U.S. Dream Academy, Inc.

U.S. Department of Justice 16.726 Juvenile Mentoring Program Grant Period: 10/1/2020-9/30/2024 Contract Number: 2020-JU-FX-0009 Criteria: Under 2 CFR Section 200.303(a) a non-Federal entity is required to establish and maintain internal controls over compliance with Federal statutes, regulations, and the terms and conditions of the Federal grant. In addition, under 2 CFR Section 200.430 Compensation – personal services, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates may be used for interim accounting purposes but budget estimates alone do not qualify as support for charges to Federal awards. The entity’s system of internal controls must include a process to review after-the-fact interim charges made to a Federal award to budget estimates and make any necessary adjustments such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: The Academy’s internal control processes do not include a comparison of actual time charged on the employee’s time slip to the budget allocation charged the grant to determine if the budget estimates reflect reasonable approximations of the activities actually performed. Effect: Without internal controls operating effectively, it is possible that the Academy could be at risk to be out of compliance with the applicable compliance requirements. Cause: Additional federal and other restricted grants resulted in employee’s time being allocated across additional funding sources. In addition, the Academy was working with the grantor on a budget adjustment. Questioned Costs: Known questioned costs: $5,573; likely questioned costs $29,683. Perspective: There is no observable evidence of the Academy’s review and reconciliation of time slips to budget estimates which affects both the allowable activities and allowable costs requirements. Repeat Finding: No Auditor’s Recommendation: We recommend the Academy establish policies and procedures to reconcile the percentage of hours charged on time slips to the budget estimates used to bill the Federal grantor. This should be done in conjunction with quarterly billings (or other determined regular interval), at fiscal year end, and at the end of the grant year (if different from the Academy’s fiscal year). Views of Responsible Officials: See Corrective Action Plan

U.S. Dream Academy, Inc. submits the following corrective action plan for the year ended December 31, 2023. The finding from the schedule of findings and questioned costs dated August 23, 2024 is discussed below. The finding is numbered consistently with the number assigned in the schedule. FINDINGS – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 2023-001 Internal Controls and Compliance over Allowable Costs and Activities - Payroll (Significant Deficiency) Recommendation: We recommend the Academy establish policies and procedures to reconcile the percentage of hours charged on time slips to the budget estimates used to bill the Federal grantor. This should be in conjunction with quarterly billings (or other determined regular interval), at fiscal year end, and at the end of the grant year (if different from the Academy’s fiscal year). Corrective Action: On November 20, 2023, U.S. Dream Academy entered into a contractual agreement with ADP Comprehensive Services to move electronic time cards from Attendance on Demand to ADP Time & Attendance. This change in software will allow program and grant allocations made by employees on time cards to be directly imported into payroll processing as is, eliminating the need to manually enter the summation of all hours worked over the pay period and manually breaking down the allocation for entry into the general ledger. The Time & Attendance software went “live” with the pay period ending May 18, 2024. Each pay period, the Financial Controller will reconcile actual time worked (as per time card) against budgeted salary allocations. The Chief Financial Officer will review these reconciliations prior to grant reporting and at year end closings. Responsible Parties: Phylicia Buie, CFO and Chris Moore, Financial Controller Date Corrected: August 23, 2024 If there are any questions regarding this plan, please contact Phylicia Buie pbuie@usdreamacademy.org or Christine Moore at cmoore@usdreamadacemy.org .

2019 ? 002 - Internal Controls over Payroll (Significant Deficiency) U. S. Department of Justice Pass-through Office of Juvenile Justice and Delinquency Prevention 16.726 Juvenile Mentoring Program Grant period ? 10/1/2016 ? 9/30/19 Pass through Contract Number: 2016-JU-FX-0024 Condition: For the year ended December 31, 2019, the Academy did not properly charge payroll expenses to the grant. The Academy?s controls over activities allowed or unallowed and allowable costs/cost principles were not operating effectively. Criteria: In accordance with 2 CFR 200, only allowable costs are to be charged to the grant and an entity must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the Federal awards in compliance with statutes, regulations, and the terms and conditions of the award. Cause: The Academy used budgeted hours and pay rates instead of actual timesheets and actual rates of pay to calculate the amounts to be charged to the grant. Questioned Costs: $726 Effect: Without internal controls operating effectively, it is possible the Academy would be at risk to be out of compliance with the activities allowed or unallowed and allowable costs/cost principles compliance requirement of the program. The Academy cannot effectively manage its federal program with controls that do not operate effectively. Recommendation: The Academy should establish procedures to ensure that the actual time sheets and pay rates be reviewed against budget and adjusted to the general ledger on a timely basis. Views of Responsible Officials: Grant billing, timesheets and pay rates will be reviewed and reconciled by accounting staff. Staff supervisors will sign off on the staff timesheet. The Director of Finance and Administration will review and sign off on the reconciliation of grant billing and timesheet and ascertain the accuracy of pay rate and percentage allocation on each grant.

2019-002 - Internal Controls over Payroll (Significant Deficiency) Single Audit payroll allocations. Actual payroll allocations were not properly incorporated into the billing for grants; budgeted allocation were used instead, which is not in compliance with the grant agreement. Actual pay rates and hours worked, as evidenced by approved timesheets, should be used for grant billing. Recommendation: Proper procedures should be followed when billing grants for payroll. Grant billing should be reviewed by the supervisor and compared to actual timesheets and accurate pay rates. Corrective Action: Grant billing, timesheets, and pay rates will be reviewed and reconciled monthly by Accounting staff. Staff supervisors will sign off on the staff timesheet. Director of Finance and Administration will review and sign off on the reconciliation of grant billing and timesheet, and ascertain the accuracy of pay rate and percentage allocation on each grant. Responsible Party: Richard White, Director of Finance and Administration Date Expected to be corrected: January 25, 2021