California Fire Safe Council, Inc.Non-Profit

Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/02/24 Compliance Requirement Affected: Subrecipient Suspension & Debarment Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For two subrecipient samples that were selected, verification of subrecipient's suspension or debarment status was not verified. Context: A nonstatistical sample of 2 of 4 subrecipients were selected for testing for the Office for Coastal Management program. Condition noted above was identified during our procedures over subrecipients. Effect: CFSC did not verify suspension or debarment status, which could result in naming a subrecipient as an award recipient, which is potentially suspended or debarred. Cause: CFSC did not consistently ensure that Suspension or Debarment status was verified before naming the subrecipients tested as award recipients. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that CFSC strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each subrecipient applicant during its pre-award subrecipient screening process. Management’s Views: See separate corrective action plan.

Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/02/24 Compliance Requirement Affected: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.332(d) - establishes that the auditee must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition: CFSC did not perform risk assessment for all subrecipients selected for testing. CFSC was unable to provide supporting documentation to show that they inquired with the subrecipients about any audits they had undergone or evidence that CFSC received and reviewed audit reports to ensure timely follow ups were made if any findings pertaining to the Federal Award was noted. Context: A nonstatistical sample of 2 out of 4 subrecipients were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over CFSC’s subrecipients. Effect: CFSC did not perform the following, which increases the risk of noncompliance: -Required risk assessments for the subrecipients, -Review subrecipient audit reports to ensure compliance with Federal Awards or make any necessary follow-ups pertaining to any findings noted, if any. Cause: CFSC’s procedures did not consistently ensure that the required risk assessments were performed. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to ensure that all required risk assessments are performed in accordance with the criteria outlined above. Management’s Views: See separate corrective action plan.

Federal Agency: United States Department of Agriculture, Forest Service Federal Program Name: Cooperative Forestry Assistance Assistance Listing Number: 10.664 Federal Award Identification Year: 2021 Pass-Through Agency: N/A Award Period: 09/01/21-08/31/26 Compliance Requirement Affected: Subrecipient Suspension & Debarment Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For one subrecipient samples that was selected, verification of subrecipient's suspension or debarment status was not verified. Context: A nonstatistical sample of 5 out of 13 subrecipients were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over CFSC’s subrecipients. Effect: CFSC did not verify suspension or debarment status, which could result in naming a subrecipient as an award recipient, which is potentially suspended or debarred. Cause: CFSC did not consistently ensure that Suspension or Debarment status was verified before naming the subrecipients tested as award recipients. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that CFSC strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each subrecipient applicant during its pre-award subrecipient screening process. Management’s Views: See separate corrective action plan.

Federal Agency: United States Department of Agriculture, Forest Service Federal Program Name: Cooperative Forestry Assistance Assistance Listing Number: 10.664 Federal Award Identification Year: 2021 Pass-Through Agency: N/A Award Period: 09/01/21-08/31/26 Compliance Requirement Affected: Allowable Costs & Activities (Payroll) Type of Finding: Significant Deficiency in Internal Control over Compliance and Nonmaterial Noncompliance Criteria: 2 CFR 200.403(a) - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: For five hourly employees, CFSC performed a review of payroll discrepancies occurring between 2020- 2024, due to differences when comparing time recorded on time sheets to time recorded to payroll, which resulted in a non-significant payment made to back to the employees. Questioned Costs: The known questioned costs are $8,600. Context: A nonstatistical sample of 60 out of >250 employee pay periods were selected for testing for the Cooperative Forestry Assistance program. The condition noted above was identified during our procedures over CFSC’s payroll disbursements. Effect: CFSC's internal controls did not include thorough review of time entry when processing payroll, which can result in understatement of payroll expense. Cause: CFSC's internal controls did not include thorough review of time entry when processing payroll.

Management agrees with the finding and is implementing the accompanying corrective action plan. Views of Responsible Officials: Jacy Hyde, Executive Director Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Contact Person: Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Corrective Action Plan: In response to the FY21 Corrective Action Plan, CFSC implemented a Subrecipient Monitoring Policy in June 2024 to ensure compliance with the Uniform Guidance for monitoring subrecipients of federal funding, including audit requirements and the verification of suspension and debarment status. To further strengthen compliance and ensure timely verification, CFSC will implement the following actions: 1.Mandatory Pre-Award Verification Timing & Documentation: a.Suspension and debarment status must be verified on SAM.gov by the assigned Grant Specialist before the execution of any subaward agreements. b.The verification data and results will be documented by the assigned Grant Specialist and included in the Risk Assessment process prior to award issuance. c.Any subrecipients flagged as high risk due to past audit findings will undergo enhanced pre-award due diligence before subaward execution to be carried out by the assigned Grant Specialist. 2.Grant Compliance Oversight & Approval: a.The Grants Manager (or designee) will review and approve all subrecipient compliance checks before final award execution. b.Any exceptions or delays in verification must be documented and approved by the CFAO & Deputy Director before proceeding. 3.Quarterly Compliance Audits: a.The Grants Manager (or designee) will conduct quarterly internal audits of subrecipient monitoring files to confirm that suspension & debarment verification was completed timely before subaward execution. b.The Grants Manager will be responsible for reporting any identified deficiencies to senior management and ensuring timely correction for policy reinforcement. Anticipated Completion Date: These corrective actions will be fully implemented by the end of Quarter 2 of FY25, with ongoing monitoring and enforcement thereafter

Management agrees with the finding and is implementing the accompanying corrective action plan. Views of Responsible Officials: Jacy Hyde, Executive Director Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Contact Person: Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Corrective Action Plan: In response to FY21 Corrective Action Plan, CFSC implemented an updated Subrecipient Monitoring Policy in June 2024 to ensure compliance with Uniform Guidance, including subrecipient risk assessment and audit review requirements. To further strengthen compliance and eliminate inconsistencies in subrecipient risk assessments, CFSC will implement the following corrective actions: 1.Mandatory Pre-Award Risk Assessment & Documentation: a.The Grants Manager will have the responsibility to ensure that a Subrecipient Risk Assessment Form is completed and documented for all subawards before execution. b.Risk assessment findings will be stored in the subrecipients grant file and reviewed during routine monitoring. c.Any subrecipients classified as high risk will be subject to enhanced monitoring procedures to be carried out by the assigned Grant Specialist, which may include additional financial oversight and/or more frequent reporting. 2.Systematic Audit review & compliance tracking: a.The Grants Manager will be responsible for ensuring timely collection and review of subrecipient audit reports. 3.Quarterly Compliance Audits of Risks Assessments & Audit Reviews: a.The Grants Manager will conduct quarterly internal audits to confirm: i.All subrecipients have undergone documented risk assessments before receiving funds. ii.All subrecipient audits have been collected, reviewed, and properly documented. iii.Any identified audit findings have been addressed with documented corrective actions. Anticipated Completion Date: These corrective actions will be fully implemented by the end of Quarter 2 of FY25.

Federal Agency: U.S. Department of Agriculture Forest Service Federal Program Name: Cooperative Forestry Assistance - Pass-Through Agency: N/A Assistance Listing Number: 10.664 Federal Award Identification Year: 2021 Award Period: 09/01/21-08/31/26 Type of Finding: Other Matters - Significant Deficiency in Internal Control Criteria: 2 CFR 200.403(a) - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: For one payroll sample that was selected, the amount of time charged to the grant was greater than the amount of time work was performed for the grant. As such, the program was overcharged. Context: A nonstatistical sample of 25 out of > 250 payroll entries were selected for testing for the Cooperative Forestry Assistance program. The condition noted above was identified during our procedures over the CFSC’s allowable costs provisions. Effect: CFSC did not identify the error to be able to make the appropriate corrections before receiving reimbursement for incorrect payroll related expenditures. Cause: CFSC did not consistently ensure that the hours worked by each employee related to the federal program were accurate applying the cost to the grant. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that all payroll amounts applied to the grant were for actual hours worked based on employee timesheets. Management’s Views: See separate corrective action plan.

Federal Agency: U.S. Department of Agriculture Forest Service Federal Program Name: Cooperative Forestry Assistance - Pass-Through Agency: N/A Assistance Listing Number: 10.664 Federal Award Identification Year: 2021 Award Period: 09/01/21-08/31/26 Type of Finding: Other Matters - Significant Deficiency in Internal Control Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For two subrecipient samples that were selected, verification of subrecipient's suspension or debarment status was not verified until after the subaward agreement was effective. Context: A nonstatistical sample of 6 out of 20 subrecipients were selected for testing for the Cooperative Forestry Assistance program. The condition noted above was identified during our procedures over CFSC’s subrecipients. Effect: CFSC did not verify suspension or debarment status timely which could result in naming a subrecipient as an award recipient who is potentially suspended or debarred. Cause: CFSC did not consistently ensure that Suspension or Debarment status was verified timely before naming the subrecipients tested as award recipients. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each subrecipient applicant during its pre-award subrecipient screening process. Management’s Views: See separate corrective action plan.

Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/31/23 Type of Finding: Other Matters - Significant Deficiency in Internal Control Criteria: 2 CFR 200.403(a) - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: For two payroll samples that were selected, the amount of time charged to the grant was greater than the amount of time work was performed for the grant. As such, the program was overcharged. Context: A nonstatistical sample of 8 out of 48 payroll entries were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over the CFSC’s allowable costs provisions. Effect: CFSC did not identify the error to be able to make the appropriate corrections before receiving reimbursement for incorrect payroll related expenditures. Cause: CFSC did not consistently ensure that the hours worked by each employee related to the federal program were accurate applying the cost to the grant. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that all payroll amounts applied to the grant were for actual hours worked based on employee timesheets. Management’s Views: See separate corrective action plan.

Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/31/23 Type of Finding: Other Matters - Significant Deficiency in Internal Control Criteria: 2 CFR 200.328 - Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB approved, governmentwide data elements available from the OMB designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. 2 CFR 200.329(c)(1) -Requirements state that the non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or passthrough entity to best inform improvements in program outcomes and productivity. Condition: For one of the two reports selected for testing, CFSC did not submit the reports to the National Fish and Wildlife Foundation by the required date. Context: A nonstatistical sample of 2 out of 4 required reports were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over the CFSC’s reporting requirements. Effect: CFSC did not submit required reports in a timely manner, increasing the risk of noncompliance. Cause: CFSC’s procedures did not consistently ensure that the required reports were submitted on a timely basis. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that management modify and strengthen its current policies and procedures to ensure that all required reports are submitted on a timely basis to the appropriate Federal Agency or Pass-Through Entity. Management’s Views: See separate corrective action plan.

Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Award Period: 9/1/20-08/31/23 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.403(a) - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: For two subrecipient samples that were selected, verification of subrecipient's suspension or debarment status was not verified. Context: A nonstatistical sample of 2 of 4 subrecipients were selected for testing for the Office for Coastal Management program. Condition noted above was identified during our procedures over subrecipients. Effect: CFSC did not verify suspension or debarment status, which could result in naming a subrecipient as an award recipient, which is potentially suspended or debarred. Cause: CFSC did not consistently ensure that Suspension or Debarment status was verified before naming the subrecipients tested as award recipients. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that management strengthen its current policies and procedures to ensure that Suspension and Debarment Status is verified for each subrecipient applicant during its pre-award subrecipient screening process. Management’s Views: See separate corrective action plan.

Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/31/23 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.332(d) - establishes that the auditee must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition: Management did not perform risk assessment for all subrecipients selected for testing. Management was unable to provide supporting documentation to show that they inquired with the subrecipients about any audits they had undergone or evidence that management received and reviewed audit reports to ensure timely follow ups were made if any findings pertaining to the Federal Award was noted. Context: A nonstatistical sample of 2 out of 4 subrecipients were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over CFSC’s subrecipients. Effect: CFSC did not perform the following, which increases the risk of noncompliance:  Required risk assessments for the subrecipients,  Review subrecipient audit reports to ensure compliance with Federal Awards or make any necessary follow-ups pertaining to any findings noted, if any. Cause: CFSC’s procedures did not consistently ensure that the required risk assessments were performed. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that management modifies and strengthens its current policies and procedures to ensure that all required risk assessments are performed in accordance with the criteria outlined above. Management’s Views: See separate corrective action plan.

Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/31/23 Type of Finding: Other Matters – Material Weakness in Internal Control Criteria: 2 CFR 200.414(c) - Federal award recipients must negotiate an indirect cost rate with the cognizant agency for indirect costs, which is typically the federal agency that provides the most funding to the recipient.2 CFR 200.403(d) - The negotiated rate must be applied consistently across all federal awards to ensure uniformity in cost allocation. 2 CFR 200.302(b)(3) - Recipients must maintain adequate documentation to support the indirect costs charged to federal awards, ensuring compliance with the cost principles outlined in the regulation. Condition: For two reimbursement requests from the grantor, an indirect cost rate was used, for which CSFC did not have a provisional or final rate agreement from the USDA. Context: Of the 2 reimbursements invoiced, 2 were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over CFSC’s subrecipients. Effect: CFSC did not identify the error to be able to make the appropriate corrections before receiving reimbursement for incorrect indirect cost rate invoiced. Cause: CFSC’s procedures did not ensure that the negotiated provisional rate was invoiced properly. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to perform review over the indirect cost rate utilized when submitting invoices to the grantor. Management’s Views: See separate corrective action plan.

Finding 2021-005 Program: Office for Coastal Management Federal Financial Assistance Listing: 11.473 Federal Grantor: U.S. Department of Commerce Passed-through: National Fish and Wildlife Foundation Award No. and Year: 0318.19.070225 (2020) Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Criteria: 2 CFR 200.403(a) - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Condition: For one payroll sample that was selected, the amount of time charged to the grant was greater than the amount of time work was performed. As such, the program was overcharged. Questioned Costs: Questioned costs were identified as a result of our procedures in the amount of $74. Context/Sampling: A nonstatistical sample of 17 out of 82 total payroll costs ($25,275 of $35,106) were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over the CFSC’s allowable costs provisions. EB expanded the sample to 22 ($26,792) and no further questioned costs were identified. Repeat Finding from Prior Year: No Effect: CFSC did not identify the error to be able to make the appropriate corrections before receiving reimbursement for incorrect payroll related expenditures. Cause: CFSC did not consistently ensure that the hours worked by each employee related to the federal program were accurate applying the cost to the grant. Recommendation: We recommend that CFSC strengthen its current policies and procedures to ensure that all payroll amounts applied to the grant were for actual hours worked based on employee timesheets. Views of Responsible Officials and Planned Corrective Actions: See Separate Corrective Action Plan.

Finding 2021-006 Program: Office for Coastal Management Federal Financial Assistance Listing: 11.473 Federal Grantor: U.S. Department of Commerce Passed-through: National Fish and Wildlife Foundation Award No. and Year: 0318.19.070225 (2020) Compliance Requirements: Reporting Type of Finding: Material Non-Compliance/Material Weakness Criteria: 2 CFR 200.328 - Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. 2 CFR 200.329(c)(1) -Requirements state that the non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Condition: For three of the four reports selected for testing, CFSC did not submit the reports to the National Fish and Wildlife Foundation by the required date. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: Sampling was not used. We selected all four reports filed during year. The condition noted above was identified during our procedures over the CFSC’s reporting provisions. Repeat Finding from Prior Year: No Effect: CFSC did not submit required reports in a timely manner, increasing the risk of noncompliance. Cause: CFSC’s procedures did not consistently ensure that the required reports were submitted on a timely basis. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to ensure that all required reports are submitted on a timely basis to the appropriate Federal Agency or Pass-Through Entity. Views of Responsible Officials and Planned Corrective Actions: See Separate Corrective Action Plan.

Finding 2021-007 Program: Office for Coastal Management Federal Financial Assistance Listing: 11.473 Federal Grantor: U.S. Department of Commerce Passed-through: National Fish and Wildlife Foundation Award No. and Year: 0318.19.070225 (2020) Compliance Requirements: Reporting Type of Finding: Material Non-Compliance/Material Weakness Criteria: 2 CFR 200.302(b)(2) - Requirements state that there must be accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. Condition: Expenditures for one financial report that was selected for testing did not agree with the expenditures that were reported on the SEFA and recorded in the General Ledger (difference of $11,791), based on the dates requested in the report. CFSC did not include known operational expenses for the period that were program costs at the time the report was due, which resulted in underreporting expenditures by $11,791. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: Sampling was not used. We selected all four reports filed during year. The condition noted above was identified during our procedures over CFSC’s reporting provisions. Repeat Finding from Prior Year: No Effect: CFSC did not include all known expenditures at the time the report was submitted to the National Fish and Wildlife Foundation, increasing the risk of noncompliance. Cause: CFSC’s procedures did not consistently ensure that all known expenditures at the time the report was submitted were included. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to ensure that all known expenditures are included at the time reports are required to be submitted. Views of Responsible Officials and Planned Corrective Actions: See Separate Corrective Action Plan.

Finding 2021-008 Program: Office for Coastal Management Federal Financial Assistance Listing: 11.473 Federal Grantor: U.S. Department of Commerce Passed-through: National Fish and Wildlife Foundation Award No. and Year: 0318.19.070225 (2020) Compliance Requirements: Subrecipient Monitoring Type of Finding: Material Non-Compliance/Material Weakness Criteria: 2 CFR Part 200.331(a) - Requirements for Pass-Through Entities, states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information as well as all the requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations, and the terms and conditions of the award. Condition: The following information was not identified at the time of subaward for three of the three subawards selected for testing from the Office for Coastal Management: • Federal Award date by the Federal Agency • Whether or not the award was R&D • The indirect cost rate for the Federal Award (including if the de minimus rate is charged) Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: Sampling was not used. We selected all three subrecipients for testing. The condition noted above was identified during our procedures over CFSC’s subrecipient monitoring provisions. Repeat Finding from Prior Year: No Effect: CFSC did not identify the required elements of the subaward to the subrecipients at the time of subaward, increasing the risk of noncompliance. Cause: CFSC’s procedures did not consistently ensure that the required award information and applicable requirements were communicated to subrecipients. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to ensure that all required award information and applicable requirements are communicated to subrecipients at the time of subaward in accordance with 2 CFR section 200.331(a). Views of Responsible Officials and Planned Corrective Actions: See Separate Corrective Action Plan.

Finding 2021-009 Program: Office for Coastal Management Federal Financial Assistance Listing: 11.473 Federal Grantor: U.S. Department of Commerce Passed-through: National Fish and Wildlife Foundation Award No. and Year: 0318.19.070225 (2020) Compliance Requirements: Subrecipient Monitoring and Matching Type of Finding: Material Non-Compliance/Material Weakness Criteria: 2 CFR 200.303(a) - establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 200.331(b) - Requirements for Pass-Through Entities, states that all pass-through entities must assess the subrecipient’s risk of non-compliance with federal statutes, regulations, and terms and conditions of the subaward. 2 CFR 200.331(d) - establishes that the auditee must follow up and ensure subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided from the Pass Through Entity (PTE) detected through audits. 2 CFR 200.332(d) - establishes that the auditee must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. As part of monitoring the subrecipients, since there is a matching requirement within the grant, the CFSC’s procedures should monitor and ensure the subrecipients are complying the required match arrangements outlined in the subaward agreements. Condition: CFSC did not perform risk assessment for all subrecipients selected for testing. CFSC was unable to provide supporting documentation to show that they inquired with the subrecipients about any audits they had undergone or evidence that CFSC received and reviewed audit reports to ensure timely follow ups were made if any findings pertaining to the Federal Award was noted. Monitoring of matching is not done each time expenditures are incurred by a subrecipient, which increases the risk that a subrecipient may not incur the required match costs before the end of the grant period. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: Sampling was not used. We selected all three subrecipients for testing. The condition noted above was identified during our procedures over CFSC’s subrecipient monitoring provisions. Repeat Finding from Prior Year: Yes –2020-001 Effect: CFSC did not perform the following, which increases the risk of noncompliance: • Required risk assessments for the subrecipients, • Review subrecipient audit reports to ensure compliance with Federal Awards or make any necessary follow-ups pertaining to any findings noted, if any. • Ensure match expenditures are incurred throughout the duration of the grant period, which increases risk that CFSC may not meet its matching requirements through its subrecipients. Cause: CFSC’s procedures did not consistently ensure that the required risk assessments, monitoring, matching through subrecipients, or subrecipient follow-up were performed. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to ensure that all required risk assessments are performed in accordance with the criteria outlined above. Views of Responsible Officials and Planned Corrective Actions: See Separate Corrective Action Plan.

Finding 2021-010 Program: Office for Coastal Management Federal Financial Assistance Listing: 11.473 Federal Grantor: U.S. Department of Commerce Passed-through: National Fish and Wildlife Foundation Award No. and Year: 0318.19.070225 (2020) Compliance Requirements: Cash Management / Subrecipient Monitoring Type of Finding: Material Non-Compliance/Material Weakness Criteria: 2 CFR 200.305 – establishes that payment methods must minimize the time elapsing between the transfer of funds from the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer or other means. The non-Federal entity must be paid in advance, provided 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, and financial management systems that meet the standards for fund control and accountability as established in this part. 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. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. Whenever possible, advance payments must be consolidated to cover anticipated cash needs for all Federal awards made by the Federal awarding agency to the recipient. Non-Federal entities must be authorized to submit requests for advance payments and reimbursements at least monthly when electronic fund transfers are not used, and as often as they like when electronic transfers are used, in accordance with the provisions of the Electronic Fund Transfer Act. Reimbursement is the preferred method when the requirements above cannot be met. Condition: We identified the following: • For amounts advanced from granting agency to CFSC, we noted $559,110 of advances were not expended timely. The expenditures were incurred (or disbursed to subrecipients) between 21 and 50 days after advanced funds were received by CFSC. • For $733,637 of pass-through payments paid by CFSC, the timing of payment to subrecipients didn’t follow a reimbursement method. The agreements allowed for funds to be advanced, with a true-up required quarterly. Funds were frequently remitted to subrecipient more than 30 days in advance of the expenditure being incurred by the subrecipient. o For 5 transactions of 9 payments to subrecipients tested, funds were provided to subrecipients prior to eligible expenditures being incurred by the subrecipient. The number of days between date funds were advanced to subrecipient, and when an eligible expenditures were completely incurred by subrecipients were as follows:  8 days - $191,830 • Time between CFSC receipt of funds (from granting agency) and subsequent remittance to subrecipient was 59 days  34 days - $195,929 • Time between CFSC receipt of funds and subsequent remittance to subrecipient was 44 days  51 days - $100,000 • Time between CFSC receipt of funds and subsequent remittance to subrecipient was 59 days  79 days - $50,000 • time between CFSC receipt of funds and subsequent remittance to subrecipient was 107 days  86 days - $195,929 • time between CFSC receipt of funds and subsequent remittance to subrecipient was 121 days Questioned Costs: Advances received of $559,110 by CFSC, and subrecipient advances paid of $733,637, as detailed under the Condition above. Context/Sampling: Sampling was not used. For advances received, we tested 6 of 6 advances. We selected all three subrecipients for testing. The condition noted above was identified during our procedures over CFSC’s subrecipient monitoring provisions. Repeat Finding from Prior Year: Yes –2020-001 Effect: CFSC did not minimize the time elapsing between receiving advances and incurring eligible expenditures, including the timing of the subrecipients incurring the related eligible expenditures. Cause: CFSC’s procedures did not consistently ensure that subrecipient agreements followed the uniform guidance requirements related to advances, nor did their policies allow for appropriately minimizing the time elapsing on advances received. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to ensure that cash management policies surrounding advances are in line with grant agreements and uniform guidance. Views of Responsible Officials and Planned Corrective Actions: See Separate Corrective Action Plan.

Program: Cooperative Forestry Assistance CFDA No.: 10.664 Federal Grantor: U.S. Department of Agriculture Passed -through: N/A Award No. and Year: 17-DG-11052012-147 (2018) and 17-DG-11052012-122 (2018) Compliance Requirements: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control and Instance of Non-Compliance Criteria: 2 CFR Part 200.332(a), Requirements for Pass-Through Entities, states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information as well as all the requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations, and the terms and conditions of the award. Condition: The following information was not provided at the time of subaward for two of the ten subawards selected for testing from the Cooperative Forestry Assistance: ? CFDA number and name Management asserted documentation was sent to the two subrecipients during the year to communicate the missing information, but evidence was not retained or available during the audit. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of 10 subrecipients out of 45 total subrecipients were selected for testing for the Cooperative Forestry Assistance. The condition noted above was identified during our procedures over the CFSC?s subrecipient monitoring provisions. Repeat Finding from Prior Year: Yes, prior year finding 2019-001 Effect: CFSC did not identify the required elements of the subaward to the subrecipients at the time of subaward, increasing the risk of noncompliance. Cause: CFSC?s procedures did not consistently ensure that the required award information and applicable requirements were communicated to subrecipients. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to ensure that all required award information and applicable requirements are communicated to subrecipients at the time of subaward in accordance with 2 CFR section 200.332(a). Views of Responsible Officials and Planned Corrective Actions: See Separate Corrective Action Plan.

Program: Cooperative Forestry Assistance CFDA No.: 10.664 Federal Grantor: U.S. Department of Agriculture Passed -through: N/A Award No. and Year: 17-DG-11052012-122 (2018), 18-DG-11052012-134 (2019), 17-DG-11052012-139 (2018) and 17-DG-11052012-147 (2018) Compliance Requirements: Reporting Type of Finding: Significant Deficiency in Internal Control and Instance of Non-Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 170 establishes requirements for recipients? reporting of information on subawards as required by the Federal Funding Accountability and Transparency Act of 2006 (FFATA). Condition: We identified the following: ? No documentation to support a formal review of the FFATA reporting information prior to submission in the FFATA Subaward Reporting System ? The FFATA reporting was not completely timely as required by 2 CFR Part 170. Subaward Transactions Subaward Report Amount Tested Not Reported Not Timely Incorrect Quantity 8 - 8 - Subaward Transactions Subaward Report Amount Tested Not Reported Not Timely Incorrect Dollar Value $1,070,485 - $1,070,485 - Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of 8 subaward transactions out of 51 total subawards were selected for testing for the Cooperative Forestry Assistance. The condition was present for all 8 subawards, and per inquiry with CFSC, submission was not timely for any of the subawards during the year. Repeat Finding from Prior Year: No Effect: Ineffective controls over this area of compliance could result in a reasonable possibility that reports that are inaccurate or incomplete could be submitted to the federal agency. In addition, due to the late filing of FFATA reports, the CFSC may be noncompliant with the compliance requirements of the program. Cause: CFSC?s procedures did not allow for the preparation or timely filing of the FFATA reports. Recommendation: We recommend that management review their process and controls related to FFATA reporting to ensure they comply with the federal requirements and complete the required reporting of subawards under FFATA within the deadline required by the Uniform Guidance Views of Responsible Officials and Planned Corrective Actions: See Separate Corrective Action Plan.

Finding 2019-001 Program: Cooperative Forestry Assistance CFDA No.: 10.664 Federal Grantor: U.S. Department of Agriculture Passed -through: N/A Award No. and Year: 17-DG-11052012-122 (2018) and 17-DG-11052012-139 (2018) Compliance Requirements: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control and Instance of Non-Compliance Criteria: 2 CFR Part 200.331(a), Requirements for Pass-Through Entities, states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information as well as all the requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations, and the terms and conditions of the award. Condition: The following information was not provided at the time of subaward for two of the seven subaward selected for testing from the Cooperative Forestry Assistance: ? CFDA number and name Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of 7 subrecipients out of 44 total subrecipients were selected for testing for the Cooperative Forestry Assistance. The condition noted above was identified during our procedures over the Organization?s subrecipient monitoring provisions. Repeat Finding from Prior Year: No. Effect: CFSC did not identify the required elements of the subaward to the subrecipients at the time of subaward, increasing the risk of noncompliance. Cause: CFSC?s procedures did not consistently ensure that the required award information and applicable requirements were communicated to subrecipients. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to ensure that all required award information and applicable requirements are communicated to subrecipients at the time of subaward in accordance with 2 CFR section 200.331(a). Views of Responsible Officials and Planned Corrective Actions: Response