Telamon Corporation

Finding 2023-002–Late Audit Reporting Nonmaterial Noncompliance–Reporting Identification of the federal program: U.S. Department of Agriculture Direct awards Program Name: Child and Adult Care Food Program ALN # 10.558 U.S. Department of Treasury Passed through the State of North Carolina Program Name: COVID-19: Emergency Rental Assistance ALN # 21.023 U.S. Department of Health and Human Services Direct awards Program Name: Head Start Cluster ALN # 93.600 Criteria: Under 45 CFR Part 75.512, the Uniform Guidance requires that audited financial statements and related data collection form are submitted by the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period. Condition: The audit of the Organization for the year ended September 30, 2023 had a submission deadline of June 30, 2024. The Organization did not complete and submit their audit for the year ended September 30, 2023 to the federal clearinghouse until July 2024. Cause: Significant delays stemming from Finding 2023-001 caused the required audit procedures and the ultimate completion date to extend beyond the regulatory deadline. Effect: The late filing could potentially delay the ability of the federal government to monitor the Organization. Questioned costs: None Context: No monetary value or effect on population as the condition relates to the late filing of the audit report. Repeat finding: Yes – (Finding 2022-003) Recommendation: We recommend that management implement procedures and controls as described in Finding 2023-001 to ensure future audits are completed timely. Views of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.

Finding 2023-003–Indirect Cost and Fringe Benefit Rates Nonmaterial Noncompliance–Allowable Costs Identification of the federal program: U.S. Department of Health and Human Services Direct Award Program Name: Head Start Cluster ALN # 93.600 Criteria: Sections 200.414 and 200.431 of Subpart E of the Uniform Guidance require that indirect costs and fringe benefit costs charged to federal programs must be reasonable and allocated to the federal program based on a written policy, and self-insured expenses must be based on historical experience and reasonable assumptions. Condition: The Organization did not perform a timely calculation or review of the indirect rate based on actual expenses compared to the provisional rate being used in order to determine if the amount being charged resulted in an adjustment to the billing for the program. Cause: The expenses allocated and charged to the program based on provisional rates for both indirect and fringe benefit costs exceeded the actual expenses reported in the trial balance and allocated to the program. Effect: The lack of timely calculations or reviews could result in having to reconcile funds due to or from the federal government a significant amount of indirect costs that were overbilled or underbilled. Questioned costs: $123,160 Context: A recalculation was performed over the indirect expenses of the major program and determined the indirect expenses were overbilled by $123,160. Repeat finding: No Recommendation: We recommend the Organization review the indirect and fringe benefit cost rates at least annually and perform reconciliations between the provisional and actual rates to determine if amounts billed to the program should be adjusted. Views of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.

Finding 2023-04–Reporting Nonmaterial Noncompliance–Reporting Identification of the federal program: U.S. Department of Health and Human Services Direct Award Program Name: Head Start Cluster ALN # 93.600 Criteria: The special reporting requirement under the Head Start program in the OMB Compliance Supplement requires the SF-429 – Real Property Status Report to be filed annually based upon the end of the budget period. The annual SF-429 is required for all grantees and must indicate whether the grantee has reportable real property. Condition: The Organization did not complete and submit their required SF-429 reports for the year ended September 30, 2023 to the federal grantor until July 2024. Cause: The SF-429 reports were not submitted to the grantor prior to the required due dates. Effect: The lack of timely submission could potentially delay the ability of the federal government to monitor the Organization. Questioned costs: None Context: No monetary value or effect on population as the condition relates to the late filing of the SF-429 report. Repeat finding: No Recommendation: We recommend the Organization review the reporting requirements with the grantor directly and create a schedule that includes due dates for each reporting requirement so they are timely submitted in the future. Views of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.

Finding 2022-003 – Late Audit Reporting U.S. Department of Treasury Passed through the State of North Carolina Program Name: COVID-19: Emergency Rental Assistance ALN # 21.023 Nonmaterial Noncompliance – Reporting Criteria: Under 45 CFR Part 75.512, the Uniform Guidance requires that audits are submitted by the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period. Condition: The Organization did not complete and submit their audit for the year ended September 30, 2022 to the federal clearinghouse until January 2024. Effect: The late filing could potentially impact future funding from government agencies. Cause: Significant delays stemming from Finding 2022-001 caused the required audit procedures and the ultimate completion date to extend beyond the regulatory deadline. Recommendation: We recommend that management implement procedures and controls as described in Finding 2022-001 to ensure future audits are completed timely. Repeat finding: No. Views of responsible officials and planned corrective actions: See attached letter. Reportable questioned costs: None

Finding 2022-003 – Late Audit Reporting U.S. Department of Treasury Passed through the State of North Carolina Program Name: COVID-19: Emergency Rental Assistance ALN # 21.023 Nonmaterial Noncompliance – Reporting Criteria: Under 45 CFR Part 75.512, the Uniform Guidance requires that audits are submitted by the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period. Condition: The Organization did not complete and submit their audit for the year ended September 30, 2022 to the federal clearinghouse until January 2024. Effect: The late filing could potentially impact future funding from government agencies. Cause: Significant delays stemming from Finding 2022-001 caused the required audit procedures and the ultimate completion date to extend beyond the regulatory deadline. Recommendation: We recommend that management implement procedures and controls as described in Finding 2022-001 to ensure future audits are completed timely. Repeat finding: No. Views of responsible officials and planned corrective actions: See attached letter. Reportable questioned costs: None

Finding 2022-004 – Indirect Cost and Fringe Benefit Rates U.S. Department of Treasury Passed through the State of North Carolina Program Name: COVID-19: Emergency Rental Assistance ALN # 21.023 Nonmaterial Noncompliance – Allowable Costs Criteria: Sections 200.414 and 200.431 of Subpart E of the Uniform Guidance require that indirect costs and fringe benefits costs charged to federal programs must be reasonable and allocated to the federal program based on a written policy, and self-insured expenses must be based on historical experience and reasonable assumptions. Condition: The Organization did not perform a timely calculation or review of the indirect rate based on actual expenses compared to the provisional rate being used, in order to determine if the amount being charged resulted in an adjustment to the billing for the program. Effect: The lack of timely calculations or reviews could result in having to reconcile funds due to or from the federal government a significant amount of indirect costs that were overbilled or underbilled.   Cause: The expenses allocated and charged to the program based on provisional rates for both indirect and fringe benefit costs exceeded the actual expenses reported in the trial balance and allocated to the program. Recommendation: We recommend the Organization review the indirect and fringe benefit cost rates at least annually and perform reconciliations between the provisional and actual rates to determine if amounts billed to the program should be adjusted. Repeat finding: No. Views of responsible officials and planned corrective actions: See attached letter. Reportable questioned costs: $60,031

Finding 2022-004 – Indirect Cost and Fringe Benefit Rates U.S. Department of Treasury Passed through the State of North Carolina Program Name: COVID-19: Emergency Rental Assistance ALN # 21.023 Nonmaterial Noncompliance – Allowable Costs Criteria: Sections 200.414 and 200.431 of Subpart E of the Uniform Guidance require that indirect costs and fringe benefits costs charged to federal programs must be reasonable and allocated to the federal program based on a written policy, and self-insured expenses must be based on historical experience and reasonable assumptions. Condition: The Organization did not perform a timely calculation or review of the indirect rate based on actual expenses compared to the provisional rate being used, in order to determine if the amount being charged resulted in an adjustment to the billing for the program. Effect: The lack of timely calculations or reviews could result in having to reconcile funds due to or from the federal government a significant amount of indirect costs that were overbilled or underbilled.   Cause: The expenses allocated and charged to the program based on provisional rates for both indirect and fringe benefit costs exceeded the actual expenses reported in the trial balance and allocated to the program. Recommendation: We recommend the Organization review the indirect and fringe benefit cost rates at least annually and perform reconciliations between the provisional and actual rates to determine if amounts billed to the program should be adjusted. Repeat finding: No. Views of responsible officials and planned corrective actions: See attached letter. Reportable questioned costs: $60,031

U.S. Department of Health and Human Services Program Name: Head Start Federal Assistance Listing # 93.600 Finding: 2021-002 Nonmaterial Noncompliance - Reporting Criteria: The Grantee is to submit the Federal Financial Reporting Form (SF-425) and the Real Property Status Report (SF-429) in accordance with the reporting deadlines based on the budget period ending month. Condition: SF-429 reports were submitted in December 2021. SF-425 Semi Annual Report was submitted May 5, 2021, and the SF-429 Final report was submitted in December 2021. Context: 3 out of 3 project?s SF-429 reports were submitted beyond their respective deadline. 2 out of 3 project?s SF-425 Semi Annual reports were submitted beyond their respective deadlines. Effect: The Grantee?s program reports were submitted beyond the deadlines. Cause: Information needed by the Grantor was not provided in time, in order to submit the reports timely. Communication regarding the delay in obtaining this information and acceptance of delayed reports was not retained by management. Recommendation: We recommend management create a process to track reporting due dates and create a work plan that enables them to obtain information from the Grantors to complete the reports timely.