The Carle FoundationNon-Profit

Carle did not have proper documentation of time and effort relating to personnel costs charged to the program. In testing of 40 selected payroll costs, Carle was unable to provide physical documentation of timesheets or other effort tracking for 30 samples to support the amounts allocated by percentage to the Illinois SOR2 award. Though Carle was able to provide rationale for the amounts allocated, including estimated time spent on the award, allocations do not meet standards for documentation of personnel expenses.

Methodist College did not accurately and/or timely report student address changes and student enrollment status changes at both the campus-level and program-level to the National Student Loan Data System (NSLDS). The U.S. Department of Education (USDE) uses enrollment data reported by the College to determine: (1) eligibility for interest subsidies, (2) loan repayment start dates, and (3) in-school loan deferments. The enrollment information is also used by USDE to measure program completion data to evaluate the effectiveness of financial aid programs. Additionally, changes in a student’s permanent address are used by USDE to service loans. During our testing of enrollment reporting at the College for a sample of 40 students, we noted that all submissions were made to NSLDS outside of the required days required. The College did not submit roster files for the 2024 year until April 2025. Further, we noted review controls were not implemented in the period to ensure enrollment and student data submitted to NSLDS was accurate and sent in accordance with required timeframes. The College disbursed FDL loans to 323 students and Pell grants to 195 students during the year ended December 31, 2024 for which enrollment reporting requirements applied. The number of undergraduate students enrolled in the College during fiscal year 2024 was 456.

Finding 2023-001: Failure to Maintain Proper Documentation of Time and Effort Reporting Condition Found: Carle did not have proper documentation of time and effort relating to personnel costs charged to the program. In testing of 40 selected payroll costs, Carle was unable to provide physical documentation of timesheets or other effort tracking for 16 samples to support the amounts allocated by percentage to the Illinois SOR2 award. Though Carle was able to provide rationale for the amounts allocated, including estimated time spent on the award, allocations do not meet standards for documentation of personnel expenses. Criteria or Requirement: 2 CFR 200.430(i) requires charges to federal awards for salaries and wages must 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 allocated. Budget estimates alone do not qualify as support for charges to Federal awards. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure time charged to federal grants is appropriately tracked and certified. Cause: In discussion with Carle management, internal controls were not effectively implemented at the organizational level or cascaded to department leadership. This was the first grant for the department and while internal controls were in place, it is clear they were not sufficient. Possible Asserted Effect: Failure to maintain appropriate documentation of personnel costs may lead to questioned costs or inaccurate reporting of federal expenditures. Repeat Finding: A similar finding was reported in the prior year audit (2022-001). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend Carle evaluate its process for preparing and reviewing time tracking for federal awards and implement the procedures necessary to ensure documentation of personnel costs are complete and accurate. Views of Carle management: There is an understanding of this repeated finding, and a need for corrective action. Actions were taken in September 2023 when the finding was initially noted to improve internal controls and ensure compliance in maintaining proper documentation for time and effort reporting under federal awards.

Finding 2023-002: Failure to Notify Subrecipients of Federal Funding Condition Found: Carle did not communicate required federal program information to subrecipients the Illinois SOR2 program. During our testing of 2 subrecipient awards, we noted the subaward document did not include most of the required elements, including but not limited to: FAIN, ALN number and title, name of the federal awarding agency, UEI, indirect cost rate, Single Audit requirements, and a suspension and debarment clause. Amounts passed through to subrecipients under the SOR2 program totaled $201,863 during the year ended December 31, 2023. Criteria or Requirement: Per 2 CFR 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information listed at 2 CFR 200.332 (1) at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include implementing risk assessment procedures required by Uniform Guidance and ensuring monitoring procedures are performed and documented in accordance with established policies and procedures. Cause: In discussion with Carle management, internal controls were not effectively implemented at the organizational level or cascaded to department leadership. The templates used for subawards was not reflective of the required communications. Possible Asserted Effect: Failure to communicate ALNs at the time of disbursement can hamper the subrecipient’s ability to correctly prepare their schedule of expenditures of federal awards. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend Carle evaluate its subaward documents for federal awards and ensure that they include all required elements. Views of Carle management: Management agrees with the finding. Ann Campen had conversations with all the sub-awardees and provided them with the information required. Staff will email the sub-awardees with an “addendum” by the end of calendar year 2024.

Finding 2023-003: Over-awarding of subsidized Direct Loans Condition Found Methodist College (Carle) awarded and disbursed subsidized loans in excess of aggregate loan limits for the 2022 to 2023 aid year. In our testing of 40 samples, one student was awarded an aggregate of $24,500 for subsidized loans which exceeded the $23,000 limit for subsidized loans. Further, we noted that the review control over student aid packaging was not operating effectively in the period. The College disbursed FDL loans to 292 students and Pell grants to 193 students during the year ended December 31, 2023 for which eligibility and disbursement requirements applied. The number of undergraduate students enrolled in the College during fiscal year 2023 was 528. Criteria Direct Subsidized Loans and Direct Unsubsidized Loans have annual loan limits that vary based on the student's grade level and (for Direct Unsubsidized Loans) dependency status (34 CFR 685.203). The annual loan limit is the maximum amount that a student may receive for an academic year. Under 34 CFR 685.203(d) and (e) the aggregate loan limits for Direct Subsidized Loans and Direct Unsubsidized Loans (a borrower's maximum allowable outstanding loan debt, excluding capitalized interest, but including amounts borrowed under the Federal Family Education Loan program prior to 2010) are $57,500 for independent undergraduate students (and for dependent students whose parents are unable to borrow Direct PLUS Loans, not more than $23,000 of which may be subsidized. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include establishing procedures to ensure student aid awarded are within the limits set by USDE. Cause When reviewing files the FAFSA for this student showed a Sub award total of $19,000. Her original loan was disbursed for $2750. It seems likely that this students ISIR was looked at with the $19,000 SUB and awarded incorrectly based on the $19,000 figure. Possible Asserted Effect Inappropriate awarding of aid are considered questioned costs and may lead to penalties, repayments, and other corrective actions. Repeat Finding A similar finding was not reported in the prior year audit. Statistical Sampling No sampling was performed. Recommendation We recommend the College review its procedures to ensure appropriate student aid packaging to ensure amounts do not exceed subsidized limitation guidelines. Views of Carle management: Methodist College agrees with the finding of an over award for the one student in question. Corrective Action Plan: In standing financial aid meetings, we will review Federal Loan limits and what our process/procedures are if a student is close to limits to insure, we don’t over award. Contact Person(s): Justina Kirchgessner Anticipated Completion Date:2024

Finding 2023 004: Inaccurate and Untimely Enrollment Reporting Condition Found Methodist College did not accurately and/or timely report student address changes and student enrollment status changes at both the campus-level and program-level to the National Student Loan Data System (NSLDS). The U.S. Department of Education (USDE) uses enrollment data reported by the College to determine: (1) eligibility for interest subsidies, (2) loan repayment start dates, and (3) in-school loan deferments. The enrollment information is also used by USDE to measure program completion data to evaluate the effectiveness of financial aid programs. Additionally, changes in a student’s permanent address are used by USDE to service loans. During our testing of enrollment reporting at the College, we noted that no submissions were made to NSLDS for the period 4/1/2023 to 12/31/2023. Further, we noted review controls were not implemented in the period to ensure enrollment and student data submitted to NSLDS was accurate and sent in accordance with required timeframes. The College disbursed FDL loans to 292 students and Pell grants to 193 students during the year ended December 31, 2023 for which enrollment reporting requirements applied. The number of undergraduate students enrolled in the College during fiscal year 2023 was 528. Criteria According to 34 CFR Section 685.309, under the Federal Direct loan program, institutions must complete and return the Enrollment Reporting roster file via NSLDS within 15 days of receipt. Enrollment information must be reported within 30 days whenever attendance changes for students unless a roster will be submitted within 60 days. An institution must notify the Secretary of Education if it discovers that a loan under Title IV of the Act was made to or on behalf of a student who was enrolled or accepted for enrollment at the school, and the student has ceased to be enrolled on at least a half time basis or failed to enroll on at least a half time basis for the period for which the loan was intended. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include establishing procedures to ensure student campus and program-level enrollment status changes and address changes are accurately and timely reported to the NSLDS. Cause In discussing these conditions with College officials, they stated that NSC was part of a security breach and when they were fixing their processes, Methodist College got incorrectly linked to Methodist University in Fayetteville, NC causing submissions to report incorrectly on our end. Possible Asserted Effect Inaccurate and delayed submission of student enrollment status and student information affects the determinations that lenders and servicers of student loans make related to in school deferments, grace periods, and repayment schedules, as well as the federal government’s payment of interest subsidies. Repeat Finding A similar finding was not reported in the prior year audit. Statistical Sampling No sampling was performed. Recommendation We recommend the College review its procedures to ensure timely and accurate reporting of student information and enrollment status information to the NSLDS. Views of Carle management: Methodist College agrees with the finding of inaccurate and delayed submissions and have been working to get everything caught back up now that NSC has fixed their security breach and incorrectly linking us to the wrong college.

Finding 2022-001: Failure to Establish Subrecipient Monitoring Procedures Federal Agency: U.S. Department of Health and Human Services (HHS) Program Name: Research and Development Programs ALN and Program Expenditures: Various ($2,585,762) Federal Award Numbers: Various ? See schedule of award numbers Federal Award Year: Various ? See schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency and Material Noncompliance Condition Found: The Carle Foundation did not perform a risk assessment or subrecipient monitoring procedures for subrecipients of Research and Development Programs for the year end December 31, 2022. Carle designated Vanderbilt University and the University of Illinois Urbana-Champaign as subrecipients for the programs. As a pass-through entity, Carle was responsible for: ? Identifying the award and applicable requirements, ? Evaluating the subrecipient?s risk of noncompliance for purposes of determining the appropriate monitoring procedures related to the subaward, ? Monitoring the activities of the subrecipient as necessary to ensure the subaward is used for authorized purposes, that the subrecipient complies with the terms and conditions of the subaward, that the subrecipient achieves performance goals, and ? Issuing a management decision for single audit findings pertaining to the federal award provided to the subrecipient, if applicable. During our testing, we noted Carle did not perform any subrecipient monitoring procedures over subrecipients with respect to the Research and Development Programs during the year ended December 31, 2022. Amounts passed through to subrecipients totaled $115,061 for the year ended December 31, 2022. Criteria or Requirement: Per 2 CFR 200.332(b), a pass-through entity must evaluate each subrecipient's risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. According to 2 CFR 200.332(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure that federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. 2 CFR 200.332(d)(3) requires pass-through entities to issue management decisions for applicable audit findings pertaining to the federal awards provided to the subrecipient and 2 CFR 200.332(d)(4) requires pass through entities to resolve audit findings through corrective action plans (CAP). In addition, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include establishing and performing monitoring procedures in accordance with Uniform Guidance and program requirements. Cause: The Grants Administration Office engaged with Clifton Larson Allen Consulting in the fall of 2022 to compose multiple, essential policies (including Sub-Recipient Monitoring) required to manage Carle?s growing grants portfolio and maintain compliance with per the terms and conditions of the awards, the awarding agencies? regulations, and 2 CFR Part 200, The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The draft policies were circulated, reviewed, and discussed by the Grants Administration Office and leadership in Research, Accounting, Capital, and Compliance prior to finalizing, but were not able to be published prior to initiating subawards on an NIH R01 transfer for our new Director of Clinical Imaging Research, Dr. Bruce Damon. The Grants Administration Office had to accept Dr. Damon?s transfer from Vanderbilt when he joined Carle and initiate the subawards so that his grant activity kept pace with sponsor milestones and deliverables as required by the award. Possible Asserted Effect: Failure to perform required risk assessments and to adequately monitor subrecipients may result in the subrecipient not properly administering the federal program in accordance with laws, regulations, and the grant agreement. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend The Carle Foundation implement subrecipient monitoring procedures in accordance with federal regulations. Views of Management: Carle did perform informal risk assessments of both sub-recipients prior to issuance in order to support Dr. Damon?s incoming NIH award and engage with both critical sub-recipient collaborators promptly. Activities at the University of Illinois and Vanderbilt had to continue on the planned research effort for his transferred NIH award even though our related policy was in final draft form and not yet published. In making the decision to proceed, the Grants Administration Office confirmed that the final draft of the Sub-Recipient Monitoring policy, as well as the Risk Assessment Matrix tool, attached to the policy, had been circulated with leadership and key stakeholders in Research, Accounting, Finance, and Compliance, and resulted in no material edits. Additionally, the Grants Administration Office judged both prospective institutions as viable recipients of federal funding based on their current and active SAM.gov registrations at the time of issuance, the integrity of these well-established academic institutions, as well as Carle?s longstanding relationship with the University of Illinois (with multiple types of agreements already in place). To ensure appropriate safeguards, Carle issued its subawards using a standard FDP Clearinghouse template, compliant with federal regulations. Included in the subaward terms and conditions were all of the required attestations that both institutions signed, regarding Conflict of Interest, Lobbying, Debarment, Audit, 2CFR 200, FFATA, Data Sharing, Copyrights, and Human Subjects Protection. All invoices from our sub-recipients were received monthly as per the agreement and reviewed by both the Grants Administration Office and Dr. Damon for allowability prior to payment.

Finding 2022-002: Failure to Maintain Proper Documentation of Time and Effort Reporting Federal Agency: U.S. Department of Health and Human Services (HHS) Program Name: Illinois SOR2 ALN and Program Expenditures: 93.788 ($1,232,160) Federal Award Numbers: H79TI083278 Federal Award Year: 2022/2023 Questioned Costs: None Compliance Requirement: Allowable Costs Type of Finding: Material Weakness and Material Noncompliance Condition Found: Carle did not have proper documentation of time and effort relating to personnel costs charged to the program. In testing of 27 selected payroll costs, Carle was unable to provide physical documentation of timesheets or other effort tracking to support the amounts allocated by percentage to the Illinois SOR2 award. Though Carle was able to provide rationale for the amounts allocated including estimated time spent on the award, allocations do not meet standards for documentation of personnel expenses. Criteria or Requirement: 2 CFR 200.430(i) requires charges to federal awards for salaries and wages must 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 allocated. Budget estimates alone do not qualify as support for charges to Federal awards. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure time charged to federal grants is appropriately tracked and certified. Cause: In discussion with Carle management, internal controls were not effectively implemented at the organizational level or cascaded to department leadership. This was the first grant for the department and while internal controls were in place, it is clear they were not sufficient. Possible Asserted Effect: Failure to maintain appropriate documentation of personnel costs may lead to questioned costs or inaccurate reporting of federal expenditures. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend Carle evaluate its process for preparing and reviewing time tracking for federal awards and implement the procedures necessary to ensure documentation of personnel costs are complete and accurate. Views of Management: There is an understanding of the finding, and a need for corrective action. Actions have already been put into place to improve internal controls and ensure compliance in maintaining proper documentation of time and effort reporting for federal awards.

Finding 2020 001 Finding Type: Material noncompliance and material weakness Federal program information: Federal Program: Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities CFDA No. 93.817, Award No. 1 U3REP150523 01 00 Federal Agency: US Department of Health and Human Services Pass through Entity: Illinois Department of Public Health (IDPH) ? Grant Agreement No. 88283002F Federal Award Year: July 1, 2017?May 17, 2020 Criteria or specific requirement Per 2 CFR 215.21 `Standards for financial management systems?, recipients? financial management systems shall provide 2 CFR 215.21(b)(1) ?accurate, current and complete disclosure of the financial results of each federally sponsored project or program in accordance with the requirements set forth in CFR 215.52.? Furthermore, 2 CFR 215.21(b)(7) indicates that recipients? financial management systems shall provide ?accounting records including cost accounting records that are supported by source documentation.? In addition, 2 CFR 215.22 (a) states that, ?payment methods shall minimize the time elapsing between the transfer of funds from the United States Treasury and the issuance or redemption of checks, warrants, or payment by other means by recipients.? In addition, per section 4.7 the grant agreement, any payment request for reimbursement to IDPH must be within 30 days of the end of the quarter. In addition, 2 CFR 200.303 requires non Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include establishing and maintaining adequate controls over the accuracy of financial reports required for the program. Condition and Context On a monthly basis, management submits reimbursement certification reports to the IDPH to request reimbursement for expenditures incurred and paid during the preceding month for the program. The expenditures reported on the monthly reimbursement certification request forms submitted in 2020 did not agree to the actual expenditures incurred for the grant for the same period as recorded in The Carle Foundation?s accounting records. Specifically, we noted the following differences between the amounts reported and the accounting records: The variance resulted due to improperly including a fixed asset acquisition from 2019 in the 2020 reporting period. Although management had obtained approval to submit this expenditure in 2020 from the granting agency the fixed asset addition had been considered during the 2019 audit when correcting for deprecation that was incorrectly submitted versus actual fixed asset acquisitions resulting in double counting the expenditure in 2020. The error reported above resulted in $14,790 of over reimbursement. Management has not established adequate internal control procedures to ensure procurement requirements are followed and documented in accordance with federal and state regulations. In addition, it was determined that the March 2020 report of reimbursable expenditures was not submitted within 30 days of the end of the quarter and that no management review of expenditure report was evidenced for January, March and April of 2020 and that no final close out report was submitted at the completion of the grant period. Finally, the grant agreement includes a requirement for management to submit a formal grant close out report which was not filed. Cause and effect/potential effect Management utilized the incorrect report of grant expenditures for preparing the monthly reimbursement forms, such that certain expenditures were not captured correctly in 2019. In 2020, the prior year acquisition was incorrectly resubmitted resulting in the questioned cost. Inadequate management review of the accuracy of the monthly reimbursement forms, including establishing an appropriate level of precision to identify potential errors in preparation also contributed to the inaccuracy of the monthly reimbursement forms. In addition, management had no control to ensure timely reporting is completed for monthly expenditure reporting as well as the grant close out form. Questioned costs $14,790 (Grant agreement #88283002F) Whether the sampling was a statistically valid sample The sample was not intended to be, and was not, a statistically valid sample

Finding 2020 002 Finding Type: Material noncompliance and material weakness Federal program information: Federal Program: Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities CFDA No. 93.817, Award No. 1 U3REP150523 01 00 Federal Agency: US Department of Health and Human Services Pass through Entity: Illinois Department of Public Health (IDPH) ? Grant Agreement No. 88283002F Federal Award Year: July 1, 2017?May 17, 2020 Criteria or specific requirement Per 2 CFR 200.320 `Methods of procurement,? states that per 2 CFR 200.320 (f), ?Procurement by noncompetitive proposals. Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply: (1) The item is available only from a single source; (2) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; (3) The Federal awarding agency or pass through entity expressly authorizes noncompetitive proposals in response to a written request from the non federal entity; or (4) After solicitation of a number of sources, competition is determined inadequate.? In addition, 2 CFR 200.303 requires non Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include establishing and maintaining adequate controls over procurements made with federal funding. Condition and Context During our testing, we noted two contractual expenditures totaling $ 96,983 in a population of contractual expenditures of $ 96,983 for which a competitive bid process was not performed. Upon further discussion with management, a sole source justification was not documented. Accordingly, the expenditure is not allowable. Management has not established adequate internal control procedures to ensure procurement requirements are followed and documented in accordance with federal and state regulations. Specifically, we noted supervisory reviews of procurement activities by an individual knowledgeable of the requirement have not been implemented. Cause and effect/potential effect Inadequate management review of purchases for compliance with federal procurement standards resulted in the noncompliance reported above. Questioned costs $ 96,983 (Grant agreement #88283002F) Whether the sampling was a statistically valid sample The sample was not intended to be, and was not, a statistically valid sample.

Finding 2020-003 Finding Type: Significant deficiency Federal program information: Federal Program: Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities CFDA No. 93.817, Award No. 1 U3REP150523 01 00 Federal Agency: US Department of Health and Human Services Pass through Entity: Illinois Department of Public Health (IDPH) ? Grant Agreement No. 88283002F Federal Award Year: July 1, 2017?May 17, 2020 Criteria or specific requirement As set forth in 2 CFR 200.313(d)(1), 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. As set forth in 2 CFR 200.313(d)(2), a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to ensure that a physical inventory is conducted over all government equipment once every two years. Conditions Found: Management did not have an effective system of internal control in place to ensure physical inventory of property and related results reconciled with the property records at least once every two years and no physical inventory was taken. Furthermore, management is required to maintain accurate property records that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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 sales price of the property. Management did not maintain fully accurate records for two of the two pieces of equipment selected for test work resulting in missing the equipment description (including serial number or other identification number) during fiscal year 2020. Questioned Cost: Undeterminable. Cause and Effect: Management indicated that they did not have an effective system of internal controls to ensure physical inventories were being completed at least once every two years and that management was maintaining accurate property records. As a result, a physical inventory was not completed during fiscal year 2020 and two of the two equipment selected for test work did not have fully accurate property records within the fixed asset subledger system. Repeat Finding: A similar finding was not reported in prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample.

Finding 2019-001 Finding Type: Material noncompliance and material weakness Federal program information: Federal Program: Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities CFDA No. 93.817, Award No. 1 U3REP150523-01-00 Federal Agency: US Department of Health and Human Services Pass-through Entity: Illinois Department of Public Health (IDPH) ? Grant Agreement No. 88283002F Federal Award Year: July 1, 2017?May 17, 2020 Criteria or specific requirement Per 2 CFR 215.21 `Standards for financial management systems?, recipients? financial management systems shall provide 2 CFR 215.21(b)(1) ?accurate, current and complete disclosure of the financial results of each federally sponsored project or program in accordance with the requirements set forth in CFR 215.52.? Furthermore, 2 CFR 215.21(b)(7) indicates that recipients? financial management systems shall provide ?accounting records including cost accounting records that are supported by source documentation.? In addition, 2 CFR 215.22 (a) states that, ?payment methods shall minimize the time elapsing between the transfer of funds from the United States Treasury and the issuance or redemption of checks, warrants, or payment by other means by recipients.? In addition, per section 4.7 the grant agreement, any payment request for reimbursement to IDPH must be within 30 days of the end of the quarter. In addition, 2 CFR 200.303 requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include establishing and maintaining adequate controls over the accuracy of financial reports required for the program. Condition and Context On a monthly basis management submits reimbursement certification reports to the IDPH to request reimbursement for expenditures incurred and paid during the preceding month for the program. The expenditures reported on the monthly reimbursement certification request forms submitted in 2019 did not agree to the actual expenditures incurred for the grant for the same period as recorded in The Carle Foundation?s accounting records. Specifically, we noted the following differences between the amounts reported and the accounting records: Date of reimbursement Reporting period request Expenditure amount reported to IDPH Expenditure amount per accounting records Difference January 2019 June 19, 2019 $ 8,172 6,300 1,872 February 2019 June 20, 2019 10,880 9,008 1,872 March 2019 June 20, 2019 16,296 14,425 1,871 April 2019 June 21, 2019 15,753 23,465 (7,712) May 2019 June 21, 2019 11,546 9,559 1,987 June 2019 September 24, 2019 24,157 22,170 1,987 July 2019 August 19, 2019 22,957 20,970 1,987 August 2019 October 17, 2019 20,192 20,474 (282) September 2019 November 1, 2019 40,873 40,476 397 October 2019 November 19, 2019 14,394 9,759 4,635 November 2019 December 16, 2019 7,994 10,184 (2,190) December 2019 February 19, 2020 13,697 26,289 (12,592) Total $ 206,911 213,079 (6,168) These variances were the result of preparing the reimbursement request reports using an improperly designed general ledger report, which had not been reconciled to the general ledger and excluded capital expenditures, which were capitalized. The errors reported above resulted in $6,168 of under-reimbursement. Management has not established adequate internal control procedures to ensure procurement requirements are followed and documented in accordance with federal and state regulations. Cause and effect/potential effect Management utilized the incorrect report of grant expenditures for preparing the monthly reimbursement forms, such that certain expenditures were not captured correctly. Inadequate management review of the accuracy of the monthly reimbursement forms, including establishing an appropriate level of precision to identify potential errors in preparation also contributed to the inaccuracy of the monthly reimbursement forms. Questioned costs $23,582 (Grant agreement #88283002F) Whether the sampling was a statistically valid sample The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend that management design and implement internal controls that will provide for a monthly reconciliation and management review process of the monthly reimbursement certification forms, with established criteria for the review including documenting the reconciliation between the general ledger expenditures of the grant and the reimbursement certification, and evidence of management approval sign- off evidencing timely completion of the review. Views of responsible officials We agree with the noted findings and have implemented the Management Corrective Action Plan effective September 30, 2020.

Finding 2019-002 Finding Type: Material noncompliance and material weakness Federal program information: Federal Program: Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities CFDA No. 93.817, Award No. 1 U3REP150523-01-00 Federal Agency: US Department of Health and Human Services Pass-through Entity: Illinois Department of Public Health (IDPH) ? Grant Agreement No. 88283002F Federal Award Year: July 1, 2017?May 17, 2020 Criteria or specific requirement Per 2 CFR 200.320 `Methods of procurement,? states that per 2 CFR 200.320 (f), ?Procurement by noncompetitive proposals. Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply: (1) The item is available only from a single source; (2) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; (3) The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-federal entity; or (4) After solicitation of a number of sources, competition is determined inadequate.? In addition, 2 CFR 200.303 requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include establishing and maintaining adequate controls over procurements made with federal funding. Condition and Context During our testing, we noted a contractual expenditure of $31,050 in a population of contractual expenditures totaling $213,079 for which a competitive bid process was not performed. Upon further discussion with management, a sole source justification was not documented. Accordingly, the expenditure is not allowable. Management has not established adequate internal control procedures to ensure procurement requirements are followed and documented in accordance with federal and state regulations. Specifically, we noted supervisory reviews of procurement activities by an individual knowledgeable of the requirement have not been implemented. Cause and effect/potential effect Inadequate management review of purchases for compliance with federal procurement standards resulted in the noncompliance reported above. Questioned costs $31,050 (Grant agreement #88283002F) Whether the sampling was a statistically valid sample The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend that management design and implement internal controls to ensure procurement requirements are followed for all expenditures and any sole source justifications are appropriate documented and authorized. Views of responsible officials We agree with the noted findings and have implemented the Management Corrective Action Plan effective September 30, 2020

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