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SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Ref. Questioned No. Compliance and Internal Control over Compliance Findings Costs 2025-001 Level of Effort - Changes in Program Plans - Significant Deficiency in Internal Control over Compliance and Noncompliance Federal Agency: Department of Education Program: ALN No. 84.362A Native Hawaiian Education Award number and award year: S362A230064, award year 2024 Criteria:The Grant Award Notification for the Keiki Steps program requires the Project Director to maintain a 100% level of effort. Under 2 CFR 200.308, recipients must obtain prior written approval from the Federal agency for disengagement from a project for more than three months, or a 25 percent reduction in time and effort devoted to the Federal award by the approved project director or principal investigator. Condition: During our testing, we noted that the Project Director devoted approximately 30% of their time and effort to the Keiki Steps program during the year ended December 31, 2025, compared to the 100% level of effort required by the award, a reduction of approximately 70 percent. INPEACE did not request or obtain prior written approval from the U.S. Department of Education for this reduction. Cause: Due to shifts in personnel and responsibilities, the Project Director devoted a portion of their time to activities outside of the Keiki Steps program. INPEACE did not have adequate procedures to identify when a reduction in the Project Director’s level of effort required prior written approval, or to obtain prior written approval before the changes occurred. Effect: INPEACE did not comply with the prior approval requirements for changes in the program plans. As a result, the U.S. Department of Education did not have the opportunity to evaluate whether the changes would affect the leadership and oversight of the Keiki Steps program committed under the award. However, INPEACE appropriately charged the Federal award only for the actual time personnel devoted to the Keiki Steps program; therefore, the exception did not result in personnel costs being charged for services that were not provided. $ -- SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) Ref. Questioned No. Compliance and Internal Control over Compliance Findings Costs 2025-001 Level of Effort - Changes in Program Plans - Significant Deficiency in Internal Control over Compliance and Noncompliance (Continued) Identification as a Repeat Finding, if applicable: Not applicable. Recommendation We recommend that INPEACE implement procedures to regularly monitor the level of effort of key personnel against the requirements of each federal award, and to identify changes that require prior written approval from the awarding agency before those changes occur. We also recommend that INPEACE promptly request approval from the U.S. Department of Education for any current changes in level of effort that have not been approved. Views of Responsible Officials and Planned Corrective Action INPEACE agrees with the finding and the recommendation. See Part V Corrective Action Plan