2025-003 Activities Allowed or Unallowed, Allowable Costs/Cost Principles We acknowledge BDO’s finding regarding an unallowable cost that was initially charged to the Home Investment Partnerships Program. Although the error was able to be rectified, the initial error indicated that internal controls did not prevent or detect the unallowable charge at the time of posting. To strengthen internal controls over allowable costs and ensure expenditures charged to federal programs comply with Uniform Guidance and program-specific requirements, VOAWW will implement the following corrective actions: Strengthened Review of Allowable Costs Before the end of FY26, the Finance Department will enhance its invoice review procedures for all programs. This strengthened review will include verification of: • Allowability under 2 CFR §200 Subpart E • Program specific requirements • Contract terms and approved budgets • Supporting documentation for each cost Review steps will be documented to ensure a clear audit trail. Training for Staff on Federal Allowable Cost Requirements Beginning in FY26, Finance, Grants, and Contract Compliance staff responsible for coding, approving, or reviewing federal expenditures will receive training on: • Allowable cost principles under 2 CFR §200.403–.405 • Program specific cost restrictions • Documentation standards • The importance of internal controls over federal expenditures Before the end of FY26, VOAWW will implement internal controls to ensure that allowability determinations are made internally by trained staff prior to charging costs to federal awards. Centralized Federal Award Compliance Reference By the end of FY26, Contract Compliance will maintain a centralized compliance reference for all federal programs, including allowability rules, program specific restrictions, and documentation requirements. Finance staff will reference this tool during invoice review to ensure consistent application of federal requirements. These corrective actions will strengthen VOAWW’s internal controls over allowable costs, reduce the risk of unallowable expenditures being charged to federal programs, and ensure compliance with Uniform Guidance and HUD program requirements. Responsible Individual: Claire Danielson, VIP of Finance Estimated Completion Date: June 30, 2026