NORTH FORK AREA TRANSIT INCNon-Profit

2025-003– Significant Deficiency in Internal Controls over Equipment and Real Property Management; Noncompliance with Equipment and Real Property Management Condition: A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). Criteria: Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property (2 CFR 200.313(d)(1)). Cause: Procedures within the Organization were inadequate to ensure that required elements are regularly updated on its vehicle listing, and that the physical inventory count and reconciliation is documented. Effect: Federal interest in property are lost or inadequately tracked. Recommendation: We recommend the Organization track all Federally-required elements along with its own internal data points (such as bus number and depreciation system number) in one consolidated listing. Further, we recommend that a policy be instituted whereby a physical inventory and related reconciliation is performed annually on June 30, with the results being documented, reviewed, and approved by appropriate personnel.. Views of Responsible Officials and Planned Corrective Actions: The Organization will update its property records to include all required information. Additionally, the Organization plans to document its performance of a physical inventory count and related reconciliation on an annual basis. Repeat Finding: Yes, 2024-003

Significant Deficiency in Allowable Costs and Cost Principles Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria Standards for documentation of personnel expenses at 2 CFR 200.430(i)(1) require that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly documented. The Organization must establish and maintain effective internal control over the Federal award that provides reasonable assurance that they are managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award (2 CFR 200.303). Condition The Organization lacked adequate documentation to support approved rates of pay. Repeat Finding Yes, 2023-005. Cause Procedures within the Organization were inadequate to ensure that personnel expenses were adequately documented. Effect or Potential Effect Increased potential for errors or misuse of funds. Questioned Costs No. Statistical Sample No. Context Auditor randomly selected 60 payroll transactions covering the entire fiscal year for testing and judgmentally selected one additional payroll transaction for testing. Of the 61 transactions that were tested, there were frequent errors regarding: - Personnel files lacking (approved) rates of pay. - Rates of pay documented in personnel files that did not match the actual rates of pay. Recommendation We recommend the Organization establish a system of internal control consisting of policies and procedures whereby personnel files contain appropriately reviewed and approved documentation to support employee rates of pay. Views of Responsible Officials See Corrective Action Plan, below.

Significant Deficiency in Internal Controls Over Equipment and Real Property Management; Noncompliance with Equipment and Real Property Management Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property (2 CFR 200.313(d)(1)). A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). Condition The Organization lacked certain required elements on its vehicle listing. The Organization failed to adequately document the performance of the required physical inventory. Repeat Finding Yes, 2023-006. Cause Procedures within the Organization were inadequate to ensure that required elements are regularly updated on its vehicle listing, and that the physical inventory count and reconciliation is documented. Effect or Potential Effect Federal interests in property are lost or inadequately tracked. Questioned Costs No. Statistical Sample No. Context Nebraska Department of Transportation provides its subrecipients with an online portal through which, among other things, a vehicle listing is kept. The auditor obtained this vehicle listing, noting that most of the elements required by 2 CFR 200.313(d)(1) were present, however, out of the seven federally-funded vehicles on the listing: - Two were missing the FAIN (VINs *8494 and *2891). - One had a total purchase price of $63,670, whereas source documentation suggested a total purchase price of $103,475 (VIN *2891). - One was missing a purchase price. Source documentation suggested a total purchase price of $36,231 (VIN *2472). - One had an acquisition date of 9/30/2019, whereas source documentation suggested an acquisition date of 2/25/2020 (VIN *2891). Management indicates that a physical inventory is performed nightly with all vehicles, however, no documentation exists to prove that this was performed during the audit period. Recommendation We recommend the Organization track all Federally-required elements along with its own internal data points (such as bus number and depreciation system number) in one consolidated listing. Further, we recommend that a policy be instituted whereby a physical inventory and related reconciliation is performed annually on June 30, with the results being documented, reviewed, and approved by appropriate personnel. Views of Responsible Officials See Corrective Action Plan, below.

Activities Allowed or Unallowed; Allowable Costs/Cost Principles Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria The Organization must establish and maintain effective internal control over the Federal award that provides reasonable assurance that they are managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award (2 CFR 200.303). Costs must be adequately documented (2 CFR 200.403(g)). Insurance refunds must be credited against insurance costs in the year the refund is received (2 CFR 200.447(e)). Condition The Organization lacked adequate documentation to support: - That certain expenditures followed an approval process before being paid. - That certain expenditures were for allowable activities and in accordance with allowable cost principles. Repeat Finding Yes: 2022-004. Cause Procedures within the Organization were inadequate to ensure that expenditures follow a review and approval process prior to being paid, that costs were in accordance with Federal requirements and that only costs which had been paid for were requested for reimbursement. Effect or Potential Effect Increased potential for errors or misuse of funds. Questioned Costs Known $20,547 Statistical Sample No. Context During the fiscal year, the Organization requested a monthly reimbursement from the pass-through entity. Auditor selected three of these monthly reimbursement requests (August 2022, October 2022, and March 2023) for testing, reviewing all non-payrollrelated expenses, resulting in testing approximately 290 different line items composing many more individual transactions. Within this sample, auditor noted: - Multiple instances where no documentation existed to support a system of internal control whereby expenditures were approved by a competent individual prior to their being paid. - One instance of a transposition error between the fuel summary report and the reimbursement request, where the amounts in the reimbursement request listed the number of gallons of fuel as opposed to the cost of the fuel, resulting in the Organization receiving a smaller reimbursement than what it was eligible for of $1,111. - In two of the months selected for testing, the fuel costs for the same five vehicles in both months were excluded from the reimbursement request, resulting in the Organization receiving a smaller reimbursement than what it was eligible for of $15,539. The vehicle VINs are *7081, *2676, *2427, *4288, and *2962. - The fuel reimbursement summary for October 2022 for VIN *9460 shows regular fill-ups in gallons exceeding the fuel tank capacity for this vehicle. - The fuel reimbursement summary for October 2022 shows multiple vehicles (VINs *5418, *5421, *4450, and *1256) that received fill-ups of both diesel fuel and regular unleaded 10% ethanol gasoline. It is the auditor’s understanding that this is not recommended for vehicles. - Multiple instances where the available supporting documentation was incomplete, resulting in questioned costs of $20,547. - Multiple instances where documentation provided did not include sufficient detail to determine if products and/or services provided meet the definition of allowable activity, or to determine if insurance coverages were for assets owned by the Organization. - One expenditure for which reimbursement was requested in August 2022 and again in September 2022 amounting to $17,951. This duplicate reimbursement was corrected in the March 2023 reimbursement request. - Multiple instances of expenditure misclassification in violation of the invoicing and documentation guidelines issued by the pass-through entity, resulting in no additional questioned costs. - Multiple instances where the expenditure appears to be for a vehicle owned by the Organization, however, the supporting documentation shows the service is for a different vehicle than that noted on the reimbursement request. - Auditor was unable to determine if insurance refunds received were credited against insurance costs. Recommendation We recommend the Organization establish a system of internal control consisting of policies and procedures whereby all expenditures are properly explained with supporting documentation and are reviewed and approved prior to payment. Additionally, that only those expenditures which have been paid for are requested for reimbursement. Views of Responsible Officials See Corrective Action Plan, below.

Activities Allowed or Unallowed; Allowable Costs/Cost Principles Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria Standards for documentation of personnel expenses at 2 CFR 200.430(i)(1) require that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. These records must: - Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly documented. - Reasonably reflect the total activity for which the employee is compensated. - Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Standards for documentation of personnel expenses at 2 CFR 200.430(i)(3) require that in accordance with Department of Labor regulations implementing the Fair Labor Standards Act (FLSA) (29 CFR 516), charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. The Organization must establish and maintain effective internal control over the Federal award that provides reasonable assurance that they are managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award (2 CFR 200.303). Condition The Organization lacked adequate documentation to support: - Hours worked by employees - Supervisory approval of time sheets - Approved rates of pay Repeat Finding Yes: 2022-005. Cause Procedures within the Organization were inadequate to ensure that personnel expenses were adequately documented. Effect or Potential Effect Increased potential for errors or misuse of funds. Questioned Costs Known $7,240 Statistical Sample No. Context Auditor haphazardly selected 60 payroll transactions covering the entire fiscal year for testing, however, auditor did not complete the testing of all 60 transactions due to the frequency of errors encountered. Of the nine transactions that were tested, there were errors regarding: - Lack of (approved) timesheets. - Personnel files lacking (approved) rates of pay. - Rates of pay documented in personnel files that did not match the actual rates of pay. - Timesheet hours that vary from the payroll summary. - A timesheet that was self-approved. Recommendation We recommend the Organization establish a system of internal control consisting of policies and procedures whereby payroll transactions and related documentation contain appropriate review and approval. Views of Responsible Officials See Corrective Action Plan, below.

Equipment/Real Property Management Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property (2 CFR 200.313(d)(1)). A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property (2 CFR 200.313(d)(3)). Condition The Organization lacked certain required elements on its vehicle listing. The Organization failed to adequately document the performance of the required physical inventory. The Organization’s vehicles were taken for personal, non-business usage. Repeat Finding Yes: 2022-006. Cause Procedures within the Organization were inadequate to ensure that required elements are regularly updated on its vehicle listing; that the physical inventory count and reconciliation is documented; and that vehicles are only used for allowable activities. Effect or Potential Effect Federal interests in property are lost or inadequately tracked. Questioned Costs No. Statistical Sample No. Context Nebraska Department of Transportation provides its subrecipients with an online portal through which, among other things, a vehicle listing is kept. The auditor obtained this vehicle listing, noting that most of the elements required by 2 CFR 200.313(d)(1) were present, however, out of the seven federally-funded vehicles on the listing: - Two were missing the FAIN (VINs *8494 and *2891). - One had a total purchase price of $63,670, whereas source documentation suggested a total purchase price of $103,475 (VIN *2891). - One was missing a purchase price. Source documentation suggested a total purchase price of $36,231 (VIN *2472). - One had an acquisition date of 9/30/2019, whereas source documentation suggested an acquisition date of 2/25/2020 (VIN *2891). Management indicates that a physical inventory is performed nightly with all vehicles, however, no documentation exists to prove that this was performed during the audit period. As is reported in a letter from the APA to the Organization and grantors dated August 7, 2023 (previously discussed above in Finding 2023-002), the former Executive Director of the Organization is known to have taken Organizational vehicles for non-business usage. Recommendation We recommend the Organization establish a system of internal control consisting of policies and procedures whereby the individual maintaining vehicle listings is different from the individual updating the Nebraska Department of Transportation online portal. Additionally, we recommend the Organization track all Federally-required elements along with its own internal data points (such as bus number and depreciation system number) in one consolidated listing. Further, we recommend that a policy be instituted whereby a physical inventory and related reconciliation is performed annually on June 30, with the results being documented, reviewed, and approved by appropriate personnel. Views of Responsible Officials See Corrective Action Plan, below.

Noncompliance with Laws, Regulations, Contracts, or Grant Agreements; Fraud Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented. Condition Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented. Repeat Finding Yes: 2022-007. Cause Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented. Effect or Potential Effect Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented. Questioned Costs Undetermined. Statistical Sample n/a Context Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented. Recommendation See Finding 2023-002. Views of Responsible Officials Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented.

Suspension and Debarment Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria The Organization’s procurement policy states that all vendors will be checked against the exclusion list on the System for Award Management website. This policy is in accordance with 2 CFR 200.212; 2 CFR 200.318(h); 2 CFR 180.300; 48 CFR 52.209-6. Condition The Organization neglected to comply with its procurement policy when entering into a covered transaction. Repeat Finding No. Cause For the instance in violation of the Organization’s procurement policy, allowable emergency procurement procedures were followed due to an urgent need for the vendor’s services. Effect or Potential Effect The Organization may enter into a covered transaction with a debarred, suspended, or otherwise excluded vendor. Questioned Costs No. Statistical Sample No. Context As described in Finding 2023-002, the Organization was the victim of fraud during the fiscal year. In the wake of this event, the Organization hired a 3rd party accountant to assist in the cleanup of the financial records. In the procurement of this accountant, the Organization followed provisions in 2 CFR 200.320(c)(3) which allowed the Organization to quickly engage with the accountant due to the emergent nature of the situation. However, the provisions of 2 CFR 200.320(c)(3) relate to the procurement of vendors, and not to the suspension and debarment of vendors. In this emergency procurement process, the Organization neglected to check the accountant against the exclusion list on the System for Award Management website. The auditor performed a search on this website, noting that the accountant is not on the exclusion list. Recommendation The auditor recommends that, even during emergency procurement procedures, the Organization check its vendors against the exclusion list on the System for Award Management website. Views of Responsible Officials See Corrective Action Plan, below.

Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria The Organization must establish and maintain effective internal control over the Federal award that provides reasonable assurance that they are managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award (2 CFR 200.303). Costs must be adequately documented. (2 CFR 200.403(g)). Costs must be paid for prior to the date of the reimbursement request. (2 CFR 200.305(b)(3)). Condition The Organization lacked adequate documentation to support: - That certain expenditures followed an approval process before being paid. - That certain expenditures were for allowable activities and in accordance with allowable cost principles. The Organization requested reimbursement for expenses that had not yet been paid. Repeat Finding No. Cause Procedures within the Organization were inadequate to ensure that expenditures follow a review and approval process prior to being paid, that costs were in accordance with Federal requirements and that only costs which had been paid for were requested for reimbursement. Effect or Potential Effect Increased potential for errors or misuse of funds. Questioned Costs Known $35,806 Statistical Sample No. Context During the fiscal year, the Organization requested a monthly reimbursement from the pass-through entity. Auditor selected three of these monthly reimbursement requests (September 2021, May 2022, and June 2022) for testing, reviewing all non-payroll-related expenses, resulting in testing approximately 90 different line items composing many more individual transactions. Within this sample, auditor noted: - Multiple instances where no documentation existed to support a system of internal control whereby expenditures were approved by a competent individual prior to their being paid. - Multiple instances where documentation provided did not include sufficient detail to determine if products and/or services provided meet the definition of allowable activity, resulting in questioned costs of $2,921. - One expenditure for which reimbursement was requested in May 2022 and again in June 2022 amounting to $1,283 (questioned cost amount included in previous point). - For June 2022, an inability to crosswalk between the Organization’s internal fuel summary report and the related vendor statements, resulting in questioned costs of $32,885. Additionally, we noted both character and line transposition errors between the fuel summary report and the reimbursement request. Similarly, auditor was unable to obtain evidence that fuel expenditures were paid prior to the Organization requesting reimbursement. - Multiple instances of expenditure misclassification in violation of the invoicing and documentation guidelines issued by the pass-through entity, resulting in no additional questioned costs. Recommendation We recommend the Organization establish a system of internal control consisting of policies and procedures whereby all expenditures are properly explained with supporting documentation and are reviewed and approved prior to payment. Additionally, that only those expenditures which have been paid for are requested for reimbursement. Views of Responsible Officials See Corrective Action Plan, below.

Activities Allowed or Unallowed; Allowable Costs/Cost Principles Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria Standards for documentation of personnel expenses at 2 CFR 200.430(i)(1) require that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. These records must: - Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly documented. - Reasonably reflect the total activity for which the employee is compensated. - Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Standards for documentation of personnel expenses at 2 CFR 200.430(i)(3) require that in accordance with Department of Labor regulations implementing the Fair Labor Standards Act (FLSA) (29 CFR 516), charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. The Organization must establish and maintain effective internal control over the Federal award that provides reasonable assurance that they are managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award (2 CFR 200.303). Condition The Organization lacked adequate documentation to support: - Hours worked by employees - Supervisory approval of time sheets - Approved rates of pay Repeat Finding No. Cause Procedures within the Organization were inadequate to ensure that personnel expenses were adequately documented. Effect or Potential Effect Increased potential for errors or misuse of funds. Questioned Costs Known $2,082 Statistical Sample No. Context Auditor haphazardly selected 60 payroll transactions covering the entire fiscal year for testing, however, auditor did not complete the testing of all 60 transactions due to the frequency of errors encountered. Of the nine transactions that were tested, there were errors regarding: - Lack of (approved) timesheets. - Personnel files lacking (approved) rates of pay. - A timesheet that did not accurately foot, resulting in questioned costs of $94. - Rates of pay documented in personnel files that did not match the actual rates of pay, resulting in questioned costs of $1,988. Recommendation We recommend the Organization establish a system of internal control consisting of policies and procedures whereby payroll transactions and related documentation contain appropriate review and approval. Views of Responsible Officials See Corrective Action Plan, below.

Equipment/Real Property Management Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property (2 CFR 200.313(d)(1)). A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). Condition The Organization lacked certain required elements on its vehicle listing. The Organization failed to adequately document the performance of the required physical inventory. Repeat Finding No. Cause Procedures within the Organization were inadequate to ensure that required elements are regularly updated on its vehicle listing, and that the physical inventory count and reconciliation is documented. Effect or Potential Effect Federal interests in property are lost or inadequately tracked. Questioned Costs No. Statistical Sample No. Context Nebraska Department of Transportation provides its subrecipients with an online portal through which, among other things, a vehicle listing is kept. The auditor obtained this vehicle listing, noting that most of the elements required by 2 CFR 200.313(d)(1) were present, however, out of the seven federally-funded vehicles on the listing: - Two were missing the FAIN (VINs *8494 and *2891). - One had a total purchase price of $63,670, whereas source documentation suggested a total purchase price of $103,475 (VIN *2891). - One was missing a purchase price. Source documentation suggested a total purchase price of $36,231 (VIN *2472). - One had an acquisition date of 9/30/2019, whereas source documentation suggested an acquisition date of 2/25/2020 (VIN *2891). Management indicates that a physical inventory is performed nightly with all vehicles, however, no documentation exists to prove that this was performed during the audit period. Recommendation We recommend the Organization establish a system of internal control consisting of policies and procedures whereby the individual maintaining vehicle listings is different from the individual updating the Nebraska Department of Transportation online portal. Additionally, we recommend the Organization track all Federally-required elements along with its own internal data points (such as bus number and depreciation system number) in one consolidated listing. Further, we recommend that a policy be instituted whereby a physical inventory and related reconciliation is performed annually on June 30, with the results being documented, reviewed, and approved by appropriate personnel. Views of Responsible Officials See Corrective Action Plan, below.

Noncompliance with Laws, Regulations, Contracts, or Grant Agreements; Fraud Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented. Condition Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented. Repeat Finding No. Cause Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented. Effect or Potential Effect Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented. Questioned Costs Undetermined. Statistical Sample n/a Context Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented. Recommendation Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented. Views of Responsible Officials Views of Responsible Officials The Organization agrees with this finding. Corrective Action Plan The fraudster has been convicted and is incarcerated. The Organization has since implemented stronger internal controls to prevent and detect future occurrences of fraud or error. Name(s) of Responsible Individuals Lacy Kimes, Board President Anticipated Completion Date Already implemented.