EDUCARE OF OMAHA, INC.Non-Profit

US Department of Agriculture Federal Financial Assistance Listing #10.558 Child and Adult Food Care Program (CACFP) Applicable Federal Award Number and Year – 28-1183-000 7/1/2023 – 6/30/2024 and 7/1/2024 – 6/30/2025 Cash Management Material Weakness in Internal Control Over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: The Organization was unable to provide adequate documentation to support the number of meals claimed for reimbursement. Cause: The Organization did not properly reconcile its reimbursement claims to its meal counts included in its attendance records. Effect: Meals claimed for reimbursement by the Organization were not properly supported by its internal records. Questioned Costs: None reported Context: Reimbursement to institutions is based upon the actual and verifiable daily counts of meals served by meal type (breakfast, lunch, snack and supper) and eligibility status (paid, reduced, free) multiplied by the applicable meal rate of reimbursement. A sample of four monthly reimbursement requests made by the Organization subject to the reporting requirement was selected for testing. Of the four monthly reimbursement requests selected, each of them contained variances between the reported number of meals served not agreeing to the Organization’s meal counts included in attendance records for the selected month. Of the items tested, meal counts were overstated by 396 meals for the meal types (breakfast, lunch and snack) on one monthly reimbursement request and understated by a total of 365 meals for the meal types (breakfast, lunch and snack) on three of the monthly reimbursement requests. Repeat Finding from Prior Years: Yes Recommendation: We recommend that management continue to evaluate its processes and controls to ensure that reimbursement requests for meals are properly reconciled to supporting documentation. Views of Responsible Officials: Management is aware of the deficiency in internal control over compliance. Management is in the process of reviewing its existing controls over the tracking and submitting of its meal counts included in its attendance records for reimbursement.

US Department of Health and Human Services Passed through Omaha Public Schools Federal Financial Assistance Listing #93.600 Head Start Cluster Applicable Federal Award Number and Year – 07CH011832-03-00 11/1/2022 – 10/31/2023, 07CH011832-02-00 11/1/2021 – 10/31/2022 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control Over Compliance Material Noncompliance 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 conditions of the federal award. Condition: The Organization requested drawdowns of grant funds in excess of amounts awarded for the grant years ended 10/31/2023 and 10/31/2022 that were denied by the passthrough agency, Omaha Public Schools, resulting in an overstatement in grant revenue and receivables, and federal awards expended included in the schedule of expenditures of federal awards. Cause: Management was not effectively tracking expenditures applied to its grant award during the year. Effect: Drawdowns submitted for reimbursement for the grant year ended 10/31/2023 in the amount of $203,096 and for the grant year ended 10/31/2022 in the amount of $102,927 were not approved resulting in grants receivable and revenue being overstated during the year. An entry was provided by management to write off the uncollectible amounts in the consolidated financial statements. The schedule of expenditures of Federal awards was adjusted to reduce federal awards expended for the amount of the overstatement during the current fiscal year. Questioned Costs: $306,023. Context: In testing the balances of grants receivable at June 30, 2024, it was noted that certain amounts were disallowed by the passthrough agency administering grant funds for the Organization. Of the $390,226 written off as uncollectible, $306,023 was applicable to the Head Start grant. Repeat Finding from Prior Years: No Recommendation: We recommend that management continue to evaluate its processes and controls over its grant monitoring to ensure that expenditures applied to each grant award are complete and accurate. Views of Responsible Officials: Management is aware of the deficiency in internal control over its grant monitoring. Management is in the process of reviewing its accounting policies and procedures over grant monitoring to ensure amounts are tracked appropriately.

US Department of Agriculture Passed through Nebraska Department of Education Federal Financial Assistance Listing #10.558 Child and Adult Food Care Program (CACFP) Applicable Federal Award Number and Year – 28-1183-000 7/1/2022 6/30/2023 and 7/1/2023 – 6/30/2024 Procurement, Suspension and Debarment Material Weakness in Internal Control Over Compliance Material Noncompliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: The Organization entered into purchase agreements with two vendors without complying with their purchasing and procurement policies and did not follow their internal policies related to debarment and suspension. Cause: The Organization did not seek competitive bids for purchase agreements that met the requirements of the Organization’s procurement policy. The Organization also did not document verification that vendors utilized were listed on the General Services List of Parties Excluded from Federal Procurement or Non-procurement programs. Effect: Purchases were made by the Organization with federal grant funds that did not follow the procurement policies in place by the Organization. Also, contracts may have been entered into with parties that may have been debarred or suspended from federal procurement programs. Questioned Costs: None reported Context: We selected a sample of purchases made by the Organization subject to the procurement compliance requirement, and noted that two purchase agreements, which accounted for $543,031 of amounts expended for the program were not subjected to a competitive bid process. Repeat Finding from Prior Years: No Recommendation: The Organization should review its procedures and controls over compliance with its purchasing and procurement policies to ensure compliance with the Procurement, Suspension, and Debarment compliance requirements of the Uniform Guidance. Views of Responsible Officials: Management is aware of the deficiency in internal control and compliance with its procurement policies. Management is in the process of reviewing its existing purchasing and procurement policies and controls over the administration of those policies to ensure compliance with Uniform Guidance requirements.

US Department of Agriculture Federal Financial Assistance Listing #10.558 Child and Adult Food Care Program (CACFP) Cash Management Material Weakness in Internal Control Over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: The Organization was unable to provide adequate documentation to support the number of meals claimed for reimbursement. Cause: The Organization did not properly reconcile its reimbursement claims to its meal counts included in its attendance records. Effect: Meals claimed for reimbursement by the Organization were not properly supported by its internal records. Questioned Costs: None reported Context: Reimbursement to institutions is based upon the actual and verifiable daily counts of meals served by meal type (breakfast, lunch, snack and supper) and eligibility status (paid, reduced, free) multiplied by the applicable meal rate of reimbursement. A sample of four monthly reimbursement requests made by the Organization subject to the reporting requirement was selected for testing. Of the four monthly reimbursement requests selected, each of them contained variances between the reported number of meals served not agreeing to the Organization’s meal counts included in attendance records for the selected month. Of the items tested, meal counts were overstated by 3 meals for one meal type (breakfast) on one reimbursement request and understated by a total of 384 meals for other meal types (breakfast, lunch and snack) on the four monthly reimbursement requests. Repeat Finding from Prior Years: No Recommendation: We recommend that management continue to evaluate its processes and controls to ensure that reimbursement requests for meals are properly reconciled to supporting documentation. Views of Responsible Officials: Management is aware of the deficiency in internal control over compliance. Management is in the process of reviewing its existing controls over the tracking and submitting of its meal counts included in its attendance records for reimbursement.

Identification of the Federal Program: Federal Assistance Listing #93.600; US Department of Health and Human Services; Head Start Cluster; Activities Allowed/Unallowed and Allowable Costs/Cost Principles 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 conditions of the federal award. Condition: Internal controls over the payroll transaction cycle were not operating effectively in that payroll was being processed without proper review and approval of employee timecards being performed by supervisors. Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the Organization?s federal programs. In testing payroll transactions for compliance, we identified instances of employees? timecards lacking approval from supervisors prior to their hours being charged to the federal program. Cause: The Organization did not have an effective internal control process in place to ensure documentation of adequate review and approval of timecards being performed prior to payroll processing. Effect: Payroll costs were being charged to the federal program without proper approval of timecards for time charged to the federal program. Questioned Costs: None reported. Context: A nonstatistical sample of 40 expenditures were selected for testing. Of the sample of 40 transactions selected, 20 of the transactions were related to the payroll transaction cycle. The sample of 20 payroll transactions totaling $287,754 included testing of payroll for 387 individual employee payroll transactions from a population of 9,340 individual employee payroll transactions totaling $3,688,359. Of the 387 payroll transactions tested, 106, or 26%, were lacking documentation of adequate review and approval. Repeat Finding from Prior Years: No Recommendation: We recommend the Organization review and enhance its existing internal control processes over the payroll transaction cycle to ensure timecards are reviewed and approved by supervisors prior to salaries and benefits being charged to federal programs. Views of Responsible Officials: Management agrees with the noted finding. Management will continue to refine processes to ensure timecards are reviewed and approved by supervisors prior to salaries and benefits being charged to federal programs.