Findings Citing § 200.502

Schedule of Expenditures of Federal Awards Reporting Significant Deficiency - Community Development Block Grant Cluster Entitlement/Special Purpose Grants Federal Granting Agency: U.S. Department of Housing and Urban Development Federal Pass-through Entity: New York City Department of Youth and Community Development Assistance Listing Number: 14.218 Award Number: 99345B Award Year: July 1, 2024 – June 30, 2025 Criteria: OMB Uniform Guidance 2 CFR 200.510(b)(3) requires that the auditee provide the Federal awards expended for each individual Federal program on the Schedule of Expenditures of Federal Awards (“Federal Schedule”). In accordance with 2 CFR 200.502, the determination of when a Federal award is expended, and thereby reported on the Federal Schedule, is generally based on when the activity related to the Federal award occurs. Condition: The Community Development Block Grant Cluster Entitlement/Special Purpose Grants award is a cost reimbursement based grant that reimburses award recipients for expenditures incurred on this program, which seeks to address health inequities faced by members of New York City’s (NYC) priority populations with HIV and was first granted in July 2024. The Association did not include the expenditures incurred under this grant on the Federal Schedule in 2024, resulting in an understatement of the entire amount of the grant expenditures incurred in the prior year of $237,306. This has been corrected by management and is included in the 2025 Federal Schedule. There was no impact to our prior year major program determination. The cumulative amount of expenditures under this award are included in the 2025 Federal Schedule. Cause: When this grant was initially awarded in mid 2024, the project was not identified in the system as being federally funded at the time of grant setup and was, therefore, inappropriately excluded from the 2024 Federal Schedule. Effect: Failure to properly identify this grant as a federal award resulted in the underreporting of federal expenditures incurred in 2024 by $237,306. Questioned Costs: None Recommendation: We recommend management enhance their controls around identification of federal grants at the time of grant setup as well as enhance completeness controls as part of the preparation and review of the Federal Schedule. Repeat Finding in the Prior Year: No Management’s Views and Corrective Action Plan: Refer to Management’s View’s and Corrective Action Plan at the end of the report after the summary schedule of prior audit findings and status.

MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS – ALL FEDERAL PROGRAMS 2025-001 Reporting Compliance Requirement Criteria – 2 CFR § 200.510 requires that the City of South St. Paul, Minnesota (the City) prepare appropriate financial statements, including the Schedule of Expenditures of Federal Awards (SEFA) for the year ended December 31, 2025, which must include the total federal awards expended as determined in accordance with 2 CFR § 200.502. Management is responsible for establishing and maintaining effective internal controls over compliance with requirements applicable to federal programs, including separately tracking federal expenditures within the finance system to provide for accurate preparation of the SEFA. Condition – During our audit, we noted the City did not have sufficient controls in place to ensure the accurate preparation of the SEFA in compliance with this requirement. The City’s SEFA for fiscal 2025 was overstated by $749,656 in federal expenditures, due to the inclusion of costs that were incurred in the previous fiscal year. Questioned Costs – None. The 2025 SEFA was corrected when the misstatement was identified during the audit, and this would not have changed the determination that a Single Audit of federal awards expenditures was required for the 2024 fiscal year and would not have changed the risk assessment and major program testing for the 2024 fiscal year. Context – The City’s SEFA presented for audit for the year ended December 31, 2025 included $749,656 in two programs that should not have been included in this fiscal year. Cause – This was an oversight by city personnel. Repeat Finding – This is a current year finding. Effect – An inaccurate SEFA could result in incorrect major program determination for the Single Audit and could be considered a violation of federal award agreements. Recommendation – We recommend that the City review its internal control procedures over reporting and verify accuracy of expenditures reported on the SEFA in the future. View of Responsible Official and Planned Corrective Actions – The City agrees with the finding. The City has separately issued a Corrective Action Plan related to this finding.

Reporting ALN 10:854: Rural Economic Development Loan and Grant Criteria: Rural Economic Development Loan and Grant Programs are subject to 2 CFR 200, subpart F Audit Requirements. These regulations state that a non-federal entity that expends $1,000,000 or more during the entity’s fiscal year in federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of this part. The determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Generally, the activity related to the Federal award pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as (2 CFR 200.501 and 2 CFR 200.502): • Expenditure/expense transactions associated with grants, cooperative agreements, cost-reimbursement contracts under the FAR, compacts with Indian Tribes, and direct appropriations; • The disbursement of funds to subrecipients; • The use of loan proceeds under loan and loan guarantee programs; • The receipt of property (including surplus property); • The receipt or use of program income; • The distribution or use of food commodities; • The disbursement of amounts entitling the non-Federal entity to an interest subsidy; and • The period when insurance is in force. Condition: The Cooperative transferred $2,000,000 in loan funds to a subrecipient in 2025. The Cooperative was unaware that they needed a single audit and did not prepare a schedule of expenditures of federal awards (SEFA). There are also no written procedures on how to prepare a SEFA. Context: The Cooperative retained support for the federal funds expended and have documentation from federal agencies to prepare a SEFA, and the Rural Economic Development Loan Agreement refers to 7 CFR 4280, Subpart A, which requires the audit. Effect: Non-compliance with federal regulations. Questioned Costs: None. Cause: This is the first year the Cooperative received these loan funds and were unaware that a single audit was needed. Auditor Recommendation: We recommend the Cooperative retain support for all federal funds expended in order to determine if the $1,000,000 threshold is met, triggering a single audit. We also recommend the Cooperative put procedures in place on how to prepare the SEFA. Fergus Electric Cooperative Response: Fergus worked in conjunction and regularly communicated with the local Montana USDA REDL/G office to understand program requirements, provide requested information, and meet federal guidelines. Loan agreement RD 4280-5, (Dated 10/31/2024) refers to 7 CFR part 4280, Subpart A, as (“Regulations”). Fergus was unaware that 2 CFR 200 regulations are associated with 7 CFR part 4280, Subpart A. Fergus regretfully acknowledges that we were not informed or aware of obligations to meet the regulatory requirements within 2 CFR 200. Fergus has adopted and implemented a policy, Federal Funding Compliance, to establish formal procedures and ensure ongoing compliance with applicable federal regulations, including 7 CFR 4280, Subpart A and 2 CFR 200.

Assistance Listing Number, Federal Agency, and Program Name - ALN 15.916, Department of the Interior, Outdoor Recreation Acquisition, Development and Planning, Outdoor Recreation Acquisition, Development and Planning Grants, and ALN 66.468, Environmental Protection Agency, Drinking Water State Revolving Fund. Federal Award Identification Number and Year - All grants under ALN Pass through Entity - ALN 15.916, Colorado Department of Natural Resources, and ALN 66.468, Colorado Water Resources and Power Development Authority Finding Type - Material weakness Repeat Finding - Yes 2024 002 Criteria - Per 2 CFR Section 200.510(b), the auditee must also prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements, which must include the total federal awards expended determined in accordance with Section 200.502. Condition - The Outdoor Recreation Acquisition, Development and Planning program and the Drinking Water State Revolving Fund program expenditures on the schedule of expenditures of federal awards (SEFA) initially presented for audit were not complete and accurate. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - The Outdoor Recreation Acquisition, Development and Planning program expenditures of $1,250,000 were omitted. The Drinking Water State Revolving Fund program was overstated by $76,884. The final SEFA has been corrected. Cause and Effect - Controls in place did not ensure the SEFA was complete and accurate, and, as a result, the SEFA was adjusted for two federal programs. This did impact major program determination for Outdoor Recreation Acquisition, Development and Planning. Recommendation - We recommend the City ensure the effectiveness of controls to ensure expenditures reported on the SEFA are complete and accurate. Views of Responsible Officials and Corrective Action Plan - The Finance Department recently hired a new Grants Manager after being without this critical position for almost a year. The Grants Manager, along with the Grant Specialist and the Financial Reporting team accountants, plan to work together to improve the tracking and reconciliation of grant activity. In addition, the City implemented eCivis Euna Grants, a grant application, tracking, and reporting system, in November of 2025. The Grants Team will be working with Departments to document the grants process formally for the City and this will ensure that all grants are accounted for and tracked in the Euna grants system. This renewed capacity and new initiatives, supported by the new administrative cost recovery framework and the City's grants management platform, reflects a broader commitment to managing external funding with the same discipline applied to locally generated revenues.

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS – ALL FEDERAL PROGRAMS 2025-002 Reporting Compliance Requirement Criteria – 2 CFR § 200.510 requires that the City prepare appropriate financial statements, including the Schedule of Expenditures of Federal Awards (SEFA) for the year ended December 31, 2025, which must include the total federal awards expended as determined in accordance with 2 CFR § 200.502. Management is responsible for establishing and maintaining effective internal controls over compliance with requirements applicable to federal programs, including separately tracking federal expenditures within the finance system to provide for accurate preparation of the SEFA. Condition – During our audit, we noted the City did not have sufficient controls in place to ensure the accurate preparation of the SEFA in compliance with this requirement. The City’s SEFA for fiscal 2025 was overstated by $147,700 in federal expenditures due to the inclusion of costs that were incurred in the previous fiscal year. Questioned Costs – None. The 2025 SEFA was corrected when the misstatement was identified during the audit, and this would not have changed the determination that a Single Audit of federal awards expenditures was not required for the 2024 fiscal year. Context – The City’s SEFA presented for audit for the year ended December 31, 2025 included $147,700 in one program that should not have been included in this fiscal year. Cause – This was an oversight by city personnel. Repeat Finding – This is a current year finding. Effect – An inaccurate SEFA could result in incorrect major program determination for the Single Audit and could be considered a violation of federal award agreements. Recommendation – We recommend that the City review its internal control procedures over reporting and verify accuracy of expenditures reported on the SEFA in the future. View of Responsible Official and Planned Corrective Actions – The City agrees with the finding. The City has separately issued a Corrective Action Plan related to this finding.

Finding No. 2025 - 001: Federal Agency: Department of Health and Human Services Federal Program Title: Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases Federal Assistance Listing Number: 93.083 Award Period: January 1, 2025 through December 31, 2025 Pass-through Entity: Council of Medical Specialty Societies ("CMSS") Federal Award Identification Number and Year: Subaward No. 101 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria In accordance with 2 CFR 200.510 (Financial Statements), an auditee must prepare a schedule of expenditures of Federal awards ("SEFA") for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2CFR 200.502. At a minimum, the schedule must include: All individual Federal programs by Federal agency. For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. Include the total amount provided to subrecipients from each Federal program. Condition The Organization had revisions to the SEFA and management’s review and approval process did not detect the following errors that were identified during the audit procedures performed: An incorrect de minimis indirect cost rate was used and charged to a federal award. Approximately $65,000 of federal expenditures were omitted from the initial SEFA. Subrecipient costs from the prior year were charged to the current year due to incomplete accruals in the prior year. As a result, the SEFA was not complete or accurate prior to submission for audit. Cause The Organization’s internal controls over the preparation and review of the SEFA were not operating effectively. Effect or Potential Effect Inadequate controls over the preparation of the SEFA could result in financial misstatements or potential noncompliance. Questioned Costs N/A Identification as a Repeat Finding This finding is not a repeat finding Recommendation We recommend the Organization strengthen its policies, procedures, and controls for the identification of federal awards to ensure a complete and accurate SEFA is prepared in a timely manner. Views of the Responsible Officials Management concurs with the finding and related recommendation. While the Organization completed its federal award activity in May 2025 and does not currently anticipate additional federal award activity, it recognizes the importance of compliance with grant reporting requirements, including the accurate preparation of the Schedule of Expenditures of Federal Awards. In response to this finding, the Organization has enhanced its procedures for determination of the appropriate indirect cost and strengthened its internal controls by implementing additional review and approval processes over grant expense reporting. These improvements, particularly in the review and approval functions, are designed to promote the timely and accurate reporting of grant activity, including SEFA preparation, should the Organization be subject to Single Audit requirements in the future. The Organization further has initiated repayment of indirect costs reported pursuant to the incorrect de minimis indirect cost rate, to the primary awardee.

Finding 2025‐001–Allowable Costs and Cost Principles and Activities Allowed and Unallowed—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE Federal Program: The Food Distribution Cluster Assistance Listing Number: 10.568 and 10.569 Year(s): 2025 Federal Agency: US Department of Agriculture (USDA) Pass‐Through Agencies: State of CA Department of Social Services, Second Harvest of Silicon Valley, San Francisco Marin Food Bank, Food Link Food Bank, and CAPK Food Bank. Criteria—In accordance with 2 CFR 200.502(g), Federal non-cash assistance food commodities received as part of a Federal award to carry out a Federal program must be valued at fair market value at the time of receipt, or the assessed value provided by the Federal agency, and must be included in determining Federal awards expended and reported on the Schedule. Condition and Context— We selected 60 food commodity delivery receipts for food commodities delivered to sub-recipients (Sub-ERAs) in order to test the controls related to food distributions to Sub-ERAs at the Division's Modesto Corps. Of the 60 selections, 51 selections did not have evidence of review, indicating a deficiency in the related internal controls. The delivery receipt includes the quantity, and thus the monetary value, of the food commodities distributed to Sub - ERAs. The monetary value of those food commodities is included in the Schedule. In addition, 4 sign-in-sheet selections related to the monthly control over food directly distributed to individuals at the Modesto Corps were provided. The sign-in sheets contained the quantity of food commodities that were distributed, which were then used to populate the Schedule. The 4 sign-in-sheet selections did not have evidence of review. The quantity of food commodities is measured in the number of food boxes, with each weighing either 13 or 50 pounds, and the monetary value of those food commodities is then included in the Schedule. Cause— Management is in the process of maintaining evidence pertaining to the review of the distribution of the food commodities. The process was not fully established as of the period under audit. Effect— Without evidence of proper reviews, discrepancies could exist between the amount of actual food commodities distributed and the amount recorded on the Schedule, which could lead to incorrect information being communicated to the grantor and the possible cessation of grant funding. Questioned Costs—None. Repeat Finding from Prior Year—Yes. Recommendation—We recommend management take steps to ensure that proper review is performed, and evidence of such reviews is maintained. View of Responsible Officials—See Corrective Action Plan.

Finding Number: 2025-003 Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: U.S. Department of Agriculture Child Nutrition Cluster ALN: 10.553, 10.555, 10.559 and 10.582 Award #: 11131-028 Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Office of the State Superintendent of Education (OSSE) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Federal Funding Accountability and Transparency Act (FFATA) Reporting Compliance: In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System (FSRS) or System for Award Management (sam.gov) website from March 8, 2025 onwards. FFATA reports are submitted no later than the month following the month in which this Federal award is made, and annually after that. In accordance with the requirements of 2 CFR Section 1402.300(b), the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR Part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR Part 170 Reporting Subaward and Executive Compensation Information. Schedule of Expenditures of Federal Awards (SEFA) Reporting Compliance: Requirements, Cost Principles, and Audit Requirements, 2 CFR Section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Condition – For one (1) subaward sample selected for FFATA testing, we noted that OSSE failed to submit the FFATA report within the required timeframe. Transactions tested - 8 Subaward not reported - 0 Report not timely - 1 Subaward amount incorrect - Not applicable – subaward amount was correct. Subaward missing key elements - Not applicable – no missing key elements. Dollar amount of tested 2025 subawards - $8,900,559 Subaward not reported - $ - Report not timely - $ 38,487 Subaward amount incorrect - Not applicable – subaward amount was correct. Subaward missing key elements - Not applicable – no missing key elements. Additionally, during our testing of the SEFA, we noted that OSSE incorrectly reported the value of subrecipient expenditures included within the subrecipient expenditure column. For the year ended September 30, 2025, OSSE incurred $25.7 million in subrecipient expenditures for this program and incorrectly reported that there were no subrecipient expenditures on the preliminary SEFA. While the subrecipient expenditure amount was not accurate, the total expenditures amount was accurately reported. The error in the subrecipient expenditures amount was subsequently identified and corrected as a result of the audit process. Questioned Costs – None. Context – This is a condition identified per review of OSSE’s compliance with reporting requirements. Effect – Failure to properly submit the FFATA report and failure to properly review and present expenditure can result in noncompliance with reporting requirements. Cause – OSSE did not have proper internal controls and policies and procedures in place to fulfill the FFATA reporting requirements. In addition, OCFO did not comply with their policies and procedures to ensure accuracy of the SEFA. Recommendation – We recommend that OSSE evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations. These procedures should include a supervisory review of the report to be submitted timely. In addition, we recommend that OCFO adhere to instituted policies and procedures to ensure accuracy of the SEFA. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – OSSE concurs with the auditor’s finding and recommendations related to this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

Finding Number: 2025-024 Prior Year Finding Number: 2024-030 Compliance Requirement: Reporting Program: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Years: 09/30/2022 – 09/29/2025 09/30/2024 – 09/29/2027 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Federal Funding Accountability and Transparency Act (FFATA) Reporting Compliance: In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System (FSRS) or System for Award Management (sam.gov) website from March 8, 2025, onwards. FFATA reports are submitted no later than the month following the month in which this Federal award is made, and annually after that. In accordance with the requirements of 2 CFR Section 1402.300(b), the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR Part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR Part 170 Reporting Subaward and Executive Compensation Information. Schedule of Expenditures of Federal Awards (SEFA) Reporting Compliance: Requirements, Cost Principles, and Audit Requirements, 2 CFR Section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Condition – During our testing of the reporting compliance requirement, we noted the following: • FFATA Reporting Compliance: During our testing of FFATA reporting, it was noted that reports were submitted late by the DBH program management due to staffing shortage. The FFATA reporting for all nine subawards selected for testing was submitted late, i.e., beyond the deadline of within 30 days of the subaward or subaward modification date. • SEFA Reporting Compliance: During our testing of the SEFA, we noted that DBH incorrectly reported the value of subrecipient expenditures included within the subrecipient expenditure column. For the year ended September 30, 2025, DBH incurred $12.4 million in subrecipient expenditures for this program and incorrectly reported $11.7 million subrecipient expenditures on the preliminary SEFA. While the subrecipient expenditure amount was not accurate, the total expenditures amount was accurately reported. The error in the subrecipient expenditures amount was subsequently identified and corrected as a result of the audit process. Questioned Costs – None. Context – This is a condition identified per review of DBH’s compliance with specified reporting requirements using a statistically valid sample. Effect – Without proper internal controls and policies and procedures in place to ensure timely reporting and that correct amounts were reported and were properly reviewed as it relates to the Opioid STR program: • FFATA Reporting Compliance: Failure to submit FFATA reports within the deadline of 30 days of the subaward or subaward modification date results in noncompliance for the DBH program. • SEFA Reporting Compliance: The effect of the condition is that the SEFA was not accurately prepared. Cause – Management did not have proper internal controls and policies and procedures in place to ensure that FFATA reports were submitted timely and the amounts on the SEFA were properly reported. Recommendation – We recommend the following: • FFATA Reporting Compliance: We recommend DBH to strengthen its internal control and procedures to ensure submission of FFATA reports within the deadline of 30 days of the subaward or subaward modification date. • SEFA Reporting Compliance: We recommend DBH to ensure that agency personnel receive proper training on subrecipient versus vendor determination; as well as review existing policies and procedures for preparing the SEFA to ensure that it is complete and accurate. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – The DBH Office of the Chief Financial Officer (OCFO) concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

Finding Number: 2025-026 Prior Year Finding Number: 2024-036 Compliance Requirement: Reporting Program: U.S. Department of Health and Human Services Block Grants for Substance Use Prevention, Treatment, and Recovery Services ALN: 93.959 Award #: Various Award Years: 10/01/2022 – 09/30/2025; 09/01/2021 – 09/30/2025; 03/15/2021 – 03/14/2025 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Federal Funding Accountability and Transparency Act (FFATA) Reporting Compliance: In accordance with 2 CFR Part 170, Appendix A, under the Federal Funding Accountability and Transparency Act (FFATA), the department is required to collect and report information on each subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System (FSRS) or System for Award Management (sam.gov) website from March 8, 2025, onwards. FFATA reports are submitted no later than the month following the month in which this Federal award is made, and annually after that. In accordance with the requirements of 2 CFR Section 1402.300(b), the non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR Part 25 Financial Assistance Use of Universal Identifier and System for Award Management and 2 CFR Part 170 Reporting Subaward and Executive Compensation Information. Schedule of Expenditures of Federal Awards (SEFA) Reporting Compliance: Requirements, Cost Principles, and Audit Requirements, 2 CFR Section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Condition – During our testing of the reporting compliance requirement, we noted the following: • FFATA Reporting Compliance: During our testing of FFATA reporting, it was noted that reports were submitted late by the DBH program management due to staffing shortage. The FFATA reporting for all four subawards selected for testing was submitted late, i.e., beyond the deadline of within 30 days of the subaward or subaward modification date. • SEFA Reporting Compliance: During our testing of the SEFA, we noted that DBH incorrectly reported the value of subrecipient expenditures included within the subrecipient expenditure column. For the year ended September 30, 2025, DBH incurred $1.2 million in subrecipient expenditures for this program and incorrectly reported $1.4 million subrecipient expenditures on the preliminary SEFA. While the subrecipient expenditure amount was not accurate, the total expenditures amount was accurately reported. The error in the subrecipient expenditures amount was subsequently identified and corrected as a result of the audit process. Questioned Costs – None. Context – This is a condition identified per review of DBH’s compliance with specified reporting requirements using a statistically valid sample. Effect – Without proper internal controls and policies and procedures in place to ensure timely reporting and that correct amounts were reported and were properly reviewed as it relates to the Block Grants for Substance Use Prevention, Treatment, and Recovery Services program: • FFATA Reporting Compliance: Failure to submit FFATA reports within the deadline of 30 days of the subaward or subaward modification date results in noncompliance for the DBH program. • SEFA Reporting Compliance: The effect of the condition is that the SEFA was not accurately prepared. Cause – Management did not have proper internal controls and policies and procedures in place to ensure that FFATA reports were submitted timely and the amounts on the SEFA were properly reported. Recommendation – We recommend the following: • FFATA Reporting Compliance: We recommend DBH to strengthen its internal control and procedures to ensure submission of FFATA reports within the deadline of 30 days of the subaward or subaward modification date. • SEFA Reporting Compliance: We recommend DBH to ensure that agency personnel receive proper training on subrecipient versus vendor determination; as well as review existing policies and procedures for preparing the SEFA to ensure that it is complete and accurate. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – The DBH Office of the Chief Financial Officer (OCFO) concurs with this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

Finding Number: 2025-027 Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: U.S. Department of Homeland Security COVID-19 – Disaster Grants - Public Assistance (Presidentially Declared Disasters) ALN: 97.036 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: Homeland Security and Emergency Management Agency (HSEMA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Uniform Guidance in 2 CFR Section 200.302(a), Financial Management, states that each state must expend and account for the federal award in accordance with state laws and procedures for expending and accounting for the state’s own funds. In addition, the state’s and the other non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. Schedule of Expenditures of Federal Awards (SEFA) Reporting Compliance: Requirements, Cost Principles, and Audit Requirements, 2 CFR Section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Condition – During our testing of federal reporting and the Schedule of Expenditures of Federal Awards (SEFA), we noted that the cumulative federal expenditures reported on two (2) quarterly Federal Financial Report (SF-425) did not reconcile the total expenditures claimed on the SEFA for the life of the award. Specifically, the SF-425 submitted for the period ended September 30, 2025 reported a cumulative total of approximately $924 million, whereas the SEFA recorded lifetime expenditures of approximately $1.051 billion, resulting in an unreconciled variance of approximately $127 million. Additionally, during our testing of the SEFA, we noted that HSEMA incorrectly reported the value of subrecipient expenditures included within the subrecipient expenditure column. For the year ended September 30, 2025, HSEMA had a negative $0.7 million in subrecipient expenditures for this program and incorrectly reported $37.9 million subrecipient expenditures on the preliminary SEFA. While the subrecipient expenditure amount was not accurate, the total expenditures amount was accurately reported. The error in the subrecipient expenditures amount was subsequently identified and corrected as a result of the audit process. Questioned Costs – None. Context – This is a condition identified per review of HSEMA’s compliance with reporting requirements. Effect – Failure to properly review and present expenditures can result in noncompliance with reporting requirements. Cause – HSEMA did not comply with their policies and procedures to ensure accuracy of the SEFA and other reports necessary to meet compliance requirements. Recommendation – We recommend that HSEMA adheres to instituted policies and procedures to ensure the accuracy of the SF-425 and the SEFA. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – HSEMA agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.

2025-001: SEFA Reporting Significant Deficiency - Ryan White HIV/AIDS Program Parts A and B Federal Agency: Department of Health and Human Services Pass-through Entity: New York City Department of Health and Mental Hygiene Program: Ending the HIV Epidemic: A Plan for America — Ryan White HIV/AIDS Program Parts A and B Assistance Listing #: 93.686 Grant Period: 3/1/21-2/28/26 Criteria OMB Uniform Guidance 2 CFR 200.510(b)(3) requires that the auditee provide the Federal awards expended for each individual Federal program on the Schedule of Expenditures of Federal Awards (“SEFA”). In accordance with 2 CFR 200.502, the determination of when a Federal award is expended, and thereby reported on the SEFA, is generally based on when the activity related to the Federal award occurs. Condition The Ryan White HIV/AIDS Program Parts A and B grant is a cost reimbursement based grant that reimburses award recipients for expenditures incurred on this program, which seeks to address health inequities faced by members of New York City’s (NYC) priority populations with HIV and was first granted in March 2021. Sunset Park has not included the expenditures incurred under this grant on the SEFA until FY2025 when it was first identified. As a result, the expenditures reported by Sunset Park on its SEFA from 2021-2024 were understated by the entire amount of the grant’s expenditures incurred in each respective year. This has been corrected by management in the 2025 SEFA included in this report. There was no impact to our prior year audit scoping given the expenditures in each respective year would not have changed the prior determination of major programs. The cumulative amount of expenditures under this award was included on the 2025 SEFA and included as a major program. Cause When this grant was initially awarded in early 2021, the Assistance Listing Number (ALN) was not identified at the time of grant setup, therefore, the award wasn’t identified as a federal award. During the annual preparation of the SEFA in the subsequent years, the award was omitted from the SEFA due to the fact that it was not identified as a federal grant within the grant listings. Effect Failure to properly identify this grant as a federal award resulted in the underreporting of federal expenditures incurred from 2021 through 2024 by $1,267,956. This was corrected in the 2025 SEFA included in this report, as such the entire cumulative expenditure amount previously underreported was reported in the current year SEFA. The major program determination and audit scoping for the 2025 audit resulted in this award being selected for testing as a major program. If the expenditures had been properly reported in each respective year’s SEFA, the major program determination and audit scoping would not have been impacted. This is not a repeat finding. Questioned Costs None Recommendation We recommend Sunset Park enhance their controls around identification of federal grants at the time of grant setup as well as enhanced completeness controls as part of the preparation and review of the SEFA. Management’s Views and Corrective Action Plan Refer to Management’s View’s and Corrective Action Plan at the end of the report.

Criteria: In accordance with 2 CFR section 200.510(b) (Uniform Guidance), “the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. The schedule must include the total Federal awards expended as determined in accordance with § 200.502.” Condition: The College did not have controls in place to ensure the Schedule of Expenditures of Federal Awards (SEFA) was accurately reconciled with the general ledger. As a result, there were discrepancies between the amounts reported on the SEFA and the actual expenditures in the College’s accounting records. Cause: The College does not have a process in place to reconcile the SEFA to the general ledger to ensure accurate records. Expense entries (expenditures) are posted by several people across the campus when funds are spent. Revenue entries (drawdowns) are posted by the business office, however there is no process to ensure these drawdowns are the same as the amounts expended. Revenue is also not deferred to the appropriate period when necessary as part of a SEFA reconciliation process. Effect: Without proper reconciliation procedures, there is an increased risk that the SEFA may be materially misstated. The current year SEFA contained net adjustments of $209,443 made by the auditors to reconcile to the general ledger and award letters. Repeat Finding from Prior Year: Yes Recommendation: We recommend management establish an informal procedure to reconcile grant funds received with funds expended on a regular basis. We also recommend management implement a formal procedure to reconcile the SEFA with the general ledger at year end. Views of Responsible Officials: The Comptroller will reconcile this report on a monthly basis making sure that all grants and other Federal / State expenditures are on the SEFA and that the two numbers reconcile with the general ledger. This will be kept in a notebook and the calendar kept in the Comptroller’s desk. The Comptroller will also create a folder in the business office folder on the server and input the current SEFA in this folder and show any discrepancies on a monthly basis and every time this report is run for drawdowns. This process will start immediately. The Comptroller will also make sure at year end that all items are on this report and they have been reconciled with the general ledger. This process will also be in the notebook and calendar within the desk of the Comptroller

Federal Agency: U.S. Department of Homeland Security Pass Through Entity: Kansas Division of Emergency Management Program Name: Building Resilient Infrastructure and Communities Assistance Listing Number: 97.047 Award Period: June 30, 2025 Criteria: According to 2 CFR 200, Subpart F, the District is required to prepare a schedule of federal expenditures, which must include the total federal awards expended as determined in accordance with §200.502. An effective internal control system exists if controls are effective in preventing or detecting material misstatements in the preparation of the schedule of federal expenditures of federal awards (the schedule). It provides reasonable assurance for the reliability of financial information and compliance with laws and regulations. Condition: We have determined that there was an inadequate design of internal control over the preparation of the schedule during the fiscal year ended June 30, 2025. The current financial reporting process does not ensure accuracy and completeness in the preparation of the schedule by the District, as required by Uniform Guidance. Cause: The District’s staff lacked the knowledge to ensure the schedule is complete and accurate. Effect: The District did not prepare the schedule in conformity with Uniform Guidance. This increases the likelihood of a material misstatement and noncompliance with laws and regulations. Context: The District was unable to provide a schedule of Expenditures of Federal Awards that was materially correct. The District is not typically subject to a Single Audit. Recommendation: We recommend the Board of Education and management review the financial reporting process. Once this review is complete, the District should then perform a risk assessment to determine the best way to implement appropriate internal controls over financial reporting to ensure that the District prepares the schedule conformity with Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and plans to develop proper written policies and procedures for the internal control over compliance to ensure accuracy and completeness in the District’s preparation of the schedule as required by Uniform Guidance.

Criteria: According to 2 CFR 200.502, the determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Generally, the activity related to the federal award pertains to events that require the nonfederal entity to comply with federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grants. For FEMA grants, non-federal entities must record expenditures on the SEFA when (1) FEMA has approved the nonfederal entity’s project, and (2) the non-federal entity has incurred the eligible expenditures. FEMA’s approval of a subaward is indicated when FEMA obligates the federal share of the eligible project cost to the recipient Federal awards expended in years subsequent to the fiscal year in which the project is approved are to be recorded on the non-federal entity’s SEFA in those subsequent years. Condition: The Authority's expenditures relating to FEMA awards obligated during the current fiscal year did not include expenditures incurred during previous fiscal years. Effect: The Authority's expenditures were understated which could have impaired proper major program determination for testing and caused a misstatement of the SEFA. Cause: The Authority experienced turnover in its grants administrator position, which led to a loss of institutional knowledge and reduced continuity in its grant management processes. As a result, the Authority faced increased difficulty complying with the unique reporting requirements applicable to FEMA awards. Recommendation: We recommend that the Authority enhance its grants administration processes by establishing formal, written procedures that address the unique reporting requirements of FEMA awards. The Authority should ensure that staff responsible for grant management receive sufficient training and that cross-training is in place to mitigate the effects of future turnover. These steps will help preserve institutional knowledge, promote consistent application of required procedures, and improve compliance with FEMA reporting standards. Views of Responsible Officials: Management agrees with the finding and will implement controls to ensure all awards are included, as well as correct going forward. See Management’s Corrective Action Plan for further details.

Assistance Listing Number, Federal Agency, and Program Name - N/A, Schedule of Expenditures of Federal Awards (SEFA) Reporting Federal Award Identification Number and Year - N/A Pass through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No Criteria - Uniform Guidance (2 CFR 200.510(b)) requires a schedule of expenditures of federal awards (SEFA) that must provide total federal awards expended for the period covered by the auditee's financial statements. Federal awards expended in accordance with §200.502 should be based on when the underlying activity related to the federal award occurs. Condition - During our review of the schedule of expenditures of federal awards, we noted that certain federal program expenditures were included in the SEFA for the fiscal year ended June 30, 2025 even though the underlying activity occurred in 2024. The College did not have adequate controls in place to ensure the SEFA was prepared to include appropriate expenditures for the Economic Development Cluster in the proper period. Questioned Costs - N/A Identification of How Questioned Costs Were Computed - N/A Context - During our review of the College's SEFA, we noted expenditures of $318,814 that were improperly included within the Economic Development Cluster in 2025. Based on review of underlying expenditures on vendor pay applications, expenditures should have been included on the SEFA in 2024. Cause and Effect - The College did not have adequate processes and internal control structure in place to ensure SEFA expenditures were recorded in the appropriate period. As a result, the SEFA is overstated by $318,814 in 2025. If the SEFA does not accurately reflect federal expenditures for the audit period, this could lead to misinterpretation of compliance requirements and inaccurate reporting to federal agencies. Recommendation - We recommend management implement procedures to ensure the SEFA preparation is based on the timing of the underlying activity rather than payment dates. Views of Responsible Officials and Planned Corrective Actions - The College will establish the proper controls to ensure that the SEFA is prepared based on the timing of the underlying activity rather than payment dates.

U.S. Department of Agriculture/Passed-through Texas Department of Agriculture Food Distribution Cluster Federal Assistance Listing Number 10.565 – Commodity Supplemental Food Program (Food Commodities), 10.569 – Emergency Food Assistance Program (Food Commodities) Award Number: 01576 Criteria or Specific Requirement: Special Test and Provisions – Accountability for USDA Foods – Non-cash assistance must be valued at USDA‑approved valuation methods which include cost‑per‑pound, WBCSXI catalog price, or rolling average (7 CFR §250.58(e) and U.G. §200.502(a)). Condition: USDA donated foods are recorded in the accounting system at standard cost based on the first product received, rather than using an approved valuation method (Fair Market Value at receipt or USDA‑determined values such as cost‑per‑pound, WBCSXI catalog price, or rolling average per 7 CFR §250.58(e) and U.G. §200.502(a)). The entity has not formally selected or documented an approved method. The Food Bank does not maintain written procedures for conducting the required annual physical inventory and reconciliation to USDA Foods records. Procedures are communicated verbally before the count. Cause: The organization had not fully implemented USDA valuation requirements due to the absence of a documented policy. Inventory practices developed informally over time, and standard operating procedures were never formalized or approved. Effect or Potential Effect: Potential misstatement of USDA Foods value for Schedule of Expenditures of Federal Awards and inconsistent valuation across periods. Inventory risk increased likelihood of count errors, timing differences, or unexplained adjustments; exposure to liability for unreconciled differences. Questioned Costs: None Context: The methodology used to value food commodities was not a USDA‑approved valuation method. Repeat Finding: No Recommendation: Select and document an approved USDA valuation method and apply it consistently. Develop and implement formal written standard operating procedures for annual physical inventory and reconciliation, including: 1. Pre‑count preparation and cut‑off 2. Tag control and independent recounts 3. Reconciliation steps and documentation of adjustments, and 4. Record retention per 7 CFR §250.19 Views of Responsible Officials and Corrective Action: Management concurs with the finding and recommendation. See further information on the corrective action plan provided by management.

Assistance Listing Number, Federal Agency, and Program Name - ALN 66.202, U.S. Environmental Protection Agency - Congressionally Mandated Projects Federal Award Identification Number and Year - CG-00E03697-0, 2024 Pass through Entity - N/A Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.510(b), the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements, which must include the total federal awards expended, as determined in accordance with 2 CFR 200.502. While not required, the auditee may choose to provide information requested by federal awarding agencies and pass through entities to make the schedule easier to use. Condition - Controls were not in place to ensure that the schedule of expenditures of federal awards (SEFA) was complete and accurate. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - In fiscal year 2025, the Village expended approximately $935,000 of federal funding from various federal agencies. The Village accumulates the financial data and other required information to complete the SEFA. Expenditures under grant ALN 66.202, Congressionally Mandated Projects, were originally overstated by $40,088 due to duplication of costs. No controls were in place to identify incompleteness or inaccuracy of the SEFA. Cause and Effect - No review or other control was in place to ensure the SEFA was complete and accurate. As a result, ALN 66.202, Congressionally Mandated Projects, expenditures were overstated by $40,088. This error has been corrected on the SEFA as of June 30, 2025. Recommendation - The Village should implement controls to ensure the SEFA is reviewed for completeness and accuracy. Views of Responsible Officials and Planned Corrective Actions - The Village has hired an outside contractor to assist with review of audit documents.

Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Campus: Sacramento, Sonoma Cluster name/program: Supplemental Nutrition Assistance Program Cluster and Reserach and Development Programs Cluster Listing Numbers: 10.561, 47.076, and 84.411 Federal Agency: U.S. Department of Agriculture National Science Foundation U.S. Department of Education Passed through Entity: 10.561 - State of California Department of Social Services Federal Award Identification Numbers: 10.561: 21-3068 and 24-3069, 47.076: 1953472, and 84.411: S411B230042 Award Year: July 1, 2024 – June 30, 2025 Criteria: According to 2 CFR 200.502(a), the determination when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity related to the Federal award pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: (1) Expenditure/expense transactions associated with grants, cooperative agreements, cost-reimbursement contracts under the FAR, compacts with Indian Tribes, and direct appropriations; (2) The disbursement of funds to subrecipients; Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws and regulations. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the Schedule of Expenditures of Federal Awards (SEFA). Condition and Context: ALN 10.561: We noted the Sacramento campus incorrectly recorded $712,979 of subrecipient expenditures which were not disbursed during FY2025. This resulted in an overstatement of expenditures on the FY2025 SEFA which management adjusted the SEFA accordingly. ALN 10.561: During our testing of nonpayroll expenditures for the Sacramento campus, we noted $25,605 related to a period outside of FY2025. The total out of period expense including the indirect cost was $32,006. This resulted in an overstatement of expenditures on the SEFA for FY2025. ALN 84.411: During our testing of indirect cost for the Sonoma campus, we noted $29,495 of expenditures related to a period outside of FY2025 resulting from management correcting the indirect cost rate for a grant that began in the prior year and recording all of the adjustment in FY2025. This resulted in an overstatement of expenditures on the FY2025 SEFA. ALN 47.076: During our payroll testing for the Sonoma campus, we noted $13,980 of expenditures related to a period outside of FY2025. The total out of period expense including the indirect cost was $21,110. This results in an overstatement of FY2025 Schedule of Expenditures of Federal Awards (SEFA). Cause and Effect: While the University’s policy is to record subrecipient expenditures on the SEFA upon the disbursement of funds to recipients, the Sacramento campus’ SEFA preparation process did not adequately consider whether amounts recorded in the SEFA had been disbursed to the subrecipient. At the Sonoma campus, the error was the results of an indirect cost rate being utilized from a previous grant versus the updated rate in the new grant. There was also a lack of internal controls over the accruals of summer payroll impacting federal awards. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA resulted in an overstatement of expenditures. Questioned Costs: Not applicable Statistical Sampling: Not applicable Repeat Finding: Yes for 10.561 and No for 47.076 and 84.411 Recommendation: We recommend the University implement a system of internal control that is designed and operating effectively to ensure the SEFA is complete and accurate. Views of Responsible Officials: The University concurs with the recommendation. The University will review and enhance its procedures and internal controls to ensure the SEFA is complete and accurate.

Management acknowledged its responsibility to establish and maintain effective internal controls to reasonably assure compliance with federal statutes, regulations and terms and conditions of federal awards and controls relating to preparing the Schedule of Expenditures of Federal Awards (the Schedule), as required by Uniform Guidance (2 CFR § 200.303(a)), in the audit engagement letter. Furthermore, Uniform Guidance (2 CFR Subpart F § 200.510(b)) requires the auditee prepare the Schedule for the period covered by the District’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. Due to insufficient controls over the monitoring of grant activity, the District did not retain appropriate support on the dates of the determination to charge prior year costs to the American Rescue Plan Elementary and Secondary School Emergency Relief Fund (ARP ESSER) grant in the amount of $678,544. The grant award was for $1,019,060, which had a grant period spanning calendar years 2020 through 2024. Lack of maintaining such documentation could result in expenditures determined to be unallowable under grant guidelines and funds required to be returned. Ineffective internal controls related to federal grants could lead to noncompliance with program requirements. Additionally, the determination of unallowable costs could have an adverse effect on future grant awards by the awarding agency or agencies in addition to an inaccurate assessment of major federal programs that would be subjected to audit. District management should implement a system to review the Schedule for errors and omissions as well as a method to monitor the related internal controls over compliance with federal grant requirements. This will help ensure the Schedule is complete and accurate, major federal programs are accurately identified for audit, and internal controls over compliance requirements are implemented and operating effectively.

2025-003 (2023-002) – INACCURATE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition The Schedule of Expenditures of Federal Awards (SEFA) was provided timely to the auditors; however, several adjustments were identified during the audit process: • The SEFA incorrectly included match expenditures, requiring an reduction to the federal expenses of $324,936. Without accurate recording of federal award expenditures, auditors cannot appropriately assess and select federal programs for testing as mandated by the Single Audit Act. Management’s Progress Toward Prior Year Corrective Action Plan: The County has made progress toward addressing the prior year’s SEFA accuracy finding; however, additional corrections remain necessary, as noted above. Criteria 2 CFR § 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program requirements. Good internal control practices require the entity to have documented procedures for: • Properly identifying federal, state, and other funding sources. • Classifying expenditures accurately under the correct federal assistance listing numbers. • Ensuring expenditures reported on the SEFA are accurate and presented according to requirements. Additionally, 2 CFR 200.510(b) mandates the preparation of an accurate and complete SEFA for the audit period, including federal expenditures as determined in accordance with 2 CFR 200.502. Cause The County did not have comprehensive controls to ensure that all federal expenditures are correctly tracked, accurately classified, and properly reported on the SEFA. Effect Without accurate, timely tracking and reporting of federal expenditures, the County is at risk of improperly accounting for federal awards, potentially leading to noncompliance, questioned costs, or repayment obligations. Recommendation We recommend that the County establish, document, and implement a comprehensive internal control structure specifically designed to: • Clearly identify, track, and report grant expenditures. • Accurately distinguish between federal and non-federal expenditures. • Prepare and review the SEFA regularly to ensure completeness, accuracy, and compliance with the Uniform Guidance (2 CFR 200.502 and .510) accrual-basis requirements.

SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Reference Number: 2025-001 Schedule of Expenditures of Federal Awards Presentation Significant Deficiency and Noncompliance Condition The audit found that the City did not include a Federal Emergency Management Agency (FEMA) award, assistance listing number 97.036, totaling $101,355, on the Schedule of Expenditures of Federal Awards (SEFA). The FEMA funds were obligated during fiscal year 2025, after the related expenditures had been incurred and approved, so they should have been reported on the SEFA for the June 30, 2025 year-end audit according to the Office of Management and Budget Compliance Supplement. Consequently, the total federal expenditures were initially reported as less than the actual amount. Criteria All federal awards, including those provided by FEMA, must be reported on the SEFA. According to 2 CFR Section 200.510 (b) of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”), the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee’s financial statements. This schedule must include all federal awards expended as defined in 2 CFR section 200.502. Excluding federal awards from this reporting may result in noncompliance with federal regulations and audit requirements. Cause The exclusion of the FEMA award from the SEFA was due to a misrepresentation of the reporting requirements for federal disaster assistance. Effect or Potential Effect Omitting any federal awards from the SEFA can result in the failure to recognize when a single audit is required, potentially leading to the City missing this crucial audit. Without a complete SEFA and the associated single audit, there is a heightened risk of noncompliance with federal regulations, which may jeopardize the City’s eligibility for future federal funding. Additionally, the absence of a single audit increases the likelihood that mismanagement or misuse of federal funds remain undetected. Federal agencies may also respond by imposing sanctions or demanding repayment of any costs deemed questionable due to incomplete reporting and lack of proper oversight. Recommendation It is recommend that the City: Review and update policies and procedures for identifying, recording, and reporting all federal awards, including disaster assistance. Implement a formal review process to ensure completeness and accuracy of the SEFA prior to submission and annual audit engagement. Consult with external auditors or grant specialists when uncertainty exists regarding the inclusion of specific awards. Management’s Response The expenditure occurred in calendar year 2020 and 2021. Since these funds were emergency funds, no deferred revenue was accrued since staff was uncertain of whether costs would be eligible for reimbursement. Final revenues of $101,355 were received in FY2025, and staff recorded the revenue received on the SEFA, but not the expenditure. Going forward, staff will report expenditures on the SEFA when eligible expenditures are approved by FEMA.

2025-013: Improve Financial Management of Federal Grants Applicable to: Department of Wildlife Resources Assigned Topic: Federal Grants Management Prior Finding Number: N/A Finding Type: Internal Control and Compliance Finding Severity: Material Weakness Financial Statement Finding: No Federal Awards Finding: Yes ALPT - ALN: Sport Fish Restoration - 15.605; Wildlife Restoration and Basic Hunter Education and Safety - 15.611; Enhanced Hunter Education and Safety - 15.626 Federal Award ID (Year): F20AF10048 (2020); F20AF11897 (2020); F21AF02409 (2021); F22AF01121 (2022); F23AF00654 (2023); F23AF03173 (2023); F23AF03185 (2023); F24AF02770 (2024); F24AF02896 (2024); F24AF02903 (2024) Federal Agency: U.S. Department of the Interior Compliance Requirement: Allowable Costs/Cost Principles - 2 CFR § 200.302; 2 CFR § 200.303(a); 2 CFR § 200.305; 2 CFR § 200.510(b); 31 CFR § 205.33 Known Questioned Costs: $0 The Department of Wildlife Resources (Wildlife Resources) should improve its financial management of federal grants and documentation of internal controls to ensure compliance with state and federal requirements. Wildlife Resources has experienced recent turnover in its grants staff positions. Wildlife Resources has hired new staff; however, there was no transition period with the previous staff, and the previous grants staff did not sufficiently document internal controls over the federal programs. Staff have started documenting desk procedures, but agency-wide policies and procedures remain lacking. As such, grants staff did not appear to have sufficient knowledge of statewide policies and procedures to adequately perform the federal grants management processes in accordance with federal regulations and the Commonwealth Accounting Policies and Procedures (CAPP) Manual. We identified the following issues: Wildlife Resources should amend its procedures to comply with CAPP Manual requirements for cash management of federal funds. CAPP Manual Topic 20605 states that two methods of recording "split" funded expenses are acceptable. The method preferred by the State Comptroller is to establish procedures to "split code" the expenses by allocating the disbursement between a state fund and the federal fund at the matching ratio prescribed by the grant or contract. A second, and temporary, funding method allows the agency to charge the original expense to a state fund and subsequently, within seven business days, prepare and submit a general ledger journal in the Commonwealth’s accounting and financial reporting system to charge the federal fund for the federal portion of the original expense, referencing the original voucher in the journal reference line for transparency. If a state agency cannot comply, the agency must request approval from the State Comptroller. Wildlife Resources follows the temporary funding method to record its federal expenses. Wildlife Resources spends from state funds and then performs journal entries to move transactions to the federal fund in bulk with some journal entries representing hundreds of individual transactions, which does not allow for transparency regarding the nature of Wildlife Resources federal expenses. Further, our analysis found that Wildlife Resources enters journal entries for federal drawdowns up to three months after the original transaction date which is not consistent with the seven-day requirement in CAPP Manual Topic 20605. Per 2 Code of Federal Regulations (CFR) § 200.302, a recipient must comply with state laws and procedures for expending and accounting for the State's funds. Additionally, the untimely performance of these extensive journal entries may result in Wildlife Resources recording journal entries in the wrong fiscal year, which could result in inaccurate information within the Commonwealth’s Annual Comprehensive Financial Report. Wildlife Resources does not maintain adequate support for its journal entries. CAPP Manual Topic 20405 requires the agency to retain sufficient supporting documentation to provide auditable records containing evidence of required coding elements for journal entries. Wildlife Resources’ journal entries lack documentation related to changes in coding. Further, Wildlife Resources does not maintain supporting documentation for journal entries in one accessible location which would allow for sufficient supervisory review. Not maintaining adequate supporting documentation over journal entries increases the risk of inaccurate or fraudulent transactions. Wildlife Resources also does not have policies and procedures in place that detail how it creates the journal entries, what type of documentation to retain to support journal entries, or how Wildlife Resources ensures it only moves allowable costs to the federal fund. Title 2 CFR § 200.303(a) requires recipients to establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. During fiscal year 2025, in response to our Office’s 2024 Internal Control Questionnaire Review, Wildlife Resources established a bimonthly drawdown and journal entry schedule to ensure timely drawdown of federal funds to reimburse expenses originally incurred within state funds and to assist in remediation of its cash flow issues. Per 31 CFR § 205.33, a state must minimize the time between the drawdown of federal funds from the federal government and their disbursement for federal program purposes in accordance with the actual, immediate cash requirements of the state. The timing and amount of funds transfers must be as close as is administratively feasible to a state's actual cash outlay for direct program costs and the proportionate share of any allowable indirect costs. However, based on our analysis of drawdowns, while Wildlife Resources has made progress in the rate of drawdowns since the previous review, due to staff shortages, Wildlife Resources has not fully followed its drawdown schedule to ensure timely drawdowns of federal funds, which could exacerbate the agency’s cash flow issues. Specifically, the drawdown schedule included twenty planned drawdowns, however Wildlife Resources completed only eleven (55%) in accordance with that schedule. Furthermore, Wildlife Resources does not have policies and procedures in place over the completion of drawdowns as required by 2 CFR § 200.302, which requires a recipient to have written procedures to implement the requirements of 2 CFR § 200.305 regarding federal drawdowns. Wildlife Resources did not record program income revenue of approximately $2.3 million in the correct fiscal year for the Fish and Wildlife Cluster. Wildlife Resources recorded the program income received in fiscal year 2025 in a suspense account and did not distribute the income to the proper revenue account until fiscal year 2026. CAPP Manual Topic 20205 requires recording of all state receipts in the Commonwealth’s accounting and financial reporting system in a timely manner within three business days of the deposit. Additionally, the Department of Accounts (Accounts) Fiscal Year-End Closing Procedures require agencies to certify that they properly distributed balances to the correct accounts before final close of Commonwealth’s accounting and financial reporting system. By not properly recording program income, Wildlife Resources may misrepresent financial information to the federal government and report information that does not agree with its accounting records. Wildlife Resources reported federal expenses on its Schedule of Expenditures of Federal Awards (SEFA), a schedule that details Wildlife Resources’ federal expenses for fiscal year 2025, that did not agree to its underlying accounting records. Wildlife Resources reported federal expenses in the SEFA that it recorded as state funds in the Commonwealth’s accounting and financial reporting system due to considering journal entries that they did not record in the system until the next fiscal year. Due to these issues and preparation of the SEFA by a member of management on long-term leave who was not available during the audit, Wildlife Resources could not support amounts totaling over $660,000 in its SEFA. Additionally, Wildlife Resources does not have documented procedures outlining its process for preparing the SEFA in accordance with 2 CFR § 200.510(b), which states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR § 200.502. Accounts’ Office of the Comptroller’s Directive No. 1-25 (Comptroller’s Directive) also provides specific directions for compiling the SEFA and supporting schedules to support its preparation of the Commonwealth’s SEFA and related disclosures. Furthermore, the Comptroller’s Directive states that an agency must ensure that it has internal controls in place to avoid material misstatements and/or misclassifications in the attachments and other financial information submitted to Accounts for inclusion in the Commonwealth’s Single Audit. By not implementing adequate internal controls over financial reporting, Wildlife Resources cannot provide reasonable assurance that the financial information it submits to Accounts for inclusion in the Commonwealth’s Single Audit is free of material misstatements. Because of the scope of the matters and errors noted above, we consider this finding to be a material weakness in internal control. Wildlife Resources should improve its financial management of federal funds and documentation of internal controls to ensure compliance with state and federal requirements. The need for strong internal controls is especially important given that Wildlife Resources is exploring additional federal funding opportunities. Wildlife Resources should work with Accounts to develop and implement a federal grants management process that complies with the CAPP Manual. Wildlife Resources should improve its process and controls related to federal fund drawdowns to ensure timely reimbursement of expenses within federal limitations. Further, Wildlife Resources should also improve its controls and procedures related to journal entry processing to ensure it retains adequate support for all entries and enters the entries timely. Additionally, Wildlife Resources should perform a thorough review of its SEFA before submitting it to Accounts and retain supporting documentation to support the SEFA. Finally, Wildlife Resources should develop policies and procedures over all federal grants processes including all compliance requirements. These improvements combined are necessary to ensure accurate accounting and financial reporting in accordance with the CAPP Manual, the Code of Federal Regulations, the Comptroller’s Directives, and applicable accounting standards. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.

Finding 2025-003: Preparation of the Schedule of Expenditures of Federal Awards Material weakness/other matter noncompliance Federal Agency: U.S. Department of Homeland Security Program Name: Transit Security Grant Programs ALN Number: 97.075 Award Number: 97.075 Award Year: 2025 Criteria: The Uniform Guidance (2 CFR 200.510b) requires that the auditee (typically a non-federal entity receiving federal funds) must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by its financial statements which must include the total Federal Awards expended as determined in accordance with 2 CFR 200.502. Condition: The SEFA for the year ended June 30, 2025, included $2,385,715 in expenditures that were incurred in the year ended June 30, 2024, overstating the total expenditures reported for the federal awards for ALN 97.075 Rail and Transit Security Grant Program. Cause: The existing internal control procedures for processing funding source reclassifications are not structured to fully support the SEFA reporting cutoff deadline. While a process is in place, it does not fully incorporate all necessary stakeholders early enough in the cycle to ensure timely communication, coordinated review, and approval of reclassifications leading to expenditures being included in the incorrect reporting cycle Effect: Not in compliance with the Uniform Guidance (2 CFR 200.510b). There could be impacts on future funding. Questioned costs: None. Context: As a result of the inclusion of fiscal year ended 2024 expenditures, total federal awards for ALN 97.075, Rail and Transit Security Grant Program, were overstated by $2,385,715. Repeat Finding: Yes. This repeat finding designation results from the identification of the $2,385,715 timing difference, which affected SEFA reporting for both fiscal year 2024 and fiscal year 2025. Findings for both fiscal years were evaluated and communicated to management in 2026. Recommendation: We recommend that the Authority review the schedule of expenditures of federal awards prior to issuance. Views of responsible officials and planned corrective actions: Management agrees with the finding and acknowledges that internal control procedures should be strengthened to ensure adherence to the SEFA reporting cutoff deadline. To address this issue, the Authority will implement a verification checklist as required supporting documentation for all funding source reclassification journal entries, ensuring that all relevant departments have reviewed and approved the entries prior to being posted. The Authority will also establish a cutoff date for Program Offices to submit current-year reclassification requests, allowing adequate time for eligibility review and fiscal year-end reporting. In addition, Accounting Policies and Procedures Manual will be updated to include guidelines limiting reclassifications of expenditures incurred in prior fiscal years. The Authority will communicate policy updates incorporate these changes to ensure consistent application across departments.

PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (SEFA) Type of Finding (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards Programs Affected Federal Agencies: 1) U.S. Department of Homeland Security and 2) U.S. General Services Administration. Title: 1) Disaster Grants - Public Assistance (Presidentially Declared Disasters) 2) Donation of Federal Surplus Personal Property ALNs: 1) 97.036 and 2) 39.003 (Not Major Federal Programs) Award #s: 1) DPS24FEMASFSP, DPS25FMAROSFL, 2) Robots Compliance Requirement: Reporting Award Period: Various Questioned Costs: None Noted Condition The Department prepares its Schedule of Expenditures of Federal Awards (SEFA) using a quarterly reconciliation process in SHARE that focuses on reviewing grant-related transactions for invoicing and monitoring purposes. This process provides a strong foundation for grant oversight and expense allowability. The SEFA originally provided for audit totaled $15,677,562 and was subsequently corrected to $16,736,829, resulting in an understatement of $1,059,269 (6.33%). The adjustments primarily consisted of: • $583,271 related to AL 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters), • $450,000 of federal noncash surplus property (equipment/robots) related to AL 39.003, and • $25,998 of other net adjustments These differences occurred because certain federal award activity was not fully captured or reported through the quarterly expense-focused reconciliation process. Specifically: • Noncash federal assistance was not identified and valued for inclusion in the SEFA, and • Federal award activity associated with a presidentially declared disaster was not fully reflected in the original SEFA, in part due to the timing and complexity of the declaration and award identification. The audit team worked collaboratively with key members of the Department’s grant management and finance teams to identify these items, evaluate applicable guidance, and confirm the accuracy and completeness of the final SEFA. Criteria The auditee is required to prepare a Schedule of Expenditures of Federal Awards for the period covered by the financial statements in accordance with 2 CFR 200.502. Federal awards expended include cash and noncash assistance, including the receipt of property (such as surplus property), which must be valued at fair market value at the time of receipt (or at the assessed value provided by the federal agency) and included in the SEFA. Effect If SEFA amounts are incomplete or inaccurate, errors may not be prevented or detected in a timely manner and could affect major federal program determination and Single Audit planning and execution, which may adversely impact compliance oversight and future funding decisions. Cause While the Department’s quarterly SHARE reconciliation process is effective for reviewing expense allowability and supporting reimbursement requests, it was not designed to fully address SEFAspecific completeness requirements. In particular: • The process did not include a formal reconciliation of SEFA totals by AL/award to federal revenue recorded in the general ledger and grant support, and • Procedures were not in place to consistently identify, value, and document noncash federal assistance and certain complex or timing-sensitive award activity for SEFA purposes. As a result, differences between expenses reviewed for reimbursement and federal revenue recorded in the accounting records were not identified during SEFA preparation. Recommendation We recommend the Department enhance its SEFA preparation documentation and review procedures. The procedures should include the following: • Reconciliation of SEFA totals – Performing and documenting a reconciliation of SEFA totals by AL/award to the general ledger, grant subledger, and other supporting documentation. • Noncash and complex award identification – Implementing procedures to identify, value, and document noncash federal assistance and other complex or timing-sensitive award activity (such as disaster-related awards) for inclusion in the SEFA. • Revenue-based SEFA completeness review – In addition to the Department’s existing expense-level review of allowability (which should continue), performing a SEFA-specific review from a revenue perspective to confirm that federal revenue recorded in the general ledger and requests for reimbursement are complete and consistent with grant-related expenses. This review would help identify situations where expenses are evaluated or adjusted for reimbursement purposes but remain recorded within grant activity in the accounting records. • Independent supervisory review – Documenting independent supervisory review and approval of the SEFA prior to submission, evidenced by sign-off.

Reference Number: 2025-010 Prior Year Finding: No Federal Agency: U.S. Department of Transportation State Agency: Agency of Transportation Federal Program: National Infrastructure Investments Assistance Listing Number: 20.933 Award Number and Year: 69A36520401930BLDVT (8/1/2020 – 10/31/2026) CA0714 (4/29/2022 – 4/29/2032) CA0751 (5/1/2023 – 10/1/2028) CA0906 (1/24/2025 – 11/1/2030) Compliance Requirement: Reporting – Schedule of Expenditure of Federal Awards Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: The auditee must prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee's financial statements. The schedule must include the total Federal awards expended as determined in accordance with § 200.502. Information reported on the SEFA must include a list of individual Federal programs by Federal agency and the applicable Assistance Listing number(s), and a total of the amount expended for each individual Federal program. 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 Agency of Transportation (Agency) reported federal program expenditures on the SEFA under the wrong Assistance Listing Numbers (ALN). Context: When the Agency compiled its SEFA, it reported $11 million under ALN 20.314-Railroad Development. During the audit, it was determined that expenditures reported under ALN 20.314 should have been $0 and $10.7 million of this amount should have been reported under ALN 20.933-National Infrastructure Investment. Additionally, $312,460 should have been reported under ALN 20.326-Federal-State Partnership for Intercity Passenger Rail, and $6,739 should have been reported under ALN 20.325-Consolidated Rail Infrastructure and Safety Improvements. Cause: The Agency’s procedures were not sufficient to ensure that the SEFA was accurate and that program expenditures were reported under the correct ALNs. The Agency assigned an incorrect ALN to the Expenditure Account associated with these payments in the accounting system which led to the SEFA reporting error. Neither payment processing nor SEFA preparation controls prevented or detected the errors. Effect: The Department’s SEFA did not agree with supporting documentation. The Department understated total expenditures under ALN 20.933 by 51%, under ALN 20.325 by 1%, under ALN 20.326 by 100%, and overstated total expenditures under ALN 20.314 by 100%. Questioned costs: Undetermined. Recommendation: We recommend the Agency review and enhance internal controls and procedures for payment processing and SEFA preparation to ensure that payments are properly coded in the accounting system and that expenditures are reported accurately on the SEFA. Views of responsible officials: Management agrees with the finding.

Reference Number: 2025-014 Prior Year Finding: No Federal Agency: U.S. Environmental Protection Agency State Agency: Department of Environmental Conservation Federal Program: Drinking Water Sate Revolving Fund Assistance Listing Number: 66.468 Award Number and Year: 99121S23 (10/1/2023 – 9/30/2030) 99121E23 (10/1/2023 – 9/30/2030) Compliance Requirement: Reporting – Schedule of Expenditure of Federal Awards Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: The auditee must prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee's financial statements. The schedule must include the total Federal awards expended as determined in accordance with § 200.502. Information reported on the SEFA must include a list of individual Federal programs by Federal agency and the applicable Assistance Listing number(s), and a total of the amount expended for each individual Federal program. 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 Department of Environmental Conservation (Department) reported federal program expenditures on the SEFA under the wrong Assistance Listing Number (ALN). Context: During audit test work, auditors determined that $3.8 million reported on the SEFA under ALN 66.468-Drinking Water State Revolving Fund should have been reported under 66.458-Clean Water State Revolving Fund. This error was made in both total expenditures and the amount passed through to subrecipients. Correction of the reporting error increased total expenditures reported in ALN 66.458 by 32% and decreased total expenditures reported in ALN 66.468 by 7%. Cause: The Department’s procedures were not sufficient to ensure that the SEFA was accurate and that program expenditures were reported under the correct ALNs. Internal controls did not prevent or detected the errors. Effect: The Department’s SEFA did not agree with supporting documentation. The Department overstated total expenditures under ALN 66.468 by 7% and underreported total expenditures under ALN 66.458 by 32%. Questioned costs: None noted. Recommendation: We recommend the Department review and enhance internal controls and procedures for SEFA preparation to ensure that expenditures are reported accurately on the SEFA. Views of responsible officials: Management agrees with the finding.

Finding 2025-006 – Internal Control Deficiency in Financial Reporting – Untimely Recording of Grant Program Expenditures Cluster: Not applicable Sponsoring Agency: United States Agency for International Development (USAID) Award Name: USAID Foreign Assistance for Programs Overseas Award Number: 7200AA19CA00018, 7200AA21LE00003 Assistance Listing Title: USAID Foreign Assistance for Programs Overseas Assistance Listing Number: ALN 98.001 Award Year: 2024-2025 Pass-through entity: Not applicable Compliance Requirement: Schedule of Expenditure of Federal Awards Reporting and Period of Performance Criteria or Specific Requirement Under 2 CFR 200.510(b), the auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the same reporting period as its audited financial statements. The SEFA must present the total federal awards expended during that period, as defined in 2 CFR 200.502. The auditee is responsible for ensuring that the SEFA is accurate, complete, and prepared in accordance with all applicable Uniform Guidance requirements. Identified Condition Across three campuses, we noted that one (1) campus converted to a new financial system effective January 1, 2024. As a result of the conversion, subaward advance balances were migrated into new system project codes using expenditure type 140200 – Subaward Advances, and recording the related advance liquidations (i.e., payment for certain expenditure invoices) were delayed. We noted delays in recording ranging from 4 to 12 months. As a result, certain fiscal year (FY) 2024 expenditures were not properly recorded in the FY 2024 SEFA, but instead recorded and reported in the FY 2025 SEFA as follows: Award Numbers: 7200AA19CA00018; 7200AA21LE00003 | Campus-FY2024 Expenditures: $3,498,905 | Campus-Portion Related to Subawardees: $3,477,528 | Campus-% of Total Program FY2025 Expenditures: 41% | % of Total Program FY2025 Expenditures: 32% Cause This condition resulted from delays in processing liquidations of migrated subaward advance balances in the new system until reconciliation of the individual projects set-up for each sub awardee was completed. As a result, there was a significant backlog in processing. Effect The delay in recording the expenditures and liquidating the advances resulted in FY2024 expenditures being incorrectly recorded in fiscal year 2025 for SEFA reporting purposes. Lack of timely recording increases the risk that that expenditures are charged beyond the awards’ authorized periods of performance. Questioned Costs None. Recommendation We recommend that the campus strengthen internal controls over financial reporting to ensure timely reconciliations of subaward account balances and recording such that amounts are allocated, liquidated, and reported in the proper period. This will help ensure timely and accurate financial reporting. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings.

2025-003 Internal controls over Schedule of Expenditures of Federal Awards Preparation (Material Weakness) Federal Agency: U.S Department of Education Pass through entity: Kansas Department of Education Program Name: Child Nutrition Cluster; Education Stabilization Fund Assistance Listing Numbers: 10.553, 10.555 and 10.559; 84.425 Award Period: June 30, 2025 Criteria: According to 2 CFR 200, Subpart F, the District is required to prepare a schedule of federal expenditures, which must include the total federal awards expended as determined in accordance with §200.502. An effective internal control system exists if controls are effective in preventing or detecting material misstatements in the preparation of the schedule of federal expenditures of federal awards (the schedule). It provides reasonable assurance for the reliability of financial information and compliance with laws and regulations. Condition: We have determined that there was an inadequate design of internal control over the preparation of the schedule during the fiscal year ended June 30, 2025. The current financial reporting process does not ensure accuracy and completeness in the preparation of the schedule by the District, as required by Uniform Guidance. Context: During our audit of the federal programs for the fiscal year ended June 30, 2025, we performed procedures to verify the accuracy and completeness of the Schedule of Expenditures of Federal Awards (SEFA). Our testing identified material misstatements in the initial SEFA provided by management, indicating that the District’s reporting process did not accurately capture all federal award activity. Cause: The District’s policies and procedures were not designed to ensure the District’s preparation of the schedule in conformity with Uniform Guidance. Effect: The District did not prepare a complete and accurate schedule in conformity with Uniform Guidance as significant modifications were required. This increases the likelihood of a material misstatement and noncompliance with laws and regulations. Recommendation: We recommend the Board of Education and management review the financial reporting process. Once this review is complete, the District should then perform a risk assessment to determine the best way to implement appropriate internal controls over financial reporting to ensure that the District prepares the schedule conformity with Uniform Guidance. Questioned Costs: None. Repeat Finding: Yes, 2024-003. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and plans to develop proper written policies and procedures for the internal control over compliance to ensure accuracy and completeness in the District’s preparation of the schedule as required by Uniform Guidance.

Criteria or Specific Requirement: Entities receiving federal awards must identify in its accounts all federal awards expended and report those amounts on the Schedule of Expenditures of Federal Awards for the period the federal award was expensed. Specifically, in accordance with Uniform Administrative Requirements outlined in 2 CFR 200, the guidance states: • Per 2 CFR 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. • Per 2 CFR 200.303, entities must establish and maintain internal controls which provide reasonable assurance that federal award expenditures are in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. • In addition, per 2 CFR 200.510, the Schedule of Expenditures of Federal Awards (SEFA) must be prepared to reflect the awards for the period covered by the auditee’s financial statements. 2 CFR 200.510 also states that for costs to be allowable, they should be determined in accordance with generally accepted accounting principles (with exceptions provided in that part). Condition: The University’s year-end cutoff controls allowed for certain costs from Fiscal Year 2023 and Fiscal Year 2024 to be reported in the Fiscal Year 2025 SEFA. Context: During our testing of 40 payroll transactions, we found 1 instance of payroll related expenses that were incurred during Fiscal Year 2023 being charged to the federal program in Fiscal Year 2025 and 12 instances of payroll related expenses that were incurred during Fiscal Year 2024 being charged to the federal program in Fiscal Year 2025. Questioned Costs: Known amounts of Fiscal Year 2023 costs included in the Fiscal Year 2025 SEFA was $813 and known amounts of Fiscal Year 2024 costs included in the Fiscal Year 2025 SEFA was $23,838. Cause: Per the University, the cause for the 13 exceptions was due to the University improperly identifying the awards as State funded at inception. During Fiscal Year 2025, the University discovered that the award through the State of Oregon was Federally funded and re-indexed costs previously recorded on the State award indexes to Federal award indexes. During the re-indexing of these costs, the transaction dates of costs that were incurred during Fiscal Year 2023 and Fiscal Year 2024 were recorded with dates in Fiscal Year 2025 causing them to be included in the Fiscal Year 2025 SEFA. Effect: The University was out of compliance as it relates to identifying and reporting federal costs in the period incurred. Repeat Finding: No Recommendation: We recommend that the University evaluate its cutoff procedures to ensure that federal costs are identified and reported in the correct fiscal year. We also recommend that the University evaluate its internal controls to ensure that federal awards are properly identified as such at inception. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding.

Program: Congressionally Recommended Awards / HOME Investment Partnerships Program / Homeland Security Grant Program / Epidemiology and Laboratory Capacity for Infectious Disease Federal Financial Assistance Listing Number: 16.753 / 14.239 / 97.067 / 93.323 Federal Grantor: U.S. Department of Justice / U.S. Department of Housing and Urban Development / U.S. Department of Homeland Security / U.S. Department of Health and Human Services Award No. and Year: Multiple Compliance Requirements: Other – Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) - Schedule of Expenditures of Federal awards Type of Finding: Material Weakness in Internal Control Over Compliance Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) states that the auditee (the County) must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined in accordance with §200.502. §200.331 of the Uniform Guidance states the County is responsible for making case-by-case determinations to determine whether the entity receiving the Federal funds is a subrecipient. In addition, §200.303 of the Uniform Guidance states that the County must establish and maintain effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition: During our audit procedures performed over the SEFA we noted the following: • The Sheriff-Coroner Department did not properly identify the amount expended for the Congressionally Recommended Awards, AL No. 16.753. The expenditures reported by the Department were overstated by $2,638,516. • The Orange County Community Resources Department did not properly identify the amount of Federal funding passed through to subrecipients for the HOME Investment Partnerships Program, AL No. 14.239. The amount passed through to subrecipients reported by the Department was overstated by $4,500,624. • The Sheriff-Coroner Department did not properly identify the amounts expended for the Homeland Security Grant Program, AL No. 97.067. The expenditures reported by the Department were overstated by $715,489. • The Orange County Health Care Agency (HCA) did not properly identify the amount expended for the Epidemiology and Laboratory Capacity for Infectious Disease program, AL No. 93.323. The expenditures reported by the Agency were overstated by $486,000. Cause: As a result, the County lacked adequate internal controls to ensure the SEFA is completely and accurately stated. Specifically, the County’s processes for recording and tracking expenditures of Federal awards are not designed so that expenditures are identified when incurred. In addition, the County’s processes for identifying and reporting subrecipients are not designed to ensure appropriate reporting on the SEFA. Effect: Adjustments to the SEFA were required. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used. Program expenditures and amounts passed through to subrecipients were reconciled to the supporting records. Repeat Finding from Prior Years: No. Recommendation: The County, including all its reporting departments, should follow existing policies, procedures and internal controls to ensure all expenditures and amounts passed through to subrecipients are accurately tracked and reported on the SEFA. Personnel knowledgeable of federal expenditures should review amounts coded to federal programs for completeness and accuracy. The SEFA should be prepared and reviewed in a timely manner and reconciled to underlying records as well as the basic financial statements. Views of Responsible Officials: See separately issued Corrective Action Plan.

25-03(Reference per Financial Statements)Material Audit Adjustments Affecting the SEFA U.S. Treasury Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listings #: 21.027 FAIN: SLFRP5410 Federal Award Date: March 3, 2021 Pass-Through Grant #: A-23-R013 Period of Performance: 4/24/2023 – 6/01/2026 Compliance Requirement: Reporting Questioned Costs: $0 Criteria: According to 2 CFR 200.510 of the Code of Federal Regulations, the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. The schedule must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 where it states, “The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity related to the Federal award pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grants.” Condition: As mentioned in finding 25-01 above, several audit adjustments were proposed and posted to the Town’s trial balance to correct material misstatements. The material adjustments were related to required expenditure/expense accruals for construction projects and related grant revenues/receivables. This directly impacted the amounts reported in the SEFA for ALN 21.027. Effect of Condition: Without the proposed audit adjustments, the Town’s financial statements would have been materially misstated, including the SEFA. Cause: There was a failure to accrue, as accounts payable, several construction invoices at year-end which were federal grant expenses. Related grant revenues and receivables were also not recorded. Recommendation: Care should be taken at each year-end to ensure that all revenues and expenditures/expenses are reported in the proper period, including accrual of all earned revenues and incurred expenditures/expenses. The adjustments should either be made to the ledger or information related to the accruals should be provided to the auditor before audit procedures commence. Views of Responsible Officials and Planned Corrective Action: Management agrees with the auditor’s recommendations. The Town will review each revenue and expenditure/expense account at year-end and ensure that all accruals of earned revenues and incurred expenses are made and reported in the proper period or that information is provided to the auditor before audit procedures commence.

25-04(Reference per Financial Statements) Material Audit Adjustments Affecting the SEFA Environmental Protection Agency Program Name: Drinking Water State Revolving Fund Assistance Listings #: 66.468 Federal Award Date: March 13, 2024 Pass-Through Grant #: CF3-23-3210002-04 Period of Performance: 3/13/2024 – 6/01/2026 Compliance Requirement: Reporting Questioned Costs: $0 Criteria: According to 2 CFR 200.510 of the Code of Federal Regulations, the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. The schedule must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 where it states, “The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity related to the Federal award pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grants.” Condition: As mentioned in finding 25-01 above, several audit adjustments were proposed and posted to the Town’s trial balance to correct material misstatements. The material adjustments were related to required expenditure/expense accruals for construction projects and related grant revenues/receivables. This directly impacted the amounts reported in the SEFA for ALN 66.468. Effect of Condition: Without the proposed audit adjustments, the Town’s financial statements would have been materially misstated, including the SEFA. Cause: There was a failure to accrue, as accounts payable, several construction invoices at year-end which were federal grant expenses. Related grant revenues and receivables were also not recorded. Recommendation: Care should be taken at each year-end to ensure that all revenues and expenditures/expenses are reported in the proper period, including accrual of all earned revenues and incurred expenditures/expenses. The adjustments should either be made to the ledger or information related to the accruals should be provided to the auditor before audit procedures commence. Views of Responsible Officials and Planned Corrective Action: Management agrees with the auditor’s recommendations. The Town will review each revenue and expenditure/expense account at year-end and ensure that all accruals of earned revenues and incurred expenses are made and reported in the proper period or that information is provided to the auditor before audit procedures commence.

Program: COVID-19 - Epidemiology and Laboratory Capacity for Infectious Disease (ELC) Assistance Listing No.: 93.323 Federal Grantor: U.S. Department of Health and Human Services Passed-through: California Department of Public Health Award No.: COVID-19ELC114 Award Year: 2021 Compliance Requirement: Other - Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) - Schedule of Expenditures of Federal Awards Type of Finding: Material Weakness in Internal Control Over Compliance Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) states that the auditee (the County) must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total federal awards expended (including amounts provided to subrecipients) as determined in accordance with §200.502. In addition, section 200.303 of the Uniform Guidance states that recipients and subrecipients must establish effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition: During our audit procedures performed over the SEFA and expenditures reported for the ELC program, we noted the County initially reported expenditures totaling $408,471 that should have been reported on the FY 2024 SEFA, as the County incurred the expenditures prior to June 30, 2024. The June 30, 2025 SEFA was corrected for this reporting error. Cause: The County did not have adequate internal controls to ensure the Schedule was prepared completely and accurately. Effect: Prior to the correction, expenditures for the ELC program were overstated by $408,471. We noted the FY 2024 expenditures incorrectly reported on the FY 2025 SEFA did not have a direct and material effect on the FY 2024 SEFA. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used; all program expenditures on the SEFA were reconciled to supporting records. Repeat Finding from Prior Years: No. Recommendation: We the recommend the County enhance internal controls to ensure federal expenditures are reported accurately and completely on the SEFA in accordance with the Uniform Guidance. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

Assistance Listing Number, Federal Agency, and Program Name 14.157 U.S. Department of Housing and Urban Development Supportive Housing for the Elderly (Section 202) Capital Advance Federal Award Identification Number and Year N/A Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria 2 CFR 200.508 states in part: "The auditee must:... (b) Prepare financial statements, including the schedule of expenditures of Federal awards in accordance with § 200.510." 2 CFR 200.510(b) states in part: The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. The schedule must include the total Federal awards expended as determined in accordance with § 200.502. The schedule must... (5) For loan or loan guarantee programs described in § 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This requirement is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule." Condition During the years ended June 30, 2023, 2024, and 2025, National Church Residences entered into capital advance grant agreements (Section 202) with HUD, which were directly funded to affiliates of National Church Residences, and, in turn, National Church Residences entered into notes receivable from the related parties in the same amount as the capital advance. The loan expenditures and outstanding loan balances related to the ALN 14.157 U.S. Department of Housing and Urban Development Supportive Housing for the Elderly (Section 202) Capital Advance were not included on the SEFA for the years ended June 30, 2025, 2024, and 2023. Questioned Costs None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported N/A Identification of How Questioned Costs Were Computed N/A Context Federal expenditures related to ALN 14.157 U.S. Department of Housing and Urban Development Supportive Housing for the Elderly (Section 202) Capital Advance were not included on the SEFA prior to audit entries for the years ended June 30, 2025, 2024, and 2023. Cause and Effect Management had not established a system of internal control that would have ensured proper reporting of the SEFA. Without a proper system of internal control in place that operated effectively, material misstatements of the SEFA remained undetected. Prior to audit entries being made, the SEFA was understated by $9,411,680, $8,049,840, and $3,111,409 at June 30, 2025, 2024, and 2023, respectively. Recommendation National Church Residences accounting and development should consider all relative accounting guidance and agreements for related party transactions and grant/debt agreements (including capital advances) to ensure all federal expenditures are properly included on the SEFA. Views of Responsible Officials and Corrective Action Plan National Church Residences is in the process of establishing additional layers of internal controls to help ensure that all new agreements and any subsequent modifications are captured timely, completely, and accurately within the special purpose financial statements and SEFA.

2025-004-Subrecipient Monitoring Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance (Modified Opinion) Criteria: Per 2 CFR sections 200.332(d) through (f), a pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves the performance goals. Per 2 CFR section 200.502(a), the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs which is generally expenditure/expense transactions associated with awards. Condition: During our testing over subrecipient monitoring, the County was unable to provide subrecipient monitoring support. Questioned Costs: None Context: We selected a sample of 7 subrecipients as part of our testing over Subrecipient Monitoring. Of the 7 subrecipients selected, the County was unable to provide adequate support for the subrecipients selected. Cause: The County has policies that require departments to conduct subrecipient monitoring to ensure compliance with grant requirements. However, the policy does not include documentation of these monitoring activities, such as site visits, financial reviews, or performance evaluations. This lack of documentation results in an inability to verify that subrecipient monitoring is being performed effectively and consistently. Effect: Without proper oversight, subrecipients may fail to achieve program goals and objectives, leading to poor performance and outcomes for the funded programs. Repeat Finding: Yes Recommendation: We recommend that the County implement procedures to ensure that federal guidance is followed related to subrecipient monitoring and provide training on these procedures, including maintaining documentation of the review performed by the County. View of Responsible Officials: There is no disagreement with the audit finding.

2025-003: Noncompliance related to SEFA, FAC Reports, and Single Audits for fiscal years ended June 30, 2022, 2023, and 2024 Federal Assistance Listing Number: 10.553, 10.555, 10.559, 84.041, 84.010A, 84.060, 84.358B, 84.365, 84.367, 84.323, 84.424A, 84.425D, 84.425U, 84.048, 94.243, and others potentially unknown in prior years. Federal Award Year(s): Multiple Program Title(s): Multiple Name of Federal Agency(ies): U.S. Department of Agriculture, U.S. Department of Education, and U.S. Department of Health and Human Services Name of Pass-Through Entity(ies): Various, including the Colorado Department of Education, Colorado Community Colleges System, and Colorado Department of Human Services COVID-19 Program(s): Yes Criteria: Section 200.510b of the Code of Federal Regulations Title 2, Subtitle A, Chapter II, Part 200, Subpart F (also known as 2CFR200) states that the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements. The schedule must include the total Federal awards expended as determined in accordance with section 200.502. In addition, in accordance with Section 200.501(a) and (b) of the 2CFR200, a non-Federal entity that expended $750,000 or more in Federal awards during the non-Federal entity’s fiscal year (2022, 2023, and 2024) must have a Single Audit conducted on major Federal programs in accordance with 200.514. The FAC report is required to be submitted the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period. Condition: The District has not prepared a schedule of expenditures of federal awards (SEFA), did not have an auditor conduct Single Audits on major Federal programs, and failed to submit the required report to the Federal Audit Clearinghouse (FAC.gov) for the fiscal years ended June 30, 2022, 2023, and 2024 (prior three fiscal years). The FAC report is required to be submitted the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period. Cause: The District lacked internal controls and awareness of the requirements noted above to prepare the SEFA, conduct an annual Single Audit, and submit an annual FAC.gov report in a timely manner. Effect: The District was noncompliant with multiple requirements of the 2CFR200 for fiscal years ended June 30, 2022, 2023, and 2024. This noncompliance impacts multiple federal grant programs and may impact future federal awards and require increased oversight, heightened risk classification, and/or special monitoring, if imposed by the grantor. The District had conversations with the Colorado Department of Education and obtain an understanding of the impacts of this noncompliance. Additional requirements may be imposed on the District by grantors as a result of this noncompliance and backlog of Single Audits on major Federal programs. Repeat Finding: No. Questioned Costs: Questioned costs are not known, because the Single Audits on major Federal programs for fiscal years ended June 30, 2022, 2023, and 2024, was not performed. However, there is likelihood and potential for questioned costs or fraud that has not been identified without the completion of the Single Audits on major Federal programs. Recommendation: The District must discuss with the grantors regarding this noncompliance and potential remedies, including the backlog of Single Audits on major Federal programs for fiscal years ended June 30, 2022, 2023, and 2024. In the future, we highly recommend that the District maintain proper internal controls and accurate grant records to prepare an accurate SEFA that will allow auditors to perform the Single Audits on major Federal programs, and submit the FAC report in a timely manner. We also recommend that the District evaluate the options to remedy the backlog of Single Audits and internally determine the best course of action for the District.

Internal Control over Preparation of the Schedule of Expenditures of Federal, State, and City Awards (SEFA), Assistance Listing Numbers (ALNs) - All Condition: Management’s SEFA did not include the ALNs for all of its federal awards with expenditures during the fiscal year. Criteria: “A non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of the Uniform Guidance Part 2 CFR section 200.50 (a). In order to accomplish this, “The auditee must also prepare a Schedule of Expenditures of Federal Awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502” per Part 2 CFR section 200.510 (b) of the Uniform Guidance. This guidance includes the requirement that the SEFA include the ALN for each grant award included in the schedule. Cause: When awards are received during the year, management does not confirm the source of funding or the ALN with the awarding agency. Effect: The SEFA provided by management in advance of the audit was misstated because two (2) federal awards with expenditures totaling $1,695,881 were excluded. This had a direct and material effect on the audit of the major programs. Context: The Chief Financial Officer (CFO) relies on pass-through agencies to provide the funding sources, including the related ALN. Two of the award agreements did not include this information, and it was only identified that the programs were federally funded upon receipt of the audit confirmation responses. As a result, the SEFA initially provided by the CFO did not include these two programs. Recommendation: We recommend management implement policies and procedures in which the funding source of all awards (including ALN) be obtained from funders at the time that all awards are granted. View of responsible officials and Planned Corrective Actions: ECA agrees with this finding and has created a policy for identification and verification of funding sources for all contracts. This will ensure that all contracts are screened for federal funding regardless of what is listed in the contract/award/agreement. ECA will review its existing contracts to confirm all funding sources.

Section III – Federal Award Findings or Questioned Costs 2025-001 – Completeness of certain programs on the prior years’ Schedules of Expenditures of Federal Awards (SEFA) Cluster: Not applicable Sponsoring Agency: Federal Emergency Management Agency (FEMA) Award Names: Presidential Disaster Declaration for Severe Storms, Straight-line Winds, and Flooding May 3-4, 2020; Presidential Disaster Declaration for COVID-19 beginning January 2020; Presidential Disaster Declaration for Severe Storms, Tornados, Straight-Line Winds and Flooding March 3, 2020 Award Numbers: FEMA-4550-DR-TN; FEMA-4514-DR-TN; FEMA-4476-DR-TN Assistance Listing Titles: Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Numbers: 97.036 Award Year: 2022, 2024 Pass-through entity: Not applicable Criteria 2 CFR 200.510 Financial statements requires auditees to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. The information presented should be consistent with accounting records and other federal guidance. Condition The following errors were identified related to funding that was improperly excluded from prior year SEFAs and is being included in the FY2025 SEFA: • FEMA funding obligated and expended in FY2022 totaling $11.9 thousand, which was incorrectly excluded from the FY2022 SEFA. Management has included this amount on the FY2025 SEFA. • FEMA funding obligated and expended in FY2024 totaling $1.7 million, which was incorrectly excluded from the FY2024 SEFA. Management has included this amount on the FY2025 SEFA. These errors did not impact the major program determination in the affected years. Cause The errors identified in the SEFA occurred because the organization did not have comprehensive and well-documented policies and procedures to ensure that all federal awards expended were consistently and accurately identified and reported. Additionally, there was insufficient communication with personnel responsible for compiling the SEFA. These factors collectively resulted in incomplete reporting and the exclusion of certain federal expenditures. Effect A SEFA that is not complete and accurate could impact the scoping of an entity’s major programs and result in incomplete information being provided to the federal government. Questioned Costs None noted. Recommendation We recommend NES review their policies and procedures to identify Federal awards expended in accordance with 2 CFR 200.502 and provide training to personnel. Additionally, we recommend updates on federal programs be periodically provided to the team that is responsible for the compilation of the SEFA. This will allow for a more comprehensive understanding of grant activity and the ability to better review and assess the completeness and accuracy reported for these programs on NES’s year-end SEFA. One means by which this might be accomplished is to develop a checklist of anticipated awards in advance of the year and also complete an interim SEFA to identify inconsistencies earlier in the fiscal year.

MATERIAL WEAKNESS; CRITERIA: Title 2 CFR §200.510(b) and the state single audit implementation act require auditees to prepare a Schedule of Expenditures of Federal and State Awards (SEFSA) for the period covered by the financial statements. 2 CFR §200.502(a) further emphasizes that the auditee is responsible for the accurate preparation and fair presentation of the SEFSA in accordance with federal requirements.; CONDITION: The Town of Spruce Pine did not prepare an accurate SEFSA for the fiscal year ended June 30, 2025. During the audit, we identified errors in reported federal expenditures, including the omission of federal program activity and incorrect amounts recorded as receivable under the federal program. As a result, material audit adjustments were required to properly state the SEFSA.; EFFECT: Because the SEFSA was not accurately prepared, there was an increased risk that federal expenditures were misstated and that federal programs subject to audit were not properly identified. This condition could result in noncompliance with federal reporting requirements and impair federal oversight. No questioned costs were identified as a result of this finding.; CAUSE: There were not adequate internal controls in place over the preparation and review of the SEFSA. Management did not maintain a complete and reconciled listing of federal awards expended during the fiscal year and did not perform a formal review of the SEFSA for completeness and accuracy prior to submission to the auditors. RECOMMENDATION: We recommend that the Town of Spruce Pine establish and document internal controls over the identification, tracking, and reporting of federal and state awards. This should include maintenance of a comprehensive schedule of known and potential awards throughout the fiscal year, reconciliation of grant expenditures to the general ledger, and performance of a supervisory review of the SEFSA prior to audit submission to ensure accuracy and completeness in accordance with federal and state requirements.; VIEWS OF RESPONSIBLE OFFICIALS AND CORRECTIVE ACTIONS: The Town of Spruce Pine agrees with this finding. Finance procedures will be updated to include a suspension and debarment requirements. Town staff will be trained on the updated policies and its implementation.

Schedule of Findings and Responses Financial Statements June 30, 2025 Comment #2025-001 CONTROLS OVER FINANCIAL STATEMENT PREPARATION SHOULD BE IMPROVED GENERAL Condition: As part of our auditing procedures, we assisted management in the preparation of the financial statements and related disclosures of the Organization in accordance with generally accepted accounting principles (GAAP) and related notes to the financial statements and the schedule of expenditures of federal awards and other financial assistance (SEFA). While we noted that management made significant efforts and improvement in its staffing, there was still a need for adjustments proposed by management during the audit process for the Organization to properly state various asset, liabilities, revenue and expense accounts. The current accounting information system, the design and programming to produce financial statements on an interim and annual basis are not adequate. The system appears to be designed to only account for grant and contract expenditures for the overall Organization and not for each type of funding and function of the Organization (i.e., federal, state, local, etc.). Currently, the Organization relies on an outside consultant to maintain and report to the board of directors the interim and annual financial statements. We further understand that the Organization has formalized an accounting policies and procedures manual; however, it does not adequately address certain key financial areas (i.e. inventory management and financial reporting, the allocation of expenses in an equitable manner to the various grants and contracts, study of bad debt for the medicaid program, reconciliation of purchased meals to those delivered during each month, formal approval of journal entries, etc.). Accurate and timely reporting of the financial information by sources are critical to the Organization. Backup procedures are performed by the third party with no backup maintained on site. Management should be thoroughly familiar with the accounting system and have controls in place to limit access to the system. Backup files should be verified and maintained by the CEO. Cyber attacks are on the rise for small entities. It is also essential for the Organization to properly track each federal, state and local program separately in the reporting system and ensure that the methodology used to allocate common direct and indirect cost is fair and equitable and follow generally accepted accounting principles and best practices. The required matching of federal funds should be adequately calculated, recorded and reporting in accordance with the applicable contractual agreement (s). Context: Review of the internal control structure of the Organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee must also prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total federal awards expended as determined in accordance with Section 200.502, basis for determining federal awards expended. [2 CFR §200.510(a) and (b)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes on a timely basis. Significant adjustments have to be made due to inaccurate programming and design. Whether the Organization is subject to a single audit pursuant to the Uniform Guidance is difficult to determine under the existing financial reporting model. (Continued) Cause: Significant turnover has been noted in key financial positions and a shortage of internal staff trained in accounting. An outside consultant with knowledge, skills, and experience in the preparation of financial statements was hired late into the fiscal year. The design of the accounting system (software utilized to process and maintain financial critical data in the general ledger and information system) is not adequate to report expenditures by source or funding type. Recommendation: The degree to which the auditors are assisting in preparation of the financial statements and related disclosures is a control deficiency and is determined by the knowledge and expertise of those in the Organization who are charged with the responsibility of its financial reporting. The accounting system should be designed to track and report revenue and expenditures by funding source and by type (federal, state, local, other, etc.). As a result, it is our recommendation that key personnel that have a role in assuring the accuracy of individual account balances obtain training to ensure that reporting, reconciliations (including cut-off procedures) and necessary supporting schedules are prepared accurately and in a timely manner. The general ledger should be maintained by departments (or by classes) to accurately report the revenue and expenditures in a manner consistent with that of the schedule of expenditures of federal awards (SEFA). The methodology used to allocated expenses should be studied to determine a more equitable means of allocating expenses (i.e. based on the number of units served for each program). Views of Responsible Officials and Planned Corrective Actions: We concur with this finding. The Organization has contracted with a seasoned outside accounting professional to assure that the financial system is designed to properly report financial activity by funding source and statements are completed and prepared timely. In addition, the Organization has committed to upgrading our accounting system software along with appropriate amendments to the formal accounting policy and procedures manual to cover the proper internal controls for accurately reporting financial activities for each grant and or contract. The Organization will maintain a backup copy of all financial data on-site. The software update process will be completed by June 30, 2026. The Organization is also engaged to have training on common software and cybersecurity awareness. Date to be implemented: On-going and completed by June 30, 2026. Persons responsible: CEO and financial consultant. Schedule of Findings and Responses Financial Statements June 30, 2025 Comment #2025-002 POLICIES AND PROCEDURES AND INTERNAL CONTROLS OVER DISBURSEMENTS AND PAYROLL PROCESSING SHOULD BE IMPROVED GENERAL Condition: We noted during our audit that the Organization’s purchasing policies and procedures and the internal controls over such procedures have not been updated to reflect the increase and diversity of funding and the compliance requirements that may affect the way the programs are carried out and accounted for. We also noted that the internal controls over the payroll processing should be improved. With the Organization receiving an increase in federal funding, management and the board of directors must be cognizant of the internal control requirements and the compliance requirement that are required when receiving such funds. The following are a summary of weaknesses and exceptions found during our audit procedures: 1. When meals are ordered for the various delivery sites, staff receives the meals each day with a corresponding ticket or voucher that identifies the type of meal and the quantities requested. The meals are purchased from one vendor. Each month, the vendor will submit an invoice for the meals delivered or sold to the Organization. We noted during our audit that there is no system in place to document the cumulative number of meals received each day and each month to authenticate the invoice (i.e., using Excel or some other accounting system). The risk exist that the number of meals invoiced may not agree with the number of meals received or delivered for the month and subsequently paid for. We also noted that there are no formal procedures in place to track and account for meals delivered by the various drivers and those not delivered (what happens to undelivered meals?). Consequently, the Organization is not able to adequately evaluate all accounts receivables by program and or properly record and value inventory at the end of each month (i.e. meals maintained in freezers). 2. The accounting for in-kind services and facilities are not properly evaluated and approved before entering into the general ledger as journal entries. Matching and in-kind are not reported by each grant as required by such grant agreements. 3. The payroll action forms are not always updated and used when there is a change in the pay rate (or salary amount) for employees. There were various reimbursements for miscellaneous expenses recorded in the payroll accounts ($10,722). Other payroll documents are either not in the file or not updated. The Organization’s has a 403 (b) Plan; however, it appears that this plan is not reviewed by the board of directors annually. Context: We reviewed and examined several transactions, based on our risk assessment and professional judgment, in each audit area for test of expenses to determine the Organization’s compliance with internal policies and procedures and other compliance requirements. Criteria: Generally accepted auditing standards and Governmental Auditing Standards. Internal controls should be designed to reduce the risk of transactions not being properly approved and executed in accordance with written policies and procedures that are approved by the board of directors. Such policies and procedures should be those determined to be best practices for not-for-profit organizations and are designed in a manner to meet the COSO framework. (Continued) Effect: Policies and procedures that are not properly designed and executed can result in the risk of assets not properly safe guarded and can lead to errors, misappropriation of assets and potentially abuse. Transactions not properly approved, could be an indirect violation of state and federal laws and other contractual requirements. Cause: Changes in senior management, the lost of staff due to the pandemic and lack of adequate monitoring activities. Also, the Organization has not established a committee or group of responsible individuals to oversee the polices and procedures and goals of the Organization. Recommendation: The Organization should immediately establish a committee of responsible individuals to author and oversee policies and procedures and internal controls over purchasing (procurement) and payroll processing procedures. Journal entries should be approved by a responsible person other than the person that initiated the journal entry. Supporting documentation should be attached to each journal entry that is not a recurring entry approved by the CEO. The 403 (b) Plan should be a regular agenda item for the board to discuss at least annually. Views of Responsible Officials and Planned Corrective Actions: We concur with this finding. The Organization will immediately assign a committee to take the lead in establishing policies and procedures and internal controls over the procurement process and the payroll procedures. The Organization has engaged a third party to help establish values of in-kind contributions. The board will discuss the 403 (b) Plan at least once annually reviewing the Plan document and the summary annual report. Date to be implemented: On-going and completed by June 30, 2026. Persons responsible: CEO and the board of directors with the outside consultant.

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

Assistance Listing Number, Federal Agency, and Program Name - ALN 20.205, Department of Transportation, Highway Planning and Construction - ALN 21.027, Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - ALN 20.205: SHO M455- 136 (2024), STU M455-129 (2024), STU 2873-215 (2024), CRP M455-164 (2024), SHO M455-137 (2024), SHO M455-135 (2024), and STU M455-125 (2024) - ALN 21.027: N/A Pass-through Entity - ALN 20.205: Colorado Department of Transportation - ALN 21.027: N/A Finding Type - Material weakness Repeat Finding - Yes 2023-003 Criteria - According to 2 CFR 200.502, the determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Generally, the activity pertains to the events that require the nonfederal entity to comply with federal status, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards including grants. Condition - The fiscal year 2024 schedule of expenditures of federal awards (SEFA) that was initially provided to the auditors was incorrect because it included expenditures related to fiscal years 2023 and 2025. 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 - Within Highway Planning and Construction, the expenditures reported on the initial SEFA included $142,724 that related to expenditures incurred in fiscal year 2023. There was also $16,128 that related to expenditures incurred in fiscal year 2024 that was not reported on the initial SEFA. Within Coronavirus State and Local Fiscal Recovery Funds, the expenditures reported on the initial SEFA included $15,921 that related to expenditures incurred in fiscal year 2023 and $99,200 that related to expenditures incurred in fiscal year 2025. Cause and Effect - The City reported federal expenditures in congruence with requests for reimbursement from the federal agency, rather than when the expenditures was incurred. Recommendation - The City should implement controls to ensure that the SEFA is prepared in accordance with applicable rules and regulations. Views of Responsible Officials and Corrective Action Plan - The City of Fort Collins, Colorado has determined that two separate and identifiable root causes led to the inclusion of expenditures from fiscal years 2023 and 2025 in the initial fiscal year 2024 SEFA. 1. Improper Accrual of Prepayments: A small number of transactions involving partial prepayments were not properly accrued in accordance with accounting standards. To address this issue, the City will implement a formal review process where all reimbursement requests are reviewed by the grant accountant prior to submission. This review will include a targeted examination of expenditure listings to identify and ensure appropriate treatment of any transactions requiring accrual as prepayments. 2. Inconsistencies Between Reimbursement Packets and the General Ledger: For the Highway Planning and Construction Cluster, the SEFA preparation process previously relied on reimbursement request packets compiled by departmental staff. In some cases, these packets did not accurately reflect the timing of expenditures recorded in the general ledger. To enhance accuracy, the City will implement a reconciliation procedure requiring the grant accountant to cross-reference reimbursement packet data with the general ledger during SEFA preparation. This step will help ensure that all expenditures are properly reported in the appropriate fiscal year. The City is confident that these corrective actions will strengthen internal controls over SEFA preparation and prevent recurrence of similar issues in future reporting periods.

Assistance Listing Number, Federal Agency, and Program Name - ALN 20.205, Department of Transportation, Highway Planning and Construction - ALN 21.027, Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - ALN 20.205: SHO M455- 136 (2024), STU M455-129 (2024), STU 2873-215 (2024), CRP M455-164 (2024), SHO M455-137 (2024), SHO M455-135 (2024), and STU M455-125 (2024) - ALN 21.027: N/A Pass-through Entity - ALN 20.205: Colorado Department of Transportation - ALN 21.027: N/A Finding Type - Material weakness Repeat Finding - Yes 2023-003 Criteria - According to 2 CFR 200.502, the determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Generally, the activity pertains to the events that require the nonfederal entity to comply with federal status, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards including grants. Condition - The fiscal year 2024 schedule of expenditures of federal awards (SEFA) that was initially provided to the auditors was incorrect because it included expenditures related to fiscal years 2023 and 2025. 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 - Within Highway Planning and Construction, the expenditures reported on the initial SEFA included $142,724 that related to expenditures incurred in fiscal year 2023. There was also $16,128 that related to expenditures incurred in fiscal year 2024 that was not reported on the initial SEFA. Within Coronavirus State and Local Fiscal Recovery Funds, the expenditures reported on the initial SEFA included $15,921 that related to expenditures incurred in fiscal year 2023 and $99,200 that related to expenditures incurred in fiscal year 2025. Cause and Effect - The City reported federal expenditures in congruence with requests for reimbursement from the federal agency, rather than when the expenditures was incurred. Recommendation - The City should implement controls to ensure that the SEFA is prepared in accordance with applicable rules and regulations. Views of Responsible Officials and Corrective Action Plan - The City of Fort Collins, Colorado has determined that two separate and identifiable root causes led to the inclusion of expenditures from fiscal years 2023 and 2025 in the initial fiscal year 2024 SEFA. 1. Improper Accrual of Prepayments: A small number of transactions involving partial prepayments were not properly accrued in accordance with accounting standards. To address this issue, the City will implement a formal review process where all reimbursement requests are reviewed by the grant accountant prior to submission. This review will include a targeted examination of expenditure listings to identify and ensure appropriate treatment of any transactions requiring accrual as prepayments. 2. Inconsistencies Between Reimbursement Packets and the General Ledger: For the Highway Planning and Construction Cluster, the SEFA preparation process previously relied on reimbursement request packets compiled by departmental staff. In some cases, these packets did not accurately reflect the timing of expenditures recorded in the general ledger. To enhance accuracy, the City will implement a reconciliation procedure requiring the grant accountant to cross-reference reimbursement packet data with the general ledger during SEFA preparation. This step will help ensure that all expenditures are properly reported in the appropriate fiscal year. The City is confident that these corrective actions will strengthen internal controls over SEFA preparation and prevent recurrence of similar issues in future reporting periods.

Assistance Listing Number, Federal Agency, and Program Name - ALN 20.205, Department of Transportation, Highway Planning and Construction - ALN 21.027, Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - ALN 20.205: SHO M455- 136 (2024), STU M455-129 (2024), STU 2873-215 (2024), CRP M455-164 (2024), SHO M455-137 (2024), SHO M455-135 (2024), and STU M455-125 (2024) - ALN 21.027: N/A Pass-through Entity - ALN 20.205: Colorado Department of Transportation - ALN 21.027: N/A Finding Type - Material weakness Repeat Finding - Yes 2023-003 Criteria - According to 2 CFR 200.502, the determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Generally, the activity pertains to the events that require the nonfederal entity to comply with federal status, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards including grants. Condition - The fiscal year 2024 schedule of expenditures of federal awards (SEFA) that was initially provided to the auditors was incorrect because it included expenditures related to fiscal years 2023 and 2025. 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 - Within Highway Planning and Construction, the expenditures reported on the initial SEFA included $142,724 that related to expenditures incurred in fiscal year 2023. There was also $16,128 that related to expenditures incurred in fiscal year 2024 that was not reported on the initial SEFA. Within Coronavirus State and Local Fiscal Recovery Funds, the expenditures reported on the initial SEFA included $15,921 that related to expenditures incurred in fiscal year 2023 and $99,200 that related to expenditures incurred in fiscal year 2025. Cause and Effect - The City reported federal expenditures in congruence with requests for reimbursement from the federal agency, rather than when the expenditures was incurred. Recommendation - The City should implement controls to ensure that the SEFA is prepared in accordance with applicable rules and regulations. Views of Responsible Officials and Corrective Action Plan - The City of Fort Collins, Colorado has determined that two separate and identifiable root causes led to the inclusion of expenditures from fiscal years 2023 and 2025 in the initial fiscal year 2024 SEFA. 1. Improper Accrual of Prepayments: A small number of transactions involving partial prepayments were not properly accrued in accordance with accounting standards. To address this issue, the City will implement a formal review process where all reimbursement requests are reviewed by the grant accountant prior to submission. This review will include a targeted examination of expenditure listings to identify and ensure appropriate treatment of any transactions requiring accrual as prepayments. 2. Inconsistencies Between Reimbursement Packets and the General Ledger: For the Highway Planning and Construction Cluster, the SEFA preparation process previously relied on reimbursement request packets compiled by departmental staff. In some cases, these packets did not accurately reflect the timing of expenditures recorded in the general ledger. To enhance accuracy, the City will implement a reconciliation procedure requiring the grant accountant to cross-reference reimbursement packet data with the general ledger during SEFA preparation. This step will help ensure that all expenditures are properly reported in the appropriate fiscal year. The City is confident that these corrective actions will strengthen internal controls over SEFA preparation and prevent recurrence of similar issues in future reporting periods.

Assistance Listing Number, Federal Agency, and Program Name - ALN 20.205, Department of Transportation, Highway Planning and Construction - ALN 21.027, Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - ALN 20.205: SHO M455- 136 (2024), STU M455-129 (2024), STU 2873-215 (2024), CRP M455-164 (2024), SHO M455-137 (2024), SHO M455-135 (2024), and STU M455-125 (2024) - ALN 21.027: N/A Pass-through Entity - ALN 20.205: Colorado Department of Transportation - ALN 21.027: N/A Finding Type - Material weakness Repeat Finding - Yes 2023-003 Criteria - According to 2 CFR 200.502, the determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Generally, the activity pertains to the events that require the nonfederal entity to comply with federal status, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards including grants. Condition - The fiscal year 2024 schedule of expenditures of federal awards (SEFA) that was initially provided to the auditors was incorrect because it included expenditures related to fiscal years 2023 and 2025. 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 - Within Highway Planning and Construction, the expenditures reported on the initial SEFA included $142,724 that related to expenditures incurred in fiscal year 2023. There was also $16,128 that related to expenditures incurred in fiscal year 2024 that was not reported on the initial SEFA. Within Coronavirus State and Local Fiscal Recovery Funds, the expenditures reported on the initial SEFA included $15,921 that related to expenditures incurred in fiscal year 2023 and $99,200 that related to expenditures incurred in fiscal year 2025. Cause and Effect - The City reported federal expenditures in congruence with requests for reimbursement from the federal agency, rather than when the expenditures was incurred. Recommendation - The City should implement controls to ensure that the SEFA is prepared in accordance with applicable rules and regulations. Views of Responsible Officials and Corrective Action Plan - The City of Fort Collins, Colorado has determined that two separate and identifiable root causes led to the inclusion of expenditures from fiscal years 2023 and 2025 in the initial fiscal year 2024 SEFA. 1. Improper Accrual of Prepayments: A small number of transactions involving partial prepayments were not properly accrued in accordance with accounting standards. To address this issue, the City will implement a formal review process where all reimbursement requests are reviewed by the grant accountant prior to submission. This review will include a targeted examination of expenditure listings to identify and ensure appropriate treatment of any transactions requiring accrual as prepayments. 2. Inconsistencies Between Reimbursement Packets and the General Ledger: For the Highway Planning and Construction Cluster, the SEFA preparation process previously relied on reimbursement request packets compiled by departmental staff. In some cases, these packets did not accurately reflect the timing of expenditures recorded in the general ledger. To enhance accuracy, the City will implement a reconciliation procedure requiring the grant accountant to cross-reference reimbursement packet data with the general ledger during SEFA preparation. This step will help ensure that all expenditures are properly reported in the appropriate fiscal year. The City is confident that these corrective actions will strengthen internal controls over SEFA preparation and prevent recurrence of similar issues in future reporting periods.

Assistance Listing Number, Federal Agency, and Program Name - ALN 20.205, Department of Transportation, Highway Planning and Construction - ALN 21.027, Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - ALN 20.205: SHO M455- 136 (2024), STU M455-129 (2024), STU 2873-215 (2024), CRP M455-164 (2024), SHO M455-137 (2024), SHO M455-135 (2024), and STU M455-125 (2024) - ALN 21.027: N/A Pass-through Entity - ALN 20.205: Colorado Department of Transportation - ALN 21.027: N/A Finding Type - Material weakness Repeat Finding - Yes 2023-003 Criteria - According to 2 CFR 200.502, the determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Generally, the activity pertains to the events that require the nonfederal entity to comply with federal status, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards including grants. Condition - The fiscal year 2024 schedule of expenditures of federal awards (SEFA) that was initially provided to the auditors was incorrect because it included expenditures related to fiscal years 2023 and 2025. 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 - Within Highway Planning and Construction, the expenditures reported on the initial SEFA included $142,724 that related to expenditures incurred in fiscal year 2023. There was also $16,128 that related to expenditures incurred in fiscal year 2024 that was not reported on the initial SEFA. Within Coronavirus State and Local Fiscal Recovery Funds, the expenditures reported on the initial SEFA included $15,921 that related to expenditures incurred in fiscal year 2023 and $99,200 that related to expenditures incurred in fiscal year 2025. Cause and Effect - The City reported federal expenditures in congruence with requests for reimbursement from the federal agency, rather than when the expenditures was incurred. Recommendation - The City should implement controls to ensure that the SEFA is prepared in accordance with applicable rules and regulations. Views of Responsible Officials and Corrective Action Plan - The City of Fort Collins, Colorado has determined that two separate and identifiable root causes led to the inclusion of expenditures from fiscal years 2023 and 2025 in the initial fiscal year 2024 SEFA. 1. Improper Accrual of Prepayments: A small number of transactions involving partial prepayments were not properly accrued in accordance with accounting standards. To address this issue, the City will implement a formal review process where all reimbursement requests are reviewed by the grant accountant prior to submission. This review will include a targeted examination of expenditure listings to identify and ensure appropriate treatment of any transactions requiring accrual as prepayments. 2. Inconsistencies Between Reimbursement Packets and the General Ledger: For the Highway Planning and Construction Cluster, the SEFA preparation process previously relied on reimbursement request packets compiled by departmental staff. In some cases, these packets did not accurately reflect the timing of expenditures recorded in the general ledger. To enhance accuracy, the City will implement a reconciliation procedure requiring the grant accountant to cross-reference reimbursement packet data with the general ledger during SEFA preparation. This step will help ensure that all expenditures are properly reported in the appropriate fiscal year. The City is confident that these corrective actions will strengthen internal controls over SEFA preparation and prevent recurrence of similar issues in future reporting periods.

Assistance Listing Number, Federal Agency, and Program Name - ALN 20.205, Department of Transportation, Highway Planning and Construction - ALN 21.027, Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - ALN 20.205: SHO M455- 136 (2024), STU M455-129 (2024), STU 2873-215 (2024), CRP M455-164 (2024), SHO M455-137 (2024), SHO M455-135 (2024), and STU M455-125 (2024) - ALN 21.027: N/A Pass-through Entity - ALN 20.205: Colorado Department of Transportation - ALN 21.027: N/A Finding Type - Material weakness Repeat Finding - Yes 2023-003 Criteria - According to 2 CFR 200.502, the determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Generally, the activity pertains to the events that require the nonfederal entity to comply with federal status, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards including grants. Condition - The fiscal year 2024 schedule of expenditures of federal awards (SEFA) that was initially provided to the auditors was incorrect because it included expenditures related to fiscal years 2023 and 2025. 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 - Within Highway Planning and Construction, the expenditures reported on the initial SEFA included $142,724 that related to expenditures incurred in fiscal year 2023. There was also $16,128 that related to expenditures incurred in fiscal year 2024 that was not reported on the initial SEFA. Within Coronavirus State and Local Fiscal Recovery Funds, the expenditures reported on the initial SEFA included $15,921 that related to expenditures incurred in fiscal year 2023 and $99,200 that related to expenditures incurred in fiscal year 2025. Cause and Effect - The City reported federal expenditures in congruence with requests for reimbursement from the federal agency, rather than when the expenditures was incurred. Recommendation - The City should implement controls to ensure that the SEFA is prepared in accordance with applicable rules and regulations. Views of Responsible Officials and Corrective Action Plan - The City of Fort Collins, Colorado has determined that two separate and identifiable root causes led to the inclusion of expenditures from fiscal years 2023 and 2025 in the initial fiscal year 2024 SEFA. 1. Improper Accrual of Prepayments: A small number of transactions involving partial prepayments were not properly accrued in accordance with accounting standards. To address this issue, the City will implement a formal review process where all reimbursement requests are reviewed by the grant accountant prior to submission. This review will include a targeted examination of expenditure listings to identify and ensure appropriate treatment of any transactions requiring accrual as prepayments. 2. Inconsistencies Between Reimbursement Packets and the General Ledger: For the Highway Planning and Construction Cluster, the SEFA preparation process previously relied on reimbursement request packets compiled by departmental staff. In some cases, these packets did not accurately reflect the timing of expenditures recorded in the general ledger. To enhance accuracy, the City will implement a reconciliation procedure requiring the grant accountant to cross-reference reimbursement packet data with the general ledger during SEFA preparation. This step will help ensure that all expenditures are properly reported in the appropriate fiscal year. The City is confident that these corrective actions will strengthen internal controls over SEFA preparation and prevent recurrence of similar issues in future reporting periods.

Assistance Listing, Federal Agency, and Program Name - 20.205, U.S. Department of Transportation, Highway Planning and Construction; 15.916, U.S. Department of the Interior, Outdoor Recreation, Acquisition, Development and Planning Federal Award Identification Number and Year - FAINs not available Pass through Entity - ALN 20.205 Colorado Department of Transportiation; ALN 15.916 Colorado Parks and Wildlife/Land and Water Conservation Fund Finding Type - Material weakness Repeat Finding - No Criteria - The Single Audit Act and Uniform Guidance require a nonfederal entity that expends $750,000 or more of federal awards in a fiscal year to have a single or program specific audit. 2 CFR §200.508 (b) indicates that the auditee must prepare financial statements, including the schedule of expenditures of federal awards, in accordance with 2 CFR §200.510. Additionally, 2 CFR §200.502 describes the basis for determining the timing of when federal awards are deemed expended and, therefore, reportable on the schedule. Condition - The schedule of expenditures of federal awards (the "SEFA") was not accurate. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - During the fiscal year ended December 31, 2024, the City expended approximately $22,617,000 of federal funding. The initial draft of the SEFA included the following inaccuracies: ALN 20.205 The expenditures reported on the SEFA were overstated by $19,522 for one award and understated by $145,869 for another award. ALN 15.916 The expenditures reported on the SEFA were overstated by $45,915 The errors noted above have been corrected on the SEFA as of December 31, 2024. Cause and Effect - Controls in place did not ensure the SEFA was complete and accurate for the fiscal period under audit. The errors resulted in the understatement of federal expenditures. Recommendation - We recommend the City implement a process to ensure that the SEFA is complete and accurate. Views of Responsible Officials and Planned Corrective Actions - The City accepts this finding. As part of the revision to the City’s grant process and procedures, we will enhance our master grant tracking spreadsheet to ensure grant expenditures are reported correctly. We will collaborate with city departments to ensure costs are recorded correctly. See the corrective action plan.

Assistance Listing, Federal Agency, and Program Name - 20.205, U.S. Department of Transportation, Highway Planning and Construction; 15.916, U.S. Department of the Interior, Outdoor Recreation, Acquisition, Development and Planning Federal Award Identification Number and Year - FAINs not available Pass through Entity - ALN 20.205 Colorado Department of Transportiation; ALN 15.916 Colorado Parks and Wildlife/Land and Water Conservation Fund Finding Type - Material weakness Repeat Finding - No Criteria - The Single Audit Act and Uniform Guidance require a nonfederal entity that expends $750,000 or more of federal awards in a fiscal year to have a single or program specific audit. 2 CFR §200.508 (b) indicates that the auditee must prepare financial statements, including the schedule of expenditures of federal awards, in accordance with 2 CFR §200.510. Additionally, 2 CFR §200.502 describes the basis for determining the timing of when federal awards are deemed expended and, therefore, reportable on the schedule. Condition - The schedule of expenditures of federal awards (the "SEFA") was not accurate. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - During the fiscal year ended December 31, 2024, the City expended approximately $22,617,000 of federal funding. The initial draft of the SEFA included the following inaccuracies: ALN 20.205 The expenditures reported on the SEFA were overstated by $19,522 for one award and understated by $145,869 for another award. ALN 15.916 The expenditures reported on the SEFA were overstated by $45,915 The errors noted above have been corrected on the SEFA as of December 31, 2024. Cause and Effect - Controls in place did not ensure the SEFA was complete and accurate for the fiscal period under audit. The errors resulted in the understatement of federal expenditures. Recommendation - We recommend the City implement a process to ensure that the SEFA is complete and accurate. Views of Responsible Officials and Planned Corrective Actions - The City accepts this finding. As part of the revision to the City’s grant process and procedures, we will enhance our master grant tracking spreadsheet to ensure grant expenditures are reported correctly. We will collaborate with city departments to ensure costs are recorded correctly. See the corrective action plan.