COLLEGE OF THE MARSHALL ISLANDS

Finding No.: 2023-005 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $61,291 Criteria: In accordance with the applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant program legislation, federal awarding agency regulations, and the terms and conditions of the award and consistent with the purpose of the grant. 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Conditions: 1. For one (or 9%) of eleven items, aggregating $74,721 of $359,456 in total non-payroll expenditures, no supporting documentation was provided to substantiate how the allocated amount charged to the program was determined and how the expenditure (PO# 23-PO- 1856 ; $35,492) directly relates to the purpose of the underlying subgrant. 2. For thirty-one (or 63%) of forty-nine items, aggregating $64,266 of $1,612,427 in total payroll expenditures, we noted the following: Item #s 1 through 6 relate to employee’s salaries and wages and related fringe benefits (employer contributions for social security and health insurance) allocated and charged to federal grant for which we noted either a) the hours paid is higher compared to the hours recorded on the approved timesheet or b) the rate paid is higher compared to the rate per contract. Item #s 7 through 14 relate to salaries – overload or adjunct that were not supported by adequate documentation (i.e. semester section offering or instructor’s schedule) to ascertain whether service was received. For item #15, we noted that the rate paid is higher compared to the rate per contract. Furthermore, the related salaries – overload was not supported by adequate documentation (i.e. semester section offering/instructor’s schedule) to ascertain whether service was received. For item #s 16 through 31, there were no approved timesheet on file to substantiate the actual number of hours worked. Further, for item #s 29 through 31, approval of the amount paid to employees relating to leave was not on file. Cause: The College lacks adequate internal controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures are necessary and reasonable for the performance of the Federal award. Effect: The College is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $61,291 based on the items identified in Conditions above. For condition #2, item #s 4 through 6, 13 through 14, and 20 through 31, questioned costs related to federal expenditures that may result from discrepancies noted or unestablished allocation are not determinable. Identification as a Repeat Finding: 2022-008 and 2022-009 Recommendation: College management should improve internal control policies and strengthen controls and procedures over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-006 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: Non-federal entities other than states must follow Sections 200.313(c) through (e) of the Uniform Guidance. Section 200.313(d) states that procedures for managing equipment, whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: a. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property; b. A physical inventory of the property must be carried out and the results reconciled with the property records at least once every two years; c. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated; d. Adequate maintenance procedures must be developed to keep the property in good condition; and e. If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: Capital assets records do not meet the criteria above and are not effectively maintained since updates to the records occur only once a year. Specifically, we noted the following: 1. No capital assets record was provided. 2. An inventory of capital assets has been performed on an annual basis; however, the result of the physical inventory was not completely reflected/reconciled with the property records. 3. As capital assets records are not effectively maintained, it does not appear that the College has effectively developed means to adequately safeguard capital assets from loss, damage, or theft, or to reasonably investigate such occurrences. 4. Long-lived assets are not routinely evaluated for possible impairment. We are unable to assess the overall cumulative monetary value of the noncompliance. However, the table below summarizes total capital outlays over the past five years: Cause: The College lacks adequate internal control policies and procedures over compliance with applicable federal property rules and regulations and lacks effective procedures governing property maintenance, as well as periodic assessment of asset impairment conditions. Moreover, internal control policies and procedures requiring periodic and timely performance and independent review of capital assets reconciliations and related general ledger accounts are not effectively implemented. Effect: The College is in noncompliance with applicable equipment and real property management requirements. Questioned costs, if any, that may result from inadequate property records, maintenance procedures, and the absence of timely reconciliations are not determinable. Identification as a Repeat Finding: 2022-010 Recommendation: College management should establish and strengthen internal control policies and procedures over compliance with applicable federal regulations on equipment and real property management. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-007 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Period of Performance Questioned Costs: $9,883 Criteria: The terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. For one (or 4%) of twenty-three items, aggregating $45,931 of $75,337 in total non-payroll expenditures, the item amounting to $1,209 (Check # 1039088; PO# 22-PO-2614) was incurred prior to the funding period stipulated in the grant awards. 2. For twenty (or 54%) of thirty-seven items, aggregating $20,993 of $121,401 in total payroll expenditures, the following costs of salaries charged to the program were incurred prior to the funding period stipulated in the grant awards: Cause: The College lacks adequate internal controls over compliance with applicable federal regulations relating to period of performance. Effect: The College is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $9,883 based on the items identified in Conditions above. For item #s 10 through 20, only $2,246 is included in the total questioned costs, which relates to costs incurred prior to the funding period stipulated in the grant awards. Identification as a Repeat Finding: 2022-011 Recommendation: College management should improve internal control policies and strengthen controls to comply with applicable period of performance requirements. Specifically, review should be made to ensure all costs charged to the program are within the funding period stipulated in the grant awards. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-008 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Procurement and Suspension and Debarment Questioned Costs: $66,667 Criteria: Under the terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards, RepMar authorizes the College to use its own procedures for procurement provided they meet the RepMar Procurement Code. RepMar’s Procurement Code states the following: (a) Section 126.7 - Award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous to the Government taking into consideration price and the evaluation factors set forth in the Request for Proposals. No other factors or criteria shall be used in the evaluation. The contract file shall contain the basis on which the award is made. (b) Section 127 - Procurement of goods and services not exceeding $25,000 may be made in accordance with small purchase procedures promulgated by RepMar’s Policy Office. Small purchase procedures are those relatively simple and informal methods for securing services, supplies, or other property that do not cost more than $25,000. RepMar’s Ministry of Finance has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. (c) Section 128 - a contract may be awarded for supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. (d) Section 129 - Notwithstanding any other provision of this Chapter, the Chief Procurement Officer, the head of a Purchasing Agency, or a designee of either officer may make or authorize others to make emergency procurement when there exists a threat to public health, welfare, or safety under emergency conditions as defined in regulations promulgated by the Policy Office; provided, that such emergency procurement shall be made with such competition as is practicable under the circumstances. 2 CFR 180.300 states that when an entity enters into a covered transaction with another person at the next lower tier, the entity must verify that the person with whom the entity intends to do business is not excluded or disqualified by doing the following: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. 2 CFR 200.320(a) states that for micro-purchases, to the extent practicable, the recipient or subrecipient should distribute micro-purchases equitably among qualified suppliers. 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: For six (or 50%) of twelve items, aggregating $157,536 in total non-payroll expenditures, supporting procurement documentation was not sufficient to substantiate compliance with the procurement method, as follows: For item #s 1 through 3, there were no vendor quotations on file. For item #s 4 and 6, procurement was sole sourced with written justification but does not appear to be justified. For item # 5, there were no adequate vendor quotations on file. Additionally, the College has no formal policies and procedures over compliance with the requirement of 2 CFR 200.320 which requires that the College distribute micro-purchases equitably among qualified suppliers. Moreover, the College has no internal control policies and procedures over verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause: The College did not follow internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Furthermore, the College lacks internal control policies and procedures over: 1) distribution of micro-purchases equitably among qualified suppliers; and 2) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Effect: The College is in noncompliance with applicable procurement requirements. The reportable questioned cost is $66,667 based on the items identified in Condition above. Identification as a Repeat Finding: 2022-012 Recommendation: Responsible personnel should ensure that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the solicitation process and rationale for contractors or vendor selection. Furthermore, the College should establish internal control policies and procedures over: 1) distribution of micro-purchases equitably among qualified suppliers; and 2) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-009 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $745,189 Criteria: In accordance with applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant statutory provisions and consistent with the purpose of the ESF “to prevent, prepare for, and respond to coronavirus”. Allowable expenditures incurred and liquidated prior to December 27, 2020 must have been “to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus”. Further, beginning December 27, 2020, any unused HEERF I Institutional Portion funds, new HEERF II Institutional Portion funds and HEERF III Institutional Portion Funds, may be used to defray expenses associated with coronavirus (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll) and to make additional financial grants to students. HEERF I and HEERF II funds may also have been used to carry out student support activities authorized by the Higher Education Act (HEA) that address needs related to coronavirus. HEERF Frequently Asked Questions (FAQ) Rollup Document dated October 14, 2020 states that: • Question #38: Institutions can use CARES Act funds under Section 18004(a)(2) to make scholarships to students. Section 18004(a)(2) of the CARES Act state that institutions may use funds specifically “for grants to students for any component of the student’s cost of attendance (as defined under section 472 of the HEA), including food, housing, course materials, technology, health care, and child care”. • Question #47: Institution may use funds from the Institutional Portion of its section 18004(a)(1) allocation to purchase equipment or software, pay for online licensing fees, or pay for internet service to enable students to transition to distance learning as such costs are associated with a significant change in the delivery of instruction due to the coronavirus. An institution may also use Institutional Portion funds for any other costs for computer system upgrades that are reasonably related to “significant changes to the delivery of instruction due to the coronavirus.” This would not include, for example, previously planned upgrades to computer systems. 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: For four items (or 33%) of twelve items, aggregating $1,085,985 of $1,184,585 in total non-payroll expenditures, we noted the following: Item #s 1 and 2 were not supported by adequate documentation (i.e. justification of the purpose prior to purchase and receiving reports) to ascertain whether such expenditure is associated to distance learning due to coronavirus. There is no evidence of communication or consultation with the grantor agency that this expenditure is allowable. Item # 3 pertains to relinquishment of student’s outstanding debt with the College, whereas the College directly credited student’s accounts and got reimbursement from the CARES Act funds under Section 18004(a)(2). These are not associated with coronavirus. There is no evidence of communication or consultation with the grantor agency that these expenditures are allowable. Item # 4 is standard recurring cost and not associated with coronavirus. Specifically, expenditure relates to annual software subscription of the College. There is no evidence of communication or consultation with the grantor agency that this expenditure is allowable. Cause: The College lacks adequate internal controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures are necessary and reasonable for the performance of the Federal award. Effect: The College is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $745,189 based on the items identified in Condition above. Identification as a Repeat Finding: 2022-019 Recommendation: College management should improve internal control policies and strengthen controls and procedures over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-010 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425E Higher Education Emergency Relief Fund (HEERF) - Student Aid Portion Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Cash Management Questioned Costs: Undeterminable Criteria: 2 CFR section 200.302(b)(6) states that the recipient must establish written procedures to implement the requirements of 2 CFR section 200.305. Specifically, 2 CFR section 200.305(b) states that for recipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient. Furthermore, per OMB Compliance Supplement May 2023, Student Aid (ALN 84.425E) should be disbursed within 15 calendar days of the drawdown from ED’s grant management system (G5), while Institutional Aid Portion, (a)(2), and (a)(3) funds (all other ALNs) should be disbursed within 3 calendar days of the drawdown from G5. 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The College does not have written procedures to implement the requirements set in the criteria above. Furthermore, monitoring of actual disbursements of the following drawdowns during the year was not performed: Cause: The College lacks written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Effect: The College is in noncompliance with applicable cash management requirements. Questioned costs, if any, that may result from non-monitoring of actual disbursements are not determinable. Identification as a Repeat Finding: 2022-021 Recommendation: College management should establish written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-011 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 Area: Procurement and Suspension and Debarment Questioned Costs: $179,015 Criteria: Under the terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards, RepMar authorizes the College to use its own procedures for procurement provided they meet the RepMar Procurement Code. RepMar’s Procurement Code states the following: (a) Section 126.7 - Award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous to the Government taking into consideration price and the evaluation factors set forth in the Request for Proposals. No other factors or criteria shall be used in the evaluation. The contract file shall contain the basis on which the award is made. (b) Section 127 - Procurement of goods and services not exceeding $25,000 may be made in accordance with small purchase procedures promulgated by RepMar’s Policy Office. Small purchase procedures are those relatively simple and informal methods for securing services, supplies, or other property that do not cost more than $25,000. RepMar’s Ministry of Finance has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. (c) Section 128 - a contract may be awarded for supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. (d) Section 129 - Notwithstanding any other provision of this Chapter, the Chief Procurement Officer, the head of a Purchasing Agency, or a designee of either officer may make or authorize others to make emergency procurement when there exists a threat to public health, welfare, or safety under emergency conditions as defined in regulations promulgated by the Policy Office; provided, that such emergency procurement shall be made with such competition as is practicable under the circumstances. 2 CFR 180.300 states that when an entity enters into a covered transaction with another person at the next lower tier, the entity must verify that the person with whom the entity intends to do business is not excluded or disqualified by doing the following: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. 2 CFR 200.319 states that: (a) All procurement transactions under the Federal award must be conducted in a manner that provides full and open competition and is consistent with the standards of this section and § 200.320. (c) (6) Examples of situations that may restrict competition include specifying only a “brand name” product instead of allowing “an equal” product to be offered and describing the performance or other relevant requirements of the procurement. (d) (2) The recipient or subrecipient must have written procedures for procurement transactions. These procedures must ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the property, equipment, or service being procured. The description may include a statement of the qualitative nature of the property, equipment, or service to be procured. When necessary, the description must provide minimum essential characteristics and standards to which the property, equipment, or service must conform. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to clearly and accurately describe the technical requirements, a “brand name or equivalent” description of features may be used to provide procurement requirements. The specific features of the named brand must be clearly stated. 2 CFR 200.320(a) states that for micro-purchases, to the extent practicable, the recipient or subrecipient should distribute micro-purchases equitably among qualified suppliers. 2 CFR 200.320(c) states that there are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. 2 CFR 200.324(a) states that the recipient or subrecipient must perform a cost or price analysis for every procurement transaction, including contract modifications, in excess of the simplified acquisition threshold. The method and degree of analysis conducted depend on the facts surrounding the particular procurement transaction. For example, the recipient or subrecipient should consider potential workforce impacts in their analysis if the procurement transaction will displace public sector employees. However, as a starting point, the recipient or subrecipient must make independent estimates before receiving bids or proposals. 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: Of four items (or 100%), aggregating $179,015 in total non-payroll expenditures, supporting procurement documentation was not sufficient to substantiate compliance with the procurement method, as follows: For item #s 1 through 3, there were no vendor quotations on file. Further for item #s 2 and 3, there was no documentation on file to support compliance with 2 CFR 200.324(a). For item #4, procurement did not provide full and open competition in the solicitation process. The solicitation specified particular models, including a requirement for a specific “brand name” product instead of allowing “an equal” product to be offered. Furthermore, for solicitation with brand name indicated, solicitation did not include “brand name or equivalent” description. In addition, the selected vendor was not among the vendors who provided quotations. Additionally, the College has no formal policies and procedures over compliance with the requirement of 2 CFR 200.320 which requires that the College distribute micro-purchases equitably among qualified suppliers. Moreover, the College has no internal control policies and procedures over verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause: The College did not follow internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Furthermore, the College lacks internal control policies and procedures over: 1) distribution of micro-purchases equitably among qualified suppliers; 2) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded; and 3) performance of a cost or price analysis for every procurement transaction in excess of the simplified acquisition threshold. Effect: The College is in noncompliance with applicable procurement requirements. The reportable questioned cost is $179,015 based on the items identified in Condition above. Identification as a Repeat Finding: 2022-022 Recommendation: Responsible personnel should ensure that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the solicitation process and rationale for contractors or vendor selection. Furthermore, the College should establish internal control policies and procedures over: 1) distribution of micro-purchases equitably among qualified suppliers; 2) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded; and 3) performance of a cost or price analysis for every procurement transaction in excess of the simplified acquisition threshold. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-012 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425E Higher Education Emergency Relief Fund (HEERF) - Student Aid Portion Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Reporting Questioned Costs: $0 Criteria: The CARES Act 18004(e) and the CRRSAA 314(e) requires an institution receiving funds under HEERF I and HEERF II to submit a report to the secretary, at such time in such a manner as the secretary may require. In accordance with applicable reporting requirements, the College is required to submit HEERF I, II, & III Annual Performance Report Form (PRA Number 1840-0850) with the following key line items: Question 5: Institutions were required to prioritize exceptional need in awarding emergency financial aid grants to students. Documentation must show methodology for distributing aid that prioritizes exceptional need. Question 9b, row 13: “Implementing evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines” and row 14: “Conducting direct outreach to financial aid applicants.” Spending under these categories indicates whether an institution has spent funds under a required use of funds established under the ARP. If an institution indicates zero-dollar amount spending for either or both categories, examine earlier annual reports to determine the institution had spending at some point on these two funding categories consistent with American Rescue Plan Act (ARP) FAQ Question 21. Additionally, the College is required to submit Quarterly Budget and Expenditure Reporting for all HEERF I, II, and III grant funds (PRA Number 1840-0849). The quarterly portion reporting requirements involve publicly posting completed forms conspicuously on the institution’s website. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. Total annual expenditures per the Annual Report Data Collection System differ from cumulative expenditures from 01/01/22 through 12/31/22 per underlying accounting records, as follows: 2. ALN 84.425F COVID-19 HEERF-Institutional Portion ALN 84.425L COVID-19 HEERF-Minority Serving Institution Quarterly Budget and Expenditure reports were publicly posted beyond the 10-day posting requirement after the end of each calendar quarter as follows: Cause: The College lacks adequate internal controls over the timely and accurate preparation and review of required reports as stipulated in the criteria above. Effect: The College is in noncompliance with applicable reporting requirements. No questioned costs are presented as the finding relates to the reporting compliance requirement. Identification as a Repeat Finding: 2022-023 Recommendation: College management should strengthen controls so that required reports are timely and accurately prepared and reviewed and submitted within the specified timeframes to evidence compliance with applicable reporting requirements. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-013 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Cash Management Questioned Costs: Undeterminable Criteria: The College’s Program Participation Agreement indicates that the College is placed on the Heightened Cash Monitoring (HCM) payment method. Based on U.S. Department of Education (ED)’s publication, the College is placed on HCM1 payment method for the quarters ended March 1, 2023, June 1, 2023, and September 1, 2023. Under the HCM payment method, an institution must credit a student’s account for the amount of Title IV funds the student is eligible to receive and pay the amount of any credit balance due before the institution submits a request for funds or seeks reimbursement. Under HCM1, after making a disbursement to eligible students from institutional funds and submitting disbursement records to the Common Origination and Disbursement (COD) system, the institution draws down funds to cover those disbursements through G5 the same way as an institution on the Advance Payment Method. Due to the effects of the COVID-19 pandemic, in a December 2020 Federal Register Notice, ED permitted institutions on the HCM1 payment method to submit a request for funds without first paying credit balances due, as long as the institution pays the credit balances no later than three calendar days after receiving the funds for those students. 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The College does not have written procedures to implement the requirements set in the criteria above. Furthermore, no detailed listing of expenditures supporting the following drawdowns during the year was on file to ascertain whether the expenditures were paid prior to the date of request for fund: Cause: The College lacks written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Effect: The College is in noncompliance with applicable cash management requirements. Questioned costs, if any, that may result from non-monitoring of actual disbursements are not determinable. Recommendation: College management should establish written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-014 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Reporting Questioned Costs: $0 Criteria: The College is required to submit origination records and disbursement records to the Common Origination and Disbursement (COD) system. Key items on origination records, if applicable, are: Social Security number, award amount, enrollment date, verification status code (when the applicant is selected for verification), transaction number, cost of attendance, and the “Academic Start Date” and “Academic End Date”. Key items on disbursement records are disbursement date and amount. Conditions: 1. For twenty-four (or 60%) of forty items tested, the cost of attendance reflected in the Origination Records is the cost of attendance for full-time students, even if the student’s enrollment status is three-quarters time, half time or less than half time. 2. For eighteen (or 45%) of forty items tested, the award amount reflected in the Origination Records do not agree with the award amount per Payment and Disbursement Schedules. Cause: The College lacks adequate internal controls over compliance with applicable federal regulations related to reporting, specifically the systematic review and updating of financial aid records. Effect: The College is in noncompliance with applicable reporting requirements. No questioned costs are presented as the finding relates to the reporting compliance requirement. Recommendation: College management should establish a systematic process for reviewing and updating the origination records prior to and/or after submission to COD system. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-015 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Special Tests and Provisions - Verification Questioned Costs: $8,619 Criteria: 34 CFR 668.53 states that: (a) An institution must establish and use written policies and procedures for verifying an applicant’s Free Application for Federal Student Aid (FAFSA) information in accordance with the provisions of this subpart. These policies and procedures must include: (1) The time period within which an applicant must provide any documentation requested by the institution in accordance with 34 CFR 668.57; (2) The consequences of an applicant’s failure to provide the requested documentation within the specified time period; (3) The method by which the institution notifies an applicant of the results of its verification if, as a result of verification, the applicant’s Expected Family Contribution (EFC) changes and results in a change in the amount of the applicant’s assistance under the title IV, HEA programs; (4) The procedures the institution will follow itself or the procedures the institution will require an applicant to follow to correct FAFSA information determined to be in error; and (5) The procedures for making referrals under 34 CFR 668.16(g). (b) An institution’s procedures must provide that it will furnish, in a timely manner, to each applicant whose FAFSA information is selected for verification a clear explanation of: (1) The documentation needed to satisfy the verification requirements; and (2) The applicant’s responsibilities with respect to the verification of FAFSA information, including the deadlines for completing any actions required under this subpart and the consequences of failing to complete any required action. (c) An institution’s procedures must provide that an applicant whose FAFSA information is selected for verification is required to complete verification before the institution exercises any authority under section 479A(a) of the HEA to make changes to the applicant’s cost of attendance or to the values of the data items required to calculate the EFC. 34 CFR 668.54(a); FSA Handbook Application and Verification Guide, Chapter 4 requires an institution to establish written policies and procedures that incorporate the provisions of 34 CFR 668.51 through 668.61 for verifying applicant information for those applicants selected for verification by ED. Institutions shall require each applicant whose application is selected by ED to verify information required for the Verification Tracking Group to which the applicant is assigned. Conditions: 1. The College’s policies and procedures for verifying an applicant’s FAFSA information do not include all of the requirements identified in the Criteria above. 2. For 2 (or 18%) of 11 participants tested, discrepancies in the information were found between the supporting documents and related verification worksheet provided against the information reflected in the student’s Institutional Student Information Record (ISIR). Cause: The College did not effectively monitor compliance with applicable verification requirements. Effect: The College is in noncompliance with applicable special tests and provisions for verification requirements. The reportable questioned cost is $8,619 based on the items identified in Conditions above. Recommendation: College management should establish and strengthen internal control policies and procedures over compliance with applicable federal regulations on verification requirements. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan .

Finding No.: 2023-016 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Special Tests and Provisions – Disbursements to or on Behalf of Students Questioned Costs: $145,861 Criteria: 34 CFR 668.165(a)(1) states that before an institution disburses title IV, HEA program funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each title IV, HEA program, and how and when those funds will be disbursed. 34 CFR 668.164(d)(1) states that an institution makes a direct payment: (i) To a student, for the amount of the title IV, HEA program funds that a student is eligible to receive by: (A) Initiating an EFT of that amount to the student’s financial account; (B) Issuing a check for that amount payable to, and requiring the endorsement of, the student; or (C) Dispensing cash for which the institution obtains a receipt signed by the student. 34 CFR 668.164(d)(2) states that an institution issues a check on the date that it: (i) Mails the check to the student or parent; or (ii) Notifies the student or parent that the check is available for immediate pick-up at a specified location at the institution. The institution may hold the check for no longer than 21 days after the date it notifies the student or parent. If the student or parent does not pick up the check, the institution must immediately mail the check to the student or parent, pay the student or parent directly by other means, or return the funds to the appropriate title IV, HEA program. 34 CFR 668.164(h) states that: (1) A title IV, HEA credit balance occurs whenever the amount of title IV, HEA program funds credited to a student’s ledger account for a payment period exceeds the amount assessed the student for allowable charges associated with that payment period. (2) A title IV, HEA credit balance must be paid directly to the student or parent as soon as possible, but no later than: (i) Fourteen (14) days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (ii) Fourteen (14) days after the first day of class of a payment period if the credit balance occurred on or before the first day of class of that payment period. 34 CFR 690.61(a)(1) states that an institution must disburse a Federal Pell Grant to an eligible student who is otherwise qualified to receive that disbursement and electronically transmit Federal Pell Grant disbursement data to the Secretary for that student if: (i) The student submits a valid SAR to the institution; or (ii) The institution obtains a valid ISIR for the student. 34 CFR 690.61(b) states that for a student to receive a Federal Pell Grant for an award year, the student must submit the relevant parts of the valid SAR to his or her institution or the institution must obtain a valid ISIR by the earlier of: (1) The last date that the student is still enrolled and eligible for payment at that institution; or (2) By the deadline date established by the Secretary through publication of a notice in the Federal Register. Conditions: 1. For sixty (or 100%) students tested, the College provided students with an award letter for the whole academic year which is based on full time enrollment. However, prior to disbursements, students were not notified of the final amount of funds that the student or his or her parent can expect to receive under title IV, and how and when those funds will be disbursed. 2. For thirty-eight (or 63%) of sixty students tested, the College did not pay the credit balance directly to the student or parent within the 14-day timeframe. 3. For five (or 8%) of sixty students tested, the College received a valid ISIR subsequent to the earlier of a) the student’s last date of enrollment; or b) the deadline date established by the Secretary through publication of a notice in the Federal Register. Cause: The College lacks adequate internal controls over compliance with applicable special tests and provisions for disbursements to or on behalf of student requirements. Effect: The College is in noncompliance with applicable special tests and provisions for disbursements to or on behalf of student requirements. The reportable questioned cost is $145,861 based on the items identified in Conditions above. Recommendation: College management should improve internal control policies and procedures requiring compliance with applicable special tests and provisions for disbursements to or on behalf of student requirements. Specifically, the College should implement a comprehensive communication strategy to ensure that all students receive clear and timely notifications regarding their Title IV funds. In addition, the College should establish a monitoring system to ensure that credit balances are disbursed within the 14-day timeframe to maintain compliance with federal regulations. Lastly, the College should strengthen internal control policies and procedures in obtaining students’ valid ISIR on a timely manner. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-017 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Special Tests and Provisions - Enrollment Reporting Questioned Costs: $0 Criteria: The College is required to report enrollment information under the Pell grant via the National Student Loan Data System (NSLDS) (OMB No. 1845-0035). Per NSLDS Enrollment Reporting Guide February 2026, schools are quired to report details about: 1) The Student – Name, Social Security Number, address, email address, and phone number. 2) The Campus-Level Enrollment for the student – Data related to the student’s overall enrollment at your campus, including Enrollment Status and Effective Date, Anticipated Completion Date, and Certification Date. 3) The Program(s) of Attendance for the student – Classification of Instructional Programs (CIP) code, CIP Year, Program Credential Level, Program Length, Program Enrollment Status, and other data about the program. 34 CFR 690.83(b)(2) states that an institution shall submit, in accordance with deadline dates established by the Secretary, through publication in the Federal Register, other reports and information the Secretary requires and shall comply with the procedures the Secretary finds necessary to ensure that the reports are correct. Institutions are responsible for timely reporting, whether they report directly or via a third-party servicer. Institutions must complete and return within 15 days the Enrollment Reporting roster file placed in their Student Aid Internet Gateway (SAIG) (OMB No. 1845-0002) mailboxes sent by ED via NSLDS. An institution determines how often it receives the Enrollment Reporting roster file with the default set at a minimum of every 60 days. Once received, the institution must update for changes in the data elements for the Campus Record and the Program Record identified above, and submit the changes electronically through the batch method, spreadsheet submittal, or the NSLDS website. Condition: The College did not report the enrollment information under the Pell grant via the NSLDS. Cause: The College lacked established internal control policies and procedures over notification to ED and updating NSLDS of changes in student status in a timely and accurate manner. Effect: The College is in noncompliance with applicable special tests and provisions for enrollment reporting requirements. No questioned costs are presented as the finding relates to the reporting compliance requirement. Recommendation: College management should establish internal control policies and procedures requiring compliance with applicable federal regulations on notifying ED and updating NSLDS of changes in student status in a timely and accurate manner. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2023-018 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Special Tests and Provisions - Gramm-Leach-Bliley Act-Student Information Security Questioned Costs: Undeterminable Criteria: 16 CFR 314.1 implements sections 501 and 505(b)(2) of the Gramm-Leach-Bliley Act (GLBA), which sets forth standards for developing, implementing, and maintaining reasonable administrative, technical, and physical safeguards to protect the security, confidentiality, and integrity of customer information. 16 CFR 314.3 requires institution to develop, implement, and maintain a comprehensive information security program that is written in one or more readily accessible parts and contains administrative, technical, and physical safeguards that are appropriate to its size and complexity, the nature and scope of its activities, and the sensitivity of any customer information at issue. The information security program shall include the elements set forth in 16 CFR 314.4 and shall be reasonably designed to achieve the objectives of this part. 16 CFR 314.4 states that in order to develop, implement, and maintain institution’s information security program, the institution shall: (a) Designate a qualified individual responsible for overseeing and implementing information security program and enforcing information security program. (b) Base its information security program on a risk assessment that identifies reasonably foreseeable internal and external risks to the security, confidentiality, and integrity of customer information that could result in the unauthorized disclosure, misuse, alteration, destruction, or other compromise of such information, and assesses the sufficiency of any safeguards in place to control these risks. (c) Design and implement safeguards to control the risks it identifies through risk assessment, including by: (1) Implementing and periodically reviewing access controls; (2) Identify and manage the data, personnel, devices, systems, and facilities that enable the institution to achieve business purposes in accordance with their relative importance to business objectives and risk strategy; (3) Protect by encryption all customer information held or transmitted by the institution both in transit over external networks and at rest; (4) Adopt secure development practices for in-house developed applications utilized by the institution for transmitting, accessing, or storing customer information and procedures for evaluating, assessing, or testing the security of externally developed applications the institution utilizes to transmit, access, or store customer information; (5) Implement multi-factor authentication for any individual accessing any information system, unless the Qualified Individual has approved in writing the use of reasonably equivalent or more secure access controls; (6) (i) Develop, implement, and maintain procedures for the secure disposal of customer information in any format no later than two years after the last date the information is used in connection with the provision of a product or service to the customer to which it relates, unless such information is necessary for business operations or for other legitimate business purposes, is otherwise required to be retained by law or regulation, or where targeted disposal is not reasonably feasible due to the manner in which the information is maintained; and (ii) Periodically review the institution’s data retention policy to minimize the unnecessary retention of data; (7) Adopt procedures for change management; and (8) Implement policies, procedures, and controls designed to monitor and log the activity of authorized users and detect unauthorized access or use of, or tampering with, customer information by such users. (d) (1) Regularly test or otherwise monitor the effectiveness of the safeguards’ key controls, systems, and procedures, including those to detect actual and attempted attacks on, or intrusions into, information systems. (2) For information systems, the monitoring and testing shall include continuous monitoring or periodic penetration testing and vulnerability assessments. Absent effective continuous monitoring or other systems to detect, on an ongoing basis, changes in information systems that may create vulnerabilities, the institution shall conduct: (i) Annual penetration testing of its information systems determined each given year based on relevant identified risks in accordance with the risk assessment; and (ii) Vulnerability assessments, including any systemic scans or reviews of information systems reasonably designed to identify publicly known security vulnerabilities in its information systems based on the risk assessment, at least every six months; and whenever there are material changes to operations or business arrangements; and whenever there are circumstances the institution knows or have reason to know may have a material impact on its information security program. (e) Implement policies and procedures to ensure that personnel are able to enact the institution’s information security program; (f) Oversee service providers; and (g) Evaluate and adjust the institution’s information security program in light of the results of the testing and monitoring required by paragraph (d) of this section; any material changes to operations or business arrangements; the results of risk assessments performed under paragraph (b)(2) of this section; or any other circumstances that the institution knows or have reason to know may have a material impact on its information security program. Condition: The College does not have a designated a Qualified Individual responsible for implementing and monitoring the institution’s information security program. Additionally, the College does not have written information security program that addresses all the required minimum elements cited in the above Criteria. Cause: There is a lack of awareness or understanding of the GLBA requirements. Effect: The College is in noncompliance with applicable special tests and provisions for Gramm-Leach- Bliley Act–Student Information Security requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: The College management should consider training responsible personnel managing federal programs to be well informed of the applicable compliance requirements. Also, the College should designate a Qualified Individual responsible for implementing and monitoring the institution’s information security program. Lastly, the College should establish written information security program that addresses all the required minimum elements cited in the above Criteria. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-008 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $8,764 Criteria: In accordance with the applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant program legislation, federal awarding agency regulations, and the terms and conditions of the award and consistent with the purpose of the grant. Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: For seven (or 15%) of forty-six items, aggregating $45,045 of $1,436,730 in total payroll expenditures, deficiencies were noted, as follows: Item # Check# Description Expense Amount Questioned Cost 1 55287 Salaries and wages and benefits $ 3,828 $2,549 2 49523 Benefits 12 12 3 51393 Salaries and wages and benefits 1,338 1,338 4 51616 Salaries and wages and benefits 1,171 1,171 5 49741 Salaries and wages and benefits 153 153 6 52930 Salaries and wages and benefits 154 154 7 55878 Salaries and wages and benefits 3,387 3,387 $10,043 $8,764 For item #s 1 through 4, there was no approved employment contract or other supporting documents on file to substantiate whether such expenditures were allowable costs of the underlying grants. For item #1, only $2,549 is included in the total questioned costs, which relates to the salaries - overload for which no approved overload contract was provided. Item #s 5 through 7 relates to salaries and wages and related fringe benefits (employer contributions for social security and health insurance) of employees whose designation do not appear to be related and consistent with the purpose of the related subgrant. Furthermore, such were not supported by adequate documentation to ascertain whether such expenditures are associated to underlying subgrant. Cause: The College lacks adequate internal controls over compliance with the applicable activities allowed or unallowed requirements. Effect: The College is not in compliance with the applicable activities allowed or unallowed requirements and allowable costs/cost principles requirements. Accordingly, questioned costs of $8,764 result because the projected questioned costs exceed the $25,000 threshold. Recommendation: College management should improve internal control policies and strengthen controls and procedures over compliance with the applicable federal regulations on activities allowed or unallowed. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-009 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Allowable Costs/Cost Principles Questioned Costs: $7,277 Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: For nine (or 20%) of forty-six items, aggregating $45,045 of $1,436,730 in total payroll expenditures, deficiencies were noted, as follows: Item # Check# Description Expense Amount Questioned Cost 1 53163 Salaries and wages and benefits $ 208 $ Undeterminable 2 54180 Salaries and wages and benefits 231 $ Undeterminable 3 54497 Salaries and wages and benefits 187 $ Undeterminable 4 54504 Salaries and wages and benefits 16 $ Undeterminable 5 50921 Salaries and wages and benefits 1,021 $ Undeterminable 6 55241 Salaries and wages and benefits 250 250 7 50097 Salaries and wages and benefits 2,509 2,509 8 51398 Salaries and wages 1,600 1,600 9 51386 Salaries and wages and benefits 2,918 2,918 $8,940 $ 7,277 Item #s 1 through 5 relate to employee’s salaries and wages and related fringe benefits (employer contributions for social security and health insurance) allocated and charged to federal grant for which we noted discrepancies in either a) the hours paid compared to the hours recorded on the approved timesheet or b) the rate paid compared to the rate per contract. For item # 6, we noted discrepancies in either a) the hours paid compared to the hours recorded on the approved timesheet or b) the rate paid compared to the rate per contract. Furthermore, a copy of the check payment to support the amount paid to the employee was not on file. Item #s 7 through 9 relate to salaries – overload or adjunct that were not supported by adequate documentation (i.e. instructor’s schedule) to ascertain whether service was received or expenditure was an allowable cost of the underlying grant. Cause: The College lacks adequate internal controls over compliance with the applicable federal regulations relating to allowable costs/cost principles, specifically, obtaining and retaining sufficient documentation to support all transactions. Effect: The College is not in compliance with the applicable allowable costs/cost principles requirements. Accordingly, questioned costs result of $7,277 as the projected questioned costs exceed the $25,000 threshold. For item #s 1 through 5, questioned costs related to federal expenditures that may result from discrepancies noted are not determinable. Identified as a Repeat Finding: 2021-006 Recommendation: College management should improve internal control policies and strengthen controls requiring obtaining and retaining sufficient documentation to support all transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-010 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: Non-federal entities other than states must follow Sections 200.313(c) through (e) of the Uniform Guidance. Section 200.313(d) states that procedures for managing equipment, whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: a. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property; b. A physical inventory of the property must be carried out and the results reconciled with the property records at least once every two years; c. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated; d. Adequate maintenance procedures must be developed to keep the property in good condition; and e. If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: Capital assets records do not meet the criteria above and are not effectively maintained since updates to the records occur only once a year. Specifically, we noted the following deficiencies: 1. Certain information in the capital assets records are either incomplete or missing, such as the source of funding for the property (including the FAIN), who holds title, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property). 2. An inventory of capital assets has been performed on an annual basis; however, the result of the physical inventory was not completely reflected/reconciled with the property records. 3. As capital assets records are not effectively maintained, it does not appear that the College has effectively developed means to adequately safeguard capital assets from loss, damage, or theft, or to reasonably investigate such occurrences. 4. Long-lived assets are not routinely evaluated for possible impairment. Cause: The College lacks adequate internal control policies and procedures over compliance with the applicable federal property rules and regulations and lacks effective procedures governing property maintenance, as well as periodic assessment of asset impairment conditions. Moreover, internal control policies and procedures requiring periodic and timely performance and independent review of capital assets reconciliations and related general ledger accounts are not effectively implemented. Effect: The College is not in compliance with the applicable equipment and real property management requirements. Questioned costs, if any, that may result from inadequate property records, maintenance procedures, and the absence of timely reconciliations are not determinable. Capital outlays within the program for fiscal years are summarized as follows: Fiscal Year Capital Outlays 2022 $131,200 2021 $207,400 2020 $248,700 2019 $249,400 2018 $359,000 Identified as a Repeat Finding: 2021-007 Recommendation: College management should establish and strengthen internal control policies and procedures over compliance with the applicable federal regulations on equipment and real property management. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-011 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Period of Performance Questioned Costs: $6,443 Criteria: The terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: For thirty-five (or 61%) of fifty-seven items, aggregating $20,314 of $418,739 in total payroll expenditures, the following costs of salaries charged to the program were incurred prior to the funding period stipulated in the grant awards: Item # Check # Check Date Description Expense Amount Questioned Cost 1 49423 10/08/21 Salaries $ 148 $ 148 2 49424 10/08/21 Salaries 29 29 3 49671 10/08/21 Salaries 30 30 4 49662 10/08/21 Social Security Tax 10 10 5 49664 10/08/21 Social Security Health Fund 19 19 6 49600 10/08/21 Salaries 1,128 1,128 7 49536 10/08/21 Salaries 752 752 8 49544 10/08/21 Social Security Tax 68 68 9 49543 10/08/21 Social Security Health Fund 19 19 10 49989 10/22/21 Salaries 171 68 11 49992 10/22/21 Social Security Tax 10 4 12 49967 10/22/21 Social Security Health Fund 5 2 13 49975 10/22/21 Social Security Health Fund 6 2 14 49936 10/22/21 Salaries 1,262 505 15 49918 10/22/21 Salaries 1,235 494 16 49954 10/22/21 Salaries 833 333 17 49940 10/22/21 Social Security Tax 86 34 18 49929 10/22/21 Social Security Health Fund 41 17 19 49816 10/22/21 Social Security Health Fund 3 1 20 49839 10/22/21 Social Security Health Fund 2 1 21 49881 10/22/21 Social Security Health Fund 30 12 22 50099 10/22/21 Salaries 2,100 840 23 50077 10/22/21 Salaries 800 320 24 50084 10/22/21 Salaries 2,100 840 25 50085 10/22/21 Social Security Tax 150 60 26 50087 10/22/21 Social Security Tax 180 72 27 50069 10/22/21 Social Security Tax 90 36 28 50073 10/22/21 Social Security Tax 180 72 29 50081 10/22/21 Social Security Tax 210 84 30 50069 10/22/21 Social Security Tax 60 24 31 50047 10/22/21 Social Security Tax 84 34 32 50101 10/22/21 Social Security Tax 324 130 33 49862 10/22/21 Salaries 502 201 34 49866 10/22/21 Social Security Health Fund 27 11 35 50050 10/22/21 Social Security Health Fund 106 43 $12,800 $6,443 Cause: The College lacks adequate internal controls over compliance with the applicable federal regulations relating to period of performance. Effect: The College is not in compliance with the applicable period of performance requirements. Accordingly, questioned costs of $6,443 result because the projected questioned costs exceed the $25,000 threshold. For item #s 10 through 25, only $4,240 is included in the total questioned costs, which relates to costs incurred prior to the funding period stipulated in the grant awards. Identified as a Repeat Finding: 2021-008 Recommendation: College management should improve internal control policies and strengthen controls to comply with the applicable period of performance requirements. Specifically, review should be made to ensure all costs charged to the program are within the funding period stipulated in the grant awards. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-012 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Procurement and Suspension and Debarment Questioned Costs: $112,538 Criteria: Under the terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards, RepMar authorizes the College to use its own procedures for procurement provided they meet the RepMar Procurement Code. RepMar’s Procurement Code states the following: (a) Section 126.7 - Award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous to the Government taking into consideration price and the evaluation factors set forth in the Request for Proposals. No other factors or criteria shall be used in the evaluation. The contract file shall contain the basis on which the award is made. (b) Section 127 - Procurement of goods and services not exceeding $25,000 may be made in accordance with small purchase procedures promulgated by RepMar’s Policy Office. Small purchase procedures are those relatively simple and informal methods for securing services, supplies, or other property that do not cost more than $25,000. RepMar’s Ministry of Finance has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. (c) Section 128 - a contract may be awarded for supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. (d) Section 129 - Notwithstanding any other provision of this Chapter, the Chief Procurement Officer, the head of a Purchasing Agency, or a designee of either officer may make or authorize others to make emergency procurement when there exists a threat to public health, welfare, or safety under emergency conditions as defined in regulations promulgated by the Policy Office; provided, that such emergency procurement shall be made with such competition as is practicable under the circumstances. 2 CFR 200.318(h) states that the recipient or subrecipient must award contracts only to responsible contractors that possess the ability to perform successfully under the terms and conditions of a proposed contract. The recipient or subrecipient must consider contractor integrity, public policy compliance, proper classification of employees, past performance record, and financial and technical resources when conducting a procurement transaction. 2 CFR 200.214 states that recipients and subrecipients are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. 2 CFR 180.300 states that when an entity enters into a covered transaction with another person at the next lower tier, the entity must verify that the person with whom the entity intends to do business is not excluded or disqualified by doing the following: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. 2 CFR 200.320 states that for micro-purchases, to the extent practicable, the recipient or subrecipient should distribute micro-purchases equitably among qualified suppliers. Per OMB Compliance Supplement April 2022, a non-federal entity must perform a cost or price analysis in connection with every procurement action more than the simplified acquisition threshold, including contract modifications, and that analysis supported the procurement action (2 CFR section 200.323 and 48 CFR section 15.404-3). 48 CFR section 15.404-3 states that: (a) The contracting officer is responsible for the determination of a fair and reasonable price for the prime contract, including subcontracting costs. The contracting officer should consider whether a contractor or subcontractor has an approved purchasing system, has performed cost or price analysis of proposed subcontractor prices, or has negotiated the subcontract prices before negotiation of the prime contract, in determining the reasonableness of the prime contract price. This does not relieve the contracting officer from the responsibility to analyze the contractor's submission, including subcontractor's certified cost or pricing data. (b) The prime contractor or subcontractor shall: (1) conduct appropriate cost or price analyses to establish the reasonableness of proposed subcontract prices; (2) include the results of these analyses in the price proposal; and (3) when required by paragraph (c) of this subsection, submit subcontractor certified cost or pricing data to the Government as part of its own certified cost or pricing data. 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: For six (or 75%) of eight items, aggregating $121,524 in total non-payroll expenditures, supporting procurement documentation was not sufficient to substantiate compliance with the procurement method, as follows: Item # PO # PO Amount Description FY 2022 Expenditures Questioned Costs 1 21-PO-1165 $6,781 Materials and supplies $ 6,781 $ 6,781 2 22-PO-2494 $3,717 Representation and entertainment 3,717 3,717 3 , 4 22-PO-2949/ 22-PO-3402 $73,063 Minor repairs and maintenance 73,063 73,063 5 22-PO-3458 $24,750 Repair – vehicles or equipment 24,750 24,750 6 22-PO-2166 $10,000 Repair – vehicles or equipment 4,227 4,227 $112,538 $112,538 For item # 1, there was no vendor quotations on file. For item #s 2, 5 and 6, there were no adequate vendor quotations on file. were no documentation on file to support compliance with 48 CFR section 15.404-3. Moreover, the College has no internal control policies and procedures over verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause: The College did not follow internal control policies and procedures over documentation of the procurement process to satisfy compliance with the applicable procurement requirements. Furthermore, the College lacks internal control policies and procedures over 1) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded; 2) distribution of micro-purchases equitably among qualified suppliers; 3) compliance with 48 CFR section 15.404-3. Effect: The College is not in compliance with the applicable procurement requirements. The total questioned cost is $112,538. Identified as a Repeat Finding: 2021-009 Recommendation: Responsible personnel should ensure that documentation is adequate to comply with the applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the solicitation process and rationale for contractors or vendor selection. Furthermore, the College should establish internal control policies and procedures over 1) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded; 2) distribution of micro-purchases equitably among qualified suppliers; 3) compliance with 48 CFR section 15.404-3. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-013 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Reporting Questioned Costs: $0 Criteria: Under the terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards, the College is required to submit: 1. As supporting report for the initial payment request, a duly accomplished standard Form SG1- Subgrant Objectives and Budget Proposal, accompanied by an expenditure budget breakdown; 2. As supporting report for subsequent payment requests, a duly accomplished standard Form SG2-Performance and Financial Evaluation quarterly report; 3. Duly accomplished Form SG2-Performance and Financial Evaluation final report within 30 calendar days after the end of the MOA’s term. If the organization is receiving subsidy or subgrant in the new fiscal year or new funding period, the prior year’s or prior funding period’s SG2 final report is required to be submitted together with the SG1 report, before the initial payment can be released under the new subsidy or subgrant MOA. Further, the College shall maintain an acceptable financial management system during the term of the sub-award agreement including an accurate, current and complete disclosure of financial activity of Company funds and consistency with all financial administration, program monitoring, performance reporting and enforcement provisions of the Financial Management Act. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. The expenditure budget breakdown that accompanies the Form SG1-Subgrant Objectives and Budget Proposal for the U.S. Compact Funding subaward for the Supplemental Education Grant could not be provided. 2. The College did not provide the required Form SG2- Performance and Financial Evaluation quarterly report for the quarter ended September 30, 2022 for the U.S. Compact Funding subaward for the Education Sector Grant. 3. The College did not provide the required Form SG2-Performance and Financial Evaluation final report for the U.S. Compact Funding subaward for the Education Sector, Ebeye Special Needs Adult Education, Compact Capital Fund and Supplemental Education Grant. 4. The underlying quarterly expenditures report for the following U.S. Compact Funding subaward sectors and related quarters could not be provided: Sector Quarter Supplemental Education Grant 1st Quarter ended December 31, 2021 Ebeye Special Needs Adult Education 1st Quarter ended December 31, 2021 Compact Capital Fund 2nd Quarter ended March 31, 2022 Ebeye Special Needs Adult Education 2nd Quarter ended March 31, 2022 Compact Capital Fund 3rd Quarter ended June 30, 2022 Ebeye Special Needs Adult Education 3rd Quarter ended June 30, 2022 5. Expenditures reported per the Form SG2-Performance and Financial Evaluation quarterly report did not agree to the quarterly expenditures reported in SEFA as follows: a. 1st Quarter ended December 31, 2021 Sector Amount per Form SG2- Performance and Financial Evaluation quarterly report Amount as reported in SEFA Variance Supplemental Educational Grant $339,289 $338,325 $ 964 Ebeye Special Needs – Adult Education $127,692 $125,000 $2,692 b. 2nd Quarter ended March 31, 2022 Sector Amount per Form SG2- Performance and Financial Evaluation quarterly report Amount as reported in SEFA Variance Compact Capital Fund $155,124 $60,035 $95,089 Ebeye Special Needs – Adult Education $ 37,752 $38,265 $( 513) c. 3rd Quarter ended June 30, 2022 Sector Amount per Form SG2- Performance and Financial Evaluation quarterly report Amount as reported in SEFA Variance Compact Capital Fund $448,795 $349,750 $ 95,045 Ebeye Special Needs – Adult Education $ 62,555 $ 66,536 $( 3,981) No reconciliation was provided to reconcile the quarterly expenditures reported in SEFA against the expenditures reported per the Form SG2- Performance and Financial Evaluation quarterly report. Cause: The College lacks adequate internal controls over the accurate preparation and review of required reports as stipulated in the sub-award agreements. Furthermore, the College lacks adequate internal controls regarding retaining sufficient documentation to support all reported transactions. Effect: The College appears to be in noncompliance with the applicable reporting requirements. No questioned costs are presented as the total expenditures per SEFA for the fiscal year were reconciled with the federal awards received from the RMI Government. Identified as a Repeat Finding: 2021-010 Recommendation: College management should strengthen controls so that required reports are accurately prepared and reviewed to provide evidence of compliance with the applicable reporting requirements and retain sufficient documentation to support all reported transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-014 Federal Agency: U.S. Department of Education AL Program: 84.047A TRIO Upward Bound Federal Award No.: P047A171556-21 Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $440 Criteria: In accordance with the applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant program legislation, federal awarding agency regulations, and the terms and conditions of the award and consistent with the purpose of the Upward Bound program. Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. For fourteen (or 74%) of nineteen items, aggregating $1,599 of $82,998 in total non-payroll expenditures, deficiencies were noted, as follows: Item # Check# Description Expense Amount Questioned Cost 1 1034572 Stipends $ 20 $ 20 2 1034794 Stipends 35 35 3 1034826 Stipends 40 40 4 1035264 Stipends 40 40 5 1035279 Stipends 40 40 6 1035478 Stipends 40 40 7 1035755 Stipends 35 35 8 1036213 Stipends 15 15 9 1036214 Stipends 40 40 10 1036236 Stipends 40 40 11 1036566 Stipends 25 25 12 1036692 Stipends 30 30 13 1036948 Stipends 30 30 14 1038344 Stipends 55 55 $485 $485 There was no supporting documentation provided to ascertain whether such expenditures were allowable costs of the underlying grants. Only $245 questioned costs are reported at this finding as $240 questioned costs are included and reported at finding # 2022-016. 2. For three (or 7%) of forty-one items, aggregating $24,427 of $186,116 in total payroll expenditures, deficiencies were noted, as follows: Item # Check# Description Expense Amount Questioned Cost 1 49803 Salaries and wages and benefits $ 40 $ 40 2 50150 Salaries and wages and benefits 43 43 3 51131 Salaries and wages and benefits 112 112 $195 $195 There was no approved employment contract or other supporting documents on file to substantiate whether such expenditures were allowable costs of the underlying grants. Cause: The College lacks adequate internal controls over compliance with the applicable federal regulations relating to activities allowed or unallowed, specifically, obtaining and retaining sufficient documentation to support all transactions. Effect: The College is not in compliance with the applicable activities allowed or unallowed and allowable costs/cost principles requirements. Accordingly, total questioned costs of $680, of which $240 is reported at finding # 2022-016, result because the projected questioned costs exceed the $25,000 threshold. Recommendation: College management should improve internal control policies and strengthen controls requiring obtaining and retaining sufficient documentation to support all transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-015 Federal Agency: U.S. Department of Education AL Program: 84.047A TRIO Upward Bound Federal Award No.: P047A171556-21 Area: Allowable Costs/Cost Principles Questioned Costs: $8,842 Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. For four (or 21%) of nineteen items, aggregating $1,599 of $82,998 in total non-payroll expenditures, deficiencies were noted, as follows: Item # Check/ Invoice # Description Expense Amount Questioned Cost 1 22-5005 Student Housing Expenses $ 268 $ 26 2 22-5206 Student Housing Expenses 268 26 3 22-6090 Student Housing Expenses 268 26 4 22-6028 Student Housing Expenses 268 26 $1,072 $104 For item #s 1 through 4, these pertain to cost of meals provided to 61 students for Summer 2022 semester for which no supporting listing of students was on file. Based on our examination, it appears that there are only 55 students for Summer 2022. Only $104 is included in the total questioned costs, which relates to the equivalent cost of 5 excess meals. 2. For twenty-three (or 56%) of forty-one items, aggregating $24,427 of $186,116 in total payroll expenditures, deficiencies were noted, as follows: Item # Check# Description Expense Amount Questioned Cost 1 51241 Salaries and wages $ 375 $ 375 2 54717 Salaries and wages and benefits 418 418 3 54807 Salaries and wages and benefits 418 418 4 54909 Salaries and wages and benefits 418 418 5 54912 Salaries and wages and benefits 418 418 6 51955 Salaries and wages and benefits 682 682 7 51957 Salaries and wages and benefits 1,991 996 8 57284 Salaries and wages and benefits 1,010 14 9 50165 Salaries and wages and benefits 223 56 10 51956 Salaries and wages and benefits 1,411 83 11 52567 Salaries and wages and benefits 1,411 83 12 53885 Salaries and wages and benefits 1,411 83 13 55824 Salaries and wages and benefits 184 74 14 55825 Salaries and wages and benefits 181 1 15 56108 Salaries and wages and benefits 1,037 118 16 56181 Salaries and wages and benefits 413 112 17 56191 Salaries and wages and benefits 407 123 18 53553 Salaries and wages and benefits 648 341 19 56107 Salaries and wages and benefits 523 163 20 52228 Salaries and wages and benefits 1,021 1,021 21 56789 Salaries and wages and benefits 1,429 1,429 22 56791 Salaries and wages and benefits 1,037 1,037 23 54234 Salaries and wages and benefits 640 275 $17,706 $8,738 For item #s 1 through 5, there was no approved employment contract to substantiate the amount paid to employees. For item # 6, there were no hours worked per approved timesheet. For item #s 7 through 8, approval of the amount paid to employees relating to incentive or bonus was not on file. Only $1,010 is included in the total questioned costs, which relates to the amount paid to the employee for incentive or bonus, and related fringe benefits (employer contributions for social security and health insurance). For item #s 9 through 19 and 23, we noted discrepancies in either a) the hours paid compared to the hours recorded on the approved timesheet or b) the rate paid compared to the rate per contract. Only $1,512 is included in the total questioned costs, which relates to the variance between the amount paid to the employee against the recalculated amount based on provided supporting documentation. For item #s 18 through 23, approval of the amount paid to employees relating to leave was not on file. For item # 23, the copy of the check payment to support the amount paid to employee was not on file. Cause: The College lacks adequate internal controls over compliance with the applicable federal regulations relating to allowable costs/cost principles, specifically, obtaining and retaining sufficient documentation to support all transactions. Effect: The College is not in compliance with the applicable allowable costs/cost principles requirements. Accordingly, questioned costs of $8,842 result because the projected questioned costs exceed the $25,000 threshold. Identified as a Repeat Finding: 2021-011 Recommendation: College management should improve internal control policies and strengthen controls requiring obtaining and retaining sufficient documentation to support all transactions.

Finding No.: 2022-016 Federal Agency: U.S. Department of Education AL Program: 84.047A TRIO Upward Bound Federal Award No.: P047A171556-21 Area: Cash Management Questioned Costs: $ Undeterminable Criteria: Per OMB Compliance Supplement April 2022, non-federal entities must establish written procedures to implement the requirements of 2 CFR section 200.305. Specifically, 2 CFR section 200.305(b) states that for recipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The College does not have written procedures to implement the requirements set in the criteria above. Furthermore, no detailed listing of expenditures supporting the following drawdowns during the year was on file to ascertain whether the expenditures were incurred prior to the date of the reimbursement request: Drawdown Amount $ 31,928 $ 31,929 $ 44,991 $ 41,652 $112,832 Cause: The College lacks written policies and procedures over cash management, including retaining documentation supporting cash drawdowns. Effect: The College is not in compliance with the applicable cash management requirements. Questioned costs, if any, that may result from inadequate records are not determinable. Recommendation: College management should establish written internal control policies and procedures, including retaining documentation supporting cash drawdowns. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-017 Federal Agency: U.S. Department of Education AL Program: 84.047A TRIO Upward Bound Federal Award No.: P047A171556-21 Area: Eligibility Questioned Costs: $54,380 Criteria: Per OMB Compliance Supplement April 2022, an individual is eligible to participate in a Regular Upward Bound project if the individual meets all of the following requirements: (a) is a citizen, national, or permanent resident of the United States, or is in the United States for other than a temporary purpose; (b) is a potential first-generation college student, a low-income individual, or an individual who has a high risk for academic failure; (c) has a need for academic support in order to pursue successfully a program of education beyond high school; and (d) at the time of initial selection has completed the 8th grade but has not entered the 12th grade and is at least 13 years old but not older than 19. A veteran, regardless of age, who meets all other criteria is eligible to participate. A citizen, national, or permanent resident of the United States, includes a permanent resident of Guam, the Northern Mariana Islands, the Trust Territory of the Pacific Islands (Palau), or resident of one of the Freely Associated States - the Federated States of Micronesia or the Republic of the Marshall Islands. Moreover, 34 CFR Part 645.6(b) defines “Individual who has a high risk for academic failure” as an individual who: (a) Has not achieved at the proficient level on State assessments in reading or language arts; (b) Has not achieved at the proficient level on State assessments in math; (c) Has not successfully completed pre-algebra or algebra by the beginning of the tenth grade; or (d) Has a grade point average of 2.5 or less (on a 4.0 scale) for the most recent school year for which grade point averages are available. Furthermore, to be eligible for a stipend, participants must show evidence of satisfactory participation in project activities, including regular attendance and performance in accordance with the number of sessions in which a student participated. Stipends for regular projects may not exceed $40 per month from September to May of the academic year and $60 for each of the summer months (June, July, and August). 34 CFR Part 645.43(c) states that for each participant, a grantee must maintain a record of the basis for the grantee’s determination that the participant is eligible to participate in the project and the basis for the grantee’s determination that the participant has a need for academic support in order to pursue successfully a program of education beyond secondary school. 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: Of 17 students tested, aggregating $54,380 of $208,665 in total participant benefits, we noted noncompliance, as follows: 1. For 1 student (Student Case Number C000421743), no documentation was on file to support whether the individual is a citizen, national, or permanent resident of the United States (including a permanent resident of Guam, the Northern Mariana Islands, the Trust Territory of the Pacific Islands (Palau), or resident of one of the Freely Associated States - the Federated States of Micronesia or the Republic of the Marshall Islands), or is in the United States for other than a temporary purpose. 2. For the 17 students listed below, no documentation on file to support the basis for the grantee’s determination that the participant has a need for academic support to successfully pursue a program of education beyond secondary school. Item # Student Case Number 1 C000303202 2 C000374298 3 C000421743 4 C000421735 5 C000374297 6 C000374309 7 C000374311 8 C000421736 9 C000374317 10 C000303229 11 C000374318 12 C000374321 13 C000421746 14 C000421747 15 C000401854 16 C000374325 17 C000303220 3. For the 4 students listed below, no documentation was on file to support whether the individual at the time of initial selection has completed the 8th grade but has not entered the 12th grade and is at least 13 years old but not older than 19. Item # Student Case Number 1 C000374298 2 C000421743 3 C000374317 4 C000374321 4. For the 2 students listed below, no documentation was on file to support whether the individual is a potential first- generation college student, a low-income individual, or an individual who has a high risk for academic failure. Item # Student Case Number 1 C000374298 2 C000374297 Cause: The College lacks adequate internal control policies and procedures over eligibility determinations, including obtaining required documentation and verification to support the College’s determination that the participant is eligible to participate in the project. Effect: The College is not in compliance with the applicable eligibility requirements. The total questioned cost is $54,380. Identified as a Repeat Finding: 2021-012 Recommendation: College management should improve internal control policies and strengthen controls so that eligibility determinations, including obtaining required documentation and verification, are performed in accordance with the applicable eligibility requirements. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-018 Federal Agency: U.S. Department of Education AL Program: 84.047A TRIO Upward Bound Federal Award No.: P047A171556-21 Area: Reporting Questioned Costs: $0 Criteria: Performance Reporting - Per OMB Compliance Supplement Addendum April 2022, grantees must submit an annual performance report to ED each year of the project period. The following line items contain critical information: Section II, Record Structure for Participant List for Upward Bound and Upward Bound Math- Science Projects, fields: 16 Eligibility (at time of initial selection) 17 At Risk: Reading Language Arts or Math Proficiency Not Achieved (at time of initial selection) 18 At Risk: Low Grade Point Average (at time of initial selection) 19 At Risk: Pre-Algebra or Algebra Course Not Successfully Completed by Beginning of 10th Grade (at time of initial selection) 20 Limited English Proficiency (at time of initial selection) 24 Date of First Project Service 25 Grade Level at First Service 27 Participant Status for reporting year 28 Participation Level for reporting year 29 Served by Another Federally Funded College Access Program for reporting year 30 Grade Level at the beginning of academic year being reported 37 Secondary School Retention and Graduation Objective – Numerator, for reporting year 45 Date of Last Project Service In addition, under the terms of the grant award, all recipients are required to submit a final performance report within 120 days after the expiration or termination of grant support. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. Section II of the Annual Performance Report which pertains to source data file could not be provided during the audit. 2. Final Performance Report could not be provided during the audit. Cause: The College lacks adequate internal controls over compliance with the applicable federal regulations relating to reporting, specifically, retaining sufficient documentation to support reported information. Effect: The College appears to be in noncompliance with the applicable reporting requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: College management should strengthen controls so that required reports and supporting records are retained to evidence compliance with the applicable reporting requirements. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-019 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $1,138,362 Criteria: In accordance with the applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant statutory provisions and consistent with the purpose of the ESF “to prevent, prepare for, and respond to coronavirus”. Allowable expenditures incurred and liquidated prior to December 27, 2020 must have been “to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus”. Further, beginning December 27, 2020, any unused HEERF I Institutional Portion funds, new HEERF II Institutional Portion funds and HEERF III Institutional Portion Funds, may be used to defray expenses associated with coronavirus (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll) and to make additional financial grants to students. HEERF I and HEERF II funds may also have been used to carry out student support activities authorized by the Higher Education Act (HEA) that address needs related to coronavirus. HEERF Frequently Asked Questions (FAQ) Rollup Document dated October 14, 2020 states that:  Question #38: Institutions can use CARES Act funds under Section 18004(a)(2) to make scholarships to students. Section 18004(a)(2) of the CARES Act state that institutions may use funds specifically “for grants to students for any component of the student’s cost of attendance (as defined under section 472 of the HEA), including food, housing, course materials, technology, health care, and child care”.  Question #47: Institution may use funds from the Institutional Portion of its section 18004(a)(1) allocation to purchase equipment or software, pay for online licensing fees, or pay for internet service to enable students to transition to distance learning as such costs are associated with a significant change in the delivery of instruction due to the coronavirus. An institution may also use Institutional Portion funds for any other costs for computer system upgrades that are reasonably related to “significant changes to the delivery of instruction due to the coronavirus.” This would not include, for example, previously planned upgrades to computer systems. Per HEERF I, II, and III Lost Revenue FAQ published March 19, 2021, sources of lost revenue that are not reimbursable under the HEERF grant programs include the following:  Capital outlays associated with facilities related to athletics (including fees assessed for capital athletic facility construction);  Acquisition of real property (including bond revenue);  Contributions or donations to the institution;  Marketing or recruitment activities;  Revenue related to sectarian instruction or religious worship;  Alcohol sales; and  Investment income (including endowment and quasi-endowment revenue). Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: For fifty items (or 66%) of seventy-six items, aggregating $4,539,770 of $10,127,277 in total non-payroll expenditures, deficiencies were noted as follows: Item # Check/ PO# Description Expense Amount Questioned Cost 1 1034969 Small tools $1,115,378 $1,115,378 2 1035648 Vehicles 101,250 337,500 3 1035874 Vehicles 67,500 --- 4 1038536 Small tools 540 540 5 1038150 Others 645,544 645,544 6 22-PO-2880 Small tools 4,796 8,191 7 22-PO-3676 Subscriptions/ periodicals 22,984 22,984 8 236-003 Scholarships and grants 2,048 2,048 9 236-005 Scholarships and grants 587 587 10 236-027 Scholarships and grants 715 715 11 236-028 Scholarships and grants 116 116 12 236-038 Scholarships and grants 419 419 13 236-039 Scholarships and grants 1,269 1,269 14 236-041 Scholarships and grants 1,623 1,623 15 236-043 Scholarships and grants 1,202 1,202 16 236-051 Scholarships and grants 874 874 17 236-070 Scholarships and grants 83 83 18 236-096 Scholarships and grants 573 573 19 236-098 Scholarships and grants 203 203 20 236-101 Scholarships and grants 721 721 21 236-112 Scholarships and grants 2,655 2,655 22 236-117 Scholarships and grants 1,080 1,080 23 236-119 Scholarships and grants 855 855 24 236-150 Scholarships and grants 183 183 25 236-156 Scholarships and grants 3,885 3,885 26 236-173 Scholarships and grants 989 989 27 236-191 Scholarships and grants 1,108 1,108 28 236-202 Scholarships and grants 1,205 1,205 29 236-210 Scholarships and grants 1,895 1,895 30 236-213 Scholarships and grants 444 444 31 236-224 Scholarships and grants 105 105 32 236-243 Scholarships and grants 182 182 33 236-256 Scholarships and grants 872 872 34 236-270 Scholarships and grants 1,459 1,459 35 236-274 Scholarships and grants 158 158 36 236-278 Scholarships and grants 2,889 2,889 37 236-301 Scholarships and grants 381 381 38 236-321 Scholarships and grants 112 112 39 236-329 Scholarships and grants 699 699 40 236-346 Scholarships and grants 736 736 41 236-350 Scholarships and grants 1,647 1,647 42 236-388 Scholarships and grants 2,432 2,432 43 236-412 Scholarships and grants 3,675 3,675 44 236-425 Scholarships and grants 1,202 1,202 45 236-446 Scholarships and grants 539 539 46 236-458 Scholarships and grants 1,607 1,607 47 236-467 Scholarships and grants 58 58 48 236-481 Scholarships and grants 1,421 1,421 49 236-494 Scholarships and grants 1,513 1,513 50 236-519 Scholarships and grants 923 923 $2,005,334 $2,177,479 Item # 1 was not supported by adequate documentation (i.e. justification of the purpose prior to purchase and receiving reports) to ascertain whether such expenditure is associated to distance learning due to coronavirus. There is no evidence of communication or consultation with the grantor agency that this expenditure is allowable. No questioned cost is reported at this finding as questioned cost is reported and included at finding # 2022-022. For item #s 2 and 3, justification for the expenditures indicated on the file is to accommodate the increasing number of students, which appears to be inconsistent and not directly associated with significant changes to the delivery of instructions due to the coronavirus. There is no evidence of communication or consultation with the grantor agency that these expenditures are allowable. The $337,500 questioned cost is reported at this finding, which pertains to the total contract price charged against the grant related to these transactions. Item # 4 was not supported by adequate documentation (i.e. vendor invoice and receiving report) to ascertain whether such expenditure is an allowable cost of the underlying grant. Item # 5 relates to lost revenue from decreased appropriation (contribution) to the College, which is not reimbursable under the HEERF grant program. Item # 6 is standard cost and not associated with coronavirus. Specifically, expenditure relates to purchase of hardware device as part of the College’s firewall system for its new centers and locations. There is no evidence of communication or consultation with the grantor agency that this expenditure is allowable. $8,191 questioned cost is reported at this finding which pertains to the total invoice price charged against the grant related to this transaction. Item # 7 is standard recurring cost and not associated with coronavirus. Specifically, expenditure relates to annual software subscription of the College. There is no evidence of communication or consultation with the grantor agency that this expenditure is allowable. No questioned cost is reported at this finding as questioned cost is reported and included at finding # 2022-022. Item #s 8 through 50 pertain to relinquishment of student’s outstanding debt with the College, whereas the College directly credited student’s accounts and got reimbursement from the CARES Act funds under Section 18004(a)(2). These are not associated with coronavirus. There is no evidence of communication or consultation with the grantor agency that these expenditures are allowable. Cause: The College lacks adequate internal controls over compliance with the applicable activities allowed or unallowed requirements. Effect: The College is not in compliance with the applicable activities allowed or unallowed requirements and allowable costs/cost principles requirements. Only $1,039,117 questioned cost is reported at this finding as $1,138,362 is reported and included at finding # 2022-022. Identified as a Repeat Finding: 2021-014 Recommendation: College management should improve internal control policies and strengthen controls and procedures over compliance with the applicable federal regulations on activities allowed or unallowed. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-020 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 Area: Allowable Costs/Cost Principles Questioned Costs: $0 Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: : For two items (or 3%) of seventy-six items, aggregating $4,539,770 of $10,127,277 in total non-payroll expenditures, deficiencies were noted as follows: Item # PO# Description Expense Amount Questioned Cost 1 21-PO-2102 Small tools $311,212 $311,212 2 21-PO-2102 Small tools 311,211 311,211 $622,423 $622,423 Item #s 1 and 2 pertain to purchase of 750 units of laptop, however, there was no student distribution log to support distribution made to students. Cause: The College lacks adequate internal controls over compliance with the applicable federal regulations relating to allowable costs/cost principles, specifically, obtaining and retaining sufficient documentation to support all transactions. Effect: The College is not in compliance with the applicable allowable costs/cost principles requirements. No questioned costs are reported at this finding as questioned costs are reported at finding # 2022-022. Identified as a Repeat Finding: 2021-015 Recommendation: College management should improve internal control policies and strengthen controls requiring obtaining and retaining sufficient documentation to support all transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-021 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425E Higher Education Emergency Relief Fund (HEERF) - Student Aid Portion Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Cash Management Questioned Costs: $ Undeterminable Criteria: Per OMB Compliance Supplement April 2022, non-federal entities must establish written procedures to implement the requirements of 2 CFR section 200.305. Specifically, 2 CFR section 200.305(b) states that for recipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient. Furthermore, per OMB Compliance Supplement April 2022, for CRRSAA HEERF II and ARP HEERF III, the Certification and Agreements and/or Supplemental Agreements requires that Student Aid Portion (ALN 84.425E) should be disbursed within 15 calendar days of the drawdown from ED’s G5 grants system and Institutional Aid Portion, (a)(2), and (a)(3) funds (all other ALNs) should be disbursed within 3 calendar days of the drawdown from G5. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The College does not have written procedures to implement the requirements set in the criteria above. Furthermore, monitoring of actual disbursements of the following drawdowns during the year was not performed: AL Sub-Program Drawdown Amount 84.425E $750,000 84.425E $250,000 84.425E $650,000 84.425F $350,000 84.425F $552,500 84.425F $900,000 84.425F $550,000 84.425F $351,000 84.425F $350,000 84.425F $450,000 84.425F $820,000 84.425F $250,000 84.425F $350,000 84.425F $292,650 84.425F $150,000 84.425F $150,000 84.425L $750,000 84.425L $360,589 84.425L $1,150,000 84.425L $350,000 84.425L $150,000 Cause: The College lacks written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Effect: The College is not in compliance with the applicable cash management requirements. Questioned costs, if any, that may result from non-monitoring of actual disbursements are not determinable. Recommendation: College management should establish written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-022 Federal Agency: U.S. Department of Education Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Procurement and Suspension and Debarment Questioned Costs: $3,318,665 Criteria: Under the terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards, RepMar authorizes the College to use its own procedures for procurement provided they meet the RepMar Procurement Code. RepMar’s Procurement Code states the following: (a) Section 126.7 - Award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous to the Government taking into consideration price and the evaluation factors set forth in the Request for Proposals. No other factors or criteria shall be used in the evaluation. The contract file shall contain the basis on which the award is made. (b) Section 127 - Procurement of goods and services not exceeding $25,000 may be made in accordance with small purchase procedures promulgated by RepMar’s Policy Office. Small purchase procedures are those relatively simple and informal methods for securing services, supplies, or other property that do not cost more than $25,000. RepMar’s Ministry of Finance has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. (c) Section 128 - a contract may be awarded for supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. (d) Section 129 - Notwithstanding any other provision of this Chapter, the Chief Procurement Officer, the head of a Purchasing Agency, or a designee of either officer may make or authorize others to make emergency procurement when there exists a threat to public health, welfare, or safety under emergency conditions as defined in regulations promulgated by the Policy Office; provided, that such emergency procurement shall be made with such competition as is practicable under the circumstances. 2 CFR 200.318(h) states that the recipient or subrecipient must award contracts only to responsible contractors that possess the ability to perform successfully under the terms and conditions of a proposed contract. The recipient or subrecipient must consider contractor integrity, public policy compliance, proper classification of employees, past performance record, and financial and technical resources when conducting a procurement transaction. 2 CFR 200.214 states that recipients and subrecipients are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. 2 CFR 180.300 states that when an entity enters into a covered transaction with another person at the next lower tier, the entity must verify that the person with whom the entity intends to do business is not excluded or disqualified by doing the following: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. 2 CFR 200.319 states that: (a) All procurement transactions under the Federal award must be conducted in a manner that provides full and open competition and is consistent with the standards of this section and § 200.320. (c) (6) Examples of situations that may restrict competition include specifying only a “brand name” product instead of allowing “an equal” product to be offered and describing the performance or other relevant requirements of the procurement. (d) (2) The recipient or subrecipient must have written procedures for procurement transactions. These procedures must ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the property, equipment, or service being procured. The description may include a statement of the qualitative nature of the property, equipment, or service to be procured. When necessary, the description must provide minimum essential characteristics and standards to which the property, equipment, or service must conform. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to clearly and accurately describe the technical requirements, a “brand name or equivalent” description of features may be used to provide procurement requirements. The specific features of the named brand must be clearly stated. 2 CFR 200.320 states that there are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. 2 CFR 200.320 states that for micro-purchases, to the extent practicable, the recipient or subrecipient should distribute micro-purchases equitably among qualified suppliers. Per OMB Compliance Supplement April 2022, a non-federal entity must perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications, and that analysis supported the procurement action (2 CFR section 200.323 and 48 CFR section 15.404-3). 48 CFR section 15.404-3 states that: (a) The contracting officer is responsible for the determination of a fair and reasonable price for the prime contract, including subcontracting costs. The contracting officer should consider whether a contractor or subcontractor has an approved purchasing system, has performed cost or price analysis of proposed subcontractor prices, or has negotiated the subcontract prices before negotiation of the prime contract, in determining the reasonableness of the prime contract price. This does not relieve the contracting officer from the responsibility to analyze the contractor's submission, including subcontractor's certified cost or pricing data. (b) The prime contractor or subcontractor shall: (1) conduct appropriate cost or price analyses to establish the reasonableness of proposed subcontract prices; (2) include the results of these analyses in the price proposal; and (3) when required by paragraph (c) of this subsection, submit subcontractor certified cost or pricing data to the Government as part of its own certified cost or pricing data. 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: Of twenty-one items, aggregating $3,218,880 of $10,113,117 in total non-payroll expenditures, deficiencies were noted, as follows: 1. For 1 item (or 5%), procurement did not provide full and open competition in the solicitation process. The invitation to bid (ITB) specified particular models, including a requirement for a specific “brand name” product instead of allowing “an equal” product to be offered. Furthermore, for solicitation with brand name indicated, solicitation did not include “brand name or equivalent” description in the ITB. Furthermore, there was no documentation on file to support compliance with 48 CFR section 15.404-3. Item # PO # Contract Amount Description FY 2022 Expenditures Questioned Cost 1 No PO $1,593,397 Small tools $1,115,378 $1,115,378 2. For 1 item (or 5%), procurement was sole sourced with written justification but does not appear to be justified. Furthermore, there was no documentation on file to support compliance with 48 CFR section 15.404-3. Item # PO # PO Amount Description FY 2022 Expenditures Questioned Cost 2 21-PO-2102 $622,423 Small tools $622,423 $622,423 3. For 13 items (or 62%), supporting procurement documentation was not sufficient to substantiate compliance with procurement method: Item # PO # PO Amount Description FY 2022 Expenditures Questioned Cost 3 No PO No PO Charter $ 14,174 $ 14,174 4 21-PO-1866 $19,422 Small Tools 19,422 19,422 5 22-PO-3676 $22,984 Subscriptions/Periodicals 22,984 22,984 6 22-PO-3677 $22,440 Subscriptions/Periodicals 22,440 22,440 7 22-PO-3366 $7,390 Subscriptions/Periodicals 7,390 7,390 8 22-PO-3321 $46,179 Subscriptions/Periodicals 46,179 46,179 9 21-PO-897 $101,663 Subscriptions/Periodicals 13,175 13,175 10 22-PO-3309 $4,225 Subscriptions/Periodicals 4,225 4,225 11 22-PO-3241 $14,000 Subscriptions/Periodicals 14,000 14,000 12 22-PO-3488 $7,631 Subscriptions/Periodicals 7,631 7,631 13 22-PO-3549 $12,200 Subscriptions/Periodicals 12,200 12,200 14 22-PO-3777 $4,550 Subscriptions/Periodicals 4,550 4,550 15 22-PO-2461 $3,779 Small Tools 3,779 3,779 $192,149 $192,149 For item #s 3, 5 through 6, and 8 through 14, there were no vendor quotations on file. For item #s 7 and 15, vendor solicitation is inadequate. For item #4, selected vendor is not the lowest bidder, and no justification of vendor selection was on file. For item #8, there was no documentation on file to support compliance with 48 CFR section 15.404-3. 4. For an additional 3 items (or 14%), there was no documentation on file to support compliance with 48 CFR section 15.404-3: Item # Contract Amount Description FY 2022 Expenditures Questioned Cost 17 $958,368 Room and board $958,368 $958,368 18 $474,870 Room and board 430,347 430,347 19 $337,500 Vehicles 337,500 337,500 $1,726,215 $1,726,215 For item # 19, no questioned cost is reported at this finding as questioned cost is reported and included at finding # 2022-019. Moreover, the College has no internal control policies and procedures over verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause: The College did not follow internal control policies and procedures over documentation of the procurement process to satisfy compliance with the applicable procurement requirements. Furthermore, the College lacks internal control policies and procedures over 1) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded; 2) distribution of micro-purchases equitably among qualified suppliers; 3) compliance with 48 CFR section 15.404-3. Effect: The College is not in compliance with the applicable procurement requirements. The total questioned cost is $3,318,665. Identified as a Repeat Finding: 2021-016 Recommendation: Responsible personnel should ensure that documentation is adequate to comply with the applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the solicitation process and rationale for contractors or vendor selection. Furthermore, the College should establish internal control policies and procedures over 1) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded; 2) distribution of micro-purchases equitably among qualified suppliers; 3) compliance with 48 CFR section 15.404-3. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2022-023 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425E Higher Education Emergency Relief Fund (HEERF) - Student Aid Portion Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Reporting Questioned Costs: $0 Criteria: Annual Reporting - Per OMB Compliance Supplement Addendum April 2022, ED will be collecting an annual report for HEERF grantees in April 2022. ED will require institutions to report on their uses of HEERF I CARES Act funds, HEERF II CRRSAA funds, and HEERF III ARP funds in advance of the ARP annual reporting deadline. Quarterly Public Reporting for (a)(1) Student Aid Portion - Per OMB Compliance Supplement Addendum April 2022, institutions that received a HEERF 18004(a)(1) Student Aid Portion award are required to publicly post certain information on their website no later than 30 days after award and update that information every 45 days thereafter. On August 31, 2020, the frequency of reporting after the initial 30-day period decreased from every 45 days thereafter to every calendar quarter. On May 13, 2021, ED published an additional notice for student aid public reporting under CRRSAA and ARP, which requires that institution publicly post certain information on their website. Institutions must publicly post their report as soon as possible, but no later than 30 days after the publication of the notice or 30 days after the date ED first obligated funds under HEERF I, II, or III to the institution for Emergency Financial Aid Grants to Students, whichever comes later. The report must be updated no later than 10 days after the end of each calendar quarter. Quarterly Public Reporting for (a)(1) Institutional Portion and (a)(2), and (a)(3) funds - Per OMB Compliance Supplement Addendum April 2022, Quarterly Budget and Expenditure form must be conspicuously posted on the institution’s primary website on the same page the reports of the IHE’s activities as to the emergency financial aid grants to students (Student Aid Portion) are posted. The form must be posted covering each quarterly reporting period no later than 10 days after the end of each calendar quarter. Any changes or updates after initial posting must be conspicuously noted after initial posting and the date of the change must be noted in the “Date of Report” line. Furthermore, as required by 2 CFR 200.334, regardless of the need to submit an audit, all financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a federal award must be retained for a period of three years from the date of submission of the last HEERF grant’s final expenditure report. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. Total annual expenditures per the Annual Report Data Collection System differ from cumulative expenditures from 01/01/21 through 12/31/21 per underlying accounting records, as follows: Annual Expenditures Student Portion Institution Portion Minority Serving Institution Annual Data Collection System $2,628,200 $2,223,328 $ --- Underlying accounting records 2,554,416 1,917,546 338,297 Over (under) reporting $ 73,784 $ 305,782 $(338,297) 2. ALN 84.425E COVID-19 HEERF-Student Aid Portion A. Quarterly reports for quarters ended 12/31/2021 and 03/31/2022 that were publicly posted in the website, along with relevant documentation evidencing compliance (i.e., webmaster logs, or other relevant documentation establishing good-faith indication that the institution posted the required information at approximately timelines established by the public reporting requirements) on whether the College was timely in publicly posting its quarterly report could not be provided. B. Relevant documentation evidencing compliance (i.e., webmaster logs, or other relevant documentation establishing good-faith indication that the institution posted the required information at approximately timelines established by the public reporting requirements) on whether the College was timely in publicly posting its quarterly report for quarters ended 06/30/2022 and 09/30/2022, could not be provided. 3. 84.425F COVID-19 HEERF-Institutional Portion 84.425L COVID-19 HEERF-Minority Serving Institution A. Relevant documentation evidencing compliance (i.e., webmaster logs, or other relevant documentation establishing good-faith indication that the institution posted the required information at approximately timelines established by the public reporting requirements) on whether the College was timely in publicly posting its quarterly report for quarters ended 12/31/2021, 03/31/2022, 06/30/2022 and 09/30/2022, could not be provided. Cause: The College lacks adequate internal controls over the timely and accurate preparation and review of required reports as stipulated in the Compliance Supplement. Furthermore, the College lacks adequate internal controls regarding retaining sufficient documentation to support all reported transactions. Effect: The College is not in compliance with the applicable reporting requirements. No questioned costs are presented as the identified reporting differences do not represent overpayments, and we are unable to quantify the impact of late reporting on the program. Identified as a Repeat Finding: 2021-017 Recommendation: College management should strengthen controls so that required reports are timely and accurately prepared and reviewed and submitted within the specified timeframes to evidence compliance with the applicable reporting requirements and retain sufficient documentation to support all reported transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2021-006 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Allowable Costs/Cost Principles Questioned Costs: $4,597 Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented. Conditions: 1. For three (or 9%) of thirty-two items, aggregating $29,888 of $1,479,778 in total payroll expenditures, deficiencies were noted, as follows: For item #s 1 and 2, there were no approved timesheets on file to substantiate the actual number of hours worked. For item # 3, we noted discrepancy in the number of credits paid which is based on employment contract against the number of equivalent credits assigned to instructors per Semester Section Offering or Instructor's Schedule. 2. For one (or 13%) of eight items, aggregating $49,248 of $320,550 in non-payroll expenditures, the item amounting to $1,250 (21-PO-2096) pertains to a per diem payment that was not supported by adequate documentation to ascertain whether the travel transpired. 3. One duplicated expenditure amounting to $2,119 (21-PO-1098) was charged to the program. Cause: The College lacks adequate internal controls over compliance with applicable federal regulations relating to allowable costs/cost principles, specifically, obtaining and retaining sufficient documentation to support all transactions. Effect: The College is in noncompliance with applicable allowable costs/cost principles requirements. Accordingly, questioned costs of $4,597 result because the projected questioned costs exceed the $25,000 threshold. Recommendation: College management should improve internal control policies and strengthen controls requiring obtaining and retaining sufficient documentation to support all transactions. Views of Auditee and Corrective Action Plan: The College partially agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2021-007 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: Non-federal entities other than states must follow Sections 200.313(c) through (e) of the Uniform Guidance. Section 200.313(d) states that procedures for managing equipment, whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: a. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property; b. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years; c. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated; d. Adequate maintenance procedures must be developed to keep the property in good condition; and e. If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Condition: Capital assets records do not meet the criteria above and are not effectively maintained since updates to the records occur only once a year. Specifically, we noted the following deficiencies: 1. Certain information in the capital assets records are either incomplete or missing, such as the source of funding for the property (including the FAIN), who holds title, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property). 2. An inventory of capital assets has been performed on an annual basis, however, the result of the physical inventory was not completely reflected/ reconciled with the property records. 3. As capital assets records are not effectively maintained, it does not appear that the College has effectively developed means to adequately safeguard capital assets from loss, damage, or theft, or to reasonably investigate such occurrences. 4. Long-lived assets are not routinely evaluated for possible impairment. Cause: The College lacks adequate internal control policies and procedures over compliance with applicable federal property rules and regulations and lacks effective procedures governing property maintenance, as well as periodic assessment of asset impairment conditions. Moreover, internal control policies and procedures requiring periodic and timely performance and independent review of capital assets reconciliations and related general ledger accounts are not effectively implemented. Effect: The College is in noncompliance with applicable equipment and real property management requirements. Questioned costs, if any, that may result from inadequate property records, maintenance procedures, and the absence of timely reconciliations are not determinable. Capital outlays within the program for fiscal years are summarized as follows: Recommendation: College management should establish and strengthen internal control policies and procedures over compliance with applicable federal regulations on equipment and real property management. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2021-008 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Period of Performance Questioned Costs: $2,107 Criteria: The terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Condition: For three (or 9%) of thirty-two items, aggregating $29,888 of $1,479,778 in total payroll expenditures, the following cost of salaries charged to the program were incurred prior to the funding period stipulated in the grant awards: Cause: The College lacks adequate internal controls over compliance with applicable federal regulations relating to period of performance. Effect: The College is in noncompliance with applicable period of performance requirements. Accordingly, questioned costs of $2,107 result because the projected questioned costs exceed the $25,000 threshold. For item # 1, only $307 is included in the total questioned costs, which relates to costs incurred prior to the funding period stipulated in the grant awards. Recommendation: College management should improve internal control policies and strengthen controls to comply with applicable period of performance requirements. Specifically, review should be made to ensure all costs charged to the program are within the funding period stipulated in the grant awards. Views of Auditee and Corrective Action Plan: The College partially agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2021-009 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Procurement and Suspension and Debarment Questioned Costs: $68,090 Criteria: Under the terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards, RepMar authorizes the College to use its own procedures for procurement provided they meet the RepMar Procurement Code. RepMar’s Procurement Code states the following: (a) Section 126.7 - Award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous to the Government taking into consideration price and the evaluation factors set forth in the Request for Proposals. No other factors or criteria shall be used in the evaluation. The contract file shall contain the basis on which the award is made. (b) Section 127 - Procurement of goods and services not exceeding $25,000 may be made in accordance with small purchase procedures promulgated by RepMar’s Policy Office. Small purchase procedures are those relatively simple and informal methods for securing services, supplies, or other property that do not cost more than $25,000. RepMar’s Ministry of Finance has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. (c) Section 128 - a contract may be awarded for supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. (d) Section 129 - Notwithstanding any other provision of this Chapter, the Chief Procurement Officer, the head of a Purchasing Agency, or a designee of either officer may make or authorize others to make emergency procurement when there exists a threat to public health, welfare, or safety under emergency conditions as defined in regulations promulgated by the Policy Office; provided, that such emergency procurement shall be made with such competition as is practicable under the circumstances. Conditions: Of twenty-one items, aggregating $104,429 of $277,718 in total non-payroll expenditures, deficiencies were noted, as follows: 1. For 2 items (or 10%), procurement was not supported by appropriate procurement methodology; thus, the following purchases appear to have been sole sourced without written justification: 2. For 10 items (or 48%), supporting procurement documentation was not sufficient to substantiate compliance with small purchase procedures. For item #s 1 through 7, there were no vendor quotations on file. Moreover, for item #s 8 through 10, selected vendor is not the lowest bidder and no justification of vendor selection was on file. Cause: The College did not follow internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Effect: The College is in noncompliance with applicable procurement requirements. Total questioned cost is $68,090. Recommendation: Responsible personnel should ensure that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the solicitation process and rationale for contractors or vendor selection. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2021-010 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Reporting Questioned Costs: $0 Criteria: Under the terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards, the College is required to submit: 1. As supporting report for the initial payment request, a duly accomplished standard Form SG1- Subgrant Objectives and Budget Proposal; 2. As supporting report for subsequent payment requests, a duly accomplished standard Form SG2- Performance and Financial Evaluation quarterly report; 3. Duly accomplished Form SG2-Performance and Financial Evaluation final report within 30 calendar days after the end of the MOA’s term. If the organization is receiving subsidy or subgrant in the new fiscal year or new funding period, the prior year’s or prior funding period’s SG2 final report is required to be submitted together with the SG1 report, before the initial payment can be released under the new subsidy or subgrant MOA. Further, the College shall maintain an acceptable financial management system during the term of the sub-award agreement including an accurate, current and complete disclosure of financial activity of Company funds and consistency with all financial administration, program monitoring, performance reporting and enforcement provisions of the Financial Management Act. Conditions: 1. The College did not prepare and submit the required Form SG1- Subgrant Objectives and Budget Proposal as supporting report for the initial payment for the U.S. Compact Funding subaward for the Education Sector, Ebeye Special Needs – Adult Education, Compact Capital Fund and Supplemental Education Grant. 2. The College did not provide the required Form SG2-Performance and Financial Evaluation final report and Form SG2- Performance and Financial Evaluation quarterly report for the quarter ended June 30, 2021 for the U.S. Compact Funding subaward for the Education Sector, Ebeye Special Needs – Adult Education, Compact Capital Fund and Supplemental Education Grant. 3. Expenditures reported per the Form SG2- Performance and Financial Evaluation quarterly report did not agree to the underlying quarterly expenditures report submitted to the Secretary of Finance as follows: a. 1st Quarter ended December 31, 2020 b. 2nd Quarter ended March 31, 2021 4. Expenditures reported per the Form SG2- Performance and Financial Evaluation quarterly report did not agree to the quarterly expenditures reported in SEFA as follows: a. 1st Quarter ended December 31, 2020 b. 2nd Quarter ended March 31, 2021 No reconciliation was provided to reconcile the quarterly expenditures reported in SEFA against the expenditures reported per the Form SG2- Performance and Financial Evaluation quarterly report. Cause: The College lacks adequate internal controls over the timely and accurate preparation and review of required reports as stipulated in the sub-award agreements. Effect: The College appears to be in noncompliance with applicable reporting requirements. No questioned costs are presented as the total expenditures per SEFA for the fiscal year were reconciled with the federal awards received from the RMI Government. Recommendation: College management should strengthen controls so that required reports are timely and accurately prepared and reviewed and submitted within the specified timeframes to evidence compliance with applicable reporting requirements. Views of Auditee and Corrective Action Plan: The College partially agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2021-011 Federal Agency: U.S. Department of Education AL Program: 84.047A TRIO Upward Bound Federal Award No.: P047A171556-21 Area: Allowable Costs/Cost Principles Questioned Costs: $7,018 Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented. Conditions: 1. For seventeen (or 71%) of twenty-four items, aggregating $17,796 of $185,064 in payroll total expenditures, deficiencies were noted, as follows: For item #s 1 through 8, employees were paid at a higher rate with no approved revised employee contract or pay increment memorandum on file to substantiate the higher rate paid to employees. For item #s 8 through 12, there were no approved timesheet on file to substantiate the actual number of hours worked. Further, for item # 12, there was no approved employment contract on file. For item #s 13 through 16, we noted discrepancy in the number of credits paid which is based on employment contract against the number of equivalent credits assigned to instructors per approved memorandum. Item # 17 pertains to salary advance for which there was inadequate documentation as to approval of advance made. 2. For one (or 6%) of sixteen items, aggregating $50,464 of $128,947 in total non-payroll expenditures, the item amounting to $2,185 (Check # 1033875) pertains to the purchase of office equipment for which no vendor invoice and receiving report was on file. Cause: The College lacks adequate internal controls over compliance with applicable federal regulations relating to allowable costs/cost principles, specifically, obtaining and retaining sufficient documentation to support all transactions. Effect: The College is in noncompliance with applicable allowable costs/cost principles requirements. Accordingly, questioned costs of $7,018 result because the projected questioned costs exceed the $25,000 threshold. For Condition # 1, item #s 1 through 7, only $403 is included in the total questioned costs, which relates to the difference between the unsupported higher rate paid and the approved rate. Further, for Condition # 1, item #s 13 through 16, only $1,641 is included in the total questioned costs, which relates to the dollar amount of difference in the number of credits paid between employment contract and approved memorandum. Recommendation: College management should improve internal control policies and strengthen controls requiring obtaining and retaining sufficient documentation to support all transactions. Views of Auditee and Corrective Action Plan: The College partially agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2021-012 Federal Agency: U.S. Department of Education AL Program: 84.047A TRIO Upward Bound Federal Award No.: P047A171556-21 Area: Eligibility Questioned Costs: $24,646 Criteria: Per OMB Compliance Supplement July 2021, an individual is eligible to participate in a Regular UB project if the individual meets all of the following requirements: (a) is a citizen, national, or permanent resident of the United States, or is in the United States for other than a temporary purpose; (b) is a potential first-generation college student, a low-income individual, or an individual who has a high risk for academic failure; (c) has a need for academic support in order to pursue successfully a program of education beyond high school; and (d) at the time of initial selection has completed the 8th grade but has not entered the 12th grade and is at least 13 years old but not older than 19. A veteran, regardless of age, who meets all other criteria is eligible to participate. A citizen, national, or permanent resident of the United States, includes a permanent resident of Guam, the Northern Mariana Islands, the Trust Territory of the Pacific Islands (Palau), or resident of one of the Freely Associated States - the Federated States of Micronesia or the Republic of the Marshall Islands. Moreover, 34 CFR Part 645.6(b) defines “Individual who has a high risk for academic failure” as an individual who: (a) Has not achieved at the proficient level on State assessments in reading or language arts; (b) Has not achieved at the proficient level on State assessments in math; (c) Has not successfully completed pre-algebra or algebra by the beginning of the tenth grade; or (d) Has a grade point average of 2.5 or less (on a 4.0 scale) for the most recent school year for which grade point averages are available. Furthermore, to be eligible for a stipend, participants must show evidence of satisfactory participation in project activities, including regular attendance and performance in accordance with the number of sessions in which a student participated. Stipends for regular projects may not exceed $40 per month from September to May of the academic year and $60 for each of the summer months (June, July, and August). Moreover, 34 CFR Part 645.43(c) states that for each participant, a grantee must maintain a record of the basis for the grantee’s determination that the participant is eligible to participate in the project and the basis for the grantee’s determination that the participant has a need for academic support in order to pursue successfully a program of education beyond secondary school. Condition: Of 9 students tested, aggregating $24,646 of $239,524 in total participant benefits, we noted noncompliance, as follows: 1. For 4 students listed below, no documentation was on file to support whether the individual is a citizen, national, or permanent resident of the United States (including a permanent resident of Guam, the Northern Mariana Islands, the Trust Territory of the Pacific Islands (Palau), or resident of one of the Freely Associated States - the Federated States of Micronesia or the Republic of the Marshall Islands), or is in the United States for other than a temporary purpose. 2. For 6 students listed below, it does not appear that the student has a need for academic support to successfully pursue a program of education beyond high school. Specifically, we noted that the student has either a) achieved at the proficient level on State assessments in reading or language arts; b) achieved at the proficient level on State assessments in math; c) successfully completed pre-algebra or algebra by the beginning of the tenth grade; or d) has a grade point average of higher than 2.5 (on a 4.0 scale) for the most recent school year. Further, we determined that the student does not have a high risk for academic failure, which is inconsistent with the College’s determined student eligibility status (“At high risk for academic failure”) reflected in the Annual Performance Report. 3. For 1 student (Student Case Number C000421734), it does not appear that the student has a need for academic support to successfully pursue a program of education beyond high school. Specifically, based on our examination of UB Program Recommendation Form accomplished by the student’s English and Math teachers, we noted that both teachers assigned the student a “B” grade (equivalent to 3.00 - 3.40 point in a 4.0 scale). Further, transcripts of records and/or State Assessments are not on file to support the College’s determined student eligibility status (“At high risk for academic failure”) reflected in the Annual Performance Report. 4. For 1 student (Student Case Number C000374322), no documentation was on file to support whether the individual has a need for academic support, to successfully pursue a program of education beyond high school. Further, transcripts of records and/or State Assessments are not on file to support the College’s determined student eligibility status (“At high risk for academic failure”) reflected in the Annual Performance Report. 5. For 3 students listed below, no documentation was on file to support whether the individual at the time of initial selection has completed the 8th grade but has not entered the 12th grade and is at least 13 years old but not older than 19. Cause: The College lacks adequate internal control policies and procedures over eligibility determinations, including obtaining required documentation and verification to support the College’s determination that the participant is eligible to participate in the project. Effect: The College is in noncompliance with applicable eligibility requirements. Accordingly, questioned costs of $24,646 result because the projected questioned costs exceed the $25,000 threshold. Recommendation: College management should improve internal control policies and strengthen controls so that eligibility determinations, including obtaining required documentation and verification, are performed in accordance with applicable eligibility requirements. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2021-013 Federal Agency: U.S. Department of Education AL Program: 84.047A TRIO Upward Bound Federal Award No.: P047A171556-21 Area: Special Tests and Provisions - Minimizing Duplication of Services under the TS and UB Programs Questioned Costs: $ Undeterminable Criteria: Per OMB Compliance Supplement July 2021, to minimize the duplication of services and promote collaborations so that more students can be served, TS and UB projects are required to collaborate with other TRIO projects, Gaining Early Awareness and Readiness for Undergraduate programs (GEAR UP) projects (Assistance Listing 84.334), or projects from other programs serving similar populations that are serving the same target schools or target area (34 CFR sections 643.11(b) and 645.21(a)(4)). In addition, the recipients of TS and UB grants are required to keep records, to the extent practicable, of any services TS or UB participants receive during the project year from another TRIO program or another federally funded program that serves populations similar to those served under the TS and UB programs (34 CFR sections 643.32(c)(5) and 645.43(c)(5)). Condition: No supporting documentation (e.g., email correspondence, advertisements, etc.) was provided to demonstrate that specified plans in the UB Grant Application Form were implemented and/or other collaboration efforts were in place during FY2021. Cause: The College lacks adequate internal control policies and procedures over compliance with applicable special tests and provisions requirements for minimizing duplication of services under the TS and UB Programs. Effect: The College is in noncompliance with applicable special tests and provisions requirements for minimizing duplication of services under the TS and UB Programs requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: College management should improve internal control policies and strengthen controls over compliance with applicable special tests and provisions requirements for minimizing duplication of services under the TS and UB Programs requirements. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2021-014 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425E Higher Education Emergency Relief Fund (HEERF) - Student Aid Portion Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Activities Allowed or Unallowed Questioned Costs: $45,752 Criteria: In accordance with applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant statutory provisions and consistent with the purpose of the ESF “to prevent, prepare for, and respond to coronavirus”. Allowable expenditures incurred and liquidated prior to December 27, 2020 must have been “to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus”. Further, beginning December 27, 2020, any unused HEERF I Institutional Portion funds, new HEERF II Institutional Portion funds and HEERF III Institutional Portion Funds, may be used to defray expenses associated with coronavirus (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll). Conditions: 1. For eleven (or 100%) of eleven items, aggregating $33,038 of $619,494 in total payroll expenditures, deficiencies were noted, as follows: The above salaries and wages were standard recurring costs and not an additional cost to the College. Specifically, for item #s 1 through 4, they are not directly associated with significant changes to the delivery of instructions due to the coronavirus (i.e. online teaching or expansion). Moreover, for item #s 5 through 11, they are not associated with coronavirus. Furthermore, there is no evidence of communication or consultation with the grantor agency that above expenditures are allowable. 2. For two (or 7%) of twenty-nine items, aggregating $1,716,073 of $2,490,000 in total non-payroll expenditures, deficiencies were noted, as follows: Item #s 12 and 13 are not associated with coronavirus. Specifically, expenditure relates to purchase of drone cameras and related accessories for the College’s graduation media operation. There is no evidence of communication or consultation with the grantor agency that above expenditures are allowable. Cause: The College lacks adequate internal controls over compliance with applicable activities allowed or unallowed requirements. Effect: The College is in noncompliance with applicable activities allowed or unallowed requirements. The total questioned cost is $45,752. Identified as a Repeat Finding: 2020-009 Recommendation: College management should improve internal control policies and strengthen controls and procedures over compliance with applicable federal regulations on activities allowed or unallowed. Views of Auditee and Corrective Action Plan: The College partially agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2012-015 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425E Higher Education Emergency Relief Fund (HEERF) - Student Aid Portion Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Allowable Costs/Cost Principles Questioned Costs: $109,757 Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented. Conditions: 1. For nine (or 82%) of eleven items, aggregating $33,038 of $619,494 in total payroll expenditures, deficiencies were noted, as follows: For item #s 1 through 2, and item #s 4 through 9, we noted discrepancy in the number of credits paid which is based on employment contract against the number of equivalent credits assigned to instructors per Semester Section Offering or Instructor’s Schedule. Moreover, for item # 1, the employee was paid total amount of $2,275 that pertains to two separate contracts ($1,300 and $975), however, there was no approved additional contract or revision to the initial contract to substantiate the payment relating to $975. For item #s 3 and 7, there was no approved employment contract on file. No questioned costs are reported at this finding as questioned costs are reported at finding # 2021-014. 2. For two (or 7%) of twenty-nine items, aggregating $1,716,073 of $2,490,000 in total non-payroll expenditures, deficiencies were noted, as follows: Item #s 10 and 11 were not supported by adequate documentation (i.e. vendor invoices and receiving reports) to ascertain whether such expenditures were allowable costs of the underlying grants. Cause: The College lacks adequate internal controls over compliance with applicable federal regulations relating to allowable costs/cost principles, specifically, obtaining and retaining sufficient documentation to support all transactions. Effect: The College is in noncompliance with applicable allowable costs/cost principles requirements. The total questioned cost is $138,920, of which $29,163 is reported at finding # 2021-014. Recommendation: College management should improve internal control policies and strengthen controls requiring obtaining and retaining sufficient documentation to support all transactions. Views of Auditee and Corrective Action Plan: The College partially agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2012-016 Federal Agency: U.S. Department of Education Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Procurement and Suspension and Debarment Questioned Costs: $192,795 Criteria: Under the terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards, RepMar authorizes the College to use its own procedures for procurement provided they meet the RepMar Procurement Code. RepMar’s Procurement Code states the following: (a) Section 126.7 - Award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous to the Government taking into consideration price and the evaluation factors set forth in the Request for Proposals. No other factors or criteria shall be used in the evaluation. The contract file shall contain the basis on which the award is made. (b) Section 127 - Procurement of goods and services not exceeding $25,000 may be made in accordance with small purchase procedures promulgated by RepMar’s Policy Office. Small purchase procedures are those relatively simple and informal methods for securing services, supplies, or other property that do not cost more than $25,000. RepMar’s Ministry of Finance has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. (c) Section 128 - a contract may be awarded for supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. (d) Section 129 - Notwithstanding any other provision of this Chapter, the Chief Procurement Officer, the head of a Purchasing Agency, or a designee of either officer may make or authorize others to make emergency procurement when there exists a threat to public health, welfare, or safety under emergency conditions as defined in regulations promulgated by the Policy Office; provided, that such emergency procurement shall be made with such competition as is practicable under the circumstances. Condition: Of eight items, aggregating $268,560 of $700,377 in total non-payroll expenditures, deficiencies were noted, as follows: 1. For 4 items (or 50%), procurement was not supported by competitive sealed bid or another appropriate procurement methodology; thus, the following purchases either appear to have been sole sourced without written justification or sole sourced with written justification but does not appear to be justified: No questioned cost is reported at this finding for item # 4 as questioned cost is reported at finding # 2021-015. 2. For 3 items (or 38%), supporting procurement documentation was not sufficient to substantiate compliance with small purchase procedures: For item # 6, there were no vendor quotations on file. Moreover, for item #s 5 and 7, selected vendor is not the lowest bidder and no justification of vendor selection was on file. Cause: The College did not follow internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Effect: The College is in noncompliance with applicable procurement requirements. The total questioned cost is $251,250, of which $58,455 is reported at finding # 2021-015. Recommendation: Responsible personnel should ensure that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the solicitation process and rationale for contractors or vendor selection. Views of Auditee and Corrective Action Plan: The College partially agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2021-017 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425E Higher Education Emergency Relief Fund (HEERF) - Student Aid Portion Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Reporting Questioned Costs: $0 Criteria: Annual Reporting - Per OMB Compliance Supplement Addendum July 2021, the HEERF Data Collection Form (OMB Control Number 1840-0850) must be submitted to ED via the Annual Report Data Collection System on February 8, 2021 (for reporting period from March 13, 2020 through December 31, 2020). Furthermore, amounts and data reported in the report should be accurate. Quarterly Public Reporting for (a)(1) Student Aid Portion - Per OMB Compliance Supplement Addendum July 2021, institutions that received a HEERF 18004(a)(1) Student Aid Portion award are required to publicly post certain information on their website no later than 30 days after award and update that information every 45 days thereafter. On August 31, 2020, the frequency of reporting after the initial 30-day period was decreased from every 45 days thereafter to every calendar quarter. On May 13, 2021, ED published an additional notice for student aid public reporting under CRRSAA and ARP, which requires that institution publicly post certain information on their website. Institutions must publicly post their report as soon as possible, but no later than 30 days after the publication of the notice or 30 days after the date ED first obligated funds under HEERF I, II, or III to the institution for Emergency Financial Aid Grants to Students, whichever comes later. The report must be updated no later than 10 days after the end of each calendar quarter. Quarterly Public Reporting for (a)(1) Institutional Portion and (a)(2), and (a)(3) funds - Per OMB Compliance Supplement Addendum July 2021, Quarterly Budget and Expenditure form must be conspicuously posted on the institution’s primary website on the same page the reports of the IHE’s activities as to the emergency financial aid grants to students (Student Aid Portion) are posted. The form must be posted covering each quarterly reporting period no later than 10 days after the end of each calendar quarter. Condition: 1. Total annual expenditures per the Annual Report Data Collection System differ from cumulative expenditures from the date of award through 12/31/20 per underlying accounting records, as follows: 2. ALN 84.425E COVID-19 HEERF-Student Aid Portion A. For both quarterly reports tested, the required quarterly updates were done on an annual basis. B. Total amount of Emergency Financial Aid Grants distributed to students for the year ended 12/31/2020 per the publicly posted Student Emergency Financial Aid Reporting differ from the annual student aid portion expenditures per underlying accounting records, as follows: C. Total amount of Emergency Financial Aid Grants distributed to students for the year ended 12/31/2021 per the publicly posted Student Emergency Financial Aid Reporting differ from the annual student aid portion expenditures per underlying accounting records, as follows: 3. 84.425F COVID-19 HEERF-Institutional Portion 84.425L COVID-19 HEERF-Minority Serving Institution A. Quarterly Budget and Expenditure reports were publicly posted beyond the 10-day posting requirement after the end of each calendar quarters as follow: B. Total quarterly expenditures for the quarter ended 06/30/2021 per the publicly posted Quarterly Budget and Expenditure Reporting differ from the quarterly expenditures per underlying accounting records, as follows: Cause: The College lacks adequate internal controls over the timely and accurate preparation and review of required reports as stipulated in the Compliance Supplement. Effect: The College is in noncompliance with applicable reporting requirements. No questioned costs are presented as the identified reporting differences do not represent overpayments, and we are unable to quantify the impact of late reporting on the program. Identified as a Repeat Finding: 2020-008 Recommendation: College management should strengthen controls so that required reports are timely and accurately prepared and reviewed and submitted within the specified timeframes to evidence compliance with applicable reporting requirements. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2020-005 Federal Agency: U.S. Department of Education CFDA Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P194572 Area: Cash Management Questioned Costs: $0 Criteria: In accordance with applicable cash management requirements, the College must comply with the following: ? In the absence of a separate bank account for the fund, the institution must identify the balance for the federal fund that is included in the school?s bank account as readily as if those funds were in a separate account. ? To help fulfill its responsibility to safeguard federal funds and ensure they are expended as intended, the institution must perform a reconciliation of each Federal Student Aid (FSA) program monthly. That is, to provide adequate internal controls, the institution must have a system for comparing separately, for each FSA program, the total draws recorded in G5 in a 30-day period to the amount disbursed to students or returned to the Department and for explaining all discrepancies. ? Under the advance payment method, the institution must make the disbursements as soon as administratively feasible, but no later than three business days following the receipt of funds. Any amounts not disbursed by the end of the third business day are considered to be excess cash and generally are required to be promptly returned to the Department. However, an excess cash balance tolerance is allowed if that balance is: (1) less than one percent of its prior year drawdowns; and (2) is eliminated within the next seven calendar days. Condition: 1. The College does not have a separate bank account for federal funds and does not maintain separate monitoring of bank balances of undisbursed funds. 2. No monthly reconciliations of drawdowns, of disbursements to students, and of returned funds are prepared. 3. During the year, the College has excess amounts not disbursed by the end of the third business day. Cause: The College lacks internal control policies and procedures over compliance with federal cash management requirements. Effect: The College is in noncompliance with applicable cash management requirements, and there is potential for the misstatement of student financial aid. For condition numbers 1 and 2, no questioned costs are reported as we are unable to determine the quantitative impact on the program. For condition number 3, no questioned costs are reported as projected questioned costs do not exceed the $25,000 threshold. Identification as a Repeat Finding: Finding 2019-003 Recommendation: College management should establish internal control policies and procedures requiring maintenance and monitoring of bank balances of undisbursed funds and perform timely reconciliation of drawdowns and related disbursements. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2020-006 Federal Agency: U.S. Department of Education CFDA Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P194572 Area: Special Tests and Provisions - Disbursements To or On Behalf of Students Questioned Costs: $0 Criteria: Per Chapter 2 of Part 2: 2019-2020 Financial Student Aid (FSA) Handbook, it is the sole responsibility of the school to pay, or make available, any FSA credit balance within the 14-day regulatory time frames. Per Chapter 2 of Part 2: 2019-2020 FSA Handbook, since the College is issuing checks to students, a school may hold the check for no longer than 21 days after the date the school notifies the student or parent. If the student or parent does not pick up the check, the school must immediately: 1) mail the check to the student or parent; 2) pay the student or parent directly by other means; or 3) return the funds to the appropriate Title IV program. Per Chapter 2 of Part 2: 2019-2020 FSA Handbook, if the school attempts to disburse the credit balance by check and the check is not cashed, the school must return the funds no later than 240 days after the date the school issued the check. Condition: Of $5,850,045 in expenditures for the Pell Grant Program, 60 items totaling $140,902 were tested for student refund disbursements and related payables, with the following deficiencies noted: 1. For 40 (or 67%) items tested, the College did not pay the refund amount aggregating $12,375 within the 14-day time frame. 2. For 9 (or 15%) items tested, the College held refund checks aggregating $2,920 beyond the 21-day time frame. 3. For 1 (or 2%) item tested, student acknowledgment did not include the date of actual check receipt. Hence, the auditor could not verify whether the College held the refund check beyond the 21-day time frame. 4. For 6 (or 10%) items tested, a $2,246 refund check as of September 30, 2020 was aged over 240 days and such should have been returned to the U.S. Department of Education no later than September 30, 2020. 5. For 2 (or 3%) items tested, the College?s calculated refunds paid to students were short by an amount aggregating $357. Cause: The College lacked established internal control policies and procedures over compliance with applicable federal regulations on issuing excess credits and returning unclaimed refunds to the agency on a timely basis. Effect: The College is potentially noncompliant with the criteria. No questioned costs are reported as projected questioned costs do not exceed the $25,000 threshold. Identification as a Repeat Finding: Finding 2019-007 Recommendation: College management should strengthen internal control policies and procedures requiring compliance with applicable federal regulations on issuing excess credits and returning unclaimed refunds to the agency on a timely basis. Regular assessment of student accounts and timely issuance of refund checks should be implemented. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2020-007 Federal Agency: U.S. Department of Education CFDA Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P194572 Area: Special Tests and Provisions - Enrollment Reporting Questioned Costs: $0 Criteria: Per Chapter 3 of Part 1: 2019-2020 FSA Handbook, the school must certify the information and return the roster file within 15 days of receiving it. Also, the school must report enrollment changes within 30 days; however, if a roster file is expected within 60 days, the school must provide the updated data on that roster file. Condition: Of $5,850,045 in expenditures for the Pell Grant Program, sixty items totaling $149,980 were tested for enrollment reporting, with the following deficiencies noted: 1. All rosters received from the National Student Loan Data System (NSLDS) (6 rosters; frequency of receipt is every 60 days) were not returned to NSLDS within 15 days from the receipt date. 2. For 57 (or 95%) of 60 transactions tested, the College did not report attendance changes for students within 60 days. 3. For 11 (or 18%) of 60 transactions tested, the College did not make changes or updates on the student?s NSLDS Program Enrollment Detail, although there were enrollment status changes during FY20. 4. For 11 (or 18%) of 60 transactions tested, we noted inconsistencies in the enrollment status reflected between the NSLDS Program Enrollment Detail and the transcript of records. Cause: The College lacked established internal control policies and procedures over notification to ED and NSLDS of changes in student status in a timely and accurate manner. Effect: The College is potentially noncompliant with the criteria. No questioned costs are reported as we are unable to determine the quantitative impact on the program. Identification as a Repeat Finding: Finding 2019-009 Recommendation: College management should establish internal control policies and procedures requiring compliance with applicable federal regulations on notifying ED and NSLDS of changes in student status in a timely and accurate manner. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2020-008 Federal Agency: U.S. Department of Education CFDA Program: 84.425E Higher Education Emergency Relief Fund - Student Aid 84.425F Higher Education Emergency Relief Fund - Institutional Portion Federal Award No.: P425E204126 P425F202732 Area: Reporting Questioned Costs: $0 Criteria: Annual Reporting - Per OMB Compliance Supplement Addendum July 2021, the HEERF Data Collection Form (OMB Control Number 1840-0850) must be submitted to ED via the Annual Report Data Collection System on February 8, 2021 (for reporting period from March 13, 2020 through December 31, 2020). Furthermore, amounts and data reported in the 2020 report should be accurate. Quarterly Public Reporting (Student Aid Portion) - Per OMB Compliance Supplement Addendum December 2020, beginning on May 6, 2020, institutions that received a HEERF 18004(a)(1) Student Aid Portion award are required to publicly post certain information on their website no later than 30 days after award, and update that information every 45 days thereafter (by posting a new report). On August 31, 2020, the frequency of reporting after the initial 30-day period was decreased from every 45 days thereafter to every calendar quarter. This information must also be updated no later than 10 days after the end of each calendar quarter. Quarterly Public Reporting (Institutional Portion) - Per OMB Compliance Supplement Addendum December 2020, Quarterly Budget and Expenditure form must be conspicuously posted on the institution?s primary website on the same page the reports of the IHE?s activities as to the emergency financial aid grants to students made with funds from the IHE?s allocation under Section 18004(a)(1) of the CARES Act (Student Aid Portion) are posted. The form must be posted covering each quarterly reporting period no later than 10 days after the end of each calendar quarter. Further, for the first report using this form, which is due October 30, 2020, institutions must provide their cumulative expenditures from the date of their first HEERF award through September 30, 2020. Condition: During our tests, the following were noted: A. 84.425E Higher Education Emergency Relief Fund - Student Aid 1. Required information that need be posted on the College?s website was posted on August 10, 2020, which is beyond the 30-day posting requirement after award date of May 12, 2020. 2. Required information posted on the College?s website was incomplete and did not include required information items #6 (the method(s) used by the institution to determine which students receive Emergency Financial Aid Grants and how much they would receive under Section 18004(a)(1) of the CARES Act) and #7 (any instructions, directions, or guidance provided by the institution to students concerning the Emergency Financial Aid Grants). 3. Required information posted on the College?s website were not timely updated. The first and last update of information was made on December 9, 2020. B. 84.425F Higher Education Emergency Relief Fund - Institutional Portion 1. The amount of the reported 2020 total annual expenditures of institutional portion of $420,045 via the Annual Report Data Collection System did not agree with the cumulative expenditures from the date of award through December 31, 2020 of $693,275 per: 1) underlying accounting records; and 2) publicly posted Quarterly Budget and Expenditure Reporting reports for quarters ended June 30, 2020, September 30, 2020, and December 31, 2020. 2. Quarterly Budget and Expenditure report for quarter ended September 30, 2020 was publicly posted on February 2, 2022, which is beyond the 10-day posting requirement after the end of calendar quarter. 3. The first report using the form which is due on October 30, 2020 was reported on August 4, 2021, and we noted a $14,514 understatement of the reported cumulative expenditures from the date of the first HEERF award through September 30, 2020. Cause: The College lacked established internal control policies and procedures over compliance with applicable federal regulations on timely and accurate reporting. Effect: The College is in noncompliance with applicable reporting requirements. No questioned costs are reported as we are unable to determine the quantitative impact on the program. Recommendation: College management should establish internal control policies and procedures requiring compliance with applicable federal regulations on timely and accurate reporting. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2020-009 Federal Agency: U.S. Department of Education CFDA Program: 84.425F Higher Education Emergency Relief Fund ? Institutional Portion Federal Award No.: P425F202732 Area: Activities Allowed or Unallowed Questioned Costs: $50,696 Criteria: Per OMB Compliance Supplement Addendum December 2020, institutions must demonstrate that costs incurred are allowable under the relevant statutory provisions and consistent with the purpose of the ESF ?to prevent, prepare for, and respond to coronavirus.? Further, for the (a)(1) Institutional Portion (CFDA 84.425F), allowable expenditures must be ?to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus, so long as such costs do not include payment to contractors for the provision of pre-enrollment recruitment activities; endowments; or capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship?. Condition: Of $435,310 in expenditures for the Emergency Financial Aid Grants Institution Portion, fourteen items totaling $192,952 were tested, with the following deficiencies noted: 1. The following expenditures are standard recurring costs and are not directly associated with the significant changes to the delivery of instructions due to the coronavirus (i.e. online teaching or expansion). Furthermore, there is no evidence of communication or consultation with the grantor agency that the following expenditures are otherwise allowable: See Schedule of Findings and Questioned Costs for chart/table. 2. The following instructor?s salaries and wages relating to Summer 2020 semester were standard recurring costs and not an additional cost to the College. Furthermore, they are not directly associated with significant changes to the delivery of instructions due to the coronavirus (i.e. online teaching or expansion) and there is no evidence of communication or consultation with the grantor agency that the following expenditures are allowable: See Schedule of Findings and Questioned Costs for chart/table. 3. A wire transfer# 3832566 payment for software licensing (invoice# 01945640) was based on a sales quotation which resulted in an overpayment of $1,098. Cause: The College lacked established monitoring controls over compliance with applicable federal regulations relating to expenditure activities allowed or unallowed. Effect: The College is in noncompliance with applicable activities allowed or unallowed requirements. Accordingly, questioned costs of $50,696 result. Recommendation: College management should strengthen monitoring controls requiring compliance with applicable federal regulations relating to expenditure activities allowed or unallowed. Views of Auditee and Corrective Action Plan: The College partially agrees with the finding and provides details in its Corrective Action Plan. Auditor Response: We reiterate the recommendation requiring compliance with applicable federal regulations relating to expenditure activities allowed or unallowed.

Finding No.: 2020-010 Federal Agency: U.S. Department of Education CFDA Program: 84.425F Higher Education Emergency Relief Fund - Institutional Portion Federal Award No.: P425F202732 Area: Period of Performance Questioned Costs: $13,500 Criteria: Per OMB Compliance Supplement Addendum December 2020, all institutions were given one calendar year (365 days) from the date of award in their HEERF Grant Award Notification (GAN) to complete the performance of their HEERF grant. Further, institutions were allowed to incur pre-award costs consistent with 2 CFR section 200.458 and 34 CFR section 75.263 from March 13, 2020, the declaration of the national emergency due to the coronavirus, to the date of their HEERF grant award for their (a)(1) Institutional Portion, (a)(2), and (a)(3) funds as long as those expenditures would have been allowable if incurred after the date of the HEERF grant award. Condition: Of $435,310 in expenditures for the Emergency Financial Aid Grants Institution Portion, fourteen items totaling $192,952 were tested with the following deficiencies noted: See Schedule of Findings and Questioned Costs for chart/table. For item #s 1 and 2, in reference to the vendor?s invoice date, expenditures were incurred by the College prior to March 13, 2020, the declaration of the national emergency due to the coronavirus. Cause: The College lacked established monitoring controls over compliance with applicable federal regulations relating to period of performance. Effect: The College is in noncompliance with applicable period of performance requirements. Accordingly, questioned costs of $33,500 result. However, only $13,500 is presented at this finding because costs related to invoice number 9215 were questioned at Finding 2020-009. Recommendation: College management should strengthen monitoring controls requiring compliance with applicable federal regulations relating to period of performance. Views of Auditee and Corrective Action Plan: The College disagrees with the finding. The College believes that expenditures identified above were incurred after March 13, 2020 based on actual payment date. Auditor Response: We reiterate the recommendation requiring compliance with applicable federal regulations relating to period of performance.

Finding No.: 2019-003 Federal Agency: U.S. Department of Education CFDA Program 84.063 Federal Pell Grant Program Area: Cash Management Questioned Costs: $0 Criteria: In accordance with applicable cash management requirements, the College must comply with the following: ? In the absence of a separate bank account for the fund, the institution must identify the balance for the federal fund that is included in the school?s bank account as readily as if those funds were in a separate account. ? To help fulfill its responsibility to safeguard federal funds and ensure they are expended as intended, the institution must perform a reconciliation of each FSA program monthly. That is, to provide adequate internal controls, the institution must have a system for comparing separately, for each FSA program, the total draws recorded in G5 in a 30-day period to the amount disbursed to students or returned to the Department and for explaining all discrepancies. Condition: 1. The College does not have a separate bank account for federal funds, and does not maintain separate monitoring of bank balances of undisbursed funds. Further, no monthly reconciliations of drawdowns, of disbursements to students, and of returned funds are prepared. 2. Program requests for drawdown were not based on either actual disbursements or expenditures recorded in the general ledger. Since advance drawdowns were made throughout the fiscal year, an accumulated amount due to grantor of $75,293 was recorded as of September 30, 2019. A corresponding list of specific students awarded undisbursed drawdowns was not available. The $75,293 balance was recorded as due to grantor, therefore, no related questioned costs is reported. Cause: There appears to be a lack of internal control policies and procedures over compliance with federal cash management requirements. Effect: The College is in noncompliance with applicable cash management requirements and a possible misstatement of student financial aid is possible. No questioned costs are reported as we are unable to determine the quantitative impact on the program. Recommendation: College management should maintain separate monitoring of bank balances of undisbursed funds and perform timely reconciliation of drawdowns and related disbursements. Further, all fund disbursements should be supported. Identification as a Repeat Finding: Finding 2018-002 Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2019-004 Federal Agency: U.S. Department of Education CFDA Program 84.063 Federal Pell Grant Program Area: Eligibility Questioned Costs: $0 Criteria: The Federal Student Aid Handbook states that the College needs to retain either the signed signature page or the signed Free Application for Federal Student Aid (FAFSA) form for its records, even if the student does not receive aid or attend school. Further, the FAFSA form must be filled-out completely and correctly. Condition: For 7 (or 12%) of 60 students tested, either the signed signature page or the signed FAFSA form was not on file. In addition, for 1 (or 2%) of 60 students tested, the FAFSA form was incomplete with blank fields. Cause: The College failed to ascertain that all required documents are submitted/maintained. Further, the College did not implement internal control policies and procedures to meet compliance with federal eligibility requirements. Effect: Possible noncompliance with the criteria exists. No questioned costs are reported since the applicants were eligible and were verified against the student identification number assigned upon registration. Recommendation: College management should strengthen and implement internal control policies and procedures to verify student files for accuracy and completeness in accordance with applicable eligibility requirements. Identification as a Repeat Finding: Finding 2018-005 Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2019-005 Federal Agency: U.S. Department of Education CFDA Program 84.063 Federal Pell Grant Program Area: Reporting - COD Questioned Costs: $0 Criteria: Per Chapter 2 Cost of Attendance (COA) of Part 1: 2018-2019 FSA Handbook, the COA for a student is an estimate of the student's educational expenses for the period of enrollment. The school/ institution must determine the appropriate and reasonable amounts for each eligible Cost of Attendance category for students. Furthermore, origination and disbursement records reflected in the Common Origination and Disbursements (COD) Report should be complete and accurate. Condition: The COA reflected on the Origination Report is carried forward from the prior year system, without any updates to reflect the current reasonable amount of COA. Further, the COA reflected on the Origination Report could not be traced to the College?s 2018-2019 Catalog. Test of origination records from the Origination Report indicated the following: 1. For 5 (or 8%) of 60 students tested, the 'Academic Calendar' field was blank. 2. For 2 (or 3%) of 60 students tested, the 'Verification Status Code' field was blank. Cause: The College failed to ascertain that compliance with federal regulations was met. Effect: The College is in noncompliance with applicable reporting requirements. No questioned costs are reported as we are unable to determine the quantitative impact on the program. Recommendation: College management should establish policies and procedures relating to the determination, and the timely and regular update of COA amounts. Further, College management should enhance adequate review of completeness and accuracy of student information submitted to COD. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2019-006 Federal Agency: U.S. Department of Education CFDA Program 84.063 Federal Pell Grant Program Area: Special Tests and Provisions ? Verification Questioned Costs: $0 Criteria: Chapter 4 Verification, Updates and Correction of Part 1: 2018-2019 FSA Handbook states that if verification reveals that answers do not match, the FAFSA needs to be corrected. Corrections and updates can be submitted by the student on the web or by the school using FSA Access to Central Processing System Online or the Electronic Data Exchange. Condition: Tests of the Institutional Student Information Record (ISIR) and the Verification Worksheet and/or FAFSA Form indicated the following unexplained/ unreconciled inconsistencies: 1. For 16 (or 27%) of 60 students tested, the number of household and/or college attendees on the ISIR did not match the information reflected on the Verification Worksheet submitted by the student. 2. For 2 (or 3%) of 60 students tested, the student's source of income on the ISIR did not match the information reflected on the FAFSA Form submitted by the student. Cause: The College failed to ascertain that compliance with federal regulations was met. Effect: The College is in noncompliance with applicable reporting requirements. No questioned costs are reported as we are unable to determine the quantitative impact on the program. Recommendation: College management should enhance adequate review of completeness and accuracy of students? information reflected on students? application form and ISIR. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2019-007 Federal Agency: U.S. Department of Education CFDA Program 84.063 Federal Pell Grant Program Area: Special Tests and Provisions ? Disbursements To or On Behalf of Students Questioned Costs: $0 Criteria: Per Chapter 2 of Part 2: 2018-2019 Financial Student Aid (FSA) Handbook, it is the sole responsibility of the school to pay, or make available, any FSA credit balance within the 14-day regulatory time frames. Per Chapter 2 of Part 2: 2018-2019 FSA Handbook, since the College is issuing check to students, a school may hold the check for no longer than 21 days after the date the school notifies the student or parent. If the student or parent does not pick up the check, the school must immediately: 1) mail the check to the student or parent; 2) pay the student or parent directly by other means; or 3) return the funds to the appropriate Title IV program. Per Chapter 2 of Part 2: 2018-2019 FSA Handbook, if the school attempts to disburse the credit balance by check and the check is not cashed, the school must return the funds no later than 240 days after the date the school issued the check. Condition: Tests of student refund disbursements and related payables indicated the following: 1. For 32 (or 52%) of 61 transactions tested, the College did not pay the refund amount aggregating $6,887 ($6,560+$327) within the 14-day time frame. 2. For 1 (or 2%) of 60 transactions tested, the College did not issue a $38 refund check as of September 15, 2020 to Student # 2018FA078 (Document # 166-093). 3. For 3 (or 5%) of 60 transactions tested, the College held refund checks aggregating $382 beyond the 21-day time frame. 4. For 10 (or 17%) of 60 transactions tested, student acknowledgment did not include the date of actual check receipt. Hence, the auditor could not verify whether the College held the refund check beyond the 21-day time frame. 5. For 1 (or 2%) of 60 transactions tested, a $19 refund check as of September 30, 2019 was aged over 240 days and such should have been returned to the U.S. Department of Education no later than September 30, 2019. Cause: The College failed to ascertain that compliance with federal regulations was met. Effect: The College is potentially noncompliant with the criteria. No questioned costs are reported as projected questioned costs do not exceed the $25,000 threshold. Recommendation: College management should strengthen control policies and procedures to comply with applicable federal regulations on issuing excess credits and returning unclaimed refunds to the agency on a timely basis. Regular assessment of student accounts and timely issuance of checks should be implemented. Further, we recommend management enhance adequate review of approved PELL awards and related disbursements to verify accuracy and to minimize the opportunity for over application of grant awards. Identification as a Repeat Finding: Finding 2018-004 Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2019-008 Federal Agency: U.S. Department of Education CFDA Program 84.063 Federal Pell Grant Program Area: Special Tests and Provisions ? Return of Title IV Funds Questioned Costs: $0 Criteria: In accordance with applicable special tests and provisions requirements, when a recipient of Title IV grant withdraws from an institution during a payment period or a period of enrollment in which the recipient began attendance, the institution must determine the amount of Title IV aid earned by the student as of the student?s withdrawal date. In addition, within 45 days (or within 30 days for students that never began attendance) of becoming aware that the student had withdrawn, the College is required to initiate the return of Title IV funds. Condition: For 4 (or 44%) of 9 transactions, no adjustments were recorded to student subledger accounts and no deposit or transfers were made into the Federal funds account for unearned Title IV funds for the following: Student # 1. 2018FA023 2. 2015FA107 3. 2018FA203 4. 2019SP375 Unadjusted amounts aggregated $3,204. The College subsequently adjusted the student subledger accounts during the audit process. Cause: The lack of adequate internal control procedures to satisfy compliance with federal special tests and provisions for the return of Title IV funds appears to be the cause of the above condition. Effect: The College is in noncompliance with applicable special tests and provisions requirements. No questioned costs are reported as projected questioned costs do not exceed the $25,000 threshold. Recommendation: College management should implement internal control over monitoring, timely filing and timely return of Title IV funds. Identification as a Repeat Finding: Finding 2018-003 Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

Finding No.: 2019-009 Federal Agency: U.S. Department of Education CFDA Program 84.063 Federal Pell Grant Program Area: Special Tests and Provisions ? Enrollment Reporting Questioned Costs: $0 Criteria: Per Chapter 3 of Part 1: 2018-2019 FSA Handbook, the school must certify the information and return the roster file within 15 days of receiving it. Also, the school must report enrollment changes within 30 days; however, if a roster file is expected within 60 days, the school must provide the updated data on that roster file. Condition: Tests of student refund disbursements and related payables noted the following: 1. All rosters received from the National Student Loan Data System (NSLDS) (6 rosters; frequency of receipt is every 60 days) were not returned to NSLDS within 15 days from the receipt date. 2. For 23 (or 38%) of 60 transactions tested, the College did not report attendance changes for students within 60 days. 3. For 10 (or 17%) of 60 transactions tested, the College did not make changes or updates on the student?s NSLDS Program Enrollment Detail, although there were enrollment status changes during FY19. 4. For 5 (or 8%) of 60 transactions tested, we noted inconsistencies in the enrollment status reflected between the NSLDS Program Enrollment Detail and the transcript of records. Cause: The College failed to ascertain that compliance with federal regulations was met. Effect: The College is potentially noncompliant with the criteria. No questioned costs are reported as we are unable to determine the quantitative impact on the program. Recommendation: College management should establish control policies and procedures to comply with applicable federal regulations on promptly notifying ED and NSLDS of changes in student status in a timely and accurate manner. Views of Auditee and Corrective Action Plan: The College agrees with the finding and provides details in its Corrective Action Plan.

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION