SOUTH DAKOTA URBAN INDIAN HEALTH, INC. (SDUIH)Non-Profit

Finding 2024 – 003: Activities Allowed and Unallowed, Allowable Costs, Period of Performance (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2021-003, 2022-003, and 2023-003) Material Weakness – 93.U01 Title V Criteria: Per Uniform Guidance 2 CFR § 200.302 and 2 CFR § 200.333, entities must maintain records that adequately identify the source and application of federal funds and retain documentation to support compliance with program requirements. Condition: The Organization’s general ledger did not allow for sufficient identification of transactions related to the major program, Title V. Title V expenditures were recorded through journal entries without supporting transaction-level detail. Because of this, the population of expenditures could not be tied to individual transactions, and pulling samples from this population would not provide a reasonable basis for drawing conclusions about the population tested. As a result, we were unable to select transactions for testing or perform the necessary audit procedures to assess compliance with federal requirements. Questioned Costs: Unable to determine due to scope limitation. Cause: Staff turnover and the Organization’s recordkeeping practices did not ensure sufficient documentation was maintained to support federal compliance. Effect: Due to the lack of adequate documentation, we were unable to obtain sufficient, appropriate audit evidence to form an opinion on the Organization’s compliance with these requirements. Consequently, a disclaimed opinion on compliance was issued for this major program. Additionally, these expenditures may be subject to repayment or further review by the granting agency. Recommendation: We recommend that management strengthen documentation and recordkeeping procedures to ensure compliance with federal record retention requirements. The Organization should implement a standardized process for tracking federal grant expenditures, ensuring proper coding within the accounting system, conduct periodic internal reviews to verify completeness and accuracy of financial records, and provide training to finance staff on Uniform Guidance requirements for grant record retention and reporting. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2024 – 004: Procurement and Suspension and Debarment (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2021-004, 2022-004, and 2023-004) Material Weakness – 93.U01 Title V Criteria: Per Uniform Guidance 2 CFR § 200.302 and 2 CFR § 200.333, entities must maintain records that adequately identify the source and application of federal funds and retain documentation to support compliance with program requirements. Additionally, per 2 CFR § 200.213, entities must verify that vendors and contractors receiving federal funds are not suspended or debarred by checking the System for Award Management (SAM) or obtaining vendor certifications. Condition: The Organization was unable to provide sufficient documentation to support compliance with federal procurement and suspension and debarment requirements for purchases made under the Title V program. The general ledger did not allow for sufficient identification of transactions related to the Title V program as all expenditures were recorded through journal entries without supporting transaction-level detail. Due to this limitation, we were unable to select procurement transactions for testing or verify whether vendors had been screened for suspension and debarment before contracts were awarded. Questioned Costs: Unable to determine due to scope limitation. Cause: The Organization did not maintain adequate financial records or procurement documentation to demonstrate compliance with Uniform Guidance requirements. The lack of a complete and detailed general ledger further limited the ability to track and substantiate transactions. Effect: Without sufficient documentation, the Organization was unable to demonstrate compliance with federal procurement regulations, increasing the risk of noncompliance and potential disallowed costs. Additionally, these expenditures may be subject to repayment or further review by the granting agency. Recommendation: We recommend the Organization strengthen its financial recordkeeping and procurement processes by implementing procedures to ensure a complete and accurate general ledger is maintained. This should include appropriate coding to identify federal program expenditures. The Organization should also establish and enforce procurement policies that align with Uniform Guidance, including documentation of procurement methods, price or cost analyses, and vendor selection, implementing a process to verify and document vendor suspension and debarment status before awarding federally funded contracts, and conducting periodic internal reviews to ensure compliance with procurement and recordkeeping requirements. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2024 – 005: Reporting (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2021-005, 2022-005, and 2023-005) Material Weakness – 93.U01 Title V Criteria: Per Uniform Guidance 2 CFR § 200.302 and 2 CFR § 200.333, entities must maintain records that adequately identify the source and application of federal funds and retain documentation to support compliance with program requirements. Condition: The Organization was unable to provide any of the required reports for the Title V program, including the financial report, activity narrative, third-party income report, GPRA/GPRAMA, urban data standards, and property inventory. Without these reports, we were unable to perform the necessary audit procedures to assess compliance with federal requirements. Questioned Costs: None. Cause: The Organization lacked sufficient record retention policies and failed to maintain the required documentation needed for reporting compliance. Effect: The Organization was unable to produce key reports necessary for compliance with grant and audit requirements. Recommendation: We recommend that the Organization implement stronger documentation and recordkeeping procedures to ensure compliance with federal reporting requirements. This should include: • ensuring that all required reports (e.g., financial reports, activity narratives, third-party income reports) are generated and retained according to Uniform Guidance, • establishing a process for regular internal reviews to verify the completeness and accuracy of required federal reports, and • providing staff with training on record retention and reporting obligations to ensure timely and accurate submissions. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2024 – 006: Reporting - Preparation of the Schedule of Expenditures of Federal Awards (SEFA) (Repeat Finding: 2021-007, 2022-006, and 2023-006) Criteria: Uniform Guidance 2 CFR § 200.510 requires an auditee to "prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements [that]… at a minimum shall… list individual Federal programs by Federal agency... [and] provide total Federal awards expenditures for each individual Federal program and the Assistance Listing number or other identifying number when the ALN information is not available." In accordance with Uniform Guidance, the auditee is required to maintain a structure of internal controls to ensure compliance with applicable reporting requirements. Condition: During fiscal year 2024, the Organization did not have adequate controls in place to ensure the SEFA accurately reflected each award's federal agency and assistance listing number. There were differences between the SEFA and the grant agreements/compliance supplements, requiring adjustments to the SEFA. Questioned Costs: None. Cause: A lack of sufficient training or understanding of Uniform Guidance requirements, particularly related to SEFA reporting elements, contributed to this finding. Effect: The Organization was unable to produce an accurate and timely SEFA, requiring additional effort and resources from both the Organization and the auditor to correct reporting errors during the audit process. Failure to produce an accurate SEFA resulted in noncompliance with requirements of Uniform Guidance which could lead to sanctions by funding agencies and curtailment of future funding. Recommendation: We recommend the Organization enhance its understanding of SEFA reporting requirements under Uniform Guidance, develop and implement a structured review process to ensure compliance with those reporting requirements, reconcile federal expenditures reported on the SEFA to the amounts recorded in the general ledger, and review federal agency names and assistance listing numbers against grant documentation to ensure accuracy. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2024 – 007: Equipment and Real Property Management (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2023-007) Material Weakness – 93.U01 Title V Criteria: Non-federal entities that acquire, manage, or dispose of equipment and real property purchased with federal funds are required to establish and maintain effective internal controls and inventory procedures to ensure proper management, safeguarding, and accountability of such assets. According to 2 CFR § 200.310–200.314, non-federal entities must adequately safeguard all assets and assure that they are used solely for authorized purposes. Specifically, 2 CFR § 200.313(d) requires that property records be maintained for equipment, a physical inventory be taken at least once every two years and reconciled to the property records, and that adequate maintenance procedures be implemented to keep the property in good condition. Additionally, 2 CFR § 200.407, 200.439, 200.313, and 200.311 require non-federal entities to obtain prior written approval from the federal awarding agency or pass-through entity before using federal funds to purchase or lease equipment (with a per-unit cost of $10,000 or more), land, or buildings. Condition: The Organization was unable to provide sufficient documentation to support compliance with federal equipment and real property management requirements for purchases made under the Title V program. The general ledger did not allow for sufficient identification of transactions related to the Title V program as all expenditures were recorded through journal entries without supporting transaction-level detail. Due to this limitation, we were unable to select equipment purchases for testing or verify if capital purchases were included in the Title V budget. The Organization also does not have an adequate system of controls established to identify, mark, record, or maintain equipment and real property purchased with federal funds, and no periodic physical inventory of such assets is being performed. Questioned Costs: None. Cause: The Organization did not maintain adequate financial records to demonstrate compliance with Uniform Guidance requirements. The lack of a complete and detailed general ledger further limited the ability to track and substantiate transactions. The Organization also does not have sufficiently established control policies and procedures to ensure that prior written approval is obtained for capital expenditures as required by federal regulations and the grant contract. Lastly, the Organization lacks established control policies for identifying, marking, recording, or maintaining equipment and real property, as well as for conducting periodic inventories. Effect: Without sufficient documentation, the Organization was unable to demonstrate compliance with federal equipment purchases, increasing the risk of noncompliance and potential disallowed costs. Additionally, these expenditures may be subject to repayment or further review by the granting agency. Also the Organization is not in compliance with federal requirements for prior written approval of capital expenditures and for equipment and real property management. As a result, there is an increased risk that federal funds may be used for unallowable purposes, and the Organization may be unable to distinguish federally funded property from other property or detect if such property is misplaced or stolen. Recommendation: We recommend that management strengthen documentation and recordkeeping procedures to ensure compliance with federal record retention requirements. The Organization should implement a standardized process for tracking federal grant expenditures, ensuring proper coding within the accounting system, conduct periodic internal reviews to verify completeness and accuracy of financial records, and provide training to finance staff on Uniform Guidance requirements for grant record retention and reporting. We further recommend that the Organization becomes familiar with the requirements of 2 CFR Part 200 and establishes appropriate internal control policies and procedures to ensure that prior written approval is obtained for all capital expenditures with federal funds. Lastly we recommend that the Organization implement procedures for maintaining property records, conducting periodic physical inventories, and ensuring all staff are trained on these requirements. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2024 – 008: Special Tests and Provisions (Compliance; Internal Controls Over Compliance) Significant Deficiency – 93.U01 Title V Criteria: The Title V contract requires the Organization to ensure employees whose duties involve regular contact with or control over Indian children comply with the personnel requirements established under the contract and Public Law 101-630, The Indian Child Protection and Family Violence Prevention Act. These requirements include completing required background investigations and maintaining executed confidentiality agreements, as applicable. Condition: During testing of ten employees subject to the Title V contract requirements, we noted that documentation supporting compliance with certain personnel requirements was not consistently maintained. Specifically, documentation of required background checks was not provided for two employees, and a signed confidentiality agreement was not provided for one employee. Questioned Costs: None. Cause: The Organization did not have adequate internal controls to ensure compliance with the Title V contract requirements, including procedures to verify that required personnel documentation was completed, maintained, and subject to supervisory review. Effect: Without adequate controls and supporting documentation, the Organization cannot demonstrate compliance with the Special Tests and Provisions of the Title V contract. As a result, there is an increased risk of noncompliance with the terms and conditions of the federal award. Recommendation: We recommend management review the Title V contract requirements and strengthen internal controls over compliance by implementing documented procedures and supervisory reviews to ensure required background checks and confidentiality agreements are completed, retained, and periodically monitored in accordance with the contract requirements. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2023 – 003: Activities Allowed and Unallowed, Allowable Costs, Period of Performance (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2021-003 and 2022-003) Material Weakness – 93.U01 Title V Criteria: Per Uniform Guidance 2 CFR § 200.302 and 2 CFR § 200.333, entities must maintain records that adequately identify the source and application of federal funds and retain documentation to support compliance with program requirements. Condition: The Organization’s general ledger did not allow for sufficient identification of transactions related to the major program, Title V. Title V expenditures were recorded through journal entries without supporting transaction-level detail. Because of this, the population of expenditures could not be tied to individual transactions, and pulling samples from this population would not provide a reasonable basis for drawing conclusions about the population tested. As a result, we were unable to select transactions for testing or perform the necessary audit procedures to assess compliance with federal requirements. Questioned Costs: Unable to determine due to scope limitation. Cause: Staff turnover and the Organization’s recordkeeping practices did not ensure sufficient documentation was maintained to support federal compliance. Effect: Due to the lack of adequate documentation, we were unable to obtain sufficient, appropriate audit evidence to form an opinion on the Organization’s compliance with these requirements. Consequently, a disclaimed opinion on compliance was issued for this major program. Additionally, these expenditures may be subject to repayment or further review by the granting agency. Recommendation: We recommend that management strengthen documentation and recordkeeping procedures to ensure compliance with federal record retention requirements. The Organization should implement a standardized process for tracking federal grant expenditures, ensuring proper coding within the accounting system, conduct periodic internal reviews to verify completeness and accuracy of financial records, and provide training to finance staff on Uniform Guidance requirements for grant record retention and reporting. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2023 – 004: Procurement and Suspension and Debarment (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2021-004 and 2022-004) Material Weakness – 93.U01 Title V Criteria: Per Uniform Guidance 2 CFR § 200.302 and 2 CFR § 200.333, entities must maintain records that adequately identify the source and application of federal funds and retain documentation to support compliance with program requirements. Additionally, per 2 CFR § 200.213, entities must verify that vendors and contractors receiving federal funds are not suspended or debarred by checking the System for Award Management (SAM) or obtaining vendor certifications. Condition: The Organization was unable to provide sufficient documentation to support compliance with federal procurement and suspension and debarment requirements for purchases made under the Title V program. The general ledger did not allow for sufficient identification of transactions related to the Title V program as all expenditures were recorded through journal entries without supporting transaction-level detail. Due to this limitation, we were unable to select procurement transactions for testing or verify whether vendors had been screened for suspension and debarment before contracts were awarded. Questioned Costs: Unable to determine due to scope limitation. Cause: The Organization did not maintain adequate financial records or procurement documentation to demonstrate compliance with Uniform Guidance requirements. The lack of a complete and detailed general ledger further limited the ability to track and substantiate transactions. Effect: Without sufficient documentation, the Organization was unable to demonstrate compliance with federal procurement regulations, increasing the risk of noncompliance and potential disallowed costs. Additionally, these expenditures may be subject to repayment or further review by the granting agency. Recommendation: We recommend the Organization strengthen its financial recordkeeping and procurement processes by implementing procedures to ensure a complete and accurate general ledger is maintained. This should include appropriate coding to identify federal program expenditures. The Organization should also establish and enforce procurement policies that align with Uniform Guidance, including documentation of procurement methods, price or cost analyses, and vendor selection, implementing a process to verify and document vendor suspension and debarment status before awarding federally funded contracts, and conducting periodic internal reviews to ensure compliance with procurement and recordkeeping requirements. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2023 – 005: Reporting (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2021-005 and 2022-005) Material Weakness – 93.U01 Title V Criteria: Per Uniform Guidance 2 CFR § 200.302 and 2 CFR § 200.333, entities must maintain records that adequately identify the source and application of federal funds and retain documentation to support compliance with program requirements. Condition: The Organization was unable to provide any of the required reports for the Title V program, including the financial report, activity narrative, third-party income report, GPRA/GPRAMA, urban data standards, and property inventory. Without these reports, we were unable to perform the necessary audit procedures to assess compliance with federal requirements. Questioned Costs: None. Cause: The Organization lacked sufficient record retention policies and failed to maintain the required documentation needed for reporting compliance. Effect: The Organization was unable to produce key reports necessary for compliance with grant and audit requirements. Recommendation: We recommend that the Organization implement stronger documentation and recordkeeping procedures to ensure compliance with federal reporting requirements. This should include: • ensuring that all required reports (e.g., financial reports, activity narratives, third-party income reports) are generated and retained according to Uniform Guidance, • establishing a process for regular internal reviews to verify the completeness and accuracy of required federal reports, and • providing staff with training on record retention and reporting obligations to ensure timely and accurate submissions. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2023 – 006: Reporting - Preparation of the Schedule of Expenditures of Federal Awards (SEFA) (Repeat Finding: 2021-007 and 2022-006) Criteria: Uniform Guidance 2 CFR § 200.510 requires an auditee to "prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements [that]… at a minimum shall… list individual Federal programs by Federal agency... [and] provide total Federal awards expenditures for each individual Federal program and the Assistance Listing number or other identifying number when the ALN information is not available." In accordance with Uniform Guidance, the auditee is required to maintain a structure of internal controls to ensure compliance with applicable reporting requirements. Condition: During fiscal year 2023, the Organization did not have adequate controls in place to ensure the SEFA accurately reflected each award's federal agency and assistance listing number. There were differences between the SEFA and the grant agreements/compliance supplements, requiring adjustments to the SEFA. Questioned Costs: None. Cause: A lack of sufficient training or understanding of Uniform Guidance requirements, particularly related to SEFA reporting elements, contributed to this finding. Effect: The Organization was unable to produce an accurate and timely SEFA, requiring additional effort and resources from both the Organization and the auditor to correct reporting errors during the audit process. Failure to produce an accurate SEFA resulted in noncompliance with requirements of Uniform Guidance which could lead to sanctions by funding agencies and curtailment of future funding. Recommendation: We recommend the Organization enhance its understanding of SEFA reporting requirements under Uniform Guidance, develop and implement a structured review process to ensure compliance with those reporting requirements, reconcile federal expenditures reported on the SEFA to the amounts recorded in the general ledger, and review federal agency names and assistance listing numbers against grant documentation to ensure accuracy. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2023 – 007: Equipment and Real Property Management (Compliance; Internal Controls Over Compliance) Material Weakness Criteria: Non-federal entities that acquire, manage, or dispose of equipment and real property purchased with federal funds are required to establish and maintain effective internal controls and inventory procedures to ensure proper management, safeguarding, and accountability of such assets. According to 2 CFR § 200.310–200.314, non-federal entities must adequately safeguard all assets and assure that they are used solely for authorized purposes. Specifically, 2 CFR § 200.313(d) requires that property records be maintained for equipment, a physical inventory be taken at least once every two years and reconciled to the property records, and that adequate maintenance procedures be implemented to keep the property in good condition. Additionally, 2 CFR § 200.407, 200.439, 200.313, and 200.311 require non-federal entities to obtain prior written approval from the federal awarding agency or pass-through entity before using federal funds to purchase or lease equipment (with a per-unit cost of $10,000 or more), land, or buildings. Condition: During our review of the Organization’s internal controls over compliance related to the Title V major program, we noted that the Organization did not obtain prior written approval from the funding agency for the purchase of land and a building with Title V funds, with the purchase exceeding the $20,000 threshold included in the Title V contract. Additionally, the Organization did not have an approved budget that included these capital expenditures. The Organization also does not have an adequate system of controls established to identify, mark, record, or maintain equipment and real property purchased with federal funds, and no periodic physical inventory of such assets is being performed. Questioned Costs: None. Cause: The Organization does not have sufficiently established control policies and procedures to ensure that prior written approval is obtained for capital expenditures as required by federal regulations and the grant contract. The Organization also lacks established control policies for identifying, marking, recording, or maintaining equipment and real property, as well as for conducting periodic inventories. Effect: The Organization is not in compliance with federal requirements for prior written approval of capital expenditures and for equipment and real property management. As a result, there is an increased risk that federal funds may be used for unallowable purposes, and the Organization may be unable to distinguish federally funded property from other property or detect if such property is misplaced or stolen. Recommendation: We recommend that the Organization becomes familiar with the requirements of 2 CFR Part 200 and establishes appropriate internal control policies and procedures to ensure that prior written approval is obtained for all capital expenditures with federal funds. We further recommend that the Organization implement procedures for maintaining property records, conducting periodic physical inventories, and ensuring all staff are trained on these requirements. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2022 – 003: Activities Allowed and Unallowed, Allowable Costs, Period of Performance (Compliance; Internal Controls Over Compliance) Material Weakness – 93.U01 Title V Criteria: Per Uniform Guidance 2 CFR § 200.302 and 2 CFR § 200.333, entities must maintain records that adequately identify the source and application of federal funds and retain documentation to support compliance with program requirements. Condition: The Organization’s general ledger did not allow for sufficient identification of transactions related to the major program, Title V. Title V expenditures were recorded through journal entries without supporting transaction-level detail. Because of this, the population of expenditures could not be tied to individual transactions, and pulling samples from this population would not provide a reasonable basis for drawing conclusions about the population tested. As a result, we were unable to select transactions for testing or perform the necessary audit procedures to assess compliance with federal requirements. Questioned Costs: Unable to determine due to scope limitation. Cause: Staff turnover and the Organization’s recordkeeping practices did not ensure sufficient documentation was maintained to support federal compliance. Effect: Due to the lack of adequate documentation, we were unable to obtain sufficient, appropriate audit evidence to form an opinion on the Organization’s compliance with these requirements. Consequently, a disclaimed opinion on compliance was issued for this major program. Additionally, these expenditures may be subject to repayment or further review by the granting agency. Recommendation: We recommend that management strengthen documentation and recordkeeping procedures to ensure compliance with federal record retention requirements. The Organization should implement a standardized process for tracking federal grant expenditures, ensuring proper coding within the accounting system, conduct periodic internal reviews to verify completeness and accuracy of financial records, and provide training to finance staff on Uniform Guidance requirements for grant record retention and reporting. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2022 – 004: Procurement and Suspension and Debarment (Compliance; Internal Controls Over Compliance) Material Weakness – 93.U01 Title V Criteria: Per Uniform Guidance 2 CFR § 200.302 and 2 CFR § 200.333, entities must maintain records that adequately identify the source and application of federal funds and retain documentation to support compliance with program requirements. Additionally, per 2 CFR § 200.213, entities must verify that vendors and contractors receiving federal funds are not suspended or debarred by checking the System for Award Management (SAM) or obtaining vendor certifications. Condition: The Organization was unable to provide sufficient documentation to support compliance with federal procurement and suspension and debarment requirements for purchases made under the Title V program. The general ledger did not allow for sufficient identification of transactions related to the Title V program as all expenditures were recorded through journal entries without supporting transaction-level detail. Due to this limitation, we were unable to select procurement transactions for testing or verify whether vendors had been screened for suspension and debarment before contracts were awarded. Questioned Costs: Unable to determine due to scope limitation. Cause: The Organization did not maintain adequate financial records or procurement documentation to demonstrate compliance with Uniform Guidance requirements. The lack of a complete and detailed general ledger further limited the ability to track and substantiate transactions. Finding 2022 – 004: Procurement and Suspension and Debarment (Compliance; Internal Controls Over Compliance), continued Effect: Without sufficient documentation, the Organization was unable to demonstrate compliance with federal procurement regulations, increasing the risk of noncompliance and potential disallowed costs. Additionally, these expenditures may be subject to repayment or further review by the granting agency. Recommendation: We recommend the Organization strengthen its financial recordkeeping and procurement processes by implementing procedures to ensure a complete and accurate general ledger is maintained. This should include appropriate coding to identify federal program expenditures. The Organization should also establish and enforce procurement policies that align with Uniform Guidance, including documentation of procurement methods, price or cost analyses, and vendor selection, implementing a process to verify and document vendor suspension and debarment status before awarding federally funded contracts, and conducting periodic internal reviews to ensure compliance with procurement and recordkeeping requirements. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2022 – 005: Reporting (Compliance; Internal Controls Over Compliance) Material Weakness – 93.U01 Title V Criteria: Per Uniform Guidance 2 CFR § 200.302 and 2 CFR § 200.333, entities must maintain records that adequately identify the source and application of federal funds and retain documentation to support compliance with program requirements. Condition: The Organization was unable to provide any of the required reports for the Title V program, including the financial report, activity narrative, third-party income report, GPRA/GPRAMA, urban data standards, and property inventory. Without these reports, we were unable to perform the necessary audit procedures to assess compliance with federal requirements. Questioned Costs: None. Cause: The Organization lacked sufficient record retention policies and failed to maintain the required documentation needed for reporting compliance. Effect: The Organization was unable to produce key reports necessary for compliance with grant and audit requirements. Recommendation: We recommend that the Organization implement stronger documentation and recordkeeping procedures to ensure compliance with federal reporting requirements. This should include: • ensuring that all required reports (e.g., financial reports, activity narratives, third-party income reports) are generated and retained according to Uniform Guidance, • establishing a process for regular internal reviews to verify the completeness and accuracy of required federal reports, and • providing staff with training on record retention and reporting obligations to ensure timely and accurate submissions. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2022 – 006: Reporting - Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Criteria: Uniform Guidance 2 CFR § 200.510 requires an auditee to "prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements [that]… at a minimum shall… list individual Federal programs by Federal agency... [and] provide total Federal awards expenditures for each individual Federal program and the Assistance Listing number or other identifying number when the ALN information is not available." In accordance with Uniform Guidance, the auditee is required to maintain a structure of internal controls to ensure compliance with applicable reporting requirements. Condition: During fiscal year 2022, the Organization did not have adequate controls in place to ensure the SEFA accurately reflected each award's federal agency and assistance listing number. There were differences between the SEFA and the grant agreements/compliance supplements, requiring adjustments to the SEFA. Questioned Costs: None. Cause: A lack of sufficient training or understanding of Uniform Guidance requirements, particularly related to SEFA reporting elements, contributed to this finding. Effect: The Organization was unable to produce an accurate and timely SEFA, requiring additional effort and resources from both the Organization and the auditor to correct reporting errors during the audit process. Recommendation: We recommend the Organization enhance its understanding of SEFA reporting requirements under Uniform Guidance, develop and implement a structured review process to ensure compliance with those reporting requirements, reconcile federal expenditures reported on the SEFA to the amounts recorded in the general ledger, and review federal agency names and assistance listing numbers against grant documentation to ensure accuracy. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.

Finding 2022 – 007: Cash Collateralization Criteria: Uniform Guidance 2 CFR § 200.305(b)(7) requires advance payments of Federal funds to be deposited and maintained in insured accounts whenever possible. Condition: During our review of the Organization’s cash, it was noted that as of September 30, 2022, they have not collateralized cash balances in excess of the amounts insured by the Federal Deposit Insurance Corporation. Cash balances of $11,685,898 were uninsured at September 30, 2022. Unearned revenue was reported at approximately $10,704,037 which includes advance payments of Federal funds. Questioned Costs: None. Cause: The Organization has not entered into a cash collateralization agreement with their financial institution. Effect: The Organization is not in compliance with Uniform Guidance 2 CFR § 200.305(b)(7) as not all cash balances received in advance from the funding agency were adequately insured or collateralized and were exposed to custodial credit risk in the event of a bank failure. Recommendation: We recommend the Organization enter into a cash collateralization agreement with their financial institution to ensure that all amounts related to grant agreements and awards received in advance are not exposed to custodial credit risk in the event of a bank failure. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.