Findings Citing § 200.510

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.

2025-001 Internal Controls over Preparation of the Schedule of Expenditures of Federal Awards and Reporting for Maine DHHS 93.044, 93.045, 93.053 Aging Cluster and Maine DHHS 93.778 Medical Assistance Program (Significant Deficiency in Internal Controls over Compliance and Noncompliance) Criteria: 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.508(b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements. Federal reporting standards require the timely and accurate filing of reports as required by pass-through grantor agreements. Condition and Context: Agreement Closeout Report filed for the Agreement ADS-24-3355B (Medical Assistance Program) for the component period ended 9/30/24 was filed late by 3 days. Federal expenditures were understated for Agreement ADS-24-3355B (93.791 Money Follows the Person Rebalancing Demonstration) by $59,405 due to errors in reconciling grant reports to the SEFA. For the Agreement ADS-24-3004C reporting for the component period ended 9/30/24 contained inaccuracies resulting from budgeted percentage of expenses reimbursable by state and federal agreement funds. Cause: There is a gap in training and understanding of the instructions for the Maine DHHS Agreement Closeout Report and Quarterly Financial Report. There are insufficient internal controls over the preparation, review, and documentation process for the SEFA and supporting documents. Effect: The Agreement Closeout Report was filed 3 days late. Agreement Cost Sharing percentages were incorrectly used on reporting forms. Key information was omitted which prevented the quarterly reports from calculating the amounts due to or from the Agency. Errors in reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. They could also lead to findings and corrective action with funders. Recommendation: Management should review their processes and procedures over preparation and review of reporting, and for tracking of reporting deadlines. Both the preparer and reviewer should have a clear understanding of the required elements and instructions. As part of the review, required elements should be vouched to original source documents including copies of awards, grant reports, and the trial balance profit and loss reports. Any inconsistencies should be resolved before submission. Management should consider training for staff tasked with completing, reviewing, and filing these reports. Views of Responsible Officials and Planned Corrective Actions: Management will review and update processes and procedures over reporting and additional training will be provided as needed to ensure accurate grant reporting and compliance.

Inadequate Internal Controls Over Compliance Related to Identification and Reporting of Assistance Listing Numbers (ALNs) in Schedule of Expenditures of Federal Awards Federal Program State Energy Program ALN 81.141 Energy Efficiency and Conservation Block Grant ALN 81.128 Name of Federal Agency U.S. Department of Energy Compliance Requirement Reporting Type of Finding Internal control over compliance/non-compliance Category Significant deficiency on internal controls over compliance and Other Matter. Criteria Title 2 CFR §200.303 requires non-Federal entities to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, 2 CFR §200.510(b) requires the Schedule of Expenditures of Federal Awards (SEFA) to include the correct Assistance Listing Number (ALN) for each Federal program. Proper identification of ALNs is essential, as different ALNs may be subject to different compliance requirements under the Uniform Guidance and program-specific terms and conditions. Condition During our review of the Schedule of Expenditures of Federal Awards (SEFA), we noted that Federal funds received under the U.S. Department of Energy were not consistently identified and documented under the correct Assistance Listing Numbers. Specifically, expenditures related to ALNs 81.141 and 81.128 were not clearly distinguished or were incorrectly classified. The entity did not have sufficient internal controls in place to ensure that Federal awards were properly identified by ALN at the time funds were received and subsequently recorded and reported on the SEFA. Cause The condition resulted from inadequate internal controls over compliance related to: •The identification of Federal awards upon receipt of funds; •The documentation and tracking of ALNs throughout the grant lifecycle; and •The preparation and review of the SEFA to ensure accurate classification by ALN. Management relied on informal processes and did not implement a formal review or reconciliation procedure to verify that Federal expenditures were recorded under the correct Assistance Listing Numbers. Effect Failure to correctly identify and document the applicable ALN may result in noncompliance with Federal requirements, as different ALNs can carry different compliance requirements, including but not limited to: •Allowable costs and activities. •Period of performance •Reporting requirements •Special tests and provisions; and •Subrecipient monitoring requirements. Misclassification of expenditures by ALN increases the risk that the entity may apply incorrect compliance requirements to a Federal award, potentially leading to unrecognized instances of noncompliance and inaccurate reporting on the SEFA. Additionally, incorrect ALN reporting may affect the determination of major programs and the scope of Single Audit testing. Context Two (2) out of a total of fifteen (15) Federal programs were not consistently identified and documented under the correct Assistance Listing Numbers. Questioned Costs None. Identification as a Repeated Finding This is not a repeat finding from the immediate previous audit. Recommendation We recommend that management strengthen internal controls over compliance by: 1. Implementing formal procedures to identify and document the correct ALN at the time Federal funds are received. 2. Maintaining detailed grant tracking records that clearly link expenditures to the appropriate ALN. 3. Establishing a supervisory review process over the preparation of the SEFA to verify the accuracy and completeness of ALN classifications prior to submission. Views of responsible officials and planned corrective actions Management of the Department agrees with this finding. Refer to the corrective action plan on pages 114-119.

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.

Federal Assistance Listing Number: 20.205, 20.513 Federal Program Name: Highway Planning and Construction, Transit Services Programs Cluster Federal Agency: U.S. Department of Transportation Pass-through Agency: State of California Department of Transportation, Los Angeles County Metropolitan Transportation Authority (LACMTA) Federal Award Number: N/A for ALN 20.205, CA-2023-236-00 for ALN 20.513 Criteria: Per 2 CFR 200.510(b), Financial statements, the auditee is required to prepare a complete and accurate SEFA that reflects actual federal expenditures incurred during the reporting period. In addition, 2 CFR 200.303, Internal controls, requires the auditee to establish and maintain effective internal control over compliance to provide reasonable assurance that federal program information, including SEFA reporting, is accurate, reliable, and free from material misstatement. Condition: During our audit, we identified that the expenditures reported for the Highway Planning and Construction Program in the SEFA included $431,605 in state-funded expenditures that were incorrectly reported as federal expenditures. This resulted in a material overstatement of federal expenditures for the program. A correction was subsequently made to remove the state-funded portion, materially reducing the total federal expenditures reported on the SEFA. We also identified an error within the Transit Services Programs Cluster involving an incorrect federal award identification number. One program was initially reported under federal award number CA-2020-167, which did not correspond to the related federal grant. The correct federal award number is CA-2023-236-00. The City has since updated the SEFA to reflect the accurate award number. Cause: The overstatement and incorrect reporting occurred because internal controls over the SEFA preparation and review process did not provide adequate assurance that expenditures and award information were accurately classified and reported. Review procedures were not designed or executed at a level sufficient to detect that state-funded costs had been commingled with federally reimbursable expenditures prior to SEFA compilation. The controls also did not ensure that grant identification details were verified against current federal award agreements, which allowed one program to be reported with an incorrect federal award identification number. Effect: Because non-federal expenditures were included in the SEFA, the federal expenditures reported for the Highway Planning and Construction Program were materially overstated. The incorrect federal award identification number in the Transit Services Programs Cluster also reduced the accuracy and clarity of the SEFA and created a risk of misidentifying the applicable federal grant award, which could affect federal monitoring or audit oversight. Taken together, these issues increase the likelihood of inaccurate reporting to federal and pass-through agencies, may influence the determination of major programs, and could affect the City’s compliance with federal reporting requirements. Questioned Costs: None. Recommendation: The City should strengthen its internal review procedures for preparing the SEFA to ensure that only federally eligible expenditures are reported and that all program information aligns with current federal award documents. This should include a more detailed reconciliation of project expenditures and award data to their underlying funding sources before amounts are compiled, along with a documented supervisory review to confirm accuracy. Staff responsible for SEFA preparation should receive additional guidance on distinguishing federal from non-federal costs and on verifying federal award identification numbers. Implementing a standardized SEFA preparation checklist and requiring formal sign-off at key review stages would help ensure that errors are identified and corrected before the SEFA is finalized. Views of Responsible Officials and Planned Corrective Action: The City is taking corrective action in response to this finding by strengthening its grant management procedures. The Director of Community Development and Public Works is responsible for overseeing these improvements, which include enhancing coordination among the Public Works Analyst, Grants Coordinator, and the City's contracted engineering firm to clearly distinguish between federally and state-funded Highway Safety Improvement Program (HSIP) activities and ensure that program information aligns with current federal award documents. Key measures include requiring identification of funding sources in Staff Reports submitted to City Council prior to grant application submission, assigning unique project numbers and classifications within the City's financial system (Incode), implementing a reconciliation process to accurately align project expenditures with their funding sources before inclusion in the Schedule of Expenditures of Federal Awards (SEFA), and providing targeted staff training along with a standardized SEFA preparation checklist. All corrective actions are set for implementation effective March 18, 2026. Personnel responsible for implementation: Gerardo Marquez Position of personnel responsible: Director of Community Development and Public Works Expected date of implementation: March 18, 2026

Finding No: 2025-002– Failure to Prepare the Schedule of Expenditures of Federal Awards (SEFA) Federal Programs ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds - ARP Act ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) Name of Federal Agency US Department of Treasury (Pass-through from the Puerto Rico Coronavirus Relief Fund Disbursement Oversight Committee) U.S. Department of Homeland Security (Pass-through program from The Central Office of Recovery, Reconstruction and Resiliency) Category Internal Control; Compliance. Compliance Requirement Reporting Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.510(b) requires the auditee to prepare a Schedule of Expenditures of Federal Awards that includes, at a minimum: • The total federal awards expended for each federal program and CFDA/Assistance Listing number; • The name of the federal agency and pass-through entity, if applicable; • The amount provided to subrecipients, if applicable. Condition The Administration did not prepare the Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year ended June 30, 2025. As a result, the SEFA was not available at the time of the audit and had to be prepared with the assistance of the auditors. Cause Management lacks adequate procedures over the identification, accumulation, and reporting of federal award expenditures necessary to prepare the SEFA. Effect The failure to prepare the SEFA increases the risk that federal expenditures may be incomplete or inaccurate, which could result in noncompliance with Uniform Guidance requirements and improper determination of major programs. Context The Schedule of Expenditures and Federal Awards was not available at the time of the audit and had to be prepared with the assistance of the auditors. Identification of repeat finding None. Questioned costs None. Recommendation We recommend that management establish and maintain effective internal controls and procedures to ensure the SEFA is prepared, reviewed, and completed in accordance with 2 CFR 200.510(b) on a timely basis. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan .

Failure to Identify Single Audit Requirement and Federal Awards (Significant Deficiency in Internal Control) Criteria: In accordance with 2 CFR §200.501, a non-federal entity that expends $750,000 or more in federal awards during the fiscal year is required to have a Single Audit conducted. Additionally, 2 CFR §200.510(b) requires the auditee to prepare a Schedule of Expenditures of Federal Awards (SEFA) that accurately identifies all federal awards expended, including Assistance Listing (ALN) numbers and pass-through entity information.Condition: The auditee did not identify that it met the threshold requiring a Single Audit. In addition, the auditee did not have adequate processes in place to identify and track all federal funds received and expended during the fiscal year. As a result, the initial SEFA prepared by the auditee was incomplete and did not include all federal awards.Context: The deficiency affected the auditee’s process for identifying and reporting federal expenditures across all applicable programs during the fiscal year.Cause: The deficiency is due to a lack of internal controls over identifying federal funding sources and monitoring cumulative federal expenditures, as well as insufficient understanding of Uniform Guidance requirements related to Single Audits and SEFA reporting.Effect: Failure to identify all federal awards and the requirement for a Single Audit resulted in incomplete financial reporting and increases the risk that compliance requirements applicable to federal programs may not be identified or followed. This condition could result in noncompliance with federal regulations and inaccurate reporting of federal expenditures.Recommendation: We recommend that the auditee implement and document procedures to: • Identify all sources of federal funding, including reviewing grant and contract agreements for federal involvement • Track federal expenditures by program and funding source throughout the year • Perform a year-end assessment to determine whether the Single Audit threshold has been met • Ensure the SEFA is complete and accurate, including all required elements • Provide training to relevant personnel on Uniform Guidance and Single Audit requirements Views of Responsible Officials: Management agrees with the finding and has developed a corrective action plan to address the deficiencies noted. The plan includes implementing procedures to identify and track federal awards and ensure compliance with Single Audit requirements, and will be implemented during the next fiscal year. Auditor’s Conclusion: This deficiency represents a significant deficiency in internal control over financial reporting and internal control over compliance, as the controls over identifying, tracking, and reporting federal awards were not sufficient to ensure a complete and accurate SEFA or timely identification of the need for a Single Audit.

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.

Type of finding: Federal Award Situation: Significant deficiency; compliance with federal regulations. Federal Program: All Programs Compliance Requirements: Reporting Prior-Year(s) Audit Finding(s): 2024-006, 2023-005, 2022-007, 2021-006 Questioned Costs: None Condition: The Single Audit reporting package, as defined and required in 2 CRF 200.512 for fiscal year ended June 30, 2025, was not submitted before the deadline established by the federal government. Context: The Municipality is required by law to design and implement procedures that support the preparation of its financial statements. The Municipality could not provide, on a timely basis, the information needed to complete the audit of their financial statements before the due date established by the federal government. Criteria: As per 2 CRF 200.12, the audit, data collection form, and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period. 2 CRF 200.508 states that it is the auditee's responsibility to (1) prepare financial statements, including the schedule of expenditures of federal awards in accordance with 2 CFR 200.510, (2) promptly follow up and take corrective action on audit findings, including preparing a summary schedule of prior audit findings and a corrective plan, and (3) provide the auditor access to personnel, accounts, books, records, supporting documentation, and any other information needed for the auditor to perform the audit required by this part, among other things. Cause: The Municipality’s accounting system does not provide the necessary information for the compilation of their financial statements. In order to address this situation, the Municipality has engaged a consultant to assist with the preparation, analysis, and necessary adjustments to prepare the Municipality’s financial statements. However, this procedure involves the participation of various municipal employees at different levels in the Municipality’s organizational structure which adds time to an already time-consuming task. The financial statements are finally available for audit after being approved by the Municipality. The Municipality issued their June 30, 2024 on July 2, 2025 and submitted their data collection form on July 21, 2025. This situation prevented the timely submission of the current fiscal year Single Audit reporting package. Effect: Because of the situation described above, the financial records needed for the preparation and subsequent audit of the financial statements were not obtained timely. The Municipality did not comply with the report submission requirement since the audit was not submitted within nine months after their fiscal period end date. Auditor’s recommendation: Management should continue to fulfill their auditee responsibilities as stated in 2 CRF 200.508, which among other things, require management to prepare appropriate financial statements and provide the auditor with access to personnel, accounts, books, records, supporting documentation, and other information as needed for the auditor to perform the audit to ensure that subsequent financial reporting packages are submitted timely. Views of Responsible officials and Corrective Actions: The Municipality shall establish procedures, training programs, and internal controls to ensure compliance with the preparation and timely submission of the Single Audit Report to the Federal Audit Clearinghouse, as required by the OMB Super Circular Uniform Guidance and in accordance with the nine-month deadline established therein. In addition, the Department of Finance will monitor the progress of the work, including the preparation of financial statements, as well as the external audit and the single audit, so that for the fiscal year ending June 30, 2026, the reports are submitted by the established deadline of no later than March 31, 2027. Audit Status: Unresolved

Reference Number 2025-004 Evaluation of Finding Material Weakness and Noncompliance: Incomplete Schedule of Expenditures of Federal Awards Condition The City failed to provide a complete schedule of expenditures of federal awards (SEFA) for the fiscal year, leading to inaccuracies pertaining to the ARPA program. This omission resulted in a direct impact on the determination of major programs. Criteria According to the Government Auditing Standards (Yellow Book) and the Uniform Guidance, 2 CFR Part 200, Subpart F—Audit Requirements, sections 200.508 and 200.510, entities receiving federal awards must prepare and submit a complete and accurate SEFA as part of their annual financial reporting. This schedule is crucial for auditors to determine major programs and conduct the necessary audits in compliance with federal regulations. Cause of Condition The incomplete SEFA was caused by a lack of oversight and insufficient internal controls within the City's financial management department. Effect or Potential Effect The failure to provide a complete SEFA has significant implications, including: • Inaccurate determination of major programs, which can affect the scope and quality of the audit process. • Increased risk of non-compliance with federal regulations, potentially leading to financial penalties and loss of federal funding. Recommendation To address this material weakness, the following actions are recommended: • Develop detailed procedures and timelines: Establish and enforce comprehensive procedures and timelines for the preparation and submission of the SEFA to ensure completeness and accuracy. • Enhance staffing and resources: Allocate adequate staffing and resources to the financial management department to support the accurate compilation and timely submission of the SEFA. • Provide comprehensive training: Offer training to financial management staff on the requirements and importance of the SEFA, including techniques for ensuring its accuracy and completeness.. • Regularly audit the SEFA preparation process: Conduct regular audits of the SEFA preparation process to ensure compliance with established policies and procedures and address any deficiencies promptly. This should be completed monthly and at a minimum quarterly. By implementing these recommendations, the City can strengthen its internal controls, improve the accuracy of its financial reporting, and ensure compliance with Government Auditing Standards and other regulatory requirements.

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.

Submission of the Audit Reporting Package and Data Collection Form (Repeat of Finding 2024-007) Federal Agency: Various Assistance Listing Number: Multiple Compliance Requirement: Reporting Criteria: Per 2 CFR §200.510(b), the auditee must prepare a Schedule of Expenditures Federal Awards (SEFA) for the period covered by the auditee’s financial statements. Per §200.512(a), the SEFA must be submitted to the Federal Audit Clearinghouse (FAC) within the required deadline. Condition: The audit reporting package and data collection form for the year ended June 30, 2025, was not submitted to the FAC within the timeframe as required by the Uniform Guidance. Cause: The Organization did not timely submit the audit reporting package and data collection form due to delays in completing the FY25 audit. The delayed completion of the FY24 audit caused a cascading impact on the timing of the FY25 audit. Effect: To qualify as a low-risk auditee, 2 CFR section 200.520 requires the audit reporting package and data collection form to be submitted to the FAC by the due date for each of the previous two years. Late filing will result in noncompliance with timely submission of financial information to the grantor agencies. Recommendation: We recommend the Organization develop and monitor a formal audit timeline that accounts for the audit reporting package and data collection form submission deadlines to help ensure future filings are submitted in accordance with federal requirements. Questioned Costs: None Responsible Official's Response: CMJTS acknowledges the delay and has been making improvements to ensure that the Audit Reporting package and Data Collection Form are submitted timely and accurately. Accounting staff have been given additional training and internal procedures have been updated. Continued ongoing training and procedure updates will be done to ensure compliance.

2025-006 - Preparation of the Schedule of Expenditures of Federal Awards Finding Type: Material weakness in internal control over compliance. Criteria: The Uniform Guidance (2 CFR 200.302 and 2 CFR 200.510(b)) requires that non-Federal entities maintain records that adequately identify the source and application of Federal awards and prepare a Schedule of Expenditures of Federal Awards (SEFA) that is complete and accurate. Condition: The City did not prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year ended June 30, 2025. A complete and accurate SEFA was prepared by the external auditor during the audit process. Cause: This condition is the result of the City’s lack of procedures and internal controls to identify, track, and report Federal award activity necessary to prepare the SEFA. Effect: As a result of this condition, the City did not maintain adequate internal control over compliance related to Federal reporting requirements and was not able to ensure that all Federal expenditures were identified and reported in accordance with Uniform Guidance. Recommendation: The City should implement procedures to identify and track Federal awards and expenditures and prepare a complete and accurate SEFA in accordance with Uniform Guidance requirements. Management Response: See Corrective Action Plan.

2025-001 16.575 Crime Victims Assistance Criteria: According to 2 CFR 200.510, the auditee is responsible for preparing a Schedule of Expenditures of Federal Awards (SEFA) that includes all federal awards received and expended, including the Assistance Listings Number (CFDA), grant numbers, and agency names. Condition: During the audit, management did not identify the total amount of federal funds received during the fiscal year. Context and Criteria: Entities that receive federal funds must have written policies, procedures, and standards of conduct (“policies”) as required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively) for compliance with Uniform Guidance. Cause: Management did not include all grants with federal funding in their SEFA. Effect: The SEFA was inaccurate, leading to an incorrect determination that the Organization fell under the Single Audit requirement of $750,000. Recommendation: Management should review all grant agreements for Assistance Listing Numbers and pass-through identification information. Management should reconcile the SEFA to the general ledger periodically throughout the year. View of Responsible Officials and Planned Corrective Actions: Management will review the SEFA process and make changes as necessary.

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.

Finding 2025-007 – Failure to Provide Schedule of Expenditures of Federal and State Grant Awards (Material Weakness) Information on the Federal Program – HRSA Health Center Programs, FALN 93.224, June 30, 2025; U.S. Department of Labor Workforce Development Adult Program, FALN 17.258; Department of Labor Workforce Development Youth Program, FALN 17.259 Criteria – Uniform Guidance 2 CFR §200.302(b) requires financial management systems to provide accurate, current, and complete disclosure of financial results of each federally funded program. Additionally, 2 CFR §200.510(b) requires auditees to prepare a Schedule of Expenditures of Federal and State Grant Awards (SEFA) that properly presents federal expenditures by program and assistance listing, supported by the general ledger and accounting records. Condition – During our review of restricted funding programs, restricted program expenditures could not be readily identified in the general ledger. Additionally, OIC was unable to provide a Schedule of Expenditures of Federal and State Grant Awards (SEFA) for audit review. Cause – OIC has not established formal processes to track federal expenditures by program within the general ledger, nor procedures to compile and reconcile a SEFA annually. Management oversight controls related to federal reporting requirements were not adequately implemented. Effect – The absence of a SEFA and lack of identifiable federal expenditures impair OIC’s ability to demonstrate compliance with Single Audit requirements and federal grant terms. This condition increases the risk of inaccurate federal reporting, audit findings, and potential noncompliance with Uniform Guidance. Questioned Costs – $0 Perspective – Although no questioned costs were identified, the lack of a SEFA represents a fundamental compliance deficiency. The inability to readily identify federal expenditures increases audit risk and limits transparency over federal award activity. This finding affects compliance reporting rather than individual transactions. Recommendation – We recommend that the Board of Directors and Audit Committee require management to develop and execute a comprehensive, time-bound remediation plan to address this material weakness and restore effective internal control over revenue recognition and accounts receivable. The remediation plan should be formally reviewed and approved by the Audit Committee and include clearly defined milestones, responsible owners, and reporting protocols. Additionally, we recommend that the Audit Committee: • Maintain active oversight of remediation progress, including periodic updates from management on the design and implementation status of corrective actions. • Require validation that revised controls are not only designed appropriately but are operating effectively for a sustained period, supported by documentation and management certification. • Ensure adequate resourcing and system capability are in place—whether through process redesign, system integration, or external support—to achieve GAAP-compliant revenue recognition and reliable billing system reconciliations. • Evaluate ongoing compliance implications for federal programs, particularly HRSA Section 330, to confirm that corrective actions sufficiently address Uniform Guidance and Single Audit requirements. Timely and effective remediation of this material weakness is critical to restoring confidence in OIC’s financial reporting, strengthening stewardship of federal funds, and reducing the risk of continued adverse audit and compliance outcomes. View of Responsible Officials – Management concurs with the finding. OIC will formalize federal award tracking and SEFA preparation procedures to ensure federal expenditures are complete, accurate, and readily identifiable by program.

Assistance Listing Number, Federal Agency, and Program Name - 21.027 - U.S. Department of the Treasury - COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - N/A Pass through Entity - Cook County Health Finding Type - Significant deficiency Repeat Finding - No Criteria - 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 that includes total federal awards expended. The SEFA must be complete and accurately reflect all federal expenditures. Condition - The Organization’s SEFA for the year ended June 30, 2024 was not complete. Specifically, certain federal expenditures were omitted from the SEFA. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - No questioned costs were identified, as the issue relates to the completeness of SEFA reporting rather than the allowability, allocability, or reasonableness of the underlying expenditures. Identification of How Questioned Costs Were Computed - N/A Context - During our procedures, we noted that $668,038 of expenditures related to the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program was not included on the fiscal year 2024 SEFA, even though these expenditures were incurred in fiscal year 2024 and should have been reported. Management identified this omission during the preparation of the fiscal year 2025 SEFA. While additional procedures were performed to assess completeness, no other omitted federal expenditures were identified. Cause and Effect - Although the Organization has a formal SEFA preparation and review process, the control did not operate effectively to identify all sources of federal funding. Specifically, CSLFRF funding was not identified by management as federal assistance and, therefore, was not included in the population subject to SEFA reporting and review in fiscal year 2024. The fiscal year 2024 SEFA was understated by $668,038. Although the omission did not impact the determination of major programs for fiscal year 2024, an incomplete SEFA increases the risk that federal expenditures are not fully identified and could result in inaccurate reporting and potential noncompliance with the Uniform Guidance requirements. The fiscal year 2025 SEFA properly excludes these expenditures. Recommendation - We recommend that management strengthen procedures over SEFA completeness by enhancing the process used to identify federal funding sources. This may include: • Implementing a centralized and regularly updated listing of all funding sources that clearly identifies federal awards, including pass through funding • Establishing procedures to evaluate new or amended agreements for federal characteristics at the time of award • Enhancing the SEFA review process (e.g., CFO review) to include a formal reconciliation of federal expenditures to the general ledger and grant listings, with specific consideration of funding sources that may not be clearly labeled as federal These enhancements will help ensure all federal expenditures are identified and accurately reflected in the SEFA. Views of Responsible Officials and Corrective Action Plan - Management agrees it is important to have a SEFA preparation process that allows the identification of all sources of federal funding. In addition to current procedures, management will confirm with grantors directly when grant award agreements are silent on whether awards are sourced from federal funding and document the confirmations from grantors.

Finding 2025-003 Accounting for Grants, Schedule of Expenditures of Federal Awards, and Fiscal Man-agement (Material Weakness) Assistance Listing Number and Title: 84.184H Title IV ESEA, School Based Mental Health Name of Federal Agency: U.S. Department of Education Criteria: Per 2 CFR §200.510(b), the auditee must prepare a complete and accurate Schedule of Federal Expenditures (SEFA) for the period covered by the auditee’s financial statements and submit it with the reporting package by the date required by auditors. The SEFA must include total federal awards expended by Assistance Listing (ALN, formerly CFDA), pass-through entity identifying numbers as applicable, the amount provided to subrecipients (if any), and other required disclosures. The SEFA must include all federal expenditures and awards for the year reported and be reconciled to the General Ledger. Condition: The District did not timely prepare an accurate Schedule of Expenditures of Federal Awards (SEFA). The SEFA provided for audit did not reconcile to the District’s general ledger and contained multiple inaccuracies, including reporting federal expenditures in excess of current-year general ledger activity and misclassification of awards, with certain state programs incorrectly reported as federal programs. Cause: The District lacked effective internal controls over the preparation and review of the Schedule of Expenditures of Federal Awards. Specifically, expenditures reported on the SEFA were not reconciled to the District’s general ledger, and there was no documented review process to verify program classification or reported amounts. Changes in finance staff and the incomplete status of the District’s general ledger at year-end further contributed to the errors and untimely completion of the SEFA. Effect or Potential Effect: Expenditures of federal awards may be reported incorrectly and not be detected and corrected. Because the Auditee’s SEFA was completed incorrectly and not reconciled to the general ledger the SEFA was materially misstated, prior to auditors’ correction recommendations. Questioned Cost: None noted Context: The Schedule of Expenditures of Federal Awards (SEFA) is a required supplementary schedule for Single Audit reporting and is intended to accurately reflect federal award activity in accordance with Uniform Guidance requirements. During the audit, the District provided an initial SEFA that was not timely and contained material inaccuracies. The re-ported expenditures did not reconcile to the District’s general ledger. Certain programs were incorrectly identified as feder-al rather than state awards, and some federal expenditures exceeded amounts recorded in the accounting records. Because the SEFA was neither complete nor accurate at the time of submission, auditors were required to perform addi-tional procedures to identify errors, investigate discrepancies, and propose audit adjustments. Thei extended the audit timeline and increased the risk of noncompliance with federal reporting requirements. Repeat of a Prior-Year Finding: No Recommendation: The District should strengthen internal controls over SEFA preparation by ensuring the general ledger is finalized prior to preparation, reconciling all reported expenditures to accounting records, and implementing a docu-mented review and approval process to verify accuracy and proper program classification. Strengthening procedures, cross training staff, and implementing supervisory review and approval process to verify accuracy, completeness and proper classification of federal versus state awards will enhance compliance with Uniform Guidance, and reduce the risk of future audit findings, and support a more efficient and timely audit process. District’s Response: The District agrees with the finding and recognizes that staffing changes and an incomplete year-end close contributed to the SEFA issues. The District is strengthening reconciliation, review, and oversight procedures to en-sure timely and accurate SEFA reporting in future years. Corrective Action Plan: The District transitioned to a new accounting software for the year ended June 30, 2026. The new system will allow for more clear tracking of individual federal awardS. that are required to be reported on the Schedule of Expenditures of Federal Awards. Additionally, the new business manager for the 2026-2027 fiscal year has multiple years' experience in preparing Schedules of Expenditures of Federal Awards. Planned Implementation Date: August 1, 2026 Responsible Person: District Finance Director

Finding Reference: 2025-004 (cross-referenced as 2025-001) Type of Finding: Material Weakness in Internal Control Over Compliance and Material Noncompliance • Federal Agency: U.S. Department of Housing and Urban Development / Department of Health and Human Services / Department of Treasury / Department of Homeland Security / Department of Agriculture / U.S. Federal Transportation Administration and U.S. Environmental Protection Agency • Federal Program Name: Housing Choice Voucher / Community Service Block Grant Program Recovery Grant / Housing Opportunities for People with Aids / State Block Grant Program / Community Service Block Grant Program / Title III, Part C, Nutrition Services / Coronavirus State and Local Recovery Funds / Coronavirus Relief Funds / Community Disaster Loan / Public Assistance Grant / Rural Housing Preservation Grant / Formula Grants for Rural Areas and Cleanup Cooperative Agreements. • Assistance Listing Number (ALN): 93.569 / 93.045 / 21.027 / 21.019 / 97.030 / 97.036 / 10.433 / 20.509 and 66.818 • Federal Award Number and Year: 21.019 – CRF-AFFAF Pass-Through Entity: 93.569 – Families and Children Administration and 20.509 – Department of Transportation and Public Works Criteria or Specific Requirement: Pursuant to Uniform Guidance (2 CFR 200.510(b)), the auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements which must be accurate and reconciled. Furthermore, 2 CFR 200.302 requires non-federal entities to establish financial management systems that provide accurate, current, and complete disclosure of the financial results of each federally- sponsored project or program, and to maintain effective control over and accountability for all funds, property, and other assets. Condition (Cross-Reference): The Municipality’s core accounting system lacked the technical and functional capacity to accurately aggregate transactions and produce reliable financial records or balanced reports due to an un-reconciled migration of historical opening balances. (Cross-Reference): The complete details regarding the operational failure of the financial software system, the database corruption, and the timeline are fully described in Finding 2025-001 under Section II – Financial Statement Findings of this schedule. Effect or Potential Effect: Because the core accounting database cannot output accurate balances, the Municipality is unable to verify the completeness or accuracy of its Trial Balances by Funds or Accounts. Questioned Costs: $0.00 (None). Although the accounting system failed to produce reports, no specific unallowable transactions or questioned costs were identified during our compliance testing. Cause: See Finding 2025-001 for the root cause regarding inadequate data-validation protocols and poor system-migration oversight by management. Recommendation: We recommend that management implement the exact corrective action plan detailed in Finding 2025- 001. In addition, management must establish an interim manual ledger or spreadsheet tracking matrix to ensure that all federal expenditures for this major program are manually reconciled with federal drawdowns and physical invoices until the core accounting system

Material Weakness – Finding 2025-002: Schedule of Expenditures of Federal Awards Completeness Statement of Condition In connection with our audit, management initially represented that the schedule of expenditures of federal awards was complete and accurate. During the course of the audit, in response to auditor inquiry regarding another grant held by the Organization, management determined that the grant represented federal funds passed through the Housing Authority of Cook County, Illinois under State and Local Fiscal Recovery Funds, ALN 21.027, and that the related expenditures of $709,506 had not been included in the schedule of expenditures of federal awards as initially prepared. This indicates that the Organization's controls did not identify and accumulate all federal awards expended during the year, specifically federal awards received as pass-through funding from a local government unit. Criteria Title 2 U.S. Code of Federal Regulations Part 200 (Uniform Guidance) requires the auditee to prepare a schedule of expenditures of federal awards that includes the total federal awards expended for the period (2 CFR 200.508 and 200.510(b)). Federal awards expended include awards received indirectly from pass-through entities, including state and local governments such as counties. The non-Federal entity is also required to establish and maintain effective internal control over the federal award that provides reasonable assurance the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the award (2 CFR 200.303). A complete and accurate schedule of expenditures of federal awards is necessary for the proper determination of major programs and the scope of the single audit. Cause The Organization's process for identifying federal awards did not include adequate procedures to detect federal funds passed through local government entities. The grant was initially treated as a non-federal award because its federal source was not apparent on its face, and the grant agreement and related funder documentation were not evaluated for indicators of federal funding (such as an Assistance Listing Number, a federal award identification number, the identity of the originating federal agency, or references to the Uniform Guidance). Effect A federal award was omitted from the schedule of expenditures of federal awards as initially prepared, resulting in an understatement of reported federal expenditures of $709,506. An incomplete schedule could result in incorrect determination of major programs and audit scope and in noncompliance with the reporting requirements of the Uniform Guidance. The schedule was subsequently revised to include the program. Questioned Costs None noted. Perspective The finding relates to the identification of a single federal pass-through award received from a local government unit. While isolated to that award, it reflects a deficiency in the design of the Organization's controls over the identification of federal awards. Statistical Sample A statistical sample is not applicable to this finding. Repeat Finding This audit finding is not a repeat finding. Recommendation We recommend that the Organization implement procedures to identify all federal awards expended, including funds passed through state and local governments. For each grant and contract, management should review the executed agreement and related funder documentation for indicators of federal funding, including an Assistance Listing Number, a federal award identification number, the originating federal agency, the pass-through entity identifying number, and references to the Uniform Guidance, and should confirm the federal funding status with the pass-through entity when it is not clear. The Organization should maintain a centralized listing of awards that is reconciled to the general ledger and reviewed for completeness in preparing the schedule of expenditures of federal awards. View of Responsible Officials Management agrees with the finding. Management will implement procedures to identify all federal awards expended, including pass-through awards received from state and local government units, and to evaluate grant agreements and funder documentation for indicators of federal funding, so that the schedule of expenditures of federal awards is complete and accurate.

Federal Program Information: Student Financial Assistance Cluster (ALN: Various), Child and Adult Care Food Program (ALN: 10.558), and Substance Abuse and Mental Health Services Projects (ALN: 93.342) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): L. Reporting - Per Uniform Guidance, §200.510(b), the auditees receiving federal funding are required to prepare a schedule of expenditures of Federal awards (the “Schedule”) for the period covered by the auditee's financial statements. 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. At a minimum, the Schedule should list individual Federal programs by Federal agency and provide total Federal awards expended for each Federal program during the entity’s fiscal year. Condition: During our audit procedures, we noted that the College did not prepare the Schedule for the year ended May 31, 2025. Cause: Insufficient internal controls and administrative oversight with respect to the timely preparation and review of the Schedule. Effect or Potential Effect: Lack of appropriate and timely preparation and review of the Schedule by management increases the risk that the amounts, contract or grant names, ALN information, and classification of the awards are presented incorrectly and that federal awards are not managed in accordance with Uniform Guidance. Questioned Costs: None. Context: The College did not prepare a Schedule for the year ended May 31, 2025. Additionally, management was unaware of certain federal awards received during the year. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend that the College implement additional internal controls and enhance their current policies and procedures to effectively maintain a detailed Schedule that contains the correct amounts, contract or grants names, ALN information and classification of the awards, which can be more readily reconciled to the underlying general ledger detail prior to receipt by the auditors. We also recommend that frequent cross departmental communication is established to ensure that all federal expenditures incurred and federal awards received during the year are appropriately reflected within the Schedule as required. The implementation of these internal controls will ensure that the Schedule is accurate/complete and also ensure that federal awards are managed appropriately in accordance with Uniform Guidance. Views of Responsible Officials: Management acknowledges the deficiency in the preparation and oversight of the Schedule of Expenditures of Federal Awards (SEFA) for the year ended May 31, 2025. To address this finding, the College will: • Implement a formal SEFA preparation policy aligned with 2 CFR §200.510(b) • Develop and maintain a centralized federal awards tracking log identifying: o Federal agency o Program name o Assistance Listing Number (ALN) o Award number o Pass-through entity (if applicable) o Expenditures by fiscal year • Establish quarterly reconciliations between the general ledger and the federal awards tracking log • Require structured cross-departmental communication between the Business Office, Financial Aid Office, Grants Administration, and program departments to ensure all federal awards received and expended are identified timely • Implement documented management review and approval of the SEFA prior to submission to auditors These corrective measures will strengthen internal controls over federal award tracking, improve the accuracy and completeness of the SEFA, and ensure compliance with Uniform Guidance requirements.

SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding 2025-001 Federal Award Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance - Reporting ALN and Name: 81.042 - Weatherization Assistance for Low Income Persons Federal Agency: Department of Energy (DOE), Passed through the Alaska Housing Finance Corporation Criteria Per 2 CFR 200.510(b) and Uniform Guidance, the auditee is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) that is complete and accurate, and to provide information reconciling the SEFA to the financial statements and underlying accounting records. Auditors are required to obtain sufficient appropriate audit evidence regarding the completeness and accuracy of the SEFA and underlying population data. Condition During the audit, it was noted that the Organization did not perform reconciliation procedures between the population data used for federal program reporting of direct client expenditures and the financial accounting records. As a result, the audit team performed additional procedures to assess the completeness of the population and identified an unreconciled difference of $8,254 between the population and the trial balance. Cause The Organization did not have adequate procedures in place to ensure that the population data for federal program reporting was reconciled to the financial accounting records. Effect Due to the lack of reconciliation and the resulting unreconciled difference, the auditor was unable to obtain sufficient appropriate audit evidence regarding the completeness and accuracy of the population data for the federal program. This constitutes a scope limitation and may affect the auditor’s ability to express an unmodified opinion on compliance for the program. Questioned Costs $8,254. This amount represents the unreconciled difference between the population and the trial balance. Context The population data consisted of a listing of all clients (homes weatherized by the Organization, including readiness) with expenditures charged to the major program during the fiscal year being audited. The organization’s procedures did not include reconciling the population data used for federal program reporting to the financial accounting records. Such expenditures in the population data consisted of direct client costs which totaled $495,220 and reconciled direct expenditures reported on the Organization's trial balance totaled $503,474, resulting in an unreconciled difference of $8,254 between the population and the trial balance. This deficiency affects the reporting and internal control over compliance requirements for the program. The lack of reconciliation procedures increases the risk that errors or omissions in federal expenditures may not be detected or corrected in a timely manner, potentially impacting the completeness and accuracy of the SEFA. Recommendation We recommend that the Organization implement procedures to ensure that all population data used for federal program reporting is reconciled to the financial accounting records. This should include periodic reconciliations and documentation of any differences identified and resolved. Views of responsible officials and planned corrective actions Interior Weatherization, Inc. agrees with the finding and will implement monthly reconciliation procedures to ensure that direct client expenditures reconcile and adequately support the financial accounting records and reporting submitted to the grantor. See the corrective action plan.

Criteria: The District is required to have internal controls in place that enable it to prepare complete financial statements, including the schedule of expenditure of federal awards in accordance with generally accepted accounting standards and in accordance with the Uniform Guidance at 2 CFR 200.510(b). Condition: The District did not record federal grant income or expenses for the Water and Waste Disposal Systems for Rural Communities program. Cause: The District failed to have internal controls to properly record all federal grant activity and identify federal funds. Effect: The District did not record federal grant income or expenditures for the Water and Waste Disposal Systems for Rural Communities. The exclusion resulted in a material misstatement of contributed capital and construction in process. In addition, management engaged the auditor to prepare the schedule of expenditure of federal awards. Management reviewed, approved and accepted responsibility for the schedule of expenditure of federal awards prior to its issuance. Recommendation: We recommend that management review their procedures for identifying federal funds and review the costs and benefits involved to retain a consultant with the required expertise to prepare the schedule of expenditure of federal awards. Response: Management agrees with the finding and will review internal control procedures related to the recording of federal grant activity and cost to retain a consultant with the required expertise to prepare the schedule of expenditure of federal awards.

Criteria: The District is required to have internal controls in place that enable it to prepare complete financial statements, including the schedule of expenditure of federal awards in accordance with generally accepted accounting standards and in accordance with the Uniform Guidance at 2 CFR 200.510(b). Condition: The District did not record material federal grant income and expenses for the Coronavirus State and Local Fiscal Recovery Fund program in the correct period. Cause: The District failed to have internal controls to properly record all federal grant activity in the correct period and identify federal funds. Effect: The District did not record all federal grant income and expenses for the Coronavirus State and Local Fiscal Recovery Fund program in the correct period. The exclusion resulted in a material misstatement of contributed capital and construction in process. In addition, management engaged the auditor to prepare the schedule of expenditure of federal awards. Management reviewed, approved and accepted responsibility for the schedule of expenditure of federal awards prior to its issuance. Recommendation: We recommend that management review their procedures for identifying federal funds and recording federal funds in the proper period. In addition, we recommend that management review the costs and benefits involved to retain a consultant with the required expertise to prepare the schedule of expenditure of federal awards. Response: Management agrees with the finding and will review internal control procedures related to the recording of federal grant activity and cost to retain a consultant with the required expertise to prepare the schedule of expenditure of federal awards.

Preparation of and Internal Controls Over Monthly Invoicing and SEFA Preparation Significant deficiency Condition: As a result of our audit procedures and review of the SEFA, we proposed adjustments to the SEFA, which resulted in a material change in total expenditures of federal awards. Additionally, for two months, the Organization didn't update costs incurred to be billed to the federal government on their monthly invoicing. Criteria: 2 CFR Part 200 Cause: There was not an independent review of the SEFA by someone other than the preparer. Effect: Audit adjustments were required for the SEFA to be materially correct in accordance with 2 CFR Part 200.510(b). Recommendation: We recommend that prior to sending the SEFA to the auditors, management perform a detailed review of the SEFA, general ledger, and monthly invoicing spreadsheets for each federal program included on the SEFA, to ensure the reports are consistent and the SEFA is complete and accurate. If possible, this review should be completed by an individual who did not prepare the SEFA. View of Responsible Official and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.

Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.