DELTA SIGMA THETA, INC.

Reference Number: 2023-001 Federal Program: All Programs Type of Finding: Significant Deficiency over Financial Reporting Repeat Finding: Yes – 2022-001 Criteria Entities should maintain an adequate system of internal controls over financial reporting in order to initiate, authorize, record, process, and report financial data reliably in accordance with accounting principles generally accepted in the United States of America. Condition In fiscal year 2022, our credit card transaction testing resulted in the following findings: (1) 17 out of 25 credit card sections did not have documentation of a valid business purpose; (2) 6 out of 25 credit card selections did not have vendor receipts; and (3) 15 out of 25 credit card selections had no evidence of approval. Based on our discussions with management, the new credit card policy was not fully implemented in fiscal year 2023 and management acknowledged that exceptions to the credit card policy still existed during fiscal year 2023. As such, we did not perform additional testing during fiscal year 2023, and this finding remains as previously documented. Cause Management did not consistently follow its formal credit card policy in place during all of fiscal year 2023 to document requirements for credit card usage and retention of supporting documents for credit card transactions (i.e. vendor invoices, approval of expenditures, proof of valid business purpose, etc.). Effect A fraud risk exists that credit card purchases are unauthorized and are not used for valid business purposes. Questioned Costs Unknown Recommendation Management should enforce its formal credit card policy through-out the year. Management should also consider electronic methods to track credit card purchases, approvals, and receipts. The Grand Chapter should maintain all credit card receipts with business purpose documentation. Management Response and Corrective Action Plan Management agrees with the finding. See schedule of corrective actions.

The Board approved a new Credit Card Policy of the Sorority in May 2021. Credit cards are an integral part of the mix of instruments available for managing payment relationships with vendors. At present, the Sorority maintains six (6) sponsored credit cards and we recognize and acknowledge that a material risk of exposure is present. While Delta Sigma Theta has a formal credit card policy in place, it has not been consistently following to ensure that assets of the organization are safeguarded. We are implementing a number of new processes and procedures to ensure that future credut card expenditures are documented with the following: 1. Valid business purpose; 2. Vendor receipts included as documentation and support, and; 3. Evidence of proper approval. This will ensure tht the credit card expenses are properly accounted for and reconciled within the general ledger. To achieve the stated objectives, the finance and accounting department has begun implementing a number of internal controls. Payment processes and procedures are being developed for transactions beginning January 1, 2024. They are as follows: 1. Develop a Credit Card Expense Request document that must be completed by those requesting expenditures that includes and discusses the business prupose of the expense. 2. Continuous training with those charged with making purchases with credit cards and those completing reports on the how to utilize the reports developed, how to properly code items to the general ledger and the documentation needed to substantiate the request. 3. New hirings, including new CFO and Director, that started in 2023. Restructuring the team to include higher level accounting staff that have greater education and experience with GAAP accounting. 4. Enforcement by management of its formal credit card policy throughout the year. 5. Monthly reconciliations that highlight compliance and allows for timely enforcement and correction of non-compliance.

2022-001

Reference Number: 2022-001 Federal Program: All Programs Type of Finding: Significant Deficiency over Financial Reporting Repeat Finding: Yes ? 2021-001 Criteria Entities should maintain an adequate system of internal controls over financial reporting in order to initiate, authorize, record, process, and report financial data reliably in accordance with accounting principles generally accepted in the United States of America. Condition Our credit card transaction testing resulted in the following findings: (1) 17 out of 25 credit card sections did not have documentation of a valid business purpose; (2) 6 out of 25 credit card selections did not have vendor receipts; and (3) 15 out of 25 credit card selections had no evidence of approval. Cause Management did not have a formal credit card policy in place during all of fiscal year 2022 to document requirements for credit card usage and retention of supporting documents for credit card transactions (i.e. vendor invoices, approval of expenditures, proof of valid business purpose, etc.). Effect A fraud risk exists that credit card purchases are unauthorized and are not used for valid business purposes. Questioned Costs Unknown Recommendation Management should enforce its formal credit card policy through-out the year. Management should also consider electronic methods to track credit card purchases, approvals, and receipts. The Grand Chapter should maintain all credit card receipts with business purpose documentation. Management Response and Corrective Action Plan Management agrees with the finding. See schedule of corrective actions.

Finding 2022-001: Significant Deficiency over Financial Reporting Responsible Official?s Response and Corrective Action Plan The Board approved a new Credit Card Policy for the Sorority in May 2021. Credit cards are an integral part of the mix of instruments available for managing payment relationships with vendors. At present, the Sorority maintains only three (3) sponsored credit cards. Generally, payments to vendors through credit card instruments account for less than three percent (3%) of all expenditures processed by the organization. Nevertheless, we recognize and acknowledge that a material risk of exposure is present. To mitigate this risk, the Sorority has established a Board-level committee whose sole responsibility was to establish a set of policies and guidelines around: 1. Who may have access to Sorority-sponsored credit cards, 2. The range of limits that will be available to staff on individual cards, 3. The frequency of required reconciliations by the Accounting and Finance Department, 4. The chains of approval that will be required for each in the range of limits established by the Board; and 5. The consequence(s) of deviation from the Board?s mandated Policy. The Board?s guidelines are now published and available; however, no new cards will be issued in the near-term. Further, the Sorority?s Accounting Department continues its practice of conducting robust, monthly reviews of each line-item appearing on the three (3) credit card statements. The Team will continue to make certain that receipts are present for all expenditures that exceed $25; and will monitor the types of transactions processed via credit card to ensure their legitimacy. Planned Implementation Date of Corrective Action April 2023 Person(s) Responsible for Corrective Action Pamela R. Hill, Treasurer Meskerem Alemu, Sr. Accounting Manager

2021-001

Type of Finding: Material Weakness over Financial Reporting Repeat Finding: Yes ? 2019-001 Criteria Entities should maintain an adequate system of internal controls over financial reporting in order to initiate, authorize, record, process, and report financial data reliably in accordance with accounting principles generally accepted in the United States of America. Condition Our credit card transaction testing resulted in the following findings: (1) 37 out of 40 credit card sections did not have documentation of a valid business purpose; (2) 13 out of 40 credit card selections did not have vendor receipts; and (3) 36 out of 40 credit card selections had no evidence of approval. Cause Management did not have a formal credit card policy in place during all of fiscal year 2020 to document requirements for credit card usage and retention of supporting documents for credit card transactions (i.e. vendor invoices, approval of expenditures, proof of valid business purpose, etc.). Effect A fraud risk exists that credit card purchases are unauthorized and are not used for valid business purposes. Questioned Costs Unknown Recommendation Management should implement a formal credit card policy which documents the spending limits, approval levels, supporting documentation requirements for all credit card purchases, and consequences of policy deviations. Management should also consider electronic methods to track credit card purchases, approvals, and receipts. The Grand Chapter should maintain all credit card receipts with business purpose documentation.

In May 2021, the Board approved a new Credit Card Policy that was immediately adopted. Credit cards are an integral part of the mix of instruments available for managing payment relationships with vendors. At present, the Sorority maintains only three (3) sponsored credit cards. Generally, payments to vendors through credit card instruments account for less then three percent (3%) of all expenditures processed by the organization. Nevertheless, we recognize and acknowledge that a material risk of exposure is present. To mitigate this risk, the Sorority has established a Board-level committee whose sole responsibility was to establish a set of policies and guidelines around: 1. Who may have access to Sorority-sponsored credit cards 2. The range of limits that will be available to staff on individual cards 3. The frequency of required reconciliations by the Accounting and Finance Department 4. The chains of approval that will be required for each in the range of limits established by the Board; and 5. The consequence(s) of deviation from the Board?s mandated Policy The Board?s guidelines are now published and available; however, no new cards will be issued in the near-term. Further, the Sorority?s Accounting Department continues its practice of conducting robust, monthly reviews of each line-item appearing on the three (3) credit card statements. The Team will make certain that receipts are present for all expenditures that exceed $25; and will monitor the types of transactions processed via credit card to ensure their legitimacy. Planned Implementation Date of Corrective Action May 2021 Person(s) Responsible for Corrective Action Pamela R. Hill, Treasurer and CFO Andrew Harris, Director, Finance and Accounting

2019-001

Type of Finding: Noncompliance and Significant Deficiency Repeat Finding: Yes ? 2019-003 Criteria As per 34 CFR section 644.3, an individual is eligible to participate in an EOC project if the individual meets all of the following requirements: (1) is a citizen, national, or permanent resident of the United States or is in the United States for other than a temporary purpose; (2) is at least 19 years of age (an individual less than 19 years of age can be served by the EOC project if TS services are not available); and (3) expresses a desire to enroll or is enrolled in a program of postsecondary education and requests information or assistance in applying for admission or financial aid for such a program. A veteran, regardless of age, is eligible to participate in an EOC project if he or she meets eligibility requirements. The program obtained signed applications with the applicant signing as certification of their citizenship. Condition There was no verification of participant citizenship for all forty samples selected. Cause Management did not require applicants to submit any verification other than their application with their signature that information on application was accurate. Effect There may be a risk of ineligible participants receiving services under the program. Questioned Costs Unknown Recommendation Management should implement a process to obtain proof of citizenship of all participants.

The Maryland Educational Opportunity Center (MEOC) determines and documents participant eligibility via the program?s intake application. Upon applying, applicants indicate their residency status (that is, whether they are a U.S. Citizen, Lawful Permanent Resident, or Other). If applicable, Alien Registration Numbers are requested. Applicants sign the intake applications attesting to the truthfulness of the responses. According to correspondence received on 18th May2020, directly from the U.S. Department of Education, ??A grantee can generally rely on the participant?s certification of eligibility unless the grantee has other information that may contradict that certification.? Nevertheless, in consideration of the audit-related recommendation, Management has expanded the applicant process to include the placement of a copy the applicants? Alien Registration Number cards; Real ID drivers? licenses or Rel ID identification cards inside the applicants? respective files. Planned Implementation Date of Corrective Action June 2020 Person Responsible for Corrective Action Patricia Lattimore, Director, MEOC Program Andrew Harris, Director, Finance and Accounting

2019-003

Reference Number: 2019-001 Federal Program: All Programs Type of Finding: Material Weakness over Financial Reporting Repeat Finding: No Criteria Entities should maintain an adequate system of internal controls over financial reporting in order to initiate, authorize, record, process, and report financial data reliably in accordance with accounting principles generally accepted in the United States of America. Condition Our credit card transaction testing resulted in the following findings: (1) 23 out of 40 credit card sections did not have documentation of a valid business purpose; (2) 20 out of 40 credit card selections did not have vendor receipts; and (3) 40 out of 40 credit card selections had no evidence of approval. Cause Management did not have a formal credit card policy in place during fiscal year 2019 to document requirements for credit card usage and retention of supporting documents for credit card transactions (i.e. vendor invoices, approval of expenditures, proof of valid business purpose, etc.). Effect A fraud risk exists that credit card purchases are unauthorized and are not used for valid business purposes. Questioned Costs Unknown Recommendation Management should implement a formal credit card policy which documents the spending limits, approval levels, supporting documentation requirements for all credit card purchases, and consequences of policy deviations. Management should also consider electronic methods to track credit card purchases, approvals, and receipts. The Grand Chapter should maintain all credit card receipts with business purpose documentation. Management Response and Corrective Action Plan Management agrees with the finding. See schedule of corrective actions.

Finding 2019-001: Material Weakness over Financial Reporting Responsible Official?s Response and Corrective Action Plan Credit cards are an integral part of the mix of instruments available for managing payment relationships with vendors. At present, the Sorority maintains only four (4) sponsored credit cards. Generally, payments to vendors through credit card instruments account for less than three percent (3%) of all expenditures processed by the organization. Nevertheless, we recognize and acknowledge that a material risk of exposure is present. To mitigate this risk, the Sorority has established a Board-level committee whose sole responsibility is to establish a set of policies and guidelines around: 1.Who may have access to Sorority-sponsored credit cards 2.The range of limits that will be available to staff on individual cards 3.The frequency of required reconciliations by the Accounting and Finance Department 4.The chains of approval that will be required for each of the range of limits established by theBoard; and 5.The consequence(s) of deviation from Board?s mandated Policy Until the Board?s guidelines become available and published, no new cards will be issued. Further, the Sorority?s Accounting Department will continue the process of conducting robust, monthly reviews of each line-item appearing on the four (4) credit card statements. The Team will make certain that receipts are present for all expenditures that exceed $25; and will monitor the types of transactions processed via credit card to ensure their legitimacy. Planned Implementation Date of Corrective Action May 2020 Person(s) Responsible for Corrective Action Pamela R. Hill, Treasurer and CFO Andrew Harris, Director, Finance and Accounting

Reference Number: 2019-003 Federal Program: TRIO Education Opportunity Center (CFDA 84.066) Type of Finding: Noncompliance and Significant Deficiency Repeat Finding: No Criteria As per 34 CFR section 644.3, an individual is eligible to participate in an EOC project if the individual meets all of the following requirements: (1) is a citizen, national, or permanent resident of the United States or is in the United States for other than a temporary purpose; (2) is at least 19 years of age (an individual less than 19 years of age can be served by the EOC project if TS services are not available); and (3) expresses a desire to enroll or is enrolled in a program of postsecondary education and requests information or assistance in applying for admission or financial aid for such a program. A veteran, regardless of age, is eligible to participate in an EOC project if he or she meets eligibility requirements. The program obtained signed applications with the applicant signing as certification of their citizenship. Condition There was no verification of participant citizenship for all forty samples selected. Cause Management did not require applicants to submit any verification other than their application with their signature that information on application was accurate. Effect There may be a risk of ineligible participants receiving services under the program. Questioned Costs Unknown Recommendation Management should implement a process to obtain proof of citizenship of all participants. Management Response and Corrective Action Plan Management agrees with the finding. See schedule of corrective actions.

Finding 2019-003: Noncompliance and Significant Deficiency over Eligibility Responsible Official?s Response and Corrective Action Plan The Maryland Educational Opportunity Center (MEOC) determines and documents participant eligibility via the program?s intake application. Upon applying, applicants indicate their residency status (that is, whether they are a U.S. Citizen, Lawful Permanent Resident, or Other). If applicable, Alien Registration Numbers are requested. Applicants sign the intake applications attesting to the truthfulness of the responses. According to the U.S. Department of Education Program Officer (Dr. Rachel Couch-Wiley), this documentation process ? which has been in place since the program?s inception ? is sufficient to assess and certify eligibility for program participants. Nevertheless, in consideration of the audit-related recommendation, MEOC management will expand the current process to include placement of a copy the applicants? Alien Registration Number cards; Real ID drivers? licenses or Rel ID identification cards inside the applicants? respective files. Planned Implementation Date of Corrective Action May 2020 Person Responsible for Corrective Action Ellen Howard, Executive Director (MEOC Program) Andrew Harris, Director, Finance and Accounting