EL CENTRO DE LA RAZANon-Profit

Finding 2024-002 Material weakness in internal controls over compliance and instances of noncompliance related to allowable costs/cost principle compliance requirements. Federal Agency: U.S. Department of Treasury Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Awards Numbers and Years: All awards Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Subpart E section 2 CFR 200.430 requires that a system of internal control exists that charges are accurate, allowable and properly allocated, as well as support the distribution of the employees salary and wages among specific cost activities or cost objectives. Condition/Context El Centro’s accounting records preliminarily allocates employee compensation expenses across activities based upon budget estimates. Employees then subsequently complete time sheets to substantiate the allocation of actual activity conducted for which the employee is compensated. El Centro’s controls did not operate in the year to perform an after-the-fact review of the interim charges recorded as compared to the allocations identified per the timesheets allocating activities and post adjustments for the final allocations. In a sample of 25 payroll transactions there were 24 transactions identified in which the allocation of activity per the timesheets did not match the allocation of compensation in the accounting records. Effect/Potential Effect El Centro was unable to substantiate allocations of payroll costs based on documentation retained. Questioned Costs Non-determinable Cause El Centro’s internal controls related to payroll costs allocation was not sufficient to prevent or detect errors in compliance with the standards and to ensure consistent treatment with policies and procedures. Repeat Finding Yes - finding related to internal controls over compliance (2023-002). Recommendation We recommend that El Centro implement internal controls to ensure that all payroll costs charged to the federal awards are supported by documented after the fact determinations of how the employees actual activities were allocated. Views of Responsible Officials Management agrees with the finding and has provided the corrective action plan following the Single Audit Report.

Finding 2024-003 Significant deficiency in internal controls over compliance and instances of noncompliance related to allowable costs/cost principle compliance requirements. Federal Agency: U.S. Department of Treasury Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Awards Numbers and Years: All awards Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Subpart E section 2 CFR 200.405 requires direct costs to be allocable based on the relative benefit received by each award. Condition/Context For the year ended December 31, 2024, in a sample of 25 transactions, there were five instances of non-payroll costs being charged to the award that were not supported by documentation identifying the individual items of costs and/or allocation of the benefits received by each federal award or cost objective. In all instances amounts were allocated to the federal award based on a budgeted rate of shared occupancy and programmatic overhead costs. Cause El Centro’s did not have internal controls in place to ensure that the allocation of occupancy expenses was based upon actual charges incurred allocated based upon the proportional benefits received by each activity. Effect/Potential Effect El Centro was unable to substantiate certain charges were based upon actual items of costs incurred allocated based upon the proportional benefits received by the federal award activities. Questioned Costs Non-determinable Repeat Finding Yes - finding related to internal controls over compliance (2023-003). Recommendation We recommend that El Centro implement internal controls to ensure that all non-payroll costs charged to the federal awards are supported by documentation of an actual item of allowable costs incurred determined to be allocable based upon the benefits received by the federal activity. Views of Responsible Officials Management agrees with the finding and has provided the corrective action plan following the Single Audit Report.

Finding 2023-002 Material weakness in internal controls over compliance and instances of noncompliance related to allowable costs/cost principle compliance requirements. Federal Agency: U.S. Department of Treasury Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Awards Numbers and Years: All awards Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Subpart E section 2 CFR 200.430 requires that a system of internal control exists that charges are accurate, allowable and properly allocated, as well as support the distribution of the employees salary and wages among specific cost activities or cost objectives. Condition/Context El Centro’s accounting records preliminarily allocates employee compensation expenses across activities based upon budget estimates. Employees then subsequently complete time sheets to substantiate the allocation of actual activity conducted for which the employee is compensated. El Centro’s controls did not operate in the year to perform an after-the-fact review of the interim charges recorded as compared to the allocations identified per the timesheets allocating activities and post adjustments for the final allocations. In a sample of 25 payroll transactions there were 13 transactions identified in which the allocation of activity per the timesheets did not match the allocation of compensation in the accounting records. Effect/Potential Effect El Centro was unable to substantiate allocations of payroll costs based on documentation retained. Questioned Costs Non-determinable Cause El Centro’s internal controls related to payroll costs allocation was not sufficient to prevent or detect errors in compliance with the standards and to ensure consistent treatment with policies and procedures. Repeat Finding Not applicable Recommendation We recommend that El Centro implement internal controls to ensure that all payroll costs charged to the federal awards are supported by documented after the fact determinations of how the employees actual activities were allocated. Views of Responsible Officials Management agrees with the finding and has provided the corrective action plan following the Single Audit Report.

Finding 2023-003 Significant deficiency in internal controls over compliance and instances of noncompliance related to allowable costs/cost principle compliance requirements. Federal Agency: U.S. Department of Treasury Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Awards Numbers and Years: All awards Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Subpart E section 2 CFR 200.405 requires direct costs to be allocable based on the relative benefit received by each award. Condition/Context For the year ended December 31, 2023, in a sample of 25 transactions, there were 3 instances of non-payroll costs being charged to the award that were not supported by documentation identifying the individuals items of costs and/or allocation of the benefits received by each federal award or cost objective. In one such instance amounts were allocated to the federal award based on a budgeted amount of occupancy costs per square foot and in two of the instances budgeted occupancy costs were reclassified between activities due to changes in budgeted amounts without documentation that the re-allocation was supported by the benefits received by each federal award. Cause El Centro’s did not have internal controls in place to ensure that the allocation of occupancy expenses was based upon actual charges incurred allocated based upon the proportional benefits received by each activity. Effect/Potential Effect El Centro was unable to substantiate certain occupancy charges were based upon actual items of costs incurred allocated based upon the proportional benefits received by the federal award activities. Questioned Costs Non-determinable Repeat Finding Not applicable Recommendation We recommend that El Centro implement internal controls to ensure that all non-payroll costs charged to the federal awards are supported by documentation of an actual item of costs incurred determined to be allocable based upon the benefits received by the federal activity. Views of Responsible Officials Management agrees with the finding and has provided the corrective action plan following the Single Audit Report.

Finding 2023-004 Material weakness in internal controls over procurement and material noncompliance related to procurement compliance requirements. Federal Agency: U.S. Department of Treasury Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Awards Number: 21-94110-040 Award Period: 3/23/2023 - 11/30/2079 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-Federal entity that has expended Federal awards to have written policies to its federal grants for procurement and that the history of each procurement is documented in accordance with 2 CFR section 200.318 to 200.320. Condition/Context El Centro received and utilized the federal award to pay for general contractor services for a construction project that was ongoing at the time of the award. El Centro had entered the procurement of general contractor service prior to receiving the federal award and in accordance with its existing procurement policy, which included a non-competitive bid procurement process. However, documentation for the rationale of the procurement methodology, contract type selection, contract selection, price analysis and review for suspension and debarment, was not retained. As a result, El Centro did not have a procurement process in place that resulted in compliance with the Uniform Guidance, including the maintenance of records to detail the history of the procurement. Effect/Potential Effect A procurement was entered into that did not meet the minimum Uniform Guidance procurement standards. Questioned Costs $1,837,379 Repeat Finding Not applicable Recommendation We recommend that El Centro maintain records to support that any procurement entered into with federal funds was done so in accordance with its policies and procedures for procuring goods and services with the proceeds of a federal award. Views of Responsible Officials Management agrees with the finding and has provided the corrective action plan following the Single Audit Report.