Clinic Expansion Grants Federal Assistance Listing Number: 93.696 Federal Award Year: 2024-2025 Criteria or Specific Requirement – Level of effort (2 CFR § 200.430) includes requirements for (a) a specified level of service to be provided from period to period, (b) a specified level of expenditures from non-federal or federal sources for specified activities to be maintained from period to period, and (c) federal funds to supplement and not supplant non-federal funding of services. Condition – The Corporation failed to meet the 80% level of effort requirements as stipulated in the grant agreements. Cause – The Corporation lacked adequate controls and procedures to support personnel costs charged to the grant, including maintaining time studies or equivalent documentation to substantiate the level of effort, as required by Uniform Guidance (2 CFR § 200.430). Effect or Potential Effect – Failure to allocate payroll costs for employees with required level of- effort commitments may result in noncompliance with grant requirements. Questioned Costs – None Context – We selected a sample of one individual out of a population of five individuals for testing. For the individual selected, the Corporation was unable to provide evidence the specified level of service to be provided was met. As a result, level of effort activities were not completed in accordance with federal regulations nor was supporting documentation retained to demonstrate compliance. The sampling methodology used is not, and is not intended to be, statistically valid. Identification as a Repeat Finding – No Recommendation – The Corporation should establish and maintain internal controls over compliance with level of effort requirements, including documenting employee time through timesheets that accurately allocate time charged to the grant in accordance with applicable grant requirements. Views of Responsible Officials and Planned Corrective Actions – Management concurs with the finding. Arisa’s time-keeping application is designed to meet FLSA recordkeeping requirements. This system does not contain a solution to subdivide hours worked by project in a manner that would satisfy level of effort reporting. Arisa will require employees in positions that are partially or fully funded through a federal contract containing level of effort requirements to complete and submit a separate paper timesheet documenting time worked on the federal contract. In addition, subcontractors will be required to include a certification on their invoices that applicable level of effort requirements were met.

Program Titles: Reentry Employment Opportunities; Social Services Block Grant Assistance Listing Numbers: 17.270 and 93.667 Funding Agency’s: U.S. Department of Labor; Illinois Department of Human Services; City of Chicago Department of Family & Support Services Award Year: Reentry Employment Opportunities : 7/01/2023 – 12/31/2026 Social Services Block Grant: 7/1/2024 – 06/30/2025 Criteria or Specific Requirement – The Foundation is required to follow Uniform Guidance, which requires non federal entities to maintain effective internal controls and financial management systems to ensure compliance with cost principles (2 CFR §200.302(b)). Payroll and other expense costs allocated across multiple programs using employee time as the basis for allocation must be supported by documentation to substantiate the allocation (2 CFR §200.430). Condition – During testing of allowable costs, we identified shared payroll and other costs charged to federal programs for which adequate support for the cost allocation methodology was not maintained. Specifically, allocation schedules and underlying documentation supporting how payroll allocation percentages were determined were incomplete or unavailable. As a result, we were unable to conclude that all sampled costs were allocated to the federal programs in proportion to the relative benefit received. Cause – The Foundation transitioned to a new payroll system and did not retain allocation schedules before losing access to the prior system. Effect or potential effect – Inadequate documentation supporting cost allocations increases the risk that costs charged to federal programs may not be allocable in accordance with Uniform Guidance, potentially resulting in questioned costs or required repayment. Questioned Costs – Unknown. Context – Of the transactions tested, 20 out of 25 payroll and 18 of 25 non-payroll expense transactions for the Reentry Employment Opportunities program, and 16 out of 25 payroll transactions for the Social Services Block Grant program, lacked sufficient documentation supporting the allocation percentages applied. The sampling was not a statistically valid sample. Identification as a repeat finding – Not a repeat finding. Recommendation – We recommend that management maintain appropriate documentation to support cost allocations when using employee time as the basis for allocation. Views of responsible officials and planned corrective actions – Management agrees with the finding. The issue resulted from a system conversion and transition between payroll providers. Moving forward, management will ensure that appropriate documentation is consistently maintained and retained to support all payroll-related transactions.

2025-004: Federal Awards – Allowable Costs Federal Agency: U.S. Department of Transportation CFDA No.: 20.509 Federal Program: Formula Grants for Rural Areas and Tribal Transit Program Control Category: Allowable Costs Questioned Costs: Does not exceed threshold for reporting Condition During our testing of payroll expenditures, we noted that administrative and maintenance 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 Authority'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 Authority 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. Recommendation We recommend that the Authority charge time to the program based on actual hours worked per the employees’ timesheets. Management’s Response Regarding Corrective Action Taken or Planned These rules apply to costs charged directly to federal programs, such as the 5311 grants that require a 44.67% match when used for operating expenses. All maintenance and administrative staff time is eligible as direct costs for these grants as their time is only spent on transit activities and not administrating non-transit programs. Staff apply payroll costs and on either actual vehicle miles or hours based their type of work, as recommended by the National Rural Transit Assistance Program, for time by staff that cannot be directly tied to a specific grant source.

Federal agency: U.S. Department of Education Federal program title: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number: H027A230076, H027A230076, H173A230039, H173A230039, FH027A230076, H027A230076 Pass-Through Agency: Massachusetts Department of Elementary and Secondary Education and Massachusetts Department of Early Education and Care Pass-Through Number(s): Various (see schedule of expenditures of federal awards) Award Period: July 1, 2024 – June 30, 2025 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Compliance Requirement: Allowable Costs/Cost Principles 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 nonfederal entity. Condition and Context: For forty of forty payroll transactions tested, the School Department did not complete time and effort certifications. Questioned Costs: None Cause: Procedures were not in place to ensure that time and effort certifications were completed. Effect: Noncompliance with federal requirements occurred. Repeat Finding: No Recommendation: We recommend procedures be implemented to ensure that time and effort certifications are completed in a timely manner. Views of Responsible Officials: Management agrees with the finding.

2025-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts’ Department of Elementary and Secondary Education Title I Grants to Local Educational Agencies – ALN 84.010 Compliance Finding and Material Weakness in Internal Controls Over Compliance 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: Time and effort certifications were not maintained for grant employees. Cause: The School was not aware of the applicable time and effort requirements. Effect: The School is not in compliance with applicable cost principles related to salaries and wages. Questioned Costs: $966,130, which represents total payroll costs charged to the grant Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to maintain time and effort certifications for all grant employees. Views of Responsible Official: Management agrees with the finding.

2025-004 Maintain Approved Rate Support for Employee Pay Rates and Time and Effort Support Federal Program(s) Information Federal Agency: U.S. Department of Education Pass-Through Entity: Massachusetts Department of Elementary and Secondary Education Award Name: Child Nutrition Cluster Assistance Listing Number: 10.553/10.555/10.559 Award Year: 2025 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Per 2 CFR 200.430, compensation for personal services must be supported by records that accurately reflect the work performed and be based on approved pay rates consistent with established payroll and personnel policies. Documentation supporting payroll costs charged to Federal awards must be properly authorized and maintained. Condition and Context As part of the testing of twenty-five employees charged to the Child Nutrition Cluster, adequate time and effort documentation supporting the allocation of payroll costs charged to the program for four employees was not provided. Cause Weakness in the design and implementation of internal controls in that payroll costs lacked sufficient supporting documentation to demonstrate costs charged to the program were based on actual work performed. Effect or Potential Effect Due to the weakness in internal controls noted above, there is a risk that amounts charged to federal awards may not be allowable or in accordance with applicable cost principles. Questioned Costs - Not determinable. Identification as a Repeat Finding - This is not a repeat finding. Recommendation The City should implement formal procedures to ensure all employee pay rates are supported by approved and retained documentation and implement controls to ensure time and effort reporting is prepared, reviewed, and maintained. View of Responsible Officials Management’s corrective action plan is included at the end of this report after the Summary Schedule of Prior Year Findings.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: HOME Investment Partnership Program Assistance Listing Number: 14.239 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR 200.430(g), Standards for Documentation of Personnel Expenses, states: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award. Condition: The City’s payroll system allocated vacation hours across various programs and needed further reconciliation to identify eligible costs per employee timesheets. Questioned Costs: None. Context: All vacation hours not directly identified in the employees timesheet are charged based on payroll systems preset allocations. Cause: When the employees are on vacation and time is not directly identified in the employees timesheet, the payroll system defaults to a preset allocation. Effect: Payroll costs charged to the program were greater than amounts supported by the documentation.

Assistance Listing Number, Federal Agency, and Program Name - 21.027 - U.S. Department of the Treasury - COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 93.959 - U.S. Department of Health and Human Services - Block Grants for Prevention and Treatment of Substance Abuse Federal Award Identification Number and Year - 21.027 - All programs reported 93.959 - Grant numbers 43CDZ03232, 43CDC03016, 43CDC03736, 43CDZ03787, and 43CDC03731 Pass through Entity - 21.027 - Cook County Health and Kane County, Illinois 93.959 - Direct Awards Finding Type - Significant deficiency Repeat Finding - No Criteria - 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. These records must: • Be supported by a system of internal control that provides reasonable assurance charges are accurate, allowable, and properly allocated • Be supported by documentation that reflects the total activity for which the employee is compensated Condition - The Organization allocates personnel costs to federal programs based on wage forms that reflect estimated time expected to be worked across programs. Supervisors perform biweekly reviews of employee time charged within the Paylocity system and compare allocations to supporting information, such as program schedules and caseloads. However, we noted that: • There is no formal documentation retained evidencing the supervisor’s review of supporting records (e.g., caseloads and schedules) to substantiate that recorded time aligns with actual work performed. • The only evidence of review is system approval within Paylocity, which indicates the timecard was approved but does not demonstrate the nature, extent, or basis of the review performed. Questioned Costs - N/A If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The Organization allocates payroll costs to federal awards based on wage forms reflecting how employees are expected to work across programs. Supervisors review employee time biweekly and consider information, such as caseloads, counselor/doctor notes, and other operational records, to assess whether recorded allocations remain reasonable. If an employee’s actual time differs from the allocation reflected in Paylocity, the allocation is expected to be reviewed and corrected within the payroll system via an updated wage form. Cause and Effect - The Organization relies on system approval within Paylocity and informal supervisory processes rather than a formal, documented review process to support payroll allocations charged to federal awards. Without documented evidence of supervisory review, the Organization cannot clearly demonstrate that payroll costs charged to federal awards are supported and accurately reflect actual work performed. Due to the lack of formal documentation to demonstrate that payroll allocations charged to the grant were reasonable, additional audit procedures were necessary. Recommendation - We recommend the Organization strengthen its internal controls over personnel cost allocations by implementing a more formal and well documented review process. At a minimum, supervisors should document their review of payroll allocations, including the supporting information considered (e.g., caseloads and counselor/doctor notes) and the basis for concluding that recorded time reasonably reflects work performed. To further enhance compliance and documentation, the Organization may consider the following approaches: • Track time by grant at the employee level: Require employees to record actual time worked by funding source (e.g., by grant or cost objective) within the payroll system, reducing reliance on estimated allocations. • Implement personnel activity reports (PARs): Utilize periodic certifications (e.g., each pay period) in which employees attest that recorded time reflects actual work performed across funding sources, with supervisory review and approval documented. • Enhance existing processes: If continuing to use estimated allocations, require consistent documentation of supervisory review, including evidence of comparison to supporting records and evaluation of any variances. Documenting and retaining evidence of these reviews will strengthen the Organization’s ability to demonstrate that personnel costs are accurate, allowable, and properly allocated in accordance with the Uniform Guidance and will reduce audit burden in future periods. Views of Responsible Officials and Planned Corrective Actions - Management agrees and will implement a control that requires direct supervisors to document their reviews of supporting records (e.g., caseloads and schedules) of direct reports to substantiate that recorded time aligns with actual work performed as a part of the supervisors' biweekly timesheet reviews. Family Guidance Centers, Inc. will retain this documentation in accordance with its document retention policy.

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

2025-003 Internal Control over Payroll – (Significant Deficiency) - Repeated and Modified (Prior Year Finding 2024-003) Federal Program Information: Funding Agency Title Federal Assistance Listing Number(s) Award Year and Number U.S. Department of Interior Indian School Equalization Program 15.042 2024; A24AV00744 U.S. Department of Interior Indian Schools Student Transportation 15.044 2024; A24AV00744 U.S. Department of Interior Administrative Cost Grants for Indian Schools 15.046 2024; A24AV00744 U.S. Department of Interior Indian Education Facilities, Operations, and Maintenance 15.047 2024; A24AV00744 U.S. Department of Education Title I Grants to Local Educational Agencies 84.010 2024; A24AV00744 U.S. Department of Education Special Education Grants to States 84.027 2024; A24AV00744 U.S. Department of Education Education Stabilization Fund 84.425 2024; A24AV00744 Criteria or Specific Requirements: In accordance with 2 CFR § 200.302(b)(3) and § 200.430(i), recipients of federal funds must maintain documentation that supports the allowability and allocability of compensation costs. Personnel expenses must be supported by records that accurately reflect the work performed, and documentation must be maintained for each employee, including executed contracts, offer letters, pay rate approvals, timesheets, and separation documentation. Adequate support is necessary to demonstrate that federal funds were used in compliance with award conditions. Condition: During our review of internal controls over payroll processing, we selected 194 payroll transactions across seven major programs for testing. Exceptions were identified in 7 transactions. The School did not fully comply with its own adopted policies or applicable federal regulations concerning payroll documentation and processing. Cause: The deficiencies appear to be due to a lack of consistent personnel file maintenance and insufficient internal controls over payroll documentation, record retention, and post-hiring compliance reviews. Effect: The lack of complete personnel documentation increases the risk of charging unallowable or unsupported costs to federal awards. It also affects the ability to verify employee eligibility, compensation accuracy, and the proper use of federal funds, potentially resulting in questioned costs and potential repayment obligations to granting agencies. Auditor's Recommendation: We recommend that the School implement enhanced internal controls and standardized procedures to ensure complete and accurate personnel records are maintained. This should include routine documentation checks to ensure that all required items, such as offer letters, contracts, paystubs, pay rate verifications, timesheets, and termination letters, are present and properly filed. Management should also provide training to relevant staff on federal compliance requirements related to payroll and personnel documentation.

Allowable Costs and Activities Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Health Center Program Cluster Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS00109-24; H80CS00109-25 Award Period: May 1, 2024 – April 30, 2025; May 1, 2025 – April 30, 2026 Criteria or specific requirement: 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; reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; 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 (2 CFR 200.430(i)(1)). Condition: Payroll costs were allocated to grants in a manner inconsistent with the time and effort documentation provided. Questioned costs: none Context: One (1) of forty (40) allowable cost transactions selected for testing was related to payroll costs which were allocated to the grant in a manner inconsistent with the time and effort documentation provided. Amount allocated used a percentage less than the corresponding percentage on the time and effort documentation provided. Cause: Unknown Effect: Grants may be allocated costs in a manner which is inconsistent with the actual level of effort associated with the underlying employee. Repeat Finding: Yes, prior year finding 2024-003. Recommendation: Management should reinforce the requirement to retain time and effort documentation for all employees that are allocated to multiple grants and implement a review process whereby the allocation percentages used are compared to the employee attestations provided. Views of responsible officials: There is no disagreement with this finding.

Federal programs Research and Development Cluster – National Institutes of Health – Drug Abuse and Addiction Research Programs AL #: 93.279 Award Year: 2024/2025 Type of finding Significant Deficiency and Noncompliance Compliance requirement Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria Under 2 CFR section 200.430(i), costs of compensation for personal services are allowable to the extent the total compensation for individual employees is reasonable for the services rendered and conforms to the established written policies and practices, follows an appointment made in accordance with non-federal entities rules and written policies, and is determined and supported as provided in 2 CFR section 200.430(i), including that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition We noted one out of forty judgmentally selected payroll transactions included cost for an employee that did not relate to services performed in relation to the grant. Questioned costs $625 Context A portion of an employee’s benefits was improperly charged to the grant. Cause When the University changed their timekeeping platform an academic affairs employees’ compensation was improperly set up in the system which incorrectly allocated their vacation time to this grant. Effect The employee’s vacation time that occurred after the change in the University’s timekeeping platform in March 2025 until the discovery after year end was incorrectly included as compensation and benefits expense within the grant. Repeat finding No Recommendations We recommend that the University ensure controls are in place to adequately review all benefits pay charged to grants to ensure appropriate. View of responsible officials To safeguard from future errors and ensure data accuracy, Human Resources partnered with Enterprise Application Services department to develop an automated process that populates earnings codes and project account codes based on employee, job record and earnings code. This enhancement streamlines data entry by consolidating it into a single interface, reducing the risk of manual entry errors. Additionally, the HR Technology Manager has implemented a new monitoring report to track employees with multiple salary distribution accounts as a part of payroll process. The biweekly report will be automatically generated and sent via email to HR’s HRIS Consultants for review. The HRIS Consultants will analyze the report, resolve any discrepancies and escalate any issues to the HR Technology Manager or Lead Application Consultant as necessary. These processes will be routinely reviewed, with adjustments made as needed.

Item 2025-005 - Activities Allowed and Unallowed Costs - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00505-23-04, 6 H2ECS45602-02-04, 1 H8LCS50772-01-00 and 6 H8HCS46163-03-01 - (Material Weakness) Criteria: Per 2 CFR §200.430(i) - Standards for Documentation of Personnel Expenses, 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, reflect actual time worked on specific federal programs and be incorporated into the official records of the non-federal entity. Statement of Condition: During our audit, we noted that LBUCC charged salaries to the Section 330 grant based on pre-determined allocations or budget rather than actual hours worked. LBUCC utilized timesheets that reflect the allocations as its time and effort documentation. Cause: LBUCC has not implemented a time and effort reporting system that captures actual hours worked on federal programs. Effect: Failure to maintain and monitor time and effort based on actual hours worked may lead to disallowed costs. Questioned Costs: None. Although salaries charged were based on allocations or budget, we determined that only one employee was charged to two grant-funded programs during one pay period. All other employees’ salaries were charged to one grant-funded program for each pay period during the year. For the employee whose salary was charged to more than one grant-funded program, we verified that the total of the employee’s salaries charged to each grant-funded program did not exceed 100% of her total salaries for the pay period. Context: LBUCC’s management meets monthly to discuss if the budgeted or allocated salaries per program for the month was reflective of actual hours worked. During this discussion, management ascertains if there is a need to adjust the budgeted or allocated salaries. However, this discussion and the approval of the final budget or salaries is not documented. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that LBUCC implement a time and effort reporting system that tracks actual hours worked on each program or grant. We recommend that they require supervisors to review and approve the actual time spent on grant activities and that such review and approval be documented. Management Response: Management agrees with the finding and will implement these steps to ensure compliance with the federal cost principles, strengthen internal controls, and reduce the risk of questioned costs.

2025-001: U.S. Department of Health and Human Services, National Institutes for Health Research and Development Cluster, Cancer Control, Assistance Listing #93.399; Lack of Required Written Policies Condition Montana Cancer Consortium (the Consortium) does not have written policies and procedures in place as required by 2 CFR § 200.302 and § 200.313. Specifically, the Consortium lacks documented policies for: • The timing of federal cash draws; • The allowability of costs charged to federal awards; and • Documentation of time-and-effort for personal services. Criteria 2 CFR § 200.302(b)(6)–(7) requires nonfederal entities to have written procedures for: (a) cash drawdowns and (b) determining cost allowability. § 200.305 requires written cash-management procedures that minimize the time between draw and disbursement. § 200.430 requires a written policy that is consistently applied to both federal and nonfederal activities for documentation of compensation for personal services. Context At the time of completion of the audit for the year ended May 31, 2025, the written policies were not in place. We noted that the policies were implemented on December 1, 2025, which was after the fiscal year under audit had ended. Cause The Consortium has not yet developed or adopted the required written policies due to limited administrative capacity and reliance on informal practices. Effect The absence of written policies increases the risk of noncompliance with federal requirements, mismanagement of federal funds, and audit findings in future periods. It may also impair the Consortium’s ability to consistently apply federal cost principles and properly safeguard assets. Recommendation We recommend that the Consortium develop and implement written policies and procedures that comply with the requirements of Uniform Guidance. Management Response See Corrective Action Plan.

Finding 2025-008 – Allowable Costs/Cost Principles and Matching, Level of Effort, and Earmarking Information on the federal program: Federal awarding agency: United States Department of Education (ED) Federal program: School Safely National Activities, Assistance Listing No. 84.184X Award year: 2024‐2025 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR 200.303 requires that a non-federal entity must (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR 200.430 (i) states “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflected 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 federal 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.” Condition: The University did not have effective internal controls over the timely preparation and approval of employees’ time and effort certifications. Cause: The University did not execute their internal controls for the timely preparation and approval of employees’ time and effort certifications on a timely basis. Effect or potential effect: Unallowable and/or inaccurate payroll expenditures could be charged to the federal program due to the delay in the preparation and approval of the time and effort certifications. Level of effort per grant award notification and grant proposal documents may not be met as required for the applicable employees with level of effort requirements, the program director/principal investigator and co-investigators, for the School Safely National Activities Program. Questioned costs: None. Context: It is the University’s policy to have time and effort certifications prepared and approved for grant employees on a semesterly basis. For 9 of 14 payroll expenditures selected for testing, the University’s employees prepared their time and effort certifications between 4 and 10 months after the applicable semester ended, with approvals made after that time. The grant documents provide for level of effort requirements for the program for five employees, including the program director/principal investigator with a level of effort of 25% and 4 co-investigators with level of effort of 2.5%. The University’s total School Safely National Activities program expenditures were $1,310,305 for the year ended May 31, 2025. Of this amount, $209,270 related to payroll expenditures, including fringe benefits. Identification of a repeat finding: Not applicable. Recommendation: We recommend the University execute its internal controls to provide for the preparation and approval of employees’ time and effort certifications on a timely basis after the end of each semester. Views of responsible officials: Management agrees with the finding and has developed a corrective action plan in which the University updated the time and effort reporting form and the Grants Accounting Office will ensure the forms are completed timely. The corrective action was implemented by February 6, 2026.

. Finding 2025-004 (Material Weakness) Program: Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Department of Treasury AL #: 21.027 Federal Award Identification Number and Year: Various – See SEFA Pass-through Entity: N/A Type of Compliance Finding: A) Activities Allowed or Unallowed and B) Allowable Costs/Cost Principles Criteria Recipients may use SLFRF payments for any eligible expenses subject to the restrictions set forth in sections 602 / 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021, codified at 42 USC sections 802 and 803, and as amended by the 2023 CAA. Per 2 CFR 200.430(g)(1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (i) be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and (vi) support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award. Condition Management did not provide sufficient evidence to support the charges for salaries and wages for five of the seven employee samples who work solely on one cost objective or multiple cost objectives. Cause Management does not have controls and processes in place to ensure that required documentation is maintained to support federal award charges for salaries and wages. Effect Unallowable salary expenses were charged to the federal award, which could result in the City not receiving federal assistance or repayment of grant funds. Questioned Costs $11,480 Context The total salaries and wages were $1,036,364 and likely questioned costs are $252,797. Is the finding a repeat finding No Recommendations We recommend management establish a process to ensure required documentation is maintained to support federal award salaries and wages. Views of Responsible Officials/ Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization’s letterhead.

2025-002 - Lack of Written Federal Program Policies. Type: Material Weakness. Condition: The Village does not have documented policies and procedures specific to the administration of the Coronavirus State and Local Fiscal Recovery Funds program. This includes the absence of written guidance on key compliance areas such as payments, procurement, allowability of costs charged to federal programs, compensation, and travel costs under Uniform Guidance. Criteria: Per 2 CFR 200.303 and 200.331 of the Uniform Guidance, non-federal entities are required to establish and maintain effective internal controls and written policies to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. These policies should be tailored to the specific requirements of each federal program. Cause: The entity has not developed formal written policies and procedures for the Coronavirus State and Local Fiscal Recovery Funds program, possibly due to reliance on informal practices or general administrative policies that do not address federal-specific requirements. Effect: Without documented policies, there is an increased risk of noncompliance with federal requirements, inconsistent program administration, and lack of accountability. This may result in questioned costs, audit findings, or potential repayment of federal funds. Recommendation: We recommend that the Village develop and implement written policies and procedures specific to the Coronavirus State and Local Fiscal Recovery Funds program. These should include: - Payments in accordance with §200.302 (6), - Procurement in accordance with §200.318, - Allowability of costs charged to federal programs in accordance with §200.302 (7), - Compensation in accordance with §200.430 and §200.431, - Travel costs in accordance with §200.474. Training should also be provided to staff responsible for administering the program to ensure consistent application of these policies. Views of Responsible Officials: Management acknowledges the auditor’s finding regarding the absence of formally documented federal program policies. We recognize the importance of maintaining written procedures to ensure consistent compliance with Uniform Guidance requirements and to strengthen internal controls over federal awards. While informal practices have historically guided our federal program administration, we agree that formalizing these policies will enhance transparency, accountability, and operational efficiency. Management is currently in the process of developing written policies covering key areas such as procurement, allowable costs, subrecipient monitoring, and cash management. We anticipate completing this documentation and implementing the policies by February 28, 2026. We are committed to continuous improvement and appreciate the auditor’s recommendations as part of our efforts to maintain strong compliance and stewardship of federal funds.

2 CFR §2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR §200.303(a) which 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. 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).Furthermore, 2 CFR §200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The “City of Columbus Fiscal Policies and Procedures for the Administration of HUD Grants Manual” Part II Section C – Standards for Documentation of Personal Services provides the following: All grant funded staff (both city staff and subrecipient staff) will utilize personal activity reports (timesheets). All timesheets will reflect total hours worked, identify the federal grant hours worked, and be signed by either the employee or the supervisor. Furthermore, the City of Columbus Department of Development has established a procedure of timesheet review which requires supervisors review employee timesheets within one week of the pay period end date. This review is evidenced by an electronic signature on the employee-completed timesheet.While the City does have an internal control policy in place in accordance with 2 CFR 430(i)(1)(i), supervisors were not always adhering to the policy which resulted in a deficiency in the application of the control process. During payroll control testing over AL #14.239 Home Investment Partnership Program, it was noted 3 out of the 5 selected worklogs (60%) were not signed by the supervisor within the one-week requirement as required by City policy. Supervisory sign offs occurred between 12 and 32 working days (not including weekends) following the end of the pay period.Failure to follow the established internal control policy and ensuring all time sheets are appropriately approved by a knowledgeable supervisor, within one week of the pay period end date, could result in unallowable costs being allocated to a federal program and could ultimately result in noncompliance and/or a questioned cost. The City should review established policies and procedures with supervisory personnel and evaluate if additional control procedures should be in place to ensure all timesheets are appropriately reviewed timely prior to allocation to a federal program.

2 CFR §2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR §200.303(a) which 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. 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).Furthermore, 2 CFR §200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The “City of Columbus Fiscal Policies and Procedures for the Administration of HUD Grants Manual” Part II Section C – Standards for Documentation of Personal Services provides the following: All grant funded staff (both city staff and subrecipient staff) will utilize personal activity reports (timesheets). All timesheets will reflect total hours worked, identify the federal grant hours worked, and be signed by either the employee or the supervisor. Furthermore, the City of Columbus Department of Development has established a procedure of timesheet review which requires supervisors review employee timesheets within one week of the pay period end date. This review is evidenced by an electronic signature on the employee-completed timesheet.While the City does have an internal control policy in place in accordance with 2 CFR 430(i)(1)(i), supervisors were not always adhering to the policy which resulted in a deficiency in the application of the control process. During payroll control testing over AL #14.239 Home Investment Partnership Program, it was noted 3 out of the 5 selected worklogs (60%) were not signed by the supervisor within the one-week requirement as required by City policy. Supervisory sign offs occurred between 12 and 32 working days (not including weekends) following the end of the pay period.Failure to follow the established internal control policy and ensuring all time sheets are appropriately approved by a knowledgeable supervisor, within one week of the pay period end date, could result in unallowable costs being allocated to a federal program and could ultimately result in noncompliance and/or a questioned cost. The City should review established policies and procedures with supervisory personnel and evaluate if additional control procedures should be in place to ensure all timesheets are appropriately reviewed timely prior to allocation to a federal program.

2 CFR §2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR §200.303(a) which 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. 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).Furthermore, 2 CFR §200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The “City of Columbus Fiscal Policies and Procedures for the Administration of HUD Grants Manual” Part II Section C – Standards for Documentation of Personal Services provides the following: All grant funded staff (both city staff and subrecipient staff) will utilize personal activity reports (timesheets). All timesheets will reflect total hours worked, identify the federal grant hours worked, and be signed by either the employee or the supervisor. Furthermore, the City of Columbus Department of Development has established a procedure of timesheet review which requires supervisors review employee timesheets within one week of the pay period end date. This review is evidenced by an electronic signature on the employee-completed timesheet.While the City does have an internal control policy in place in accordance with 2 CFR 430(i)(1)(i), supervisors were not always adhering to the policy which resulted in a deficiency in the application of the control process. During payroll control testing over AL #14.239 Home Investment Partnership Program, it was noted 3 out of the 5 selected worklogs (60%) were not signed by the supervisor within the one-week requirement as required by City policy. Supervisory sign offs occurred between 12 and 32 working days (not including weekends) following the end of the pay period.Failure to follow the established internal control policy and ensuring all time sheets are appropriately approved by a knowledgeable supervisor, within one week of the pay period end date, could result in unallowable costs being allocated to a federal program and could ultimately result in noncompliance and/or a questioned cost. The City should review established policies and procedures with supervisory personnel and evaluate if additional control procedures should be in place to ensure all timesheets are appropriately reviewed timely prior to allocation to a federal program.

2 CFR §2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR §200.303(a) which 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. 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).Furthermore, 2 CFR §200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The “City of Columbus Fiscal Policies and Procedures for the Administration of HUD Grants Manual” Part II Section C – Standards for Documentation of Personal Services provides the following: All grant funded staff (both city staff and subrecipient staff) will utilize personal activity reports (timesheets). All timesheets will reflect total hours worked, identify the federal grant hours worked, and be signed by either the employee or the supervisor. Furthermore, the City of Columbus Department of Development has established a procedure of timesheet review which requires supervisors review employee timesheets within one week of the pay period end date. This review is evidenced by an electronic signature on the employee-completed timesheet.While the City does have an internal control policy in place in accordance with 2 CFR 430(i)(1)(i), supervisors were not always adhering to the policy which resulted in a deficiency in the application of the control process. During payroll control testing over AL #14.239 Home Investment Partnership Program, it was noted 3 out of the 5 selected worklogs (60%) were not signed by the supervisor within the one-week requirement as required by City policy. Supervisory sign offs occurred between 12 and 32 working days (not including weekends) following the end of the pay period.Failure to follow the established internal control policy and ensuring all time sheets are appropriately approved by a knowledgeable supervisor, within one week of the pay period end date, could result in unallowable costs being allocated to a federal program and could ultimately result in noncompliance and/or a questioned cost. The City should review established policies and procedures with supervisory personnel and evaluate if additional control procedures should be in place to ensure all timesheets are appropriately reviewed timely prior to allocation to a federal program.

2 CFR §2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR §200.303(a) which 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. 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).Furthermore, 2 CFR §200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The “City of Columbus Fiscal Policies and Procedures for the Administration of HUD Grants Manual” Part II Section C – Standards for Documentation of Personal Services provides the following: All grant funded staff (both city staff and subrecipient staff) will utilize personal activity reports (timesheets). All timesheets will reflect total hours worked, identify the federal grant hours worked, and be signed by either the employee or the supervisor. Furthermore, the City of Columbus Department of Development has established a procedure of timesheet review which requires supervisors review employee timesheets within one week of the pay period end date. This review is evidenced by an electronic signature on the employee-completed timesheet.While the City does have an internal control policy in place in accordance with 2 CFR 430(i)(1)(i), supervisors were not always adhering to the policy which resulted in a deficiency in the application of the control process. During payroll control testing over AL #14.239 Home Investment Partnership Program, it was noted 3 out of the 5 selected worklogs (60%) were not signed by the supervisor within the one-week requirement as required by City policy. Supervisory sign offs occurred between 12 and 32 working days (not including weekends) following the end of the pay period.Failure to follow the established internal control policy and ensuring all time sheets are appropriately approved by a knowledgeable supervisor, within one week of the pay period end date, could result in unallowable costs being allocated to a federal program and could ultimately result in noncompliance and/or a questioned cost. The City should review established policies and procedures with supervisory personnel and evaluate if additional control procedures should be in place to ensure all timesheets are appropriately reviewed timely prior to allocation to a federal program.

2 CFR §2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR §200.303(a) which 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. 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).Furthermore, 2 CFR §200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The “City of Columbus Fiscal Policies and Procedures for the Administration of HUD Grants Manual” Part II Section C – Standards for Documentation of Personal Services provides the following: All grant funded staff (both city staff and subrecipient staff) will utilize personal activity reports (timesheets). All timesheets will reflect total hours worked, identify the federal grant hours worked, and be signed by either the employee or the supervisor. Furthermore, the City of Columbus Department of Development has established a procedure of timesheet review which requires supervisors review employee timesheets within one week of the pay period end date. This review is evidenced by an electronic signature on the employee-completed timesheet.While the City does have an internal control policy in place in accordance with 2 CFR 430(i)(1)(i), supervisors were not always adhering to the policy which resulted in a deficiency in the application of the control process. During payroll control testing over AL #14.239 Home Investment Partnership Program, it was noted 3 out of the 5 selected worklogs (60%) were not signed by the supervisor within the one-week requirement as required by City policy. Supervisory sign offs occurred between 12 and 32 working days (not including weekends) following the end of the pay period.Failure to follow the established internal control policy and ensuring all time sheets are appropriately approved by a knowledgeable supervisor, within one week of the pay period end date, could result in unallowable costs being allocated to a federal program and could ultimately result in noncompliance and/or a questioned cost. The City should review established policies and procedures with supervisory personnel and evaluate if additional control procedures should be in place to ensure all timesheets are appropriately reviewed timely prior to allocation to a federal program.

2 CFR §2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR §200.303(a) which 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. 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).Furthermore, 2 CFR §200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The “City of Columbus Fiscal Policies and Procedures for the Administration of HUD Grants Manual” Part II Section C – Standards for Documentation of Personal Services provides the following: All grant funded staff (both city staff and subrecipient staff) will utilize personal activity reports (timesheets). All timesheets will reflect total hours worked, identify the federal grant hours worked, and be signed by either the employee or the supervisor. Furthermore, the City of Columbus Department of Development has established a procedure of timesheet review which requires supervisors review employee timesheets within one week of the pay period end date. This review is evidenced by an electronic signature on the employee-completed timesheet.While the City does have an internal control policy in place in accordance with 2 CFR 430(i)(1)(i), supervisors were not always adhering to the policy which resulted in a deficiency in the application of the control process. During payroll control testing over AL #14.239 Home Investment Partnership Program, it was noted 3 out of the 5 selected worklogs (60%) were not signed by the supervisor within the one-week requirement as required by City policy. Supervisory sign offs occurred between 12 and 32 working days (not including weekends) following the end of the pay period.Failure to follow the established internal control policy and ensuring all time sheets are appropriately approved by a knowledgeable supervisor, within one week of the pay period end date, could result in unallowable costs being allocated to a federal program and could ultimately result in noncompliance and/or a questioned cost. The City should review established policies and procedures with supervisory personnel and evaluate if additional control procedures should be in place to ensure all timesheets are appropriately reviewed timely prior to allocation to a federal program.

2 CFR §2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR §200.303(a) which 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. 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).Furthermore, 2 CFR §200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The “City of Columbus Fiscal Policies and Procedures for the Administration of HUD Grants Manual” Part II Section C – Standards for Documentation of Personal Services provides the following: All grant funded staff (both city staff and subrecipient staff) will utilize personal activity reports (timesheets). All timesheets will reflect total hours worked, identify the federal grant hours worked, and be signed by either the employee or the supervisor. Furthermore, the City of Columbus Department of Development has established a procedure of timesheet review which requires supervisors review employee timesheets within one week of the pay period end date. This review is evidenced by an electronic signature on the employee-completed timesheet.While the City does have an internal control policy in place in accordance with 2 CFR 430(i)(1)(i), supervisors were not always adhering to the policy which resulted in a deficiency in the application of the control process. During payroll control testing over AL #14.239 Home Investment Partnership Program, it was noted 3 out of the 5 selected worklogs (60%) were not signed by the supervisor within the one-week requirement as required by City policy. Supervisory sign offs occurred between 12 and 32 working days (not including weekends) following the end of the pay period.Failure to follow the established internal control policy and ensuring all time sheets are appropriately approved by a knowledgeable supervisor, within one week of the pay period end date, could result in unallowable costs being allocated to a federal program and could ultimately result in noncompliance and/or a questioned cost. The City should review established policies and procedures with supervisory personnel and evaluate if additional control procedures should be in place to ensure all timesheets are appropriately reviewed timely prior to allocation to a federal program.

2 CFR §2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR §200.303(a) which 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. 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).Furthermore, 2 CFR §200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The “City of Columbus Fiscal Policies and Procedures for the Administration of HUD Grants Manual” Part II Section C – Standards for Documentation of Personal Services provides the following: All grant funded staff (both city staff and subrecipient staff) will utilize personal activity reports (timesheets). All timesheets will reflect total hours worked, identify the federal grant hours worked, and be signed by either the employee or the supervisor. Furthermore, the City of Columbus Department of Development has established a procedure of timesheet review which requires supervisors review employee timesheets within one week of the pay period end date. This review is evidenced by an electronic signature on the employee-completed timesheet.While the City does have an internal control policy in place in accordance with 2 CFR 430(i)(1)(i), supervisors were not always adhering to the policy which resulted in a deficiency in the application of the control process. During payroll control testing over AL #14.239 Home Investment Partnership Program, it was noted 3 out of the 5 selected worklogs (60%) were not signed by the supervisor within the one-week requirement as required by City policy. Supervisory sign offs occurred between 12 and 32 working days (not including weekends) following the end of the pay period.Failure to follow the established internal control policy and ensuring all time sheets are appropriately approved by a knowledgeable supervisor, within one week of the pay period end date, could result in unallowable costs being allocated to a federal program and could ultimately result in noncompliance and/or a questioned cost. The City should review established policies and procedures with supervisory personnel and evaluate if additional control procedures should be in place to ensure all timesheets are appropriately reviewed timely prior to allocation to a federal program.

Criteria or Specific Requirement: Federal regulations (45 CFR 1635.4(a) and 2 CFR 200.430), state that federal award recipients must base allocations of salaries and wages costs to grants on records that accurately reflect the work performed. Federal regulations (45 CFR 1630.5 and 2 CFR 200.403) state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities. Condition: During our testing we noted:  Payroll transactions: Eleven instances of errors totaling a net amount of $2,009 (an absolute value amount of $2,009) where the incorrect percentages were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee’s pay, and  Payroll transactions: Seven instances of errors totaling a net amount of $109 (an absolute value amount of $4,405) where an unsupported allocation percentage was used to allocate the employee's pay to the grant - typically, employee salaries are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund.  Fringe-benefit transactions: Two instances of an error totaling $91 where an unsupported allocation percentage was used to allocate employer-paid employee insurance costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund.  Fringe-benefit transactions: Two instances of errors totaling $275 where employer-paid employee insurance and HSA contribution deductions per the employee's pay stub were allocated to the grant at a rate of 100%.  Non-payroll and fringe transactions: one instance of an error totaling $884 where an unsupported allocation percentage was used to allocate general costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Additionally, we noted inconsistency in the general fund (LSC and two other private grants) allocation basis used during the year - grant hours and projected revenue were both utilized at different times during the year. Additionally, we noted that allocations in the general fund are done using projected revenue. However as revenue was recognized as expenses were incurred for the general fund the allocation based on revenue approximated an allocation method based on costs. As such, the costs mentioned above were allocated in an inconsistent manner to other grant costs and were not fully representative of the employees’ time and effort. However, we noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. 2024 – 002: Cost Allocation of Expenses to LSC Grants (Continued) Questioned Costs: A net amount of $3,150 of allocated salary expense described above, which is related to Assistance Listing Number 09.706060. Context: These 23 instances were noting during testing of 55 disbursements. Cause: The Organization’s cost allocation methodology is primarily based on time and effort records, and periodic calculations of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund, but it often includes manual adjustments based on review of individual time records, expense and other data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities and in a manner where costs are not applied uniformly to both LSC (or, federally)-funded and non-LSC (of, federally) -funded activities. Repeat Finding: The finding is a repeat of findings in the immediately prior year. The prior year finding numbers were 2023-003 and 2023-004. Recommendation: We recommend that the Organization consider updating its cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations that are calculated in a consistent manner that ensure costs are applied uniformly to respective benefited activities, and that are reflective on employees’ time and effort records Views of responsible officials: Management partially agrees with this finding. First, 45 CFR Part 1635 codifies the timekeeping requirement. CLS keeps track of every case and time dedicated by staff in strict compliance with this requirement. Additionally, the distribution of expenses in the general fund, which includes LSC and two other funding sources, represents a fair method and allocation. Regarding the questioned costs, CLS disagrees with the finding of material weakness given the extremely low total dollar value. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Federal regulations state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities.

Criteria or Specific Requirement: Federal regulations (45 CFR 1635.4(a) and 2 CFR 200.430), state that federal award recipients must base allocations of salaries and wages costs to grants on records that accurately reflect the work performed. Federal regulations (45 CFR 1630.5 and 2 CFR 200.403) state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities. Condition: During our testing we noted:  Payroll transactions: Eleven instances of errors totaling a net amount of $2,009 (an absolute value amount of $2,009) where the incorrect percentages were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee’s pay, and  Payroll transactions: Seven instances of errors totaling a net amount of $109 (an absolute value amount of $4,405) where an unsupported allocation percentage was used to allocate the employee's pay to the grant - typically, employee salaries are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund.  Fringe-benefit transactions: Two instances of an error totaling $91 where an unsupported allocation percentage was used to allocate employer-paid employee insurance costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund.  Fringe-benefit transactions: Two instances of errors totaling $275 where employer-paid employee insurance and HSA contribution deductions per the employee's pay stub were allocated to the grant at a rate of 100%.  Non-payroll and fringe transactions: one instance of an error totaling $884 where an unsupported allocation percentage was used to allocate general costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Additionally, we noted inconsistency in the general fund (LSC and two other private grants) allocation basis used during the year - grant hours and projected revenue were both utilized at different times during the year. Additionally, we noted that allocations in the general fund are done using projected revenue. However as revenue was recognized as expenses were incurred for the general fund the allocation based on revenue approximated an allocation method based on costs. As such, the costs mentioned above were allocated in an inconsistent manner to other grant costs and were not fully representative of the employees’ time and effort. However, we noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. 2024 – 002: Cost Allocation of Expenses to LSC Grants (Continued) Questioned Costs: A net amount of $3,150 of allocated salary expense described above, which is related to Assistance Listing Number 09.706060. Context: These 23 instances were noting during testing of 55 disbursements. Cause: The Organization’s cost allocation methodology is primarily based on time and effort records, and periodic calculations of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund, but it often includes manual adjustments based on review of individual time records, expense and other data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities and in a manner where costs are not applied uniformly to both LSC (or, federally)-funded and non-LSC (of, federally) -funded activities. Repeat Finding: The finding is a repeat of findings in the immediately prior year. The prior year finding numbers were 2023-003 and 2023-004. Recommendation: We recommend that the Organization consider updating its cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations that are calculated in a consistent manner that ensure costs are applied uniformly to respective benefited activities, and that are reflective on employees’ time and effort records Views of responsible officials: Management partially agrees with this finding. First, 45 CFR Part 1635 codifies the timekeeping requirement. CLS keeps track of every case and time dedicated by staff in strict compliance with this requirement. Additionally, the distribution of expenses in the general fund, which includes LSC and two other funding sources, represents a fair method and allocation. Regarding the questioned costs, CLS disagrees with the finding of material weakness given the extremely low total dollar value. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Federal regulations state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities.

Criteria or Specific Requirement: Federal regulations (45 CFR 1635.4(a) and 2 CFR 200.430), state that federal award recipients must base allocations of salaries and wages costs to grants on records that accurately reflect the work performed. Federal regulations (45 CFR 1630.5 and 2 CFR 200.403) state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities. Condition: During our testing we noted:  Payroll transactions: Eleven instances of errors totaling a net amount of $2,009 (an absolute value amount of $2,009) where the incorrect percentages were utilized in the allocation of the employee's pay, the incorrect employee's time was used in the allocation of the employee's pay, or there were unsupported amounts added to the allocation of the employee’s pay, and  Payroll transactions: Seven instances of errors totaling a net amount of $109 (an absolute value amount of $4,405) where an unsupported allocation percentage was used to allocate the employee's pay to the grant - typically, employee salaries are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund.  Fringe-benefit transactions: Two instances of an error totaling $91 where an unsupported allocation percentage was used to allocate employer-paid employee insurance costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund.  Fringe-benefit transactions: Two instances of errors totaling $275 where employer-paid employee insurance and HSA contribution deductions per the employee's pay stub were allocated to the grant at a rate of 100%.  Non-payroll and fringe transactions: one instance of an error totaling $884 where an unsupported allocation percentage was used to allocate general costs to the grant - typically, costs are allocated to LSC and two other private grants using an allocation base of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund. Additionally, we noted inconsistency in the general fund (LSC and two other private grants) allocation basis used during the year - grant hours and projected revenue were both utilized at different times during the year. Additionally, we noted that allocations in the general fund are done using projected revenue. However as revenue was recognized as expenses were incurred for the general fund the allocation based on revenue approximated an allocation method based on costs. As such, the costs mentioned above were allocated in an inconsistent manner to other grant costs and were not fully representative of the employees’ time and effort. However, we noted a lower frequency of differences in sample selections that occurred during the last several months of the year after management implemented a change to its allocation processes in response to the prior year audit. 2024 – 002: Cost Allocation of Expenses to LSC Grants (Continued) Questioned Costs: A net amount of $3,150 of allocated salary expense described above, which is related to Assistance Listing Number 09.706060. Context: These 23 instances were noting during testing of 55 disbursements. Cause: The Organization’s cost allocation methodology is primarily based on time and effort records, and periodic calculations of a LSC cost driver for the period divided by the total cost driver coded to the Organization’s general fund, but it often includes manual adjustments based on review of individual time records, expense and other data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities and in a manner where costs are not applied uniformly to both LSC (or, federally)-funded and non-LSC (of, federally) -funded activities. Repeat Finding: The finding is a repeat of findings in the immediately prior year. The prior year finding numbers were 2023-003 and 2023-004. Recommendation: We recommend that the Organization consider updating its cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations that are calculated in a consistent manner that ensure costs are applied uniformly to respective benefited activities, and that are reflective on employees’ time and effort records Views of responsible officials: Management partially agrees with this finding. First, 45 CFR Part 1635 codifies the timekeeping requirement. CLS keeps track of every case and time dedicated by staff in strict compliance with this requirement. Additionally, the distribution of expenses in the general fund, which includes LSC and two other funding sources, represents a fair method and allocation. Regarding the questioned costs, CLS disagrees with the finding of material weakness given the extremely low total dollar value. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. Federal regulations state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities.

Significant deficiency in internal control over compliance and noncompliance related to allowable costs/cost principles compliance requirements. Federal Agency: U.S. Department of Treasury Pass-Through Entity: City and County of Denver Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number: 202474319 Criteria Nonfederal entities must follow the standards for documentation of personnel expenses set out at 2 CFR section 200.430(i). Under those standards, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, those standards require that the records a) reasonably reflect the total activity for which the employee is compensated by the nonfederal entity, not exceeding 100% of compensated activities; b) 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 which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity; and c) budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Budget estimates may be used for interim account purposes, provided that a) The system for establishing the estimates produces reasonable approximations of the activity performed; b) significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and c) the recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated Condition and Context The Organization maintains a timekeeping and payroll system for charges to federal awards that documents approved wage and salary rates, time and effort certification, hours, and actual amounts paid to employees. The Organization is allocating payroll costs to federal programs for individual employees using budget estimates of time and effort on different activities. The Organization maintains after-the-fact review documentation of time spent for each employee to support the allocation in the form of “Time and Effort” certifications that are signed by all employees and supervisors to verify actual time spent on major program. During our testing we noted two pay-periods for one employee where the Organization did not maintain the “Time and Effort” certification. Section III - Reportable Findings and Questioned Costs for Federal Awards Cause The Organization’s management noted that the missing certifications were due to the employee leaving employment before the certifications were completed for the two pay periods. The Organization did not have a process in place to ensure alternate certification documentation was created and retained in the situation of terminated employees. Effect The effect is that the Organization is not in compliance with the requirements of 2 CFR section 200.430(i) for the two pay periods for this employee. For two pay-periods for one employee the payroll costs charged to the major program were not supported by documentation of after-the-fact review evidencing that those costs reasonably reflect the work actually performed on the activity. Questioned Costs The expenditures for the two pay periods for the one employee totaled of $8,846. Repeat Finding This is not a repeat finding. Recommendation We recommend management update its internal control process for employees who depart or are unable to certify their timesheets to ensure all time spent on federal programs is certified by employees and their supervisors. Views of Responsible Official and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.