LOCAL REDEVELOPMENT AUTHORITY OF THE LANDS AND FACILITIES OF NAVAL STATION ROOSEVELT ROADS

2025-004 Inadequate Personnel Documentation Compliance Requirement Allowable Costs / Cost Principles Category Significant Deficiency in Internal Control and Noncompliance ALN 12.607 Federal Program Community Economic Adjustment Assistance for Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense Criteria Under 2 CFR § 200.303, the entity must establish, document, and maintain effective internal controls over Federal awards to provide reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. Such internal controls must be consistent with the Standards for Internal Control in the Federal Government (GAO “Green Book”) or the COSO Internal Control Framework. Additionally, under 2 CFR § 200.430(g), charges to Federal awards for salaries and wages must be supported by records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. These records must be maintained as part of the Authority’s official records. Condition From a sample of six employee files whose compensation was charged, in whole or in part, to the federal program, we identified deficiencies in four files reviewed. The files lacked required personnel documentation; missing items varied by individual and included employment applications and medical clearance forms. One of the four files corresponds to an employee transferred to the Authority from the Puerto Rico Electric Power Authority (PREPA) pursuant to Act No. 8 of February 4, 2017 (Mobility Act). Although the personnel file was received, it did not contain all required documentation and was missing more required documents than the other files with deficiencies. These conditions indicate that personnel files were not consistently maintained in accordance with federal requirements and the Authority’s established policies. Cause The condition is attributed to inadequate controls and oversight over the maintenance and review of personnel files. In addition, procedures to ensure completeness of documentation particularly for employees transferred under the Mobility Act were not consistently implemented. Effect The absence of required documentation, such as job applications and medical clearance forms, may result in noncompliance with federal requirements and the Authority’s established policies. It also limits the Authority’s ability to demonstrate that payroll costs charged to federal awards are allowable and properly supported, and may result in questioned costs or increased scrutiny from federal oversight agencies. Questioned Costs None. Repeated Finding A similar condition was reported in the prior year as Finding No. 2024-002 in the Summary Schedule of Prior Year Audit Findings. Recommendation We recommend that the Authority strengthen controls over the maintenance of personnel files to ensure that all required documentation supporting payroll costs charged to federal awards is complete, accurate, and properly retained in accordance with applicable requirements. This should include implementing periodic reviews of personnel files, utilizing standardized checklists to verify completeness, and ensuring that any missing documentation is promptly obtained and filed. Additionally, the Authority should establish and enforce specific procedures to verify the completeness of personnel records received through interagency transfers under the Mobility Act, including timely follow-up with the transferring entity to obtain any outstanding documentation. Cross-Reference See Finding 2025-002 for related internal control issues affecting financial reporting. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan.

2025-005 FEMA Working Capital Advances Compliance Requirement Cash Management Category Material Weakness in Internal Control and Material Noncompliance ALN 97.036 Federal Program Disaster Grants - Public Assistance (Presidentially Declared Disasters) Federal Agency US Department of Homeland Security Criteria Pursuant to 2 CFR §200.305(b)(1), when advances are made by a pass-through entity, the non-federal entity must maintain procedures to minimize the time elapsing between the receipt of federal funds and their disbursement for program purposes. Funds must be disbursed timely and only to meet immediate cash needs. Condition In May 2024, the Authority received FEMA Working Capital Advance (WCA) funds through the pass-through entity, the Central Office for Recovery, Reconstruction and Resiliency of Puerto Rico (COR3). These funds were intended to support eligible disaster recovery expenditures. As of the date of audit testing, the Authority had retained a significant portion of the WCA funds for more than 365 days without disbursing them for allowable program purposes. Specifically, $4,464,090 was returned in October 2024, and an additional $8,301,812 was subsequently returned on December 15, 2025. Although the funds were ultimately returned, the prolonged retention of advance funds exceeded the allowable time period under federal cash management requirements and was not supported by documented short-term cash needs projections, as required by federal regulations. The retention of these funds beyond the permitted time-frame constituted material noncompliance with federal cash management requirements during the period under audit. Cause The Authority did not establish or implement adequate internal controls to ensure compliance with federal cash management requirements under 2 CFR §200.305. Specifically, the Authority lacks formal policies and procedures for cash management, including documented short-term cash needs forecasting, monitoring of advance balances and their aging, and periodic supervisory review. Additionally, the Authority relied on guidance and instructions provided by the pass-through entity (COR3) in administering FEMA Working Capital Advances. However, the Authority did not implement controls to evaluate and ensure that such guidance was consistent with applicable federal requirements. As a result, advance funds were retained beyond immediate cash needs and allowable time-frames. Effect The retention of federal funds for periods exceeding immediate cash needs constitutes noncompliance with Uniform Guidance cash management requirements. These conditions increase the risk of questioned costs, potential repayment of federal funds, heightened oversight by the pass-through entity and the federal agency, and additional administrative burden on the Authority. Questioned Costs None. The finding relates to noncompliance with federal cash management requirements due to the prolonged retention of advance funds. The condition did not result in unallowable or unsupported program expenditures. Repeated Finding This issue was reported in the prior year as Finding No. 2024-003, in the Summary Schedule of Prior Year Audit Findings. Recommendation We recommend that the Authority design and implement a formal cash management control framework to ensure full compliance with 2 CFR §200.305 and WCA requirements. The Authority should establish comprehensive written policies and procedures governing the request, receipt, monitoring, and timely disbursement of federal advance funds to ensure that advances are drawn solely to meet immediate cash needs and are expended within allowable timeframes. These procedures should incorporate documented short-term cash flow forecasting to support advance requests, clearly defined responsibility for monitoring advance balances and their aging, and periodic supervisory review of outstanding advance funds. The Authority should also implement a structured process to identify and escalate delays in project execution or funding utilization so that corrective action can be taken promptly. In addition, relevant personnel should receive training on Uniform Guidance cash management requirements and FEMA program-specific guidance to reinforce compliance responsibilities. The Authority should strengthen project planning and procurement oversight to better align advance funding requests with realistic project execution timelines, thereby reducing the risk of prolonged retention of federal funds. Finally, the Authority should establish and implement formal controls to independently evaluate and ensure that guidance provided by the pass-through entity (COR3) complies with applicable federal requirements. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan.

2025-006 Noncompliance with Procurement Procedures Compliance Requirement Procurement, Suspension and Debarment Category Material weakness in Internal Control and Material Noncompliance ALN 21.027 Federal Program COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Federal Agency US Department of Treasury Criteria Under 2 CFR §200.317, states, including Puerto Rico, may follow their own procurement policies and procedures; however, such flexibility does not relieve the non-Federal entity from complying with other applicable requirements of 2 CFR Part 200. Under 2 CFR §200.327 and Appendix II, all contracts funded with Federal awards must include applicable required contract provisions. Under 2 CFR §200.331, non-Federal entities must determine whether an arrangement constitutes a subaward or a procurement contract based on the substance of the relationship. Condition The Authority entered into agreements with the Municipality of Ceiba for services funded with Federal awards. Under these agreements, the Municipality of Ceiba was responsible for procuring contractors, administering projects, supervising execution, and certifying payments, and received an administrative fee of approximately 5% of the contract amounts. Based on the substance of the arrangements, the Municipality of Ceiba functioned as a contractor providing project management and administrative services, rather than as a subrecipient. The Authority did not perform or document a procurement process to select the Municipality of Ceiba in accordance with its applicable state and federal procurement policies (2 CFR §200.317). Specifically, the Authority did not conduct a competitive procurement process, such as a Request for Proposals, to select a provider for project management and related services, nor did it document the rationale for contractor selection. While the Municipality of Ceiba subsequently conducted procurement processes for subcontracted work, such procedures do not satisfy the Authority’s obligation to conduct its own procurement when selecting the Municipality of Ceiba as a contractor. Furthermore, the agreements with the Municipality of Ceiba did not include all applicable Federal contract provisions required under 2 CFR §200.327 and Appendix II to Part 200 – Contract Provisions for Non-Federal Entity Contracts Under Federal Awards. Cause The condition resulted from management’s reliance on the intergovernmental nature of the agreement and procurement procedures performed by the Municipality of Ceiba under local law. Management did not evaluate the arrangement based on its substance for purposes of Federal compliance, nor implement controls to ensure inclusion of required Federal contract provisions or proper classification under 2 CFR Part 200. Additionally, the Authority lacked formal policies and internal controls requiring the inclusion of required Federal contract provisions in agreements funded with Federal awards. Effect Although competitive procurement procedures were performed by the Municipality of Ceiba, the Authority cannot demonstrate compliance with Federal requirements applicable to contracts funded with Federal awards. The absence of required Federal contract provisions increases the risk of noncompliance with 2 CFR §200.327 and Appendix II. These deficiencies increase the risk that costs associated with the agreement may be subject to further review by the pass-through entity or awarding agency. Questioned Costs $1,090,585. These costs are not questioned for allowability; however, due to deficiencies in compliance with applicable Federal requirements, such costs are considered subject to further evaluation by the pass-through entity or awarding agency. Recommendation We recommend that the Authority consult with the pass-through entity, Puerto Rico Fiscal Agency and Financial Advisory Authority (FAFAA), and the U.S. Department of the Treasury, as applicable, to address the costs totaling $1,090,585. To prevent recurrence, the Authority should strengthen compliance by: Ensuring all agreements funded with Federal awards include required provisions under 2 CFR §200.327 and Appendix II. Establishing controls to ensure that agreements with other governmental entities are evaluated based on substance rather than form. Providing training to management and relevant personnel on Federal requirements under Uniform Guidance. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

2025-007 Performance Reporting Deadlines Compliance Requirement Reporting Category Significant Deficiency in Internal Control and Noncompliance ALN 12.607 Federal Program Community Economic Adjustment Assistance for Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense Criteria Under 2 CFR § 200.329, non-Federal entities are required to submit performance reports in accordance with the terms and conditions of the Federal award. Performance reports are generally due no later than 30 days after the end of each reporting period for quarterly or semiannual reports, unless otherwise specified by the awarding agency. Condition From a sample of four Quarterly Performance Reports examined, three performance reports were not submitted on a timely basis. Specifically, three Quarterly Performance Reports were submitted late from 9 days to 154 days. Cause The delays resulted from inadequate internal controls over grant reporting, including the absence of effective tracking mechanisms and insufficient supervisory oversight to ensure required reports were prepared and submitted within established deadlines. Effect Untimely submission of federally required performance reports limits the ability of the awarding agency and pass-through entity to monitor project progress, evaluate program performance, and ensure compliance with award terms and conditions. Continued noncompliance with reporting requirements may result in additional administrative oversight or other actions by the awarding agency. Questioned Costs None Repeated Finding This issue was reported in the prior year as Finding No. 2024-006 in the Summary Schedule of Prior Year Audit Findings. Recommendation We recommend that the Authority strengthen internal controls over grant reporting by establishing formal procedures to track reporting deadlines, assigning clear responsibility for the preparation, review, and submission of required reports, and providing training to relevant personnel on federal performance reporting requirements to promote timely and consistent compliance. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

2025-008 Biweekly Use of Funds Reports Delayed Submissions Compliance Requirement Reporting Category Significant Deficiency in Internal Control and Noncompliance ALN 21.027 Federal Program Coronavirus State and Local Fiscal Recovery Funds Federal Agency US Department of Treasury Criteria Fiscal Agency and Financial Authority (FAFAA), as the pass-through entity, requires subrecipients to submit biweekly reports of funds by the established deadlines as part of its monitoring and oversight responsibilities under the CSFRF program. Condition From a sample of eight biweekly CSFRF Use of Funds reports selected to test compliance with the submission deadlines established by the pass-through entity, we identified five instances of noncompliance. During our review of the biweekly CSFRF Use of Funds reports submitted for the year ended June 30, 2025, we noted that five reports were not submitted by the due dates established by FAFAA, the pass-through entity. The delays ranged from approximately three to four days beyond the required submission date. Cause The delays resulted from the absence of a formalized reporting compliance framework and documented internal controls to ensure timely submission of required biweekly reports. The Authority did not establish clearly defined timelines, assigned accountability, or supervisory review procedures to monitor reporting deadlines established by the pass-through entity. In addition, there was no formal escalation mechanism to address situations where report due dates coincided with staff workload constraints or end-of-week deadlines. Effect Failure to submit reports timely may hinder FAFAA’s ability to perform timely oversight and monitoring of CSFRF funds and constitutes noncompliance with reporting requirements established by the pass-through entity. Questioned Costs None. Recommendation We recommend that management strengthen internal procedures to ensure that all biweekly Use of Funds reports are submitted to FAFAA on or before the required due dates, including implementing internal cutoff dates or reminder controls when deadlines fall on non-peak processing days. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

2024-003 FEMA Working Capital Advances (NOT A MAJOR PROGRAM) Compliance Requirement Cash Management Category Material Weakness in Internal Control and Material Noncompliance ALN 97.036 Program Disaster Grants - Public Assistance (Presidentially Declared Disasters) Federal Agency US Department of Homeland Security Criteria Per 2 CFR §200.305(b)(1), when advances are made by a pass-through entity, the non-federal entity must maintain procedures to minimize the time elapsing between the receipt of federal funds and their disbursement for program purposes. Funds must be disbursed timely and only to meet immediate cash needs. Condition The Authority received FEMA Working Capital Advances through the pass-through entity, Central Office for Recovery, Reconstruction and Resiliency of Puerto Rico (COR3). As of the date of this review, the funds have remained in the Authority’s bank account for over 365 days without being expended. This prolonged retention violates federal cash management requirements under the Uniform Guidance. Cause The Authority lacks sufficient back-office personnel to effectively manage and track federal funds, as well as in-house project managers with the engineering and architectural expertise necessary to efficiently execute the projects tied to the FEMA advances. Additionally, the Authority does not have adequate internal controls or segregation of duties in place to ensure compliance with FEMA program requirements and federal cash management standards. These deficiencies have contributed to delays in project implementation and the prolonged retention of federal funds. Effect The retention of federal funds for over 365 days without use constitutes noncompliance with the cash management requirements of Uniform Guidance. This may result in increased scrutiny, potential repayment obligations, and administrative burden for both the subrecipient and the pass-through entity. Questioned Costs Amount in process to be returned, $8,090,354. Recommendation We recommend that the Authority strengthen its internal controls over cash management by updating its written procedures to ensure that federal advances are disbursed based on immediate cash needs, in accordance with 2 CFR §200.305(b). The Authority should implement a cash flow forecasting process to support the timing and amount of advances, assign responsibility to specific personnel for monitoring the aging and use of federal funds, and conduct periodic internal reviews to identify and address delays in fund disbursement. Additionally, staff involved in the management of federal funds should receive training on applicable cash management requirements under Uniform Guidance to ensure consistent compliance. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan.

2024-004 Reserve Account (NOT A MAJOR PROGRAM) Compliance Requirement Cash Management Category Material weakness in Internal Control and Material Noncompliance ALN 10.770 Program Water and Waste Disposal Loans and Grants (Section 306C) Agency US Department of Agriculture (Rural Development) Criteria 2 CFR § 200.303 – Internal Controls, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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).” Water and Waste System Grant Agreement, Section 4, Protection and Disposition of the Funds outlines the reserve account requirements: (c) Reserve Account - From the remaining funds in the General Account, after transfers and payments required in (b) and (c), there shall be set aside into an account(s) designated as the Reserve Account(s) the sum of $1,684 each month until the sum of $201,982 is reached. With the prior written approval of the Government, funds may be withdrawn and used for such things as loan installments, emergency maintenance, extensions to facilities and replacement of short-lived assets, subject to conditions established by the Government. RUS Bulletin 1780-12, Exhibit A – Water and Waste System Grant Agreement, the grantee is required to comply with all terms and conditions of the grant agreement. Specially, Section I – Default and Termination Clause: Default by the Grantee will constitute termination of the grant thereby causing cancellation of Federal assistance under the grant. Condition The Authority has a deposit deficiency of $151,462 in the Reserve Account. The balance of the debt service reserve as of June 30, 2024, shall be $201,982. Cause Lack of oversight controls to comply with the cash management compliance requirement. Effect Default by the Authority constitutes a violation of the grant agreement and may result in termination of federal assistance under RUS Bulletin 1780-12. Additionally, under 2 CFR § 200.339, the federal awarding agency may temporarily withhold cash payments pending correction of the deficiency. The noncompliance also exposes the Authority to potential enforcement actions, including repayment of grant funds with interest and restrictions on future federal funding. Questioned Costs None Repeated Finding This finding has been present since fiscal year 2020. However, it was not disclosed in the Schedule of Prior Audit Findings included in the Single Audit reporting packages for fiscal years 2021, 2022, and 2023, as required by 2 CFR §200.511(c). The omission of this repeated finding from the reporting packages represents a departure from federal audit follow-up requirements and may hinder transparency and accountability in the entity’s corrective action process. Recommendation We recommend that management implement a formal review process to ensure that all prior year findings are properly tracked and disclosed in future Single Audit reporting packages. Additionally, we recommend that the understatement in the reserve debt account be addressed through an appropriate deposit to reconcile the balance. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

2024-005 Delayed Requests for Reimbursement of Federal Funds Compliance Requirement Cash Management Category Material Weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense Criteria Per 2 CFR §200.305(b) of the Uniform Guidance, when entities are funded on a reimbursement basis, they must submit payment requests in a timely manner after incurring eligible costs to ensure proper cash management and compliance with federal requirements. Condition During our review of the Authority’s grant management practices, we noted that requests for reimbursement of federal funds under the cost reimbursement method were delayed by approximately five to seven months after the incurrence of eligible expenditures. Cause The delay appears to be due to internal administrative inefficiencies and a lack of timely coordination between program and finance personnel responsible for grant reporting and fund drawdowns. Effect Delays in requesting reimbursement may result in cash flow constraints for the entity and could potentially impact program operations. Additionally, such delays may be viewed as noncompliance with federal grant management standards, which require timely and accurate reporting and drawdown of funds. Questioned Costs None. Recommendation We recommend that the Authority implement procedures to ensure reimbursement requests are submitted within a reasonable timeframe following the incurrence of costs, typically within 30 days, depending on the Authority's internal disbursement cycle and cash flow needs. Recommended actions include establishing internal deadlines, improving interdepartmental coordination, and conducting periodic reviews of outstanding expenditures eligible for reimbursement. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

2024-006 Performance Reporting Deadlines Compliance Requirement Reporting Category Significant Deficiency in Internal Control and Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense Criteria Per 2 CFR § 200.328 and 2 CFR § 200.329, non-federal entities must submit performance and financial reports as required by the federal awarding agency or pass-through entity. These reports must be accurate, complete, and submitted timely, as outlined in the terms and conditions of the award. Condition The Authority failed to submit required federal reports in accordance with the deadlines established in the Notice of Award, with an average delay of approximately 146 days. Specifically, the Quarterly Performance Reports, Final Performance Report, and Federal Financial Report (FFR) were submitted after their respective due dates, resulting in noncompliance with federal reporting requirements. Cause The Authority did not implement adequate tracking and oversight mechanisms to ensure timely submission of required reports. This may reflect deficiencies in internal controls related to grant management and compliance monitoring. Effect Late submission of federally required reports hinders the ability of the awarding agency and pass-through entity to monitor project progress, assess financial accountability, and ensure compliance with grant terms. Continued noncompliance may result in administrative actions, including restrictions on future funding. Questioned Costs None Repeat Finding Disclosure This finding was reported in the prior year’s Single Audit and was marked as corrected. However, based on current audit procedures and documentation reviewed, the corrective action was not effectively implemented, and the condition persists. Therefore, this finding is considered repeated and unresolved. Refer to item 2022-001. Recommendation The Authority should strengthen its internal controls over grant reporting by assigning clear responsibilities for the preparation and timely submission of required reports. Additionally, relevant personnel should receive training on federal reporting requirements to ensure ongoing compliance. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

2024-007 Late Single Audit Submissions Compliance Requirement Reporting Category Material weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense ALN 10.770 Program Water and Waste Disposal Loans and Grants (Section 306C) (NOT A MAJOR PROGRAM) Agency US Department of Agriculture (Rural Development) ALN 97.036 Program Disaster Grants - Public Assistance (Presidentially Declared Disasters) (NOT A MAJOR PROGRAM) Federal Agency US Department of Homeland Security ALN 21.027 (COVID-19) Program Coronavirus State and Local Fiscal Recovery Funds Federal Agency US Department of Treasury Criteria Per 2 CFR § 200.512(a), non-federal entities that expend $750,000 or more in federal awards during a fiscal year must submit the single audit report to the Federal Audit Clearinghouse within the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period. Condition The Authority did not submit its Single Audit reports for the fiscal years ended June 30, 2021, 2022, 2023, and 2024 to the Federal Audit Clearinghouse (FAC) within the required timeframe. Specifically, the Single Audit reports for fiscal years 2021, 2022, and 2023 were submitted in July 2025, well beyond the nine-month deadline established under federal regulations. The report for fiscal year 2024 had also not been submitted as of the date of this audit. Cause The delay in submission was due to a lack of effective management control activities to ensure the timely completion and submission of the Single Audit reports in accordance with federal requirements. This includes insufficient oversight, inadequate planning, and lack of accountability mechanisms within the Authority’s financial reporting process. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Repeat Finding Disclosure This is a repeat finding. The same condition was reported in the prior year’s audit. Although corrective action was anticipated, the Authority did not implement effective measures to ensure timely submission of the Single Audit reports. As a result, the issue remains unresolved. Refer to item 2023-001. Recommendation The Authority should implement robust internal controls and oversight procedures to ensure timely completion and submission of Single Audit reports. This includes assigning clear responsibilities, establishing internal deadlines aligned with federal requirements, and monitoring progress throughout the audit cycle. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

Part III - Findings and Questioned Costs Relating to Federal Awards 2023-001 Late Single Audit Submissions Effect (Continued) (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Recommendation To comply with the Single Audit submission requirements, the Authority needs to perform and submit the compliance reporting packages in default for the fiscal years ended June 30, 2022, and 2023, on a timely basis. Moving forward, the Authority needs to establish controls to ascertain all Federal reports are filed on time. Prior year finding This finding is similar to a prior year finding identify as 2022-002 Views of Responsible Official (Unaudited) Refer to Corrective Action Plan Compliance Reporting Category Material weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense ALN 97.036 Program Disaster Grants - Public Assistance (Presidentially Declared Disasters) Federal Agency US Department of Homeland Security Criteria 2 CFR §200.512 Report Submission, (a) General (1) The audit must be completed, and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. (Refer also to 10 CFR § 600.226, Non-Federal audit, 10 CFR §600.126, Non-Federal audits, and 45 CFR §75.501, Audit requirement) Condition The Authority has not timely submitted the Single Audit Reporting Packages for the year ended 2023. Cause Lack of management control activities to ensure compliance with Single Audits timely submissions. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award.

Part III - Findings and Questioned Costs Relating to Federal Awards 2022-001 Performance and Financial Reports Submissions Compliance Reporting Category Material weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense Criteria Office of Economic Adjustment, Department of Defense, Notice of Award 21. Award Performance Goals Reporting Type Frequency Due Date Federal Financial Report Semi-Annual 2022-09-30 Semi-annual Federal Financial Report (SF-425) Grantees that received awards on or after October 1, 2009, are required by law to submit semi-annual Federal Financial Reports (FFR) (also known as Standard Form-425) throughout the grant's entire period of performance. They are due twice during the calendar year. This Report must be submitted no later than 30 days after its due date, except the final SF-425, which is due 90 days after the end date of the grant's performance period. Condition The Authority did not comply with the submission due dates of the Federal Financial Reports established by the OEA in their Notice of Award. In addition, from five reports examined to test compliance with due dates, the submission date could not be verified in four instances, including the Federal Financial Report. Cause Lack of control activities to ascertain compliance with OEA Terms and Conditions related to reporting. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. Part III - Findings and Questioned Costs Relating to Federal Awards (Continued) 2022-001 Performance and Financial Reports Submissions (Continued) Compliance Reporting Category Material weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense Effect (Continued) (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Recommendation We recommend strengthening monitoring procedures to ensure compliance with the due dates and other provisions of the required reports by the OEA terms and conditions. Prior year finding This finding is similar to a prior year finding identify as 2021-003 Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

Part III - Findings and Questioned Costs Relating to Federal Awards (Continued) 2022-002 Late Single Audit Submissions Compliance Reporting Category Material weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense ALN 97.036 Program Disaster Grants - Public Assistance (Presidentially Declared Disasters) Federal Agency US Department of Homeland Security Criteria 2 CFR §200.512 Report Submission, (a) General (1) The audit must be completed, and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. (Refer also to 10 CFR § 600.226, Non-Federal audit, 10 CFR §600.126, Non-Federal audits, and 45 CFR §75.501, Audit requirement) Condition The Authority has not timely submitted the Single Audit Reporting Packages for the years ended June 30, 2021, and 2022. Cause Lack of management control activities to ensure compliance with Single Audits timely submissions. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. Part III - Findings and Questioned Costs Relating to Federal Awards (Continued) 2022-002 Late Single Audit Submissions (Continued) Compliance Reporting Category Material weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense ALN 97.036 Program Disaster Grants - Public Assistance (Presidentially Declared Disasters) Federal Agency US Department of Homeland Security Effect (Continued) (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Recommendation To comply with the Single Audit submission requirements, the Authority needs to perform and submit the compliance reporting packages in default for the fiscal years ended June 30, 2020, and 2021, on a timely basis. Moving forward, the Authority needs to establish controls to ascertain all Federal reports are filed on time. Prior year finding This finding is similar to a prior year finding identify as 2020-004 Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

Part III - Findings and Questioned Costs Relating to Federal Awards (Continued) 2022-003 Disbursement to Vendor not Registered in SAM Compliance Subrecipient Monitoring, Procurement, Suspension & Debarment Category Material weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense ALN 97.036 Program Disaster Grants - Public Assistance (Presidentially Declared Disasters) Federal Agency US Department of Homeland Security Criteria 2 CFR Part 25 Universal Identifier and System for Award Management According to 2 CFR Part 25, entities applying for federal grants or cooperative agreements must be registered in the System for Award Management (SAM) before submitting an application and must maintain an active SAM registration throughout the period of the federal award. Condition During the audit, it was noted that Jorge R. Calderon Lopez, to which disbursements were made for legal services was not registered in SAM at the time of the award and remained unregistered throughout the audit period. Cause The entity was unaware of the requirement to register in SAM or failed to complete the registration process. Effect The lack of SAM registration could result in the entity's ineligibility to receive federal funds and raises concerns about compliance with federal regulations, including those related to suspension and debarment. Questioned Costs $7,965.00 Recommendation We recommend that Authority communicates the supplier to complete the SAM registration process immediately and implement procedures to ensure ongoing compliance with SAM registration requirements. Additionally, the Authority should review its policies and procedures to prevent a recurrence of this issue. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

Part III - Findings and Questioned Costs Relating to Federal Awards 2021-002 Reserve Account Compliance Cash Management Category Significant Deficiency in Internal Control and Noncompliance ALN 10.770 Program Water and Waste Disposal Loans and Grants (Section 306C) Agency US Department of Agriculture (Rural Development) Criteria Section 4, Protection and Disposition of the Funds of Water and Waste System Grant Agreement (b) Debt Service Account - For borrowers on other than monthly debt service payments, transfers, in proportion to income availability, shall be made from the General Account and set aside in an account designated as the Debt Service Account, in sufficient amount which will accumulate for the next installment on the note. (c) Reserve Account - From the remaining funds in the General Account, after transfers and payments required in (b) and (c), there shall be set aside into an account(s) designated as the Reserve Account(s) the sum of $1,684 each month until the sum of $201,982 is reached. With the prior written approval of the Government, funds may be withdrawn and used for such things as loan installments, emergency maintenance, extensions to facilities and replacement of short-lived assets, subject to conditions established by the Government. Condition The Authority has a deposit deficiency of $40,416 in the Reserve Account. The balance of the debt service reserve as of June 30, 2021, shall be $90,936. Cause Lack of oversight controls to comply with the cash management compliance requirement. Effect The Federal awarding agency could temporarily withhold cash payments pending correction of the deficiency by the Authority. Questioned Costs None Recommendation The Authority needs to strengthen its internal controls over the cash management compliance requirements. Prior year finding This finding is similar to a prior year finding identify as 2020-012 Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

Part III - Findings and Questioned Costs Relating to Federal Awards (Continued) 2021-003 Performance and Financial Reports Submissions Compliance Reporting Category Material weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense Criteria Office of Economic Adjustment, Department of Defense, Notice of Award 21. Award Performance Goals Reporting Type Frequency Due Date Performance Report Quarterly 2021-04-30 Federal Financial Report Semi-Annual 2021-09-30 Final Performance Report Semi-Annual 2021-09-30 Semi-annual Federal Financial Report (SF-425) Grantees that received awards on or after October 1, 2009, are required by law to submit semi-annual Federal Financial Reports (FFR) (also known as Standard Form-425) throughout the grant's entire period of performance. They are due twice during the calendar year. This Report must be submitted no later than 30 days after its due date, except the final SF-425, which is due 90 days after the end date of the grant's performance period. Condition The Authority did not comply with the submission due dates of the Performance Reports and Federal Financial Reports established by the OEA in their Notice of Award granted on June 6, 2020. In addition, from five reports examined to test compliance with due dates, the submission date could not be verified in four instances, including the Federal Financial Report. Cause Lack of control activities to ascertain compliance with OEA Terms and Conditions related to reporting. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. Part III - Findings and Questioned Costs Relating to Federal Awards (Continued) 2021-003 Performance and Financial Reports Submissions (Continued) Compliance Reporting Category Material weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense Effect (Continued) (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Recommendation We recommend strengthening monitoring procedures to ensure compliance with the due dates and other provisions of the required reports by the OEA terms and conditions. Prior year finding This finding is similar to a prior year finding identify as 2020-013 Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

Part III - Findings and Questioned Costs Relating to Federal Awards (Continued) 2021-004 Late Single Audit Submissions Compliance Reporting Category Material weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense ALN 97.036 Program Disaster Grants - Public Assistance (Presidentially Declared Disasters) Federal Agency US Department of Homeland Security Criteria 2 CFR §200.512 Report Submission, (a) General (1) The audit must be completed, and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. (Refer also to 10 CFR § 600.226, Non-Federal audit, 10 CFR §600.126, Non-Federal audits, and 45 CFR §75.501, Audit requirement) Condition The Authority has not timely submitted the Single Audit Reporting Packages for the years ended June 30, 2021, and 2022. Cause Lack of management control activities to ensure compliance with Single Audits timely submissions. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award.Part III - Findings and Questioned Costs Relating to Federal Awards (Continued) 2021-004 Late Single Audit Submissions (Continued) Compliance Reporting Category Material weakness in Internal Control and Material Noncompliance ALN 12.607 Program Community Economic Adjustment of Establishment, Expansion, Realignment, or Closure of a Military Installation Federal Agency US Department of Defense ALN 97.036 Program Disaster Grants - Public Assistance (Presidentially Declared Disasters) Federal Agency US Department of Homeland Security Effect (Continued) (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Recommendation To comply with the Single Audit submission requirements, the Authority needs to perform and submit the compliance reporting packages in default for the fiscal years ended June 30, 2020, and 2021, on a timely basis. Moving forward, the Authority needs to establish controls to ascertain all Federal reports are filed on time. Prior year finding This finding is similar to a prior year finding identify as 2020-014 Views of Responsible Official (Unaudited) Refer to Corrective Action Plan

Criteria Non-Federal entities must minimize the time elapsing between the transfer of funds from the Federal entity and disbursement by the non-Federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Payment Methods ? Advance and/or Reimbursement Under the advance payment method, Federal awarding agency or pass-through entity payment is made to the non-Federal entity before the non-Federal entity disburses the funds for program purposes (2 CFR section 200.3). A non-Federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR section 200.305(b)(1)). Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs (upt to 30 days for anticipated expenses). The reimbursement payment method is the preferred payment method if (a) the non-Federal entity cannot meet the requirements in 2 CFR section 200.305(b)(1) for advance payment, (b) the Federal awarding agency sets a specific condition for the use of the reimbursement or (3) if requested by the non-Federal entity (2 CFR sections 200.305(b)(3) and 200.207)). The reimbursement payment method also may be used on a Federal award for construction or for other construction activity as specified in 2 CFR section 200.305(b)(3), program costs must be paid by non-Federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)), i.e., the non-Federal entity must disburse funds for program purposes before requesting payment from the Federal awarding agency or pass-through entity. Condition From a sample of twenty-one disbursements, we found ten that did not follow a reasonable time elapsing between transfer and disbursement. The Authority requested most of its funds under the advance method on a quarterly basis, including funds for contracted services. The Authority time elapsing between the transfer and payment of those ten transactions ranged between 90 days and 152 days. Cause The Authority lacks control over cash management related to federal funds. Effect The OEA could force the Authority to draw funds based on the reimbursement method, instead of the advance option. Questioned Costs None Recommendation We recommend the Authority to design and implement controls over the cash management of OEA funds to ascertain disbursements are made promptly after the drawdown. Views of Responsible Officials and Planned Corrective Actions Unaudited Corrective Action Attached.

GSA_MIGRATION

GSA_MIGRATION