View of Responsible Officials The Foundation is of the opinion that finding number 2025-001 for Cash Management is not applicable to the Equipment for Skilled Trades Training Programs as part of the Virginia Infrastructure Academy under ALN 84-116Z as requests for advance payments were limited to the minimum amounts needed and were timed with actual, immediate cash requirements to carry out the purpose of the approved programs and projects. With regards to College and Career Success for Foster Youth through Work-based Learning Opportunities and Coaching Support under ALN 84-116Z, the Foundation was notified by the U.S. Department of Education on September 12, 2024, that unused principal be returned. On September 25, 2024, the funds in the amount of $753,800 were refunded by wire transfer. This was the only notification the Foundation received from the U.S. Department of Education; no other notification was received regarding other advance payments made during the fiscal year. With regards to Improving the Quality of Early Childhood Educators under ALN 84-116Z, the Foundation did not receive any notification from the U.S. Department of Education requesting that advance payments be returned. In all instances of advance payments, the Foundation maintained funds in interest bearing accounts as outlined in the respective agreements for the three federal awards. With regards to the requests for advances that were made on a quarterly basis, the respective agreements for the three federal awards do not explicitly outline a timeframe for advance payments, nor did these advances trigger the federal government’s threshold for excessive drawdown. Estimated quarterly advance payments were made from the uncertainty of the U.S. Department of Education clawing back award funding while ensuring sufficient cash on hand to support approaching distributions to students and colleges and mitigating risk to the Foundation covering respective distributions with its own funds. Brown Edwards shared the suggested interpretation is a one-to-three-day timeframe between drawdown and distribution. Action taken: The Foundation calculated advance payment balances as of November 4, 2025, and issued respective returns to the U.S. Department of Education on November 5, 2025. Subsequent drawdowns have been made on a reimbursement basis. Action planned: The Foundation will revise its policies and procedures for requesting federal funds to ensure that requests for advance payments be limited to the minimum amounts needed and be timed with actual, immediate cash requirements to carry out the purpose of approved programs and projects. Specific steps: The Foundation will develop and implement a written policy requiring a documented review of immediate cash needs before any federal fund drawdown request is submitted and establishing a process to request funds on a reimbursement basis or just-in-time advance basis to align drawdowns with actual disbursements. Responsibility: The Chief Operating Officer and Finance Manager will work to draft the policy and will bring it to the Audit Committee for review and approval. Timeline: Policy approved and implemented by February 2026.