Southeast New Mexico CollegeHigher Education

Recommendation We recommend the College establish the required written procedures for federal monies and have them available to all personnel who work with federal programs Management Response Corrective Action Unfortunately, due to the untimely completion and release of the June 30, 2023 audit report (released on August 8, 2025 - over two years after the end of the June 30, 2023 fiscal year audit), the College did not have the opportunity to review and begin a timely process of addressing a majority of the audit findings until well after the end of the audit period. While the College is committed to corrective action, the delayed delivery of the June 30, 2023 audit limited the ability to implement corrective measures earlier. The College is working proactively to ensure that these issues are resolved going forward. It is important to note that Southeast New Mexico College was a newly established independent community college, having formally separated from New Mexico State University (NMSU) as of April 2022. During this transition period, many administrative processes, including federal grant compliance procedures, were in the process of being developed, transitioned, and implemented independently from NMSU systems. As a result, certain policies, procedures, and documentation processes were not yet fully established or operational at the time of the audit. Corrective Action Taken / Planned: Policy Development • The institution will develop comprehensive written policies and procedures to address compliance requirements related to 2 CFR 200, Subparts D and E of the Uniform Guidance and approved by institutional leadership by July 31, 2025. Policy Review and Approval • Draft policies will be reviewed by VP of Business and Finance and approved by institutional leadership by August 31, 2025. Training • Relevant personnel will be trained on the new policies and procedures to ensure consistent understanding and compliance. Implementation • The institution will fully implement the new procedures by August 31, 2025, and will ensure all departments involved with federal awards are following them. Ongoing Review: • Policies and procedures will be reviewed annually, and updates will be made as necessary to ensure continued compliance with federal regulations. Date of Completion: August 31, 2025 Responsible Parties Vice President for Business and Finance (or appropriate official), Dean of Business and Finance, Director of Finance, Restricted Funds Manager

2023-005

Recommendation We recommend the College develop and implement adequate policies and procedures to ensure charging of expenses for allowability are based off approved amounts. Corrective Action Unfortunately, due to the untimely completion and release of the June 30, 2023 audit report (released on August 8, 2025 - over two years after the end of the June 30, 2023 fiscal year audit), the College did not have the opportunity to review and begin a timely process of addressing a majority of the audit findings until well after the end of the audit period. While the College is committed to corrective action, the delayed delivery of the June 30, 2023 audit limited the ability to implement corrective measures earlier. The College is working proactively to ensure that these issues are resolved going forward. It is important to note that Southeast New Mexico College was a newly established independent community college, having formally separated from New Mexico State University (NMSU) as of April 2022. During this transition period, many administrative processes, including federal grant compliance procedures, were in the process of being developed, transitioned, and implemented independently from NMSU systems. As a result, certain policies, procedures, and documentation processes were not yet fully established or operational at the time of the audit. Corrective Action Taken / Planned: Policy and Procedure Development The institution will revise or develop written policies and procedures to ensure compliance with 2 CFR §200.430. The revised procedures will include: • Detailed requirements for supporting documentation for payroll costs. • Clear guidance on time and effort reporting. • Procedures for periodic payroll reconciliation between payroll records and grant charges. Staff Training Training will be provided for payroll, grants accounting, and department personnel involved in charging payroll costs to federal awards to ensure understanding and compliance with the new procedures. Payroll Reconciliation A process will be established to reconcile payroll charges to the grant with actual payroll records at least quarterly, with reviews and approvals documented. Effort Certification Employees whose salaries are charged to federal grants will be required to complete effort certifications, which will be reviewed and retained per federal guidelines. Monitoring and Review Grant accounting and payroll offices will implement an annual review process to ensure continued compliance and address any gaps or errors identified. Due Date of Completion: August 31, 2025 Responsible Part(ies) Vice President for Business and Finance (or appropriate official), Dean of Business and Finance, Restricted Funds Manager, Payroll Manager

2023-006

Recommendation We recommend the College develop and implement adequate policies and procedures to ensure charging of expenses for allowability are based off approved amounts. Corrective Action Unfortunately, due to the untimely completion and release of the June 30, 2023 audit report (released on August 8, 2025 - over two years after the end of the June 30, 2023 fiscal year audit), the College did not have the opportunity to review and begin a timely process of addressing a majority of the audit findings until well after the end of the audit period. While the College is committed to corrective action, the delayed delivery of the June 30, 2023 audit limited the ability to implement corrective measures earlier. The College is working proactively to ensure that these issues are resolved going forward. It is important to note that Southeast New Mexico College was a newly established independent community college, having formally separated from New Mexico State University (NMSU) as of April 2022. During this transition period, many administrative processes, including federal grant compliance procedures, were in the process of being developed, transitioned, and implemented independently from NMSU systems. As a result, certain policies, procedures, and documentation processes were not yet fully established or operational at the time of the audit. Corrective Action Taken / Planned: Policy and Procedure Development The institution will revise or develop written policies and procedures to ensure compliance with 2 CFR §200.430. The revised procedures will include: • Detailed requirements for supporting documentation for payroll costs. • Clear guidance on time and effort reporting. • Procedures for periodic payroll reconciliation between payroll records and grant charges. Staff Training Training will be provided for payroll, grants accounting, and department personnel involved in charging payroll costs to federal awards to ensure understanding and compliance with the new procedures. Payroll Reconciliation A process will be established to reconcile payroll charges to the grant with actual payroll records at least quarterly, with reviews and approvals documented. Effort Certification Employees whose salaries are charged to federal grants will be required to complete effort certifications, which will be reviewed and retained per federal guidelines. Monitoring and Review Grant accounting and payroll offices will implement an annual review process to ensure continued compliance and address any gaps or errors identified. Due Date of Completion: August 31, 2025 Responsible Part(ies) Vice President for Business and Finance (or appropriate official), Dean of Business and Finance, Restricted Funds Manager, Payroll Manager

2023-008

Recommendation We recommend the College strengthen controls to ensure future FISAP reports are submitted timely. Management Response Corrective Action To ensure timely submission of the Fiscal Operations Report and Application to Participate (FISAP) in future reporting cycles, the College will implement the following corrective measures: 1) Establish a Regulatory Compliance Calendar a. A centralized compliance calendar will be developed and maintained by the Business Office in coordination with Financial Aid. The calendar will include all federal and state reporting deadlines, including the FISAP, with automated reminders set at 90, 60, and 30 days prior to each deadline. 2) Formal Assignment of Responsibility a. The Director of Financial Aid will be designated as the primary responsible party for preparation and submission of the FISAP. A secondary backup (Controller or Business Office designee) will be assigned to ensure continuity and oversight. 3) Written Procedures Update a. The Financial Aid Procedures Manual will be updated to include documented steps, internal timelines, required data sources, reconciliation processes, and final submission verification procedures for FISAP completion. 4) Supervisory Review and Certification a. Prior to submission, the Vice President for Business and Finance will receive written confirmation of completion and submission to ensure executive level oversight. 5) Cross-Training a. Annual cross training between Financial Aid and Business Office staff will be conducted to strengthen institutional knowledge and reduce dependency on a single individual. Implementation Timeline: Compliance calendar implemented within 30 days Written procedures updated within 60 days Cross training completed prior to next FISAP cycle Executive review process effective immediately Monitoring Timely submission will be verified annually and documented as part of the College’s internal controls review process. Due of Completion: July 1, 2026 Responsible Party(ies) Vice President for Business and Finance, Dean of Student Affairs

Recommendation The College should continue to work with the accounting department and accounting systems to assist its auditor to catch up its financial reporting and records to allow for the completion of future audits. Corrective Action Unfortunately, due to the untimely completion and release of the June 30, 2023 audit report (released on August 8, 2025 - over two years after the end of the June 30, 2023 fiscal year audit), the College did not have the opportunity to review and begin a timely process of addressing a majority of the audit findings until well after the end of the audit period. While the College is committed to corrective action, the delayed delivery of the June 30, 2023 audit limited the ability to implement corrective measures earlier. The College is working proactively to ensure that these issues are resolved going forward. It is important to note that Southeast New Mexico College was a newly established independent community college, having formally separated from New Mexico State University (NMSU) as of April 2022. During this transition period, many administrative processes, including federal grant compliance procedures, were in the process of being developed, transitioned, and implemented independently from NMSU systems. As a result, certain policies, procedures, and documentation processes were not yet fully established or operational at the time of the audit. To ensure timely future submissions, the following corrective actions have been implemented. Revised Timeline and Calendar Controls: • A compliance calendar has been developed and integrated into the Business Office workflow to monitor federal reporting deadlines, including the DCF due date. This calendar includes reminder notifications at 90, 60 and 30 days before the March deadline. Internal Review Process: • A designated compliance officer or fiscal services staff member has been assigned responsibility for tracking the DCF submission process and coordinating with the external auditors to ensure timely receipt of the final audit. Audit Planning Coordination: • Annual audit planning meetings now include a discussion of reporting deadlines, and the contract with the external audit firm will include a clause requiring delivery of the final audit in a timeframe that supports compliance with federal submission timelines. Training and Awareness: • Relevant staff will have completed training in Uniform Guidance reporting requirements, including DCF submission procedures and deadlines to ensure full understanding of the importance of timely compliance. Due of Completion: August 31, 2025 Responsible Party(ies) Vice President for Business and Finance (or appropriate official), Dean of Business and Finance, Director of Finance, Accounts Receivable Coordinator, Business Office Manager

2023-013

2023-005 – Inadequate Policies and Procedures (Significant Deficiency in Internal Controls over Compliance) Recommendation: We recommend the College establish the required written procedures for federal monies and have them available to all personnel who work with federal programs. Action Taken: The 2022-2023 fiscal year was entirely encompassed by the separation Memorandum of Understanding (MOU) of March 2022 and then the final release settlement in December 2023. It is important to note that Southeast New Mexico College was a newly established independent community college, having formally separated from New Mexico State University (NMSU) as of April 2022. During this transition period, many administrative processes, including federal grant compliance procedures, were in the process of being developed, transitioned, and implemented independently from NMSU systems. As a result, certain policies, procedures, and documentation processes were not yet fully established or operational at the time of the audit. Unfortunately, due to the untimely receipt of the completed audit report, the College did not have the opportunity to review and begin addressing several of the findings until well after the end of the audit period. While the College is committed to corrective action, the delayed delivery of the audit limited the ability to implement corrective measures earlier. The College is working proactively to ensure that these issues are resolved going forward. Corrective Action Taken / Planned: • Policy Development o The institution will develop comprehensive written policies and procedures to address compliance requirements related to 2 CFR 200, Subparts D and E of the Uniform Guidance and approved by institutional leadership by July 31, 2025. • Policy Review and Approval o Draft policies will be reviewed by VP of Business and Finance and approved by institutional leadership by August 31, 2025. • Training o Relevant personnel will be trained on the new policies and procedures to ensure consistent understanding and compliance. • Implementation o The institution will fully implement the new procedures by August 31, 2025, and will ensure all departments involved with federal awards are following them. • Ongoing Review: o Policies and procedures will be reviewed annually, and updates will be made as necessary to ensure continued compliance with federal regulations. Due Date of Completion: August 31, 2025 Responsible Official: Carolyn Kasdorf, Vice President for Business and Finance (or appropriate official), Karla Volpi, Dean of Business and Finance, Rebecca Silva, Director of Finance, Lisa Ryan, Restricted Funds Manager

2023-006 – Payroll (Material Weakness in Internal Controls over Compliance/Material Noncompliance) Recommendation: We recommend the College develop and implement adequate policies and procedures to ensure charging of expenses for allowability are based off approved amounts. Action Taken: The 2022-2023 fiscal year was entirely encompassed by the separation Memorandum of Understanding (MOU) of March 2022 and then the final release settlement in December 2023. It is important to note that Southeast New Mexico College was a newly established independent community college, having formally separated from New Mexico State University (NMSU) as of April 2022. During this transition period, many administrative processes, including federal grant compliance procedures, were in the process of being developed, transitioned, and implemented independently from NMSU systems. As a result, certain policies, procedures, and documentation processes were not yet fully established or operational at the time of the audit. Unfortunately, due to the untimely receipt of the completed audit report, the College did not have the opportunity to review and begin addressing several of the findings until well after the end of the audit period. While the College is committed to corrective action, the delayed delivery of the audit limited the ability to implement corrective measures earlier. The College is working proactively to ensure that these issues are resolved going forward. Corrective Action Taken / Planned: • Policy and Procedure Development o The institution will revise or develop written policies and procedures to ensure compliance with 2 CFR §200.430. The revised procedures will include:  Detailed requirements for supporting documentation for payroll costs.  Clear guidance on time and effort reporting  Procedures for periodic payroll reconciliation between payroll records and grant charges. • Staff Training o Training will be provided for payroll, grants accounting, and department personnel involved in charging payroll costs to federal awards to ensure understanding and compliance with the new procedures. • Payroll Reconciliation o A process will be established to reconcile payroll charges to the grant with actual payroll records at least quarterly, with reviews and approvals documented. • Effort Certification o Employees whose salaries are charged to federal grants will be required to complete effort certifications, which will be reviewed and retained per federal guidelines. • Monitoring and Review o Grant accounting and payroll offices will implement an annual review to ensure continued compliance and address any gaps or errors identified. Due Date of Completion: August 31, 2025 Responsible Official: Carolyn Kasdorf, Vice President for Business and Finance (or appropriate official), Karla Volpi, Dean of Business and Finance, Lisa Ryan, Restricted Funds Manager, Steven Gonzales, Payroll Manager

2023-007 – Procurement, Small Purchases (Significant Deficiency in Internal Controls over Compliance, Questioned Costs Greater than $25k) Recommendation: We recommend the College strengthen controls to ensure purchasing policies and procedures are being followed and train staff in the purchasing department to comply with all relevant federal procurement requirements. Action Taken: The 2022-2023 fiscal year was entirely encompassed by the separation Memorandum of Understanding (MOU) of March 2022 and then the final release settlement in December 2023. It is important to note that Southeast New Mexico College was a newly established independent community college, having formally separated from New Mexico State University (NMSU) as of April 2022. During this transition period, many administrative processes, including federal grant compliance procedures, were in the process of being developed, transitioned, and implemented independently from NMSU systems. As a result, certain policies, procedures, and documentation processes were not yet fully established or operational at the time of the audit. During the audit period, the College operated under procurement policies and procedures inherited from New Mexico State University (NMSU), as the College had recently separated from NMSU. The procedures were followed in good faith. Two College employees successfully completed Certified Procurement Officer (CPO) training in July 2021 and were recertified in March 2024. Another employee became certified in February 2024, and the College is having two additional employees participate in fiscal year 2025. This training demonstrates the College’s commitment to compliance and proper procurement practices. Unfortunately, due to the untimely receipt of the completed audit report, the College did not have the opportunity to review and begin addressing several of the findings until well after the end of the audit period. While the College is committed to corrective action, the delayed delivery of the audit limited the ability to implement corrective measures earlier. The College is working proactively to ensure that these issues are resolved going forward. Corrective Action Taken / Planned: • Policy Update o The institution will revise its procurement policies to fully align with Uniform Guidance (2 CFR §200.320) requirements for small purchases. Policies will specify:  The dollar thresholds for small purchases  Requirements for obtaining at least two or more quotes, as applicable.  Acceptable methods of documenting quotes (written, online or verbal with notation).  Exceptions or special circumstances, if applicable under federal regulations. • Procedure Implementation o Detailed procedures and checklists will be developed to ensure consistent documentation of all small purchases under federal awards, including price comparisons and vendor justification. • Training o Procurement and grant personnel will receive training on the revised small purchase procedures to ensure understanding of documentation and compliance requirements. • Monitoring: o A periodic review process will be established to verify adherence to small purchase procurement requirements, with corrective actions taken if any deficiencies are identified. Due Date of Completion: August 31, 2025 Responsible Official: Carolyn Kasdorf, Vice President for Business and Finance (or appropriate official), Karla Volpi, Dean of Business and Finance, Rebecca Silva, Director of Finance, Lisa Ryan, Restricted Funds Manager

2023-008 – Procurement, Above Simple Acquisition (Significant Deficiency in Internal Controls over Compliance) Recommendation: We recommend the College strengthen controls to ensure purchasing policies and procedures are being followed and train staff in the purchasing department to comply with all relevant federal procurement requirements. Action Taken: The 2022-2023 fiscal year was entirely encompassed by the separation Memorandum of Understanding (MOU) of March 2022 and then the final release settlement in December 2023. It is important to note that Southeast New Mexico College was a newly established independent community college, having formally separated from New Mexico State University (NMSU) as of April 2022. During this transition period, many administrative processes, including federal grant compliance procedures, were in the process of being developed, transitioned, and implemented independently from NMSU systems. As a result, certain policies, procedures, and documentation processes were not yet fully established or operational at the time of the audit. During the audit period, the College operated under procurement policies and procedures inherited from New Mexico State University (NMSU), as the College had recently separated from NMSU. The procedures were followed in good faith. Two College employees successfully completed Certified Procurement Officer (CPO) training in July 2021 and were recertified in March 2024. Another employee became certified in February 2024, and the College is having two additional employees participate in fiscal year 2025. This training demonstrates the College’s commitment to compliance and proper procurement practices. Unfortunately, due to the untimely receipt of the completed audit report, the College did not have the opportunity to review and begin addressing several of the findings until well after the end of the audit period. While the College is committed to corrective action, the delayed delivery of the audit limited the ability to implement corrective measures earlier. The College is working proactively to ensure that these issues are resolved going forward. Corrective Action Taken / Planned: • Policy and Procedure Revision o The institution will revise its procurement policies and procedures to explicitly address purchases exceeding the Simplified Acquisition Threshold, incorporating:  Public solicitation and competitive bidding requirements  Cost or price analysis requirements per 2 CFR §200.324  Documentation of bid evaluations, vendor selection, and contract award  Use of federally compliant contract clauses (per 200.327 and Appendix II). • Training o Procurement, finance, and grant management staff will be trained on updated procedures, including:  Competitive procurement processes  Cost/price analysis methods  Documentation requirements • Procurement Checklist: o A standardized procurement checklist will be developed and required for all procurements above the Simplified Acquisition Threshold to ensure all federal steps are documented and reviewed. • Pre-Award Review Process o For all purchases above the Simplified Acquisition Threshold, the institution will implement a review and approval process involving procurement leadership and the grants compliance office before contract award. • Monitoring: o Annual internal monitoring will be conducted by the Procurement Office or Grants Compliance Office to ensure ongoing compliance with federal procurement requirements. Due Date of Completion: August 31, 2025 Responsible Official: Carolyn Kasdorf, Vice President for Business and Finance (or appropriate official), Karla Volpi, Dean of Business and Finance, Rebecca Silva, Director of Finance, Lisa Ryan, Restricted Funds Manager

2023-009 – Equipment and Real Property Management (Significant Deficiency in Internal Controls over Compliance) Recommendation: We recommend the College enhance the design of its control activities and create a tool to assist in tracking and maintaining equipment purchased with federal funds. Additionally, the employees responsible for the inventory should be trained to ensure understanding of the Uniform Guidance requirements relevant to equipment and real property management. Action Taken: The 2022-2023 fiscal year was entirely encompassed by the separation Memorandum of Understanding (MOU) of March 2022 and then the final release settlement in December 2023. It is important to note that Southeast New Mexico College was a newly established independent community college, having formally separated from New Mexico State University (NMSU) as of April 2022. During this transition period, many administrative processes, including federal grant compliance procedures, were in the process of being developed, transitioned, and implemented independently from NMSU systems. As a result, certain policies, procedures, and documentation processes were not yet fully established or operational at the time of the audit. Unfortunately, due to the untimely receipt of the completed audit report, the College did not have the opportunity to review and begin addressing several of the findings until well after the end of the audit period. While the College is committed to corrective action, the delayed delivery of the audit limited the ability to implement corrective measures earlier. The College is working proactively to ensure that these issues are resolved going forward. Corrective Action Taken / Planned: • Policy Development and Revision o The institution will update its property management policies and procedures to comply with 2 CFR §200.313 and §200.311. Updates will address:  Accurate and complete property records, including required data elements (description, serial number, location, use, acquisition cost, federal grant information, etc);  Biennial physical inventory procedures, including reconciliation with property records  Safeguarding and maintenance protocols  Requirements for disposition of federally funded property • Inventory Process Implementation o A full physical inventory of all federally funded equipment and real property will be conducted by August 31, 2025, and discrepancies will be investigated and resolved. • Training o All personnel responsible for managing equipment and real property will be trained on the updated policies, inventory procedures, and compliance requirements. • Monitoring and Oversight: o The institution will implement an internal review process to ensure ongoing compliance with equipment and real property management standards. Monitoring will include:  Periodic spot checks of property records  Documentation of follow-up on any missing or unaccounted for items  Regular reviews to ensure appropriate safeguarding and maintenance of property. • Documentation of Federal Interest o For any real property acquired or improved with federal funds, the institution will ensure proper recording of the federal government’s interest in accordance with federal regulations. Due Date of Completion: August 31, 2025 Responsible Official: Carolyn Kasdorf, Vice President for Business and Finance (or appropriate official), Karla Volpi, Dean of Business and Finance, Rebecca Silva, Director of Finance, Lisa Ryan, Restricted Funds Manager, Inventory Control