Penfield Children's Center, Inc. and AffiliatesNon-Profit

Finding 2024-005: Single Audit Reporting Package Not Submitted in a Timely Manner (Repeat Finding of 2023-101) – Material Weakness Federal program: All federal programs Criteria: Section 200.512 of the Uniform Guidance requires the organization submit an annual single audit reporting package and submit the data collection form prior to nine months after the end of the audit period. Condition: NACA did not submit its single audit reporting package or data collection form within the required timeline. Cause: Financial reporting and adjustments through December 31, 2024 were delayed due to lack of proper oversight over the accounting team. Effect or Potential Effect: The late submission of the audited financial statements and data collection form resulted in NACA being noncompliant with the provisions of Section 200.512 of the Uniform Guidance. Recommendations: We recommend that NACA hire, train and retain an experienced accounting team including a CFO to effectively oversee the accounting processes and financial reporting responsibilities so that the preparation of its financial statements can be completed in a timely manner. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-005: Single Audit Reporting Package Not Submitted in a Timely Manner (Repeat Finding of 2023-101) – Material Weakness Federal program: All federal programs Criteria: Section 200.512 of the Uniform Guidance requires the organization submit an annual single audit reporting package and submit the data collection form prior to nine months after the end of the audit period. Condition: NACA did not submit its single audit reporting package or data collection form within the required timeline. Cause: Financial reporting and adjustments through December 31, 2024 were delayed due to lack of proper oversight over the accounting team. Effect or Potential Effect: The late submission of the audited financial statements and data collection form resulted in NACA being noncompliant with the provisions of Section 200.512 of the Uniform Guidance. Recommendations: We recommend that NACA hire, train and retain an experienced accounting team including a CFO to effectively oversee the accounting processes and financial reporting responsibilities so that the preparation of its financial statements can be completed in a timely manner. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-006 Allowable Costs/Cost Principles Overbilling of indirect costs – Material weakness in internal Control, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Questioned Costs: $772,209 Criteria: As per grant agreement terms, NACA is allowed to request reimbursement for indirect costs (such as "overhead" or "administrative costs") they incur when providing the services described in the grant agreements. Some of the grant agreements specifically state the allowable indirect cost rate or that recovery of indirect costs are not allowed. Condition: During 2023 and 2024, NACA used an incorrect indirect cost rate, resulting in overbilling and over-reimbursement. Additionally, amounts were recorded to contracts that did not allow recovery of indirect costs. Some of these amounts were overbilled through a reduction in the deferred revenue balance. Cause: NACA experienced the loss of key staff that previously had background and experience with grant compliance relating to cost reimbursement agreements. The individual completing the cost reimbursement forms had not reviewed the grant agreements to realize that the indirect cost rates had changed. In addition, the process for review and approval of monthly cost reimbursement requests did not include review of the indirect cost rate being utilized. Effect or Potential Effect: As a result of applying an incorrect indirect cost rate, NACA overbilled the funding source for indirect costs in the amount of $266,825 either by direct overbilling or by overcharging to the deferred revenue balance. Additionally, indirect costs totaling $505,384 were recorded to contracts that did not allow recovery of indirect costs. Recommendation: We recommend that NACA implement a communication process between an individual with grant compliance responsibilities and the individual completing the cost reimbursement requests to ensure that the correct indirect cost rate is being utilized and to communicate on any changes to the rate. In addition, we recommend that the process for reviewing and approving cost reimbursement requests includes review of the indirect cost rate being utilized to ensure the rate is correct. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-006 Allowable Costs/Cost Principles Overbilling of indirect costs – Material weakness in internal Control, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Questioned Costs: $772,209 Criteria: As per grant agreement terms, NACA is allowed to request reimbursement for indirect costs (such as "overhead" or "administrative costs") they incur when providing the services described in the grant agreements. Some of the grant agreements specifically state the allowable indirect cost rate or that recovery of indirect costs are not allowed. Condition: During 2023 and 2024, NACA used an incorrect indirect cost rate, resulting in overbilling and over-reimbursement. Additionally, amounts were recorded to contracts that did not allow recovery of indirect costs. Some of these amounts were overbilled through a reduction in the deferred revenue balance. Cause: NACA experienced the loss of key staff that previously had background and experience with grant compliance relating to cost reimbursement agreements. The individual completing the cost reimbursement forms had not reviewed the grant agreements to realize that the indirect cost rates had changed. In addition, the process for review and approval of monthly cost reimbursement requests did not include review of the indirect cost rate being utilized. Effect or Potential Effect: As a result of applying an incorrect indirect cost rate, NACA overbilled the funding source for indirect costs in the amount of $266,825 either by direct overbilling or by overcharging to the deferred revenue balance. Additionally, indirect costs totaling $505,384 were recorded to contracts that did not allow recovery of indirect costs. Recommendation: We recommend that NACA implement a communication process between an individual with grant compliance responsibilities and the individual completing the cost reimbursement requests to ensure that the correct indirect cost rate is being utilized and to communicate on any changes to the rate. In addition, we recommend that the process for reviewing and approving cost reimbursement requests includes review of the indirect cost rate being utilized to ensure the rate is correct. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding Number: 2024-007 Procurement/Suspension and Debarment Procurement policy not followed and suspension and debarment checks not completed – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR §§ 200.318–200.327 requires non-federal entities to establish and maintain written procurement policies and procedures that reflect applicable federal requirements and ensure compliance with federal procurement standards. These requirements apply regardless of the volume or frequency of procurement activity. In addition, 2 CFR § 200.213 and 2 CFR Part 180 require non-federal entities to ensure that they do not enter into covered transactions with vendors or contractors that are suspended or debarred and to have procedures in place to verify vendor eligibility prior to entering into such transactions. Condition: As a result of auditor testing, it was found that NACA did not follow written procurement policies and procedures during the audit period. Management indicated that procurement activity is limited and typically consists of routine or low-dollar purchases; however, no formal process existed to ensure that purchases made with federal funds complied with Uniform Guidance procurement requirements. Additionally, NACA did not have a documented process to verify whether vendors or contractors were suspended or debarred prior to entering into covered transactions, nor was evidence of such verification retained. NACA did not have a control process to ensure oversight over procurement policies and over suspension and debarment checks. Cause: During the year ended December 31, 2024, NACA has limited administrative resources and believed that the infrequency and low dollar amount of procurement activity did not necessitate formal procurement policies or suspension and debarment procedures. Effect: Without a suspension and debarment verification process and failure to follow established procurement policies and procedures, NACA is at increased risk of noncompliance with Uniform Guidance requirements, including the risk of entering into transactions with suspended or debarred vendors or failing to comply with applicable federal procurement standards. Recommendation: We recommend that NACA implement a process to obtain quotes for small purchases (individual purchases greater than $10,000) and to maintain documentation of those quotes. We also recommend that NACA implement a regular process for performing suspension and debarment checks for any vendors that are expected to be paid $25,000 or more on an annual basis and to maintain documentation of those checks. We also recommend NACA strengthen internal controls to ensure consistent adherence to existing procurement policies and procedures. This should include implementing monitoring or review controls to verify compliance with procurement requirements and ensuring that suspension and debarment checks are performed and documented for applicable transactions. Training may also be beneficial to reinforce staff understanding of procurement requirements and documentation expectations. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-007 Procurement/Suspension and Debarment Procurement policy not followed and suspension and debarment checks not completed – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR §§ 200.318–200.327 requires non-federal entities to establish and maintain written procurement policies and procedures that reflect applicable federal requirements and ensure compliance with federal procurement standards. These requirements apply regardless of the volume or frequency of procurement activity. In addition, 2 CFR § 200.213 and 2 CFR Part 180 require non-federal entities to ensure that they do not enter into covered transactions with vendors or contractors that are suspended or debarred and to have procedures in place to verify vendor eligibility prior to entering into such transactions. Condition: As a result of auditor testing, it was found that NACA did not follow written procurement policies and procedures during the audit period. Management indicated that procurement activity is limited and typically consists of routine or low-dollar purchases; however, no formal process existed to ensure that purchases made with federal funds complied with Uniform Guidance procurement requirements. Additionally, NACA did not have a documented process to verify whether vendors or contractors were suspended or debarred prior to entering into covered transactions, nor was evidence of such verification retained. NACA did not have a control process to ensure oversight over procurement policies and over suspension and debarment checks. Cause: During the year ended December 31, 2024, NACA has limited administrative resources and believed that the infrequency and low dollar amount of procurement activity did not necessitate formal procurement policies or suspension and debarment procedures. Effect: Without a suspension and debarment verification process and failure to follow established procurement policies and procedures, NACA is at increased risk of noncompliance with Uniform Guidance requirements, including the risk of entering into transactions with suspended or debarred vendors or failing to comply with applicable federal procurement standards. Recommendation: We recommend that NACA implement a process to obtain quotes for small purchases (individual purchases greater than $10,000) and to maintain documentation of those quotes. We also recommend that NACA implement a regular process for performing suspension and debarment checks for any vendors that are expected to be paid $25,000 or more on an annual basis and to maintain documentation of those checks. We also recommend NACA strengthen internal controls to ensure consistent adherence to existing procurement policies and procedures. This should include implementing monitoring or review controls to verify compliance with procurement requirements and ensuring that suspension and debarment checks are performed and documented for applicable transactions. Training may also be beneficial to reinforce staff understanding of procurement requirements and documentation expectations. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-008 Cash Management Cost reimbursement reports not maintained – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Award Number: H722IHS0128-22-00 Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. Additionally, 2 CFR § 200.334 requires retention of financial records, including reports submitted to the grantor, for a period of three years. Condition: As a result of auditor testing, it was found that NACA did not retain copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts. As a result, auditors were unable to verify amounts reported or reconcile reported amounts to NACA’s accounting records. Also, NACA did not have internal controls in place to ensure that copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts were maintained for internal records. Cause: NACA lacked procedures to ensure that financial reports submitted for reimbursement were retained in accordance with Federal record retention requirements. Effect: Failure to retain cost reimbursement reports increases the risk of noncompliance with Federal requirements and limits NACA’s ability to support amounts requested for reimbursement. This also impacts transparency and auditability of financial activity. Recommendation: We recommend that NACA implement a process to ensure all cost reimbursement reports are retained and properly organized. This should include establishing a centralized recordkeeping system and periodic review procedures to confirm completeness of financial reporting documentation. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-008 Cash Management Cost reimbursement reports not maintained – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Award Number: H722IHS0128-22-00 Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. Additionally, 2 CFR § 200.334 requires retention of financial records, including reports submitted to the grantor, for a period of three years. Condition: As a result of auditor testing, it was found that NACA did not retain copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts. As a result, auditors were unable to verify amounts reported or reconcile reported amounts to NACA’s accounting records. Also, NACA did not have internal controls in place to ensure that copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts were maintained for internal records. Cause: NACA lacked procedures to ensure that financial reports submitted for reimbursement were retained in accordance with Federal record retention requirements. Effect: Failure to retain cost reimbursement reports increases the risk of noncompliance with Federal requirements and limits NACA’s ability to support amounts requested for reimbursement. This also impacts transparency and auditability of financial activity. Recommendation: We recommend that NACA implement a process to ensure all cost reimbursement reports are retained and properly organized. This should include establishing a centralized recordkeeping system and periodic review procedures to confirm completeness of financial reporting documentation. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-009 Reporting Performance reports not maintained- Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results for each Federal award. In addition, non-Federal entities must ensure required programmatic (performance) reports are supported by appropriate documentation. Condition: As a result of auditor testing, it was found that NACA did not maintain adequate supporting documentation for performance-related reports submitted to the grantor for the Title V program. Cause: During the year ended December 31, 2024, NACA had limited administrative resources and lacked formal procedures to ensure that performance reporting documentation was retained and properly organized. Effect: Without sufficient supporting documentation, NACA is at increased risk of noncompliance with Federal reporting requirements, and there is reduced transparency and accountability over reported program performance. Recommendation: We recommend that NACA strengthen internal controls over performance reporting by implementing procedures to retain supporting documentation for all submitted reports and establishing a review process to ensure completeness and accuracy. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-009 Reporting Performance reports not maintained- Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results for each Federal award. In addition, non-Federal entities must ensure required programmatic (performance) reports are supported by appropriate documentation. Condition: As a result of auditor testing, it was found that NACA did not maintain adequate supporting documentation for performance-related reports submitted to the grantor for the Title V program. Cause: During the year ended December 31, 2024, NACA had limited administrative resources and lacked formal procedures to ensure that performance reporting documentation was retained and properly organized. Effect: Without sufficient supporting documentation, NACA is at increased risk of noncompliance with Federal reporting requirements, and there is reduced transparency and accountability over reported program performance. Recommendation: We recommend that NACA strengthen internal controls over performance reporting by implementing procedures to retain supporting documentation for all submitted reports and establishing a review process to ensure completeness and accuracy. Views of responsible officials: NACA concurs with the recommendation.

Finding 2024-005: Single Audit Reporting Package Not Submitted in a Timely Manner (Repeat Finding of 2023-101) – Material Weakness Federal program: All federal programs Criteria: Section 200.512 of the Uniform Guidance requires the organization submit an annual single audit reporting package and submit the data collection form prior to nine months after the end of the audit period. Condition: NACA did not submit its single audit reporting package or data collection form within the required timeline. Cause: Financial reporting and adjustments through December 31, 2024 were delayed due to lack of proper oversight over the accounting team. Effect or Potential Effect: The late submission of the audited financial statements and data collection form resulted in NACA being noncompliant with the provisions of Section 200.512 of the Uniform Guidance. Recommendations: We recommend that NACA hire, train and retain an experienced accounting team including a CFO to effectively oversee the accounting processes and financial reporting responsibilities so that the preparation of its financial statements can be completed in a timely manner. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-005: Single Audit Reporting Package Not Submitted in a Timely Manner (Repeat Finding of 2023-101) – Material Weakness Federal program: All federal programs Criteria: Section 200.512 of the Uniform Guidance requires the organization submit an annual single audit reporting package and submit the data collection form prior to nine months after the end of the audit period. Condition: NACA did not submit its single audit reporting package or data collection form within the required timeline. Cause: Financial reporting and adjustments through December 31, 2024 were delayed due to lack of proper oversight over the accounting team. Effect or Potential Effect: The late submission of the audited financial statements and data collection form resulted in NACA being noncompliant with the provisions of Section 200.512 of the Uniform Guidance. Recommendations: We recommend that NACA hire, train and retain an experienced accounting team including a CFO to effectively oversee the accounting processes and financial reporting responsibilities so that the preparation of its financial statements can be completed in a timely manner. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-006 Allowable Costs/Cost Principles Overbilling of indirect costs – Material weakness in internal Control, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Questioned Costs: $772,209 Criteria: As per grant agreement terms, NACA is allowed to request reimbursement for indirect costs (such as "overhead" or "administrative costs") they incur when providing the services described in the grant agreements. Some of the grant agreements specifically state the allowable indirect cost rate or that recovery of indirect costs are not allowed. Condition: During 2023 and 2024, NACA used an incorrect indirect cost rate, resulting in overbilling and over-reimbursement. Additionally, amounts were recorded to contracts that did not allow recovery of indirect costs. Some of these amounts were overbilled through a reduction in the deferred revenue balance. Cause: NACA experienced the loss of key staff that previously had background and experience with grant compliance relating to cost reimbursement agreements. The individual completing the cost reimbursement forms had not reviewed the grant agreements to realize that the indirect cost rates had changed. In addition, the process for review and approval of monthly cost reimbursement requests did not include review of the indirect cost rate being utilized. Effect or Potential Effect: As a result of applying an incorrect indirect cost rate, NACA overbilled the funding source for indirect costs in the amount of $266,825 either by direct overbilling or by overcharging to the deferred revenue balance. Additionally, indirect costs totaling $505,384 were recorded to contracts that did not allow recovery of indirect costs. Recommendation: We recommend that NACA implement a communication process between an individual with grant compliance responsibilities and the individual completing the cost reimbursement requests to ensure that the correct indirect cost rate is being utilized and to communicate on any changes to the rate. In addition, we recommend that the process for reviewing and approving cost reimbursement requests includes review of the indirect cost rate being utilized to ensure the rate is correct. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-006 Allowable Costs/Cost Principles Overbilling of indirect costs – Material weakness in internal Control, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Questioned Costs: $772,209 Criteria: As per grant agreement terms, NACA is allowed to request reimbursement for indirect costs (such as "overhead" or "administrative costs") they incur when providing the services described in the grant agreements. Some of the grant agreements specifically state the allowable indirect cost rate or that recovery of indirect costs are not allowed. Condition: During 2023 and 2024, NACA used an incorrect indirect cost rate, resulting in overbilling and over-reimbursement. Additionally, amounts were recorded to contracts that did not allow recovery of indirect costs. Some of these amounts were overbilled through a reduction in the deferred revenue balance. Cause: NACA experienced the loss of key staff that previously had background and experience with grant compliance relating to cost reimbursement agreements. The individual completing the cost reimbursement forms had not reviewed the grant agreements to realize that the indirect cost rates had changed. In addition, the process for review and approval of monthly cost reimbursement requests did not include review of the indirect cost rate being utilized. Effect or Potential Effect: As a result of applying an incorrect indirect cost rate, NACA overbilled the funding source for indirect costs in the amount of $266,825 either by direct overbilling or by overcharging to the deferred revenue balance. Additionally, indirect costs totaling $505,384 were recorded to contracts that did not allow recovery of indirect costs. Recommendation: We recommend that NACA implement a communication process between an individual with grant compliance responsibilities and the individual completing the cost reimbursement requests to ensure that the correct indirect cost rate is being utilized and to communicate on any changes to the rate. In addition, we recommend that the process for reviewing and approving cost reimbursement requests includes review of the indirect cost rate being utilized to ensure the rate is correct. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding Number: 2024-007 Procurement/Suspension and Debarment Procurement policy not followed and suspension and debarment checks not completed – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR §§ 200.318–200.327 requires non-federal entities to establish and maintain written procurement policies and procedures that reflect applicable federal requirements and ensure compliance with federal procurement standards. These requirements apply regardless of the volume or frequency of procurement activity. In addition, 2 CFR § 200.213 and 2 CFR Part 180 require non-federal entities to ensure that they do not enter into covered transactions with vendors or contractors that are suspended or debarred and to have procedures in place to verify vendor eligibility prior to entering into such transactions. Condition: As a result of auditor testing, it was found that NACA did not follow written procurement policies and procedures during the audit period. Management indicated that procurement activity is limited and typically consists of routine or low-dollar purchases; however, no formal process existed to ensure that purchases made with federal funds complied with Uniform Guidance procurement requirements. Additionally, NACA did not have a documented process to verify whether vendors or contractors were suspended or debarred prior to entering into covered transactions, nor was evidence of such verification retained. NACA did not have a control process to ensure oversight over procurement policies and over suspension and debarment checks. Cause: During the year ended December 31, 2024, NACA has limited administrative resources and believed that the infrequency and low dollar amount of procurement activity did not necessitate formal procurement policies or suspension and debarment procedures. Effect: Without a suspension and debarment verification process and failure to follow established procurement policies and procedures, NACA is at increased risk of noncompliance with Uniform Guidance requirements, including the risk of entering into transactions with suspended or debarred vendors or failing to comply with applicable federal procurement standards. Recommendation: We recommend that NACA implement a process to obtain quotes for small purchases (individual purchases greater than $10,000) and to maintain documentation of those quotes. We also recommend that NACA implement a regular process for performing suspension and debarment checks for any vendors that are expected to be paid $25,000 or more on an annual basis and to maintain documentation of those checks. We also recommend NACA strengthen internal controls to ensure consistent adherence to existing procurement policies and procedures. This should include implementing monitoring or review controls to verify compliance with procurement requirements and ensuring that suspension and debarment checks are performed and documented for applicable transactions. Training may also be beneficial to reinforce staff understanding of procurement requirements and documentation expectations. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-007 Procurement/Suspension and Debarment Procurement policy not followed and suspension and debarment checks not completed – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR §§ 200.318–200.327 requires non-federal entities to establish and maintain written procurement policies and procedures that reflect applicable federal requirements and ensure compliance with federal procurement standards. These requirements apply regardless of the volume or frequency of procurement activity. In addition, 2 CFR § 200.213 and 2 CFR Part 180 require non-federal entities to ensure that they do not enter into covered transactions with vendors or contractors that are suspended or debarred and to have procedures in place to verify vendor eligibility prior to entering into such transactions. Condition: As a result of auditor testing, it was found that NACA did not follow written procurement policies and procedures during the audit period. Management indicated that procurement activity is limited and typically consists of routine or low-dollar purchases; however, no formal process existed to ensure that purchases made with federal funds complied with Uniform Guidance procurement requirements. Additionally, NACA did not have a documented process to verify whether vendors or contractors were suspended or debarred prior to entering into covered transactions, nor was evidence of such verification retained. NACA did not have a control process to ensure oversight over procurement policies and over suspension and debarment checks. Cause: During the year ended December 31, 2024, NACA has limited administrative resources and believed that the infrequency and low dollar amount of procurement activity did not necessitate formal procurement policies or suspension and debarment procedures. Effect: Without a suspension and debarment verification process and failure to follow established procurement policies and procedures, NACA is at increased risk of noncompliance with Uniform Guidance requirements, including the risk of entering into transactions with suspended or debarred vendors or failing to comply with applicable federal procurement standards. Recommendation: We recommend that NACA implement a process to obtain quotes for small purchases (individual purchases greater than $10,000) and to maintain documentation of those quotes. We also recommend that NACA implement a regular process for performing suspension and debarment checks for any vendors that are expected to be paid $25,000 or more on an annual basis and to maintain documentation of those checks. We also recommend NACA strengthen internal controls to ensure consistent adherence to existing procurement policies and procedures. This should include implementing monitoring or review controls to verify compliance with procurement requirements and ensuring that suspension and debarment checks are performed and documented for applicable transactions. Training may also be beneficial to reinforce staff understanding of procurement requirements and documentation expectations. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-008 Cash Management Cost reimbursement reports not maintained – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Award Number: H722IHS0128-22-00 Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. Additionally, 2 CFR § 200.334 requires retention of financial records, including reports submitted to the grantor, for a period of three years. Condition: As a result of auditor testing, it was found that NACA did not retain copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts. As a result, auditors were unable to verify amounts reported or reconcile reported amounts to NACA’s accounting records. Also, NACA did not have internal controls in place to ensure that copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts were maintained for internal records. Cause: NACA lacked procedures to ensure that financial reports submitted for reimbursement were retained in accordance with Federal record retention requirements. Effect: Failure to retain cost reimbursement reports increases the risk of noncompliance with Federal requirements and limits NACA’s ability to support amounts requested for reimbursement. This also impacts transparency and auditability of financial activity. Recommendation: We recommend that NACA implement a process to ensure all cost reimbursement reports are retained and properly organized. This should include establishing a centralized recordkeeping system and periodic review procedures to confirm completeness of financial reporting documentation. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-008 Cash Management Cost reimbursement reports not maintained – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Award Number: H722IHS0128-22-00 Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. Additionally, 2 CFR § 200.334 requires retention of financial records, including reports submitted to the grantor, for a period of three years. Condition: As a result of auditor testing, it was found that NACA did not retain copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts. As a result, auditors were unable to verify amounts reported or reconcile reported amounts to NACA’s accounting records. Also, NACA did not have internal controls in place to ensure that copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts were maintained for internal records. Cause: NACA lacked procedures to ensure that financial reports submitted for reimbursement were retained in accordance with Federal record retention requirements. Effect: Failure to retain cost reimbursement reports increases the risk of noncompliance with Federal requirements and limits NACA’s ability to support amounts requested for reimbursement. This also impacts transparency and auditability of financial activity. Recommendation: We recommend that NACA implement a process to ensure all cost reimbursement reports are retained and properly organized. This should include establishing a centralized recordkeeping system and periodic review procedures to confirm completeness of financial reporting documentation. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-009 Reporting Performance reports not maintained- Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results for each Federal award. In addition, non-Federal entities must ensure required programmatic (performance) reports are supported by appropriate documentation. Condition: As a result of auditor testing, it was found that NACA did not maintain adequate supporting documentation for performance-related reports submitted to the grantor for the Title V program. Cause: During the year ended December 31, 2024, NACA had limited administrative resources and lacked formal procedures to ensure that performance reporting documentation was retained and properly organized. Effect: Without sufficient supporting documentation, NACA is at increased risk of noncompliance with Federal reporting requirements, and there is reduced transparency and accountability over reported program performance. Recommendation: We recommend that NACA strengthen internal controls over performance reporting by implementing procedures to retain supporting documentation for all submitted reports and establishing a review process to ensure completeness and accuracy. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-009 Reporting Performance reports not maintained- Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results for each Federal award. In addition, non-Federal entities must ensure required programmatic (performance) reports are supported by appropriate documentation. Condition: As a result of auditor testing, it was found that NACA did not maintain adequate supporting documentation for performance-related reports submitted to the grantor for the Title V program. Cause: During the year ended December 31, 2024, NACA had limited administrative resources and lacked formal procedures to ensure that performance reporting documentation was retained and properly organized. Effect: Without sufficient supporting documentation, NACA is at increased risk of noncompliance with Federal reporting requirements, and there is reduced transparency and accountability over reported program performance. Recommendation: We recommend that NACA strengthen internal controls over performance reporting by implementing procedures to retain supporting documentation for all submitted reports and establishing a review process to ensure completeness and accuracy. Views of responsible officials: NACA concurs with the recommendation.

Finding 2024-005: Single Audit Reporting Package Not Submitted in a Timely Manner (Repeat Finding of 2023-101) – Material Weakness Federal program: All federal programs Criteria: Section 200.512 of the Uniform Guidance requires the organization submit an annual single audit reporting package and submit the data collection form prior to nine months after the end of the audit period. Condition: NACA did not submit its single audit reporting package or data collection form within the required timeline. Cause: Financial reporting and adjustments through December 31, 2024 were delayed due to lack of proper oversight over the accounting team. Effect or Potential Effect: The late submission of the audited financial statements and data collection form resulted in NACA being noncompliant with the provisions of Section 200.512 of the Uniform Guidance. Recommendations: We recommend that NACA hire, train and retain an experienced accounting team including a CFO to effectively oversee the accounting processes and financial reporting responsibilities so that the preparation of its financial statements can be completed in a timely manner. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-005: Single Audit Reporting Package Not Submitted in a Timely Manner (Repeat Finding of 2023-101) – Material Weakness Federal program: All federal programs Criteria: Section 200.512 of the Uniform Guidance requires the organization submit an annual single audit reporting package and submit the data collection form prior to nine months after the end of the audit period. Condition: NACA did not submit its single audit reporting package or data collection form within the required timeline. Cause: Financial reporting and adjustments through December 31, 2024 were delayed due to lack of proper oversight over the accounting team. Effect or Potential Effect: The late submission of the audited financial statements and data collection form resulted in NACA being noncompliant with the provisions of Section 200.512 of the Uniform Guidance. Recommendations: We recommend that NACA hire, train and retain an experienced accounting team including a CFO to effectively oversee the accounting processes and financial reporting responsibilities so that the preparation of its financial statements can be completed in a timely manner. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-006 Allowable Costs/Cost Principles Overbilling of indirect costs – Material weakness in internal Control, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Questioned Costs: $772,209 Criteria: As per grant agreement terms, NACA is allowed to request reimbursement for indirect costs (such as "overhead" or "administrative costs") they incur when providing the services described in the grant agreements. Some of the grant agreements specifically state the allowable indirect cost rate or that recovery of indirect costs are not allowed. Condition: During 2023 and 2024, NACA used an incorrect indirect cost rate, resulting in overbilling and over-reimbursement. Additionally, amounts were recorded to contracts that did not allow recovery of indirect costs. Some of these amounts were overbilled through a reduction in the deferred revenue balance. Cause: NACA experienced the loss of key staff that previously had background and experience with grant compliance relating to cost reimbursement agreements. The individual completing the cost reimbursement forms had not reviewed the grant agreements to realize that the indirect cost rates had changed. In addition, the process for review and approval of monthly cost reimbursement requests did not include review of the indirect cost rate being utilized. Effect or Potential Effect: As a result of applying an incorrect indirect cost rate, NACA overbilled the funding source for indirect costs in the amount of $266,825 either by direct overbilling or by overcharging to the deferred revenue balance. Additionally, indirect costs totaling $505,384 were recorded to contracts that did not allow recovery of indirect costs. Recommendation: We recommend that NACA implement a communication process between an individual with grant compliance responsibilities and the individual completing the cost reimbursement requests to ensure that the correct indirect cost rate is being utilized and to communicate on any changes to the rate. In addition, we recommend that the process for reviewing and approving cost reimbursement requests includes review of the indirect cost rate being utilized to ensure the rate is correct. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-006 Allowable Costs/Cost Principles Overbilling of indirect costs – Material weakness in internal Control, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Questioned Costs: $772,209 Criteria: As per grant agreement terms, NACA is allowed to request reimbursement for indirect costs (such as "overhead" or "administrative costs") they incur when providing the services described in the grant agreements. Some of the grant agreements specifically state the allowable indirect cost rate or that recovery of indirect costs are not allowed. Condition: During 2023 and 2024, NACA used an incorrect indirect cost rate, resulting in overbilling and over-reimbursement. Additionally, amounts were recorded to contracts that did not allow recovery of indirect costs. Some of these amounts were overbilled through a reduction in the deferred revenue balance. Cause: NACA experienced the loss of key staff that previously had background and experience with grant compliance relating to cost reimbursement agreements. The individual completing the cost reimbursement forms had not reviewed the grant agreements to realize that the indirect cost rates had changed. In addition, the process for review and approval of monthly cost reimbursement requests did not include review of the indirect cost rate being utilized. Effect or Potential Effect: As a result of applying an incorrect indirect cost rate, NACA overbilled the funding source for indirect costs in the amount of $266,825 either by direct overbilling or by overcharging to the deferred revenue balance. Additionally, indirect costs totaling $505,384 were recorded to contracts that did not allow recovery of indirect costs. Recommendation: We recommend that NACA implement a communication process between an individual with grant compliance responsibilities and the individual completing the cost reimbursement requests to ensure that the correct indirect cost rate is being utilized and to communicate on any changes to the rate. In addition, we recommend that the process for reviewing and approving cost reimbursement requests includes review of the indirect cost rate being utilized to ensure the rate is correct. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding Number: 2024-007 Procurement/Suspension and Debarment Procurement policy not followed and suspension and debarment checks not completed – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR §§ 200.318–200.327 requires non-federal entities to establish and maintain written procurement policies and procedures that reflect applicable federal requirements and ensure compliance with federal procurement standards. These requirements apply regardless of the volume or frequency of procurement activity. In addition, 2 CFR § 200.213 and 2 CFR Part 180 require non-federal entities to ensure that they do not enter into covered transactions with vendors or contractors that are suspended or debarred and to have procedures in place to verify vendor eligibility prior to entering into such transactions. Condition: As a result of auditor testing, it was found that NACA did not follow written procurement policies and procedures during the audit period. Management indicated that procurement activity is limited and typically consists of routine or low-dollar purchases; however, no formal process existed to ensure that purchases made with federal funds complied with Uniform Guidance procurement requirements. Additionally, NACA did not have a documented process to verify whether vendors or contractors were suspended or debarred prior to entering into covered transactions, nor was evidence of such verification retained. NACA did not have a control process to ensure oversight over procurement policies and over suspension and debarment checks. Cause: During the year ended December 31, 2024, NACA has limited administrative resources and believed that the infrequency and low dollar amount of procurement activity did not necessitate formal procurement policies or suspension and debarment procedures. Effect: Without a suspension and debarment verification process and failure to follow established procurement policies and procedures, NACA is at increased risk of noncompliance with Uniform Guidance requirements, including the risk of entering into transactions with suspended or debarred vendors or failing to comply with applicable federal procurement standards. Recommendation: We recommend that NACA implement a process to obtain quotes for small purchases (individual purchases greater than $10,000) and to maintain documentation of those quotes. We also recommend that NACA implement a regular process for performing suspension and debarment checks for any vendors that are expected to be paid $25,000 or more on an annual basis and to maintain documentation of those checks. We also recommend NACA strengthen internal controls to ensure consistent adherence to existing procurement policies and procedures. This should include implementing monitoring or review controls to verify compliance with procurement requirements and ensuring that suspension and debarment checks are performed and documented for applicable transactions. Training may also be beneficial to reinforce staff understanding of procurement requirements and documentation expectations. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-007 Procurement/Suspension and Debarment Procurement policy not followed and suspension and debarment checks not completed – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR §§ 200.318–200.327 requires non-federal entities to establish and maintain written procurement policies and procedures that reflect applicable federal requirements and ensure compliance with federal procurement standards. These requirements apply regardless of the volume or frequency of procurement activity. In addition, 2 CFR § 200.213 and 2 CFR Part 180 require non-federal entities to ensure that they do not enter into covered transactions with vendors or contractors that are suspended or debarred and to have procedures in place to verify vendor eligibility prior to entering into such transactions. Condition: As a result of auditor testing, it was found that NACA did not follow written procurement policies and procedures during the audit period. Management indicated that procurement activity is limited and typically consists of routine or low-dollar purchases; however, no formal process existed to ensure that purchases made with federal funds complied with Uniform Guidance procurement requirements. Additionally, NACA did not have a documented process to verify whether vendors or contractors were suspended or debarred prior to entering into covered transactions, nor was evidence of such verification retained. NACA did not have a control process to ensure oversight over procurement policies and over suspension and debarment checks. Cause: During the year ended December 31, 2024, NACA has limited administrative resources and believed that the infrequency and low dollar amount of procurement activity did not necessitate formal procurement policies or suspension and debarment procedures. Effect: Without a suspension and debarment verification process and failure to follow established procurement policies and procedures, NACA is at increased risk of noncompliance with Uniform Guidance requirements, including the risk of entering into transactions with suspended or debarred vendors or failing to comply with applicable federal procurement standards. Recommendation: We recommend that NACA implement a process to obtain quotes for small purchases (individual purchases greater than $10,000) and to maintain documentation of those quotes. We also recommend that NACA implement a regular process for performing suspension and debarment checks for any vendors that are expected to be paid $25,000 or more on an annual basis and to maintain documentation of those checks. We also recommend NACA strengthen internal controls to ensure consistent adherence to existing procurement policies and procedures. This should include implementing monitoring or review controls to verify compliance with procurement requirements and ensuring that suspension and debarment checks are performed and documented for applicable transactions. Training may also be beneficial to reinforce staff understanding of procurement requirements and documentation expectations. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-008 Cash Management Cost reimbursement reports not maintained – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Award Number: H722IHS0128-22-00 Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. Additionally, 2 CFR § 200.334 requires retention of financial records, including reports submitted to the grantor, for a period of three years. Condition: As a result of auditor testing, it was found that NACA did not retain copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts. As a result, auditors were unable to verify amounts reported or reconcile reported amounts to NACA’s accounting records. Also, NACA did not have internal controls in place to ensure that copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts were maintained for internal records. Cause: NACA lacked procedures to ensure that financial reports submitted for reimbursement were retained in accordance with Federal record retention requirements. Effect: Failure to retain cost reimbursement reports increases the risk of noncompliance with Federal requirements and limits NACA’s ability to support amounts requested for reimbursement. This also impacts transparency and auditability of financial activity. Recommendation: We recommend that NACA implement a process to ensure all cost reimbursement reports are retained and properly organized. This should include establishing a centralized recordkeeping system and periodic review procedures to confirm completeness of financial reporting documentation. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-008 Cash Management Cost reimbursement reports not maintained – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Award Number: H722IHS0128-22-00 Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. Additionally, 2 CFR § 200.334 requires retention of financial records, including reports submitted to the grantor, for a period of three years. Condition: As a result of auditor testing, it was found that NACA did not retain copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts. As a result, auditors were unable to verify amounts reported or reconcile reported amounts to NACA’s accounting records. Also, NACA did not have internal controls in place to ensure that copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts were maintained for internal records. Cause: NACA lacked procedures to ensure that financial reports submitted for reimbursement were retained in accordance with Federal record retention requirements. Effect: Failure to retain cost reimbursement reports increases the risk of noncompliance with Federal requirements and limits NACA’s ability to support amounts requested for reimbursement. This also impacts transparency and auditability of financial activity. Recommendation: We recommend that NACA implement a process to ensure all cost reimbursement reports are retained and properly organized. This should include establishing a centralized recordkeeping system and periodic review procedures to confirm completeness of financial reporting documentation. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-009 Reporting Performance reports not maintained- Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results for each Federal award. In addition, non-Federal entities must ensure required programmatic (performance) reports are supported by appropriate documentation. Condition: As a result of auditor testing, it was found that NACA did not maintain adequate supporting documentation for performance-related reports submitted to the grantor for the Title V program. Cause: During the year ended December 31, 2024, NACA had limited administrative resources and lacked formal procedures to ensure that performance reporting documentation was retained and properly organized. Effect: Without sufficient supporting documentation, NACA is at increased risk of noncompliance with Federal reporting requirements, and there is reduced transparency and accountability over reported program performance. Recommendation: We recommend that NACA strengthen internal controls over performance reporting by implementing procedures to retain supporting documentation for all submitted reports and establishing a review process to ensure completeness and accuracy. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-009 Reporting Performance reports not maintained- Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results for each Federal award. In addition, non-Federal entities must ensure required programmatic (performance) reports are supported by appropriate documentation. Condition: As a result of auditor testing, it was found that NACA did not maintain adequate supporting documentation for performance-related reports submitted to the grantor for the Title V program. Cause: During the year ended December 31, 2024, NACA had limited administrative resources and lacked formal procedures to ensure that performance reporting documentation was retained and properly organized. Effect: Without sufficient supporting documentation, NACA is at increased risk of noncompliance with Federal reporting requirements, and there is reduced transparency and accountability over reported program performance. Recommendation: We recommend that NACA strengthen internal controls over performance reporting by implementing procedures to retain supporting documentation for all submitted reports and establishing a review process to ensure completeness and accuracy. Views of responsible officials: NACA concurs with the recommendation.

Finding 2024-005: Single Audit Reporting Package Not Submitted in a Timely Manner (Repeat Finding of 2023-101) – Material Weakness Federal program: All federal programs Criteria: Section 200.512 of the Uniform Guidance requires the organization submit an annual single audit reporting package and submit the data collection form prior to nine months after the end of the audit period. Condition: NACA did not submit its single audit reporting package or data collection form within the required timeline. Cause: Financial reporting and adjustments through December 31, 2024 were delayed due to lack of proper oversight over the accounting team. Effect or Potential Effect: The late submission of the audited financial statements and data collection form resulted in NACA being noncompliant with the provisions of Section 200.512 of the Uniform Guidance. Recommendations: We recommend that NACA hire, train and retain an experienced accounting team including a CFO to effectively oversee the accounting processes and financial reporting responsibilities so that the preparation of its financial statements can be completed in a timely manner. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-005: Single Audit Reporting Package Not Submitted in a Timely Manner (Repeat Finding of 2023-101) – Material Weakness Federal program: All federal programs Criteria: Section 200.512 of the Uniform Guidance requires the organization submit an annual single audit reporting package and submit the data collection form prior to nine months after the end of the audit period. Condition: NACA did not submit its single audit reporting package or data collection form within the required timeline. Cause: Financial reporting and adjustments through December 31, 2024 were delayed due to lack of proper oversight over the accounting team. Effect or Potential Effect: The late submission of the audited financial statements and data collection form resulted in NACA being noncompliant with the provisions of Section 200.512 of the Uniform Guidance. Recommendations: We recommend that NACA hire, train and retain an experienced accounting team including a CFO to effectively oversee the accounting processes and financial reporting responsibilities so that the preparation of its financial statements can be completed in a timely manner. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-006 Allowable Costs/Cost Principles Overbilling of indirect costs – Material weakness in internal Control, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Questioned Costs: $772,209 Criteria: As per grant agreement terms, NACA is allowed to request reimbursement for indirect costs (such as "overhead" or "administrative costs") they incur when providing the services described in the grant agreements. Some of the grant agreements specifically state the allowable indirect cost rate or that recovery of indirect costs are not allowed. Condition: During 2023 and 2024, NACA used an incorrect indirect cost rate, resulting in overbilling and over-reimbursement. Additionally, amounts were recorded to contracts that did not allow recovery of indirect costs. Some of these amounts were overbilled through a reduction in the deferred revenue balance. Cause: NACA experienced the loss of key staff that previously had background and experience with grant compliance relating to cost reimbursement agreements. The individual completing the cost reimbursement forms had not reviewed the grant agreements to realize that the indirect cost rates had changed. In addition, the process for review and approval of monthly cost reimbursement requests did not include review of the indirect cost rate being utilized. Effect or Potential Effect: As a result of applying an incorrect indirect cost rate, NACA overbilled the funding source for indirect costs in the amount of $266,825 either by direct overbilling or by overcharging to the deferred revenue balance. Additionally, indirect costs totaling $505,384 were recorded to contracts that did not allow recovery of indirect costs. Recommendation: We recommend that NACA implement a communication process between an individual with grant compliance responsibilities and the individual completing the cost reimbursement requests to ensure that the correct indirect cost rate is being utilized and to communicate on any changes to the rate. In addition, we recommend that the process for reviewing and approving cost reimbursement requests includes review of the indirect cost rate being utilized to ensure the rate is correct. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding 2024-006 Allowable Costs/Cost Principles Overbilling of indirect costs – Material weakness in internal Control, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Questioned Costs: $772,209 Criteria: As per grant agreement terms, NACA is allowed to request reimbursement for indirect costs (such as "overhead" or "administrative costs") they incur when providing the services described in the grant agreements. Some of the grant agreements specifically state the allowable indirect cost rate or that recovery of indirect costs are not allowed. Condition: During 2023 and 2024, NACA used an incorrect indirect cost rate, resulting in overbilling and over-reimbursement. Additionally, amounts were recorded to contracts that did not allow recovery of indirect costs. Some of these amounts were overbilled through a reduction in the deferred revenue balance. Cause: NACA experienced the loss of key staff that previously had background and experience with grant compliance relating to cost reimbursement agreements. The individual completing the cost reimbursement forms had not reviewed the grant agreements to realize that the indirect cost rates had changed. In addition, the process for review and approval of monthly cost reimbursement requests did not include review of the indirect cost rate being utilized. Effect or Potential Effect: As a result of applying an incorrect indirect cost rate, NACA overbilled the funding source for indirect costs in the amount of $266,825 either by direct overbilling or by overcharging to the deferred revenue balance. Additionally, indirect costs totaling $505,384 were recorded to contracts that did not allow recovery of indirect costs. Recommendation: We recommend that NACA implement a communication process between an individual with grant compliance responsibilities and the individual completing the cost reimbursement requests to ensure that the correct indirect cost rate is being utilized and to communicate on any changes to the rate. In addition, we recommend that the process for reviewing and approving cost reimbursement requests includes review of the indirect cost rate being utilized to ensure the rate is correct. Views of Responsible Officials and Planned Corrective Action: NACA management concurs with the finding and will implement the recommendation above.

Finding Number: 2024-007 Procurement/Suspension and Debarment Procurement policy not followed and suspension and debarment checks not completed – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR §§ 200.318–200.327 requires non-federal entities to establish and maintain written procurement policies and procedures that reflect applicable federal requirements and ensure compliance with federal procurement standards. These requirements apply regardless of the volume or frequency of procurement activity. In addition, 2 CFR § 200.213 and 2 CFR Part 180 require non-federal entities to ensure that they do not enter into covered transactions with vendors or contractors that are suspended or debarred and to have procedures in place to verify vendor eligibility prior to entering into such transactions. Condition: As a result of auditor testing, it was found that NACA did not follow written procurement policies and procedures during the audit period. Management indicated that procurement activity is limited and typically consists of routine or low-dollar purchases; however, no formal process existed to ensure that purchases made with federal funds complied with Uniform Guidance procurement requirements. Additionally, NACA did not have a documented process to verify whether vendors or contractors were suspended or debarred prior to entering into covered transactions, nor was evidence of such verification retained. NACA did not have a control process to ensure oversight over procurement policies and over suspension and debarment checks. Cause: During the year ended December 31, 2024, NACA has limited administrative resources and believed that the infrequency and low dollar amount of procurement activity did not necessitate formal procurement policies or suspension and debarment procedures. Effect: Without a suspension and debarment verification process and failure to follow established procurement policies and procedures, NACA is at increased risk of noncompliance with Uniform Guidance requirements, including the risk of entering into transactions with suspended or debarred vendors or failing to comply with applicable federal procurement standards. Recommendation: We recommend that NACA implement a process to obtain quotes for small purchases (individual purchases greater than $10,000) and to maintain documentation of those quotes. We also recommend that NACA implement a regular process for performing suspension and debarment checks for any vendors that are expected to be paid $25,000 or more on an annual basis and to maintain documentation of those checks. We also recommend NACA strengthen internal controls to ensure consistent adherence to existing procurement policies and procedures. This should include implementing monitoring or review controls to verify compliance with procurement requirements and ensuring that suspension and debarment checks are performed and documented for applicable transactions. Training may also be beneficial to reinforce staff understanding of procurement requirements and documentation expectations. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-007 Procurement/Suspension and Debarment Procurement policy not followed and suspension and debarment checks not completed – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR §§ 200.318–200.327 requires non-federal entities to establish and maintain written procurement policies and procedures that reflect applicable federal requirements and ensure compliance with federal procurement standards. These requirements apply regardless of the volume or frequency of procurement activity. In addition, 2 CFR § 200.213 and 2 CFR Part 180 require non-federal entities to ensure that they do not enter into covered transactions with vendors or contractors that are suspended or debarred and to have procedures in place to verify vendor eligibility prior to entering into such transactions. Condition: As a result of auditor testing, it was found that NACA did not follow written procurement policies and procedures during the audit period. Management indicated that procurement activity is limited and typically consists of routine or low-dollar purchases; however, no formal process existed to ensure that purchases made with federal funds complied with Uniform Guidance procurement requirements. Additionally, NACA did not have a documented process to verify whether vendors or contractors were suspended or debarred prior to entering into covered transactions, nor was evidence of such verification retained. NACA did not have a control process to ensure oversight over procurement policies and over suspension and debarment checks. Cause: During the year ended December 31, 2024, NACA has limited administrative resources and believed that the infrequency and low dollar amount of procurement activity did not necessitate formal procurement policies or suspension and debarment procedures. Effect: Without a suspension and debarment verification process and failure to follow established procurement policies and procedures, NACA is at increased risk of noncompliance with Uniform Guidance requirements, including the risk of entering into transactions with suspended or debarred vendors or failing to comply with applicable federal procurement standards. Recommendation: We recommend that NACA implement a process to obtain quotes for small purchases (individual purchases greater than $10,000) and to maintain documentation of those quotes. We also recommend that NACA implement a regular process for performing suspension and debarment checks for any vendors that are expected to be paid $25,000 or more on an annual basis and to maintain documentation of those checks. We also recommend NACA strengthen internal controls to ensure consistent adherence to existing procurement policies and procedures. This should include implementing monitoring or review controls to verify compliance with procurement requirements and ensuring that suspension and debarment checks are performed and documented for applicable transactions. Training may also be beneficial to reinforce staff understanding of procurement requirements and documentation expectations. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-008 Cash Management Cost reimbursement reports not maintained – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Award Number: H722IHS0128-22-00 Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. Additionally, 2 CFR § 200.334 requires retention of financial records, including reports submitted to the grantor, for a period of three years. Condition: As a result of auditor testing, it was found that NACA did not retain copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts. As a result, auditors were unable to verify amounts reported or reconcile reported amounts to NACA’s accounting records. Also, NACA did not have internal controls in place to ensure that copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts were maintained for internal records. Cause: NACA lacked procedures to ensure that financial reports submitted for reimbursement were retained in accordance with Federal record retention requirements. Effect: Failure to retain cost reimbursement reports increases the risk of noncompliance with Federal requirements and limits NACA’s ability to support amounts requested for reimbursement. This also impacts transparency and auditability of financial activity. Recommendation: We recommend that NACA implement a process to ensure all cost reimbursement reports are retained and properly organized. This should include establishing a centralized recordkeeping system and periodic review procedures to confirm completeness of financial reporting documentation. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-008 Cash Management Cost reimbursement reports not maintained – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Award Number: H722IHS0128-22-00 Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. Additionally, 2 CFR § 200.334 requires retention of financial records, including reports submitted to the grantor, for a period of three years. Condition: As a result of auditor testing, it was found that NACA did not retain copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts. As a result, auditors were unable to verify amounts reported or reconcile reported amounts to NACA’s accounting records. Also, NACA did not have internal controls in place to ensure that copies of cost reimbursement reports submitted to the grantor for the Urban Health Clinic/Substance Abuse Prevention and Title V contracts were maintained for internal records. Cause: NACA lacked procedures to ensure that financial reports submitted for reimbursement were retained in accordance with Federal record retention requirements. Effect: Failure to retain cost reimbursement reports increases the risk of noncompliance with Federal requirements and limits NACA’s ability to support amounts requested for reimbursement. This also impacts transparency and auditability of financial activity. Recommendation: We recommend that NACA implement a process to ensure all cost reimbursement reports are retained and properly organized. This should include establishing a centralized recordkeeping system and periodic review procedures to confirm completeness of financial reporting documentation. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-009 Reporting Performance reports not maintained- Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results for each Federal award. In addition, non-Federal entities must ensure required programmatic (performance) reports are supported by appropriate documentation. Condition: As a result of auditor testing, it was found that NACA did not maintain adequate supporting documentation for performance-related reports submitted to the grantor for the Title V program. Cause: During the year ended December 31, 2024, NACA had limited administrative resources and lacked formal procedures to ensure that performance reporting documentation was retained and properly organized. Effect: Without sufficient supporting documentation, NACA is at increased risk of noncompliance with Federal reporting requirements, and there is reduced transparency and accountability over reported program performance. Recommendation: We recommend that NACA strengthen internal controls over performance reporting by implementing procedures to retain supporting documentation for all submitted reports and establishing a review process to ensure completeness and accuracy. Views of responsible officials: NACA concurs with the recommendation.

Finding Number: 2024-009 Reporting Performance reports not maintained- Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR § 200.302(a) requires non-Federal entities to maintain financial management systems that provide accurate, current, and complete disclosure of financial results for each Federal award. In addition, non-Federal entities must ensure required programmatic (performance) reports are supported by appropriate documentation. Condition: As a result of auditor testing, it was found that NACA did not maintain adequate supporting documentation for performance-related reports submitted to the grantor for the Title V program. Cause: During the year ended December 31, 2024, NACA had limited administrative resources and lacked formal procedures to ensure that performance reporting documentation was retained and properly organized. Effect: Without sufficient supporting documentation, NACA is at increased risk of noncompliance with Federal reporting requirements, and there is reduced transparency and accountability over reported program performance. Recommendation: We recommend that NACA strengthen internal controls over performance reporting by implementing procedures to retain supporting documentation for all submitted reports and establishing a review process to ensure completeness and accuracy. Views of responsible officials: NACA concurs with the recommendation.

Finding 2024-001 – Special Tests and Provisions, Return of Title IV Calculations Federal Program – Federal Direct Student Loans, Federal Pell Grant Program Federal Agency - U.S. Department of Education Pass-Through Entity - Not Applicable Assistance Listing Number - 84.063, 84.268 Federal Award Year - May 31, 2024 Criteria: 34 CFR 668.22 requires that when a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of Title IV grant or loan assistance that the student earned as of the student's withdrawal date in accordance with Federal regulations and return the unearned portion of the grant or loan funds to the Title IV programs as soon as possible but no later than 45 days after the withdrawal date. Condition/Context: In a sample of 18 students that withdrew during the fiscal year testing, a return of Title IV (R2T4) calculation was not performed for one student. The sample was not a statistically valid sample. Cause: The University’s Registrar did not have a procedure to inform Student Financial Aid when a graduate student withdrawals. Effect: The R2T4 calculation was not performed for a student who withdrew resulting in noncompliance with Title IV requirements. Questioned Costs: $2,402 in unreturned Title IV funds. Recommendation: It is recommended that the University implement policies and procedures for withdrawals of graduate students and R2T4 calculations and implement enhanced tracking procedures to ensure timely R2T4 calculations and returns. View of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. The University will implement a process that ensures notification from the Registrar when a student drops from any course or from the University. A review of R2T4 will be completed at that time if deemed necessary. The process will be reviewed annually by the University to ensure compliance.

Finding 2023-001: Tenant Eligibility - Material Weakness - Material Noncompliance Repeat of prior year findings: 2021-001 and 2022-002 Assistance Listing Number: 14.181 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2022 - June 30, 2023 Pass-Through Entity: Not applicable Criteria: Section 811 of the National Affordable Housing Act provides funding for housing for persons with disabilities. To qualify as disabled, the household must consist of at least one person who is an adult (18 years or older) with a disability, two or more persons with disabilities living together, or a surviving household member under certain circumstances (42 USC 1437a(b)(3); 24 CFR section 891.505). Residents must also qualify as very low-income households to be eligible (42 USC 8013). Eligibility is only determined at move-in or at initial certification except in circumstances whereas family composition changes after initial occupancy a determination must be made as to whether the remaining member of the household will be eligible to receive assistance. Eligibility requirements are found in HUD's regulations at 24 CFR Part 5. The Corporation is responsible for annually reexamining incomes of households occupying assisted units and make appropriate adjustments to the tenant payment and the project rental assistance payment (24 CFR section 891.410). Assistance applicants shall submit signed consent forms upon initial application and at reexamination (24 CFR section 5.230). Questioned Cost: Not determinable. Condition/Context: During our risk assessment procedures and follow-up on the prior year findings, we noted that the tenant eligibility issues that were identified in the prior years persisted and worsened. The issues affecting tenant eligibility include missing documentation to support the eligibility requirements and tenant recertification. As a result, we did not select a sample from the population for testing. Effect: Insufficient documentation of tenant eligibility. Similar issues over tenant recertification has caused delays in obtaining renewal of the Corporation's PRAC contract. As a result of not renewing the PRAC contract timely there were operating cash flow deficiencies resulting in significant growth in related party balances due to the parent entity and unpaid subsidies at June 30,2023. Cause: Lack of management oversight due to turnover. As a result, management has not been able to implement their planned corrective actions in a timely fashion. Recommendation: The Corporation should have procedures in place to ensure documentation is maintained accordance with its requirements.

Finding 2023-001: Tenant Eligibility - Material Weakness - Material Noncompliance Repeat of prior year findings: 2021-001 and 2022-002 Assistance Listing Number: 14.181 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2022 - June 30, 2023 Pass-Through Entity: Not applicable Criteria: Section 811 of the National Affordable Housing Act provides funding for housing for persons with disabilities. To qualify as disabled, the household must consist of at least one person who is an adult (18 years or older) with a disability, two or more persons with disabilities living together, or a surviving household member under certain circumstances (42 USC 1437a(b)(3); 24 CFR section 891.505). Residents must also qualify as very low-income households to be eligible (42 USC 8013). Eligibility is only determined at move-in or at initial certification except in circumstances whereas family composition changes after initial occupancy a determination must be made as to whether the remaining member of the household will be eligible to receive assistance. Eligibility requirements are found in HUD's regulations at 24 CFR Part 5. The Corporation is responsible for annually reexamining incomes of households occupying assisted units and make appropriate adjustments to the tenant payment and the project rental assistance payment (24 CFR section 891.410). Assistance applicants shall submit signed consent forms upon initial application and at reexamination (24 CFR section 5.230). Questioned Cost: Not determinable. Condition/Context: During our risk assessment procedures and follow-up on the prior year findings, we noted that the tenant eligibility issues that were identified in the prior years persisted and worsened. The issues affecting tenant eligibility include missing documentation to support the eligibility requirements and tenant recertification. As a result, we did not select a sample from the population for testing. Effect: Insufficient documentation of tenant eligibility. Similar issues over tenant recertification has caused delays in obtaining renewal of the Corporation's PRAC contract. As a result of not renewing the PRAC contract timely there were operating cash flow deficiencies resulting in significant growth in related party balances due to the parent entity and unpaid subsidies at June 30,2023. Cause: Lack of management oversight due to turnover. As a result, management has not been able to implement their planned corrective actions in a timely fashion. Recommendation: The Corporation should have procedures in place to ensure documentation is maintained accordance with its requirements.

Finding 2023-001: Tenant Eligibility - Material Weakness - Material Noncompliance Repeat of prior year findings: 2021-001 and 2022-002 Assistance Listing Number: 14.181 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2022 - June 30, 2023 Pass-Through Entity: Not applicable Criteria: Section 811 of the National Affordable Housing Act provides funding for housing for persons with disabilities. To qualify as disabled, the household must consist of at least one person who is an adult (18 years or older) with a disability, two or more persons with disabilities living together, or a surviving household member under certain circumstances (42 USC 1437a(b)(3); 24 CFR section 891.505). Residents must also qualify as very low-income households to be eligible (42 USC 8013). Eligibility is only determined at move-in or at initial certification except in circumstances whereas family composition changes after initial occupancy a determination must be made as to whether the remaining member of the household will be eligible to receive assistance. Eligibility requirements are found in HUD's regulations at 24 CFR Part 5. The Corporation is responsible for annually reexamining incomes of households occupying assisted units and make appropriate adjustments to the tenant payment and the project rental assistance payment (24 CFR section 891.410). Assistance applicants shall submit signed consent forms upon initial application and at reexamination (24 CFR section 5.230). Questioned Cost: Not determinable. Condition/Context: During our risk assessment procedures and follow-up on the prior year findings, we noted that the tenant eligibility issues that were identified in the prior years persisted and worsened. The issues affecting tenant eligibility include missing documentation to support the eligibility requirements and tenant recertification. As a result, we did not select a sample from the population for testing. Effect: Insufficient documentation of tenant eligibility. Similar issues over tenant recertification has caused delays in obtaining renewal of the Corporation's PRAC contract. As a result of not renewing the PRAC contract timely there were operating cash flow deficiencies resulting in significant growth in related party balances due to the parent entity and unpaid subsidies at June 30,2023. Cause: Lack of management oversight due to turnover. As a result, management has not been able to implement their planned corrective actions in a timely fashion. Recommendation: The Corporation should have procedures in place to ensure documentation is maintained accordance with its requirements.

Finding No. 2022-004: Material Weakness, Material Noncompliance - Housing Choice Voucher Program Scope Limitation Federal Program: 14.871 – Housing Voucher Cluster: Section 8 Housing Choice Voucher Pass-through Entity: Not Applicable Award Year: 2022 Questioned Costs: Not determinable as we were unable to obtain sufficient appropriate audit evidence due to a scope limitation. Criteria: 2 CFR Part 200, 200.501 states a non-Federal entity that expends $750,000 or more during the non-Federal entity’s fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of this part. Furthermore, 200.518 requires the auditor to use a risk-based approach to determine which Federal programs are major programs and are therefore, required to be tested. 200.508 provides for the auditee responsibilities, which include preparing appropriate financial statements, including the Schedule of Expenditures of Federal Awards (SEFA) and providing the auditor with access to personnel, accounts, books, records, supporting documentation, and other information needed for the auditor to perform the audit required by this part. Condition/Context: In December 2022, the U.S. Department of Housing and Urban Development (HUD), Office of Public Housing and Voucher Programs, Quality Assurance Division conducted a Financial Management Review (FMR) and a Management & Operations Review (MOR) of the Housing Choice Voucher (HCV) program of the Authority for the period ending December 31, 2022. The results of those reviews noted several instances where appropriate and sufficient information was not available, and a continued degradation of internal controls was noted when compared to previous reports conducted. They noted substantive errors in the financial recording and reporting that appear to be prevalent, pervasive and systemic. Lastly, their review of participant files yielded a 100% error rate that resulted in them suspending their review of the remaining sample selected. HUD conducted a follow-up review in February 2023 noting similar findings pertaining to the HCV program. This letter was not made available to us in a timely fashion. Based on the provisions of 200.518, assistance listing number 14.871, Section 8 Housing Choice Voucher program was selected as a major program. However, we were unable to complete the required testing due to the matters identified by HUD whereby no progress had been made towards corrective action at the time of audit. Cause: The Authority does not have an appropriate internal control system that allows for proper review, analysis and implementation of financial reporting and compliance requirements in a timely manner, nor to a satisfactory level. Documentation supporting eligibility determinations and program expenditures is deemed unsatisfactory. Effect: As a result, we were unable to perform the required testing over the program which was required to be audited based on the provisions of 200.518 in the time frame mandated by Management and HUD, resulting in a scope limitation. Recommendation: The Authority should review the job roles and overall organizational structure, specifically impacting the Housing Choice Voucher program, to ensure timely and accurate reporting, including maintaining satisfactory documentation supporting eligibility determinations and program expenditures. Management should work directly with HUD to agree upon a corrective action plan to address the matters raised in their report. Management's Response: We are currently working on the Corrective Action Plan that is agreed with both HUD – Quality Assurance Division and Milwaukee Field Office, resulting from their review. We have invested significant efforts and resources in: Fully implementing our enterprise-wide system with assistance of the software provider to ensure correct set up and process implementation; Documenting standard operating procedures for clarity and consistency of application; Re-structuring the Housing Choice Voucher organization; Institutionalizing training to all staff; Hiring for adequate staffing and skill sets; and Contracting with outside vendors. These will ensure that our Housing Choice Voucher operations will be in continuous compliance with program regulations and accurate and timely financial reporting.

Repeat of Prior Year Finding 2018-002 Condition: In our testing of IDEA Flow-Through, we noted that debarment was not reviewed before purchases were made. The School District has a policy in place, however it was not followed. Criteria: The School District should follow proper procurement and disadvantaged business entity requirements. Questioned Cost: N/A Context: Population: 82. Sample size 9; Sample not statistically valid. Effect: Vendors could be used that do not follow the procurement rules or that are debarred. Recommendation: The School District should perform their debarment review prior to purchase or to put language into contracts that they engage in.

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