Findings Citing § 200.430

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.

EPIDEMIOLOGY AND LABORATORY CAPACITY FOR INFECTIOUS DISEASES (ELC) – 93.323 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS) Federal Award Fiscal Years: 2019 to 2027 Federal Award Number: NU50CK000519 Administered by: Rhode Island Department of Health (RIDOH) IMMUNIZATION COOPERATIVE AGREEMENTS – 93.268 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS) Federal Award Fiscal Years: 2019 to 2025 Federal Award Number: NH23IP922618 Administered by: Rhode Island Department of Health (RIDOH) DRINKING WATER STATE REVOLVING FUND – 66.468 Federal Awarding Agency: Environmental Protection Agency Federal Award Fiscal Years: 2022-2030 Federal Award Numbers: 99126120, 99126122, 99126E22, 99126S22, 99126L22, 99126123, 99126E23, 99126S23, 99126121and 99126L23 Pass-through Entity: Rhode Island Infrastructure Bank (RIIB) Administered by: Rhode Island Department of Health (RIDOH) Compliance Requirement: Allowable Costs/Cost Principles TIME AND EFFORT REPORTING RIDOH controls over time and effort reporting are lacking to ensure accurate allocations and reimbursements from federal programs. Background: RIDOH has built and implemented a complex time-reporting system using internal worksheets for employees to allocate time spent on various activities during the pay periods. Reconciliations of the hours worked versus the hours charged to the State’s payroll and accounting systems are performed quarterly. Recorded amounts are adjusted quarterly (using quarterly variance reports prepared using a spreadsheet application) accordingly to ensure charges to the federal programs are consistent with actual time worked on the various programs. Criteria: 45 CFR §75.430(i)(1) and 2 CFR §200.430(g)(1) require that “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed.” Condition: Our testing of personnel costs and payroll allocation controls identified a variety of documentation discrepancies and control deficiencies for the ELC, Immunization, and DWSRF programs. As part of our testing, we determined a complete population of RIDOH personnel by payroll period that we reconciled to the State accounting system to validate the completeness of payroll costs charged directly to the programs. For each program tested, we randomly selected 40 distinct RIDOH employee time reporting periods (2-week periods with weekly timesheets) to test the accuracy and completeness of time and effort reporting. For each employee selected, we verified that the time reported for the period selected agreed to RIDOH’s internal worksheets that supported the personnel cost allocation adjustments made by RIDOH. Once the employee time was verified, we determined if the adjustment required for that employee to adjust the respective allocation of personnel costs to the program agreed to the adjustments posted to the State accounting system. These procedures noted the following: • Our procedures commonly noted discrepancies between required adjustments per the quarterly variance report and the actual adjustments posted in the accounting system. We noted exceptions in 39 of the 120 adjustments (33%) selected for testing, which were provided to RIDOH to research and make any necessary corrections. The actual amount of personnel expenditures incorrectly allocated to federal programs remained undetermined as RIDOH efforts to review the adjustments and reported discrepancies remained incomplete. • To evaluate the significance of potential personnel misstatements by program, we conducted analytical procedures of personnel expenditures charged in fiscal 2024 where audit work performed found that personnel expenditures charged to the program were supported by RIDOH. Our analytical procedures found that personnel expenditures charged to the ELC, Immunization, and DWSRF programs in fiscal 2025 were reasonably consistent as a percentage of total program expenditures with fiscal 2024. We relied on this analysis, and other considerations, to conclude that while RIDOH made clerical errors when adjusting payroll allocations amongst federal grants, the amount of likely personnel expenditures improperly allocated to these programs in fiscal 2025 was not deemed to be material to the programs as a whole. • Our review of sampled timesheets (240 weekly timesheets) in conjunction with time and effort reporting noted isolated instances where timesheet documentation and/or supervisory review and approval were deficient. Cause: Current policies and procedures were ineffective to ensure amounts claimed and reimbursed by Federal programs for personnel costs were reflective of the actual work performed on the various programs/projects listed. Personnel changes, in conjunction with a lack of documented policies and procedures, during fiscal 2025 contributed to the difficulties in adjusting personnel cost allocations cited above. Effect: Personnel costs reimbursed from Federal awards could be unallowable due to insufficient support and/or improper allocation. Questioned Costs: Undetermined Valid Statistical Sample: Yes RECOMMENDATIONS 2025-043a Enhance reporting of time and effort for general timesheet category activities to improve documentation and support for personnel costs charged to Federal programs. RIDOH should explore capabilities in the State’s new ERP system to allow for direct charging of personnel costs through time and effort reporting directly in the ERP. 2025-043b Ensure all payroll allocation adjustments are supported by complete, accurate, and independently verifiable documentation. 2025-043c Review all payroll allocation entries that were not supported by RIDOH’s internal worksheets and determine if additional adjustment of personnel costs to federal programs is required.

2 CFR 200.430(a) states that compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Compensation for personal services may also include fringe benefits addressed in § 200.431. Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the recipient or subrecipient consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with the recipient's or subrecipient's laws, rules, or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (g) of this section, when applicable. In addition, District Policy #6116 - Time and Effort Reporting states, in part, that Section 200.430 of the Code of Federal Regulations requires certification of effort to document salary expenses charged directly or indirectly against Federally-sponsored projects. This process is intended to verify that compensation for employment services, including salaries and wages, is allocable and properly expended, and that any variances from the budget are reconciled. Compensation for employment services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Compensation for personal services may also include fringe benefits, which are addressed in 2 C.F.R. 200.431 Compensation-fringe benefits. Costs of compensation are allowable to the extent that they satisfy the specific requirements of these regulations, and that the total compensation for individual employees: A. is reasonable for the services rendered, conforms to the District’s established written policy, and is consistently applied to both Federal and non-Federal activities; and B. follows an appointment made in accordance with the District’s written policies and meets the requirements of Federal statute, where applicable. Semi-annual certifications and time-and-effort documentation are used to support salary amounts charged to a federal program. Semi-annual certifications are allowed when an employee’s compensation is funded by only one federal grant. The School District did not complete semi-annual certifications or time-and-effort documentation for 3 employees tested that were charged to the Special Education Cluster AL #84.027/84.173 federal program for the period of July 2024 through June 2025. Failure to complete time and effort certifications after the time worked could lead to questioned costs being issued in future audits as well as possible reductions in future federal funding. The School District should establish and implement procedures to verify that all employees charging salaries and benefits to federal grants and completing semi-annual certifications, sign/certify the time spent on the grant subsequent to the time period worked.

Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027, 84.173 Federal Award Identification Number and Year: H027A230076 (9/8/2023 – 9/30/2025), H027A240076 (9/10/2024 – 9/30/2026), FH027A230076 (11/3/2023 – 9/30/2024) Pass-Through Agency: Massachusetts Department of Elementary and Secondary Education Pass-Through Number(s): 240-000558-2024-0700, 240-000558-2025-0700, 274-000662-2025-0700 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Qualified Opinion) Criteria or specific requirement: Under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200), specifically 2 CFR §200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, the non-Federal entity is required to have written procedures and a system of internal controls to ensure that charges for compensation are accurate, allowable, and properly allocated to each applicable cost objective. Condition: For the year ended June 30, 2025, The District did not maintain adequate time and effort documentation to support payroll costs charged to the Special Education (SPED) program. Specifically, for a sample of employees whose compensation was partially or fully charged to SPED, required time and effort certifications were either missing, incomplete, or did not clearly support the allocation of time between SPED and non‑SPED activities. Questioned costs: $88,558 Context: During testing of payroll expenditures it was identified that the District was not able to provide the time and effort documentation required for SPED payroll expenditures. Cause: District procedures for monitoring and retaining time and effort documentation were not consistently implemented. In addition, management oversight procedures did not ensure that required certifications were completed timely, reviewed for accuracy, and retained in accordance with federal requirements. Effect: Without adequate time and effort documentation, the District is unable to demonstrate that payroll expenditures charged to the SPED program were allowable and allocable. This condition increases the risk that federal funds may have been charged for costs not properly supported or not benefiting the SPED program, resulting in noncompliance with federal grant requirements. Repeat Finding: No. Recommendation: Establish and formally document procedures to ensure time and effort documentation is completed in accordance with federal requirements. Require periodic review of procedures by management to verify accuracy and completeness. Ensure all time and effort documentation is properly retained and readily available for audit purposes. Provide training to applicable staff on federal time and effort documentation requirements for SPED programs. Views of responsible officials: There is no disagreement with the audit finding.

2025-003 Internal Control Over Payroll Charged to Federal Awards Program Information Federal Agency U.S. Department of Health and Human Services Assistance Listing Numbers 93.224 Health Centers Program Cluster Award Numbers H80CS00055, H8GCS48089 Criteria Under 2 CFR 200.303, the auditee is required to establish, document, and maintain effective internal control over federal awards, and under 2 CFR 200.430, compensation charged to federal awards must be supported by records that accurately reflect work performed and provide reasonable assurance that charges are accurate, allowable, and properly allocated. [ ] Compliance Finding [X] Significant Deficiency [ ] Material Weakness Condition During fiscal year 2025, we noted that payroll rates used to charge employees’ compensation to the federal award were not reviewed and approved in accordance with the auditee’s established payroll control process. A sample size of 25 employees included 5 employees for which there was no evidence the rate of pay used was approved by the appropriate level per Clinic policy. Cause The auditee did not consistently perform or retain evidence of the payroll-rate approval for employees whose wages were charged to federal awards due to turnover in payroll personnel and insufficient monitoring. Effect Without evidence that payroll rates were reviewed and approved, there is a reasonable possibility that unallowable, inaccurate, or improperly allocated payroll costs could be charged to the federal award and not be prevented, or detected and corrected, on a timely basis. Questioned Costs No questioned costs were identified as a result of this finding. All wages paid were considered reasonable based on the work performed. Recommendation We recommend the Clinic implement a documented payroll-rate approval process, require evidence of approval before payroll costs are charged to federal awards, periodically review payroll-rate changes, and retain approval documentation as part of the official payroll records. Views of responsible officials and planned corrective action White Bird Clinic agrees with this finding. With the onboarding of a new Director of Human Resources, best practices around payroll documentation have been implemented. This includes individual forms for all wage changes per employee. Approval is documented with Supervisors’ signatures on these forms. The wage form is used to update the payroll system and a final accuracy review is performed by the HR Director to verify the updated rate matches the approved change form. The approved wage forms are securely stored in the Human Resources files.

Agency: U.S. Department of Health and Human Services Federal Assistance Listing Number: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.958 Block Grants for Community Mental Health Services, 93.959 Block Grants for Prevention and Treatment of Substance Abuse. Criteria: In accordance with 2 CFR §200.430(i) of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), compensation for personal services charged to federal awards must be based on records that accurately reflect the work performed. When budget estimates are used for interim accounting purposes, they must: produce reasonable approximations of the activity actually performed, be reconciled to actual effort on a regular basis, and be adjusted in a timely manner to reflect significant changes in work activity. Documentation may include timesheets, effort certifications, payroll distribution reports, and other personnel activity records, and must be reviewed and approved by authorized personnel. Condition and Context: The Organization did not maintain documentation evidencing a hindsight review of employee working hours to verify alignment between actual hours worked and budgeted hours. This oversight was noted in instances where payroll costs for individual employees were allocated across multiple federal programs. While a time and effort certification was lacking for the items included in our sample, there was evidence of work performed on the grants and the amounts allocated aligned closely to the budget. Questioned Costs: We were unable to quantify an amount of questioned costs. While a time and effort certification was lacking for the items included in our sample, there was evidence of work performed on the grants and the amounts allocated aligned closely to the budget. Therefore, we were unable to quantify the amount of questioned costs. Cause: The Organization has not established or enforced formal policies and procedures requiring the documentation of time and effort for employees. Effect: The lack of documentation of hindsight review increases the risk of inaccurate payroll cost allocations and potential noncompliance with federal grant requirements. Recommendation: The Organization should update its policies and procedures to require and document a formal hindsight review of employee working hours. This review should verify that actual hours worked align with budgeted hours, particularly in cases where payroll costs are allocated across multiple federal programs. The updated procedures should include clear guidelines for conducting and retaining evidence of such reviews to support accurate cost allocations and ensure compliance with federal grant requirements.

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBERS 84.425D AND 84.425U PASS-THROUGH NUMBER 5440 AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 2025-005. Allowable Costs/Cost Principles Criteria or specific requirement: Office of Management and Budget (OMB) 2 CFR 200.430(g)(1) requires that salaries and wages charged to federal awards must be based on records that accurately reflect the work performed. Condition: Time distribution certifications that support salaries and wages charged to the Education Stabilization Fund were not maintained. A similar finding was noted in the prior year. Cause: Procedures are in place for personnel to review the accuracy of the time distribution certifications. However, these procedures were not followed in the current year. Effect or potential effect: Without proper documentation, it cannot be verified that salaries and wages charged to program were based on actual time spent on allowable program-related activities. Questioned costs: $19,396. Context: A sample of 4 employees from a population of 31 employees. Our sample was not a statistically valid sample. Identification as a repeat finding: Yes Recommendation: The Charter School should follow procedures established to ensure charges are accurate, allowable, and properly allocated. Views of responsible officials: The School has now made personnel and policy changes, and established procedures regarding time certifications that provide assurance that charges are accurate, allowable, and properly allocated.

Finding 2025-011 – Child Nutrition Cluster – Inadequate Payroll Support and Documentation Federal Agency: U.S. Department of Agriculture Federal Program: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559 Compliance Requirement: Activities Allowed and Allowable Costs/Cost Principles Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria Pursuant to 2 CFR §200.430, compensation for personal services charged to Federal awards must be based on records that accurately reflect the work performed and must be supported by a system of internal controls that provides reasonable assurance that charges are accurate, allowable, and properly allocated. Additionally, 2 CFR §200.302 requires non-Federal entities to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the entity is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should include procedures to ensure payroll costs charged to Federal awards are supported by approved timesheets, approved compensation rates, supervisory review, and adequate documentation retention practices. Condition During testing of payroll expenditures charged to the Child Nutrition Cluster, UHY identified instances where required payroll documentation was not available for review. Specifically, management was unable to provide approved timesheets for certain employees selected for testing and was unable to provide approved compensation documentation for other employees. In addition, UHY identified payroll instances where the approved hourly rate did not agree to the effective hourly rate calculated from payroll records, and management was unable to provide supporting documentation explaining the differences. Context The Child Nutrition Cluster reported approximately $788,550 in Federal expenditures during the fiscal year ended June 30, 2025. UHY tested payroll expenditures charged to the program as part of its procedures over Activities Allowed and Allowable Costs/Cost Principles. The exceptions identified were not isolated to a single payroll transaction and included multiple instances of missing support and unsupported payroll rate variances. Because required documentation was not maintained or available for review, UHY was unable to verify that all payroll costs tested were properly supported, approved, and allowable under the Child Nutrition Cluster. Cause Management did not maintain complete payroll documentation and did not have procedures in place to ensure approved timesheets, compensation authorizations, and payroll calculations were consistently retained and available for review. Existing review procedures were not sufficient to ensure that payroll charges to the Child Nutrition Cluster were adequately documented and supported in accordance with Federal requirements. Effect Because supporting documentation was not available, UHY was unable to verify that certain payroll costs charged to the Child Nutrition Cluster were properly supported, approved, and allowable. The lack of documentation increases the risk that payroll expenditures may be misstated, unauthorized, inaccurately calculated, or charged to Federal programs inappropriately. Furthermore, the inability to produce required payroll documentation impairs management's ability to demonstrate compliance with Uniform Guidance requirements and constitutes a material weakness in internal control over compliance because there is a reasonable possibility that material noncompliance could occur and not be prevented or detected on a timely basis. Identification as a Repeat Finding, if Applicable No. Questioned Costs None identified. UHY was unable to determine questioned costs for all items selected for testing because supporting documentation was not available. Recommendation Management should strengthen controls over payroll documentation and record retention to ensure that approved timesheets, compensation authorizations, and payroll support are maintained and readily available for audit and review. Management should also implement procedures requiring supervisory review of payroll calculations and verification that payroll charges agree to approved compensation rates prior to processing and charging costs to Federal awards. Documentation supporting payroll charges should be retained in accordance with established record retention policies and Uniform Guidance requirements. Responsible Official Superintendent of Schools and Finance Director Views of Responsible Official The County concurs with the recommendation. The personnel action process as described in Section II of this document was implemented to correct this finding for the proper pay rates. Internal controls should be enhanced to ensure that all payroll charges are supported by approved timesheets prior to processing. School Management should review procedures to be implemented to verify payroll calculations and compensation rates, and documentation retention practices will be strengthened to ensure all required support is maintained and readily available for audit purposes.

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 controls; -Be incorporated into the official records of the non‑Federal entity; -Reasonably reflect total activity for which the employee is compensated; -Support distribution among specific activities or cost objectives. Commonly accepted forms of support include Personal Activity Reports (PARs), timesheets, or an equivalent system documenting actual time worked. Condition: During our testing of payroll charges for employees whose salaries were allocated to the programs, we noted that the entity improperly allocated funds for an employee based on time for a different employee based on the documentation provided supporting the distribution of time to the federal program. Context: Documentation was not properly maintained for support of all employees' salaries and wages tested. Cause: The District has had vacancies in certain positions that are key parts of the District's control processes which led to the District not maintaining proper documentation. Effect or Potential Effect: Without adequate expenditure documentation, there is an increased risk that payroll costs charged to the federal award are inaccurate or unallowable. The lack of supporting records may result in questioned costs related to unsupported salary expenditures. Questioned Costs: None Recommendation: We recommend that the entity: - Implement and enforce policies requiring Personal Activity Reports or an equivalent method that meets 2 CFR 200.430. - Train employees and supervisors responsible for documenting and approving time charged to federal programs. -Maintain documentation that accurately reflects actual time worked on federal awards

Federal Program: ALN 93.575 Child Care and Development Block Grant (CCDBG) Category: Compliance Compliance requirements: Allowable Costs / Cost Principles Record retention Condition: BGCPR did not maintain sufficient documentation to demonstrate compliance with minimum personnel qualification requirements. Criteria: Pursuant to 2 CFR §200.430(a)(2), costs of compensation are allowed only to the extent that the total compensation for individual employees follows an appointment made in accordance with the recipient's or subrecipient's laws, rules, or written policies Additionally, 2 CFR §200.303(a) requires recipients and subrecipients to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, 2 CFR §200.403(g) requires costs charged to Federal awards to be adequately documented. Moreover, pursuant to 2 CFR §200.334, recipients and subrecipients must retain all Federal award records, including financial records, supporting documentation, and statistical records, for a minimum of three years from the date of submission of the final financial report. If litigation, claims, or audit findings are initiated before the expiration of the retention period, the records must be retained until all such matters are resolved and final action has been taken. Context: During testing of four payroll-related transactions selected for Allowable Activities and Allowable Costs compliance testing, we noted that one sampled employee did not meet the minimum educational and experience qualifications established for the position. Cause: For one payroll-related item, the personnel file did not contain documentation demonstrating that the employee met the minimum educational and experience qualifications established for the position. The employee did not possess the required bachelor's degree at the time of promotion. Although management subsequently provided an undated narrative explaining the basis for the hiring decision, no supporting documentation evidencing an approved exception at the time of promotion was maintained in the personnel file. Questioned cost: Amount is below the threshold to be considered a questioned cost. Effect or potential effect: As a result, BGCPR could not demonstrate that the employee's appointment was made in accordance with its established hiring requirements. Consequently, compensation costs charged to the Federal award may not be fully supported as allowable. Recommendation: Ensure personnel files contain documentation demonstrating that employees meet the minimum qualifications for their positions and retain evidence of any approved exceptions or waivers supporting hiring or promotion decisions. Views of officials responsible: BGCPR will provide additional training and guidance to Human Resources personnel to ensure consistent adherence to the internal procedures established. Anticipated completion date: September 30, 2026

Federal Program: ALN 93.575 Child Care and Development Block Grant (CCDBG) Category: Compliance Compliance requirements: Allowable costs Record retention Condition: The BGCPR did not maintain sufficient documentation to demonstrate compliance with employee background check requirements. Criteria: Pursuant to 2 CFR §200.430(a)(2), compensation costs are allowable when appointments are made in accordance with the recipient's written policies and procedures. Further, 2 CFR §200.303(a) requires recipients to establish and maintain effective internal controls to ensure compliance with applicable requirements. Additionally, 2 CFR §200.403(g) requires costs charged to Federal awards to be adequately documented. Moreover, pursuant to 2 CFR §200.334, recipients and subrecipients must retain all Federal award records, including financial records, supporting documentation, and statistical records, for a minimum of three years from the date of submission of the final financial report. If litigation, claims, or audit findings are initiated before the expiration of the retention period, the records must be retained until all such matters are resolved and final action has been taken. Per the BGCPR Human Resources Policies and Procedures Manual, specifically the Required Certifications and Background Check Policy, all employees and leaders must maintain current required certifications and documentation, including Criminal Record Certificate, Health Certificate, Law 300 Certificate, Educational Credentials, and Fingerprint Verification, and must successfully complete applicable background checks before perform their duties. Failure to comply with these requirements may result in restrictions from performing job responsibilities and may affect continued employment. Context: We found that two (2) of the four (4) sample employees lacked documentation, evidencing compliance with BGCPR's required background check procedures. Cause: For two (2) payroll-related items, the personnel files did not contain evidence demonstrating that required background checks had been completed in accordance with the BGCPR's hiring policies. For one employee, the background check was performed after the employee's recruitment date. For the second employee, the required background check documentation was not available in the personnel file at the time of the audit. Although management subsequently provided the documentation after the exception was identified, the evidence indicated that the background check report was printed in July 2026. Accordingly, the personnel files did not contain sufficient documentation to support compliance with the BGCPR's background check requirements during the audited period. Questioned cost: Amount is below the threshold to be considered a questioned cost. Effect or potential effect: As a result, BGCPR could not demonstrate that the employees were hired in accordance with established hiring requirements or that compensation costs charged to the Federal award were supported by adequate documentation. Recommendation: Ensure personnel records are complete, accurate, and maintained in accordance with established policies and procedures Views of officials responsible: BGCPR will provide additional training and guidance to Human Resources personnel to ensure consistent adherence to the internal procedures established. Anticipated completion date: September 30, 2026

FA 2025-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Award Numbers: S010A240010 (Year: 2025), S010A230010 (Year: 2024) Questioned Costs: $127,026 Repeat of Prior Year Findings: FA 2024-001, FA 2023-001, FA 2022-001 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it related to the Title I Grants to Local Educational Agencies program. Background Information: The Title I Grants to Local Educational Agencies (Title I) program is authorized under the Elementary and Secondary Education Act of 1965 to help local educational agencies (LEAs) improve teaching and learning in highpoverty schools in particular for children failing or most at-risk of failing, to meet challenging state academic standards. LEAs may operate targeted assistance programs in which children who are failing or most at-risk of failing may be served or schoolwide programs in which all children in eligible schools may be served. Title I funding is granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED), and GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. Title I funds totaling $621,294 were expended and reported on the Talbot County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) …Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (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…” Condition: A sample of ten nonpersonal expenditures was randomly selected for testing using a nonstatistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For three expenditures, evidence of review and approval was not reflected within the voucher package totaling $3,597. • For one expenditure, the amount recorded on the general ledger did not agree to supporting documentation resulting in a difference of $112. In addition, a sample of eleven employees was randomly selected for testing using a nonstatistical sampling approach. These employees were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For two employees, supporting documentation could not be provided to support payments totaling $126,674. • For one employee, the amount paid did not agree to the supporting documentation provided and resulted in an overpayment of $240. Questioned Costs: Upon testing a sample of $16,775 in nonpersonal services expenditures, known questioned costs of $112 were identified for expenditures not supported by adequate documentation. Using the total nonpersonal services expenditures population of $101,353, we project the likely questioned costs to be approximately $678. Upon testing a sample of $136,554 in personal services expenditures, known questioned costs of $126,914 were identified for expenditures not supported by adequate documentation. Using the total personal services expenditures population of $356,564, we project the likely questioned costs to be approximately $331,393. Cause: In discussing the deficiencies with the School District, they believe that these items are primarily due to improper documentation retention and oversight of approval processes. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to ensure that expenditures and employee compensation payments associated with the Title I program are made for the appropriate amount and supported by appropriate documentation could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Title I program fund as GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control processes regarding the retention of documentation to support expenditures and employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately documented and to ensure that Title I program employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.

FA 2025-002 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425U210012 (Year: 2024) Questioned Costs: $20,040 Repeat of Prior Year Findings: FA 2024-002, FA 2023-002, FA 2022-002 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund Program revealed that the School District’s internal control procedures were not operating to ensure that expenditures were appropriately documented to support allowability. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID- 19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $1,052,459 were expended and reported on the Talbot County School District’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation–Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements… and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the recipient or subrecipient consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a recipient’s or subrecipient’s laws, rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (g)…, [as follows:] (g) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the recipient or subrecipient…” Condition: All journal entries and general ledger adjustments impacting program expenditures were selected for testing. The following deficiencies were noted: • For one of the four items tested, appropriate evidence of review and approval was not maintained. • Sufficient supporting documentation was not provided for one journal entry posted to reverse expenditure activity. • For one journal entry used to record expenditures totaling $7,046 in the ESSER fund, sufficient supporting documentation could not be provided to determine the allowability of $889 of the expenditures moved to the program. In addition, a sample of eight employees was randomly selected for testing using a nonstatistical sampling approach. These employees were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements met. The following deficiencies were noted: • Evidence of properly designed and implemented controls over personal services expenditures could not be provided. • For seven employees, supporting documentation was not maintained to support salaries totaling $19,151. Questioned Costs: Upon testing a sample of $31,426 in personal services expenditures, known questioned costs of $19,151 were identified for expenditures not supported by adequate documentation. Using the total personal services expenditures population of $121,406, we project the likely questioned costs to be approximately $73,985. In addition, known questioned costs of $889 were identified for expenditures not supported by adequate journal entry documentation and were not tested as part of a sample; therefore, there are no related projected questioned costs. Cause: In discussing these deficiencies with the School District, they believe these issues are due to improper documentation retention and the need for updated policies and procedures. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to ensure that documentation exists to support the allowability of payments from the ESSER program could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the ESSER program fund as GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their current internal control processes related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect evidence of review and approval and are supported by appropriate documentation. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly.

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

Type of Finding: Significant Deficiency in Compliance and Internal Control over Compliance Federal Agency: Department of Housing and Urban Development; Department of Veterans Affairs Federal Program Name: Emergency Solutions Grant Program; Veterans Affairs Supportive Services for Veteran Families Program Assistance Listing Number: 14.231; 64.033 Federal Award Identification Number and Year: 14.231: HCS-24-31-2401-007, HCS-23-32-2301-007, HCS-24-32-2401-007, SC-111170, CW2254906, CW2259491, SC-111171 64.033: 20-WA-146 - 10/1/23-9/30/26, 2020-WA-146-LT - 8/19/22-9/30/26 Pass-Through Agency: 14.231: Snohomish County Office of Housing, Homelessness & County Development, City of Tacoma, Pierce County Human Services 64.033: N/A – Direct Pass-Through Number(s): 14.231: HCS-24-31-2401-007, HCS-23-32-2301-007, HCS-24-32-2401-007, SC-111170, SC-111171, CW2259491, CW2254906 64.033: N/A – Direct Award Period: 14.231: July 1, 2024 – June 30, 2025; October 1, 2023 – September 30, 2024; October 1, 2024 – September 30, 2025; November 1, 2022 – December 31, 2024; July 1, 2024 – June 30, 2026 64.033: October 1, 2023 – September 30, 2026; August 19, 2022 – September 30, 2026 Criteria or specific requirement: 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." Condition: 14.231: 2 of 40 payroll expenditures tested was not subject to the timely use of internal control process that reasonably assures that the payroll charges were accurate, allowable, and properly allocated. For 64.033, there was 2 of 40 payroll expenditures tested that lacked appropriate and timely review. In total, there were 4/80 payroll transactions that lacked adequate documentation of the key control. Questioned costs: None Context: 14.231: During testing of payroll disbursements CLA noted that one employee's timecard was not approved by a manager for one pay period in September 2024. The internal control was eventually performed in November 2024, 44 days after CLA would expect to see management review & approval of the employees’ timecard. A second employee's timecard showed timecard review but not approval. 64.033: During testing of payroll disbursements CLA noted that 2 samples had timecards that were not subject to timely review & approval (lack of internal control). Cause: The lack of timely approval appears to have occurred due to an oversight by the person responsible for performing the internal control. Additionally, there was no internal process for ensuring that the internal control was performed by a different employee if the original employee responsible for performing the control separated from the entity. Upon separation of a manager who is responsible for performing this control, a temporary manager with sufficient knowledge of the employee's work, programs worked, and program requirements should be assigned to perform the control to ensure compliance with allowable costs and accurate billing of payroll expenses. Effect: Inadequate allocation of wages to federal programs may result in noncompliance with grant regulations. This can also lead to overcharging the federal grant, which may result in penalties or repayment obligations. Repeat Finding: 2024-002 Recommendation: CLA recommends implementing a process that ensures the control is performed timely by an alternative employee with sufficient understanding of the program requirements to accurately review and approve cost allocations that meet documented time and effort spent on each program. This will include ensuring an appropriate timesheet reviewer is assigned, and that an appropriate back-up reviewer is available. Views of responsible officials: There is no disagreement with the audit finding.

Finding 2025-109 Federal Program Name Research and Development Cluster (R&D) Federal Awarding Agency Various State Agency University of Montana - Missoula (university) ALN # Various Grant # Various Compliance Requirement A. Activities Allowed/Unallowed B. Allowable Costs/Cost Principles H. Period of Performance N. Special Tests and Provisions Type of Finding Material Weakness (A, B, H) Material Noncompliance (A, B) Significant Deficiency (N) Questioned Costs 15.R&D: $34,044 15.247: $1,041 Criteria: Federal regulation, 2 CFR 200.430(g)(1)(i) 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.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The university did not follow established controls to certify payrolls charged to grants. As a result, payroll expenses charged to various grants were not certified as required by federal regulations. Questioned Costs: From our sample, questioned costs were accumulated based on payrolls charged to grants that were not approved. From this, we identified known questioned costs of $35,085. $24,439 of questioned costs occurred in FY24 and $10,646 of questioned costs occurred in FY25. From review of summary-level payroll information additional payrolls were not approved, leading estimated questioned costs to be higher. Context: The Office of Sponsored Programs (OSP) at the university administers the grant, while the Principal Investigator (PI) (normally faculty) is responsible for carrying out the grant. The university manages R&D grant awards in three stages: Pre-Award: A PI identifies a funding opportunity and works with OSP to document proposed funding details, including salaries, budget, and subawards. Award Management: OSP staff record award information and conduct regular financial reviews to assess whether expenses are allowable as charged to the project. PI’s oversee the award’s progression and certify staff time on the grant. Post-Award: When an award ends, OSP staff use a checklist to complete close-out procedures, including reconciling expenses and performing final billing. Federal regulations require that salary and wage charges to federal awards be based on records that accurately reflect work performed and are supported by internal controls that provide reasonable assurance that charges are accurate, allowable, and properly allocated. The university fulfills this requirement through a Personnel Activity Report (PAR). After each pay period, employees approve their time allocations to each grant, and PIs certify both their own time and the employees’ time charged to their grant. If a PI does not act, the PAR system sends two notifications to the PI to certify payroll. After the second notification, the PAR system is to alert the OSP Director so they can follow up directly with the PI. We performed testing of a random nonstatistical sample of 15 personal services transactions from a population of 222,024 transactions, 4 transactions had not been certified. Because certification is required for costs to be allowable, these costs were deemed unallowable. Additional uncertified payroll expenses charged to federal grants were also identified during the same pay period for those employees and included in questioned costs. For example, the two payrolls that occurred under a grant in October 2023 had 4 employees whose total uncertified payroll was $7,813. A different grant for the pay periods in October 2024 had 3 employees charge time to the grant that was not certified that totaled $2,720. A broader review of PARs across the audit period indicated additional grants and payrolls may be affected where PIs had not approved payroll. Effect: The university is not in compliance with the federal requirement to maintain effective internal controls over federal awards. The university is also noncompliant with federal requirements that salaries and wages charged to federal grants be based on records that accurately reflect the work performed. Consequences may include clawback of unallowed amounts, suspension or termination of federal awards, or heightened monitoring by federal awarding agencies. Cause: The university experienced staffing turnover and performance issues, causing some employees to be unaware of which grants they were responsible for reviewing. This led to missed reviews and missing documentation in grant files. The PAR system was also not configured to notify the new OSP Director when PIs failed to approve PARs after their notifications. As a result, the OSP did not receive notifications that these payrolls had not been certified. Recommendation: We recommend the University of Montana - Missoula: A. Ensure that charges to federal awards for salaries and wages are based on records that actively reflect the work performed. B. Follow established internal controls to provide reasonable assurance that charges to federal awards for salaries and wages are accurate, allowable, and properly allocated. Views of Responsible Officials: The department concurs with this recommendation. For additional information regarding the department’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2025-069 Federal Program Name Education Stabilization Fund (ESF) (COVID-19) Federal Awarding Agency U.S. Department of Education State Agency Office of Public Instruction (office) ALN # 84.425D and 84.425U Grant # S425D200006, S425U210006, S425D210006 Compliance Requirement B. Allowable Costs/Cost Principles Type of Finding Material Weakness and Material Noncompliance Questioned Costs $668,828 Criteria: Federal regulation, 2 CFR 200.403(c) and (g) states, that for costs to be allowable, they must be consistent with policies and procedures that apply uniformly to both federal-financed and other activities of the recipient. They also must be adequately documented. Federal regulation, 2 CFR 200.413(c), states that administrative and clerical staff salaries should normally be treated as indirect costs. Federal regulation, 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. The records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The office charged salaries to the ESSER grant as direct costs for staff whose positions are normally recovered through indirect cost collections. Supporting documentation was not available to show that these staff worked directly on the grant. The office also applied an indirect cost rate to those direct salary charges, which is not permitted under federal regulations. Questioned Costs: In total, we question $668,828 in costs calculated as described below. Context: During the audit we noted the following situations: 1. Indirect cost overcharge: When indirect costs were moved out of the office’s indirect cost account, the amounts already allocated and charged to federal programs through the indirect cost fund were not reduced. This resulted in overcharging the ESSER program by an estimated $207,363 for indirect costs. We question costs in this amount. 2. Unallowable direct salary: Personal services costs for administrative and executive positions, including a Financial Manager, Budget Analyst, Chief Operating Officer, and Chief Information Officer, were moved from a non-federal funding source directly to the ESSER grant. No time-and-effort documentation was available to support these charges. We question these costs totaling $398,096. 3. Indirect cost rate applied to unallowable salary: The indirect cost rate was also applied to the salaries in item 2 above, effectively charging the federal government twice for a portion of the same costs. We question these additional costs totaling $63,370. Effect: The office did not comply with federal regulations, resulting in $668,828 in questioned costs. Questioned costs are based on actual amounts moved to the ESSER grant as well as the auditor’s calculation to prorate the federal share for the indirect costs that were removed from the indirect cost account. Cause: The office's internal controls were not sufficient to ensure that salaries and indirect costs charged to the ESSER grant were allowable and supported by adequate documentation. While the office indicated the administrative and executive positions worked on ESSER reports, presentations to community partners, and inquiries from schools, there was no documentation that supported this time and effort. The office has implemented time and effort controls; however, it was implemented subsequent to the ending of the ESSER program. Recommendation: We recommend the Office of Public Instruction: A. Strengthen internal controls over salaries and indirect costs to ensure only allowable and supported costs are charged to federal grants. B. Track and document time and effort on grants to support both direct and indirect charges, as required by federal regulations. Views of Responsible Officials: The office partially concurs with the recommendation as they noted administrative and management staff did work on the grant. Rebuttal of Views of Responsible Officials: We considered the office’s nonconcurrence. We agree that administrative and management staff could have direct charges to the grant as allowed under federal regulations. However, no time and effort documentation was provided to support these staff members worked directly on the grant to support the costs were allowable as a direct charge. As such, our recommendation stands.

Finding 2025-059 Federal Program Name Title I Grants to Local Educational Agencies Federal Awarding Agency U.S. Department of Education State Agency Office of Public Instruction (Office) ALN # 84.010A Grant # S010A220026, S010A230026, and S010A240026 Compliance Requirement A. Activities Allowed or Unallowed B. Allowable Costs/Cost Principles Type of Finding Material Weakness & Material Noncompliance Questioned Costs $1,104,982 Criteria: Federal regulation 2 CFR 200.403(a) and (g) states costs are allowable when they are necessary and reasonable for the performance of the federal award and adequately documented. Federal regulation 2 CFR 200.430 (g) states salaries and wages charged to a federal award must be based on records that accurately reflect the work performed. Paragraph 430(g)(1)(vii) (A) and (B) allows for budgeted estimates if the estimates produce reasonable approximations of the activity actually performed and significant changes are identified and entered into the records in a timely manner. Federal regulation 2 CFR 200.303 requires non-Federal entities to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the entity manages the award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The Office of Public Instruction (OPI) controls were not adequate to ensure compliance with federal regulations related to personal service costs. Questioned Costs: We question $1,104,982 of costs. This is the total for personal services for Title I for the audit period, less any staff who indicated they worked all of their time on the program and further adjusted for staff time supported (that we tested) for April – June 2026 that was supported by agency records . Context: The office added a new internal control in April of 2025 requiring staff to track time for their time spent on each Federal program. However, this control was not in place for 21 months of the audit period and documentation for some staff’s work on Title I could not be provided after implementation of the control. Therefore, we question $1,104,982 of costs. Since the office was not tracking time spent on each Federal program for 21 months of the audit period and documentation for all requested staff after implementation of the new control could not be provided, this resulted in material noncompliance. Repeat Finding: This is a repeat finding and was reported as Single Audit finding 2023-034 in the audit for the two fiscal years ended June 30, 2023. Effect: The office lacked controls to ensure that only salary and benefit costs for time worked on Title I were charged to the award. There is insufficient support to show that personal services costs were allocated to the federal program where the work was performed, resulting in $1,104,982 in questioned costs. Cause: Before April 2025, the office had not implemented a control requiring staff to track time spent on each federal program. Without this control, employees did not complete periodic time and effort certifications, and time was not confirmed as allocated to the correct state and Federal programs. Staff time allocations relied solely on budget estimates. Recommendation: We recommend the Office of Public Instruction: A. Continue to use enhanced internal controls to ensure personal services costs are adequately documented and reflect actual time and effort for the Title I program. B. B. Allocate personal service costs based on support for actual time and effort on the Title I program, in accordance with federal regulations. Views of Responsible Officials: The office concurs with the recommendation. For additional information regarding the office’s planned corrective action see the Corrective Action Plan starting on page D-1.

FINDING 2025-004 Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): BREAKFAST SY 24-25, LUNCH FY24-25, SUPPLY CHAIN SY 24-25, ADMIN 24-25, OPER FY 24-25, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context Internal controls were not effective in ensuring that supporting documentation of pay rates were retained for payroll expenditures. Six payroll expenditures paid from the School Lunch fund were tested, and documentation supporting the pay rates for these expenditures was not provided for audit. As a result, these expenditures were considered questioned costs totaling $12,697. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 26 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.1 states in part: "Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." INDIANA STATE BOARD OF ACCOUNTS 27 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause Management had not developed an adequate system of internal controls to ensure costs charged to the program were allowable and necessary for the operation of the program. Effect Without an effective review of the detailed records, federal expenditures were unallowable, which the funding agency could potentially recover. Questioned Costs Questioned costs in the amount of $12,697 were identified as described in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure costs that are charged to the program are allowable and necessary. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-007 Subject: Title I Grants to Local Educational Agencies - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A210014, S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Findings This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context Costs charged to grant funds must be adequately documented. To adequately document payroll expenses charged to the grant fund, contracts or other documentation supporting the employees' approved rates of pay are necessary. The School Corporation utilized a financial software system that has two different sides, an employee portal side and an administrator side. Employee contracts are approved by the employee, the Superintendent of Schools, and the President of the School Board within the system on the employee portal side. Once approved, the data in the employee portal side is fed into a process in the administrator side. The School Corporation could not provide a contract or approved payroll rate for 4 of 24 employees tested. As such, we could not verify the employee was paid their correct rates for hours spent working on grant-related activities. This resulted in known questioned costs of $103,640. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 35 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.1 states in part: "Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses INDIANA STATE BOARD OF ACCOUNTS 36 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause The School Corporation did not maintain or provide adequate documentation to support payroll expenses charged to the grant fund. While employee contracts are approved within the financial software system, the process lacked sufficient oversight and record retention practices to ensure that approved pay rates were accessible and verifiable. Effect Without access to approved contracts or documentation verifying payroll rates for 4 of the 24 employees tested, the School Corporation could not demonstrate that payroll costs charged to the grant were accurate and allowable. This lack of documentation resulted in known questioned costs totaling $103,640. Additionally, the absence of reliable records increases the risk of noncompliance with federal grant requirements and necessitates expanded audit procedures, which will likely lead to higher audit costs. Questioned Costs Questioned costs in the amount of $103,640 were identified as described in the Condition and Context. Recommendation The School Corporation should establish and enforce documentation procedures to verify payroll rates for all employees whose compensation is charged to federal grants. This includes maintaining approved contracts, salary schedules, and supporting records that clearly demonstrate the accuracy and allowability of payroll costs. A review and approval process by a second knowledgeable party should be implemented to ensure compliance prior to submission. Additionally, the School Corporation should provide necessary support and resources for staff involved in payroll and grant management to strengthen recordkeeping practices. These measures will reduce the risk of noncompliance, minimize questioned costs, and help control future audit expenses. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-012 Subject: Gaining Early Awareness and Readiness for Undergraduate Programs - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Gaining Early Awareness and Readiness for Undergraduate Programs Assistance Listings Number: 84.334 Federal Award Number and Year (or Other Identifying Number): P334A210080 Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context Costs charged to grant funds must be adequately documented. To adequately document payroll expenses charged to the grant fund, contracts or other documentation supporting the employees' approved rates of pay are necessary. The School Corporation utilized a financial software system that has two different sides, an employee portal side and an administrator side. Employee contracts are approved by the employee, the Superintendent of Schools, and the President of the School Board within the system on the employee portal side. Once approved, the data in the employee portal side is fed into a process in the administrator side. INDIANA STATE BOARD OF ACCOUNTS 44 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation provided approved payroll rate documentation that did not agree with the amount paid for eight of nine employees tested. As such, we could not verify the employee was paid the correct rate for hours spent working on grant-related activities. Seven of the employees were overpaid, and one of the employees was underpaid based on the approved payroll rate documentation that was provided. This resulted in known questioned costs of $2,981. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.1 states in part: "Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: INDIANA STATE BOARD OF ACCOUNTS 45 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (c) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (d) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause The School Corporation did not maintain or provide adequate documentation to support payroll expenses charged to the grant fund. While employee contracts were approved within the financial software system, the process lacked sufficient oversight and record retention practices to ensure that approved rates of pay were accessible and verifiable. Effect Without access to accurate approved contracts or documentation verifying payroll rates for 8 of the 9 employees tested, the School Corporation could not demonstrate that payroll costs charged to the grant were accurate and allowable. This lack of accurate documentation resulted in known questioned costs totaling $2,981. Additionally, the absence of reliable records increases the risk of noncompliance with federal grant requirements and necessitates expanded audit procedures, which will likely lead to higher audit costs. Questioned Costs Questioned costs in the amount of $2,981 were identified as described in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 46 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation management establish and implement an internal control system over payroll processes to ensure compliance with federal grant requirements. This includes developing formal procedures for documenting payroll charges to federal programs, review and approval processes by a second knowledgeable individual, and maintaining records to support all payroll expenditures. Staff involved in payroll and grant management should receive necessary support and resources regarding federal documentation standards and allowable cost principles. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-020 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U, 84.425W Federal Award Numbers (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-009. Condition and Context The COVID-19 - Education Stabilization Fund (ESF) established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act, was for the purpose of preventing, preparing for, or responding to the novel coronavirus. An effective internal control system was not in place at the School Corporation over payroll costs charged to grant funds. Payroll distribution reports were provided to the director responsible for the ESF grant compliance; however, documentation was not presented for audit as evidence of a review. Additionally, the following issues were detected: Vendor Disbursements The School Corporation was unable to provide supporting documentation for one vendor tested: LTIA, Inc. Although Memorandums of Understanding (MOUs) were initiated by the Treasurer, no evidence was provided to demonstrate that the MOUs were reviewed or approved by the School Board at the time of execution. Information provided was based on documentation generated by the School Corporation, including purchase orders, handwritten vendor claim forms, and copies of check payments. However, no itemized vendor invoices were submitted to substantiate the services provided or the payments made, nor to detail the nature of the services rendered. In addition, the School Corporation was unable to provide supporting documentation to verify student participation or substantiate any of the reported metrics associated with MOU agreements. This resulted in known questioned costs of $12,000. Payroll Records Out of 20 payroll transactions tested, the following errors were detected: INDIANA STATE BOARD OF ACCOUNTS 63 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)  One employee's authorized pay rate was $30 per hour; however, the issued paycheck reflected $40 per hour.  One employee's authorized stipend was $5,000; however, the issued paycheck reflected a payment of $5,500.  Pay rates for three employees could not be verified as the School Corporation was unable to provide documentation of a School Board-approved pay rate.  Eight stipends could not be verified as the School Corporation was unable to provide documentation confirming the School Board approval.  These issues combined resulted in known questioned costs of $50,845. The combined vendor and payroll issues resulted in known questioned costs of $62,845. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.1 states in part: "Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or INDIANA STATE BOARD OF ACCOUNTS 64 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Cause The School Corporation demonstrated weaknesses in documentation and compliance practices. Vendor contracts and payments lacked adequate supporting records, including evidence of the School Board approval for MOUs and itemized invoices. In addition, payroll records were incomplete, with missing documentation of the School Board approved pay rates limiting the ability to verify the accuracy and appropriateness of expenditures. INDIANA STATE BOARD OF ACCOUNTS 65 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without proper documentation, the allowability of grant expenditures cannot be substantiated, creating a risk that unallowable costs may be charged to the federal grant. In addition, incomplete payroll records prevent verification of compensation, heightening the risk of inaccurate payments, unsupported variances, and potential misuse of federal funds. Questioned Costs Questioned costs in the amount of $62,845 were identified as described in the Condition and Context. Recommendation To address these deficiencies, the School Corporation should strengthen documentation practices by ensuring all vendor contracts, MOUs, and invoices are properly reviewed, approved by the School Board, and retained. Payroll internal controls should be improved by reconciling authorized salary ordinances to actual pay rates, documenting hours worked, and retaining evidence of the School Board approval for all compensation. In addition, periodic monitoring and internal reviews should be implemented to verify adherence to federal grant requirements and School Corporation policies, thereby reducing the risk of noncompliance and enhancing accountability. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

Federal Agencies: U.S. Department of Agriculture Federal Program Names: Child and Adult Care Food Program Assistance Listing Numbers: 10.558 Pass-Through Agency: Commonwealth of Pennsylvania, Department of Education Pass-Through Number: 359-46-477-8 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Material Weakness in Internal Control over Compliance and Other Matters Criteria: Under the Uniform Guidance, costs charged to a federal award must be necessary, reasonable, allocable, consistent with the entity’s established policies, incurred during the award period, and adequately documented. In accordance with 2 CFR 200.403 and 2 CFR 200.430, payroll costs are allowable only when they are properly authorized and supported by records that accurately reflect the work performed. Accordingly, employee hours, including personal time off and overtime, should be recorded and compensated in the appropriate period based on the related time and effort performed. Condition: As part of our audit procedures, we selected a sample of 60 payroll transactions for review. Our testing included examining employee human resource files, including signed W-4 and I-9 forms, approved pay rates, timesheets with supervisory approval, and related payroll reports. We recalculated hours and compensation based on approved pay rates and compared the results to the payroll reports. During our review, we noted that management did not record and compensate all employee hours in the appropriate period based on the time and effort performed. Specifically, two employees were not properly compensated for one day of personal time off and 1.12 hours of overtime related to the administration of the CBS Food Program. These amounts were subsequently adjusted and paid in a later period. Questioned Costs: None Cause: Management did not consistently maintain and enforce internal controls over payroll documentation, review, and follow-up to ensure that payroll amounts, including personal time off and overtime, were accurately calculated, approved, and paid in the correct period. Although payroll support was maintained and available for audit, the review process did not identify the compensation differences before payroll was finalized, and the errors were not corrected until a subsequent period. Effect: Without proper documentation, approval, and timely review of payroll calculations, the Organization may charge unallowable, inaccurate, or inadequately supported compensation to the federal program. Payroll changes and compensation amounts, including personal time off and overtime, could be processed without appropriate authorization or correction in the proper period, increasing the risk of errors, unauthorized transactions, noncompliance with Uniform Guidance compensation requirements, and potential questioned costs. Repeat Finding: No Recommendation: We recommend that management strengthen its payroll review controls to ensure that employee compensation, including personal time off and overtime, is accurately calculated, reviewed, approved, and paid in the appropriate period. The review should include comparing approved timesheets, pay rates, payroll reports, and any leave or overtime documentation before payroll is finalized. Management should also document its review and establish a follow-up process to identify and correct payroll discrepancies timely. Views of Responsible Officers and Corrective Action Plan: Please refer to Community Benefit Solutions dba CBS Food Program’s Corrective Action Plan.

Finding 2025-005 – U.S. Department of Education (ED) – Title III Program-Inadequate Control Over Payroll Cost Allocation and Time and Effort Reporting Requirements, (Material Weakness): Information on the federal program – Strengthening Historically Black Colleges and Universities (HBCU), ALN 84.031B, June 30,2025. Criteria – Compensation – Personnel Services Documentation Requirements: Under 2 CFR § 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and such records must: • Be supported by a system of internal controls providing reasonable assurance that the charges are accurate, allowable, and properly allocated; • Reflect 100% of the employee’s compensated activities, both Federal and non-Federal; • Be incorporated into the official records of the non-Federal entity; and • Be completed and documented in a timely and consistent manner. For Title III programs, personnel costs must be supported by complete and accurate documentation demonstrating the portion of time dedicated to allowable Title III activities. Condition – During our testing of payroll expenditures charged to the Title III program, we noted exceptions in eight (8) of nine (9) payroll transactions selected for testing, which is an 89% error rate. Specifically: • For two (2) of nine (9) transactions tested, salary expenses charged to the Title III grant did not agree with the grant allocation percentages authorized in employee contracts, personnel action forms, or other approved Human Resources documentation. • For six (6) of nine (9) transactions tested, salary expenses charged to the Title III grant did not agree with the employees' documented distribution of actual time and effort as reflected on certified time and effort reports. As a result, payroll costs charged to the Title III programs were not consistently supported by approved personnel documentation or by records reflecting actual work performed on the program. Cause – Management did not establish or effectively implement procedures to ensure salary costs charged to the Title III program were consistently supported by approved personnel allocation documentation and reconciled to certified time and effort reports reflecting actual work performed. In addition, supervisory review controls designed to verify the accuracy of payroll allocations before reimbursement requests and financial reporting were not operating effectively. Effect – Without procedures to ensure payroll allocations are supported by approved personnel records and reconciled to certified time and effort documentation; there is an increased risk that payroll costs charged to the Title III program may be unallowable, inaccurately allocated, or not supported in accordance with Federal requirements. Questioned Costs – $4,522 Repeat Finding – No Auditor’s Perspective – The testing results disclosed a systemic breakdown in controls over payroll allocations charged to the Title III program, as exceptions were identified in 89% of the transactions tested. The pervasive nature of the exceptions indicates that management's controls were not sufficient to provide reasonable assurance that payroll costs charged to the Federal award were accurate, allowable, and properly supported. Consequently, there is a reasonable possibility that material noncompliance with Federal requirements could occur and not be detected in a timely manner. Auditor’s Recommendation – We recommend that management strengthen internal controls over payroll allocations charged to federal awards by: 1. Ensuring employee contracts, personnel action forms, and approved grant allocation schedules accurately reflect the intended distribution of salary costs among funding sources. 2. Requiring periodic reconciliations between payroll charges recorded in the general ledger, approved salary allocation documentation, and certified time and effort reports. 3. Implementing a documented supervisory review process to verify that payroll expenditures charged to the Title III program are supported by records that accurately reflect actual work performed before costs are charged to the grant. 4. Providing training to personnel responsible for grant accounting and payroll administration regarding the requirements of 2 CFR §200.430 related to compensation and time and effort reporting. Views of Responsible Officials - Management agrees with the finding. See the accompanying Corrective Action Plan for the University's planned corrective actions, responsible officials, and implementation dates.