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Significant Deficiency U.S. DEPARTMENT OF THE INTERIOR ALN #: 15.658 Federal Award Identification #: F24AC00584 Condition: ABC did not accurately report federal expenditures incurred on the 9/30/25 or 12/30/25 SF-425 reports. Criteria: 2 CFR 200.328 Questioned Costs: $0 Context: 2 out of 4 quarterly SF-425 reports within FY25 had inaccurate expenditures reported. ABC inadvertently did not include 3 months of expenditures and the previous fiscal year-end accruals on the 09/30/25 SF-425 report. While the 12/30/25 report included the 3 months of expenditures missing from the 9/30/25 report, it did not include the previous fiscal year-end accruals. These resulted in total expenditures on both the 9/30/25 and 12/30/25 SF-425 reports to be under-reported. Cause: Oversight by management. Effect: Inaccurate information reported to the grantor regarding grant activity. Identification as repeat finding, if applicable: Not applicable. Recommendation: We recommend that ABC implements a review process to compare expenditures reported on the SF-425 to a cumulative general ledger detail from the beginning of the grant through the report period prior to the quarterly report being submitted. We also recommend that ABC implements a check on the expenditures reported on the first SF-425 report submitted during the fiscal year to ensure that all accruals from the previous fiscal year are included. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Finding 2022-002: Preparation of the Schedule of Federal Expenditures (SEFA) Criteria: In accordance with 2 CFR 200.302 (Financial Management) the auditee must be able to identify all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the assistance listing number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. Condition: During our review of the initial SEFA several errors came to our attention. There were multiple instances where the expenditures reported on the SEFA did not agree to the underlying supporting financial reports, and adjustments to the SEFA were required. Cause: During fiscal year 2022, the SEFA was not maintained with sufficient accuracy and detail. At year-end, there was insufficient review of the SEFA by the appropriate personnel who possess the necessary expertise. Effect or Potential Effect: Inaccurate and incomplete information on the SEFA could lead to unreliable and erroneous grant reporting, internal record keeping and decision making. Questioned Costs: Undetermined Context: Our audit testwork consisted of substantive procedures over the Schedule of Expenditures of Federal Awards. We determined that the issue was systemic in nature. Identification as a Repeat Finding: Yes - Findings 2020-002 and 2021-002. Recommendation: We recommend ABC review the SEFA and supporting schedules prior to the audit to ensure the SEFA is complete and all numbers are accurate and can be supported. Additionally, to reduce the risk of human error, we recommend all grant activity be tracked within the accounting system.

Finding 2021-002: Preparation of the Schedule of Federal Expenditures (SEFA) Criteria: In accordance with 2 CFR 200.302 (Financial Management) the auditee must be able to identify all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the assistance listing number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. Condition: During our review of the initial SEFA several errors came to our attention. Paycheck Protection Program funding and State Government funding had been included on the Schedule. Additionally, we noted several awards funded by multiple ALN's where the expenses had not been properly allocated to the various funding sources. Further, the dollar amount of grants passed through to subrecipients was not properly stated. Cause: During fiscal year 2021, the SEFA was not maintained with sufficient accuracy and detail. At year-end, there was insufficient review of the SEFA by the appropriate personnel who possess the necessary expertise. Effect or Potential Effect: Inaccurate and incomplete information on the SEFA could lead to unreliable and erroneous grant reporting, internal record keeping and decision making. Questioned Costs: Undetermined Context: Our audit testwork consisted of substantive procedures over the Schedule of Expenditures of Federal Awards. We determined that the issue was systemic in nature. Identification as a Repeat Finding: Yes - Finding 2020-002. Recommendation: We recommend ABC review the SEFA and supporting schedules prior to the audit to ensure the SEFA is complete and all numbers are accurate and can be supported. Additionally, to reduce the risk of human error, we recommend all grant activity be tracked within the accounting system.

Finding 2021-003: Reporting to the Federal Government Federal Program: All Criteria: The U.S. Government requires that ABC submits the annual audit report the earlier of 30 days after the receipt of the auditor's report or nine months after year-end. Condition: The fiscal year 2021 audit report was not completed and submitted within the required timeframe. Context: ABC failed to submit the annual audit report to the Federal Audit Clearinghouse on a timely basis. Cause: ABC did not have the appropriate policies and procedures in place to ensure that asset and liability account reconciliations and the SEFA were prepared accurately and timely, which resulted in a delay of the audit. Effect: ABC is not in full compliance with the terms of its grant agreements. Identification as a Repeat Finding, if Applicable: Not identified as a repeat finding. Questioned Costs: None noted Recommendation: To ensure full compliance with respect to this requirement, and to avoid potential penalties (such as suspension or termination of the award), we recommend that ABC improve its procedures with respect to timely preparation of asset and liability account reconciliations, as well as the SEFA, to enable ABC to complete and submit the audit within the required timeframe.

Finding 2020-002: Preparation of the Schedule of Federal Expenditures (SEFA) Criteria: In accordance with 2 CFR 200.302 (Financial Management) the auditee must be able to identify all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the CFDA title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. Condition: During our review of the substantiation for the amounts reported as expenditures for the current year for our major programs, we noted the expenses reported for multiple awards did not agree to the underlying internal financial reports. Management performed an analysis over all grants on the SEFA which revealed additional awards that were not accurately represented on the original SEFA. Cause: During fiscal year 2020, ABC tracked grant activity outside of the accounting system in excel "forecast sheets". Each grant manager was responsible for ensuring their grants activity was included in the SEFA worksheet. The information from the forecast sheets was not properly represented in the SEFA. Effect or Potential Effect: Inaccurate and incomplete information on the SEFA could lead to unreliable and erroneous grant reporting, internal record keeping and decision making. Questioned Costs: Undetermined Context: Our audit testwork consisted of substantive procedures over the expenditures reported for our major program. We determined that the issue was systemic in nature. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend ABC review the SEFA and supporting schedules prior to the audit to ensure the SEFA is complete and all numbers are accurate and can be supported. Additionally, to reduce the risk of human error, we recommend all grant activity be tracked within the accounting system.

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