MILLE LACS ENERGY COOPERATIVENon-Profit

United States Department of Agriculture Federal Assistance Listing #10.855 Distance Learning and Telemedicine Grants United States Department of Treasury Federal Assistance Listing #21.029 COVID-19 Coronavirus Capital Projects Fund Procurement, Suspension, and Debarment Material Weakness in Internal Control Over Compliance Criteria - Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition - In our testing of procurement, suspension, and debarment it was identified that the Cooperative’s written policy did not address the requirements of 2 CFR sections 200.318 through 200.326. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with all of these requirements. Effect - A lack of compliant policies increases the overall risk of non-compliance. Questioned Costs - None reported. Context – Sampling was not used. Repeat Finding from Prior Years - No Recommendation - We recommend that management establish a written policy that is in compliance with all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.326 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections. Views of Responsible Officials - There is no disagreement with the audit finding.

2022-002 United States Department of Agriculture 10.863 Preparation of the Schedule of Expenditures of Federal Awards Significant Deficiency in Internal Control Over Compliance Criteria ? Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (Schedule) and accompanying notes to the Schedule. Condition ? The Cooperative does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. We were requested to draft the Schedule. Cause ? Auditor assistance with preparation of the Schedule is not unusual, as the Schedule has unique and specialized requirements and preparation is only required with the Cooperative meets a specified threshold of federal expenditures. Effect ? There is a reasonable possibility that the Cooperative would not be able to draft a Schedule that is correct without assistance of the auditors. Questioned Costs ? None reported. Context ? Sampling was not used. Repeat Finding from Prior Years ? No Recommendation ? We recommend management be aware of the financial reporting requirements relating to the Cooperative?s schedule of expenditures of federal awards and internal controls that impact financial reporting. Views of Responsible Officials ? Management agrees with the finding.