8. Criteria or specific requirement Per Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200) Subpart D, Post Federal Award Requirements Section 200.303(a), Internal controls, the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per the Frequently Asked Questions, Elementary and Secondary School Emergency Relief Programs (ESSER), Governor's Emergency Education Relief (GEER) Programs, December 7, 2022 Update, a local educational authority has until September 30, 2024 to obligate the American Rescue Plan (ARP) ESSER funds it received and ESSER funds must be liquidated within 120 calendar days after the end of the performance period. The original liquidation period applicable to the District for its ARP ESSER funds was January 28, 2025. The U.S. Department of Education approved extension of the District's liquidation period through March 28, 2026 for funds obligated on or before September 30, 2024. On March 28, 2025, the U.S. Department of Education modified the liquidation period extension to end on March 28, 2025. On May 6, 2025, the liquidation period was extended to May 24, 2025 per a preliminary injunction entered by the U.S. District Court for the Southern District of New York as a result of litigation initiated by the State of New York challenging the U.S. Department of Education's revocation of the March 28, 2026 liquidation period extension. On June 26, 2025, the U.S. Department of Education ultimately reinstated the March 28, 2026 liquidation period extension. 9. Condition On May 15, 2025, ISBE communicated to the District that ARP ESSER recipients had until May 24, 2025 to liquidate obligations and that the District needed to submit its expenditure report to ISBE by May 21, 2025 for ISBE to process and submit to the U.S. Department of Education by the new deadline. On May 21, 2025, the District submitted a claim for reimbursement of expenditures totaling $4,343,814. The expenditures comprising this claim by date incurred and liquidated were as follows: $1,668,710 incurred through May 21, 2025 and liquidated as of that date $31,692 incurred through May 21, 2025 but not liquidated as of that date $325,805 incurred from May 21, 2025 through June 30, 2025 and liquidated as of June 30, 2025 $531,321 incurred from May 21, 2025 through June 30, 2025 but not liquidated as of June 30, 2025 $1,786,286 incurred after June 30, 2025 At May 21, 2025 and June 30, 2025, expenditures totaling $2,675,104 and 2,349,299, respectively, out of the $4,343,814 claimed for reimbursement were not incurred, not liquidated or both and, therefore, did not qualify for reimbursement based on the Federal statutes, regulations and the terms and conditions of the Federal award in effect at those dates. 10. Cause The District's established internal controls over compliance were able to be overridden. '11. Effect The District was not in compliance with the activities allowed or unallowed compliance requirement. 12. Questioned Costs The District's expenditures claimed for reimbursement but not incurred and liquidated as of June 30, 2025 were not reported in the schedule of expenditures of federal awards for the year ended June 30, 2025. These expenditures will be reported in the schedule of expenditures of federal awards when both incurred and liquidated in the year ending June 30, 2026. Accordingly, no questioned costs have been identified. '13. Context The population of sixty-four (64) expenditures comprising the May 21, 2025 claim for reimbursement totaling $4,343,814 were identified as high risk and all were selected for tested to determine the elements of the finding reported herein. However, our sample of thirteen (13) expenditure transactions selected from throughout the year for testing resulted in no identified exceptions. A statistically valid sample was not utilized. 14. Recommendation We recommend that management review its policies and procedures and implement changes to strengthen internal control over compliance. 15. Management's response The District agrees with the auditor's finding and recommendation.