Camino Real Regional Utility Authority

2025-002 — LATE DATA COLLECTION FORM SUBMISSION Type of Finding: (G) Instance of Non-compliance related to Federal Awards and (H) Other Non-compliance Required to be Reported per Section 12-6-5 NMSA 1978 Funding Agency: U.S. Department of the Treasury Title: COVID 19 - Coronavirus State & Local Fiscal Recovery Fund AL #: 21.027 Award #: 23-002 Award Period: July 16, 2024 – December 31, 2026 Questioned Costs: None Condition For the Authority’s year ended June 30, 2025, the data collection form was not submitted to the Federal Audit clearinghouse database by March 31, 2026. Criteria Per 2 CFR 200.512(a)(1), Report Submission: The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Cause The fiscal agent’s implementation of the new ERP system resulted in challenges related to system configuration, data conversion, and staff familiarity with the new system. Additionally, the fiscal agent experienced significant staffing changes within the Finance Department during the transition period, which contributed to delays in completing reconciliations, reviewing accounting records, and finalizing financial information in a timely manner. Effect Not submitting the data collection form denies access to the public and grantor agencies which could lead in loss of funding needed. Recommendation The Authority should work with the auditors to ensure the audit is submitted within a time frame that allows the data collection form to be submitted prior to the nine-month period following the close of the fiscal year.

2023-002 – SINGLE AUDIT DETERMINATION AND COMPLETION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Type of Finding: (E) Material Weakness in Internal Control Over Compliance of Federal Awards and (H) Other Non-compliance Required to be Reported per Section 12-6-5 NMSA 1978 Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition The Authority is responsible for preparing the Schedule of Expenditures of Federal Awards (SEFA), based on grant and loan information obtained from the financial accounting records. During the audit process, it was determined that the Authority received multiple loans and grants which were under Uniform Guidance; Clean Water Drinking State Revolving Fund and Drinking Water State Revolving Fund. The Authority was under the impression that these loans and grants were state funded, however it was determined they are federal funds and are required to be included on a Schedule of Expenditures of Federal Awards. The Authority spent over $750,000 in federal expenses related to these loans and grants, which triggered the requirement for a single audit. Criteria Per the Uniform Guidance 200.508 Auditee responsibilities; the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with section 200.502 ‘Basis for Determining Federal Awards Expended’. The SEFA should be correct when provided to the auditors, as it affects the determination of major federal programs required to be audited and to be properly presented as supplementary information of the audited financial statements. Cause The Authority was under the impression that these loans and grants were state funded due to their names. Effect The Authority could have been out of compliance with Uniform Guidance requirements and greatly increased the risk of the auditors not being aware of the requirement of performing a single audit, which would result in a substandard audit report. Recommendation We recommend that the Authority review all grants and loans carefully for language related to assistance list numbers (previously referred to as CFDA numbers) and uniform guidance requirements. Additionally, if the loans and grants are unclear, we recommend the Authority follow up with the grantor to confirm if they have an applicable assistance list number and are under Uniform Guidance. Finally, we recommend the Authority include the assistance list numbers on their grant summary trackers and update them throughout the year. Management Response CRRUA had an oversight issue with identifying the federal components of the state grants/loans. CRRUA will implement recommendations and all grants with federal funding will be identified with Assistance Listing #. In addition, CRRUA will confirm with Grant and Loan agencies during the agreement process to determine if federal funding is involved, so that CRRUA follows Uniform Guidance Requirements for Federal Awards. Prior to signing a grant or loan, the (Interim) Executive Director will identify the type of grant and loan so that appropriate reporting measure is in place for federally funded grants and loans. Finding resolved timeline: Immediately for current grants and loans and with a process in place for federal identification of future grants and loans. Designation of employee position responsible for meeting this deadline: (Interim) Executive Director.

2023-003 – UNIFORM GUIDANCE WRITTEN POLICIES AND PROCEDURES Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards, (G) Instance of Non-compliance related to Federal Awards, and (H) Other Non-compliance Required to be Reported per Section 12-6-5 NMSA 1978 Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition During the audit, we noted the Authority’s policies and procedures required updates to conform with Uniform Guidance. Criteria Uniform Guidance requires that procedures are documented related to cash management, cost allowability, procurement, and conflict of interest provisions. Cash Management 2 C.F.R. Part 200, §200.302(b)(6) “Written procedures to implement the requirements of §200.305 Payment.” • Written procedures should answer questions such as: who determines that the cash management procedures are being followed; how the procedures are followed; when the steps are performed; what is being verified. A subrecipient’s Cash Management written procedures must address both advance payments and cost reimbursement. The written procedures should include steps involved in the obligating, liquidating, and claiming of federal funds. Allowable Costs 2 C.F.R. Part 200, §200.302(b)(7) “Written procedures for determining the allowability of costs in accordance with Subpart E—Cost Principles of this part and the terms and conditions of the Federal award.” • Written procedures on Allowable Costs must address how the subrecipient is ensuring that costs on the federal grant, and ultimately claimed, are allowed under the individual Federal program and in accordance with the cost principles established in the Uniform Grant Guidance. Conflict of Interest 2 C.F.R. Part 200, §200.318(c)(1) “The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts.” • Written procedures such as required per 2 C.F.R. Part 200, §200.318 should not be a reiteration of the federal requirements or the policies or goals. Rather, procedures are the step-by-step process that is used to obtain the goal or the steps that are necessary to be in compliance with the federal requirement. Written procedures should answer questions like: what is considered a conflict of interest; how is it determined that an employee has a conflict of interest, how it is determined the procedures are followed; when the steps are performed; what is being verified. Procurement CFR 2, § 200.318(a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Cause The Authority has not previously required a single audit under Uniform Guidance. As a result, the Authority’s policies and procedures have not been updated to include the required language. Effect The Authority is noncompliant with the requirements of Uniform Guidance, which could result in future findings. Recommendation We recommend that the Authority review their current policies and procedures and bring them up to date with the appropriate language as required per Uniform Guidance. Adding the language will ensure that the Authority is always in compliance when single audits are required. Management Response CRRUA has not previously required a single audit under Uniform Guidance, CRRUA will work with DAC Grant and Accounting team, who assist in oversight per contract agreement, to develop written procedures and policies per Uniform Guidance requirements. In addition, CRRUA will enlist external assistance for additional review and recommendations regarding the drafted policies and procedures. Finding resolved timeline: Implemented by June 30, 2024. In the next 3 months CRRUA will implement policies and procedures required to conform with Uniform Guidance. Designation of employee position responsible for meeting this deadline: Office Manager