Grant County

2025-003 (2023-002) – INACCURATE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition The Schedule of Expenditures of Federal Awards (SEFA) was provided timely to the auditors; however, several adjustments were identified during the audit process: • The SEFA incorrectly included match expenditures, requiring an reduction to the federal expenses of $324,936. Without accurate recording of federal award expenditures, auditors cannot appropriately assess and select federal programs for testing as mandated by the Single Audit Act. Management’s Progress Toward Prior Year Corrective Action Plan: The County has made progress toward addressing the prior year’s SEFA accuracy finding; however, additional corrections remain necessary, as noted above. Criteria 2 CFR § 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program requirements. Good internal control practices require the entity to have documented procedures for: • Properly identifying federal, state, and other funding sources. • Classifying expenditures accurately under the correct federal assistance listing numbers. • Ensuring expenditures reported on the SEFA are accurate and presented according to requirements. Additionally, 2 CFR 200.510(b) mandates the preparation of an accurate and complete SEFA for the audit period, including federal expenditures as determined in accordance with 2 CFR 200.502. Cause The County did not have comprehensive controls to ensure that all federal expenditures are correctly tracked, accurately classified, and properly reported on the SEFA. Effect Without accurate, timely tracking and reporting of federal expenditures, the County is at risk of improperly accounting for federal awards, potentially leading to noncompliance, questioned costs, or repayment obligations. Recommendation We recommend that the County establish, document, and implement a comprehensive internal control structure specifically designed to: • Clearly identify, track, and report grant expenditures. • Accurately distinguish between federal and non-federal expenditures. • Prepare and review the SEFA regularly to ensure completeness, accuracy, and compliance with the Uniform Guidance (2 CFR 200.502 and .510) accrual-basis requirements.

Views of Responsible Officials and Planned Corrective Action The County fully implemented a grant software program in FY 2026 to provide accurate and complete tracking and reporting of federal award expenditures. Finding resolution timeline: This has been resolved as of 12/4/2025. Designation of employee position responsible for meeting this deadline: Andrea Montoya (Deputy County Manager), Gabriella (Betty) Orosco (Assistant Finance Director) and Francine Mondello( Grant Administrator)

2024-002

Type of Finding: (G) Instance of Non-compliance related to Federal Awards and (H) Other Non-compliance Required to be Reported per Section 12-6-5 NMSA 1978 Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition The County’s year ended June 30, 2024, data collection form was submitted to the Federal Audit clearinghouse database on April 19, 2025, and was due by March 31, 2025. Management’s Progress Toward Prior Year Corrective Action Plan: Significant progress was achieved during the year ended June 30, 2025, and the data collection form is expected to be submitted on time for that period. Criteria Per 2 CFR 200.512(a)(1), Report Submission: 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. Cause The County audit was not completed in a timely manner in order to submit the data collection form within the 9-month period after year ended June 30, 2024. Effect Not submitting the data collection form denies access to the public and grantor agencies which could lead in loss of funding needed. Recommendation The County should work with the auditors to ensure the audit is submitted within a time frame that allows the data collection form to be submitted prior to the nine-month period following the close of the fiscal year.

Views of Responsible Officials and Planned Corrective Action FAC accepted the County’s data collection form on April 19, 2025, Report ID 2024-06-GSAFAC-0000364488. Due to the lateness of the FY 2023, this finding will be cleared in FY 2026, as it has already been filed and accepted. Finding resolution timeline: Resolved as of 04/19/2025. Designation of employee position responsible for meeting this deadline: Andrea Montoya, Deputy County Manager

2024-008

2024-002 (2023-002) – INACCURATE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Type of Finding: (E) Material Weakness in Internal Control Over Compliance of Federal Awards Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition The Schedule of Expenditures of Federal Awards (SEFA) was provided timely to the auditors; however, several adjustments were identified during the audit process: • Adjustments were required to properly record accruals and present expenditures on the modified accrual basis, resulting in a reduction of expenditures by $140,941. • The SEFA incorrectly included state-funded expenditures, requiring an adjustment that reduced reported federal expenditures by $50,766. • A disbursement related to the Local Assistance & Tribal Consistency Fund grant was initially posted incorrectly (reversed) in the general ledger. Correcting this error resulted in an increase in reported federal expenditures by $1,000,509. Without accurate recording of federal award expenditures, auditors cannot appropriately assess and select federal programs for testing as mandated by the Single Audit Act. Moreover, insufficient internal controls increase the risk of noncompliance and potential disallowed federal expenditures. Management’s Progress Toward Prior Year Corrective Action Plan: The County has made progress toward addressing the prior year’s SEFA accuracy finding; however, additional corrections remain necessary, as noted above. Criteria 2 CFR § 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program requirements. Good internal control practices require the entity to have documented procedures for: • Properly identifying federal, state, and other funding sources. • Classifying expenditures accurately under the correct federal assistance listing numbers. • Ensuring expenditures reported on the SEFA are accurate and presented according to requirements. Additionally, 2 CFR 200.510(b) mandates the preparation of an accurate and complete SEFA for the audit period, including federal expenditures as determined in accordance with 2 CFR 200.502. Cause The County lacks comprehensive controls to ensure that all federal expenditures are correctly tracked, accurately classified, and properly reported on the SEFA. Effect Without accurate, timely tracking and reporting of federal expenditures, the County is at risk of improperly accounting for federal awards, potentially leading to noncompliance, questioned costs, or repayment obligations. Recommendation We recommend that the County establish, document, and implement a comprehensive internal control structure specifically designed to: • Clearly identify, track, and report grant expenditures. • Accurately distinguish between federal and non-federal expenditures. • Prepare and review the SEFA regularly to ensure completeness, accuracy, and compliance with modified accrual accounting requirements.

Views of Responsible Officials and Planned Corrective Action The County has established a document and an internal control structure designed for tracking in the future. Finding resolution timeline: This has been resolved for FY 25 as of 03/20/2025. Designation of employee position responsible for meeting this deadline: Andrea Montoya, Deputy County Manager

2023-002

2024-005 (2023-008) – INADEQUATE POLICIES AND PROCEDURES UNDER UNIFORM GUIDANCE Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition The County does not have written policies and procedures in place addressing key requirements under 2 CFR 200 (Uniform Guidance), specifically those required in Subparts D and E. Management’s Progress Toward Prior Year Corrective Action Plan: No progress has been made toward resolving this finding as of June 30, 2024. Criteria Uniform Guidance (2 CFR Part 200) mandates documented procedures in several critical areas of federal program management, including cash management, allowable costs, procurement, and conflict of interest: Cash Management (2 CFR §200.302(b)(6)): Requires written procedures detailing how the County manages cash flows for federal programs. Procedures should clearly define responsibilities for monitoring cash transactions, the timing of cash drawdowns, reimbursement claims, obligations, and the verification steps taken to ensure compliance. Allowable Costs (2 CFR §200.302(b)(7)): Requires written procedures specifying how allowable costs are determined, documented, reviewed, and claimed under each federal program in compliance with the Uniform Guidance cost principles. Procurement (2 CFR §200.318(a)): Requires documented procurement policies that adhere to federal standards as well as applicable State, local, and tribal laws. These procedures must clearly outline steps for soliciting, evaluating, awarding, and documenting procurements using federal funds. Cause The County has not developed or implemented written policies and procedures to address the federal program financial management requirements under the Uniform Guidance. Effect The absence of required written procedures places the County at risk of noncompliance with Uniform Guidance, potentially resulting in sanctions, disallowed expenditures, repayment obligations, or loss of future federal funding. Recommendation The County should promptly develop and adopt comprehensive written procedures addressing cash management, allowable costs, procurement, and conflict of interest. Once approved, these procedures should be distributed and communicated clearly to all relevant personnel managing or overseeing federal programs.

Views of Responsible Officials and Planned Corrective Action The County has a written policy regarding Federal Grants that was passed by the Grant County Commissioners in January 2025. Finding resolution timeline: Resolved. Designation of employee position responsible for meeting this deadline: Andrea Montoya, Deputy County Manager

2023-008

2024-007 (2023-012) – EQUIPMENT AND REAL PROPERTY MANAGEMENT Type of Finding: (E) Material Weakness in Internal Control Over Compliance of Federal Awards and (G) Instance of Non-compliance related to Federal Awards Funding Agency: U.S. Department of Transportation Title: Airport Improvement Program AL #: 20.106 Award #: 3-35-0039-031-2024, 3-35-0039-027-2022, 3-35-0039-028-2022, 3-35-0039-029-2023 Award Period: May 1, 2024 – January 1, 2025, December 13, 2021 – December 13, 2025, June 24, 2022 – June 24, 2026, July 3, 2023 – July 7, 2027 Questioned Costs: None Statement of Condition The County was not able to provide a complete and accurate equipment listing tracking items purchased with federal funding nor did the County conduct a physical inventory identifying federal assets. Management’s Progress Toward Prior Year Corrective Action Plan: There was no progress made in the year ended June 30, 2024. Criteria Per 2 CFR 200.303(a), the non-federal entity must 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). Per 2 CFR 200.313(d)(1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. Cause The County is not following policy and procedures to ensure that equipment purchased with federal funds is maintained and tracked and the County performing a physical inventory at a minimum of every two years. Effect The County could dispose of or lose federally funded equipment without following federal guidelines. Recommendation The auditor recommends the County enhance the design of its control activities and policies and procedures should be developed to ensure physical inventories are taken at least once every two years and that the County creates a tool to assist in tracking and maintaining equipment purchased with federal funds.

Views of Responsible Officials and Planned Corrective Action The County will enhance the control activities and procedures to ensure physical inventories are taken at least every two years and will track and maintain equipment purchased with federal funds. Finding resolution timeline: There is currently a documented process and a physical inventory was completed in February 2025. A spreadsheet has been developed for assistance of tracking federal assets. Designation of employee position responsible for meeting this deadline: Andrea Montoya, Deputy County Manager

2023-012

2024-008 (2023-014) – DATA COLLECTION FORM SUBMISSION Type of Finding: (G) Instance of Non-compliance related to Federal Awards and (H) Other Non-compliance Required to be Reported per Section 12-6-5 NMSA 1978 Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition The County’s year ended June 30, 2023 data collection form was submitted to the Federal Audit clearinghouse database on October 22, 2024, and was due by March 31, 2024. Management’s Progress Toward Prior Year Corrective Action Plan: There was no progress made in the year ended June 30, 2024. Additionally, the year ended June 30, 2024 data collection was not submitted by March 31, 2025. Criteria Per 2 CFR 200.512(a)(1), Report Submission: 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. Cause The County audit was not completed in a timely manner in order to submit the data collection form within the 9-month period after year ended June 30, 2023. Effect Not submitting the data collection form denies access to the public and grantor agencies which could lead in loss of funding needed. Recommendation The County should work with the auditors to ensure the audit is submitted within a time frame that allows the data collection form to be submitted prior to the nine-month period following the close of the fiscal year.

Views of Responsible Officials and Planned Corrective Action The County submitted the Single Audit to the Federal Audit Clearinghouse as soon as it was is completed and released by the New Mexico Office of the State Auditor for the fiscal year ending June 30, 2023. Finding resolution timeline: As soon as the fiscal year 2024 audit is released by the New Mexico Office of the State Auditor. Designation of employee position responsible for meeting this deadline: Andrea Montoya, Deputy County Manager

2023-012 Equipment and Real Property Management (Material Noncompliance, Material Weakness in Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: Formula Grants for Rural Areas and Tribal Transit Program, 20.509 Federal Awarding Agency: U.S. Department of the Transportation Pass-Through Entity: New Mexico Department of Transportation Federal Award ID Number: N/A Federal Award Year: 2023 Condition - The County was not able to provide a complete and accurate equipment listing tracking items purchased with federal funding nor did the County conduct a physical inventory. Criteria - Per 2 CFR 200.303(a), the non-federal entity must 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). Per 2 CFR 200.313(d)(1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. Cause - The County is not following policy and procedures to ensure that equipment purchased with federal funds is maintained and tracked and the County performing a physical inventory at a minimum of every two years. Effect - The County could dispose of or lose federally funded equipment without following federal guidelines. Auditor’s Recommendation - The auditor recommends the County enhance the design of its control activities and policies and procedures should be developed to ensure physical inventories are taken at least once every two years and that they create a tool to assist in tracking and maintaining equipment purchased with federal funds. Views of Responsible Officials and Planned Corrective Action - The County will enhance the control activities and procedures to ensure physical inventories are taken at least every two years and will track and maintain equipment purchased with federal funds. Responsible Official – Andrea Montoya, Deputy County Manager and Robert Placencio, Finance Director Timeline and Estimated Completion Date –This will be a documented procedure by August 31, 2024. The County will have a physical inventory completed by December 31, 2024.

Views of Responsible Officials and Planned Corrective Action - The County did complete an annual inventory in November 2023 and is scheduling another inventory for November 2024. Responsible Official -Andrea Montoya, Deputy County Manager, and Robert Placencio, Finance Director Timeline and Estimated Completion Date - December 31, 2024.