Recommendation We recommend the College develop and implement adequate policies and procedures to ensure charging of expenses for allowability are based off approved amounts. Corrective Action Unfortunately, due to the untimely completion and release of the June 30, 2023 audit report (released on August 8, 2025 - over two years after the end of the June 30, 2023 fiscal year audit), the College did not have the opportunity to review and begin a timely process of addressing a majority of the audit findings until well after the end of the audit period. While the College is committed to corrective action, the delayed delivery of the June 30, 2023 audit limited the ability to implement corrective measures earlier. The College is working proactively to ensure that these issues are resolved going forward. It is important to note that Southeast New Mexico College was a newly established independent community college, having formally separated from New Mexico State University (NMSU) as of April 2022. During this transition period, many administrative processes, including federal grant compliance procedures, were in the process of being developed, transitioned, and implemented independently from NMSU systems. As a result, certain policies, procedures, and documentation processes were not yet fully established or operational at the time of the audit. Corrective Action Taken / Planned: Policy and Procedure Development The institution will revise or develop written policies and procedures to ensure compliance with 2 CFR §200.430. The revised procedures will include: • Detailed requirements for supporting documentation for payroll costs. • Clear guidance on time and effort reporting. • Procedures for periodic payroll reconciliation between payroll records and grant charges. Staff Training Training will be provided for payroll, grants accounting, and department personnel involved in charging payroll costs to federal awards to ensure understanding and compliance with the new procedures. Payroll Reconciliation A process will be established to reconcile payroll charges to the grant with actual payroll records at least quarterly, with reviews and approvals documented. Effort Certification Employees whose salaries are charged to federal grants will be required to complete effort certifications, which will be reviewed and retained per federal guidelines. Monitoring and Review Grant accounting and payroll offices will implement an annual review process to ensure continued compliance and address any gaps or errors identified. Due Date of Completion: August 31, 2025 Responsible Part(ies) Vice President for Business and Finance (or appropriate official), Dean of Business and Finance, Restricted Funds Manager, Payroll Manager